Patagonia Gold Announces Placing And Subscription To Raise £6.5 million

TORONTO, Oct. 25, 2012 /CNW/ - Patagonia Gold Plc (TSX: PAT, AIM: PGD) ("Patagonia Gold" or "the Company") today announced it has raised, through Mirabaud Securities LLP, gross proceeds of approximately £6.5 million (approximately $10.5 million) through a placing (the "Placing") of 16,630,000 new ordinary shares of 1p each in the Company (the "Placing Shares") and a subscription (the "Subscription") of 12,390,000 new ordinary shares of 1p each in the Company (together with the Placing Shares, the "New Ordinary Shares") each at a price of 22.5 pence per New Ordinary Share (the "Issue Price").

The Issue Price represents a discount of approximately 2 per cent to the closing middle market price of 23 pence per ordinary share on 24 October 2012, being the last trading day prior to this announcement and the new shares represent approximately 3.6 per cent of the enlarged issued share capital. The Placing Shares will be subscribed for in accordance with, and subject to, the terms and conditions set out in Appendix I to this Announcement. The Appendix may be viewed as part of the long version of the release, posted to www.patagoniagold.com and filed to SEDAR.

In addition, subscribers for the New Ordinary Shares have been issued with three quarters of a warrant for every such New Ordinary Share so subscribed (with fractional entitlements rounded down to the nearest whole warrant) (the "Warrants"). A total of 21,765,000 Warrants have been issued pursuant to the Placing and Subscription. The Warrants are exercisable into Ordinary Shares on a one for one basis at a price of 24.75 pence each (being equal to a 10 per cent premium to the Placing Price) at any time prior to 31 October 2016. The Warrants are non-transferable save in limited circumstances. No application will be made for admission of the Warrants to trading on AIM or to be listed on the Toronto Stock Exchange.

The net proceeds of the Placing and Subscription will be used to fund the development expenditure for the Lomada de Leiva gold production project, continuing development expenditure on the Cap-Oeste and COSE projects in Argentina and to provide general working capital for the Company.

Pursuant to the Subscription, New Ordinary Shares were subscribed for by William Humphries, Managing Director of the Company, whose discloseable interest is as set out below.

Commenting on today's announcement, Bill Humphries, Managing Director of Patagonia Gold, said: "This financing, together with the gold sales revenue derived from the successful Lomada heap leach trial, will provide the Company with the financial resources to construct and commission the Lomada main heap leach facility, expected to be fully operational in March 2013, subject to receiving all required permitting during Q4 2012.

"The financing will also allow for the continuation of the drilling program on the Company's flagship Cap-Oeste development and to commence the construction of our Bonanza COSE project early in 2013. We expect that incremental cash flow from the operation of the Lomada main heap leach facility will be adequate to continue funding COSE to production by Q3 2013.

"The board was particularly gratified by the continued support of its existing shareholders."

The accompanying investor presentation used for the Placing and Subscription is available on the Company's website: www.patagoniagold.com.

Further details on the Placing

The Placing and Subscription are conditional on admission of the New Ordinary Shares to trading on AIM ("Admission"). The New Ordinary Shares will be fully paid and will rank pari passu in all respects with the Company's existing ordinary shares 1p each ("Ordinary Shares"). Application has been made to the London Stock Exchange for Admission and application has been made to list the New Ordinary Shares on the Toronto Stock Exchange.  It is expected that Admission will become effective and that dealings in the New Ordinary Shares will commence at 8.00 a.m. on Wednesday, 31 October 2012. Following Admission the Company's issued share capital will consist of 808,685,878 Ordinary Shares with voting rights. Patagonia Gold does not hold any Ordinary Shares in treasury.

The aforementioned figure of 808,685,878 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Patagonia Gold under the Financial Service Authority's Disclosure and Transparency Rules.

The participation of William Humphries in the Subscription is deemed to be a related party transaction under the AIM Rules. The Company's independent Directors consider, having consulted with Strand Hanson Limited, the Company's nominated adviser, that the terms of his participation in the Subscription are fair and reasonable insofar as the Company's shareholders are concerned.

About Patagonia Gold

Patagonia Gold Plc is an advanced mining exploration company that seeks to grow shareholder value through the acquisition, exploration and development of gold and silver projects in the southern Patagonia region of Argentina. The Company is primarily focused on the development of three projects: the flagship Cap-Oeste project, which has yielded large scale exploration results, the nearby COSE project, which is expected to begin generating free cash flow in 2013, and the Lomada project, which is expected to begin gold production in the fourth quarter of 2012. Patagonia Gold, indirectly through its subsidiaries or under option agreements, has mineral rights to over 220 properties in several provinces of Argentina and Chile, being one of the largest landholders in the province of Santa Cruz. The Company is headquartered in London, with subsidiary offices in Buenos Aires and Toronto.

Patagonia Gold is listed on the Toronto Stock Exchange (TSX) under the symbol PAT and has been listed on the AIM market of the London Stock Exchange under the symbol PGD since 2003.

NEITHER THIS ANNOUNCEMENT NOR ANY PART OF IT CONSTITUTES AN OFFER TO SELL OR ISSUE OR THE SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE OR ACQUIRE ANY NEW ORDINARY SHARES IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (SAVE IN CERTAIN LIMITED CIRCUMSTANCES FURTHER DETAILS OF WHICH ARE SET OUT IN THE TERMS AND CONDITIONS ATTACHED TO THIS ANNOUNCEMENT), AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. 

Cautionary Statement Regarding Forward-Looking Information

This news release includes certain information that may constitute "forward-looking information" under applicable securities legislation. Forward looking information includes, but is not limited to, statements about the expected closing of the Placing and Subscription, the admission of the New Ordinary Shares to trading and the use of proceeds from the Placing and Subscription. Forward-looking information is necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information, including the risks identified in the Company's public disclosure, the risk that regulatory approvals required in connection with the Placing and Subscription may not be received and the risk that other conditions of the Placing and Subscription may not be met. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management at the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

SOURCE Patagonia Gold plc