Rockfire Resources raising £18.2m to acquire Emirates Gold and Emperesse Bullion in "transformational" deal
() , a gold and critical minerals explorer, announced a share purchase agreement constituting a reverse takeover with Paloma Precious for its 100% interest in Emirates Gold DMCC and 99% interest in Emperesse Bullion LLC, subject to regulatory approvals. Paloma is the largest shareholder in Rockfire with an interest of 21.7%.
Per AIM rules, a reverse takeover requires a new application to be made for the enlarged share capital to be readmitted to AIM. As a result, Rockfire shares were suspended at 7:30 AM on September 15 until a new Admission Document is published. Rockfire said it seeks to publish the document "as soon as possible", but did not announce exact timing.
Rockfire will acquire the two companies for a total consideration of US$20m. On signing of the agreement, Rockfire will acquire 10% of each company for US$2m in cash. Upon all conditions of the agreement being met, Rockfire will acquire the remainder of shares for US$18m in cash.
To help finance the acquisitions, Rockfire is simultaneously undertaking a fundraise of approximately £14.7m at 0.5p a share, a 36% premium to the 's closing price on September 14. The investors in this fundraise have entered a binding but conditional agreement to subscribe for ordinary shares pursuant to the reverse takeover agreement. Separately, Rockfire announced a £3.5m fundraise from two new institutional investors subscribing for 700 million new shares at the same 0.5p/share price.
View from Vox
Major news from Rockfire as the company has decided to greatly expand its footprint through the acquisition of two profitable UAE-based companies, currently owned by Rockfire's largest shareholder, Paloma. To fund the acquisitions, Rockfire is raising all the capital required and more at a 36% premium to its closing price yesterday. We will not observe a market reaction to the news, however, as shares are currently suspended per AIM rules on reverse takeovers. As soon as the suspension lifts, a major price move should be expected.
The two companies are profitable and cash-generative. Emirates' principal activities are operating a gold and silver refinery and trading of non-manufactured precious metals and jewelry in Dubai's DMCC multi commodities centre free-trade zone. In the year ended 31 December 2022, Emirates made a profit (EBIDTA) of £2.4m on revenue of £3.9bn, and had audited net assets of £41.8m.
The smaller company Emperesse is also engaged in precious metal trading and operates a leased gold, silver and platinum trading shop in the 'Dubai Gold Souk' market. In the year ended 31 December 2022, Emperesse made a profit of £65k on revenue of £616k and had audited net assets of £3.6m.
Rockfire is already active in the leadership of the two companies, with Gordon Hart (Chairman of Rockfire) and David Price (CEO of Rockfire) having joined their respective management teams (but not the boards). The two executives will also provide advice to Paloma on the management of the two acquisitions up until the completion of the transaction.
Overall, this is a major milestone for Rockfire that should further accelerate its growth as a global gold and precious metals explorer and refiner. Rockfire's success in finding supportive investors to raise the capital needed for the transaction at a significant price premium is further validation of its M&A strategy.
While most of the proceeds from the fundraises will be used to fund the acquisitions, some will also go toward general working capital and continued development of Rockfire's flagship Molaoi polymetallic project in Greece. Rockfire recently confirmed the presence of high-grade germanium and gallium at Molaoi, which added significant value to the project, as well as yet higher concentrations of zinc, silver and lead. Based on results so far, we expect a resource upgrade soon, followed by a feasibility study later this year.
Molaoi continues to see positive results that exceed expectations and demonstrate the high quality and grades of its polymetallic deposit. Investors have rewarded the good results from Greece, pushing shares 115% higher year-to-date. Today's news has elicited a positive reaction from investors as well, albeit without the ability to trade on the news yet.
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