China Africa Resources to raise £1m and become cash shell

The AIM-listed company said that as investors in the proposed fundraising had no interest in funding its 100% owned Berg Aukas zinc and lead project in Northern Namibia, it would distribute the shares of its Namibian subsidiary via a 1.75p dividend to all shareholders.

China Africa has agreed the £1m fundraising at a price of 2.17p, with each share coming with an attached warrant to acquire an additional ordinary share at an exercise price of 4.34p within the next two years.

Brokers SI Capital and Beaufort Securities will also each get 500,000 warrants to subscribe for new shares at 4.34p, with an exercise life of two years as part consideration for their services, while current and propose directors will received 6.7m shares between them.

Non-executive chairman Cungen Ding and several other directors will step down, with 25% shareholder Weatherly International's Rod Webster taking over as chairman and ex-Metal Tiger boss Paul Johnson becoming chief executive.

As a cash shell, the company intends to focus on finding a suitable reverse takeover in the energy metal and minerals sector, with a key focus on opportunities in respect of uranium, lithium, cobalt, copper and coal.

"The new board considers that, as evidenced by the financial support provided by the new investors for the proposals outlined there is a strong demand for energy metal and mineral opportunities on London's AIM," the statement said, adding that the £1m cash "should provide operating cash for at least 18 months".

Shares in China Africa, having last Wednesday topped 7.5p before finishing the week at 5.6p, dropped 24% on Monday to 4.18p.