Announcement PDF ASX Announcement | 26 September 2024 Variscan Mines Limited (ASX:VAR) FULLY UNDERWRITTEN RIGHTS ISSUE TO ADVANCE NOVALES-UDIAS ZINC PROJECT & CORPORATE DEVELOPMENT Highlights • Fully underwritten renounceable Entitlement Offer to raise approximately $2.067m • Significant support from Variscan’s major shareholder and attracting new sophisticated and professional investors • Funds to be used to accelerate exploration and drilling programs and development studies at the high grade zinc Novales-Udias project in Cantabria, northern Spain and for corporate and operational working capital Variscan Mines CEO, Stewart Dickson, commented on the Rights Issue: “To successfully raise funds in this market and to bring in new first-rate investors, is a huge endorsement of our high-quality zinc development projects in Spain and the progress made to date. We look forward to using the funds raised to continue to principally advance the Novales-Udias Project towards production. Key deliverables are drilling results, an updated Mineral Resource Estimate and the Mine Re-start Study. These are all value accretive development milestones. The Board considers this attractively priced Rights Issue will allow all shareholders to participate equally in our future growth with the confidence that it is well supported. Our exploration team are very excited to following-up and drill-testing the recently announced high grade sampling results at the Udias Mine complex. With supporting studies about to start, we are poised to unlock further value from one of the highest-grade, development stage zinc deposits in Europe, which is continuing to make good progress towards re-starting production. We have always maintained our growth mindset. Having the opportunity to evaluate additional zinc projects in Europe providing potential exploration upside and further company-level scale to the advanced, de-risked projects we currently own in Spain is attractive. The Board welcomes the support we have received from our largest shareholder and other sophisticated and professional investors, and recommend the Renounceable Entitlement Offer to shareholders.” Overview Variscan Mines Limited (“Variscan” or “Company”) is pleased to announce a 2 for 3 renounceable entitlement offer (“Rights Issue” or “Offer”) to raise approximately A$2.067m (before costs) to accelerate the development of its existing and new mineral projects in Spain and provide additional working capital. Proceeds of the Offer will fund: - underground drilling program at the Udias Mine; - exploration drilling over the newly enlarged Novales-Udias Project ; - the generation of additional data for a Mineral Resource Estimate upgrade; ASX Code: VAR Web - www.variscan.com.au - additional input data and studies for the intended Mine Re-start Study; and the review of additional complimentary prospects and corporate development opportunities; and general working capital purposes. Rights Issue Details Eligible Variscan shareholders are being offered the opportunity to acquire new ordinary shares in the capital of the Company via a renounceable pro rata entitlement issue. The Rights Issue is being made to Eligible Shareholders (refer below) on the basis of two (2) New Shares for every three (3) shares held by Eligible Shareholders registered at 5pm (Sydney) on Monday, 30 September 2024 (the “Record Date”). Each New Share has an offer price of 0.7cents. Eligible Shareholders will also receive one (1) free attaching New Option for every four (4) New Shares subscribed for and issued under the Offer. The New Options will be unlisted, exercisable at 1.5cents and will have an expiry date of two years from the date of issue. Eligible Shareholders will also be given the opportunity to apply for additional new shares in excess of their entitlement. Further details of the Offer, including how to apply for entitlement and additional shares are set out in a prospectus to be dated 25 September 2024 (“Prospectus”) which has been lodged the ASIC and ASX and which will be made available to all Eligible Shareholders in accordance with the timetable set out below. Whairo Capital Pty Ltd (ACN 618 944 568) (Corporate Authorised Representative (number 1282684) of Redleaf Securities Pty Ltd (ACN 606 000 800) the holder of Australian Financial Services Licence number 510097) has been appointed as Lead Manager and Underwriter to the Rights Issue. Assuming all entitlements are accepted, or if all shortfall shares are placed, following completion the Offer, the Company will have issued approximately 295.3 million New Shares, resulting in a total of approximately 738.3 million fully paid ordinary shares on issue. Major Shareholder Participation Whairo Capital Pty Ltd has entered into sub-underwriting agreements with major shareholder, Zinc GroupCo Pty Ltd, and other sophisticated and professional investors, to ensure the offer is fully underwritten. Eligible Shareholders The eligible shareholders to whom the Offer is being made are those shareholders who are: (a) registered as a holder of Variscan’s Shares as at the Record Date; (b) have a registered address in Australia, New Zealand, Germany, Spain, Singapore or United Kingdom; (c) not in the United States, are not a “U.S. person”, as defined in Regulation S under the U.S. Securities Act of 1933 (“U.S. Person”), and are not acting for the account or benefit of any person in the United States or any “US Person‟; and (d) eligible under all applicable securities laws to receive an offer under the Entitlement Offer. Shareholders with registered addresses outside Australia, New Zealand, Germany, Spain, Singapore or United Kingdom are considered Ineligible Shareholders and cannot participate in the Offer. The Company has determined that it is not practicable for Ineligible Shareholders to participate in the Offer having regard to the number of Ineligible Foreign Shareholders, the number and value of New Shares they would be offered and the costs of complying with the regulatory requirements of those jurisdictions. Pursuant to ASX Listing Rule 7.7 and section 615 of the Corporations Act 2001 (Cth), the Company has appointed Whairo Capital Pty Ltd as nominee to sell the entitlements to which Ineligible Shareholders are entitled. The Company will seek to obtain ASIC approval for the appointment of the nominee, as required by section 615 of the Corporations Act. Page | 2 Timetable The timetable for the Offer is set out below. The Directors may extend the Closing Date by giving at least 3 business days’ notice to ASX prior to the Closing Date. Accordingly, the date the securities are expected to commence trading on ASX may vary. EVENT DATE Lodgement of Prospectus with the ASIC Pre-market open on Thursday, 26 September 2024 Lodgement of Prospectus and Appendix 3B with ASX Pre-market open on Thursday, 26 September 2024 Ex date Tuesday, 1 October 2024 Rights start trading on a deferred settlement basis Tuesday, 1 October 2024 Record Date for determining Entitlements Wednesday, 2 October 2024 Offer opening date, Prospectus sent out to Shareholders and Company announces this has been completed Rights trading ends at close of trading Monday, 7 October 2024 Wednesday, 16 October 2024 Securities quoted on a deferred settlement basis Thursday, 17 October 2024 Last day to extend the Closing Date Friday, 18 October 2024 Closing Date 5:00pm (AEDT) Wednesday, 23 October 2024 ASX and Underwriter/Sub-Underwriter notified of under subscriptions Thursday, 24 October 2024 Announcement of results of issue, lodgement of Appendix 2A (Prior to 12:00pm (AEDT) Wednesday, 30 October 2024 Quotation of Securities issued under the Offer Thursday, 31 October 2024 Enquiries Eligible Shareholders will be sent further details about the Rights Issue in the Prospectus. Shareholders should read the Prospectus carefully before making any investment decision regarding the Rights Issue. The Prospectus and associated ASX releases will be made available shortly on the Company’s website at: www.variscan.com.au and on ASX. Shareholders who have questions relating to the Rights Issue should contact the Company Secretary on email at info@variscan.com.au during the offer period for the Rights Issue. ENDS This ASX announcement has been approved by the Board and authorised for issue by Mr Stewart Dickson, Managing Director and CEO, Variscan Mines Limited For further information, please contact: Variscan Mines Limited (ASX:VAR) Stewart Dickson Managing Director & CEO E: stewart.dickson@variscan.com.au T: +44 (0) 7799 694195 Page | 3 Media & Investor Enquiries The Capital Network Julia Maguire E: julia@thecapitalnetwork.com.au P: +61 2 8999 3699 About Variscan Mines Limited (ASX:VAR) Variscan Mines Limited (ASX:VAR) is a growth oriented, natural resources company focused on the acquisition, exploration and development of high-quality strategic mineral projects. The Company has compiled a portfolio of highimpact base-metal interests in Spain, Chile and Australia. Its primary focus is the development of its advanced zinc projects in Spain. The Company’s name is derived from the Variscan orogeny, which was a geologic mountain building event caused by Late Paleozoic continental collision between Euramerica (Laurussia) and Gondwana to form the supercontinent of Pangea. To learn more, please visit: www.variscan.com.au For more information Follow us on LinkedIn Follow us on Twitter Visit our investor website: www.variscan.com.au Competent Person Statement The information in this announcement that relates to technical information about the Novales-Udias project is based on, and fairly represents information and supporting documentation compiled and reviewed by Dr. Mike Mlynarczyk, Principal of the Redstone Exploration Services, a geological consultancy acting as an external consultant for Variscan Mines. Dr. Mlynarczyk is a Professional Geologist (PGeo) of the Institute of Geologists of Ireland, and European Geologist (EurGeol) of the European Federation of Geologists, as well as Fellow of the Society of Economic Geologists (SEG). With over 10 years of full-time exploration experience in MVT-style zinc-lead systems in several of the world’s leading MVT provinces, Dr. Mlynarczyk has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (‘JORC Code’). Dr. Mlynarczyk consents to the inclusion in the report of the matters based upon the information in the form and context in which it appears. The information in this document that relates to previous exploration results was prepared pre-2012 JORC code. It is the opinion of Variscan that the exploration data is reliable. Although some of the data is incomplete, nothing has come to the attention of Variscan that causes it to question the accuracy or reliability of the historic exploration. Forward Looking Statements Forward-looking statements are only predictions and are not guaranteed. They are subject to known and unknown risks, uncertainties and assumptions, some of which are outside the control of the Company. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward-looking statements or other forecast. The occurrence of events in the future are subject to risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to differ from those referred to in this announcement. Given these uncertainties, recipients are cautioned not to place reliance on forward looking statements. Any forward-looking statements in this announcement speak only at the date of issue of this announcement. Subject to any continuing obligations under applicable law and the ASX Listing Rules, the Company, its directors, officers, employees and agents do not give any assurance or guarantee that the occurrence of the events referred to in this announcement will occur as contemplated. Page | 4 Project Summary The Novales-Udias Project is located in the Basque-Cantabrian Basin, some 30km southwest from the regional capital, Santander. The project is centred around the former producing San Jose underground mine with a large surrounding area of exploration opportunities which include a number of satellite underground and surface workings and areas of zinc anomalism identified from recent and historic geochemical surveys. Variscan has delineated a significant 9km mineralised trend and a sub-parallel 3km trend from contemporary and historical data across both the Buenahora exploration and Novales mining permits. The San Jose Mine is nearby (~9km) to the world class Reocin Mine which is the largest known strata-bound carbonatehosted Zn-Pb deposit in Spain 1 and one of the world’s richest MVT deposits 2. Further it is within trucking distance (~80km) from the San Juan de Nieva zinc smelter operated by Asturiana de Zinc (100% owned by Glencore). Significantly, the Novales-Udias Project includes a number of granted mining tenements 3. Novales-Udias Project Highlights • • • • Near term zinc production opportunity (subject to positive exploration and development work) Maiden JORC compliant Mineral Resource Estimate of 1.08 Mt at 9% Zn defined in Q4/2023 Large tenement holding of +100 km2 (including a number of granted mining tenements) Regional exploration potential for further discoveries analogous to Reocin (total past production and remaining • • resource 62Mt @ 8.7% Zn and 1.0% Pb 45) Novales Mine is within trucking distance (~ 80km) from the zinc smelter in Asturias Classic MVT carbonate hosted Zn-Pb deposits • • • • Historic production of high-grade zinc; average grade reported as ~7% Zn 6 Simple mineralogy of sphalerite – galena – calamine Mineralisation is strata-bound, epigenetic, lenticular and sub-horizontal Reported historic production of super high grade ‘bolsas’ (mineralised pods and lenses) commonly 10-20% Zn • and in some instances +30% Zn 7 Assay results of recent targeted grab samples taken from within the underground Novales Mine recorded • • 31.83% Zn and 62.3% Pb 8 Access and infrastructure all in place Local community and government support due to historic mining activity 1 Velasco, F., Herrero, J.M., Yusta, I., Alonso, J.A., Seebold, I. and Leach, D., (2003) ‘Geology and Geochemistry of the Reocin Zinc-Lead Deposit, Basque-Cantabrian Basin, Northern Spain’ Econ. Geol. v.98, pp. 1371-1396. 2 Leach, D.L., Sangster, D.F., Kelley, K.D., Large, R.R., Garven, G., Allen, C.R., Gutzner, J., Walters, S., (2005) ‘Sedimenthosted lead-zinc deposits: a global perspective’. Econ. Geol. 100th Anniversary Special Paper 561 607 3 Refer to ASX announcement of 29 July 2019 4 Velasco, F., Herrero, J.M., Yusta, I., Alonso, J.A., Seebold, I. and Leach, D., 2003 - Geology and Geochemistry of the Reocin Zinc-Lead Deposit, Basque-Cantabrian Basin, Northern Spain: in Econ. Geol. v.98, pp. 1371-1396. 5 Cautionary Statement: references in this announcement to the publicly quoted resource tonnes and grade of the Project are historical and foreign in nature and not reported in accordance with the JORC Code 2012, or the categories of mineralisation as defined in the JORC Code 2012. A competent person has not completed sufficient work to classify the resource estimate as mineral resources or ore reserves in accordance with the JORC Code 2012. It is uncertain that following evaluation and/or further exploration work that the foreign/historic resource estimates of mineralisation will be able to be reported as mineral resources or ore reserves in accordance with the JORC Code 2012. 6 These figures have been taken from historical production data from the School of Mines in Torrelavega historical archives. 7 Reports of the super high-grade mineralisation are supported with historical production data from the School of Mines in Torrelavega historical archives. (Refer ASX release 29 July 2019) 8 Refer to ASX Announcement of 19 December 2020 Page | 5 Figure 1. Summary of the Novales-Udias Project Figure 2. Map of Novales-Udias Project Licence Areas with Udias Mine highlighted Page | 6 Figure 3. Map of Novales-Udias Project Licence Areas and local infrastructure Page | 7 VARISCAN MINES LIMITED ACN 003 254 395 ENTITLEMENT ISSUE PROSPECTUS For a pro-rata renounceable entitlement issue of two (2) Shares for every three (3) Shares held by those Shareholders registered at the Record Date at an issue price of $0.007 per Share together with one (1) free New Option for every four (4) Shares applied for and issued to raise up to $2,067,335 (based on the number of Shares on issue as at the date of this Prospectus) (Offer). This Prospectus also contains the Secondary Offers, which are detailed further in Section 2.2. This Offer is fully underwritten by Whairo Capital Pty Ltd (ACN 618 944 568) (Corporate Authorised Representative (number 1282684) of Redleaf Securities Pty Ltd (ACN 606 000 800) the holder of Australian Financial Services Licence number 510097) (Underwriter). Refer to Section 6.4.1 for details regarding the terms of the underwriting. IMPORTANT NOTICE This document is important and should be read in its entirety. If, after reading this Prospectus you have any questions about the Securities being offered under this Prospectus or any other matter, then you should consult your professional advisers without delay. The Securities offered by this Prospectus should be considered as highly speculative. IMPORTANT NOTICE This Prospectus is dated 26 September 2024 and was lodged with the ASIC on that date. The ASIC, ASX and their respective officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. No Securities may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus. It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Securities offered by this Prospectus should be considered as highly speculative. Applications for Securities offered pursuant to this Prospectus can only be made by an original Entitlement and Acceptance Form or Shortfall Application Form. This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus and is only required to contain information in relation to the effect of the issue of securities on a company and the rights attaching to the securities. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company. Representations contained in this Prospectus are made taking into account that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters are publicly available information or may reasonably be expected to be known to investors and professional advisers whom prospective investors may consult. No Investment Advice The information contained in this Prospectus is not financial product advice or investment advice and does not take into account your financial or investment objectives, financial situation or particular needs (including financial or taxation issues). You should seek professional advice from your accountant, financial adviser, stockbroker, lawyer or other professional adviser before deciding to subscribe for Securities under this Prospectus to determine whether it meets your objectives, financial situation and needs. Forward-looking statements This Prospectus contains forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, the Directors and the Company’s management. The Company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this Prospectus will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. The Company has no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where required by law. These forward-looking statements are subject to various risk factors that could cause the Company’s actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 5. Overseas shareholders This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of Shares these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offer is not being extended and Securities will not be issued to Shareholders with a registered address which is outside Australia or New Zealand, Germany, Spain, Singapore and United Kingdom (together, the Permitted Jurisdictions). For further information on overseas Shareholders please refer to Section 2.10. Continuous disclosure obligations The Company is a “disclosing entity” (as defined in section 111AC of the Corporations Act) for the purposes of section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Securities. This Prospectus is intended to be read in conjunction with the publicly available information in relation to the Company which has been notified to ASX and does not include all of the information that would be included in a prospectus for an initial public offering of securities in an entity that is not already listed on a stock exchange. Investors should therefore have regard to the other publicly available information in relation to the Company before making a decision whether or not to invest. Having taken such precautions and having made such enquires as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the three months before the issue of this Prospectus which required the Company to notify ASX of information about specified events or matters as they i arise for the purpose of ASX making that information available to the stock market conducted by ASX. Please refer to Section 6.2 for further details. Target Market Determination In accordance with the design and distribution obligations under the Corporations Act, the Company has determined the target market for the offer of New Options issued under this Prospectus. The Company and the Lead Manager will only distribute this Prospectus to those investors who fall within the target market determination (TMD) as set out on the Company’s website (www.variscan.com.au). By making an application under the Offer, you warrant that you have read and understood the TMD and that you fall within the target market set out in the TMD. Electronic Prospectus A copy of this Prospectus can be downloaded from the website of the Company at www.variscan.com.au. If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must reside in the Permitted Jurisdictions and must only access this Prospectus from within the Permitted Jurisdictions. The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus, or it accompanies the complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company via email at info@variscan.com.au. The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. Company Website No documents or other information available on the Company’s website is incorporated into this Prospectus by reference. Financial forecasts The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection. Electronic sub-registers also mean ownership of securities can be transferred without having to rely upon paper documentation. Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month. Definitions and Time Unless the contrary intention appears or the context otherwise requires, words and phrases contained in this Prospectus have the same meaning and interpretation as given in the Corporations Act and capitalised terms have the meaning given in the Glossary in Section 8. All references to time in this Prospectus are references to Australian Western Standard Time. Privacy statement If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder. The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the share registry. You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the share registry at the relevant contact number set out in this Prospectus. Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Securities, the Company may not be able to accept or process your application. Enquiries If you are in any doubt as to how to deal with any of the matters raised in this Prospectus, you should consult with your broker or legal, financial or other professional adviser without delay. Should you have any questions about the Offers or how to accept the Offer please email the Company Secretary on mark.pitts@automicgroup.com.au. Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship The Company will apply to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Electronic sub-registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with statements (similar to a bank account statement) that set out the number of Securities issued to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship. ii CORPORATE DIRECTORY Directors Share Registry* Anthony Wehby Non-Executive Chairman Boardroom Pty Ltd GPO Box 3993 SYDNEY NSW 2001 Stewart Dickson Managing Director & CEO Nick Farr-Jones Non-Executive Director Telephone: +61 2 9290 9600 Legal Advisers Company Secretary Steinepreis Paganin Lawyers and Consultants Level 14, QV1 Building 250 St Georges Terrace PERTH WA 6000 Mark Pitts Lead Manager and Underwriter