Rare Earth Minerals Plc (AIM: REM) announces a funding of £7 million by way of a Placing and an Equity Swap Agreement with YA Global Master SPV, Ltd. ("YAGM") at 0.9 pence per share. YAGM have contractually agreed that the effective date of the Swap Agreement commences on 1 February 2015.

David Lenigas, the Company's Chairman, commented:

"This funding will be used to further strengthen the Company's balance sheet as we head in to an active 2015 and provide the anticipated funding required for next year's exploration and development programmes in Mexico, Australia and Greenland. A proportion of these funds will also be used to further increase REM's strategic shareholdings in the lithium and rare earth elements sector."

 Placing and Equity Swap:

YAGM have subscribed for a total of 777,777,778 new ordinary shares (the "Placing Shares") in the Company at a price of 0.9p per share ("Placing Price") for a gross consideration of £7,000,000. Of this amount, £3,700,000 will be paid back by REM to YAGM under an Equity Swap Agreement from which REM is expected to receive subject to adjustment a base amount of £308,333.33 per month for a 12 month period from the effective date commencing 1 February 2015. The final amount of these monthly funds received by the Company under the Equity Swap Agreement will be dependent on the future price performance of the Company's ordinary shares, as set out below. 

Equity Swap Agreement: 

The Company and YAGM have entered into an equity swap agreement ("the Equity Swap Agreement") pursuant to which the Company will pay YAGM £3,700,000. In consideration for this payment, the Company will receive twelve monthly payments of £308,333.33, amounting to £3,700,000 in aggregate, between the effective date of the end of February 2015 and the end of February 2016. The monthly payments can be adjusted either:

·     up, if 90% of the lowest 10 day VWAP during the relevant one month period is greater than 0.99p, being a 10% premium to the Placing Price, in accordance with the adjustment formula for an additional payment over the base amount calculated as  64,814,815 shares x (Market Price – 0.99p) x 50%; or

·     down, if 90% of the lowest 10 day VWAP during the relevant one month period is lower than or equal to 0.99p in accordance with the adjustment formula for a reduction in base amount by an amount calculated as 64,814,815 shares x (0.99p – Market Price)  . This would result in the Company receiving less funds from YAGM in any relevant one month period.

The Market Price attributable to each monthly payment being the average of the lowest 10 daily VWAPs of the Ordinary shares during the preceding month.

Thus the funds received by the Company in respect of the Swap Shares will be dependent on the future price performance of the Company's ordinary shares.

YAGM may elect to terminate the Equity Swap Agreement and accelerate the payments due under it in certain circumstances including a Takeover Offer being declared unconditional, the Company's shares ceasing to be admitted to trading on Aim or an Insolvency event.

YAGM has agreed that it and its affiliates will refrain from holding any net short position in respect of the Company's ordinary until the expiry or, if earlier, termination of the Equity Swap Agreement.

The issue of the Placing Shares and entry into the Equity Swap Agreement are conditional on admission of the Placing Shares to trading on AIM ("Admission"). It is expected that Admission will occur and that trading in the new ordinary shares will commence on AIM at 8.00 am on Tuesday 23 December 2014. These Placing Shares will rank pari passu in all respects with the Company's existing issued ordinary shares. 

Total Voting Rights:

Following Admission, the Company's enlarged issued share capital will comprise 6,503,153,495  ordinary shares. The Company does not hold any shares in treasury. This figure of 6,503,153,495 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 in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

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For further information please contact: 

Rare Earth Minerals plc                                                                   +44 (0) 207 440 0647

David Lenigas

Kiran Morzaria

WH Ireland Limited (NOMAD & Joint Broker)                               +44 (0) 207 220 1666

James Joyce

Mark Leonard

Hume Capital plc (Joint Broker)                                                     +44 (0) 203 693 1470

Guy Peters

Jon Belliss

Square1 Consulting

David Bick, Mark Longson                                                                  +44 (0) 207 929 5599