Frontier Mining Ltd, a development
stage mining company, has announced its intention to re-domicile from Delaware
to the Cayman Islands. The company, which currently operates two licenses to develop
and exploit gold and copper deposits in Kazakhstan, explained the intended move
with a change in strategy. In a statement submitted to the London Stock
Exchange, the AIM listed company said it incorporated the group company in
Delaware because it had originally planned to establish operations in the US in
addition to Kazakhstan.
Frontier Mining has now shifted its
strategy and aims to invest in Kazakhstan and Community of Independent State
countries, making the incorporation of the holding company in Delaware no
longer efficient from a commercial or financial perspective, the statement
It would also restrict the trading
of shares and may “restrict access to future opportunities for the group by
rendering its operation and potential future acquisitions inefficient from a
tax perspective, leaving it potentially liable to US taxation on its foreign operations,”
the company said.
The board proposes a re-domicile to
the Cayman Islands to its shareholders in order to maximise cost efficiency,
enhance the tax efficiency of the group, facilitate the trading of its shares,
obtain access to a broader range of financing and thus achieve a greater degree
of corporate flexibility.
“The Board has carefully considered
several options and believes the Cayman Islands to be the most suitable place
to incorporate the group’s holding company and that the Cayman Islands appeals
to international investors from whom the group intends to attract future
investment,” the 18 October statement said.
Frontier Mining has convened a
special shareholder meeting for 8 November to approve the transaction. The
proposed new company FML (Cayman) would then be anticipated to start trading on
the London AIM from 23 November.
Following the re-domiciliation
Frontier Mining intends to increase its interest in the Benkala copper deposit
in Northern Kazakhstan and acquire a gold deposit in the southern Ural region
of Russia. This would be achieved through a merger with Coville Intercorp, a
BVI-registered company and Frontier’s current joint venture partner at Benkala.
As a result of the merger Frontier
would take full control of Benkala and add the Maminskaya gold deposit in