Private Placement Memorandum
BRITANNIA’S GOLD LIMITED PRIVATE PLACEMENT MEMORANDUM
TABLE OF CONTENTS
Important dates and investment summary. 6
- Information On Britannia’s Gold Limited. 11
- Background of the Company. 11
- Group structure. 13
- Objectives of the Private Placement 14
- Strategy and objectives. 16
- Media and PR policy. 21
- Donations to charities. 21
- Directors and employees. 22
- Summary of operation agreements. 24
- Advisers. 25
- Details of the Private Placement 26
- Purpose of the Private Placement 26
- Terms and conditions. 26
- Tax considerations. 28
- Financial information. 33
- Proforma statement of financial position. 33
- Forecast proforma financial information. 34
- Dividend policy. 37
- Material commitments and contingent liabilities. 38
- Business and investment risks. 39
- Risks relating to the salvage operation. 39
- Risks relating to the salvage reward. 40
- Risks relating to the management of the Company. 42
- Risks relating to the shipping industry. 44
- Appendices. 48
Appendix One: Research sources and outcomes. 48
Disclaimers
IMPORTANT INFORMATION ABOUT THIS PRIVATE PLACEMENT MEMORANDUM
The Company accepts responsibility for the information contained in this Private Placement Memorandum. To the best of the knowledge and belief of the Company (having taken all reasonable care to ensure that such is the case), the information contained in this Private Placement Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information.
This Private Placement Memorandum does not constitute an offer to sell or the solicitation of an offer to buy shares in any jurisdiction to any person whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Private Placement Memorandum and the offer or sale of shares may be restricted by law in certain jurisdictions. The Company does not represent that this Private Placement Memorandum may be lawfully distributed, or that shares may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Company which is intended to permit a public offering of shares or the distribution of this Private Placement Memorandum in any jurisdiction where action for that purpose is required. Accordingly, no shares may be offered or sold, directly or indirectly, and neither this Private Placement Memorandum nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Private Placement Memorandum or any shares may come must inform themselves about, and observe any such restrictions on the distribution of this Private Placement Memorandum and the offering and sale of shares.
The shares have not been nor will they be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or qualified under applicable State statutes, and the shares may not be offered or sold, directly or indirectly, in the United States of America, its territories or possessions and all areas subject to its jurisdiction ("United States") or to any US Person (except in accordance with an applicable exemption to the registration requirements of the Securities Act and with the prior consent of the directors of the Company). For the purposes thereof, the term "US Person" shall have the meaning described in Regulation S under the Securities Act. Applicants will be required to certify that they are not US Persons precluded from purchasing, acquiring or holding shares or if they are US Persons, that they are permitted to purchase, acquire or hold shares (i) in accordance with an applicable exemption to the registration requirements of the Securities Act and (ii) with the prior consent of the directors of the Company.
This Private Placement Memorandum is strictly confidential and is addressed to a limited number of professional investors for the sole purpose of providing information about an investment in the Company. This Private Placement Memorandum should not be distributed, published or reproduced, in whole or in part, nor should its contents be disclosed by recipients to any other person.
The contents of this Private Placement Memorandum are not to be construed as, and shall not be relied on as legal, business or tax advice, and each investor should consult its own legal, business, tax and other advisers for any such advice that may be relevant to such investor.
No person is or has been authorised by the Company to give any information or to make any representation not contained in or not consistent with this Private Placement Memorandum or any other information supplied in connection with the offering of the shares and, if given or made, such information or representation must not be relied upon as having been authorised by or on behalf of the Company.
Neither this Private Placement Memorandum nor any other information supplied in connection with the offering of the shares (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by the Company that any recipient of this Private Placement Memorandum or any other information supplied in connection with the offering of the shares should purchase any shares. Each investor contemplating purchasing any shares should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Company.
Neither the delivery of this Private Placement Memorandum nor the offer, issue, sale or delivery of the shares shall, under any circumstances, imply that there has been no change in the affairs of the Company since the date hereof or that the information contained herein concerning the Company is correct as at any time subsequent to its date or that any other information supplied in connection with the offering of the shares is correct as at any time subsequent to the date hereof.
NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED KINGDOM
Within the United Kingdom, this Private Placement Memorandum is directed only (a) at persons who have professional experience in matters relating to investments falling within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (b) who are persons falling within article 49(2)(a) to (d) of the Order, (c) persons to whom the Private Placement Memorandum may otherwise be directed without contravention of section 21 of the Financial Services and Markets Act 2000 ("FSMA") or (d) to whom it may otherwise lawfully be distributed in accordance with the Order ("relevant persons"). The Private Placement Memorandum must not be acted on or relied on by persons in United Kingdom who are not relevant persons. Any investment or investment activity in the United Kingdom to which the prospectus relates is available only to relevant persons and will be engaged in only with relevant persons.
Any other person to whom this document has been passed must return it immediately. This document is being supplied to you solely for your information and may not be reproduced, further distributed or published, in whole or in part, by any other person. This document is exempt from the general restriction (in section 21 of the FSMA) on the communication of invitations or inducements to engage in investment activity, inter alia, on the grounds that it is made to certified sophisticated investors within the meaning of Article 50 of the Order. A person will qualify as a certified sophisticated investor if he or she has a current certificate in writing or other legible form signed by an authorised person to the effect that he or she is sufficiently knowledgeable to understand the risks associated with that description of investment and he or she has signed, within the period of 12 months ending on the date of this document, a statement in the form set out in Article 50(1)(b) of the Order. The contents of this document have been approved by an authorised person; such approval is required by section 21 of the FSMA unless the exemption set out in Article 50 of the Order or any other exemption applies. Reliance on this document for the purpose of engaging an investment activity may expose the individual to a significant risk of losing all of the property invested or of incurring additional liability. Any person who is in any doubt as to an investment in shares should consult an authorised person specializing in investments of the kind in question.
NOTICE TO PROSPECTIVE INVESTORS IN THE EEA
No shares have been offered or sold, or will be offered or sold, to the public in any member state of the European Economic Area that has implemented directive 2003/71/EC of the European Union (the "Prospective Directive") (each a "Relevant Member State"), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date") except (with effect from and including the Relevant Implementation Date): (a) to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; (b) to any legal entity that has two or more of: (i) an average of at least 250 employees during the last year; (ii) a total balance sheet of more than €43,000,000; and (ii) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; (c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospective Directive); or (d) in any other circumstances that do not require the publication by the Company of a prospectus pursuant to Article 3 of the Prospectus Directive.
IMPORTANT INFORMATION ABOUT RISKS
The attention of investors in the Company is drawn to the general and specific risk factors which appear under the heading "Risk Factors" in this Private Placement Memorandum. Accordingly, any investment should only be undertaken by persons in a position who understand and are happy to take such a risk.
Investors should note that because such an investment in this sector can be volatile and that their value may decline as well as appreciate, there can be no assurance that the Company will be able to attain its objectives (or any of them).
Investment in any shares will involve significant risks as identified below and should be viewed as a long term investment. Shares may not be suitable for all recipients or be appropriate for their personal circumstances. An investment in the Company is only suitable for financially sophisticated investors who are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses which may arise (which may be equal to the whole amount invested).
This Private Placement Memorandum may not be translated into any other language.
Corporate information
- Company Name: BRITANNIA'S GOLD LIMITED
- Company number: 10413252
- Company type: Private Limited Company
- Incorporated on: 6 October 2016
- Accounts Date: 31 October
- Registered Office: Bond House, 4th Floor, 20 Woodstock Street, London, W1C 2AW
- Telephone: +44 (0) 203 375 8189
- Website: www.britanniasgold.com
Important dates and investment summary
Up to £250,000 invested by the Seed Investors for 250 preference shares
Additional fund raising:
- Offer price (per share) £1,000
- Number of shares 15,000
- Maximum amount to be raised £15,000,000
- Minimum amount to be raised £10,000,000
- Maximum to be raised by EIS Investors £5,000,000
- Minimum to be raised by non-EIS Investors £10,000,000
- Minimum subscription level £1,000
- Maximum subscription level No maximum
- Offer period open 09:00 28 March 2017
- Offer period close 12:00 30 June 2017
- Notification of allotments 4 August 2017
The offer period will close earlier if all funds are raised at which point allotment of shares will be notified within 7 days of close. The board of directors of Britannia’s Gold Limited reserves the right to extend the offer period.
Definitions
AIM means Alternative Investment Market.
Angel Equity means Angel Equity International Limited.
BGL or the Company means Britannia’s Gold Limited.
BoE means Bank of England.
Britannia’s Founders or the Current BGL Shareholders means Philip Reid, IDM Exploration Limited, Belgravia Gold Limited, Mauricio Garrido and Nick Henry.
Bn means Billion.
Board means the board of Directors of the Company.
- means circa.
Cargo means the gold or other precious commodities that may be recovered from the Vessels.
CEO means Chief Executive Officer.
CFO means Chief Financial Officer.
CGT means Capital Gains Tax.
Charterhire means money paid to the ship owner by a charterer for the use of a vessel under a Time Charter. Such payments are usually made during the course of the charter, every 15 or 30 days in advance, or in arrears by multiplying the daily charter rate by the number of days and, under a time charter only, subtracting any time the vessel was deemed to be off-hire.
Charter Rate means the amount of money agreed between the Company as charterer and the Owner accrued on a (usually) a 15 or 30 day basis that is used to calculate the vessel’s Charterhire under a Time Charter.
Chartered in Ship means the dynamically positioned salvage vessel to be subject to a Time Charter between the Company as charterer and an Owner and includes (where appropriate) the “work class remotely operated vehicles” to be deployed from the mother vessel and its cranes and other equipment.
Comex means Comex SA (based in France).
Directors means the directors of the Company.
EIS means the Enterprise Investment Scheme.
FCCA means the Fellow of the Chartered Association of Certified Accountants.
FSMA means the Financial Services and Markets Act 2000.
FSW means Feet of Sea Water.
Head Licenses means the agreements between IDM and the Researchers, such agreements have been verified by Campbell Johnston Clark Limited, the legal advisers of BGL.
HMG or Cargo Owner means the duly constituted government of the Great Britain and Northern Ireland.
HMRC means Her Majesty’s Revenue and Customs.
HMT means Her Majesty’s Treasury.
HSEQ means Health, Safety, Environment and Quality.
IDM means IDM Exploration Ltd, a company incorporated in the Isle of Man with its registered office at 56 Ballachrink Drive, Onchan, Isle of Man IM3 4NF.
Information means all the research and information provided and to be provided to the Company by IDM pursuant to the Sub-License and by the Researchers to IDM pursuant to the Head Licences.
K means thousand.
Lehman Scale means a formula used to calculate fees on funds raised. The scale is: 5% on the first £1m raised, 4% on the second £1m raised, 3% of the third £1m raised, 2% on the fourth £1m raised and 1% on any balance above £4m.
LLC means Limited Liability Company.
M means Million.
Market Gold means gold used for everyday commerce, shipped by Midland Bank and by The Joint Stock Banks
New Ordinary Shares means new ordinary shares issued by the Company.
Order means article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.
Owner means the owner of a Chartered in Ship.
P&I Insurance means insurance obtained through mutual associations (called “Clubs”) formed by shipowners to provide liability insurance protection against a large financial loss by one member by contribution towards that loss by all members.
Private Placement Memorandum or PPM means this private placement memorandum.
Prospective Directive means directive 2003/71/EC of the European Union.
Relevant Implementation Date means the date on which the Prospectus Directive is implemented in that Relevant Member State.
Relevant Member State means any member state of the European Economic Area that has implemented the Prospective Directive.
Relevant Person means to whom the Private Placement Memorandum may otherwise lawfully be distributed in accordance with the Order.
Researchers means the research teams working with BGL and IDM.
RIE means Remote Intervention Equipment.
ROV means Remotely Operated Vehicle.
Salvage Convention means the International Convention on Salvage, 1989 (and includes any amendment or replacement to the same).
Services Agreement means the agreement dated 15 February 2017 made between IDM and the Company in relation to the provision of (amongst other matters) the research and Information relating to the Vessels.
SDRT means Stamp Duty and Stamp Duty Reserve Tax.
Securities Act means the United States Securities Act of 1933.
Seed Investors means early investors in the Company.
Set-Aside Gold means gold belonging to other governments than HMG.
Shareholder means any person, company or other institution that owns at least one share in the Company.
SMEs means Small and Medium Entities.
SOLAS means the International Convention for the Safety of Life at Sea 1974, as amended, adopted under the auspices of the International Maritime Organisation.
Sub-License means the IP license dated 15 February 2017 and entered into between IDM as licensor and the Company as licensee in relation to the Information and includes any amendment or variation of the same and which will be on back-to-back terms with the Head Licenses.
Swire means Swire Seabed AS (based in Norway).
Time Charter means a time charter contract under which the Company as charterer shall pay the Owner Charterhire for a fixed period of time for use of a Chartered in Ship. The Company pays the voyage related expenses such as fuel, canal tolls, and port charges. The Owner pays all Vessel Operating Expenses. Any delays at port or during the voyages are the responsibility of the Company, save for certain specific exceptions such as loss of time arising from vessel breakdown and routine maintenance.
UK or United Kingdom means the United Kingdom.
US or United States means the United States of America.
VCT means Venture Capital Trust.
Vessel Operating Expenses means the costs of operating a vessel that is incurred during a Time Charter, primarily consisting of crew wages and associated costs, insurance premiums, lubricants, spare parts and repair and maintenance costs. Vessel operating expenses exclude fuel and port charges, which are known as “voyage expenses”. For a Time Charter, the Owner pays vessel operating expenses.
Vessel(s) means the vessel(s) whose Cargo will be salved by the Company.
WRI means War Risk Insurance.
WRIO means War Risk Insurance Office.
World Wars means WW1 and WW2.
WW1 means World War One.
WW2 means World War Two.
To pay for munitions and goods in both World Wars, HMG shipped gold bullion worldwide with an estimated present day value of circa £300bn. The majority of these gold shipments were carried by the merchant fleet under HMG direction. During the World Wars, some 7,500 merchant ships were sunk with great loss of life.
The Company has been established to try to recover a certain number of these cargoes and return them to the UK for the benefit of HMG, investors and merchant marine charities.
Significant specialist research covering the maritime losses in both World Wars has been gathered over the past 25 years resulting in a database of some 27 terabytes of digitized information. Of the 7,500 ships lost, this research has identified more than 700 to have been specific gold and silver carriers.
BGL has unique and exclusive access to this research which provides for a clear strategy to identify and locate the lost gold carriers. Working exclusively with IDM, which is a procurer and provider of specialist services on behalf of BGL, and utilising tried and tested modern day survey and salvage techniques, BGL’s board are confident a number of these known cargoes are recoverable.
BGL and IDM are compiling digital shipwreck research packs on each Vessel which will be made available, after signing a Non-Disclosure Agreement, to those investors who invest over £750k in BGL.
Currently BGL has five research packs ready to be viewed and further packs are under development.
Each individual shipwreck research pack will have all available information contained within an electronic folder structure which will allow the reader to cross reference between documentation. The folders shall be further populated with relevant information as it becomes available.
The folders will include details on:
| · Vessel particulars · Researcher reports · Depositions · Cargo manifests · Bank ledgers · Specie and bullion stowage · Plans · Images | · Survey data · Maps · Previous salvage attempts · Press cuttings · Passenger listings · Sketches · General information · WRIO |
BGL believes an opportunity exists for investment offering potentially exceptional returns when the cargoes are recovered. BGL intends to raise up to £15m through equity share capital from a range of investors to fund these recovery operations.
Group structure
Share structure:
| 000's | Preference shares | Ordinary shares |
|
| b |
| Non - EIS Investors |
| 10,000 | 33.33% | At least |
|
| EIS Investors |
| 5,000 | 16.67% | Up to |
|
| Current BGL shareholders |
| 14,750 | 49.17% | - |
|
| Seed Investors | 250 |
| 0.83% | Up to |
|
|
|
|
|
|
| |
| Total | 250 | 29,750 | 30,000 |
|
|
Notes:
The Seed Investors’ preference shares will have rights to the first dividend distribution, equal to 3x the initial investment, after which they will convert to ordinary shares.
The Current BGL Shareholders will have their shares held under option, subject to meeting certain financial performance hurdles, as detailed further in Section 15 of this PPM.
Further information on the dividend policy for all shareholders is detailed in Section 15 of this PPM.
The purpose of the private placing is to raise adequate funding to fulfil the business objectives of the Company, which are to recover certain shipwreck cargoes and return them to the UK for the benefit of HMG, investors and merchant marine charities. The Company is seeking to raise up to £15m by way of equity capital and the majority of the funding will be used for financing the mobilisation and operation of bespoke survey and salvage craft, all on a sub contract time charter basis, with the rest of the funding to be used to cover administrative expenses and third party costs.
BGL intends that this Private Placement Memorandum should facilitate and encourage as wide an investor base as possible. Whilst the quantum of investment sought would indicate an institutional offering, the Company believes this unique opportunity will have real appeal for the private investor.
Therefore, the minimum subscription is £1,000 and save for any individual limit under EIS legislation, there is no maximum cap on participation.
The Company will have a full pay out policy, save for the retention of a level of working capital each year to fund the following year’s salvage operations, as discussed further in Sections 14 to 16 of this PPM, and any retentions made to cover subrogated claim at the discretion of the Directors. Investors will receive their return by way of dividends; further details on the dividend policy can be found in Section 16 of this PPM.
Of the Founder Shareholders, the Chairman and Non-Executive Directors will be paid modest fees for their services. The Operational Director, Will Carrier, will be paid a salary commensurate with his position of executive responsibility. Any additional payments to shareholders will be via dividends, which will be awarded in line with the dividend policy.
IDM, which is a Founder Shareholder of BGL, is a procurer and provider of specialist services on behalf of BGL. The specialist services are provided at cost and are always subject to approval by the BGL Board. IDM may have various costs which have to be covered in the provision of such services but IDM's reward will be as a Founder Shareholder and not as a sub-contractor.
It is intended that there will be no increase in the management and staff salary costs until investors have received their initial investment return and the Company is in possession of sufficient working capital to fund the second shipwreck cluster without further recourse to investors.
The private placement will be carried out by Angel Equity International Limited (“Angel Equity”) on their platform www.angeleqt.com. Angel Equity is an appointed representative of Capital Plus Partners Ltd (formerly Orange Corporate Finance Ltd) which is authorised by the Financial Conduct Authority to carry out Crowd Funding activity with the FRN: 189495. Angel Equity International Ltd will provide this service on a non-advisory basis only.
Philip Reid, who is Executive Chairman of BGL, is also a director of Angel Equity.
The minimum amount the Company requires to commence operations is £10m, either in cash or a combination of cash and equipment contribution in kind. The minimum amount is required in order to carry out the key operational procedures but does not change the anticipated charter range. The following points outline key operational procedures and activities once BGL has raised the minimum funding requirement:
- The Company will undertake 60 day Time Charters with extensions. This mitigates day one financial exposure and allows for the Company to extend to longer charters as and when required or justified.
- The Company can charter craft in pre-season price mode but utilise to advantage in the coming summer season, thereby providing for early investment recoupment and investor return.
- The minimum funding will permit the Company to continue fundraising although any success in the first salvage operations will preclude the need for any further external finance.
- The Company believes that its relationships with salvage companies provides a reasonable and probable expectation of "in kind" contributions of survey and salvage craft as well as "credit terms for deferred success payments". In this case, it is anticipated that any such contributions will be rate card charged and treated as equity contributions ranking pari passu with ordinary shareholders.
The Company will be commencing discussions in the near future regarding potential commercial offers from major suppliers of vessels and equipment. If these commercial offers are forthcoming, this would potentially reduce the minimum cash requirement. As a result, and contingent on the clarity and certainty of equipment provision in kind, the Company reserves the right to adjust the minimum cash raise.
Objective: Recovering Britain’s Gold
During both World Wars, Britain paid for war supplies through shipments of predominantly gold bullion.
- During WW1, the BoE shipped gold worth £125bn at 2016 prices.
- During WW2, the BoE shipped gold worth £175bn at 2016 prices.
These figures do not include other substantial shipments of precious metals, gems and gold owned or controlled by Joint Stock Banks.
The great majority of shipments were carried out by merchant ships under the direction of HMG; approximately 5,000 of these were sunk in WW1 and a further 2,500 in WW2, many of which were designated “Official Gold Carriers”. The approximate attrition rate of merchant ships during both World Wars has been estimated at around 60%. Although HMG introduced War Risk Insurance during both World Wars, this only covered ‘market’ and ‘set-aside’ gold as well as some BoE gold – HMG gold was not insured.
Research: Exclusive access to 25 years’ worth of research
BGL has exclusive access to four dedicated research teams located in the UK, the US and Canada, although investigations have also taken place in South Africa and India. The teams have spent some 25 years accumulating 8 million documents (27 terabytes of digitized information) which provide substantive evidence of which sunken ships carried the valuable cargoes.
Records of these shipping losses are scattered globally throughout HMG archives, maritime museums, banks and National Record Offices both public and privately sealed to which our research teams have had access. Widespread research is continuing with existing research being further validated and previously unknown losses continually being brought to light.
Current research covers both World Wars. Today, historians are currently engaged in on-going research, in the UK, the US and Canada with discoveries of previously unknown losses. Appendix One outlines the archives used to gather the evidence and the documentation and digitisation of information from the research.
This is not the first time that recovery has been attempted; there have been a number of successful recoveries including:
- HMG agreed the recovery of gold bullion from HMS Edinburgh, north of Murmansk in 1981. The recovery was estimated at £60m with the salvor being awarded circa £16m.
- Odyssey Marine confirmed recovery of 110 tons of silver ingots from SS Gairsoppa, 300 miles South West of Ireland in 2013 – estimated recovery value £137m with the salvor believed to have been awarded 80% of recovery value.
- During 2013, Deep Ocean Search recovered cargo from City of Cairo, sunk in 1942. Lying at 5,000 metres some 160 miles south west of St. Helena, she carried silver Rupees worth c.£34m.
Massive shipments of non-ferrous metals were not kept secret and there have been scattered salvage missions over the years on ships carrying these cargoes.
Salvage and recovery: Treating all shipwrecks with the highest level of respect at all times.
These shipwrecks are not war graves but will be treated with utmost respect at all times. Any researched wrecks that are legally or equally importantly, emotionally sensitive, will not form part of any potential recovery programme. A combination of high level research identifying the cargo positions on board and the use of modern day salvage technology will facilitate a surgical approach to the extraction of cargoes, thus ensuring as little interference to the wreck as possible.
Upon the completion of operations at each site, a commemorative plaque will be placed upon each shipwreck, honouring those that succumbed to the loss at the time.
All salvage and recovery will be undertaken by IDM, whose experienced and dedicated management personnel have decades of successful salvage missions behind them, including:
- Nuestra Señora de las Mercedes: a Spanish merchant vessel which was sunk off the coast of Portugal in 1804 with a large cargo of gold and silver coins, worked gold and artefacts. Recoveries commenced in 2007 with a total estimated value of $500m.
- SS Republic: a passenger ship lost in a storm whilst on a journey from New York to New Orleans in 1865, carrying a large cargo of gold and silver coins. To date $75m has been recovered, with an estimated further $150m still to be salvaged.
- François Vieljeux: a French cargo vessel lost in 1,250 meters of water off the North West coast of Spain in 1979 with a cargo of 3,500 tons of copper and 350 tons of zinc. The salvaged value of metals is estimated at $25m.
- Multiple shipwrecks located, positively identified and surveyed by IDM team members.
- Recovery of a perished submarine, numerous commercial aircraft, an oil tanker, an oil platform and an oil storage facility.
- Various oil field decommissioning projects.
- a) Salvage criteria
BGL has access to databases containing many thousands of wrecks of interest. From this, BGL has identified wrecks of high value, and has prioritised recoveries based on the “Cluster Principle”, whereby wrecks within close vicinity are grouped to ensure optimisation of survey and salvage procedures and cost effectiveness, whilst minimising risk.
Each cluster consists of three to six high probability target wrecks within typically a 500-square mile area.
- b) Salvage technical
BGL’s research has highlighted a number of criteria for selection including: cargoes, location, water depth and ownership claims which together with the following help to ensure the clusters identified have the highest probability of success.
Criteria:
- The circumstances and location of the sinking being known from inquest documentation and survivor accounts.
- Formed research packages of each individual wreck target.
- Cluster principle allows for close proximity survey and salvage operations, single mobilisation and demobilisation of survey and salvage vessels.
- GPS provides pinpoint accuracy of target’s position.
- Autonomous underwater vehicles or side scan sonar are used for detection of “Position Approximate” wrecks – these coordinates allow for identification and conclusive inspection.
- Processed survey data determines best methods for cargo extraction.
- ROV and RIE allow for cutting and removal of hull and superstructure and ultimate access to the bullion storage locations.
The timeline below shows the expected survey and salvage operations process for the first survey and salvage operation:
The commencement of the survey and salvage operations are subject to the timing of raising the equity investment funding.
How does the salvage reward work?
Research indicates that the Cargoes on the ships targeted for recovery were covered under British Government War Risk Reinsurance, and are therefore legally owned by HMG.
In the absence of a prior agreed contract with HMG, as owner of the Cargo, all salvage claims are governed by the Salvage Convention.
Subject to jurisdiction in the event of a successful recovery, the Company will aim to establish a lien over the Cargo immediately after recovery, pending and until agreement is reached with HMG. This lien is covered under the Salvage Convention and local law, and the Company will seek legal advice as to local law regarding the sanctity of the proposed recovery landings.
Assuming the salvage operation is successful, in the absence of agreement, the Company will seek to commence proceedings for a salvage claim under the Salvage Convention which as a minimum would ensure the Company’s recovery of all reasonable “out-of-pocket expenses” incurred in the salvage operation, subject to the value of the goods recovered as a cap.
The Company has no formal agreement with HMG but intends to negotiate to commit 20% of each Cargo’s recovery value to HMG, for which there is precedent. A firm agreement with HMG at the outset would be preferable, but this is not possible as HMG will only opine after a successful recovery operation and confirmation that it is the legal owner of the salved Cargo.
If the salvage operation is successful, the Company as a proven salvor, would hope to establish a formal agreement with HMG which would cater for all future recoveries, irrespective of the value, and would provide more certainty as to profitability within each future recovery operation.
As the general practice during WW1 was for War Risk Insurance to cover only 70% of the cargo value, in certain cases there could be subrogated claims for which the Company will maintain a retention fund and/or attempt to identify and validate any insurance claims that could be brought against the Company. It is intended that any retention fund in relation to these claims would be established after the investors have received their initial investment return.
Outsourcing the salvage and recovery operations
Pursuant to the Services Agreement, IDM is able to provide the experienced offshore management personnel to identify, guide and oversee the salvage and recovery operations undertaken by the designated contractors and sub-contractors. The employment of any ship will be through the Company and not IDM.
Having good market experience, IDM is able to identify contractors with the knowledge, expertise and proven track records to undertake the operations on their behalf. Furthermore, interacting with the designated contractors engineering departments ahead of time allows for a clear understanding of the project and to agree the requirements for safe and efficient execution.
For survey operations, IDM wishes to utilise the services of Comex based upon its extensive history in deep water operations, unique state of the art survey equipment and preferential Charter Rates. Also, the fact that the designated IDM Survey Manager (Sebastien Lacombe) previously spent several years employed by Comex means close relationships have already been established and a complete understanding of the contractor’s operational methodologies are already understood. IDM will place one client representative onboard the survey vessel, Sebastien Lacombe, to oversee all required survey operations; he will work closely with the Comex Survey Party Chief onboard in order to complete the survey operations in a timely manner.
IDM has a long standing relationship with its preferred salvage shipping provider, Swire, and will be in a position to approach it directly for vessel, equipment and crew from its in-house pool of resources. However, should it be the case that Swire is not in a position to meet the timelines IDM require, then it is the intention to approach the subsea vessel market via a reputable shipping broker such as Clarksons Platou (London). With the current downturn in the marine oil and gas industry, the securing of a suitable vessel, equipment and crew is not considered to be problematic when coupled with the ability of IDM to ‘hand-pick’ both equipment and personnel on offer to suit the operational requirements. Additionally, the Non-Executive Directors, who have significant experience and standing in the industry, will be able to assist the Company in securing sub-contracts on competitive terms with major suppliers of vessels and equipment.
The organogram below highlights the relevant departments onboard the salvage vessel and their subsequent interaction:
The search for British gold is an attractive story line. Stories of gold and precious cargo recoveries such as the infamous pirate ship the Wydah, the Spanish Galleon Atocha or the Chinese Nan King cargo have filled newspapers and television screens for the last 20 years. From Discovery Channel to National Geographic, the BBC, ITV and Channel 4, television shows about shipwrecks and treasure hunts continue to attract large audiences.
The Company believes there is considerable potential for generating revenue through the production of a single 50-70 minute film or a short three part series of 45 minutes each that describes inter alia the BGL story, the story of individual ships and the modern day story of survey and salvage recovery.
BGL is advised by Will Aslett, an ex-BBC executive producer and creator of many hours of prime time marine salvage and archaeology films for every major broadcaster. Guided by him, the Company will examine the merits of three approaches to creating high-quality TV documentary coverage:
- Control the editorial content by paying for the production of the film upfront and then selling the completed film to broadcasters through an international distributor. This also allows control over video and still images for News Media.
- Seek a co-production agreement in which the film is funded by a group of broadcasters but in which case they control the editorial thrust and content of the resulting film and there is a smaller financial return.
- Try to have the film commissioned by a streaming service like Amazon or Netflix. Revenue is unpredictable and again access by News Media may also be compromised.
In all cases, the cost of production of a documentary film is the same. The costs only vary by length or ambition but a basic outline is: 50-70 minutes at c.£500k or a three-part series at £600k.
BGL are still considering the merits of producing a documentary film and therefore there are no income or expenditure assumptions in relation to this project in the proforma financial forecasts, as discussed further in Sections 13 and 14.
After the fundraising, BGL are considering developing a trailer in order to attract broadcaster interest in the Company; it is expected that this will cost in the region of £10k to produce.
BGL are intending to make charitable donations to merchant marine charities after each successful salvage operation. The amount of the donations will be at the discretion of the Board and will be made to appropriate merchant marine charities.
Directors
- Philip Reid (Executive Chairman)
- Will Carrier (Operational Director)
- Nigel Blincow FCCA (Finance Director)
- Mauricio Garrido (Non-Executive Director)
- Nick Henry (Non-Executive Director)
IDM employees
- Benton Wilcoxon (CEO)
- Capt Mark Martin (Salvage Master / Offshore Manager)
- Seb Lacombe (Naval Architect/ Marine Engineer/ Salvage Master)
- BC (Marine Archaeologist)
BGL Board
Philip Reid (Executive Chairman)
Philip is currently Chairman of the Angel Business Club and has over 35 years’ experience in financial services specialising in the development and funding of early stage companies. He was a Chief Executive of the National Research Development Corporation, a government backed venture capital organisation which oversaw the exploitation of many of the UK’s leading industrial innovations. He was later a Senior Vice President of Merrill Lynch, co-founder of Custom House Asset Management in Dublin and in recent years has been Chairman of some five AIM or Plus Listed public companies.
Will Carrier (Operational Director)
Will has spent over 30 years working in the marine subsea industry, both operationally and as business development consultant to corporate level. His broad spectrum of expertise encompasses relevant legislation, HSEQ and maritime contracting both on and offshore gives credence in his ability to manage and develop the operational aspects of the business.
Will has been involved in some of the world’s largest and most challenging marine engineering and oilfield subsea construction and decommissioning projects, including the Piper Alpha disaster, the recovery of the Kursk and the salvaging of the Francois Vieljeux. More recently, Will has conducted preliminary survey expeditions on various wrecks BGL has identified as targets, using state of the art vessels equipped with the latest in marine survey technology.
Nigel Blincow FCCA (Finance Director)
Nigel has been involved in shipping for most of his career, initially as an auditor, and for the past 23 years as a CFO in ship management overseeing a fleet of product carriers. He has experience in treasury and banking together with company structuring, budgeting, cash flow reporting, accounts preparation and liaison with auditors and banks.
Mauricio Garrido (Non-Executive Director)
Mauricio’s role in BGL is to provide strategic advice on the operations of the Company. Mauricio is currently the president of Houston based T&T Salvage LLC (“T&T Salvage”), from where he manages global operations in response to salvage, wreck removal, oil spill and other emergencies for the maritime and energy sectors. Since October 2008, Mauricio has been at the helm of T&T Salvage, a Teichman Group LLC company, where he has successfully led the company’s expansion into the top tier of the international marine and offshore salvage market. As president of T&T Salvage, Mauricio is responsible for leading the day to day global operations of a highly skilled and specialized team to deliver solutions to challenging salvage cases.
Mauricio is a past president and executive committee member of the American Salvage Association. He is a member of the North American Environmental Protection Association and the International Association of Emergency Managers. In addition, Mauricio is an active member and lecturer of the Organization of American States Inter-American Committee on Ports, as well as the Pan-American Institute of Naval Engineering.
Nick Henry (Non-Executive Director)
Nick’s role in BGL is to provide strategic advice on the operations of the Company. Nick was appointed as CEO of James Fisher and Son’s plc in 2004 having joined the company in 2003 as a Managing Director of James Fisher Tankships Ltd. Prior to this Nick worked for 20 years for P&O Containers and P&O Ports, of which 10 years were in senior management positions based in Singapore, Hong Kong, Australia, Netherlands and the Indian Sub-Continent. Nick's experience encompasses a wide range of commercial and operational roles, including fleet management and information technology.
IDM Team
Benton Wilcoxon (CEO)
Benton leads the financing, administration and landside operations of IDM. He is an experienced founder and CEO of several advanced materials and processes technology companies that have established significant markets worldwide. He is currently involved in commercializing novel high performance nano-structured titanium metal products for use in subsea equipment and the oil industry. He has also been responsible for both funding and co-ordinating the research effort and will be responsible for the latter within IDM and BGL.
Capt. Mark Martin (Salvage Master/Offshore Manager)
Mark is an accomplished marine manager with an excellent knowledge of marine survey systems and deep water salvage and recovery techniques, having started his career as a submariner on USS Dolphin, the world’s deepest diving submarine. He subsequently spent five years at Odyssey Marine Exploration, managing expeditions that discovered Black Swan, HMS Victory, SS Republic and five WW2 German U-boats. He has conducted numerous other expeditions in the Atlantic, Western Approaches, Caribbean and Mediterranean, operating in depths from 300FSW to 17,000FSW.
Seb Lacombe (Naval Architect/Marine Engineer/ Salvage Master)
Seb, a fully qualified marine engineer, has huge knowledge of the marine oil and gas industry as well as shipwreck survey and salvage enabling him to design and implement subsea salvage systems such as electro-mechanical grabs and Remote Operated Vehicle tooling skids for use on recovery projects. Seb has been involved in search, identification and survey operations utilising side-scan and acoustic multi-beam survey systems as well as several successful recovery operations.
TBC (Marine Archaeologist)
BGL is also seeking a suitably qualified marine archaeologist to assist in all survey and salvage activities.
- A six year licence agreement was signed on 14 February 2017 between IDM and one of the Researchers to use and exploit the data and materials relating to vessels carrying precious metals and other valuable cargoes as well as various non-ferrous metals on vessels sunk during both World Wars. During the licence period, the licence provides IDM with exclusive access to view and exploit the data and materials and to work with the Researcher to improve the information on the Vessels.
- A six year licence agreement was signed on 14 February 2017 between IDM and one of the Researchers to use and exploit the data and materials in relation to 20 valuable shipwrecks scattered globally. In addition, all new research acquired during the period of the licence agreement will be fully available to IDM.
- A licence agreement was signed on 15 February 2017 between BGL and IDM to sub-licence the data and materials provided by the Researchers, as outlined below:
- research information on shipwreck targets with valuable cargos to salvage;
- agreements with the researchers to utilize the information;
- providing the analysis and selection of the shipwreck targets for salvage;
- locating and procuring survey vessels with equipment and crews, salvage vessels, equipment, and crews, survey and salvage expertise;
- logistics operations;
- recovery and handling of recovered cargos;
- providing presentations and reporting as required by the Company;
- coordinating with the Company on any public relations and media necessary; and
- participation in discussions with any identified recovered cargo owners.
BGL is yet to enter into any Time Charters.
- Advisers
Financial Advisers
Capital Plus Partners Ltd, Bond House, 4th Floor, 20 Woodstock Street, London, W1C 2AN
Accountants
Moore Stephens LLP, 150 Aldersgate Street, London, EC1A 4AB
Legal Advisers
Campbell Johnston Clark Ltd, 59 Mansell Street, London, E1 8AN
Registrars
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