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SAM
SAM
SAM - Samroc - Proposed capital restructure and recapitalization; further
cautionary announcement
SA MINERAL RESOURCES CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
Share code: SAM
ISIN: ZAE000012019
("Samroc" or "the company")
PROPOSED CAPITAL RESTRUCTURE AND RECAPITALISATION
FURTHER CAUTIONARY ANNOUNCEMENT
Further to the cautionary announcement released on SENS on 18 May 2007, Samroc
shareholders are advised that:
1 GVM Metals Limited ("GVM"), the principal shareholder of Samroc, has
agreed, subject to the recapitalisation referred to below, to dispose of
its 27% shareholding (98 million shares) in Samroc to a black-owned company
yet to be formed at a price of 1 cent per share;
2 Proposals will be put before the shareholders of Samroc for the restructure
of Samroc`s capital;
3 Further proposals will be placed before shareholders in due course for the
acquisition of new mineral resources assets; and
4 Samroc will issue new shares following the restructure to a consortium of
investors to raise R10 million.
Background and rationale
Samroc was listed in 1996 on the venture capital sector of the JSE Limited
("JSE"). It has had a history of poor performance and has only once made an
operating profit. In May 2004 its major shareholder, GVM Metals Limited ("GVM"),
which owns 27% of Samroc, became the major creditor of Samroc by acquiring a
long term loan account from the Industrial Development Corporation ("IDC"). This
loan account now stands in the Samroc books at approximately R9.779 million
("GVM loan account"). The last audited accounts of Samroc for the period to 30
June 2006 contained the note that "Though the repayment of the debt is in
default, the directors are of the opinion that GVM Metals will not call up the
loan within the next 12 months."
The directors of Samroc are of the opinion that the company has no foreseeable
prospect of repaying the GVM loan account from operating cash flows and will
have to be recapitalised to place it on a sound financial footing.
A group of black investors approached GVM to obtain its assistance in
establishing a broad based black controlled mineral resources company that would
focus on acquiring mineral prospects, taking them up the value chain, and
entering into joint venture agreements with recognised operators to turn such
resources into account. GVM, which is listed on the JSE Limited in the "Mining -
General Mining" sector of the JSE, agreed to dispose both of its shareholding
and of the GVM loan account in order to facilitate this initiative. GVM also
agreed to vote in favour of the restructure and recapitalisation proposals
referred to below.
Restructure and recapitalisation proposals
The Samroc board proposes to restructure the company`s share capital by:
* Consolidating and restructuring the increased share capital on a 1 for 100
basis, and
* Increasing the authorised share capital from 4.50 million shares to 200
million shares of 1 cent each to result in 200 million authorised shares of
1 cent each and 3 742 749 issued shares of 1 cent each.
("the restructure")
Immediately thereafter the company will issue 10 million new ordinary shares at
an issue price of 100 cents per share to new investors, the majority of whom
will be previously disadvantaged persons ("the recapitalisation").
Pro forma financial effects of the recapitalisation
The table below sets out the pro forma financial effects of the recapitalisation
on the earnings, headline earnings, NAV and tangible NAV per Samroc ordinary
share. The unaudited pro forma financial effects are prepared for illustrative
purposes only and due to their nature may not fairly present Samroc`s financial
position. The pro forma financial effects are the responsibility of the
directors of Samroc.
Before the After the %
recapitalisation recapitalisation improvement
loss - cents per share (19.0) (5.2) 27%
Headline loss - cents per (19.0) (5.2) 27%
share
Net asset value and net 33.3 81.8
tangible asset value - cents 246%
per share
Number and weighted average 3 742 749 13 742 749 367%
number of shares in issue
Notes and assumptions:
(1) All figures are stated using the assumption that the shares have been
consolidated on a 1 for 100 basis in terms of the restructure.
(2) Pro forma earnings and headline earnings are based on Samroc`s
published unaudited interim results for the six months ended 31 December
2006 and the assumption is made that the recapitalisation will not affect
reported earnings because the amount subscribed will be earmarked for
working capital and new investments.
(3) The net asset value and net tangible asset figures are based on the
assumption that the recapitalisation proceeds were received on 31 December
2006.
Intentions following the recapitalisation
Following the implementation of the recapitalisation the GVM representatives on
the Samroc board will resign and be replaced by new appointees. These will be
persons who are respected and experienced operators in the resources fields in
which Samroc intends to invest.
Samroc is in discussions with certain parties relating to the acquisition of
assets in line with its new investment policy stated above in the rationale
paragraph. It is intended to apply in due course to the JSE to transfer the
listing of Samroc from the Venture Capital Sector either to the AltX or to the
appropriate minerals sector of the Main Board following the acquisition of new
assets.
Documentation and further announcements
Documentation in relation to the restructure and recapitalisation is in the
course of being prepared and will be posted to shareholders upon receiving the
appropriate regulatory approvals.
Further announcements will be made on the conclusion of agreements relating to
the acquisition of new assets.
Further cautionary announcement
In the light of the above, Samroc shareholders are advised to continue to
exercise caution when dealing in their Samroc shares until a further
announcement is made.
Woodmead
8 June 2007
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Date: 08/06/2007 16:19:25 Produced by the JSE SENS Department.
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