| Mon 3 Sep 2007, 8:52 | | SCN - Scharrig Mining Limited - Detailed Cautionar |
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SCN - Scharrig Mining Limited - Detailed Cautionary Announcement
SCHARRIG MINING LIMITED
(Registration number 1992/001973/06)
Share code: SCN ISIN: ZAE000006474)
("Schamin" or "the Company")
DETAILED CAUTIONARY ANNOUNCEMENT
1. THE JONAH COAL AGREEMENT
INTRODUCTION
Schamin shareholders are advised that the Company has entered into an agreement
("the Jonah Coal agreement") with Sir Sam Jonah, Jonah Limited and Jonah Capital
Limited (collectively "the Jonah Entities") with regard to the formation of a
new joint venture coal company to be named "Jonah Coal".
TERMS OF THE JONAH COAL AGREEMENT
In terms of the Jonah Coal agreement, both the Jonah Entities, and Schamin ("the
Parties") will contribute all of their future coal interests in Africa (other
than in South Africa and excluding the current Nkomati Anthracite project) to
Jonah Coal. The Parties have in addition agreed that Jonah Coal shall be
controlled by a board of four directors, two executive and two non-executives.
Sir Sam Jonah shall be the first chairman of the board, but shall not be
entitled to a second or casting vote. In addition, each Party shall be entitled
to appoint a non-executive director to the board
Jonah Coal shall initially be funded by a loan of R150 million from Schamin, on
such terms and conditions that the Parties may agree. Jonah Mining shall
contribute its portion of the funding of Jonah Coal by the earlier of either the
second year of the commencement of the incorporation of Jonah Coal, or the
listing of the shares of Jonah Coal on any recognised stock exchange, by the
purchase from Schamin of half of its then loan account against Jonah Coal, for
its then face value. On the listing of the shares of Jonah Coal, all
shareholder claims will either be repaid or converted into equity.
Schamin shall have a right of first refusal with respect to the provision of all
mining services to Jonah Coal.
RELATED PARTY TRANSACTION
The JSE Limited ("JSE") has ruled that the joint venture between Schamin and the
Jonah entities constitutes a small related party transaction. In terms of
section 10.7(b) of the JSE Listings Requirements, an independent expert will be
appointed to prepare a fair and reasonable opinion on the transaction.
Shareholders shall be advised of their opinion, which shall lie open for
inspection at the registered office of Schamin, 28 Patrick Road, Jet Park, for a
period of 28 days from the date of the announcement of the opinion of the
independent expert.
2. FURTHER JOINT VENTURE WITH AQUILA RESOURCES LIMITED
INTRODUCTION
Scharrig Mining Limited, Jonah Capital Limited and Aquila Resources Limited
("Aquila") are pleased to announce the formation of a joint venture between
Jonah Coal and Aquila ("the Aquila agreement") to accelerate the evaluation and
development of significant coal resources in Botswana and progress plans to
construct related power generation facilities. The opportunity to fast track
this development has arisen due to the growing demand for power in the Southern
African region and the establishment of joint venture with strong in-country
leadership, technical capacity and an excellent resource base.
Aquila Resources Limited is a West Australian based mining company focusing on
the bulk commodities utilised by the steel industry, being predominantly coal
and iron ore. Aquila`s geographical focus is Australia and Southern Africa, and
it has offices in Perth, Brisbane and South Africa. Aquila is listed on the
Australian Securities Exchange (share code AQA).
The project areas are situated near rail, road and power infrastructure and
cover an area of 4719km2. Recent drilling has confirmed the thickness and
quality of the coal seams identified in extensive drilling campaigns on the
properties in the 1980`s.
TERMS OF THE AQUILA AGREEMENT
Under the terms of the Aquila agreement, Scharrig Mining Limited and Jonah
Capital Limited will earn an aggregate 50% interest in the Botswana tenements.
An initial interest of 16.67% will be earned by the payment to Aquila of US$5m
and the balance of the interest will be progressively earned by the expenditure
of US$10m on an extensive work programme on the Botswana tenements.
RATIONALE FOR THE AQUILA AGREEMENT
The Aquila agreement supports Scharrig Mining`s overall strategy to further
enhance the company`s standing as a developer of coal opportunities. The
consortium brings to the project the wealth of expertise, capital, and
experience and importantly the political tail wind needed to take this process
to completion in as short a time as possible.
CONDITIONS PRECEDENT
The Aquila agreement is subject to the registration of the joint venture
companies in accordance with the signed agreement.
3. RENEWAL OF CAUTIONARY
Shareholders are advised to continue to exercise caution when dealing in their
Schamin shares until such time as a more detailed announcement is made
4. CONFERENCE CALL
Shareholders, analysts and the media are invited to join a conference call at
11h00 on Monday 3 September 2007 to participate in a management information
session and to discuss the transaction. Conference call participants shall have
to dial - toll free - 0800 200 648 or - toll - 011 535 3600. The playback
recording will be available on 011 305 2030, PIN code 99307# from Monday
afternoon.
Boksburg
3 September 2007
Corporate Advisor
Manhattan Equity Corporate Finance (Pty) Limited
Sponsor
Arcay Moela Sponsors (Pty) Limited
Date: 03/09/2007 08:52:01 Produced by the JSE SENS Department.
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