| Tue 4 Sep 2007, 9:28 | | MVL / NHM - Mvela Resources / Northam Platinum / M |
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MVL NHM
MVL NHM
MVL / NHM - Mvela Resources / Northam Platinum / Mvela Holdings / Afripalm
Resources - The Proposed Acquisition By Northam Of 100% Of The Booysendal
Platinum Project ("Booysendal")
Mvelaphanda Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1980/001395/06)
(ISIN: ZAE000050266)
(Share Code: MVL)
("Mvela Resources")
Mvelaphanda Holdings (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1997/021524/07)
("Mvela Holdings")
Northam Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1977/003282/06)
(ISIN: ZAE000030912)
(Share Code: NHM)
Afripalm Resources (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2006/011933/07)
("Afripalm Resources")
The Booysendal Transaction
Unveiling the only independent, fully integrated, HDSA controlled platinum
company
Announcement relating to:
- the proposed acquisition by Northam of 100% of the Booysendal Platinum
Project ("Booysendal");
- the proposed acquisition by Mvela Resources of Anglo Platinum Limited`s
("Anglo Platinum") entire interest of 53 million shares in Northam and Anglo
Platinum`s stake in Booysendal;
- a specific issue of ordinary shares by Mvela Resources to Afripalm
Resources; and
- the withdrawal of Mvela Resources` and Northam`s cautionary announcements.
1.Introduction
Shareholders of Mvela Resources and Northam are referred to the cautionary
announcements of 23 July 2007 and 1 August 2007 respectively, in which
shareholders were advised that the companies were engaged in negotiations that
might have a material effect on the price of the companies` securities.
Shareholders are also referred to the announcement released today by Anglo
Platinum advising, inter alia, that Mvela Resources, Anglo Platinum, Afripalm
Resources and Mvela Holdings have entered into a detailed transaction framework
agreement which records a series of inter-conditional transactions (collectively
"the Transaction") pursuant to which:
- Mvela Resources will acquire Anglo Platinum`s 50% interest in Booysendal
and its entire 22.4% interest in Northam for R4 billion; in cash and
- Northam will acquire 100% of Booysendal from Mvela Resources in exchange
for 125 million new Northam ordinary shares to be issued to Mvela Resources.
On implementation of the Transaction, Mvela Resources will own approximately
63.4% of the issued share capital of Northam, which, in turn, will own 100% of
Booysendal, including full control of the smelting, refining and marketing of
its production.
The effective date of the Transaction is expected to be 1 January 2008.
2. Rationale
Northam is a mature, lease bound mine with a limited operational life of
approximately 16 years at its current annual production rate of around 325 000
oz of Platinum Group Metals ("PGM").
The acquisition of Booysendal will add 112 million oz of 3 Platinum Group
Elements + Gold ("3PGE+Au") to Northam`s current 17 million oz (3PGE+Au)
resource base. The size of the resource, the 12 km available strike-length and
the lower average depth of the reef horizons (both Merensky and UG2 reefs can be
extracted concurrently) offer significant near-term growth, at lower unit costs
than are currently being achieved by Northam. Once developed, Booysendal will
add significant volumes to Northam`s current production levels, lower the
average mining depth and cost of production of Northam and could create further
opportunity for the optimal utilization of Northam`s downstream beneficiation
facilities. As only three other active South African PGM producers have access
to smelting and refining technology, Northam`s metallurgical expertise and
access to world class refining technology provides a competitive advantage as
yet unrealised.
Northam has provided technical support to Mvela Resources in relation to
Booysendal and therefore already has a sound knowledge of the project. Its 100%
ownership of Booysendal, on completion of the Transaction, will expedite the
decision-making process on the project, with Northam being able to drive the
implementation schedule independently.
Through the successful conclusion of the Transaction, Mvela Resources` will
achieve a milestone in its longer-term strategic objectives by gaining control
of an operating company. Consolidation of the strategic corporate shareholding
in Northam under Mvela Resources, a company controlled by Historically
Disadvantaged South Africans ("HDSAs"), will permit Northam to pursue further
growth opportunities in the South African platinum sector.
The acquisition of Booysendal by Northam is a company-transforming event,
creating the first HDSA controlled, fully-integrated PGM producer with the
fourth largest attributable PGM resource base in South Africa (Northam will be
entitled to smelt, refine and market all production from Booysendal).
3. Overview of Mvela Resources and Northam
3.1 Mvela Resources
Mvela Resources is a broad-based HDSA controlled mining and minerals company.
Since inception in 2001, Mvela Resources has acquired significant investments in
the South African gold, platinum and diamond sectors, as well as exploration and
development joint ventures in sub-Saharan Africa, with a focus on South Africa.
Listed investments include a 21.8% shareholding in Northam and a fully diluted
20.7% shareholding in Trans Hex Group Limited ("Trans Hex"). Mvela Resources,
through its wholly-owned subsidiary Mvela Gold, holds a 15% interest in Gold
Fields Mining South Africa (Proprietary) Limited, an unlisted subsidiary of Gold
Fields Limited ("Gold Fields") (which houses Gold Fields` South African
operations including the Driefontein, Kloof, Beatrix and South Deep mines).
Exploration and development joint ventures have been established with global
mining groups such as De Beers Consolidated Mines Limited, Trans Hex and Lonmin
plc.
3.2 Northam
Northam is the fifth largest global PGM producer with a listing on the JSE
Limited ("JSE"). With operations located at the upper end of the Western Limb
of South Africa`s Bushveld Complex, Northam wholly owns and operates a PGM mine,
two concentrators for treating Merensky and UG2 ore respectively, a smelter and
base metal removals plant. Northam`s final concentrate is refined at Heraeus`s
new precious metals refinery in Port Elizabeth, South Africa and at its
refineries in Hanau, Germany. Northam markets its own precious metals to a
customer base in North America, Europe and Japan. Currently, Anglo Platinum and
Mvela Resources own 22.4% and 21.8% respectively of the issued share capital of
Northam.
The technical and operational expertise that Northam has developed as owner and
operator of one of the deepest and most technically challenging PGM mines in
South Africa, together with the independence of its metal beneficiation stream
and marketing channels, provides a competitive advantage not readily available
to junior platinum companies in South Africa. The intellectual and human
capital that Northam offers would be difficult to replicate in the current
mining environment where mining skills and experience are in short supply.
4. Overview of Booysendal
Booysendal, situated on the Eastern Limb of the Bushveld Complex in South
Africa, comprises ten farms, approximately 10 608 hectares in extent, eight of
which are held under "old order" mining rights and two under "new order"
exploration rights. Pursuant to a diamond core drilling programme undertaken by
Anglo Platinum, a measured, indicated and inferred resource totaling 112 million
ounces (3PGE+Au) on the Merensky and UG2 Horizons has been demarcated.
Booysendal is currently at pre-feasibility stage.
In June 2003, Anglo Platinum and Khumama (then controlled by an HDSA consortium)
agreed in principle to establish a joint venture to exploit the mining rights in
relation to Booysendal. Mvela Resources subsequently acquired Khumama in
January 2004. In February 2004, Mvela Resources announced its intention to sell
its participation right in the Booysendal joint venture to Northam.
5. Conditions Precedent
The implementation of the Transaction will be subject, inter alia, to
fulfillment or, where appropriate, waiver of the following suspensive
conditions:
-the execution of agreements recording the full terms of the Transaction and
such agreements becoming unconditional;
-the execution by Mvela Resources of the requisite agreements to fund the
Transaction and such agreements becoming unconditional;
-independent Northam shareholders in general meeting waiving their right to
receive a mandatory offer (see paragraph 9 below);
-the Transaction being unconditionally approved, alternatively approved subject
to conditions acceptable to Anglo Platinum, Northam and Mvela Resources by the
relevant regulatory authorities (including, inter alia, the JSE and competition
authorities);
-shareholder resolutions required to implement the Transaction, being approved
by Mvela Resources and Northam shareholders in general meeting (Anglo Platinum
and Mvela Resources, being related parties to Northam, will not vote at the
general meeting of Northam shareholders); and
-the proposed issue of ordinary shares to Afripalm Resources contemplated in
paragraph 7 below being approved by Mvela Resources shareholders in general
meeting.
6. Issue by Mvela Resources of New Ordinary Shares to Afripalm Resources
Afripalm Resources is an HDSA owned and controlled company headed by Lazarus
Zim. Lazarus Zim was publicly identified as a future participant in the ongoing
empowerment process of Anglo Platinum in February 2006 by Anglo American plc.
In a transaction announced in December 2006 and concluded in February 2007,
Afripalm Resources agreed to acquire shares with a voting interest of
approximately 31% in Mvela Resources.
As set out in the circular to Mvela Resources shareholders dated 1 February 2007
(`the Mvela Resources circular"), Afripalm Resources undertook to offer any
mining opportunities it may receive exclusively to Mvela Resources. Pursuant to
this undertaking, Mvela Resources has been offered Anglo Platinum`s 50% interest
in Booysendal. Mvela Resources is therefore required, subject to shareholder
approval in general meeting and the obtaining of a fair and reasonable opinion,
to issue ordinary shares to Afripalm Resources.
7. Pro forma financial effects
7.1 Financial effects of the Transaction on Mvela Resources
The draft unaudited pro forma financial effects set out below are included for
the purpose of illustrating the effect of the Transaction on Mvela Resources`
earnings, headline earnings, net asset and tangible net asset value per ordinary
share. The directors of Mvela Resources are responsible for the unaudited pro
forma financial effects below. These draft unaudited pro forma financial
effects are presented for illustrative purposes only, and because of their
nature may not give a fair reflection of Mvela Resources` financial position,
changes in equity, results of operations or cash flows after the Transaction.
The unaudited pro forma financial information set out below does not necessarily
represent or indicate sustainable earnings or future financial positions.
Before the After the Percentage
Transaction Transaction change
Basic and diluted
loss per ordinary
share (cents) (1 189) (202) 83
Basic and diluted
Headline loss
per ordinary
share (cents) (1 199) (382) 68
Net asset value
per ordinary share
(cents) 2 796 4373 56
Net tangible asset
value per ordinary
share (cents) 2 759 4337 57
Number of ordinary
shares in issue (000`s) 208 710 212 289 2
Weighted average
number of
ordinary shares
in issue(000`s) 175 867 179 446 2
Notes:
1."Before the Transaction" represents the reviewed preliminary results of Mvela
Resources for the year ended 30 June 2007 as announced on SENS on 3 September
2007
2. The financial effects have been determined based on the following key
assumptions:
2.1 the Transaction was effective from 1 July 2006 for calculation of earnings
and headline earnings per ordinary share. Net asset value and tangible net asset
value per ordinary share have been calculated as if the Transaction was
effective as at 30 June 2007.
2.2 the Transaction was funded by utilising R1.5 billion of Mvela Resources` own
funds and issuing preference shares (at a cost of 68% of prime) to the value of
R2.5 billion;
2.3 Mvela Resources receives 125 million Northam shares;
2.4 an assumed volume weighted average Northam share price of R50.00 per Northam
share; and
2.5 an assumed 3.58 million Mvela Resources shares issued to Afripalm Resources.
7.2 Financial Effects of the Transaction on Northam
The draft unaudited pro forma financial effects of the Transaction have been
prepared for illustrative purposes only, and because of their nature, may not
give an accurate overview of Northam`s financial position, changes in equity,
results of operations or cash flows. The directors of Northam are responsible
for the unaudited pro forma financial effects below. These draft unaudited pro
forma financial effects are presented for illustrative purposes only, and
because of their nature may not give a fair reflection of Northam`s financial
position, changes in equity, results of operations or cash flows after the
Transaction. The unaudited pro forma financial information set out below does
not necessarily represent or indicate sustainable earnings or future financial
positions.
The draft unaudited pro forma financial effects of the Transaction set out below
are based on the reviewed preliminary results for the year ended 30 June 2007,
published on 3 August 2007.
Before the After the Percentage
Notes Transaction Transaction change
Basic earnings
per share
(cents) 1,2 560 365 (35)
Headline
earnings per
share (cents) 1,3 560 365 (35)
Fully diluted
earnings per
share (cents) 1,3 548 360 (34)
Net asset value
and tangible net
asset value per
share (cents) 4 1004 2 382 137
Number of shares
in issue (000`s) 237 226 362 226 53
Weighted average
number of share
in issue (000`s) 236 747 361 747 53
Fully diluted
weighted average
number of share
in issue (000`s) 242 047 367 047 52
Notes:
1. The financial effects have been determined based on the following
assumptions:
1.1 an assumed volume weighted average Northam share price of R50 per share; and
1.2 estimated Transaction costs of R4.5 million
2. The basic earnings per share and headline earnings per share are based on the
weighted average number of shares in issue during the period and assume that the
consideration shares were issued on 1 July 2006.
3. The fully diluted earnings per share are based on the weighted average number
of shares in issue during the period plus the weighted average number of Northam
Share Option Scheme options outstanding during the period and assumes that the
consideration shares were issued on 1 July 2006.
4. The net asset value and tangible net asset value is based on the actual
number of shares in issue at 30 June 2007, and assumes that the consideration
shares were issued at that date.
8. Waiver of the Requirement on Mvela Resources to Make a Mandatory Offer to
Northam Shareholders
On implementation of the Transaction, Mvela Resources` holding in Northam will
increase from approximately 21.8% to approximately 63.4%. Subject to a waiver
by a majority of the votes exercised by Northam shareholders (other than Mvela
Resources and Anglo Platinum) and to any objections being successfully raised by
Northam shareholders, the Securities Regulations Panel ("SRP") has indicated
that it will, in terms of Rule 8.7 of the SRP Code on Takeovers and Mergers,
grant a dispensation to Mvela Resources exempting it from having to make a
mandatory offer to the remaining shareholders in Northam. Northam shareholders
will be given the opportunity (once the Transaction circular has been posted to
shareholders) to make submissions to the executive director of the SRP as to why
the dispensation should not be granted.
9. Shareholder Support
Northam
Northam shareholders holding approximately 40 percent of Northam`s issued shares
(excluding 104.8 million shares held by Anglo Platinum and Mvela Resources who
cannot vote on the Transaction), have indicated that they support the
Transaction.
Mvela Resources
Mvela Resources shareholders holding approximately 50 percent of Mvela
Resources` shares in issue, have undertaken to vote in favour of the necessary
resolutions to implement the Transaction.
10. Withdrawal of Cautionary Announcements
Shareholders of Mvela Resources and Northam are advised that the cautionary
announcements dated 23 July 2007 and 1 August 2007, respectively, are hereby
withdrawn.
11. Circulars
Circulars relating to the matters contemplated in this announcement will be
posted to shareholders of Northam and Mvela Resources in due course.
Johannesburg
4 September 2007
Financial Advisor and Transactional sponsor to Mvela Resources
JP Morgan
Legal Advisors to Mvela Resources
Bowman Gilfillan
Sponsor to Mvela Resources
PWC Corporate Finance
Financial advisors to Afripalm
Nedbank Capital
Legal advisor to Afripalm
Edward Nathan Sonnenbergs
Independent advisor to Northam
PWC Corporate Finance
Legal Advisor to Northam
Brink Cohen Le Roux
Sponsor to Northam
BJM Corporate Finance
Legal advisors to Mvela Holdings
Hofmeyr Inc
Date: 04/09/2007 07:11:01 Produced by the JSE SENS Department.
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implicitly, represent, warrant or in any way guarantee the truth, accuracy or
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employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
