| Tue 18 Sep 2007, 8:39 | | DRD - DRDGOLD LIMITED - Merger of emperor and intr |
|
DRD
DRDD
DRD - DRDGOLD LIMITED - Merger of emperor and intrepid and disposal by DRDGOLD
of its stake in Emperor
DRDGOLD LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1895/000926/06)
JSE trading symbol: DRD
ISIN Code: ZAE000058723
Nasdaq trading symbol: DROOY
("DRDGOLD")
1. Introduction
Emperor Mines Limited ("Emperor"), the 78.7% subsidiary of DRDGOLD, has today
announced that its board and the board of Intrepid Mines Limited ("Intrepid")
have signed an agreement to merge the two companies.
2. The merged company
The new company, to be named Intrepid Mines Limited, will be a dynamic and well
funded international gold producer, developer and explorer listed on both the
Toronto Stock Exchange and ASX Limited.
The combination of Emperor`s balance sheet strength, Intrepid`s producing
Paulsens Gold Mine and its Casposo development project, and both companies`
exploration assets, together with the combined skills of the two management
teams, will create a well balanced company capable of adding significant value
for its shareholders.
In particular, the merged Intrepid`s strengthened balance sheet and the ability
to secure project finance, will allow it to immediately move forward with
corporate objectives, including:
* accelerated underground exploration at the Paulsens Gold Mine;
* imminent development of the Casposo gold/silver Project in Argentina on an
unhedged basis and continued examination of early expansion options;
* immediate exploration at Taviche (Mexico) and Tujuh Bukit Project
(Indonesia) and an expanded exploration budget of up to approximately A$8.0
million per annum; and
* improved capacity to target project and corporate acquisition opportunities.
The proposed merger, if it proceeds, will take place by way of a scheme of
arrangement.
3. DRDGOLD`s intentions
DRDGOLD has informed Emperor that it intends to re-focus its attention on
opportunities in South Africa and so intends to seek to realise its investment
in an orderly manner prior to the scheme meeting convened by the Court to
approve the proposed scheme. Emperor has agreed to work with DRDGOLD to seek to
facilitate such an exit. The proposed merger with Intrepid is therefore subject
to DRDGOLD being able to successfully realise its investment in Emperor prior to
this time.
4. Board support
The boards of directors of Emperor and Intrepid have resolved to support the
proposed merger.
5. Overview
The merger will take place by way of a scheme of arrangement, with Emperor
shareholders receiving 1 Intrepid share for every 4.25 Emperor shares held.
Existing unlisted Emperor employee options are to be either cancelled for cash
or new Intrepid options issued on equivalent terms and conditions.
6. Board and Management Structure
The merged company will benefit from the skills and international experience of
the combined management teams, with personnel who have held senior positions
with major resource companies such as Placer Dome, BHP Billiton, and Western
Mining Corporation.
Management of the merged company will be led by Mr Brad Gordon as Chief
Executive Officer and Mr Laurence Curtis as President. The merged company`s
head office will be located in Brisbane, Australia and the capital markets and
the Americas exploration office will be located in Toronto, Canada.
The Board of the merged company will comprise at least three representatives
from each of Intrepid and Emperor. Mr Colin G Jackson will continue as Chairman
of the merged company.
7. Synergy and benefits of the merged company
The principal assets of the merged company will be:
* Paulsens` operating gold mine in Western Australia (100% interest);
* Casposo gold/silver development project in Argentina (100% interest); and
* advanced exploration projects with multi-million ounce potential at Taviche
(Mexico - earning a 35% interest, gold/silver) and Tujuh Bukit Project
(Java, Indonesia - earning up to 70% interest, gold/silver/copper).
The merger is expected to deliver an expanded production profile and near term
increased gold inventory potential, leveraging exposure to the gold price.
8. Transaction implementation
Emperor and Intrepid have entered into a Merger Implementation Deed under which
they have agreed to certain undertakings and arrangements to facilitate the
merger. The complete document may be found on the companies` websites or on
www.sedar.com, the official site that provides access to most public securities`
documents and information filed by public companies and investment funds with
the Canadian Securities Administrators in the SEDAR filing system. Key terms of
the Merger Implementation Deed are summarised in Appendix A.
The proposed merger is conditional on, amongst other things:
i) Emperor shareholder approval;
ii) If required, Intrepid shareholder approval;
iii) DRDGOLD selling its shareholding in Emperor;
iv) The acquisition or cancellation of all Emperor options;
v) Each of Emperor and Intrepid being satisfied with the results of their
respective due diligence enquiries;
vi) Emperor having surplus net cash of at least $54 million immediately prior
to the second Court hearing to approve the scheme (taking into account any
amounts provided by Emperor to Intrepid, any sum expended in respect of the
Tujuh Bukit Joint Venture and any other expenditure approved by Intrepid);
vii) Any other regulatory approvals, no regulatory action, no material adverse
change, no prescribed occurrences and TSX consent; and
viii) Court approval.
Both companies have entered into no solicitation-no talk provisions customary
for this type of transaction. In addition Emperor has provided financial
accommodation to Intrepid Minerals Corporation, a wholly owned subsidiary of
Intrepid, amounting to A$5.0 million and holds an option to convert this loan
into Intrepid shares.
9. Timetable
The proposed timetable to complete the merger involves:
* Despatch Emperor shareholder documentation early-November
* Emperor scheme meeting early-December
* Implementation date early-January
10. Advisors
Emperor`s financial advisor in relation to this transaction is Gryphon Partners
and legal advice is being provided by Blake Dawson Waldron. Intrepid`s legal
advisors are Q Legal and Gardiner-Roberts.
11. Market Briefing/Conference Calls
Emperor and Intrepid will host two conference calls to discuss the benefits of
the proposed merger. For further details on the conference calls, please refer
to Appendix B.
For further details please contact:
Brad Gordon Laurence Curtis
Emperor Mines Limited Intrepid Mines Limited
Ph: +61 (7) 3007 8011 Ph: +1 (416) 368 4525
Rob Greenslade
Gryphon Partners
Ph: +61 (8) 8418 8525
Randburg
18 September 2007
Sponsor
BDO QuestCo (Pty) Limited
Appendix A
Summary of Key Terms of the Merger Implementation Deed
Conditions Precedent to the The principal conditions precedent to the
Scheme implementation of the Scheme include:
* approvals from applicable regulatory bodies
such as ASIC, ASX, TSX and, if required,
FIRB;
* continued recommendation of the Scheme by
the Emperor and Intrepid Boards;
* Emperor shareholder approval of the Scheme
at the Scheme Meeting by the requisite
majorities under the Corporations Act;
* if required by TSX, ASX or applicable laws
of Australia and Canada, Intrepid shareholder
approval of the Scheme;
* DRDGOLD selling their Emperor shares prior
to the Scheme Meeting;
* approval of the Scheme by Intrepid`s third
party providers of finance;
* Court approval of the Scheme in accordance
with s411(4)(b) of the Corporations Act;
* no Emperor or Intrepid Material Adverse
Change occurs;
* Intrepid executing the Deed Poll;
* no Emperor or Intrepid Prescribed Occurrence
occurs;
* confirmation that the actual Net Cash
Position of Emperor (plus any sum advanced
under the Emperor Working Capital Funding or
any other expenditure approved by Intrepid) is
no more than $6 million below the forecast $62
million Net Cash Position of Emperor as at 30
September 2007;
* confirmation that as at the Business Day
prior to the Second Court Date, the actual Net
Cash Position of Emperor (plus any sum advanced
under the Emperor Working Capital Funding, any
sum expended in respect of the Tujuh Bukit
Joint Venture or any other expenditure
approved by Intrepid) is no more than $8
million below the forecast $62 million Net
Cash Position of Emperor as at 30 September
2007;
* no changes in any material respect to the
intention of Emperor to effect the Sale of
Tolukuma (as announced on 10 September 2007),
other than as approved by Intrepid in writing,
before 8.00am on the Second Court Date;
* all Emperor options to subscribe for shares
having been exercised, cancelled or acquired
by Intrepid; and
* Emperor and Intrepid being satisfied with
their respective due diligence
investigations.
Scheme Consideration The Scheme will be concluded on terms which will
provide for the issue of 1 Intrepid Share for
every 4.25 Emperor Shares held by Scheme
Participants.
Subscription Option Intrepid has granted to Emperor an option to
subscribe for up to 20 million shares in Intrepid
at Intrepid`s 20 day volume weighted average
price at the time of exercising the option.
Should the option be exercised, the funds due to
Intrepid under the option exercise shall be
applied to extinguishing the existing A$5.0
million loan with Intrepid Minerals Corporation.
Independent Expert`s report Emperor has discretion whether or not to
commission an Independent Expert to provide an
opinion as to whether the Scheme is in the best
interests of Emperor Shareholders ("Expert
Report"). Emperor is not obliged to commission
an Expert Report.
If Emperor does decide to commission an Expert
Report, then a further condition precedent to the
implementation of the Scheme will be that the
Expert Report concludes that the Scheme is in the
best interests of the Scheme Participants.
No talk and no shop Each party must ensure that during the
obligations Exclusivity Period:
* (No Shop) It, nor any of its
Representatives, directly or indirectly
solicits, invites, facilitates any
discussions or negotiations (or encourages, or
communicates any intention to do any of
these things), with a view to obtaining any
expression of interest, offer or proposal from
any Person for or in respect of a Competing
Transaction in relation to that party; and
* (No Talk) It, nor any of its
Representatives, in connection with or for the
purposes of a Competing Transaction in relation
to that party, without the other party`s prior
written consent, directly or indirectly
participate or engage in any negotiations or
discussions with any Person or provide or make
available any information to any Person
(including any information or access for the
purposes of undertaking due diligence
investigations of the party or any of its
Related Bodies Corporate).
Limitations to no talk The no talk provision summarised above does not
obligation restrict a party from responding to a bona fide
offer or proposal which was not solicited or
initiated by it, and to the extent necessary to
discharge their fiduciary duties as a director of
Emperor or Intrepid in accordance with the
written opinion of senior counsel ("Fiduciary
Carve-out").
Competing Transactions and If a party ("Recipient") is approached by another
the parties` right to person during the Exclusivity Period with a
respond Competing Transaction to which the No Talk or No
Shop provisions apply, they must promptly notify
the other party of such approach.
The Recipient must not enter into any agreement
in relation to that Competing Transaction unless,
after notifying the other party, the other party
has not within 3 Business Days of notification
submitted a written proposal which is on terms no
less favourable than the Competing Transaction
("Counterproposal"). If the Counterproposal is
on terms no less favourable than the Competing
Transaction, then in the absence of a more
favourable offer, the parties must proceed
exclusively with the Counterproposal, otherwise
the Recipient may proceed exclusively with the
Competing Transaction.
There are various capitalised terms used in this summary which are defined in
the Merger Implementation Deed.
Appendix B
Conference Call Details
Conference Call One
The call is scheduled for 18 September 2007 and will be hosted by Intrepid Mines
Chairman Mr. Colin Jackson and Emperor Mines CEO Mr. Brad Gordon. An invitation
is extended to all interested investors, analysts or media representatives to
attend.
Timing and dial in details appear below, with AEST meaning Australian Eastern
Standard Time.
Schedule of events:
1:50 pm AEST To participate in the conference call, dial 1800 148 258 and
reference Conference ID 17374994 (if calling from outside
Australia, dial +61 2 8524 6650)
2:00 pm AEST Conference call commences
An audio recording of the teleconference will be available approximately 4 hours
after the call. To listen to the audio recording of the call, visit Emperor`s
website at www.emperor.com.au.
Conference Call Two
The call is scheduled for 18 September 2007 and will be hosted by Intrepid Mines
Chairman Mr. Colin Jackson and Emperor Mines CEO Mr. Brad Gordon. An invitation
is extended to all interested investors, analysts or media representatives to
attend.
Timing and dial in details appear below;
Schedule of events:
10:00 am (Toronto eastern time) To participate in the conference call, dial
(toll free) 1-888-300-0053 or
(international/local) 1-647-427-3420
An audio replay of the call will be available for one week by dialing 1-800-365-
8354 (passcode 17401204), and will also be available on Intrepid`s website at
www.intrepidmines.com.
Date: 18/09/2007 08:39:15 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
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.
