| Mon 25 Feb 2008, 9:24 | | PZG - Pamodzi Gold Limited - Announcement Of The Fulfilment Of Conditions |
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PZG
PZG
PZG - Pamodzi Gold Limited - Announcement Of The Fulfilment Of Conditions
Precedent And Final Terms For The Acquisition
PAMODZI GOLD LIMITED
(Formerly Bema Gold South Africa (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
Registration number: 2002/013039/06
Share code: PZG ISIN: ZAE000088563
("Pamodzi Gold" or "the Company")
Announcement of the fulfilment of conditions precedent and final terms for the
acquisition of the Orkney shafts No 1 to 7 ("Orkney business") from Harmony
Gold Mining Company Limited ("Harmony") ("Orkney transaction") and acquisition
of the entire issued share capital of and all claims on loan account against
President Steyn Gold Mines Free State (Proprietary) Limited ("President Steyn")
from Thistle Mining Inc. and its subsidiaries ("Thistle") ("President Steyn
transaction")
Shareholders are referred to the detailed terms announcement released on SENS
on 23 November 2007 and published in the press on 26 November 2007 regarding,
inter alia, the Orkney transaction and the President Steyn transaction
("detailed terms announcement").
Pamodzi Gold is pleased to announce the conclusion of the Orkney transaction
and the President Steyn transaction on revised terms.
1.Revision to the terms of the Orkney transaction
In the detailed terms announcement, Pamodzi Gold stated that it had entered
into formal agreements in terms of which it:
- would acquire the Orkney business for R550 million plus a secondary
consideration; and
- envisaged settling such acquisition consideration through a cash payment of
R350 million and the issue of 9 272 903 ordinary shares in Pamodzi Gold
("shares") at a price per share of R21.56 to Harmony.
Pamodzi Gold and Harmony have agreed to revise the terms of the Orkney
transaction such that Pamodzi Gold will now acquire the Orkney business for
R300 million ("revised Orkney consideration"). In addition Harmony has agreed
to accept 30 million shares in full and final settlement of the revised Orkney
consideration, which translates into a price per share of R10.00 ("Orkney
consideration shares").
The terms have been revised to reflect changes in the economic, operating and
market environments since the Orkney transaction was first announced some ten
months ago. In reaching agreement on these terms, the parties were eager to
reflect the fair value of the assets, the importance of maintaining Pamodzi
Gold`s Black Economic Empowerment ("BEE") status and to recognise the discount
between the parties` view of the inherent value of Pamodzi Gold (including the
Orkney business) and the current Pamodzi Gold share price.
All of the conditions precedent to the Orkney transaction have been fulfilled
or waived, as the case may be, and the Orkney consideration shares will be
issued to Harmony on Wednesday, 27 February 2008. Pamodzi Gold will take over
absolute control of the Orkney business on Wednesday, 27 February 2008.
In terms of the Orkney transaction agreements, Harmony shall not be entitled to
dispose of the Orkney consideration shares for a period of twelve months after
the effective date of the Orkney transaction. Should Harmony wish to reduce its
exposure to Pamodzi Gold, it may approach Pamodzi Gold and request it to place
the Orkney consideration shares on its behalf.
2. Finalisation of the terms of the President Steyn transaction
In terms of the President Steyn agreement, an adjustment to the President Steyn
acquisition consideration was to be made based on the movement in the working
capital of President Steyn from 30 June 2007 to 1 December 2007 (as more fully
described in the detailed terms announcement and the Pamodzi Gold circular
posted on 23 January 2008 ("circular")). This adjustment has been finalised and
will result in a R7 221 074 reduction to the President Steyn acquisition
consideration, reducing it from R240 000 000 to R232 778 926. It was initially
envisaged that this adjustment would reduce the cash payment portion of the
President Steyn acquisition consideration from R100 000 000 to R96 389 463 and
loan consideration portion of the President Steyn acquisition consideration
from R140 000 000 to R136 389 463. Thistle has, however, agreed to accept
shares in full and final settlement of the cash portion of the President Steyn
acquisition consideration("President Steyn consideration shares").
The President Steyn acquisition consideration will therefore be settled as
follows:
- the issue of 9 259 927 shares to Clidet 776 (Proprietary) Limited ("Clidet
776"), a 100% subsidiary of Pamodzi Resources (Proprietary) Limited at a price
per share of R14.73. This represents the reinvestment of the loan consideration
portion of the President Steyn acquisition consideration;
- the issue of 9 084 067 shares to Thistle at a price per share of R9.51,
which translates into a 10% discount to the 30 day volume weighted price of the
shares traded on the JSE up to the close of trade on 20 February 2008; and
- the issue of 683 491 shares to Mindserv (Proprietary) Limited ("Mindserv")
at a price per share of R9.51 and the payment of a cash consideration of R3.5
million.
All of the conditions precedent to the President Steyn transaction have been
fulfilled or waived as the case may be, and the President Steyn consideration
shares will be issued to Thistle and Mindserv on Monday, 25 February 2008.
Pamodzi Gold will take over absolute control of the President Steyn business
immediately therafter.
In terms of the President Steyn transaction agreements, Thistle and/or Mindserv
shall not be entitled to dispose of the President Steyn consideration shares
until 30 June 2008. Should Thistle and/or Mindserv wish to
reduce its exposure to Pamodzi Gold, it may approach Pamodzi Gold and request
it to place the President Steyn consideration shares on its behalf.
3. Revised share capital and BEE status
As a result of the issue of shares to Harmony, Thistle, Mindserv and Clidet 776
("share issues"), the issued share capital of Pamodzi Gold will increase by 49
027 485 to 92 493 150. The envisaged share capital and share premium of Pamodzi
Gold after the Orkney and President Steyn transactions is:
Current issued share capital 43 465 665
Share to be issued to Harmony 30 000 000
Shares to be issued to Thistle/Mindserv 9 767 558
Shares to be issued to Clidet 776 9 259 927
Total shares in issue 92 493 150
Share premium following the issues of shares (R`000) 760 968
Following the share issues, the BEE shareholding in the Company will be
approximately 27.8%.
As described in the detailed terms announcement and in the circular,
Pamodzi Resources is currently in discussions with potential funders, which if
successfully concluded, will enable it to subscribe for additional shares in
Pamodzi Gold. A subscription by Pamodzi Resources will serve to strengthen the
Company`s BEE credentials.
Following the share issues, the major beneficial shareholders are expected to
be:
Shareholder name Shares held % held
Harmony 30 000 000 32.4
Pamodzi Resources 25 733 260 27.8
Kinross Gold Corporation 12 160 000 13.1
Thistle/Mindserv 9 767 557 10.6
Broker Proprietary 4 069 239 4.4
4. Status of the capital development private placement
As stated in the detailed terms announcement, Pamodzi Gold intends to undertake
the capital raising to fund capital development projects at its current and
newly acquired operations. To this end, the Directors proposed and the
shareholders approved a special resolution authorising the issue of 16 000 000
shares as a specific issue of shares for cash at the general meeting held on 8
February 2008. However, as a result of the recent equity market volatility, the
Company has decided to postpone their capital raising in the short term.
The Company is, in the interim, exploring other avenues of funding in order to
ensure that it has sufficient capital to deploy at its operations until the
capital raising can be completed.
5. Revised financial effects
The table below represents the revised unaudited pro forma financial effects
following the conclusion of the Orkney transaction and the President Steyn
transaction on revised terms and the capital raising. The pro forma financial
effects are based on the unaudited financial results of Pamodzi Gold as at 30
June 2007 and are therefore comparable to the financial effects contained in the
circular.
The unaudited pro forma financial effects are the responsibility of the Pamodzi
Gold directors and have been prepared for illustrative purposes only to provide
information about how the conclusion of the Orkney transaction and the President
Steyn transaction and the capital raising may have affected the financial
position of Pamodzi Gold. Due to their nature, the unaudited pro forma financial
effects may not be a fair reflection of the Company`s financial position after
the the conclusion of the Orkney transaction and the President Steyn transaction
and the capital raising.
Pro forma financial following the conclusion of the Orkney transaction and the
President Steyn transaction on revised terms and the capital raising.
Unaudited Unaudited Unaudited
published pro forma pro forma
interim financial effects financial effects
financial after the after the
results as at Orkney President Steyn
30 June 2007 transaction transaction
(cents) (cents) (cents)
EPS (26.5) (53.2) (66.3)
Diluted EPS (26.5) (53.2) (66.3)
HEPS (26.5) (53.2) (66.3)
Diluted HEPS (26.5) (53.2) (66.3)
NAV per ordinary share 473.7 701.7 794.9
NTAV per ordinary share 472.6 701.1 794.4
Number of ordinary shares
in issue 41 020 73 466 92 493
Unaudited pro forma financial
The capital effects after the conclusion
development of the Orkney transaction,
private President Steyn transaction
placement and the capital raising Change
(cents) (cents) (%)
EPS 9.8 (56.5) (113.0)
Diluted EPS 9.8 (56.5) (113.0)
HEPS 9.8 (56.5) (113.0)
Diluted HEPS 9.8 (56.5) (113.0)
NAV per ordinary share 59.7 854.6 80.4
NTAV per ordinary share 59.8 854.2 80.8
Number of ordinary shares
in issue 16 000 108 493 164.49
1. For the purpose of the pro forma financial effects, it has been assumed that
the current market price of a Pamodzi Gold share is R10.00.
2. For the purpose of the pro forma financial effects, it has been assumed that
the initial Orkney acquisition consideration is settled as follows:
a. Pamodzi Gold issues and allots 30 million Pamodzi Gold shares to Harmony in
terms of the revised Orkney transaction agreements for the purchase price of
R300 million; and
b. The secondary purchase consideration has been waived.
3. The President Steyn acquisition consideration is settled as follows:
a. Pamodzi Resources subscribes for 9 259 927 shares at R14.73 per
share in terms of the option agreement. No IFRS2: Share Based Payments charge
has been calculated as the current market price is below the agreed share price
as per the option agreement.
b. 9 084 067 shares are placed with Thistle at R9.51 per share
pursuant to the President Steyn private placement.
c. 683 491 Pamodzi Gold shares are placed with Mindserv at R9.51 per share
pursuant to the President Steyn private placement.
4. 16 000 000 Pamodzi Gold shares are placed with institutional investors
at R12.50 per share pursuant to the capital development private placement.
Transaction costs relating to the capital development private placement have
been capitalised to equity.
The table below sets out the relevant pro forma financial effects as disclosed
in the circular:
Pro forma financial effects assuming Pamodzi Gold raises R350 million in terms
of the Orkney private placements and Pamodzi Resources does not follow its
rights in terms of the option agreement
Unaudited Unaudited
pro forma pro forma
financial effects financial effects
Unaudited after the after the
published Orkney President Steyn
interim transaction transaction and
financial and the the President
results as at Orkney private Steyn private
30 June 2007 placement placement
(cents) (cents) (cents)
EPS (26.5) (81.9) (110.9)
Diluted EPS (26.5) (81.9) (110.9)
HEPS (26.5) (81.9) (110.9)
Diluted HEPS (26.5) (81.9) (110.9)
NAV per
ordinary share 473.7 926.3 1 002.2
NTAV per ordinary
share 472.6 925.7 1 001.7
Number of ordinary
shares in issue 41 020 76 072 93 297
Unaudited
pro forma effects
financial after the
The capital proposed
development transactions
private and the private
placement placement Change
(cents) (cents) (%)
EPS 13.9 (97.0) (265.8)
Diluted EPS 13.9 (97.0) (265.8)
HEPS 13.9 (97.0) (265.8)
Diluted HEPS 13.9 (97.0) (265.8)
NAV per ordinary share 54.7 1 057.0 123.1
NTAV per ordinary share 54.8 1 056.5 123.6
Number of ordinary shares in issue 13 333 106 630 159.9
Bruma
25 February 2008
Merchant bank and sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Legal Advisors
CLIFFE DEKKER INC.
Transactional sponsor
PRICEWATERHOUSECOOPERS INC.
www.pamodzigold.co.za
Date: 25/02/2008 09:24:01 Produced by the JSE SENS Department.
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