| Thu 10 Apr 2008, 11:19 | | WSL - Wescoal - Acquisition Of Coal Prospecting Ri |
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WSL
WSL
WSL - Wescoal - Acquisition Of Coal Prospecting Rights And Withdrawal
Of Cautionary Announcement
Wescoal Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/006913/06)
(JSE code: WSL & ISIN: ZAE000069639)
("Wescoal" or "the group")
ACQUISITION OF COAL PROSPECTING RIGHTS AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcement dated 6 March
2008.
Wescoal has subject to the conditions precedent set out below, purchased:
- the Prospecting Rights extending over Portions 16 and 12 of the Farm
Vlakvarkfontein 213 IR district of Witbank from Razorbill Properties
269 (Pty) Limited ("Razorbill") ("Vlakvarkfontein acquisition");
- the Prospecting Rights over Portion 10 of the Farm Bankfontein 216 IR
district of Witbank from Vuselela Mining (Pty) Limited ("Vuselela")
("Bankfontein acquisition "); and
- the Prospecting Rights over Portions 8,9 & 10 of the Farm Mooiplaats
165 JS Mpumalanga province from Vuselela ("Mooiplaats acquisition")
(collectively "the coal rights acquisitions").
2. RATIONALE FOR THE COAL RIGHTS ACQUISITIONS
Wescoal is involved in the coal washing and coal trading business, with
coal being sourced from mines and other suppliers. The coal rights
acquisitions will enable Wescoal to source its own coal for its washing
operation thereby substantially reducing input costs and in addition will
provide the trading operations with significant additional tonnage.
The coal rights acquisitions are also in line with Wescoal`s stated
objective of expanding into the fast growing coal mining industry to derive
benefit from the high inland and export pricing structures. By becoming a
primary producer of coal product, Wescoal can enter new markets such as
export, Eskom and the cement industry.
3. DESCRIPTION OF THE COAL RIGHTS ACQUISITIONS
From previous prospecting carried out on the properties, the following
limited information is available:
- Portion 16 of the farm Vlakvarkfontein 213 IR - an indicated resource
of 1,8 million tons and an inferred resource of 238,000 tons of Eskom
grade coal.
- Portion 12 of the farm Vlakvarkfontein 213 IR - an inferred resource
of 1,9 million tons of high grade thermal coal;
- Portion 10 of the farm Bankfontein 216 IR - an inferred resource of
5,1 million tons of high grade thermal coal.
- Portions 8,9 & 10 of the farm Mooiplaats 165 IS - sufficient
information available to indicate the presence of coal but
insufficient for any additional comment.
4. TERMS AND CONDITIONS OF THE COAL RIGHTS ACQUISITIONS
On 7 April 2008 Wescoal concluded agreements for the purchase of the coal
rights acquisitions, subject to the fulfilment of the conditions precedent
in 5 below, with effect from the date the conditions precedent have been
fulfilled ("effective date").
The purchase consideration for each of the respective coal rights
acquisitions are as follows:
- Vlakvarkfontein acquisition - an amount of R 9 211 470 payable by the
issue of 8 608 850 Wescoal ordinary shares at 107 cents per share. The
purchase price is based on 1 842 294 mineable tons at a price of R 5
per ton;
- Bankfontein acquisition - a maximum of R 15 000 000 payable by the
issue of Wescoal ordinary shares at 107 cents per share. The final
price will be determined based on the quantity of mineable coal as
determined by a Competent Persons Report ("CPR") multiplied by R 5 per
mineable ton; and
- Mooiplaas acquisition - a maximum of R 15 000 000 payable by the issue
of Wescoal ordinary shares at 107 cents per share. The final price
will be determined based on the quantity of mineable coal as
determined by a CPR multiplied by R 5 per mineable ton.
5. CONDITIONS PRECEDENT TO THE COAL RIGHTS ACQUISITIONS
The coal rights acquisitions are subject to the fulfilment of the following
conditions precedent:
- Completion of a due diligence investigation to the satisfaction of
Wescoal;
- The compilation of a CPR and pre-feasibility study to the satisfaction
of Wescoal;
- Wescoal obtaining all the necessary regulatory approvals including any
consents required under the relevant mining legislation including
Section 11 transfer in terms of the Minerals and Petroleum and
Resources Act, 2002 and Competition Commission approval; and
- The Securities Regulation Panel granting Waterberg Portion Property
Investments (Pty) Limited a waiver from any obligation to extend an
offer to Wescoal shareholders as a consequence of these transactions.
6. PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects are provided for illustrative
purposes only to provide information about how the coal rights acquisitions
may have impacted on Wescoal`s results and financial position. Due to the
nature of the unaudited pro forma financial information, it may not give a
fair presentation of the group`s results and financial position after the
coal rights acquisitions.
The unaudited pro forma financial effects are based on the reviewed
financial information for the six months ended 30 September 2007 as
announced on SENS on 24 October 2007.
The unaudited pro forma financial effects have been included in terms of
the JSE Listings Requirements. The directors of Wescoal are responsible
for the preparation of the unaudited pro forma financial effects.
Reviewed Unaudited pro % Change
results for forma after
the six months the coal
ended 30 rights
September 2007 acquisitions
30 September
2007
Earnings per share 7.3 5.40 -26%
(cents) (1)
Headline earnings 7.1 5.25 -26%
per share (cents)
(1)
Fully diluted 7.2 5.38 -25%
earnings per share
(cents) (1)
Fully diluted 7.1 5.24 -26%
headline earnings
per share (cents)
(1)
Net asset value 51.11 65.34 28%
per share (cents)
(2)
Net tangible asset 16.46 39.59 141%
value per share
(cents) (2)
Shares in issue 105 931 142 577
(`000)
Weighted average 104 972 141 618
number of shares
(`000)
Fully diluted 105 472 142 118
weighted average
number of shares
(`000)
Notes:
(1) The unaudited pro forma financial effects on the results were prepared
on the basis that the acquisition of the coal rights acquisitions was
completed on 1 April 2007.
(2) The unaudited pro forma financial effects on the financial position
were prepared on the basis that the coal rights acquisitions were
completed on 30 September 2007.
(3) It is assumed that no income and profits after taxation has been
earned on the coal rights acquisitions.
(4) The "after the acquisition" column has been adjusted to include the
issue of 36 646 234 new ordinary shares at 107 cents per share.
Although in the short term the coal rights acquisitions will decrease the
earnings per share of Wescoal due to the dilutionary impact of the
additional shares issued, it is expected that in the medium term
substantial profits will be generated from these acquisitions.
7. RELATED PARTY TRANSACTION
Messrs Robinson Ramaite and Mpumelelo Sikhosana, directors of Wescoal, have
an equity interest in Razorbill and Vuselela through their BEE company
Waterberg Portion Property Investments (Pty) Limited and is therefore
regarded as a related party to Wescoal in terms of the Listing Requirements
of the JSE Limited ("Listing Requirements"). Accordingly the coal rights
acquisitions are a related party transaction in terms of the Listing
Requirements.
The requirements to be met for a related party transaction in terms of the
Listing Requirements will only be known once the final acquisition price
has been determined. It could however include a fairness opinion from the
Designated Advisor.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Caution is no longer required to be exercised by shareholders when dealing
in their securities.
9. FURTHER ANNOUNCEMENT
Shareholders will be notified of the progress of the acquisitions including
the related party transaction implications.
Johannesburg
10 April 2008
Designated adviser Exchange Sponsors
Attorneys Kim Warren, Rambau & Associates
Date: 10/04/2008 11:19:04 Produced by the JSE SENS Department.
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