| Mon 30 Jun 2008, 17:54 | | ABO - Absolute Holdings Limited - The proposed acquisition of 25.1% of Qinisele |
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ABO
ABO
ABO - Absolute Holdings Limited - The proposed acquisition of 25.1% of Qinisele
Resources (Proprietary) Limited ("Qinisele Resources"),
ABSOLUTE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1986/004649/06)
Share code: ABO ISIN No: ZAE000062998
("Absolute" or "the company")
ANNOUNCEMENT REGARDING
* THE PROPOSED ACQUISITION OF 25.1% OF QINISELE RESOURCES (PROPRIETARY)
LIMITED ("Qinisele Resources"),
* THE ACQUISITION OF 49% OF MVUZO MINING (PROPRIETARY) LIMITED ("Mvuzo
Mining"),
* THE ACQUISITION OF THE BUSINESS AND ASSETS OF BOTH ALLIED QUARTZITE
(PROPRIETARY) LIMITED ("Allied Quartzite") AND THE RICHTERSVELD QUARTZITE
COMPANY LIMITED ("Richtersveld Quartzite")
* AND A WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. Acquisition of 25.1% of Qinisele Resources
1.1 Introduction
Shareholders are referred to the cautionary announcement dated 29 May 2008 and
interim results announcement released on 2 April 2008, detailing the appointment
of Qinisele Resources as mining consultants to assist the company in procuring,
acquiring and developing junior mining exploration projects. Shareholders are
advised that the shareholders of Qinisele Resources, namely the RAB Investment
Trust, the Susanna Catarina Du Toit Trust, the Tucker Boys Trust, Andreas Markus
Lobert and Robert Grant Philpot (collectively hereinafter referred to as "the
Qinisele Resources shareholders"), have accepted an offer by Absolute to
purchase 25.1% of the Qinisele Resources shareholders` shareholding in Qinisele
Resources ("the Qinisele Resources acquisition"), with effect from 1 July 2008.
The purchase price of R20 000 000.04 will be settled through the issue of 333
333 334 new ordinary shares in Absolute at an issue price of 6 cents per share
("the purchase consideration")
1.2 Nature of business of Qinisele Resources
Qinisele Resources is a specialist resources corporate finance boutique focussed
on providing advisory services to companies operating in the mining sector, with
a specific emphasis on merger and acquisition transactions, capital raising and
investment advice.
1.3 Terms of the Qinisele Resources acquisition
In terms of the accepted offer to purchase, Absolute will be required to settle
the purchase price on the 3rd (third) business day following the date of
fulfilment of the conditions precedent.
1.4 Conditions precedent
The Qinisele Resources acquisition is subject to, inter alia, the following
conditions precedent:
1.4.1 the signing of a formal sale of shares agreement pertaining to the
accepted offer to purchase, together with the conclusion of a Qinisele Resources
shareholders agreement. Both agreements are in the process of being concluded,
which agreements will include the terms and conditions as indicated above as
well as the normal terms and conditions applicable usual for a transaction of
the nature contemplated;
1.4.2 the approval of the acquisition by all regulatory bodies necessary for
implementing the Qinisele Resources acquisition; and
1.4.3 the approval of the shareholders of Absolute in general meeting.
1.5 Pro form financial effects of the acquisition
The pro forma financial effects of the Qinisele Resources acquisition on the
unaudited interim results of Absolute for the six months ended 31 December 2007
are set out below. The pro forma information assumes the Qinisele Resources
acquisition was effective for income statement purposes on 1 July 2007 and for
balance sheet purposes on 31 December 2007. The pro forma information is the
responsibility of the directors of Absolute and has been prepared for
illustrative purposes only and, because of its nature, may not fairly present
the company`s financial position, changes in equity, results of operations or
cash flows.
Before After %
Change
Weighted average shares in 739 1 073 45.1%
issue (`000) 708 041
Loss per share ordinary (0.44) (0.07) 83.6%
share (cents)
Headline loss per ordinary (0.43) (0.07) 84.2%
share (cents)
Shares in issue at period 739 1 073 45.1%
end (`000) 708 041
Net asset value per share 0.21 2.01 847.7%
(cents)
Net tangible asset value (1.93) 0.53 127.6%
per share (cents)
Assumptions:
1. The "Before" column is extracted from the published unaudited interim
results of Absolute for the six months ended 31 December 2007.
2. The "After" column reflects the adjustment for the Qinisele Resources
acquisition based on unaudited management accounts for the period ended 30 April
2008 and balance sheet at 30 April 2008, assuming associate accounting of 25.1%
of Qinisele Resources` profit after taxation for six months, as if the Qinisele
Resources acquisition had been in place from 01 July 2007 for income statement
purposes and as at 31 December 2007 for balance sheet purposes, adjusted for the
balance sheet of Qinisele Resources at 30 April 2008.
3. The pro forma financial effects assume that 333 333 334 new shares in
Absolute were issued at 6 cents per share on 01 July 2007.
1.6 Rationale
The Qinisele Resources acquisition will secure a strategic relationship between
Absolute and Qinisele Resources. The Qinisele Resources acquisition will give
the Company access to a highly experienced mining and corporate finance team
with the necessary skills to help exploit the Company`s junior mining
exploration projects and as such, assist the Company in achieving its strategic
objectives which are the procuring, acquiring and developing of junior mining
and exploration projects.
2. Offer to purchase 49% of Mvuzo Mining
2.1 Introduction
Pursuant to the cautionary announcement published on 29 May 2008, shareholders
are advised that the shareholders of Mvuzo Mining, namely Nolwazi Qata and David
Qata ("the Mvuzo Mining shareholders"), have, in terms of an offer to purchase
dated 23 May 2008 and approved by the Absolute Board of Directors on 30 June
2008 ("the accepted offer to purchase"), accepted the offer by Absolute to
purchase from them 49% of the issued share capital of and 49% of all
shareholders claims against Mvuzo Mining for a purchase price which is to be
determined by way of an independent valuation of the new order prospecting
and/or mining rights over two farms in the Lephalala region ("the exploration
assets") ("the Mvuzo Mining acquisition").
2.2 Nature of business of Mvuzo Mining
Mvuzo Mining has several exploration mining licences which Absolute is
interested in developing. Absolute will undertake an evaluation of these
properties with a view to developing, mining and processing of coal reserves.
2.3 Terms of the Mvuzo Mining acquisition
In terms of the accepted offer to purchase, Absolute shall:
(i) be required to settle the purchase price on the 3rd (third) business day
following the date of fulfilment of the conditions precedent ("the closing
date"). The purchase price will be settled by the payment of a cash
consideration of R8 million and the balance of the purchase price, calculated as
being the purchase price less the cash consideration, is to be settled by the
issue of new ordinary shares in Absolute at an issue price of 6 cents per share.
The effective date of the acquisition is the closing date;
(ii) pursuant to the successful conclusion of initial reconnaissance drilling in
order to determine the occurrence of coal and a subsequent pre-feasibility
study, evaluate the development and mining of the exploration assets through the
sole funding and completion of a bankable feasibility study ("the BFS"); and
(iii) have an option to purchase the remaining 51% of the issued share
capital of and claims against Mvuzo Mining on conclusion of the BFS, the price
of which will not exceed 51% of the net present value (calculated at a 15% real
discount) as ascribed by the BFS, and which will be settled by a combination of
cash and new ordinary shares in Absolute, which ratio is to be determined by
Absolute and Mvuzo Mining shareholders at the date on which the option is
exercised.
2.4 Conditions precedent
The conditions precedent to the Mvuzo Mining acquisition include:
2.4.1 the approval of the acquisition by
2.4.1.1 the Competition Commission;
2.4.1.2 the Board of Directors of Absolute;
2.4.1.3 the shareholders of Absolute in general meeting; and
2.4.1.4 the JSE Limited;
2.4.2 the completion of a due diligence investigation into the business and
affairs of Mvuzo Mining and Absolute being reasonably satisfied
therewith; and
2.4.3 the completion of an independent valuation of the exploration assets
being performed, which valuation will be used to determine the final
purchase price.
An option agreement and a formal sale of shares agreement pertaining to the
accepted offer to purchase are in the process of being concluded, which
agreements will include the above terms and conditions as well as the normal
terms and conditions applicable to a transaction of the nature contemplated,
including warranties and indemnities in relation to the exploration assets.
2.5 Pro form financial effects of the acquisition
The pro forma financial effects of the Mvuzo Mining acquisition on the unaudited
interim results of Absolute for the six months ended 31 December 2007 are set
out below. The pro forma information assumes the Mvuzo Mining acquisition was
effective for income statement purposes on 01 July 2007 and for balance sheet
purposes on 31 December 2007. The pro forma information is the responsibility
of the directors of Absolute and has been prepared for illustrative purposes
only and, because of its nature, may not fairly present the company`s financial
position, changes in equity, results of operations or cash flows.
Before After %
Change
Weighted average shares in 739 739 --
issue (`000) 708 708
Loss per share ordinary 0.44 0.44 --
share (cents)
Headline loss per ordinary 0.43 0.43 --
share (cents)
Shares in issue at period 739 739 --
end (`000) 708 708
Net asset value per share 0.21 0.21 --
(cents)
Net tangible asset value (1.93) (3.01) (56.0%)
per share (cents)
Assumptions:
1. The "Before" column is extracted from the published unaudited interim
results of Absolute for the six months ended 31 December 2007.
2. The "After" column reflects the adjustment for the Mvuzo Mining acquisition
assuming that the total cost of acquisition is limited to R8 million cash
and no additional payment is required pursuant to the valuation. The
purchase price has been allocated to mining rights. No income statement
effect has been assumed as Mvuzo Mining is an exploration company.
2.6 Rationale
The Mvuzo Mining acquisition is in line with the Company`s stated strategy of
procuring, acquiring and developing junior mining exploration projects, in that
Mvuzo Mining presents brown fields where a coal exploration project could be
developed.
3. Acquisition of the businesses conducted by Allied Quartzite and
Richtersveld Quartzite
3.1 Introduction
Shareholders are advised that Lubtalk Investments (Proprietary) Limited
("Lubtalk"), a subsidiary of Absolute`s mining holding company, Lenopodi
(Proprietary) Limited ("Lenopodi"), has entered into a sale of business
agreement with Allied Quartzite and Richtersveld Quartzite ("the Quartzite
sellers") to acquire the businesses of these two companies at a combined
acquisition price of R1.8 million ("the Quartzite acquisition").
3.2 Nature of business of the Quartzite sellers
The Quartzite sellers carry on the business of prospecting and mining
quartzite in the Richtersveld region.
3.3 Terms of the acquisition
The sale of business agreement was entered into on 27 June 2008 and provides for
the acquisition price to be settled through the vendor issue of 45 000 000 new
ordinary shares in Absolute at an issue price of 4 (four) cents per share, which
shares will be issued in equal portions to the Quartzite sellers, after which
Calulo Resources (Proprietary) Limited ("Calulo Resources") has agreed to
purchase the vendor shares in order to increase its BEE shareholding in
Absolute. The businesses, which include assets and old order mining leases,
have not been acquired as a going concern, as they are not VAT vendors. The
effective date of the acquisition is the date on which the conditions precedent
have been fulfilled.
3.4 Conditions precedent
The conditions precedent to the Quartzite acquisition include:
3.4.1 the approval of the Quartzite acquisition by:
3.4.1.1 the Board of Directors of Absolute;
3.4.1.2 the directors of the Quartzite sellers in a general meeting; and
3.4.2 the provision by the Quartzite sellers of accounts prepared by them at
the effective date.
3.5 Pro forma financial effects of the acquisition
Pro forma financial effects have not been presented as the announcement of the
Quartzite acquisition is a voluntary announcement in terms of Listings
Requirements of the JSE. Shareholders are however advised that the Quartzite
businesses did not trade over the past couple of years due to the old order
mining licences not having been converted to new order mining licences. Lubtalk
has in the interim secured a mining right for the Diamond Quartzite deposit in
the Northern Cape.
3.6 Rationale
The Quartzite acquisition is in line with the Company`s stated strategy of
procuring, acquiring and developing junior mining exploration projects and
increases the Company`s investment in natural stone in the same region as its
diamond quartzite interests.
4 Documentation
Shareholders are advised that the transactions detailed in paragraphs 1 and 2
above will require shareholder approval in general meeting. The requisite
circular is in the process of being prepared and will be distributed to
shareholders in due course.
5. Withdrawal of cautionary
Further to the cautionary announcement which was released on SENS on 29 May
2008, the Board of Directors wishes to inform shareholders that they are no
longer required to exercise caution when dealing in their securities.
Johannesburg
30 June 2008
Corporate advisor to the Mvuzo Mining acquisition
Qinisele Resources (Proprietary) Limited
Legal advisor
Routledges Modise in association with Eversheds
Sponsor
Arcay Moela Sponsors (Proprietary) Limited
Date: 30/06/2008 17:54:01 Produced by the JSE SENS Department.
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