| Thu 16 Oct 2008, 10:38 | | MML - Metmar Limited - Proposed acquisition by Metmar of up to 20% of the issued |
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MML
MML
MML - Metmar Limited - Proposed acquisition by Metmar of up to 20% of the issued
share capital of Minero Zinc (Proprietary) Limited
Metmar Limited
Incorporated in the Republic of South Africa
Registration number: 1998/007269/06
Share code: MML
ISIN code: ZAE000078747
("Metmar" or "the company")
Proposed acquisition by Metmar of up to 20% of the issued share capital of
Minero Zinc (Proprietary) Limited
1 Introduction
Metmar has entered into an agreement with Minero Mining Company (Proprietary)
Limited ("Minero") and Minero Zinc (Proprietary) Limited ("Minero Zinc")
(collectively "the Sellers") to acquire up to 20% of the issued share capital of
Minero Zinc ("the Subscription for Shares") for a cash consideration of up to
R80.0 million.
2 Nature of the Acquisition
Minero Zinc has exercised its exclusive option to acquire 100% of the issued
share capital of Pering Mine (Proprietary) Limited ("Pering Company"), Pering
Company is the beneficial holder of the rights and title to the existing mining
authorisation / license number ML 1/94 granted to Pering Company in terms of the
Minerals Act No. 50 of 1991 ("Old Order Mining Right") and which has been
repealed by the Mineral and Petroleum Resources Development Act No. 28 of 2002
("MPRDA") and the related assets (collectively "Pering Mine"). Minero Zinc has
invested in Pering Mine for purposes of developing exploration projects and
mining activities in respect of zinc and related base metals.
Pering Mine is located in the south western portion of the North West Province,
close to the border with the Northern Cape Province in South Africa. Pering Mine
is an open pit, truck and shovel operation which produces lead and zinc
concentrates ("Concentrates") by means of conventional crushing, milling and
flotation processes from a low grade Mississippi type ore body.
3 Rationale
The Subscription for Shares is in line with Metmar`s stated objective to take
strategic stakes in mining and related projects.
In addition, Zinc is currently a large part of Metmar`s business and if Metmar
subscribes for the full 20% of Minero Zinc, Metmar will have exclusive marketing
rights for the Concentrates for an initial period of 5 years.
4 Subscription for Shares, the purchase considerations and the conditions
precedent
Metmar will subscribe for up to 2 500 000 shares in Minero Zinc as follows:
* 256 410 shares in Minero Zinc ("Tranche 1 Subscription Shares") for cash
amounting to R10.0 million, which was settled on 30 September 2008;
* 854 701 shares in Minero Zinc ("Tranche 2 Subscription Shares") for cash
amounting to R30.0 million, to be settled 5 business days after the later
of the following dates:
* the date on which Minero Zinc lodges its application with the
Department of Minerals and Energy for the conversion of the Old Order
Mining Right in terms of the MPRDA; and
* the date on which Minero Zinc delivers the technical report in the
form of a resource statement, which has been reviewed by a competent
person, and which confirms that there is a measured and indicated
resource at Pering Mine containing at least:
* 50 million tonnes of ore at grades better than 0.75%; and
* 600 000 tonnes of zinc metal in total;
* 1 388 889 shares in Minero Zinc ("Tranche 3 Subscription Shares") for cash
amounting to R40.0 million, to be settled 5 business days after the
delivery of a document presenting the results of a full bankable
feasibility study that:
* supports the continued re-commissioning of Pering Mine;
* indicates that the projected investment return in respect of Pering
Mine exceeds the weighted average cost of capital; and
* in respect of which a competent person has expressed an opinion.
5 Financial effects
The table below sets out the unaudited pro forma financial effects of the
Subscription for Shares on Metmar`s basic earnings and headline earnings per
share. The unaudited pro forma financial effects are presented for illustrative
purposes only and because of their nature may not give a fair reflection of
Metmar`s results of operations after the Subscription for Shares has been
implemented. The unaudited pro forma financial effects are the responsibility of
the directors of Metmar. It has been assumed for purposes of the pro forma
financial effects that the Subscription for Shares took place with effect from 1
March 2007 for income statement purposes.
The pro forma financial effects of the Subscription for Shares on Metmar`s net
asset value and net tangible asset value per share are 0% and, therefore, have
not been presented.
Before 1 After % Change
Published Pro forma Pro forma
Basic Earnings per 36.5 168.2 164.0 (2.5%)
share (cents)
Headline earnings per 37.2 42.8 38.6 (9.8%)
share (cents)
Weighted average number 184 741 184 741 184 741 -
of shares in issue
(000`s)
Notes:
1 The "Before" financial information has been based on the pro forma
financial effects of the proposed disposal by Metmar of its 21% interest in
PGR 17 Investments (Proprietary) Limited, which were published on SENS on 2
June 2008 and in the press on 3 June 2008.
2 Earnings and headline earnings per share have been adjusted to include the
following:
a. reduction in interest received as a result of the payment of the
Tranche 1 Subscription Shares purchase consideration of R10.0 million,
amounting to R0.72 million (net of taxation)
b. interest charged in unwinding the Tranche 2 Subscription Shares and
the Tranche 3 Subscription Shares deferred purchase consideration of
R70.0 million, amounting to R7.0 million.
6 JSE requirements
The Subscription for Shares is classified as a Category 2 transaction in terms
of the JSE Listings Requirements and, accordingly, no further documentation or
shareholder approval is required for implementation of the Subscription for
Shares.
Bryanston
16 October 2008
Sponsor
QuestCo Sponsors (Pty) Ltd
Date: 16/10/2008 10:38:02 Produced by the JSE SENS Department.
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