| Fri 24 Oct 2008, 11:38 | | SAM - SA Mineral Resources Corporation Limited - Update on acquisition of oil |
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SAM
SAM
SAM - SA Mineral Resources Corporation Limited - Update on acquisition of oil
concessions by SAMROC further cautionary announcement
SA MINERAL RESOURCES CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
Share code: SAM
ISIN: ZAE000110029
("Samroc"")
UPDATE ON ACQUISITION OF OIL CONCESSIONS BY SAMROC
FURTHER CAUTIONARY ANNOUNCEMENT
1 Introduction
Samroc shareholders are referred to the announcements dated 28 February and 26
March 2008. Samroc has now finalised, and in certain aspects amended, the
agreements in terms whereof the vendors of SacOil will reverse their 100%
interest in SacOil into Samroc ("the agreement"), subject to the outstanding
suspensive conditions set out in 2.3 below, for a total consideration of R533.1
million ("the transaction"). The company has posted a circular, dated 24 October
2008, detailing the transaction, the company`s change of name to SacOil Holdings
Limited, the transfer of its listing to the "Mining - Integrated Oil and Gas"
sector on the JSE Limited lists, the introduction of a share option scheme and
convening the general meeting of shareholders to approve the aforesaid to
shareholders on Friday, 21 November 2008.
Following the implementation of the transaction the company will be the South
African registered holding company of interests in the oil concessions located
in Block I and III of the Albertine Graben area of the Democratic Republic of
the Congo ("DRC") ("the Oil Concessions") and will be able effectively to fund
an exploration and development programme in the Albertine Graben area.
2 Terms of the agreement
2.1 Vendors
The SacOil vendors are: (i) Divine Inspiration Group (Proprietary) Limited
("DIG"), a company controlled by Ms A Brown; (ii) Encha Capital (Proprietary)
Limited, a company jointly controlled by the Moseneke family and Investec Bank
Limited, the controlling shareholder of Samroc and thus a related party; (iii)
Columbia Falls Properties 114 (Proprietary) Limited, a company controlled by Mr
Phatudi Maponya, and (iv) The Kulsum Moosa Family Trust.
2.2 Purchase consideration
The total transaction cost to Samroc is R533.1 million. The aggregate purchase
consideration payable to the SacOil vendors is R516.9 million, to be settled as
follows:
2.2.1 partly by the issue of 474 445 714 Samroc shares at an issue price of
105 cents per share, being equivalent to R498 168 000 and representing
a discount of 10% to the volume weighted average trading price of
Samroc shares for the 30 days until 11 March 2008, the date of the
agreement; and
2.2.2 partly by set off of a loan advanced and payments made to DIG in the
amount of R18 730 911.
In terms of further agreements concluded separately with DIG and SacOil, Samroc
advanced a total amount of approximately USD$2 million payable direct to the DRC
Government in lieu of signature bonus obligations for the oil concessions, which
are included, together with the expenses of the transaction in the total
transaction cost to Samroc.
2.3 Suspensive conditions
The agreement remains subject to the fulfilment, by not later than 31 December
2008, of the following outstanding suspensive conditions;-
* Approval of the agreement by a resolution of the shareholders of Samroc in
the general meeting convened in the circular dated 24 October 2008;
* The assignment to SacOil by DIG of all rights in respect of Block I of the
Oil Concessions; and
* The issue by the President of the DRC of an Ordinance or equivalent
authorisation of the relevant Production Sharing Agreements in respect of
the Oil Concessions.
3 Financial effects of the acquisition
The table below sets out the unaudited pro forma financial effects of the
transaction on Samroc. The unaudited pro forma financial effects are presented
for illustrative purposes only and because of their nature may not give a fair
reflection of Samroc`s results, financial position and changes in equity after
the transaction. It has been assumed for purposes of the pro forma financial
effects that the transaction took place with effect from 1 July 2007 for income
statement purposes and 30 June 2008 for balance sheet purposes. The directors of
Samroc are responsible for the preparation of the unaudited pro forma financial
effects:
Before 1 After the % change
transaction2
Loss per share (5.68) (1.87) (67.0)
(cents)
Headline loss (2.90) (1.15) (60.4)
per share
(cents)
Net asset value 14.18 68.88 385.7
per share
(cents)
Tangible net 14.18 (0.71) (105.0)
asset value per
share (cents)
Weighted 167 592 528 642 038 242 283.1
average number
of shares in
issue
Number of 313 291 612 787 737 326 151.4
shares in issue
Notes:
1 The "Before" financial information is based on Samroc`s published reviewed
preliminary results for the twelve months ended 30 June 2008.
2 The loss per share and headline loss per share have been adjusted for the
following:
* The inclusion of the loss from operations of SacOil;
* An increase in the net interest paid as a result of the interest cost
of 10.5% on the cash settled transaction costs of R14.1 million;
* The issue of 474 445 714 shares to SacOil vendors.
The adjustments to the net asset value and tangible net asset value per share
are as a result of:
* The recording of an exploration and evaluation asset at the effective
acquisition price of R516.9 million;
* The elimination of the inter-group loan of R18.7 million advanced to
DIG and the capitalisation of the loan to SacOil of R16.2 million to
the value of the exploration and evaluation asset;
* The capitalisation of cash transaction costs of R14.1 million to the
cost of the exploration and evaluation asset;
* The issue of 474 445 714 new ordinary shares to SacOil vendors.
In terms of IFRS 6 (AC143): Exploration for and Evaluation of Mineral Resources
all costs associated with the acquisition of the oil concession rights have been
capitalised to the cost of the exploration and evaluation asset.
In terms of IFRS 3: Business Combinations, the accounting for transactions among
entities under common control is specifically excluded from its scope. Samroc
has therefore elected not to apply the provisions of IFRS 3 in respect of the
transaction.
Further cautionary announcement
Further to the announcement released on SENS on 2 September 2008, shareholders
are advised that the negotiations referred to therein are ongoing. Accordingly,
Samroc shareholders are advised to continue to exercise caution when dealing in
their Samroc shares until a further announcement is made.
Midrand
24 October 2008
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Transactional sponsor
Tlotlisa Corporate Finance (Proprietary) Limited
Corporate adviser to Samroc
Lonsa Proprietary Limited
Joint legal adviser to Samroc
Deneys Reitz
Joint legal adviser to Samroc
Brink Cohen Le Roux Incorporated
Date: 24/10/2008 11:38:10 Produced by the JSE SENS Department.
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