| Wed 17 Dec 2008, 7:56 | | ARI - African Rainbow Minerals - Proposed Acquisition by Arm of Teal Minorities |
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ARI
ARIM
ARI - African Rainbow Minerals - Proposed Acquisition by Arm of Teal Minorities
and Formation of a 50:50 Joint Venture With Vale
African Rainbow Minerals Limited
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
JSE Share code: ARI
ISIN: ZAE000054045
("ARM")
Proposed acquisition by ARM of TEAL minorities and formation of a 50:50 joint
venture with Vale
Johannesburg, 17 December 2008
African Rainbow Minerals Limited ("ARM") announces the proposed transaction to
acquire the shares held by minority shareholders in TEAL Exploration & Mining
Incorporated ("TEAL") and to simultaneously introduce Companhia Vale do Rio Doce
("Vale") as a 50% strategic joint venture ("JV") partner. TEAL will then be
delisted from the Toronto Stock Exchange ("TSX") and JSE Limited ("JSE"). This
will have the net effect of reducing ARM`s shareholding in TEAL to 50%. The cash
offer price to TEAL shareholders and the price ARM will receive for the sale of
its 15% stake in TEAL is C$3.00 per share.
TEAL has been listed on the TSX since November 2005 and on the JSE since April
2006 and is currently 65% owned by ARM.
Transaction rationale
ARM`s rationale for listing TEAL was to enable TEAL to raise capital to advance
its exploration activities. These activities have been well progressed to date,
however, due to TEAL`s share price performance, capital raisings have not been
possible. This inability to raise equity capital has been further impacted by
the recent market crisis which has made it difficult to raise capital for mining
exploration type projects. ARM has been required to provide ongoing financial
support to TEAL, disproportionate to its level of shareholding. ARM has embarked
on a strategic review of its growth plans into Africa as well as its TEAL
investment and remains focused on building large scale, quality copper
operations in the DRC and Zambia. TEAL remains key to ARM`s long term
diversification plans, being ARM`s chosen vehicle for expanding its copper
interests in Africa.
ARM has publicly stated that it intends to position itself as a partner of
choice for mining in Africa, as demonstrated by its partnerships with world
class mining companies. A JV partnership with Vale in respect of TEAL would
ensure that risk exposure, capital allocation, funding and copper mining
expertise would be optimised for the development of a successful copper business
in Africa.
About Vale
Vale, headquartered in Brazil, is the second-largest diversified metals and
mining company in the world.
Vale is the world`s largest producer of iron ore and pellets, key raw materials
for the steel industry, and one of the largest producers of nickel, which is
used to produce stainless steel, batteries, special alloys, chemicals and other
products. Vale also produces copper, manganese, ferroalloys, bauxite, alumina,
aluminum, coal, cobalt, PGMs, among other raw materials important to the global
industrial sector.
Investment in the copper business is an important part of Vale`s growth
strategy. Vale already operates a copper mine in Brazil, Sossego, and has copper
production associated with its nickel operations in Canada. It is currently
developing copper projects in Salobo, in Brazil, and Tres Valles, in Chile, and
is studying several initiatives that could enable Vale to reach an annual
production capacity of one million metric tons over the next five to seven
years.
Transaction details
Pursuant to the terms of the proposed transaction, TEAL shareholders will
receive C$3.00 per share ("the transaction consideration"), which represents a
123% premium to the 120 day volume weighted average trading price of the TEAL
shares on the TSX for the period ended 12 December 2008 and values 100% of TEAL
at approximately C$162 million. The proposed transaction is structured as a plan
of arrangement under the corporate laws of the Yukon territory of Canada, and in
connection with such plan of arrangement, in addition to the acquisition by ARM
of the minority TEAL shares, Vale will acquire 50% of the shares of a wholly-
owned subsidiary of TEAL which at such time would hold, directly or indirectly,
all of TEAL`s mining and exploration assets and liabilities.
A special committee of independent directors of TEAL (the "Independent
Committee") has reviewed the proposed transaction, in consultation with its
independent legal and financial advisors and has recommended that shareholders
vote in favour of the transaction.
Financial impact on ARM
The following outlines the anticipated impact on ARM post the transaction
completion:
ARM will reduce its effective shareholding in TEAL from 65% to 50%
ARM will receive a cash consideration of approximately C$24 million for the sale
of the 15% stake in TEAL (at C$3.00 per share)
ARM will proportionately consolidate its 50% interest in TEAL
ARM`s capital investment requirement into potential TEAL project development
reduces
Conditions precedent and timing
The implementation of the proposed transaction is subject to, inter alia, the
approval by TEAL shareholders and by various regulatory authorities, including
the South African Reserve Bank.
It is expected that the proposed transaction will be implemented by the end of
the first quarter of 2009.
Patrice Motsepe, Executive Chairman of ARM said: "We are delighted to announce
this proposed joint venture with Vale. We have several joint ventures with
leading global mining companies and see significant benefit for the development
of TEAL`s assets under such a JV arrangement. We are excited about working with
Vale. They bring world class skills and expertise to the proposed JV.
ARM understands and is uniquely positioned to grow in Africa. This proposed JV
will increase our presence in copper on the African continent."
For more information please visit the TEAL website at www.tealmining.com and the
Vale website at www.vale.com
ENDS
For all investor relations queries please contact:
Monique Swartz
Corporate Development and Head of Investor Relations
Office: +27 11 779 1507
Mobile: +27 83 411 2881
E-mail: monique.swartz@arm.co.za
or
Stompie Shiels
Executive Director: Business Development
Office: +27 11 779 1476
Mobile: +27 82 412 1004
E-mail: stompie.shiels@arm.co.za
Financial advisors to ARM: J.P. Morgan
Sponsors to ARM: Deutsche Securities (SA) (Proprietary) Limited
Date: 17/12/2008 07:56:24 Produced by the JSE SENS Department.
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