| Thu 4 Jun 2009, 8:00 | | MVL - Mvelaphanda Resources Limited - Withdrawal of Cautionary Announcement |
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MVL
MVL
MVL - Mvelaphanda Resources Limited - Withdrawal of Cautionary Announcement,
Strategy and Resignation of Director
MVELAPHANDA RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1980/001395/06)
Share code: MVL
ISIN: ZAE000050266
("Mvela Resources" or "the Company")
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT, STRATEGY AND RESIGNATION OF DIRECTOR
1. Withdrawal of Cautionary Announcement
Shareholders of Mvela Resources are referred to the Cautionary Announcement
by Mvela Resources dated 11 May 2009, in which shareholders were advised
that the Company had entered into negotiations with a third party.
Subsequent to the Cautionary Announcement, the Board of Mvela Resources,
taking into consideration the prevailing economic environment, has
concluded that the possible recapitalization of Northam through a rights
issue to all shareholders, followed by the unbundling of Mvela Resources`
Northam shares to its shareholders and collapsing of the pyramid corporate
holding structure to release the trading discount, is the lowest risk and
most efficient strategy to unlock shareholder value.
Shareholders of Mvela Resources are advised that the negotiations with the
third party have been terminated and that shareholders are no longer
required to exercise caution when dealing in the Company`s securities.
2. Strategy
At its interim results briefing and in a SENS announcement on 19 February
2009, Mvela Resources set out various strategic options it could pursue to
remove the holding company discount to net asset value ("NAV") that it
trades at in the market. These included:
- refinancing the R2.1 billion Gold Fields Limited ("Gold Fields")
mezzanine debt, due on 17 March 2009;
- crystallizing the value in its Gold Fields investment through an
orderly disposal programme;
- utilizing the proceeds of the Gold Fields disposal to redeem all of
its debt and other liabilities;
- Applying any excess proceeds to one of the following:
- growth opportunities that may exist in the current market; or
- in the event that Northam has a rights issue following the
completion of the Booysendal bankable feasibility study, Mvela
Resources would follow its rights; or
- acquiring Northam shares in the market.
On 16 March 2009, Mvela Resources announced that it successfully refinanced
the mezzanine debt and on 30 March 2009 that it had disposed of 11 million
Gold Fields shares enabling the Company to expunge half of its related
debt, significantly in advance of its repayment obligations under the
facility.
In line with its commitment to unlock shareholder value, Mvela Resources
intends to pursue a strategy which, inter alia, will embrace:
- the orderly disposal of the remaining shares in Gold Fields and other
non-core assets;
- Application of the proceeds to:
- the redemption of the company`s debt and other liabilities;
- the subscription of the company`s rights in the event that
Northam Platinum Limited ("Northam") undertakes a rights offer
after the completion of the final Booysendal Bankable Feasibility
Study, in September 2009
- Unbundling the Company`s Northam shareholding to its shareholders; and
- the distribution to the Company`s shareholders of any net surplus,
(collectively "the Strategy").
The board is confident that crystallizing the value in the non-core assets
and securing financing for the optimal development of Booysendal will,
through a direct exposure in Northam, ensure significant value accretion
for its shareholders as we emerge from the current global economic slump.
Flattening the corporate structure is also likely to result in an immediate
narrowing of the discount to NAV that Mvela Resources has attracted in the
market. The strategy, as outlined, can be concluded within a controlled
time frame and is less exposed to exogenous risks and uncertainties than
the alternatives.
A sub-committee of the Board of Directors of Mvela Resources (the
"Committee") consisting of the Chairman of Mvela Resources, Mr. Lazarus Zim
and Messrs Mark Willcox and Michael Beckett (has been appointed to oversee
the implementation and execution of the Strategy. Simultaneously, Mr.
Beckett has been appointed as the Lead Independent Non-Executive Director
on the Board.
3. Resignation of the Chief Executive Officer
Implementation of the Strategy will render the role of Chief Executive
Officer at Mvela Resources redundant. Accordingly Mvela Resources advises,
in terms of rule 3.59 of the JSE Limited Listings Requirements that Mr.
Pine Pienaar has resigned with immediate effect as Chief Executive Officer
and as a director of the Company.
Mr. Pienaar will consult to Mvela Resources over the next six months (the
"Consultancy Term") to assist the Company with the implementation and
execution of the Strategy. The Consultancy Term will be on an exclusive
basis for the first two months.
Mr. Pienaar has made an outstanding contribution to the growth of the
Company, during his tenure. The Board extends its sincere thanks to Mr.
Pienaar for his contribution and wishes him well in his new career.
Johannesburg
4 June 2009
Sponsor
J.P. Morgan Equities Limited
Date: 04/06/2009 08:00:01 Produced by the JSE SENS Department.
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