| Thu 4 Jun 2009, 15:14 | | PGL - Pallinghurst - Sells part of its Tshipi Manganese Investment to Posco |
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PGL
PGL
PGL - Pallinghurst - Sells part of its Tshipi Manganese Investment to Posco
Pallinghurst Resources Limited
Registration Number: 47656
(Incorporated in Guernsey)
ISIN: GG00B27Y8Z93
BSX share code: PALLRES
JSE share code: PGL
("Pallinghurst" or the "Company")
(formerly Pallinghurst Resources (Guernsey) Limited)
PALLINGHURST SELLS PART OF ITS TSHIPI MANGANESE INVESTMENT TO POSCO
Introduction
Pallinghurst Resources Limited ("Pallinghurst") is pleased to announce the
purchase by a subsidiary of POSCO of South Korea of an effective 11.36% interest
in Tshipi e Ntle Manganese Mining (Pty) Ltd ("Tshipi") from the existing
Pallinghurst co-investors, for a total consideration of US$34.3mm.
Pallinghurst, as one of the existing Pallinghurst co-investors in Tshipi, has
disposed of an effective 2.27% stake for US$6.9mm. The disposal is effective 1
July 2009 and is subject to the award of a mining permit to the Tshipi project.
The total interest of the Pallinghurst co-investors in Tshipi will remain
constant at 49.9%. The 50.1% remaining interest in Tshipi will continue to be
held by the broad based BEE group, Ntsimbintle Mining (Pty) Ltd.
Rationale
Manganese is a key raw material mainly used in the production of steel and POSCO
is one of the world`s leading steel producers. The inclusion of POSCO as a
Tshipi partner will allow the Tshipi project to benefit from POSCO`s technical
capability and experience. Additionally, POSCO have negotiated the right to an
off-take agreement once the mine enters production. POSCO will purchase a
minimum of 11% and a maximum of 20% of the total manganese ore production from
Tshipi each year, at market related prices.
Consideration
Pallinghurst`s share of the disposal consideration is US$6.9mm with the disposal
decreasing Pallinghurst`s effective stake in Tshipi from 9.98% to 7.71%. It is
anticipated that the consideration will be used for further investments or
general corporate purposes.
Financial effects
The fair valuation of Pallinghurst`s remaining 7.71% stake is US$23.1mm based on
the price paid by POSCO in this transaction and is consistent with the fair
valuation used in the most recent audited annual report to 31 December 2008.
The headline earnings, net assets and net tangible assets per share of
Pallinghurst will therefore not change by more than 3% as a result of the
implementation of the transaction.
Condition precedent to the sale
The sale is subject to the award of a mining permit to the Tshipi project by the
South African Department of Minerals and Energy.
Categorisation of the disposal
The disposal has been categorised as a category 2 transaction in terms of
section 9.5(a) of the JSE Listings Requirements.
Pallinghurst Chairman Brian Gilbertson said: "I welcome POSCO as a partner in an
exciting manganese project, and see this as a vote of confidence in the project
from one of the world`s leading steel producers. For South Africa, this is also
an important transaction, since this direct investment into the resources space
shows international investor confidence and is set to create new jobs".
Pallinghurst CEO Arne H. Frandsen said: "I look forward to a long-term
partnership with POSCO in Tshipi as we unlock value in what is set to be one of
the world`s largest unmined manganese deposits, which can be brought to market
at a very attractive cost profile."
For further information please contact:
College Hill +27 11 447 3030
Johannes van Niekerk +27 82 921 9110
Guernsey
4 June 2009
Investment Bank and Sponsor: Investec Bank Limited
Date: 04/06/2009 15:14:02 Produced by the JSE SENS Department.
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