| Wed 24 Jun 2009, 15:19 | | WSL - Wescoal - Acquisition of Khanyisa Mine and Further Cautionary Announcement |
|
WSL
WSL
WSL - Wescoal - Acquisition of Khanyisa Mine and Further Cautionary Announcement
Wescoal Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/006913/06)
(JSE code: WSL & ISIN: ZAE000069639)
("Wescoal" or "the company")
ACQUISITION OF KHANYISA MINE AND FURTHER CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Shareholders are referred to the cautionary announcements dated 12 May 2009 and
6 April 2009.
Wescoal Mining (Pty) Limited, a wholly owned subsidiary of Wescoal has, subject
to the conditions precedent set out below, purchased from Nucoal Mining (Pty)
Limited ("Nucoal Mining") the business of Nucoal of conducting a mining
operation at Portions 96, 97 and 99 Heuwelfontein 215 IR under the name and
style of Khanyisa Mine ("Khanyisa Mine") and certain specified assets and
liabilities ("the business") ("the proposed acquisition").
2. RATIONALE
As an ongoing strategy, Wescoal continues to seek additional coal resources to
build an asset base and sustainability. Since the depletion of the Schoongezicht
operation, Wescoal has been sourcing its run of mine ("ROM") from Khanyisa Mine
and the washing yields have been proven to be good and constant. The acquisition
of the business has the advantages of:
- Substantially reduced ROM input costs;
- No capital expenditure requirements as the mine is operational;
- Significantly increased sustainability of constant quality ROM;
- Added capability of doubling the current 40,000 tons per month processing
capacity when required; and
- Ability to enter new markets that require the sustainability afforded by
this acquisition.
3. DESCRIPTION OF THE BUSINESS
Khanyisa Mine is an operating opencast mine situated near Kendal in Mpumalanga
with remaining measured in situ coal reserves totalling 4, 5 million tons and
further indicated resources of 0, 5 million tons. The mine has 2 operational
opencast pits currently extracting 100,000 tons per month with the necessary
infrastructure such as offices and access roads but does not process coal on
site. Mining activity is currently sub-contracted and will remain as such for
the foreseeable future.
4. TERMS AND CONDITIONS OF THE PROPOSED ACQUISITION
On 23 June 2009 Wescoal concluded an agreement ("acquisition agreement") for the
purchase of the business, subject to the fulfilment of the conditions precedent
in 6 below, with effect from 1 August 2009.
The purchase consideration for the business is R36.5 million, subject to a
maximum purchase price of R42.5 million payable as follows:
- R25 million within 7 days of the effective date, payable in cash; and
- The balance up to a maximum of R11.5 million and a minimum of R8.8 million,
payable in cash on the first anniversary of the effective date.
If Wescoal decides to mine the coal in situ on portion 99 of the Farm
Heuwelfontein 215 IR ("portion 99"), then Wescoal is obliged to pay Nucoal the
maximum of R8 per tonne of coal actually mined from portion 99 limited to a
maximum of R6 million.
5. FUNDING OF THE PROPOSED ACQUISITION
The purchase price will be funded through the existing cash resources of the
company.
6. CONDITIONS PRECEDENT TO THE PROPOSED ACQUISITION
The proposed acquisition is subject to the fulfilment of inter alia the
following conditions precedent:
- Approval by Wescoal`s board of directors ;
- Wescoal obtaining all the necessary regulatory approvals, including
Competition Commission approval;
- Wescoal completing a due diligence to its satisfaction on the business;
- Wescoal receiving a Competent Persons Report in connection with mineable
reserves;
- Nucoal furnishing Wescoal with written confirmation from the Department of
Mineral and Energy Affairs that both the contract concluded between Nucoal
and BSM Mining (Pty) Limited and the cession and assignment of such
contract to Wescoal comply with the provisions of the Mineral and Petroleum
Resources Development Act 28 of 2002;
- Nucoal concluding certain agreements with certain parties as described in
the acquisition agreement;
- Nucoal ceding and assigning all contracts with certain parties to Wescoal
as described in the acquisition agreement;
- Nucoal obtaining written confirmations regarding payments of contracts from
certain parties as described in the acquisition agreement;
- Nucoal terminating certain agreements with certain parties as described in
the acquisition agreement;
- Nucoal obtaining written confirmation from a certain supplier that it has
no claim whatsoever against the business or Wescoal;
- Nucoal furnishing Wescoal with a special resolution passed by their
shareholders in terms of Section 228 of the Companies Act,1973, authorising
the sale of the business to Wescoal; and
- Notices in terms of Section 34 (1) of the Insolvency Act, 24 of 1926 as
amended being published.
7. PRO FORMA FINANCIAL EFFECTS
Financial effects will be published as soon as possible.
8. FURTHER CAUTIONARY ANNOUNCEMENT
Shareholders are advised to continue exercising caution in dealing in the
company`s securities on the JSE until such time as the financial effects of the
transaction are published.
9. FURTHER ANNOUNCEMENT
Shareholders will be notified once the proposed acquisition has become
unconditional.
Designated Adviser:
Exchange Sponsors
Johannesburg
24 June 2009
Date: 24/06/2009 15:19:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
