| Mon 29 Jun 2009, 17:00 | | CMO - Chrometco - Acquisition related party transaction and further |
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CMO
CMO
CMO - Chrometco - Acquisition, related party transaction and further
cautionary announcement
Chrometco Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2002/026265/06)
(JSE Code: CMO ISIN: ZAE000070249)
("Chrometco" or "the company")
ACQUISITION, RELATED PARTY TRANSACTION AND FURTHER CAUTIONARY
ANNOUNCEMENT
1. Introduction
River Group is authorised to announce that Chrometco has entered into
an agreement with William Edward Bramley ("Bramley")and Moorgarth
Holdings Limited ("Moorgarth")for the acquisition of all their shares
in and claims against Lime-Chem (Pty) Ltd ("Lime-Chem") comprising a
90% interest in Lime-Chem for the purchase consideration as set out in
3 below and subject to inter alia the conditions precedent as set out
in 7 below ("the transaction").
2. Rationale for the transaction and background to Lime-Chem
2.1. Lime-Chem holds a used old order mining license to a limestone and
dolomite deposit located outside the town of Marble Hall in Limpopo
province. Application has been made for the conversion of the old order
mining license to a new order mining right.
Lime-Chem owns and operates a high grade calcitic limestone and
dolomite mine on the abovementioned property. Lime-Chem currently
supplies raw limestone and dolomite to the mineral benefication,
metallurgical, construction and agricultural industries.
2.2. The said deposit is also strategically positioned for the supply
of value added products, specifically burnt lime and burnt dolomite to
the mining, metallurgical, energy, construction and agricultural
industries located in North West, Gauteng, Limpopo, Mpumalanga and
northern KwaZulu-Natal provinces.
2.3. The Limestone resource is estimated at 33mt measured and 32,6mt
indicated, while the Dolomite portion of the deposit is estimated at
9,8mt measured and 18,6mt indicated. Both the limestone resource and
the dolomite resource lend themselves to conversion into burnt lime and
burnt dolomite through calcining.
2.4. In addition, Lime-Chem commenced with a definitive feasibility
study for the construction of a 500 ton/day kiln in order to convert
its raw limestone and dolomite into burnt lime and burnt dolomite
respectively ("the kiln project").
2.5. Under Chrometco`s direction the feasibility study and resource
model will be completed with the intention of erecting a plant for the
conversion of the raw material into higher value burnt lime and burnt
dolomite
3. Purchase consideration
The purchase consideration for the transaction is the aggregate of:
3.1. A cash consideration of R20 million (the "Cash Consideration");
3.2. The issue of 66 800 000 new Chrometco shares at an issue price of
12.5 cents per share amounting to R8.35 million (the "First Tranche
Shares");
3.3. The issue of 90 000 000 new Chrometco shares at an issue price of
12.5 cent per share amounting to R11.25 million (the "Second Tranche
Shares");and
3.4. The issue of 216 000 000 new Chrometco shares at an issue price of
12.5 cents per share amounting to R27 million (the "Kiln Consideration
Shares").
4. Discharge of the purchase consideration
The discharge of the purchase consideration will be contingent upon
whether Lime-Chem`s old order mining right has been converted to a new
order mining right at the time when all other conditions precedent have
been fulfilled, details of which will be included in the circular to
shareholders.
It is envisaged that the purchase consideration will be discharged as
follows:
4.1. The Cash Consideration and First Tranche Shares will be discharged
on the Effective Date, being the date on which the last of the
conditions precedent has been fulfilled;
4.2. The Second Tranche Shares will be issued on the later of:
4.2.1. The Effective Date; or
4.2.2. The date on which the old order mining license is converted
to a new order mining right;
4.3. The Kiln Consideration Shares will be issued as follows:
4.3.1. 25% on the Kiln Commission Date, being the fifth business day
after production at a rate of at least 60% of the rated capacity of the
kiln has been achieved for a consecutive period of not less than 30
days; and
4.3.2. As to the balance, in six-monthly tranches commencing on the
Kiln Commission Date. Each tranche will in aggregate be equal to 20% of
Lime-Chem`s total income from burnt lime and burnt dolomite divided by
the issue price of 12.5 cents per share.
5. Related Party
Bramley is a related party as defined by the Listing Requirements of
the Listings Division of the JSE Limited. As such the transaction will
be treated as a related party transaction and the related party will be
precluded from voting on the transaction at any meeting of shareholders
convened for that purpose.
6. Financial Effect
The financial effects will only be finalised upon completion of a
thorough due diligence process and will therefore only be published in
the circular to be sent to shareholders.
7. Conditions Precedent
The transaction is subject to the fulfillment of, inter alia, the
following conditions precedent:
7.1. The satisfactory completion of a due diligence by the purchaser on
Lime-Chem;
7.2. Shareholder and board approval of Lime-Chem;
7.3. The Exchange Control Department of the South African Reserve Bank
approving of or consenting to,, to the extent necessary, the proposed
transaction;
7.4. The board of directors of Chrometco recommending the transaction
to the Chrometco shareholders based on a fairness opinion by an
independent expert acceptable to the JSE and SRP;
7.5. Approval, to the extent required, by the Competition Authorities
in terms of the Competition Act;
7.6. Approval of the circular to shareholders by the JSE and the
SRP;
7.7. The waiver by the SRP and shareholders of the mandatory offer to
minorities by concert parties, if any;
7.8. Valid transfer of title of the Lime-Chem shares by Bramley and
Moorgarth to Chrometco in terms of the Minerals and Petrolium
Development Act; and
7.9. Fulfilment of all other suspensive conditions incidental to a
transaction of this nature including but not limited to the requisite
shareholder approval in general meeting by the shareholders of
Chrometco.
8. Categorisation and circular to shareholders
Shareholders are advised that due to the size of the transaction in
relation to Chrometco and due to the related party nature of the
transaction, this transaction is categorized as a category 1
transaction as per section 9.5 of the JSE Listings Requirements
A circular setting out the details of the transaction for this purpose
will be posted to shareholders in due course
9. Further Cautionery
Further to the cautionary announcement dated 1 June 2009, shareholders
are advised that the full impact of the financial effects of the
transaction will be determined during the due diligence period and may
have a material effect on the Company`s securities.
In addition, shareholders are advised that Chrometco is continuing with
negotiations for the acquisition of two additional exploration
properties, the outcome of which may have a material influence on
Chrometco`s share price.
Accordingly shareholders are advised to continue to exercise caution
when dealing in Company`s securities until a further announcement is
made.
For further information, please contact:
Chrometco Limited
+27 11 99644800
or 073 750 9898
Petrus Cilliers (Interim Managing Director)
or
Designated Adviser
River Group
+12 346 8540
Andrew Lianos
29 June 2009
Johannesburg
Date: 29/06/2009 17:00:03 Produced by the JSE SENS Department.
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