| Mon 13 Jul 2009, 17:51 | | SIM - Simmer & Jack Mines Limited - Simmers formally withdraws from the bidding |
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SIM
SIIF
SIM - Simmer & Jack Mines Limited - Simmers formally withdraws from the bidding
process for Pamodzi Gold`s orkney assets
Simmer & Jack Mines Limited
(Incorporated in the Republic of South Africa)
(Registration number 1924/007778/06)
Share code: SIM
ISIN Code: ZAE000006722
("Simmers" or the "Company")
SIMMERS FORMALLY WITHDRAWS FROM THE BIDDING PROCESS FOR PAMODZI GOLD`S ORKNEY
ASSETS
Simmers announced today that it had formally withdrawn from the bidding process
for Pamodzi Gold`s Orkney assets ("PGO").
There have been several media statements by the liquidators with regard to
Simmers` offer for the distressed assets and the Company wishes to clarify the
process leading up to its withdrawal.
In response to the initial disposal process document, dated 28 May 2009, and
issued by Standard Bank - the liquidators` advisers - Simmers submitted a
proposal on 5 June 2009, to acquire 100% of the shares in PGO.
Simmers` offer was made on the understanding that all parties concerned would
strive for an early re-start of the operations. This was based on Simmers`
experience at Buffelsfontein Gold Mine, where a protracted bidding process in
2005 resulted in the mine lying dormant for eight months. During that time
stopes closed, infrastructure collapsed, talented people sought employment
elsewhere and the property was extensively vandalized. The community also
suffered severe deprivations and many people lost their homes and life savings.
In order to prevent a similar tragedy from unfolding at PGO, Simmers urged the
liquidators and their advisers, to embark on a formal process whereby bids would
be adjudicated within a week after the closing date. Accordingly, the initial
disposal process document recorded that "the provisional liquidators anticipate
being in a position to advise the successful Potential Purchaser of its
selection by no later than 12 June 2009." The Company consequently made its
proposal subject to it being open for acceptance until 17h00 on Monday, 15 June
2009, in line with the anticipated selection date. At no stage prior to the
expiry of its bid was the Company asked to extend the validity of its proposal.
Subsequent to the Company informing the market that its bid for PGO had lapsed
and that it had not been selected as preferred bidder, various references to the
Company`s offer have been made in the press, including a reference to the
Simmers` offer price.
The details of the Simmers` offer are subject to a confidentiality provision,
and Simmers is disappointed by the failure on the part of the liquidators to
adhere to this confidentiality provision. This breach of confidentiality has
compromised Simmers in any future participation in the disposal process. Also,
Simmers believes that the liquidator`s price expectation as reported in the
press, is unrealistic given the capital expenditure required to return the mine
to profitability.
Simmers` offer under the initial disposal process document was predicated on the
need for an early start-up to prevent further costly deterioration. This was a
key factor in determining the viability of the operation and since this is
clearly unachievable, Simmers is of the opinion that there is no further merit
in pursuing the offer, especially given the liquidators` improbable price tag.
"The asset`s integrity is strongly linked to the Rand gold price, which has
deteriorated markedly since May 2009, and at these levels, it is much less
attractive that when we first submitted our bid. This factor, combined with the
fact that it will cost more to re-open the mine with each passing day, precludes
us from increasing our initial offer. Simmers has therefore taken the decision
to focus its growth efforts instead on the development of the low cost, low-risk
Weltevreden project which is adjacent to the Tau Lekoa mine," said Deon van der
Mescht, managing director of Simmers` gold operations.
The Weltevreden project has some 2.3 million ounces of Measured and Indicated
resources at 4.7g/t. A shallow up-dip extension of the Tau Lekoa mine which
Simmers acquired in February 2009, Weltevreden presents substantial up-side
potential for Simmers and is expected to create approximately 1000 jobs in the
area for phase one of the project.
About Simmers
Simmers is a gold and uranium miner focused on the development and expansion of
surface and underground operations in South Africa. These include a 37% stake in
TSX and JSE-listed First Uranium Corporation Limited which is aiming to become a
significant low-cost producer through the re-opening and underground development
of the Ezulwini Mine and the expansion of the Mine Waste Solutions tailings
recovery operation.
Simmers has two wholly-owned gold operations: Buffelsfontein Gold Mines Limited
in the North West Province and Transvaal Gold Mining Estates Limited in the
Pilgrim`s Rest / Sabie gold field. Simmers entered into an agreement with
AngloGold Ashanti on 17 February 2009 to purchase 100% of the Tau Lekoa mine,
situated 12km`s from Buffelsfontein Gold Mine. The deal is subject to certain
conditions precedent and is expected to close on 01 January 2010.
For further information please contact:
Nick Goodwin
(Investor Relations Executive)
+27 83 629 8605 or nick@simmers.co.za
Gail Strauss
(Communications)
+27 82 2936 8481 or gail@simmers.co.za
Date: 13/07/2009 17:51:18 Produced by the JSE SENS Department.
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