| Fri 12 Mar 2010, 13:30 | | SIM - Simmer & Jack Mines - Detailed Cautionary Announcement Relating To The |
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SIM
SIIF
SIM - Simmer & Jack Mines - Detailed Cautionary Announcement Relating To The
Recapitalisation Of First Uranium Corporation And Changes To The Board
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")
DETAILED CAUTIONARY ANNOUNCEMENT RELATING TO THE RECAPITALISATION OF FIRST
URANIUM CORPORATION AND CHANGES TO THE BOARD
1 Introduction
Shareholders are advised that the board of directors of Simmers has resolved
that Simmers will participate in the First Uranium Corporation ("First Uranium")
recapitalisation programme ("FIU recapitalisation programme") which was
announced on 12 March 2010. Simmers currently holds 62,122,653 common shares in
First Uranium representing an approximate 37.24% interest in First Uranium.
2 The FIU recapitalisation programme
2.1 Outline of the FIU recapitalisation programme
The FIU recapitalisation programme aims to provide First Uranium with a capital
infusion of between C$125 and C$150 million. The total recapitalisation package
ranges between C$165.7 and C$190.7 million as set out below:
Secured Convertible Notes
Simmers conversion of loan C$22.7 million
Rand FIU notes C$40 million
Canadian FIU notes
- Gold Wheaton C$20-0 million
- Others C$65-110 million
Total C$147.7-172.7 million
Common shares
Gold Wheaton penalty C$18 million
2.2 Terms of the FIU Notes
The recapitalisation programme will include a private placement offering ("the
FIU Offering") between C$125 million and C$150 million in senior secured
convertible notes, due 31 March 2013 ("the FIU Notes") consisting of i) C$40
million in South African Rand denominated Notes ("the Rand FIU Notes") and ii)
C$85-110 million in Canadian dollar denominated Notes ("the Canadian FIU
Notes").
Simmers intends to subscribe for the Rand FIU Notes and Gold Wheaton Corporation
("Gold Wheaton") intends to subscribe for C$20 million of the Canadian FIU
Notes. RBC Capital Markets Inc. will offer the remaining C$65-90 million
Canadian FIU Notes to accredited investors ("the FIU Private Placement"). Gold
Wheaton may reduce its C$20 million commitment to the extent that the private
placement offering to accredited investors exceeds C$65 million in gross
proceeds.
Each Canadian FIU Note will have a principal amount of C$1,000 and will be
convertible into 769.2307 common shares representing a conversion price of
C$1.30, a 13% discount to the 5-day volume weighted average price of First
Uranium common shares. Each Rand FIU Note will have a principal amount of
ZAR1,000 and will be convertible into 107.36 First Uranium common shares, also
representing a conversion price of C$1.30.
The FIU Notes will be guaranteed by the subsidiaries of First Uranium, secured
by second ranking security over all assets currently encumbered by Gold Wheaton
and first security over all other current and future assets of First Uranium,
not be redeemable until maturity and be subject to typical anti-dilution
protections.
As part of the FIU capital restructuring Simmers will exchange its approximate
C$22.1 million loan amount to First Uranium (Pty) Ltd plus accrued and unpaid
interest ("Debt Payments") for an equivalent value of Rand FIU Notes.
If Simmers were to convert all of the Rand FIU Notes held by it into common
shares of First Uranium, it would acquire an additional 48,227,920 common shares
bringing its holdings to approximately 48% of FIU common shares of the issued
and outstanding First Uranium common shares (assuming the other FIU Notes were
not converted but giving effect to the issuance to Gold Wheaton of the Penalty
Payment (as defined below). Assuming all the FIU Notes were to be converted and
the maximum capital infusion under the FIU recapitalisation programme were to
take place, Simmers would hold 35% of the FIU common shares).
2.3 Gold Wheaton penalty
Gold Wheaton has agreed to settle in part the US$42 million completion penalty
due pursuant to its gold stream transaction for 14 million First Uranium common
shares and a commitment to complete construction of the third gold plant module
and satisfaction of the technical completion tests prior to September 1, 2011
(the "Penalty Payment"). In the event that the construction and tests are not
met by such date a US$1.5 million payment shall be payable by First Uranium to
Gold Wheaton on the first day of each of September, October, November and
December 2011 unless such tests have been met prior to such date. In the event
that these commitments to construction and technical completion are not met
prior to December 1, 2011, a remaining penalty of US$30 million will be payable.
2.4 Conditions precedent and approvals
The commitments by Simmers and Gold Wheaton are conditional upon, inter alia,
granting of the agreed security, necessary regulatory approvals and settlement
of legal agreements.
First Uranium is relying upon exemptions from the security holder approval
requirements of the TSX in Subsection 604(e) of the Toronto Stock Exchange
("TSX") Company Manual available in cases of financial hardship to implement the
FIU recapitalisation programme.
The completion of the FIU Offering is subject to the approval of the TSX and all
other necessary regulatory approvals.
2.5 Use of proceeds
Proceeds of the FIU Offering will be used for the Mine Waste Solutions tailings
recovery project, capital expenditures including completion of the first gold
module and uranium plant, new tailings facility, the third gold plant module,
restructuring, financing and interest expenses and for general corporate
purposes.
3 Interim funding of Simmers participation in the FIU Offering
In order to meet its obligations under the FIU Offering, Simmers will use the
rand equivalent of C$10 million from Simmers` cash reserves to participate in
the FIU Rand Note offering. In addition, Rand Merchant Bank, a division of
FirstRand Bank Limited ("RMB"), will, subject to a number of conditions
precedent normal for a transaction of this nature, provide Simmers with a bridge
loan facility ("RMB Bridge Loan Facility") of R220 million (approximately C$30
million) and will underwrite an amount of R246.8 million of the Simmers Rights
Issue.
4 Simmers recapitalisation
In order to restructure its participation in the First Uranium Offering, the
Simmers Board has resolved to conduct a Secured Convertible Notes Rights Issue
("Simmers Rights Issue"). The detailed terms of the Simmers Rights Issue will be
announced in due course.
5 Board and management changes
Changes to the management and board of First Uranium are proposed, subject to
TSX approval of the nominees. The changes include the appointment of Simmers`
current CEO, Deon van der Mescht, as Interim Chief Executive Officer of First
Uranium. Mr Van der Mescht will resign as CEO of Simmers immediately prior to
his appointment by First Uranium. The First Uranium board will also be
restructured on closing of the FIU Offering to include three Simmers nominees.
If Gold Wheaton subscribes for a minimum of C$10 million of the Notes, then Gold
Wheaton shall be entitled to nominate one of the independent directors.
Upon the resignation of Mr Van der Mescht, the Simmers board will appoint Mr
Nico Schoeman, Group Business Development Executive, as Interim Chief Executive
Officer of Simmers.
Mr Schoeman, a civil engineer by profession, joined Simmers in 2007 and played a
key role in the acquisition of Tau Lekoa Mine and the restructuring of
Buffelsfontein Gold Mine. He has also been instrumental in defining Simmers`
role in the refinancing of First Uranium.
6 Cautionary announcement
Shareholders are advised that once the final agreement relating to the
participation of Simmers in the First Uranium recapitalisation has been reached
and the final terms of the Simmers Rights Issue have been agreed, a detailed
terms announcement will be released on SENS and published in the press.
Shareholders are accordingly advised to exercise caution when dealing in the
Company`s securities until a further announcement is made.
Johannesburg
12 March 2010
Merchant Bank and Sponsor
RAND MERCHANT BANK, A DIVISION OF FIRSTRAND BANK LTD
Date: 12/03/2010 13:30:01 Produced by the JSE SENS Department.
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