| Mon 17 May 2010, 8:59 | | ABO - Absolute Holdings - Acquisition of Platinum assets and withdrawal of |
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ABO
ABO
ABO - Absolute Holdings - Acquisition of Platinum assets and withdrawal of
cautionary announcement
ABSOLUTE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1986/004649/06)
Share code: ABO ISIN No: ZAE000144267
("Absolute" or "the Company")
ACQUISITION OF PLATINUM ASSETS THROUGH THE ACQUISITION OF AN EFFECTIVE 60%
INTEREST IN BAUBA A HLABIRWA MINING INVESTMENTS (PROPRIETARY) LIMITED ("BAUBA"),
ASSOCIATED TRANSACTIONS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Following the detailed cautionary announcement on 15 February 2010, the Company
is pleased to advise that, in line with Absolute`s strategic objective of
procuring, acquiring and developing junior mining and exploration projects, the
Company has concluded a binding agreement ("the Transaction Agreement") with
Hlabirwa Mining Investments (Pty) Limited ("Hlabirwa"), Highland Trading
Investments Limited ("Highland") and the shareholders of Ndarama Mineral
Resources (Pty) Limited ("the NMR Shareholders")(collectively "the vendors"),
whereby Absolute will acquire an effective 60% direct and indirect participation
in Bauba ("the acquisition"). A circular to shareholders has been issued today
detailing the following:
- the acquisition of:
an effective 60% participation in Bauba for a purchase consideration of R340 623
000 to be settled through the issue of 68 124 600 new shares in Absolute at an
issue price of R5.00 per share, incorporating a minimum capital raising of R60
000 000, and
the potential further acquisition of an effective 60% participation in the
Houtbosch prospecting right subject to the notarial execution and registration
of the already granted prospecting right, for an additional consideration of
R105 948 000, which will be settled though the further issue of 21 189 600 new
shares in Absolute at an issue price of R5.00 per share.
The following changes will be implemented to effect the transaction:
- an increase in the Company`s authorised share capital from 25 000 000
shares of R1.00 each to 200 000 000 shares of R1.00 each;
- the specific issue of up to 30 000 000 shares for cash to non-related
parties at a price to be determined;
- the issue of approximately 1 875 598 shares to Qinisele Resources at a
price to be determined;
- a proposed waiver of a mandatory offer; and
- the amendment to the share incentive scheme.
This transforming transaction will be repositioning the Company by:
- the reconstitution of the board of directors;
- a proposed name change of the Company to Bauba Platinum Limited; and
- the transfer of the Company`s listing to the Main Board of the JSE Limited.
THE BAUBA PROJECT AND LOCATION
Bauba holds prospecting rights over eight farms, which are prospective for
platinum mineralisation in the Eastern Bushveld Igneous Complex, encompassing an
area of approximately 50km in length and 6km in width (approximating 12 700
hectares) along the Leolo mountain range in the Limpopo Province, collectively
the Bauba Project. The farms cover the known down-dip extent of several current
development projects and operating mines on the Eastern limb of the Bushveld
Igneous Complex. The geological location is expected to reveal both Merensky
Reef and UG-2 Chromitite Layer occurrences as extensive exploration programmes
have been conducted on the properties neighbouring the Bauba Project.
The prospecting rights are geographically clustered as follows:
The Southern Cluster comprising the farms Genokakop 284 KT and Grootvygenboom
285 KT as well as the Houtbosch prospecting right as described below;
The Central Cluster comprising the farms Magneetsvlakte 541 KS and Dingaanskop
543 KT; and
The Northern Cluster comprising the farms Fisant Laagte 506 KT, the remainder of
Indie 474 KS, Zwitzerland 473 KS and Schoonoord 462 KS.
A targeted resource has been estimated by geologist Mr Stephen Gain (Pr.SciNat
Msc) using average modifying factors from projects and mines on adjacent
properties. An initial estimate of the in situ resource tonnages on the farms is
700 Mt which could include in excess of 100 million oz PGM`s metal content. This
in situ targeted resource estimation is considered conservative but is not
SAMREC Code compliant. This target resource has been independently verified by
Venmyn and is now estimated to be 138 million oz PGM`s.
Bauba has designed a detailed investigative exploration programme that will be
initiated by diamond drilling, geological and geophysical mapping, and
interpretation of the areas of interest. The drilling sequence will commence on
the Southern Cluster, followed by the Central and Northern Clusters to determine
the mineral resource base and the style of mineralisation. The drilling
programme will extend through to the base of the Bushveld Igneous Complex to
establish the form and style of the PGM mineralisation in the Middle and Lower
groups of the Bushveld Igneous Complex, based on public information from
adjacent properties. The programme will focus on the known mineralisation
targets of the Merensky Reef and UG-2 Chromitite.
Results from the initial drilling, which commenced in April 2010, will form the
basis of the balance of the drilling programme on the Southern Cluster with the
aim of establishing the extent of the resource, which would be converted to a
fully compliant reserve statement to form the basis of the Bankable Feasibility
Study.
HOUTBOSCH PROSPECTING RIGHT
In addition, Bauba has been granted a prospecting right over the farm Houtbosch.
This prospecting right is pending notarial execution and registration in the
Mining Titles Registration Office. Upon this being achieved, in the name of
Bauba, Absolute will issue an additional 21 189 600 new shares in Absolute to
the vendors at an issue price of R5.00 per share and equating to an additional
consideration of R105 948 000.00, as the Company will effectively hold a 60%
interest in the Houtbosch prospecting right through its effective 60%
shareholding in Bauba.
ISSUE OF SHARES FOR CASH TO FUND WORK PROGRAMME
The company intends raising up to R150 million, which incorporates the minimum
capital raising of R60 million, through the issue of up to 30 000 000 new
shares, in order to determine the nature and extent of the platinum
mineralisation (including a resource base which is SAMREC compliant). Funds
raised will be employed by the Company on a detailed drilling programme, as well
as the geological assaying and modeling, early design and planning work
(including scoping study), and for working capital requirements.
NAME CHANGE AND TRANSFER TO THE MAIN BOARD OF THE JSE
As part of a repositioning and rebranding exercise it is proposed that the
Company changes its name to Bauba Platinum Limited pursuant to the Bauba
acquisition, which holds primarily platinum resource assets. The name
reservation has been approved by CIPRO and is subject to the registration of the
special resolution to be contained in the notice of General Meeting.
The Company will transfer to the Main Board of the JSE and trade under the share
code BAU, subject to the JSE Listings Requirements.
BBBEE (Broad Based Black Economic Empowerment)
The proposed transactions will ensure full compliance with the requirements and
spirit of participation by Historically Disadvantaged South Africans ("HDSA`s")
in the mining industry as per the Mining Charter.
The Bapedi Nation holds a direct shareholding of 37.6% in Bauba, whilst Hlabirwa
will retain its participation in the Bauba Project, through its direct and
indirect shareholding in Bauba of 2.4% and 3.6% respectively, thereby ensuring
the continuous involvement of the surrounding community.
The Math-Pin Trust and Calulo Resources (Pty) Limited ("Calulo") will hold an
effective 6.5% and 3.6% interest in the Company, which equates to a 3.9% and
2.2% interest in the Bauba Project respectively. The effective cumulative
participation by BEE in the Bauba Project will therefore equate to 49.7% post
the capital raising. The Company is committed to the development of these
properties to the benefit of the surface right owners through a detailed
community development plan in terms of which these prospecting rights were
conferred.
CLAW BACK OR REPURCHASE
There is currently a review application pending in the North Gauteng High Court
of South Africa, Pretoria, brought by Rustenburg Platinum Mines Limited ("RPM")
and ARM Mining Consortium Limited against a decision of the Department of
Mineral Resources ("DMR") and citing certain other parties in respect of the
refusal of the DMR of an application to grant prospecting rights in respect of
certain farms, some of which are farms forming part of the Southern Cluster in
respect of which the DMR has granted prospecting rights to Bauba on 19 December
2007 ("the Southern Rights").
Those prospecting rights have been notarially executed in terms of Section 104
of the Mineral and Petroleum Resources Act, No. 28 of 2002 ("MPRDA"). Bauba is
not a party to, nor has it been cited in the High Court application.
Accordingly, the parties have no reason not to proceed with the transaction
recorded in the acquisition agreement on the terms and conditions stipulated.
These rights were applied for in terms of section 104 of the MPRDA, and granted
in terms of this section, which grants communities the preferential right to be
awarded the prospecting rights subject to them inter alia having the necessary
financial and technical resources to develop these for the benefit of the local
community. The rights have been granted for a period of five years, and the
MPRDA provides for a further five year period for renewal.
CONDITIONS PRECEDENT
The acquisition is still subject to the fulfilment of the following conditions
precedent:
Absolute confirming in writing to the vendors and submitting written proof on or
before the date of the general meeting that it has secured irrevocable
undertakings from potential investors for the purposes of raising capital in the
minimum amount of R60 000 000.00 (sixty million rand);
the shareholders of Absolute by 30 June 2010 pass in general meeting such
resolutions as may be necessary for the acquisition to proceed and that Absolute
submits written proof to the vendors thereof by 30 June 2010;
the board of Absolute obtaining the requisite shareholder resolution by 30 June
2010 providing that, in the event of the claw back contemplated in terms of
acquisition agreement applying, such number of shares in Absolute be returned to
Absolute and if a court does not sanction the cancellation thereof (upon an
application being made to a competent court for the cancellation of such number
of the shares in Absolute), then in such event, Absolute buys back such number
of shares in the Company from the vendors at a purchase price of R1.00 (one
rand) (it being deemed by the Parties that such number of the shares in the
Company were issued and allotted for no consideration and shall be void ab
initio);
Absolute obtaining its shareholders` approval and waiver of the requirement for
the Sellers to make a mandatory offer of R5.00 per share to minorities in terms
of the SRP Code in general meeting; and
The entering into of a formal loan agreement between Absolute and Calulo.
REVERSE TAKEOVER
Shareholders are cautioned that the implementation of the proposed acquisition
will result in the issue of more than 100% of the current issued share capital
of the Company, a change in control and the reconstitution of the board of
directors and accordingly will result in a reverse takeover of Absolute for the
purposes of the Listings Requirements, which stipulate that the Company can only
retain its listing following the reverse take-over if the JSE is satisfied that
the Company continues to qualify to be listed. The directors of Absolute are
confident that the Company will meet this requirement post the implementation of
the proposed acquisition as the Company already has approximately 1 400
shareholders and the share issue for cash will ensure that the minimum
shareholding of 20% to be held by the general public will be achieved. The
listing on the Main Board is conditional on the Company maintaining the said
shareholder spread requirements.
PRO FORMA FINANCIAL EFFECTS OF THE TRANSACTIONS
The table below reflects the unaudited pro forma financial effects of the
proposed transactions. These have been prepared in terms of the JSE Listings
Requirements, are for illustrative purposes only and due to their nature, may
not truly reflect Absolute`s financial position or results of operations. It
has been assumed for purposes of the pro forma financial effects that the
transactions took place with effect from 1 July 2009 for income statement
purposes and 31 December 2009 for balance sheet purposes. The directors of
Absolute are responsible for the preparation of the unaudited pro forma
financial effects.
Before After After After Change After Change
the share Bauba specific (%) specific (%)
acqui- consoli- acqui- issue issue
sition1 dation sition3 (minimum) (maximum)
and odd 4 5
lot
offer 2
(Loss)/ (0.19) (19.09) (9.57) (6.88) 64.0% (3.54) 81.5%
earnings
per
share
(c)
Headline (0.19) (19.09) (17.77) (14.25) 25.4% (9.94) 47.9%
(loss)/
earnings
per
share
(c)
Net 1.77 176.98 55.16 98.13 (44.6%) 148.49 (16.1%)
asset
value
per
share
(c)
Tangible (0.13) (12.66) (0.27) 48.28 481.4% 105.18 930.8%
net
asset
value
per
share
Weighted 1 532 15 325 106 515 118 515 673.3% 136 515 790.8%
average 545
number
of
shares
in issue
(`000)
Number 1 601 16 012 107 202 119 202 644.5% 137 756.9%
of 185 202
shares
in issue
(`000)
After claw Change (%) After claw Change (%)
back and back and
assuming assuming
minimum maximum
specific specific
issue 6 issue 7
(Loss)/ (10.01) (45.5%) (4.86) (37.3%)
earnings
per share
(c)
Headline (20.73) (45.5%) (13.64) (37.2%)
(loss)/
earnings
per share
(c)
Net asset 134.97 37.5% 197.33 32.9%
value per
share (c)
Tangible 70.04 (45.1% 144.07 (37.0%)
net asset
value per
share
Weighted 81 482 (31.2%) 99 482 (27.1%)
average
number of
shares in
issue
(`000)
Number of 82 168 (31.1%) 100 168 (27.0%)
shares in
issue
(`000)
Notes:
The "Before" financial information is based on Absolute`s published unaudited
interim results for the six months ended 31 December 2009.
After the 1:100 share consolidation and odd lot offer as approved by
shareholders in general meeting on 17 February 2010.
The "After the Bauba acquisition" column is based on the assumption that the
issue of 68,124,600 new ordinary shares in respect of the Bauba acquisition
(excluding Houtbosch) and 21 189 600 new ordinary shares in respect of the
Houtbosch acquisition was effective from 1 July 2009 for basic (loss)/earnings
per share and headline (loss)/earnings per share and 31 December 2009 for net
asset value and tangible net asset value purposes. The basic (loss)/earnings per
share and headline (loss)/earnings per share include the results of Bauba for
the year ended 28 February 2010, extracted from the audited annual financial
statements of Bauba for the year ended 28 February 2010. The results have been
adjusted to reflect a six month period only (with the exception of the gain from
sale of capital asset of R10 150 000, where the full amount is included).
The acquisition has been accounted for in terms of the revised IFRS 3: Business
Combinations, as the expected effective date is after 1 July 2009, being the
effective date of the revised statement. As this is a reverse acquisition, the
fair value of the consideration transferred has been determined with reference
to the fair value of the consideration transferred (based on the value of
R573.23 million attributed to the Bauba Project) and in terms of IFRS 6:
Exploration for and Evaluation of Mineral Resources, the cost associated with
the acquisition of Absolute`s mineral assets has been capitalised to the cost of
exploration and evaluation assets.
The "After the Bauba acquisition" financial information includes total
transaction costs of R16.634 million and related tax effects as follows:
R10,218,690 payable to Qinisele Resources ("QR") including the issue of 1 430
617 new shares to QR at an assumed price of R5.00 in respect of the Bauba
acquisition (excluding Houtbosch);
R3,178,440 payable to QR including the issue of 444 981 new shares to QR at an
assumed issue price of R5.00 in respect of the Houtbosch acquisition).
Total other transaction costs of R3,237,000.
The "After minimum specific issue" financial information assumes:
Issue of 12,000,000 new ordinary shares at R5.00;
Total transaction costs of R19.634 million in respect of the Bauba acquisition
and capital raising of R60 million as follows:
Capital raising fees of R3 million payable to QR that have been set-off against
share premium;
The proceeds of R60 million from the specific issue;
Finance income at 6.7% earned on the proceeds of the specific issue (less
transaction costs), being the prevailing money market rates on deposits of
greater than R10 million for basic loss/earnings per share and headline
loss/earnings per share purposes only; and
The tax effects of the above.
The "After maximum specific issue` financial information assumes:
Issue of 30, 000,000 new ordinary shares at R5.00;
Capital raising fees of R7.5 million payable to QR that have been set-off
against share premium
The proceeds of up to R150 million from the specific issue;
Finance income at 6.7% earned on the proceeds of the specific issue (less
transaction costs), being the prevailing money market rates on deposits of
greater than R10 million for basic loss/earnings per share and headline
loss/earnings per share purposes only; and
The tax effects of the above.
The `After claw back and assuming minimum specific issue` assumes the
implementation of the Bauba acquisition (including Houtbosch) and minimum
specific issue and subsequent reduction of the purchase consideration via the
repurchase of 37,033,200 Absolute shares.
The `After claw back and assuming maximum specific issue` assumes the
implementation of the Bauba acquisition (including Houtbosch) and maximum
specific issue and subsequent reduction of the purchase consideration via the
repurchase of 37,033,200 Absolute shares.
CHANGE OF CONTROL AND WAIVER OF MANDATORY OFFER OF R5.00 PER SHARE
On implementation of the transactions, the vendors` shareholding in Absolute
will increase from 0% to approximately 65.1% (pursuant to the share issue for
cash and the Houtbosch payment shares) and more specifically, Highland`s
shareholding will be approximately 44.5% post the transactions. The acquisition
is thus an "affected transaction" under the SRP Code, which ordinarily would
require the vendors to make a mandatory offer to acquire the Absolute shares
owned by all Absolute shareholders at an offer price of R5.00 per share.
The SRP has advised that it is willing to consider an application to grant a
dispensation to the vendors, in terms of the SRP Code, from the obligation to
make a mandatory offer at R5.00 per share to acquire the ordinary shares of
Absolute shareholders if Absolute shareholders in general meeting other than the
Bauba Sellers, NMR Sellers and any person acting in concert (as defined in the
SRP Code) with the vendors waive their right to require the vendors to make a
mandatory offer of R5.00 per share and subject to the SRP considering any
representations (if any) made by Absolute shareholders, as contemplated below.
Any Absolute shareholder who wishes to object to the dispensation shall have 10
days from the date of posting of the circular to raise such an objection with
the SRP. Objections should be made in writing and addressed to "The Executive
Director, Securities Regulation Panel" at the following address:
Physical: Postal:
Ground Floor PO Box 91833
2 Sherborne Road (Off Jan Smuts Avenue) Auckland Park
Parktown, 2193 2006
Fax: +27 11 482 5635
and should reach the SRP by not later than the close of business on 27 May 2010
in order to be considered.
If any submissions are made to the SRP within the permitted timeframe, the SRP
will consider the merits thereof and, if necessary, provide the sellers with an
opportunity to make representations to the SRP. Thereafter, subject to the
waiver in general meeting being granted by the Absolute shareholders, the SRP
will rule on the requirement for a mandatory offer of R5.00 per share.
The granting of the aforesaid waiver and of the dispensation is a condition
precedent to the acquisition.
SALIENT DATES
Circular and notice of general meeting to Monday,17 May
be posted to shareholders on
SENS announcement regarding publication Tuesday, 25 May
of SAMVAL report on Lekkersing
Last day for lodging forms of proxy at Thursday, 3 June
10h00 on
General meeting at 10h00 on Monday, 7 June
Announcement of results of the general Monday, 7 June
meeting published on SENS on
Announcement of results of the general Tuesday, 8 June
meeting published in the press and
special resolution submitted to CIPRO on
Special resolution and name change Tuesday, 22 June
certificate expected to be registered by
CIPRO on or about
Listing of new shares on the JSE from Friday, 25 June
commencement of business on or about
Finalisation data announced on SENS by no Friday, 25 June
later than
Finalisation data announced in the press Monday, 28 June
by no later than
Last day to trade shares in the name of Friday, 9 July
Absolute in order to be recorded as a
shareholder by the record date on
Trading in new shares under the JSE code Monday, 12 July
BAU and ISIN ZAE000145686 commences on
Record date for determining those Friday, 16 July
shareholders whose shares will be subject
to the change of name on
Date of issue of new replacement share Monday, 19 July
certificates, provided that the old share
certificates have been lodged by 12h00 on
the record date (share certificates
received after this time will be posted
within five (5) business days of receipt)
on or about
Dematerialised shareholders will have Monday, 19 July
their accounts at their CSDP or broker
updated on
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The cautionary announcement is withdrawn pursuant to this announcement.
By order of the board
Johannesburg
17 May 2010
Corporate advisor Legal advisor Sponsor
Qinisele Resources Eversheds Arcay Moela Sponsors
(Pty) Ltd (Pty) Ltd
Date: 17/05/2010 08:59:01 Produced by the JSE SENS Department.
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