| Mon 24 May 2010, 7:33 | | WEZ - Wesizwe Platinum Limited - Detailed Cautionary announcement |
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WEZ
WEZ
WEZ - Wesizwe Platinum Limited - Detailed Cautionary announcement
Wesizwe Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2003/020161/06)
JSE code: WEZ ISIN: ZAE000075859
(the "Company" or "Wesizwe")
Detailed Cautionary announcement
Introduction
Further to the cautionary announcements published by Wesizwe, the last one
appearing on 22 April 2010, Wesizwe is pleased to announce that the Company
has signed a term sheet ("Term Sheet") with Jinchuan Group Limited ("JNMC")
and China-Africa Development Fund ("CADFund") ("the Parties"), which sets
out a proposal by JNMC and CADFund to provide the Company, subject to
certain conditions precedent set out in the Term Sheet, with a total
financing solution for the development of the Company`s core Frischgewaagd-
Ledig Project ("the Project") ("the Proposed Transaction"). The terms and
conditions set out in the Term Sheet are to be formalised in a set of
definitive transaction agreements ("Transaction Documents"), which are
currently being negotiated by the Parties. This announcement summarises the
key terms and conditions contained in the Term Sheet.
Neither the Term Sheet nor this announcement constitutes a firm intention
on the part of JNMC and CADFund to make an offer to shareholders of Wesizwe
for the purposes of the Securities Regulation Code on Takeovers and
Mergers.
Details of the Proposed Transaction
The Proposed Transaction will, if successfully concluded, comprise of:
- an equity component of US$227 million whereby JNMC and CADFund (or a new
entity to be jointly owned by JNMC and CADFund) will subscribe for
829,884,460 new ordinary shares, which will constitute 51% of the fully
diluted issued share capital of Wesizwe upon closing of the Proposed
Transaction, for an aggregate subscription price of US$227.53 million
("the Equity Component"). This will equate to a subscription price of
R2.07 per Wesizwe share at an exchange rate of US$/ZAR 7.55;
- a debt component of US$650 million pursuant to which JNMC and CADFund
have secured a Letter of Commitment from the China Development Bank for
the provision of a US$650 million project finance facility ("the Debt
Component") to the Company; and
- a financial guarantee / shareholder loan commitment pursuant to which
JNMC shall provide any funding shortfall needed in order for the Project
to reach full production via a shareholders loan to Wesizwe on the same
commercial terms as the Debt Component.
JNMC and Wesizwe have agreed that JNMC will purchase all of the PGM
concentrate from the Project through a long term off-take agreement on
terms and conditions still to be agreed between Wesizwe and JNMC, which
terms and conditions will include pricing mechanisms consistent with market
practice and timely payment provisions.
Rationale for the Proposed Transaction
Wesizwe believes that the Proposed Transaction represents both a compelling
value and strategic proposition for shareholders for, inter alia, the
following reasons:
- It will provide shareholders with a total financing solution of US$877
million (R6.6 billion) (consisting of a combination of debt and
equity) for the development of the Project. This will:
- ensure that that there will be no further equity dilution through
the Project`s construction phase;
- allow shareholders to retain exposure to one of the best quality
undeveloped PGM projects in South Africa; and
- provide shareholders with an excellent value proposition in the
current global uncertainty.
- With the introduction of JNMC, Wesizwe will secure an experienced
mining, financial and technical partner;
- The debt funding will be secured at globally competitive financing
rates;
- Furthermore, the provision of financial guarantees by JNMC will enhance
the certainty that shareholders will not be called upon for further
funding as regards the development of the Project; and
- It will provide Wesizwe with the financial muscle to enable it to
examine future growth opportunities.
Conditions precedent to the Proposed Transaction
The Proposed Transaction is subject to approval by inter alia the Board of
Directors of each of the Parties respectively.
The Proposed Transaction will further be subject to the fulfilment of
conditions precedent which are customary for transactions of this nature.
Such conditions precedent include inter alia:
- The Proposed Transaction being approved, inter alia, by the
shareholders of Wesizwe;
- The Parties obtaining all approvals necessary for the implementation
of the Proposed Transaction from relevant regulatory authorities in
South Africa and China respectively;
- The shareholders of Wesizwe have in general meeting waived JNMC and
CADFund`s obligation to make a mandatory offer for all the issued
shares of Wesizwe held by the other shareholders in terms of the
Securities Regulation Code and Rules of the Securities Regulation
Panel; and
- The Securities Regulation Panel of South Africa has agreed to dispense
with the requirement for JNMC/CADFund to make the mandatory offer.
Information on JNMC and CADFund
JNMC
- JNMC is a Chinese state owned company under the jurisdiction of the
Peoples Government of the Gansu Province, Peoples Republic of China
("China").
- JNMC is the largest producer of nickel and PGM`s in China and the
largest producer of refined copper in Northern China.
- JNMC has an integrated business in non-ferrous metals from mining,
refining and marketing to project engineering and mining equipment
manufacturing.
- JNMC has over the last few years been actively involved in investment
projects outside of China.
CADFund
- Established on June 26th, 2007, the CADFund is the first investment
fund in China focusing on investments in Africa.
Cautionary
Shareholders are advised to continue to exercise caution when dealing in
the Company`s shares until a further announcement is made. A detailed
terms announcement will, subject to the approval of the South African
Securities Regulation Panel on Takeovers and Mergers and JSE Limited be
released in due course by the Company once the formal definitive
Transaction Documents have been signed.
Melrose, Johannesburg
24 May 2010
Corporate advisor Legal advisor Sponsor
Qinisele Resources Deneys Reitz Investec Bank
(Pty) Limited Limited
Date: 24/05/2010 07:33:01 Produced by the JSE SENS Department.
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