| Thu 17 Jun 2010, 7:48 | | CZA - CoAL - Proposed Cash Placing Of Up To 50 Million New Ordinary Shares To |
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CZA
CZA
CZA - CoAL - Proposed Cash Placing Of Up To 50 Million New Ordinary Shares To
Raise Up To Approximately GBP55 Million
Coal of Africa Limited
(previously, "GVM Metals Limited")
(Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
JSE/ASX/AIM Share code: CZA
ISIN AU000000CZA6
("CoAL" or the "Company")
THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION,
RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES, CANADA,
JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR
DISTRIBUTION WOULD BE UNLAWFUL
Neither this Announcement nor any part of it constitutes an offer to sell or
issue or the solicitation of an offer to buy, subscribe or acquire any new
Ordinary Shares in any jurisdiction in which any such offer or solicitation
would be unlawful and the information contained herein is not for publication or
distribution, directly or indirectly, in or into the United States, Canada,
Japan or any jurisdiction in which such publication or distribution would be
unlawful.
PROPOSED CASH PLACING OF UP TO 50 MILLION NEW ORDINARY SHARES TO RAISE UP TO
APPROXIMATELY GBP55 MILLION
CoAL announces its intention to place up to 50 million new ordinary shares in
the Company (the "Placing Shares") representing approximately 10.4% of CoAL`s
existing issued ordinary share capital (the "Placing"). The proposed placing by
CoAL of new ordinary shares in the Company ("Ordinary Shares") will be to
institutional investors to raise up to approximately GBP55 million (South
African Rand 625 million/ Australian Dollar 95 million) (before expenses). J.P.
Morgan Securities Ltd. which conducts its UK investment banking activities as
J.P. Morgan Cazenove ("J.P. Morgan Cazenove") is acting as Global Co-ordinator
and Sole Bookrunner, Macquarie First South Advisers (Proprietary) Limited
("Macquarie") is acting as joint lead manager, Evolution Securities Limited
("Evolution") and Mirabaud Securities LLP ("Mirabaud") are acting as co-lead
managers, (together, the "Managers").
THE PLACING
The Placing is subject to the terms and conditions set out in Appendix A. The
Managers will today commence an accelerated bookbuilding process in respect to
the Placing ("Bookbuild"). The price per Ordinary Share at which the Placing
Shares are to be placed (the "Placing Price") will be decided at the close of
the Bookbuild. The book will open with immediate effect. The timing of the
closing of the book, pricing and allocations is at the discretion of J.P. Morgan
Cazenove and CoAL. Details of the Placing Price will be announced as soon as
practicable after the close of the Bookbuild.
The Placing Shares will be credited as fully paid and will rank pari passu in
all respects with the existing Ordinary Shares including the right to receive
all dividends and other distributions declared, made or paid after the date of
issue.
The Placing will be made on a non-pre-emptive basis. If all the Placing Shares
are placed, it would represent an increase of approximately 10.4% of the current
issued ordinary share capital of the Company, and the Placing Shares would
represent approximately 9.4% of the enlarged issued ordinary share capital of
the Company.
The Company has applied for admission of the Placing Shares to trading on the
AIM market of the London Stock Exchange ("AIM") and the Main Board of JSE
Limited ("JSE"), and application will be made to the Australian Securities
Exchange ("ASX"). It is expected that admission to trading or quotation and
listing will take place on AIM and the JSE on 21 June 2010 and on 22 June 2010
on ASX.
The Appendix A to this Announcement (which forms a part of this Announcement)
sets out further information relating to the Bookbuild and the terms and
conditions of the Placing. Appendix B sets out certain risk factors in relation
to the Company and its business.
USE OF PROCEEDS
The Company intends to use the net proceeds of the Placing to fund the
following:
- Makhado bulk sample - approximately US$7.5 million;
- Makhado Definitive Feasibility Study - approximately US$6.5 million;
- Potential acquisitions contiguous to CoAL existing assets or existing
inorganic growth opportunities - approximately US$15 million and U$20
million respectively;
- Repay the existing JPMorgan Chase Bank, N.A. working capital facility -
US$20 million; and
- General working capital
Commenting on the Placing, Simon Farrell, Executive Deputy Chairman of CoAL
said:
"CoAL has grown into a multi-site producer with a sizeable resource base,
carefully considered logistics and a high quality and supportive investor base
including its proposed off-take partners. We have a significant platform for
production growth and an exciting development trajectory. Today`s equity placing
will ensure that we have the right capital structure to deliver further material
value for all stakeholders across our portfolio."
Contacts
CoAL
Simon Farrell Tel: +61 (0) 417 985 383
Blair Sergeant Tel: +27 (0) 11 785 4518
J.P. Morgan Cazenove Tel: +44 (0) 20 7588 2828
Verne Grinstead
Neil Passmore
Macquarie Tel: +27 (0) 11 583 2000
Murray Stewart
Melanie de Nysschen
Evolution Tel: +44 (0) 20 7071 4300
Simon Edwards
Chris Sim
Conduit PR Tel: +44 (0) 20 7429 6603
Jos Simson
Leesa Peters
IMPORTANT NOTICE
THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION,
RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES, CANADA,
JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR
DISTRIBUTION WOULD BE UNLAWFUL
This Announcement has been issued by and is the sole responsibility of the
Company. No representation or warranty, express or implied, is or will be made
as to, or in relation to, and no responsibility or liability is or will be
accepted by J.P. Morgan Cazenove, Macquarie, Evolution or Mirabaud or by any of
their respective affiliates or agents as to or in relation to, the accuracy or
completeness of this Announcement or any other written or oral information made
available to or publicly available to any interested party or its advisers, and
any liability therefore is expressly disclaimed.
J.P. Morgan Cazenove is acting as Global Co-ordinator and Sole Bookrunner,
Macquarie is acting as joint lead manager, and Evolution and Mirabaud are acting
as co-lead managers in connection with the Placing. Each of J.P. Morgan
Cazenove,,Evolution and Mirabaud, each of which is authorised and regulated by
the Financial Services Authority, and of Macquarie which is authorised by the
Financial Services Board are acting for the Company in connection with the
Placing and no-one else and none of J.P. Morgan Cazenove, Macquarie, Evolution
nor Mirabaud will be responsible to anyone other than the Company for providing
the protections afforded to the respective clients of J.P. Morgan Cazenove,
Macquarie, Evolution and Mirabaud nor for providing advice in relation to the
Placing or any other matter referred to herein.
The distribution of this Announcement and the Placing of the Placing Shares in
certain jurisdictions may be restricted by law. No action has been taken by the
Company, J.P. Morgan Cazenove, Macquarie, Evolution or Mirabaud that would
permit an offering of such shares or possession or distribution of this
Announcement or any other offering or publicity material relating to such shares
in any jurisdiction where action for that purpose is required. Persons into
whose possession this announcement comes are required by the Company, J.P.
Morgan Cazenove, Macquarie, Evolution and Mirabaud to inform themselves about,
and to observe, such restrictions.
Macquarie First South Advisers (Proprietary) Limited is not an authorised
deposit-taking institution for the purposes of the Banking Act 1959
(Commonwealth of Australia), and its obligations do not represent deposits or
other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does
not guarantee or otherwise provide assurance in respect of the obligations of
Macquarie First South Advisers (Proprietary) Limited.
The information in this Announcement shall not constitute an offer to sell or
the solicitation of an offer to buy, nor shall there be any sale of, the
securities referred to herein in any jurisdiction in which such offer,
solicitation or sale would require preparation of further prospectuses or other
offer documentation, or be unlawful prior to registration, exemption from
registration or qualification under the securities laws of any such
jurisdiction.
No public offer of securities of the Company is being made in Australia, the
United Kingdom, the United States, the Republic of South Africa or elsewhere.
The information in this Announcement does not constitute or form a part of any
offer or solicitation to purchase or subscribe for securities in the United
States. The securities mentioned herein have not been, and will not be,
registered under the United States Securities Act of 1933 (the "Securities Act")
nor the security laws of any state or other jurisdiction of the United States.
The securities mentioned herein may not be offered or sold in the United States
except pursuant to Regulation S under the Securities Act or another exemption
from, or transaction not subject to, the registration requirements of the
Securities Act. There will be no public offer of securities in the United
States.
The information in this Announcement may not be forwarded or distributed to any
other person and may not be reproduced in any manner whatsoever. Any forwarding,
distribution, reproduction, or disclosure of this information in whole or in
part is unauthorised. Failure to comply with this directive may result in a
violation of the Securities Act or the applicable laws of other jurisdictions.
APPENDIX A
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY IN OR INTO THE UNITED STATES, CANADA OR JAPAN OR ANY OTHER
JURISDICTION IN OR INTO WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION IS
UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION
PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE
EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE
2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC) ("QUALIFIED
INVESTORS"); (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO:
(I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING
WITHIN ARTICLE 19(5) OF THE UNITED KINGDOM FINANCIAL SERVICES AND MARKETS ACT,
2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); OR (II) ARE PERSONS FALLING
WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS, ETC") OF THE ORDER; (C) IN AUSTRALIA, PERSONS TO WHOM AN OFFER OF
SECURITIES MAY BE MADE UNDER SECTION 708(8) OR 708(11) OF THE AUSTRALIAN
CORPORATIONS ACT; (D) IN SOUTH AFRICA, THOSE PERSONS ENVISAGED UNDER AN OFFER
DETAILED IN SECTION 144(b) OF THE SOUTH AFRICAN COMPANIES ACT NO 61 OF 1973; OR
(E) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS
TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS APPENDIX AND THE TERMS
AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO
ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS
APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY
TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS
APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY.
Persons who are invited to and who choose to participate in the Placing, by
making an oral or written offer to subscribe for Placing Shares (the "Placees"),
will be deemed to have read and understood this Announcement, including this
Appendix, in its entirety and to be making such offer on the terms and
conditions, and to be providing the representations, warranties,
acknowledgements, undertakings and agreements contained in this Appendix. In
particular, each such Placee represents, warrants and acknowledges that it is a
Relevant Person (as defined above) and undertakes that it will acquire, hold,
manage or dispose of any Placing Shares that are allocated to it for the
purposes of its business. In addition, Placees located in certain jurisdictions
will be required to execute placing allocation letters in a form provided
("Placing Allocation Letter").
This Announcement does not constitute an offer, and may not be used in
connection with an offer, to sell or issue or the solicitation of an offer to
buy or subscribe for Placing Shares in any jurisdiction in which such offer or
solicitation is or may be unauthorised or unlawful. This Announcement and the
information contained herein is not for publication or distribution, directly or
indirectly, to persons in the United States, Canada or Japan or in any
jurisdiction in which such publication or distribution is unlawful. Persons into
whose possession this Announcement may come are required by the Company to
inform themselves about and to observe any restrictions of transfer of this
Announcement. No public offer of securities of the Company is being made in
Australia, the United Kingdom, the United States, the Republic of South Africa
or elsewhere.
In particular, the Placing Shares referred to in this Announcement have not been
and will not be registered under the Securities Act or the laws of any state and
may not be offered, sold, pledged or otherwise transferred within the United
States except pursuant to an exemption from, or as part of a transaction not
subject to, the registration requirements of the Securities Act and applicable
state laws.
The relevant clearances have not been, and nor will they be, obtained from the
securities commission of any province or territory of Canada; no prospectus has
been lodged and/or registered with the ASIC, or the CIPRO or the Japanese
Ministry of Finance; and the Placing Shares have not been, and nor will they be,
registered under or offered in compliance with the securities laws of any state,
province or territory of Canada or Japan. Accordingly, the Placing Shares may
not (unless an exemption under the relevant securities laws is applicable) be
offered, sold, resold or delivered, directly or indirectly, in or into Canada or
Japan or any other jurisdiction where to do so would be unlawful.
Persons (including, without limitation, nominees and trustees) who have a
contractual or other legal obligation to forward a copy of this Appendix or the
Announcement of which it forms part should seek appropriate advice before taking
any action.
NOTICE TO AUSTRALIAN RESIDENTS
This Announcement is not a prospectus for the purposes of the Australian
Corporations Act and may not contain all of the information that an Australian
investor may find in a prospectus prepared in accordance with the Australian
Corporations Act which may be required in order to make an informed investment
decision regarding, or about the rights attaching to, Placing Shares. As no
prospectus will be lodged with ASIC or otherwise prepared in accordance with the
Australian Corporations Act in respect of the Placing, the Placing Shares will
only be offered or issued to persons in Australia to whom an offer of shares for
issue may be made without a prospectus under Part 6D.2 of the Australian
Corporations Act or to persons outside Australia in accordance with the laws of
any other applicable jurisdiction. If you are located in Australia, you confirm
and warrant that you are a person to whom an offer of securities may be made
under section 708(8) or section 708(11) of the Australian Corporations Act such
that any offer or invitation to you does not require a prospectus or other form
of disclosure document under the Australian Corporations Act and you agree that
you will not offer to sell the Placing Shares to any person that is not a
sophisticated or professional investor under section 708(8) or section 708(11)
of the Australian Corporations Act until the day after a notice is lodged by the
Company with the ASX that complies with subsections 708A(5)(e) and (6) of the
Australian Corporations Act.
NOTICE TO SOUTH AFRICAN RESIDENTS
This document is not a prospectus and is not to be construed as an offer to the
public in terms of the South African Companies Act, 1973 (No 61 of 1973).
Accordingly, any securities referenced in this Announcement will not be offered
in such a way as to require the issuing and registration of a prospectus in
South Africa in accordance with applicable South African law. This Announcement
is being distributed only to certain identified investors in South Africa to
whom it may be lawfully distributed. Nothing in this Announcement should be
viewed, or construed, as "advice" by Macquarie as that term is used in the South
African Securities Services Act, 2004 and/or Financial Advisory and Intermediary
Services Act, 2002.
NOTICE TO UK RESIDENTS
This Announcement is not a prospectus for the purposes of the Prospectus Rules
published by the UK Financial Services Authority ("FSA") and has not been
approved by, or filed with, the FSA. This Announcement contains no offer to the
public within the meaning of Section 102B of the United Kingdom Financial
Services and Markets Act 2000, the United Kingdom Companies Act 2006 or
otherwise.
NOTICE TO US RESIDENTS
THIS ANNOUNCEMENT MAY NOT BE DISTRIBUTED, TAKEN OR TRANSMITTED IN OR INTO THE
UNITED STATES, ITS TERRITORIES OR POSSESSIONS AND ANY FORWARDING, DISTRIBUTION
OR REPRODUCTION OF THIS ANNOUNCEMENT IN WHOLE OR IN PART IS UNAUTHORISED.
FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A VIOLATION OF THE SECURITIES
ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.
THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES UNLESS SUCH PLACING SHARES ARE REGISTERED UNDER THE SECURITIES ACT OR ARE
OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
STATE SECURITIES LAWS. THE PLACING SHARES ARE BEING OFFERED AND SOLD OUTSIDE THE
UNITED STATES PURSUANT TO REGULATION S.
THE PLACING SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY IN THE UNITED STATES, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED
UPON OR ENDORSED THE MERITS OF THE PLACING OR THE ACCURACY OR ADEQUACY OF THIS
ANNOUNCEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE IN THE
UNITED STATES.
DETAILS OF THE PLACING AGREEMENT AND THE PLACING SHARES
The Managers have entered into the Placing Agreement with the Company under
which the Managers have severally (and not jointly or jointly and severally), on
the terms and subject to the conditions set out therein, undertaken to use their
reasonable endeavours to procure subscribers for the Placing Shares at the
Placing Price.
The Placing Shares will, when issued, be credited as fully paid and will rank
pari passu in all respects with the existing issued Ordinary Shares including
the right to receive all dividends and other distributions declared made or paid
after the date of issue.
In this Appendix, unless the context otherwise requires, Placee means a Relevant
Person (including individuals, funds or others) on whose behalf a commitment to
subscribe for Placing Shares has been given.
APPLICATION FOR LISTING AND ADMISSION TO TRADING
Application has been made to the London Stock Exchange for admission to trading
of the Placing Shares to AIM. It is expected that Admission on AIM will become
effective and that dealings on AIM in the Placing Shares will commence at 8.00
a.m. (London time) on 21 June 2010.
Application will be made to the ASX for quotation of the Placing Shares on the
ASX as soon as reasonably practicable following the issue of the Placing Shares.
It is expected that dealings on the ASX in the Placing Shares will commence at
8.00 a.m. (Sydney time) on 22 June 2010.
Application has been made to the JSE for the Placing Shares to be listed and
admitted to trading on the Main Board of the JSE. It is expected that listing
will become effective at 9.00 a.m. (Johannesburg time) on 21 June 2010.
Settlement of the Placing Shares to be held on the South African Share Register
is expected to take place on 23 June 2010 in accordance with the terms of the
Placing Allocation Letters.
BOOKBUILD
The Managers will today commence an accelerated bookbuilding process in respect
to the Placing (the "Bookbuild") to determine demand for participation in the
Placing by Placees. This Appendix gives details of the terms and conditions of,
and the mechanics of participation in, the Placing. No commissions will be paid
to Placees or by Placees in respect of any Placing Shares.
The Managers and the Company shall be entitled to effect the Placing by such
alternative method to the Bookbuild as they may, in their sole discretion,
determine.
PARTICIPATION IN, AND PRINCIPAL TERMS OF, THE PLACING
1. J.P. Morgan Cazenove is acting as sole Bookrunner and as an agent of the
Company. Macquarie is acting as joint lead Manager and Evolution and
Mirabaud are each acting as co-lead Managers, all as agents of the Company.
2. Participation in the Placing will only be available to persons who may
lawfully be, and are, invited to participate by the Managers. The Managers
and their respective affiliates or their respective agents are entitled to
enter bids as principal in the Bookbuild.
3. The Bookbuild will establish a single price in Pounds Sterling. An
Australian Dollar and a South African Rand price will be determined from
that Pounds Sterling price at an exchange rate to be determined at the sole
discretion of the Bookrunner. When submitting bids, Placees will be
entitled to choose whether they wish to settle in Pounds Sterling or
Australian Dollar or South African Rand, in each case payable to the
Managers by all Placees whose bids are successful (the "Placing Price").
The Placing Price and the aggregate proceeds to be raised through the
Placing will be agreed between the Bookrunner and the Company following
completion of the Bookbuild. The Placing Price will be announced on a
Regulatory Information Service following the completion of the Bookbuild
(the "Placing Results Announcement").
4. To bid in the Bookbuild, Placees should communicate their bid by telephone
to their usual sales contact at the Managers (the "Relevant Manager"). Each
bid should state the number of Placing Shares for which the prospective
Placee wishes to subscribe at either the pounds sterling, Australian Dollar
or South African Rand Placing Price, which is ultimately established by the
Company and the Bookrunner, or at prices in Pounds Sterling, Australian
Dollars or South African Rand up to a price limit in Pounds Sterling,
Australian Dollars or South African Rand specified in its bid. Bids may be
scaled down by the Bookrunner on the basis referred to in paragraph 9
below.
5. The Bookbuild is expected to close no later than 4:30 p.m. (London time) on
Wednesday 16 June 2010 but may be closed earlier or later at the discretion
of the Bookrunner. The Managers may, in agreement with the Company, accept
bids that are received after the Bookbuild has closed. The Company reserves
the right to reduce or seek to increase the amount to be raised pursuant to
the Placing, in its absolute discretion.
6. Each Placee`s allocation will be confirmed to the Placee orally by the
Relevant Manager following the close of the Placing, and a conditional
contract note or in certain jurisdictions, a Placing Allocation Letter,
will be dispatched as soon as possible thereafter. The Relevant Manager`s
oral confirmation to such Placee will constitute an irrevocable legally
binding commitment upon such person (who will at that point become a
Placee) in favour of the Relevant Manager and the Company, under which the
Placee agrees to acquire the number of Placing Shares allocated to it at
the Placing Price on the terms and conditions set out in this Appendix and
in accordance with the Company`s constitution.
7. Each prospective Placee`s allocation and commitment will be evidenced by a
conditional contract note issued to such Placee by the Relevant Manager and
in certain jurisdictions, a Placing Allocation Letter. The terms of this
Appendix will be deemed to be incorporated in that contract note or Placing
Allocation Letter.
8. The Placing Results Announcement shall detail the number of Placing Shares
to be issued and the Placing Price in Pounds Sterling as well as the
Australian Dollar and South African Rand price derived from that Pounds
Sterling price at an exchange rate to be determined at the sole discretion
of the Bookrunner.
9. Subject to paragraphs 4 and 5 above, the Managers may choose to accept
bids, either in whole or in part, on the basis of allocations determined at
their discretion (in consultation with the Company) and may scale down any
bids for this purpose on such basis as it may determine. The Managers may
also, notwithstanding paragraphs 4 and 5 above, subject to the prior
consent of the Company: (i) allocate Placing Shares after the time of any
initial allocation to any person submitting a bid after that time; and (ii)
allocate Placing Shares after the Bookbuild has closed to any person
submitting a bid after that time. The Managers each reserve the right not
to accept bids or to accept bids in part rather than in whole.
10. A bid in the Bookbuild will be made on the terms and subject to the
conditions in this Announcement and in certain jurisdictions, the terms and
conditions in the Placing Allocation Letter and will be legally binding on
the Placee on behalf of which it is made and except with the Bookrunner`s
consent will not be capable of variation or revocation after the time at
which it is submitted. Each Placee will also have an immediate, separate,
irrevocable and binding obligation, owed to the Relevant Manager, to pay it
(or as it may direct) in cleared funds an amount equal to the product of
the Placing Price and the number of Placing Shares such Placee has agreed
to acquire. Each Placee`s obligations under this paragraph will be owed to
the Relevant Manager.
11. Except as required by law or regulation, no press release or other
announcement will be made by the Managers or the Company using the name of
any Placee (or its agent), in its capacity as Placee (or agent), other than
with such Placee`s prior written consent.
12. Irrespective of the time at which a Placee`s allocation pursuant to the
Placing is confirmed, settlement for all Placing Shares to be acquired
pursuant to the Placing will be required to be made at the relevant time,
on the basis explained below under "Registration and Settlement".
13. All obligations under the Bookbuild and Placing will be subject to
fulfilment of the conditions referred to below under "Conditions of the
Placing" and to the Placing not being terminated on the basis referred to
below under "Right to terminate under the Placing Agreement".
14. By participating in the Bookbuild, each Placee will agree that its rights
and obligations in respect of the Placing will terminate only in the
circumstances described below and will not be capable of rescission or
termination by the Placee.
15. To the fullest extent permissible by law, none of the Managers nor any of
their respective affiliates or agents shall have any liability to Placees
(or to any other person whether acting on behalf of a Placee or otherwise).
In particular, none of the Managers nor any of their respective affiliates
or agents shall have any liability (including to the extent permissible by
law, any fiduciary duties) in respect of the conduct of the Bookbuild
process or of such alternative method of effecting the Placing as the
Managers and the Company may agree.
16. Each prospective Placee who is purchasing the Placing Shares in the
Republic of South Africa will be required to sign a Placing Allocation
Letter to be provided by Macquarie. The terms contained in this Appendix
will be deemed to be incorporated in that Placing Allocation Letter.
CONDITIONS OF THE PLACING
The obligations of the Managers under the Placing Agreement in respect of the
Placing Shares are conditional on, inter alia:
(a) AIM Admission occurring not later than 8.00 a.m. (London time) on 21 June
2010 or such other date as may be agreed between the Company and the
Managers, not being later than 30 June 2010;
(b) the Company having lodged with the ASX an Appendix 3B announcement
conditional only on the issue of the Placing Shares by the business day
after the date of this Announcement (or such other date as may be agreed
between the Company and the Managers not being later than 30 June 2010);
(c) the JSE having confirmed to the Company in writing before the date of AIM
Admission (or such other date as may be agreed between the Company and the
Managers) the agreement of the JSE that the Placing Shares will be eligible
for listing on the JSE on the date of Admission (or such other date as may
be agreed between the Company and the Managers, not being later than 30
June 2010);
(d) the agreement between the Bookrunner and the Company of the Placing Price
and the number of Placing Shares to be issued as established in the
Bookbuild process;
(e) the warranties contained in the Placing Agreement being true and accurate
and not misleading on and as of the date of the Placing Agreement and at
AIM Admission as though they had been given and made on such dates by
reference to the facts and circumstances then subsisting; and
(f) in the opinion of the Bookrunner, acting in good faith, there having been
since the date of the Placing Agreement no material adverse effect (as
defined in the Placing Agreement), whether or not foreseeable at the date
of the Placing Agreement.
If: (i) any of the conditions contained in the Placing Agreement in relation to
the Placing Shares are not fulfilled or waived by the Bookrunner by the
respective time or date where specified (or such later time or date as the
Company and the Bookrunner may agree); (ii) any of such conditions becomes
incapable of being fulfilled; or (iii) the Placing Agreement is terminated in
the circumstances specified below, the Placing in relation to the Placing Shares
will lapse and the Placee`s rights and obligations hereunder in relation to the
Placing Shares shall cease and terminate at such time and each Placee agrees
that no claim can be made by the Placee against either the Company or any of the
Managers in respect thereof.
The Bookrunner may, in its absolute discretion and upon such terms as it thinks
fit, waive compliance by the Company with the whole or any part of any of the
Company`s obligations in relation to the conditions in the Placing Agreement
save that certain conditions, including the condition relating to AIM Admission
taking place, may not be waived. Any such extension or waiver will not affect
Placees` commitments as set out in this Announcement.
Neither the Bookrunner nor the Company shall have any liability to any Placee
(or to any other person whether acting on behalf of a Placee or otherwise) in
respect of any decision it may make as to whether or not to waive or to extend
the time and /or date for the satisfaction of any condition to the Placing nor
for any decision they may make as to the satisfaction of any condition or in
respect of the Placing generally and by participating in the Placing each Placee
agrees that any such decision is within the absolute discretion of the
Bookrunner and the Company.
RIGHT TO TERMINATE UNDER THE PLACING AGREEMENT
The Bookrunner may, in its absolute discretion, at any time before Admission,
terminate the Placing Agreement by giving notice to the Company in certain
circumstances, including a breach of the warranties given to the Managers in the
Placing Agreement, the failure of the Company to comply with obligations which
are material in the Bookrunner`s opinion or, the occurrence of a force majeure
event which in the opinion of the Bookrunner, is likely to prejudice the success
of the Placing. Following Admission to AIM, the Placing Agreement is not capable
of rescission or termination to the extent that it relates to the Placing or the
Placing Shares.
By participating in the Placing, the Placees agree that the exercise by the
Bookrunner of any right of termination or other discretion under the Placing
Agreement shall be within the absolute discretion of the Bookrunner and the
Company and that they need not make any reference to Placees and that they shall
have no liability to Placees whatsoever in connection with any such exercise.
NO PROSPECTUS
The Placing Shares are being offered to a limited number of specifically invited
persons only and will not be offered in such a way as to require a prospectus in
the United Kingdom, Australia, South Africa or in any other jurisdiction. No
offering document or prospectus has been or will be submitted to be approved by
the FSA, ASIC or registered by CIPRO in relation to the Placing and Placees`
commitments will be made solely on the basis of the information contained in
this Announcement (including this Appendix). Each Placee, by accepting a
participation in the Placing, agrees that the content of this Announcement is
exclusively the responsibility of the Company and confirms that it has neither
received nor relied on any other information, representation, warranty, or
statement made by or on behalf of the Company or the Managers or any other
person and none of the Managers nor the Company nor any other person will be
liable for any Placee`s decision to participate in the Placing based on any
other information, representation, warranty or statement which the Placees may
have obtained or received and, if given or made, such information,
representation, warranty or statement must not be relied upon as having been
authorised by the Company, its officers or board of directors. Each Placee
acknowledges and agrees that it has relied on its own investigation of the
business, financial or other position of the Company in accepting a
participation in the Placing, including the merits and risks involved. The
Company is not making any undertaking or warranty to any Placee regarding the
legality of an investment in the Placing Shares by such Placee under any legal,
investment or similar laws or regulations. Each Placee should not consider any
information in this Announcement to be legal, tax or business advice. Each
Placee should consult its own attorney, tax advisor and business advisor for
legal, tax and business advice regarding an investment in the Placing Shares.
Nothing in this paragraph shall exclude the liability of any person for
fraudulent misrepresentation.
REGISTRATION AND SETTLEMENT
UK SETTLEMENT
Settlement of transactions in the Placing Shares following Admission on AIM will
take place in respect of the Placing Shares to be held on the UK depositary
interest register, on a delivery versus payment basis in Depositary Interest
form within CREST.
The Company will deliver the Placing Shares in Depositary Interest form to a
CREST account operated by the Bookrunner as agent for the Company and the
Bookrunner will enter its delivery (DEL) instruction into the CREST system. The
input to CREST by a Placee of a matching or acceptance instruction will then
allow delivery of the relevant Placing Shares to that Placee against payment.
It is expected that settlement will be on 21 June 2010 in CREST on a T+3 basis
in accordance with the instructions set out in the conditional contract note.
AUSTRALIAN SETTLEMENT
Settlement of transactions in the Placing Shares following quotation on the ASX
will take place in respect of Placing Shares to be held on the Australian share
register, on a delivery versus payment basis through CHESS.
The Company will deliver the Placing Shares in CHESS holdings as the Relevant
Manager directs in respect of the Placing Shares which are to be allotted in
uncertificated form and, in each case, the Company will ensure that the same are
enabled for settlement as soon as practicable after Admission and in any event
prior to the relevant Record Date
It is expected that settlement will be on 22 June 2010 in CHESS on a T+3 basis
in accordance with the instructions set out in the conditional contract note.
SOUTH AFRICAN SETTLEMENT
Settlement of transactions in the Placing Shares following listing on the JSE
will take place in respect of the Placing Shares to be held on the South African
share register, on a free of payment basis in accordance with the rules of
Strate with Computershare Investor Services (Pty) Limited acting as broker under
the rules of Strate to manage settlements on behalf of the Company on 23 June
2010.
The Placing Allocation Letter sets out further details of the proposed
arrangements for payment for and settlement of Placing Shares to be held on the
South African share register.
It is expected that settlement will be on 23 June 2010 on a T+4 basis in
accordance with the instructions set out in the Placing Allocation Letter.
GENERAL
The Company reserves the right to require settlement for and delivery of the
Placing Shares (or a portion thereof) to any Placee in any form it requires if,
in the Bookrunner`s opinion, delivery or settlement is not possible or
practicable within CREST, CHESS or Strate, as the case may be, or would not be
consistent with the regulatory requirements in the Placee`s jurisdiction.
Following the close of the Bookbuild for the Placing, each Placee allocated
Placing Shares in the Placing will be sent a conditional contract note or
Placing Allocation Letter, as the case may be, stating the number of Placing
Shares to be allocated to it at the Placing Price and settlement instructions.
Each Placee agrees that it will do all things necessary to ensure that delivery
and payment is completed in accordance with the standing CREST, CHESS or Strate
rules and regulations and settlement instructions that it has in place with the
Managers.
Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above at the rate of two
percentage points above LIBOR as determined by the Bookrunner.
Each Placee is deemed to agree that, if it does not comply with these
obligations, the Bookrunner may sell any or all of the Placing Shares allocated
to that Placee on such Placee`s behalf and retain from the proceeds, for the
Bookrunner`s account and benefit, an amount equal to the aggregate amount owed
by the Placee plus any interest due thereof. The relevant Placee will, however,
remain liable for any shortfall below the aggregate amount owed by it and may be
required to bear any stamp duty or stamp duty reserve tax or securities transfer
tax (together with any interest or penalties) which may arise upon the sale of
such Placing Shares on such Placee`s behalf.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the conditional contract note or Placing Allocation
Letter, as the case may be, is copied and delivered immediately to the relevant
person within that organisation. Insofar as Placing Shares are registered in a
Placee`s name or that of its nominee or in the name of any person for whom a
Placee is contracting as agent or that of a nominee for such person, such
Placing Shares should, subject as provided below, be so registered free from any
liability to UK stamp duty or stamp duty reserve tax or securities transfer tax.
REPRESENTATIONS AND WARRANTIES
By participating in the Placing each Placee (and any person acting on such
Placee`s behalf) makes the following representations, warranties,
acknowledgements, undertakings and agreements (as the case may be) to the
Company and to the Managers:
1. represents and warrants that it has read and understood this Announcement,
including the Appendices, in its entirety;
2. acknowledges that no offering document or prospectus has been prepared in
connection with the placing of the Placing Shares and represents and
warrants that it has not received a prospectus or other offering document
in connection therewith;
3. acknowledges that neither the Managers nor the Company nor any of their
affiliates or agents nor any person acting on behalf of any of them has
provided, and will not provide it, with any information or material
regarding the Placing Shares or the Company other than this Announcement;
nor has it requested any of the Managers, the Company, any of their
affiliates or agents or any person acting on behalf of any of them to
provide it with any such information or material;
4. acknowledges that the content of this Announcement is exclusively the
responsibility of the Company and that none of the Managers nor any person
acting on their respective behalf has or shall have any liability for any
information, representation or statement contained in this Announcement or
any information previously published by or on behalf of the Company and
will not be liable for any Placee`s decision to participate in the Placing
based on any information, representation or statement contained in this
Announcement or otherwise. Each Placee further represents, warrants and
agrees that the only information on which it is entitled to rely and on
which such Placee has relied in committing itself to acquire the Placing
Shares is contained in this Announcement and any information previously
published by the Company by notification to a Regulatory Information
Service, such information being all that it deems necessary to make an
investment decision in respect of the Placing Shares and that it has
neither received nor relied on any other information given or
representations, warranties or statements made by any of the Managers or
the Company and neither the Managers nor the Company will be liable for any
Placee`s decision to accept an invitation to participate in the Placing
based on any other information, representation, warranty or statement. Each
Placee further acknowledges and agrees that it has relied on its own
investigation of the business, financial or other position of the Company
in deciding to participate in the Placing;
5. acknowledges that the Ordinary Shares are listed, admitted to trading or
quoted (as the case may be) on the ASX, AIM and the JSE and the Company is
therefore required to publish certain business and financial information in
accordance with the rules of such exchanges (collectively, the "Exchange
Information"), which includes a description of the nature of the Company`s
business and the Company`s most recent resource statements, financial
statements, and similar statements for preceding financial years, and that
it is able to obtain or access the Exchange Information without undue
difficulty;
6. acknowledges that neither the Managers nor any person acting on their
behalf nor any of their affiliates or agents has or shall have any
liability for the Exchange Information, any publicly available or filed
information or any representation relating to the Company, provided that
nothing in this paragraph excludes the liability of any person for
fraudulent misrepresentation made by that person;
7. acknowledges that it is not, and at the time the Placing Shares are
acquired will not, be a resident of Canada or Japan, and that the Placing
Shares have not been and will not be registered under the securities
legislation of Canada or Japan and, subject to certain exceptions, may not
be offered, sold, taken up, renounced or delivered or transferred, directly
or indirectly, within those jurisdictions;
8. unless otherwise specifically agreed with the Managers, represents and
warrants that it is, or at the time the Placing Shares are acquired that it
will be, the beneficial owner of such Placing Shares, or that the
beneficial owner of such Placing Shares is not a resident of Canada or
Japan;
9. acknowledges that the Placing Shares have not been and will not be
registered under the securities legislation of Canada or Japan and, subject
to certain exceptions, may not be offered, sold, taken up, renounced or
delivered or transferred, directly or indirectly, within those
jurisdictions;
10. represents and warrants that the issue to it, or the person specified by it
for registration as holder, of Placing Shares will not give rise to a
liability under any of sections 67, 70, 93 or 96 of the Finance Act, 1986
(depositary receipts and clearance services) and that the Placing Shares
are not being acquired in connection with arrangements to issue depositary
receipts or to transfer Placing Shares into a clearance system;
11. represents and warrants that it has complied with its obligations in
connection with money laundering and terrorist financing under the United
Kingdom Proceeds of Crime Act, 2002, the United Kingdom Terrorism Act, 2003
and the United Kingdom Money Laundering Regulations, 2007 and the
equivalent Australian and South African legislation (the "Regulations")
and, if making payment on behalf of a third party, that satisfactory
evidence has been obtained and recorded by it to verify the identity of the
third party as required by the Regulations;
12. if a financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, represents and warrants that the Placing Shares
purchased by it in the Placing will not be acquired on a non-discretionary
basis on behalf of, nor will they be acquired with a view to their offer or
resale to, persons in a member state of the European Economic Area which
has implemented the Prospectus Directive other than Qualified Investors, or
in circumstances in which the prior consent of the Managers has been given
to the offer or resale;
13. represents and warrants that it has not offered or sold and, prior to the
expiry of a period of six months from Admission, will not offer or sell any
Placing Shares to persons in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
business or otherwise in circumstances which have not resulted and which
will not result in an offer to the public in the United Kingdom within the
meaning of section 85(1) of the FSMA;
14. represents and warrants that it has not offered or sold and will not offer
or sell any Placing Shares to persons in the European Economic Area prior
to AIM Admission except to persons whose ordinary activities involve them
in acquiring, holding, managing or disposing of investments (as principal
or agent) for the purposes of their business or otherwise in circumstances
which have not resulted in and which will not result in an offer to the
public in any member state of the European Economic Area within the meaning
of the Prospectus Directive;
15. represents and warrants that it has only communicated or caused to be
communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the
meaning of section 21 of the FSMA) relating to the Placing Shares in
circumstances in which section 21(1) of the FSMA does not require approval
of the communication by an authorised person;
16. represents and warrants that it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to the Placing Shares in, from or otherwise involving, the United
Kingdom;
17. represents and warrants that if it resides in a member state of the
European Economic Area it is a Qualified Investor within the meaning of the
Prospectus Directive;
18. represents and warrants that it has complied and will comply with all
applicable provisions of the Australian Corporations Act (including
relevant insider trading provisions) and the ASX Listing Rules in relation
to the Placing Shares;
19. agrees that it must comply with all applicable provisions of the Australian
Foreign Investments and Takeovers Act, 1975 (Cth) in relation to the
Placing Shares;
20. represents and warrants that its participation in the Placing will not
cause its aggregate shareholding in the Company to be 20% or more of the
issued share capital of the Company;
21. represents and warrants that it is not a `related party` of the Company as
that term is defined in section 228 of the Australian Corporations Act
and/or the ASX Listing Rules, (or if it is a `related party` of the
Company, that its acquisition of Placing Shares would not require the
Company to obtain the approval of its shareholders under section 208(1)(a)
of the Australian Corporations Act);
22. represents and warrants that if it resides in the United Kingdom it is a
Qualified Investor within the meaning of the Prospectus Directive and a
person (a) who has professional experience in matters relating to
investments and fall within article 19(5) (investment professionals) of the
Order, or (b) who falls within article 49(2)(a) to (d) (high net worth
companies, unincorporated associations etc) of the Order;
23. represents and warrants that if it resides in Australia it is a person to
whom an offer of securities may be made under section 708(8) or section
708(11) of the Australian Corporations Act and agrees that it will not
offer to sell the Placing Shares to any person that is not a sophisticated
or professional investor under section 708(8) or section 708(11) of the
Australian Corporations Act until the day after a notice is lodged by the
Company with ASX that complies with subsections 708A(5)(e) and (6) of the
Australian Corporations Act;
24. represents and warrants that if it resides in the Republic of South Africa
it qualifies as an addressee described in section 144(b) of the South
African Companies Act , 1973 (No 61 of 1973), as amended;
25. represents and warrants that is has complied with and will comply with all
applicable provisions of the South African Companies Act, 1973 (No 61 of
1973), as amended, Securities Services Act, 2004 (No 36 of 2004), as
amended and the JSE Listings Requirements in relation to the Placing
Shares;
26. represents and warrants that it and any person acting on its behalf is
entitled to acquire the Placing Shares under the laws of all relevant
jurisdictions and that it has all necessary capacity and has obtained all
necessary consents and authorities (including without limitation any and
all approvals that may be required for the purposes of the South African
Exchange Control Regulations, 1961) to enable it to commit to this
participation in the Placing and to perform its obligations in relation
thereto (including, without limitation, in the case of any person on whose
behalf it is acting, all necessary consents and authorities to agree to the
terms set out or referred to in this Announcement) and will honour such
obligations, and it has had access to such financial and other information
concerning the Company and the Placing shares as it deems necessary in
connection with its decision to purchase the Placing Shares;
27. where it is acquiring Placing Shares for one or more managed accounts,
represents and warrants that it is authorised in writing by each managed
account: (a) to acquire the Placing Shares for each managed account; (b) to
make on its behalf the representations, warranties, acknowledgements,
undertakings and agreements in this Appendix and the Announcement of which
it forms part; and (c) to receive on its behalf any investment letter or
Placing Allocation Letter relating to the Placing in the form provided to
you by any of the Managers;
28. undertakes that it (and any person acting on its behalf) will make payment
for the Placing Shares allocated to it in accordance with this Announcement
and Placing Allocation Letter on the due time and date set out herein and
it has obtained all necessary consents and authorities to enable it to give
its commitment so to subscribe, failing which the relevant Placing Shares
may be placed with other placees or sold as the Bookrunner may in its sole
discretion determine and without liability to such Placee;
29. acknowledges that none of the Managers, nor any of their respective
affiliates, nor their respective agents nor any person acting on behalf of
any of them, is making any recommendations to it, advising it regarding the
suitability of any transactions it may enter into in connection with the
Placees and that participation in the Placing is on the basis that it is
not and will not be a client of any of the Managers and that none of the
Managers have any duties or responsibilities to it for providing the
protections afforded to their respective clients or customers or for
providing advice in relation to the Placing nor in respect of any
representations, warranties, acknowledgements, undertakings or indemnities
contained in the Placing Agreement nor for the exercise or performance of
any of its rights and obligations thereunder including any rights to waive
or vary any conditions or exercise any termination right;
30. undertakes that the person whom it specifies for registration as holder of
the Placing Shares will be: (a) itself; or (b) its nominee, as the case may
be. Neither the Managers nor the Company will be responsible for any
liability to stamp duty or stamp duty reserve tax or securities transfer
tax resulting from a failure to observe this requirement. Each Placee and
any person acting on behalf of such Placee agrees to participate in the
Placing and it agrees to indemnify the Company and the Managers in respect
of the same on the basis that the Placing Shares will be allotted to the
CREST, CHESS or Strate stock account of the Relevant Manager or its
affiliate or agent who will hold them as nominee on behalf of such Placee
until settlement in accordance with its standing settlement instructions;
31. acknowledges that any agreements entered into by it pursuant to these terms
and conditions shall be governed by and construed in accordance with the
laws of England and Wales and it submits (on behalf of itself and on behalf
of any person on whose behalf it is acting) to the exclusive jurisdiction
of the English courts as regards any claim, dispute or matter arising out
of any such contract, except that enforcement proceedings in respect of the
obligation to make payment for the Placing Shares (together with any
interest chargeable thereon) may be taken by the Company or the Managers in
any jurisdiction in which the relevant Placee is incorporated or in which
any of its securities have a quotation on a recognised stock exchange;
32. acknowledge that time shall be of the essence as regards to obligations
pursuant to this Appendix to the Announcement;
33. agrees that the Company and the Managers and their respective affiliates
and agents and others will rely upon the truth and accuracy of the
foregoing representations, warranties, acknowledgements, undertakings and
agreements which are given to the Managers on their own behalf and on
behalf of the Company and are irrevocable, and with respect to any of the
representations, warranties, acknowledgements, undertakings and agreements
deemed to have been made by a purchaser of the Placing Shares as a
fiduciary or agent for one or more investor accounts, it has sole
investment discretion with respect to each such account and it has full
power and authority to make the foregoing representations, warranties,
acknowledgements, undertakings and agreements on behalf of each such
account;
34. agrees to indemnify and hold the Company and the Managers and their
respective affiliates and agents harmless from any and all costs, claims,
liabilities and expenses (including legal fees and expenses) arising out of
or in connection with any breach of the representations, warranties,
acknowledgements, agreements and undertakings in this Appendix and further
agrees that the provisions of this Appendix shall survive after completion
of the Placing;
35. represents and warrants that it is an institution which: (a) has such
knowledge and experience in financial and business matters and expertise in
assessing credit, market and all other relevant risks as to be capable of
evaluating, and has evaluated independently, the merits, risks and
suitability of its investment in the Placing Shares; and (b) it and any
accounts for which it is acting are each able to bear the economic risk of
such investment, and are each able to sustain a complete loss of any
investment in the Placing Shares;
36. represents and warrants that it is entitled to subscribe for the Placing
Shares under the laws of all relevant jurisdictions which apply to it; it
is outside the United States; has not purchased the Placing Shares as a
result of any directed selling efforts within the meaning of Rule 902(c) of
Regulation S; and its purchase of the Placing Shares will be in compliance
with the requirements of Regulation S, including, without limitation, that
the offer and sale of the Placing Shares to it will be made in an "offshore
transaction" as such term is defined in Regulation S;
37. understands and acknowledges that the Placing Shares are being offered in a
transaction not involving any public offering in the United States within
the meaning of the Securities Act and that the Placing Shares have not been
and will not be registered under the Securities Act or the securities laws
of any State in the United States. It agrees that the Placing Shares may
not be reoffered, sold, pledged or otherwise transferred, and that it will
not directly or indirectly reoffer, sell, pledge or otherwise transfer the
Placing Shares, except in an offshore transaction in accordance with Rule
903 or 904 of Regulation S or another exemption from, or transaction not
subject to, the Securities Act and that such offer, sale, pledge or
transfer must, and will, be made in accordance with any applicable
securities laws of any State or other jurisdiction of the United States;
and
38. understands that no representation has been, is being or will be made by
the Company as to the availability of an exemption from the registration
for the reoffer, resale, pledge or transfer of the Placing Shares in
accordance the Securities Act.
Placees should note that they will be liable for any stamp duty and all other
stamp, issue, securities, transfer, registration, documentary or other duties or
taxes (including any interest, fines or penalties relating thereto) payable
outside the UK by them or any other person on the subscription by them of any
Placing Shares or the agreement by them to acquire any Placing Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that
none of the Managers owe any fiduciary or other duties to any Placee in respect
of any representations, warranties, undertakings, acknowledgements, agreements
or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and
agrees that the Managers or any of their respective affiliates or agents may, at
their absolute discretion, agree to become a Placee in respect of some or all of
the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with the
Managers, any money held in an account with any of the Managers, on behalf of
the Placee and/or any person acting on behalf of the Placee will not be treated
as client money within the meaning of the rules and regulations of the FSA made
under the FSMA. The Placee acknowledges that the money will not be subject to
the protections conferred by the client money rules; as a consequence, this
money will not be segregated from the relevant Manager`s money, as the case may
be, in accordance with the client money rules and will be used by the Managers
in the course of their own respective businesses and the Placee will rank only
as a general creditor of the Managers.
If the Company or any of the Managers their respective affiliates or agents
request any information about a Placee`s agreement to acquire Placing Shares,
including, without limitation, any information required by the South African
Reserve Bank in respect of the Placing Shares and any evidence supporting the
representations and warranties given above, such Placee shall (and it undertakes
to) promptly disclose it to them.
All times and dates in this Announcement may be subject to amendment. The
Managers shall notify the Placees and any person acting on behalf of the Placees
of any changes.
APPENDIX B
RISK FACTORS
An investment in the Ordinary Shares is subject to a number of risks and
uncertainties. Prospective investors should carefully consider the following
risk factors, in addition to the other information in this Announcement, prior
to making any investment decision in relation to the Ordinary Shares. These
risks and uncertainties represent all of those known to the Directors, as at the
date of this Announcement, which the Directors consider to be material. However,
they are not the only risks facing the Company and its subsidiaries (the
"Group"); additional risks and uncertainties not presently known to the
Directors, or that the Directors currently consider to be immaterial, could also
impair the business of the Group. If any or a combination of these risks and
uncertainties actually occurs, the business, results of operations, financial
condition and/or growth prospects of the Group could be materially and adversely
affected. In such case, the market price of the Ordinary Shares could decline
and investors could lose all or part of their investment.
RISKS RELATING TO THE MINING INDUSTRY
THE NATURE OF MINERAL EXPLORATION AND PRODUCTION ACTIVITIES INVOLVES A HIGH
DEGREE OF RISK
The establishment and operation of a commercial mine is complex, and entails
significant execution risk as well as the need for effective operational
management, purchase of required equipment, creation of necessary
infrastructure, and the retention of relevant staff with the required levels of
experience and technical skill. The establishment, development and operation of
the Company`s operations are therefore subject to a number of risks, including:
- delays or higher than expected costs in obtaining necessary equipment;
- adverse mining conditions, including unanticipated variations in grade and
other geological problems, difficult surface or underground conditions and
unusual or unexpected ground conditions, which may delay and hamper
production;
- mechanical and electrical equipment under-performance and maintenance
problems;
- disruption to transport services including air, overland conveyor and other
systems;
- closure by governmental or other regulatory authorities as a result of
actual or alleged safety or environmental risks;
- fire, flooding, rock bursts, cave-ins and landslides;
- climate change, unusual weather, seismic events or other natural phenomena;
- strikes, lock-outs and shut downs;
- terrorism, sabotage, theft or other interference in the maintenance or
provision of infrastructure; and
- other adverse conditions resulting from drilling, blasting and removal and
processing of material associated with underground mining.
The occurrence of these or other risks could result in operational delays, loss
of production and decreased revenues and cash flows, and consequently have a
material adverse effect on the Company`s business, results of operations,
financial condition and/or growth prospects.
THE GROUP IS EXPOSED TO A REDUCTION IN THE PRICE OF ITS PRODUCTS
The Group`s revenues are currently substantially derived from sales of coal and
nickel magnesium alloy and related products, and are therefore affected by the
price which it is able to obtain for those products. The Group`s expansion plans
involve increasing its coal production and sales of Nimag Limited`s products
will therefore contribute proportionally less to the Group`s total revenue,
thereby reducing the Group`s exposure to decreases in the price of those
products. However, the Group`s exposure to decreases in the price of coal will
be correspondingly higher. The supply, demand and prices for commodities such as
coal are volatile and are influenced by factors beyond the Group`s control.
These factors include global demand and supply, the costs of freight, exchange
rates, commodity trading on the future markets, interest and inflation rates and
political events. There can be no assurance that the price of coal or the other
commodities sold by the Group will not decline in the future.
The Group does not currently enter into forward sales, derivative or other
hedging arrangements in respect of its coal and other products in order to
establish a price for those products in advance.
MINERAL RESOURCE ESTIMATES ARE UNCERTAIN AND SUBJECT TO CHANGE FROM A VARIETY OF
FACTORS, AND RESOURCES RECOVERED MAY NOT BE ABLE TO BE BROUGHT INTO PROFITABLE
PRODUCTION
The estimation of mineral resources is a subjective process and the accuracy of
mineral resource estimates is a function of the quantity and quality of
available data, the assumptions used and judgements made in interpreting
engineering and geological information. There is significant uncertainty in any
mineral resource estimate and the actual deposits encountered and the economic
viability of mining a deposit may differ materially from the Group`s estimates.
The exploration of mineral rights is speculative in nature and is frequently
unsuccessful. The Group may be unable to successfully discover and/or exploit
mineral resources.
Estimated mineral resources may also have to be recalculated based on changes in
coal or other commodity prices, further exploration or development activity
and/or actual production experience. In addition, by their very nature, mineral
resource estimates are imprecise and depend to some extent on interpretations,
which may prove to be inaccurate. As further information becomes available
through additional fieldwork and analysis the estimates may change, which could
result in: (i) alterations to development and mining plans which may, in turn,
adversely affect the Group`s operations; and (ii) a material adverse effect on
estimates of the volume or grade of mineralisation, estimated recovery rates or
other important factors that influence mineral resource estimates. Further,
there can be no assurance that any resources recovered can be brought into
profitable production. Price fluctuations, increased production costs or reduced
recovery rates, or other factors may render the present estimated or inferred
resources of the Group uneconomical or unprofitable to develop at a particular
site or sites.
THE GROUP MAY NOT ACHIEVE ITS PRODUCTION ESTIMATES, AND PRODUCTION MAY NOT BE
ECONOMICALLY VIABLE
The Group cannot give any assurance that it will achieve its production
estimates or that production will be economically viable. These production
estimates are dependent on, among other things, the accuracy of mineral resource
estimates, the accuracy of assumptions regarding ore grades and recovery rates,
ground conditions and physical characteristics of ores, such as hardness and the
presence or absence of particular metallurgical characteristics and the accuracy
of estimated rates and costs of mining and processing. The Group`s actual
production may also vary from its estimates for a variety of reasons, including
adverse operating conditions (such as unexpected geological conditions, fire,
weather, accidents), compliance with governmental requirements, labour and
safety issues, delays in installing or repairing plant and equipment, inability
to complete, or lack of success of, capital development and exploration
drilling.
Even where resources are discovered, it can take a number of years from the
initial phases of exploration and drilling until production is possible, during
which time the economic feasibility of production may change. Substantial
expenditures are required to establish the viability of coal resources through
drilling and, in the cases of new properties, to construct mining and processing
facilities. As a result of these uncertainties, there can be no assurance that
it will be economically viable to operate a mine at the time production is due
to commence.
Further the grade of coal recovered may vary from estimates. Insufficient coal
of the appropriate grade may make it impossible for CoAL to comply with its
obligations under off-take agreements, as a result of which the Group could
incur penalties or additional costs or, in certain circumstances, an off-take
agreement could be terminated.
THE GROUP`S OPERATIONS ARE SUBJECT TO STRICT ENVIRONMENTAL REGULATION AND
ENFORCEMENT
The Group`s operations are subject to existing and possible future
environmental, heritage and health and safety legislation, regulations and
actions which impose significant costs and burdens on the Group (the extent of
which cannot be predicted) both in terms of compliance and potential penalties,
liabilities and remediation or decommissioning costs. Breach of any
environmental obligations could result in penalties and civil liabilities and/or
suspension of operations, any of which could adversely affect the Group.
Mining and mineral processing operations have inherent risks and liabilities
associated with damage to the environment, particularly water resources and the
disposal of waste products occurring as a result of mineral exploration,
production and processing. Laws and regulations involving the protection and
remediation of the environment are constantly changing and are generally
becoming more restrictive. Approval is required for land clearing and for ground
disturbing activities. Delays in obtaining such approvals can result in delay to
anticipated exploration programmes or mining activities.
THE GROUP MAY BE UNABLE TO MAKE THE CONTRIBUTIONS NECESSARY TO MEET ITS
ENVIRONMENTAL REHABILITATION OBLIGATIONS
The Group`s operations in South Africa are subject to various laws and
regulations governing mine closure and mined-land rehabilitation. Amendments in
these laws and regulations or community expectations may result in an increase
in the Group`s regulatory obligations and compliance costs. As estimated costs
increase, the Group is required to post increasing amounts of financial
assurance to ensure the availability of funds to perform future closure and
rehabilitation estimated at rates and on a basis of calculation prescribed by
the DMR, which will impact the Group`s financial provisioning and costs at the
affected operations. There is no certainty that the basis of calculation
prescribed by the DMR will prove to be an accurate estimate of the obligations
of the Group in remediating the sites of its mining activities in South Africa.
The Group has made financial provision for mine and site remediation and has
mine closure plans for all of its operating and former mining sites. Although
the Directors consider that the Group has made adequate financial provision for
potential environmental liability, the estimation of such liability is highly
subjective and uncertain, and there can be no guarantee that actual
environmental liability will not exceed the amount provided for. Should the
amount of financial assurance set aside by the Group as a provision for
reclamation and remediation be insufficient for any reason, the Group could be
required to post other collateral, cash or cash equivalents directly in support
of its financial assurance obligations in relation to reclamation and
remediation.
THE GROUP`S OPERATIONS MAY BE ADVERSELY AFFECTED AS A RESULT OF CHANGES TO
CLIMATE CHANGE LEGISLATION
The Group`s operations may be subject to laws, regulations and policies aimed at
limiting or reducing greenhouse gas emissions (such as the Kyoto Protocol).
While the impact of such laws, regulations and policies cannot be quantified at
this time, the Directors believe this could increase costs for fossil fuels,
electricity and transportation, restrict industrial emission levels, impose
added costs for emissions in excess of permitted levels and increase costs for
monitoring, reporting and financial accounting. As the Group incurs certain of
these costs in the operation of its business, significant increases in such
costs could have a material adverse effect on the business, results of
operations, financial condition and/or growth prospects of the Group.
Further, the Group may be required to change operations, reduce production
capacity or make additional investments to adapt to new or amended environmental
laws and regulations. The coal industry, governments and other organisations are
actively investing in research projects to reduce greenhouse gas emissions from
the use of coal in power generation. Global demand for coal is expected to be
supported by forecast increases in global demand for energy. However, the
introduction of laws, regulations and practices to limit greenhouse gas
emissions may, in the future, adversely affect the price of, and demand for,
coal.
THE MARKET FOR PROFITABLE COAL MINING OPPORTUNITIES IS COMPETITIVE
The Group may encounter competition in identifying exploration and development
opportunities for attractive coal properties in South Africa and elsewhere. For
the Group to expand its operations in South Africa or elsewhere, it is likely to
face competition from both domestic and international coal mining companies
which already have significant operations in these countries, together with
potential new entrants into such markets, any of which may have greater
financial, technological and other resources than the Group. There is a high
degree of competition for the discovery and acquisition of properties considered
to have a commercial potential. The Group competes with other mining companies
for the acquisition of mineral claims, leases and other mineral interests as
well as for the recruitment and retention of qualified employees and other
personnel.
THE GROUP MAY NOT BE ABLE TO SOURCE SUFFICIENT AND APPROPRIATE EQUIPMENT FOR ITS
OPERATIONS
The current and foreseeable levels of global exploration and development
activity are such that equipment utilisation rates are high, and the Group will
be in a competitive environment in relation to sourcing appropriate equipment
and so may be unable to source appropriate equipment economically or at all for
its projects, and in particular for the development of its Vele and Makhado
projects in line with current plans.
RISKS RELATING TO THE GROUP`S BUSINESS
THE GROUP RELIES ON ACCESS TO ADEQUATE, AFFORDABLE AND CONTINUOUS POWER SUPPLY
The Group is particularly dependant on reliable and continuous delivery of
sufficient quantities of power to its mines at an affordable rate. South Africa
has historically experienced widespread and prolonged power outages, also known
as load shedding, and all mines are being required to cut back on power usage in
the long term. Although the recent global economic downturn has resulted in a
reduction of power consumption in South Africa, a resumption of rolling power
outages, voltage imbalances or reductions in availability may restrict, or
result in the shut-down of, the Group`s production facilities. The Group has
power generators for use in the event of a power outage. However, should a
serious failure of basic infrastructure occur or should high occurrences of
power outages across the country occur or, should the price of electricity
further increase significantly exploration, development and production at the
Group`s operations in South Africa could be materially and adversely impacted.
Limits on the availability of energy could also curtail the Group`s ability to
maintain or grow production, and may prevent the Group from meeting
contractually-agreed delivery requirements. The existing contractual level of
energy provided by Eskom (the South African state-owned power utility) to the
Group will, if kept in place or reduced, restrict the Group`s ability to grow
its operations and production. New projects, or extensions of existing sites or
development work, may not receive sufficient energy allocation from Eskom to
implement the Group`s strategy, and as a result such new projects may have to be
delayed or cancelled altogether.
Eskom and the National Energy Regulator of South Africa ("NERSA"), continue to
recognise the need for new supply capacity and a series of recent tariff
increases and proposals have either been approved or tabled. In the third
quarter of 2008, Eskom applied for a tariff review and NERSA granted a 20 per
cent. increase for the nine remaining months of the Eskom financial year (July
2008 to March 2009). In 2009, effective 1 July, an increase of 34 per cent. was
approved and implemented. Eskom tabled its 2010 tariff increase proposal to
NERSA at the end of September 2009, with a proposed 45 per cent. increase for
each of the next three years, which proposal was subsequently revised down to 35
per cent., to help raise funds for the expansion programme. In February 2010,
NERSA approved an electricity tariff increase of 24.8 per cent. For 2010,
effective 1 April 2010, following an extensive process of consultation and
deliberation. NERSA further approved tariff increases for 2011 and 2012 of 25.8
per cent. and 25.9 per cent. respectively, thus providing certainty of
electricity costs over the next three years.
THE GROUP IS DEPENDANT ON ADEQUATE ACCESS TO RAIL AND PORT FACILITIES AND THERE
CAN BE NO ASSURANCE THAT THE GROUP WILL BE ABLE TO OBTAIN SUFFICIENT RAIL
TRANSPORT FACILITIES TO MEET ITS CONTINUING NEEDS
The Group has contracted with Transnet Freight Rail (a division of the South
African government owned rail and freight organisation) for the transportation
of coal by rail from the Group`s mines and the Woestalleen colliery to the
Richards Bay terminals in South Africa and the Matola Terminal in Maputo,
Mozambique. The contractual arrangements, which the Directors consider typical
for agreements of this type in South Africa, do not impose any financial or
other penalties on Transnet Freight Rail for failure to perform its obligations,
nor are there any performance guarantees. While the Directors have no reason to
expect that Transnet Freight Rail will not be able to fulfil its contractual
obligations, this may nevertheless occur as a result of circumstances outside
the Group`s or Transnet Freight Rail`s control (including, for example, as a
result of a dispute between the South African and Mozambique governments in
relation to the cross-border rail link or a terrorist or criminal act which
disrupts or severs the rail service or due to badly maintained or outdated
rolling stock or rail tracks). Therefore, there can be no assurance that the
Group will be able to obtain sufficient rail transport facilities to meet its
continuing needs, and the Group would not be entitled to financial compensation
under the existing contractual arrangements if such facilities were not
available. Any significant disruption to the Group`s rail transportation
arrangements may have a material adverse effect on the Group`s business, results
of operations, financial condition and/or growth prospects.
The Group has secured long term port allocation for the export of coal through
the Matola Terminal. Any future allocation to accommodate increased production
will depend on a number of factors including expansion of the port terminal.
Although the Group has provided significant loan financing to the owners of the
Matola Terminal for the expansion of the terminal and work has commenced, there
can be no guarantee that such expansion will be completed or that the expansion
will be sufficient to meet the Group`s future requirements.
Further, the Group currently relies upon the Matola Terminal for the export of a
substantial proportion of its coal production and has based its expansion plans
on utilising the Matola Terminal as the single port facility for its export
sales. The Group is therefore disproportionately exposed to any event or
circumstance which disrupts the operation of the Matola Terminal (such as an
accident, criminal act or natural disaster) for any significant period of time.
THE GROUP MAY NOT BE ABLE TO FINANCE THE OPERATION, DEVELOPMENT AND EXPANSION OF
ITS BUSINESS IN THE LONGER TERM
Additional funding is likely to be required in the longer term to develop the
Group`s projects, to take advantage of opportunities for acquisitions, joint
ventures or other business opportunities, to meet any unanticipated liabilities
or expenses which the Group may incur and to continue to grow the Group`s
business. The Group may seek in the longer term to raise further funds through
equity or debt financing, joint ventures, production sharing arrangements or
otherwise bringing in a partner to share costs. There can be no assurance that
additional finance or a suitable partner will be available when needed or, if
financing is available, that the terms of the financing will be commercially
acceptable to the Group. Further, any additional debt financing, if available,
may involve onerous restrictions on other financing and operating activities. A
failure to obtain sufficient financing for the Group`s activities and future
projects may result in delay or indefinite postponement of exploration,
development or production on the Group`s properties or even loss of a property
interest (including any prospecting or mining right).
FLUCTUATIONS IN EXCHANGE RATES COULD HAVE A MATERIAL ADVERSE AFFECT ON THE
GROUP`S OPERATING RESULTS, CASHFLOWS AND OVERALL PROFITABLITY
A substantial proportion of the Group`s revenues are generated in US dollars,
while the majority of its costs are incurred in South African Rand. The Group
has also previously raised capital and paid for acquisitions in pounds sterling.
Further, the Group reports its financial results in Australian dollars. The
Group is therefore exposed to changes in the exchange rate between the South
African Rand and the US Dollar and between the Australian dollar and the South
African Rand, the US dollar and Pound Sterling. The Group does not currently
operate a foreign exchange hedging policy in order to reduce its exposure to
movements in these currencies and so may be exposed to significant adverse
changes in exchange rates.
CONFLICTS OF INTEREST WITH SUBSTANTIAL SHAREHOLDERS COULD DISRUPT THE OPERATION
OF THE GROUP`S BUSINESS
The Company has a number of substantial shareholders, one of which has a
representative on the Board. While the Board has set up a procedure to deal with
potential conflicts of interest whereby potentially conflicted directors are
required to abstain from relevant discussions and voting, there can be no
assurance that conflicts will not arise or that, if they do, they can be
successfully overcome. Further, the Company is party to certain agreements with
shareholders which contain consent requirements regarding certain material
decisions such as issues of shares, changes in share capital structure or
material borrowings, acquisitions, disposals or changes in business. To the
extent that such agreements remain outstanding, refusal of such consents might
materially impair or prevent the Company from pursuing its plans.
THE GROUP`S INSURANCE COVERAGE MAY BE INSUFFICIENT TO COVER LOSSES OR THE GROUP
COULD BE SUBJECT TO UNINSURED LIABILITIES WHICH COULD MATERIALLY AFFECT ITS
BUSINESS, RESULTS OF OPERATIONS OR FINANCIAL CONDITION
There are circumstances where insurance will not cover the consequences of an
event, or where the Group may become liable for costs incurred in events or
incidents against which it either cannot insure or may have elected not to have
insured (whether on account of prohibitive premium costs or for other commercial
reasons). Although the Group maintains insurance that it considers to be
adequate, liabilities might exceed policy limits. Insurance fully covering
sovereign risk, terrorism and many environmental risks (including potential
liability for pollution or other hazards as a result of disposal of waste
products occurring from exploration, production and processing) is not generally
available to the Group. Moreover, the Group may be subject to large excess
payments in the event that it has a valid claim, and may not therefore be
entitled to recover the full extent of its loss, or may decide that it is not
economical to seek to do so.
THE GROUP RELIES ON CERTAIN KEY PERSONNEL
The Group`s business is dependent on retaining the services of a small number of
key personnel of the appropriate calibre as the business develops. The success
of the Group is, and will continue to be to a significant extent, dependent on
the expertise and experience of the directors and senior management. Whilst the
Group has entered into contractual arrangements with the aim of securing the
services of the existing management team, the retention of their services cannot
be guaranteed. Accordingly, the loss of key personnel could have an adverse
effect on the Group. There can be no assurance that the Group will be able to
manage effectively the expansion of its operations or that the Group`s current
personnel, systems, procedures and controls will be adequate to support the
Group`s operations.
THE GROUP IS EXPOSED TO THE FAILURE OR NON-PERFORMANCE OF COMMERCIAL
COUNTERPARTIES
The Group is dependent on numerous third parties with whom it has commercial
agreements (such as its mining contractors, the counterparties to its off-take
agreements and the parties responsible for transporting and/or storing the
Group`s products) for its current or future exploration, development,
production, sales or other activities. The efficiency, timeliness and quality of
contract performance by third party providers are largely beyond the Group`s
direct control. If one or more of these third parties fails to meet its
contractual obligations to the Group, or if such services were to be temporarily
or permanently unavailable (for example, as a result of technical problems or
industrial action), or not available on commercially acceptable terms, this
could have a material adverse effect on the Group.
INCREASE IN PRODUCTION COSTS COULD HAVE A MATERIAL ADVERSE EFFECT ON THE GROUP`S
PROFITABILITY
An increase in the Group`s production costs could have a material impact on its
profitability. The Group`s main production costs are energy, contractor costs,
materials and personnel costs. Changes in the costs of the Group`s mining and
processing operations could occur as a result of unforeseen events, including
international and local economic and political events, and could result in
changes in profitability or mineral resource estimates. Further, the majority of
the Group`s production costs are incurred in South Africa, which historically
has had a relatively high rate of inflation. There is therefore a risk that
production and other costs could grow more rapidly than coal prices.
A BREAKDOWN IN THE RELATIONSHIP WITH THOSE LABOUR UNIONS OF WHICH EMPLOYEES OF
THE GROUP AND THE GROUP`S CONTRACTORS ARE MEMBERS MAY DISRUPT THE OPERATIONS OF
THE GROUP`S BUSINESS
A significant number of employees of the Group and of the Group`s contractors
are engaged in mining operations and are members of one or more labour unions.
Accordingly the Group is subject to collective agreements with such labour
unions. Typically, South African labour unions issue their demands to employers
in June of each year resulting in the negotiation of collective agreements
regulating the basic conditions of employment for the following 12 months. Such
demands may include among other things wage increases, limitation on hours of
work, leave entitlement increases and the provision of death benefits payable to
employees` dependants. Any breakdown in the negotiation process could result in
the Group being unable to continue to negotiate wages and salaries on
competitive terms, or, could lead to strikes or other industrial action (or the
threat of strikes or industrial action) which could damage the Group`s
reputation.
RISKS RELATING TO SOUTH AFRICA
THE GROUP IS DEPENDANT ON ACCESS TO WATER USE RIGHTS IN SOUTH AFRICA
South Africa is a water scarce country and its water resources are under threat
nationally from acid mine drainage caused by many years of mining without
adequate controls on potential pollution. The 1998 National Water Act imposed a
new regime on the use of water resources and requires a water licence for all
water uses including consumption, diversion of water courses, mine dewatering,
discharge of waste water and activities within the 1:100 flood line. All new
mining operations require an integrated water use licence for all of the
anticipated water uses and a detailed study of the water balance in the area
must precede an application for a licence. There is a significant back log in
the processing of such applications within the Department of Water Affairs and
as a result certain mines in South Africa proceed with new water uses without
authorisation (although this has not currently occurred in respect of any of the
Group`s mines). This issue has received Parliamentary notice and enforcement
action by the Department of Water Affairs against all illegal water uses, but
particularly illegal water use within the mining industry, has increased in the
past year. Although no specific action has been threatened, it is possible that
the regulator could refuse to grant a water use licence to an entity which
commenced operations without the required licence.
Further, water use licences are granted for specific uses and water allocations.
Any use of water by the Group which goes beyond what is permitted under the
licence would be illegal and may be subject to enforcement action. If the breach
of the licence was sufficiently material, the water use licence could be revoked
and the Group could be required to cease operations at the relevant mine. Third
parties also have the right to appeal any water licence granted by the
Department of Water Affairs. If any such appeal is upheld the water use licence
could be revoked and in such circumstances the Group could be required to cease
operating at the relevant mine.
If the Group was unable to obtain a water use licence for any of its projects,
and in particular its Vele and Makhado projects, or if a water use licence
granted to the Group was subsequently revoked for any reason (for example
because it was deemed that such licence had been improperly or illegally
granted), this could impact on the Group`s ability to continue or commence its
operations at the relevant mine.
THE GROUP IS SUBJECT TO RIGOROUS GOVERNMENT REGULATION IN SOUTH AFRICA WHICH
COULD RESTRICT ITS OPERATIONS OR THE CONTINUED EXPANSION OF ITS BUSINESS
The Group`s exploration activities, development projects and any future mining
operations are subject to laws and regulations in South Africa governing the
acquisition and retention of title to mineral rights, mine development, worker
health and safety, employment standards, waste disposal, protection of water
resources, protection of the environment, and protection of endangered and
protected species, protection and designation of conservation and heritage
protected areas, protection of heritage sites and artefacts and other matters.
It is possible that future changes in applicable laws, regulations and
agreements, or changes in their enforcement, regulatory interpretation or
application could result in changes to legal or practical requirements or the
terms of existing permits, rights and agreements applicable to the Group or its
projects, which could have a material adverse impact on the Group`s current
exploration activities, planned development projects or future mining
operations, including by requiring the Group to cease, materially delay or
restrict exploration, development or mining operations.
The South African Government has passed the Mineral and Petroleum Resources
Development Amendment Act, 2008 (No 49 of 2008), which has not yet commenced.
Once it commences, the date of which is presently unknown, it will require any
change in the shareholding of an unlisted mining company and a change of control
of a mining company held (directly or indirectly) by a South African listed
company to be submitted to the South African Minister of Mineral Resources for
approval. Any such consent would be subject to the Minister being satisfied
regarding the BBBEE arrangements in place and that the new shareholder is in a
position to support the holder of the relevant mineral rights, if necessary, to
ensure that such holder can still meet the applicable licence requirements. This
new legislation will place an additional regulatory burden on, and could cause
delay and/or complication in, the disposal of mining subsidiaries by the Group
or any future acquisitions of mining companies by the Group.
THE GROUP MAY NOT BE GRANTED OR RETAIN THE NECESSARY MINING AND PROSPECTING
RIGHTS FOR THE CONTINUED OPERATION AND EXPANSION OF ITS BUSINESS
The acquisition and retention of title to mineral rights is a detailed and time-
consuming process. Title to, and the area of, mineral resource claims may be
disputed or challenged. Although the Group believes it has taken and is taking
reasonable measures to secure and retain title to its projects, there is no
guarantee that title to its projects will be granted, that prospecting rights
will be converted into mining rights or that title will not be challenged or
impaired.
Certain of the Group`s mining rights and prospecting rights may from time to
time have technical defects, errors or breaches, have not been registered with
the applicable authority or may have cessions, consents or approvals
outstanding. These include, for instance, outstanding consents in terms of
section 11 of the MPRDA and/or outstanding cession delivering rights in to the
name of the Group companies and/or outstanding registration of rights or of
transfers of rights at the Mining and Petroleum Titles Registration Office
established in terms of the Mining Titles Registration Act 1967, and/or
discrepancies in related documentation, including in relation to the Mooiplaats
mine, the Vele project and the Makhado project. Whilst the Company believes that
these are primarily administrative in nature, and written notice must be given
prior to cancellation or suspension of the relevant rights, there can be no
guarantee that the rights in question will not be cancelled, suspended, revoked
or otherwise impaired and any such cancellation, suspension, revocation or
impairment to the rights comprising the Group`s projects could stop, materially
delay or restrict the Group from proceeding with exploration activities, mining
activities, any development, or future mining operations.
Most of the Group`s mineral rights have been acquired through acquisition of the
shares of existing holders or the mineral interests of existing holders. In
certain cases administrative matters remain outstanding which are required to
complete the record of the acquisition process, including in relation to the
Mooiplaats mine, the Vele project and the Makhado project. Whilst the Company
believes these are administrative in nature, there can be no guarantee that the
process of recording the acquisitions will be completed, nor is there a
guarantee that as a result of any such non-completion the Group`s projects will
not stop, be materially delayed or that the Company will not be restricted from
proceeding with exploration activities, mining activities, any development, or
future mining operations.
In addition, under South African law it is possible that third parties may be
granted rights on areas covered by the Group`s prospecting and mining rights.
Although the Group can avail itself of certain appeal, review and court
processes to defend itself against such competing rights, the award of such
competing rights may delay or result in the suspension of prospecting or mining
activities.
THE GROUP`S MINING LICENCES ARE SUBJECT TO TERMINATION IF THE GROUP DOES NOT
COMPLY WITH ITS OBLIGATIONS UNDER THE PROVISIONS OF THE MPRDA.
With the enactment of the MPRDA, the South African state became the custodian of
all mineral rights in South Africa. All prospecting and mining rights granted in
terms of the MPRDA are `new order rights`. DMR officials undertake ad hoc or
periodic reviews of the Group`s compliance with MPRDA requirements with regard
to its new order mining licences and prospecting rights, and may conclude that
the Group is not complying with certain provisions of these, some of which are
subjective and whose assessment is dependent upon the views of the DMR as to
whether the Group is in compliance.
If the DMR rules that the Group has breached any material condition attaching to
a mining or prospecting right, or has submitted any inaccurate, incorrect or
misleading information to the DMR, the DMR would be entitled to suspend or
cancel the relevant mining or prospecting right. Such rights may also be
suspended or cancelled by reason of the Group`s non-compliance with the
applicable mining works programme, under the `use it or lose it` provisions
referred to above.
COMPLIANCE WITH BROAD-BASED BLACK ECONOMIC EMPOWERMENT REQUIREMENTS COULD IMPOSE
SIGNIFICANT COSTS ON THE GROUP AND A FAILURE TO COMPLY WITH BROAD-BASED BLACK
ECONOMIC EMPOWERMENT REQUIREMENTS COULD ADVERSELY AFFECT THE GROUP`S ABILITY TO
OBTAIN OR MAINTAIN ITS PROSPECTING AND MINERAL RIGHTS
The MPRDA introduced a broad based socio economic charter which sets out a
framework, targets and timetable for affecting the entry of historically
disadvantaged South Africans ("HDSA") into the mining industry in South Africa
(which is also known as the BBBEE legislation). The implementation and
administration of the Mining Charter is in its infancy and the long term
implications for mining companies, including the Company, are still unfolding.
The MPRDA gives the South African Minister of Mineral Resources a discretion
when considering a licence application regarding the BBBEE structure to be
implemented by an applicant. In general, the Mining Charter refers to targets of
15% of equity or attributable units of production vesting in HDSA hands within
five years from the commencement of the MPRDA (i.e. by 30 April 2009) and 26% of
equity or attributable units of production vesting in HDSA hands within ten
years from the commencement of the MPRDA (i.e. by 30 April 2014). Specific
commitments which a company has made regarding HDSA ownership are generally
recorded as a condition of the mineral rights granted by the South African
Minister of Mineral Resources.
The Company has put in place a BBBEE structure which does not result in the
straightforward placement of 15% or 26% equity ownership in HDSA hands. However,
the Department of Mineral Resources has confirmed that it is satisfied that the
structure is sufficient for the purposes of compliance with the BBBEE
requirements which it considers when issuing licences and has subsequently
granted the Company mining rights to, amongst others, the Vele project based on
the BBBEE structure put in place.
Although the Company has a BBBEE strategy and intends to comply with the Mining
Charter and the Codes of Good Practice or any requirement imposed by the South
African Minister of Mineral Resources going forward, no assurance can be given
that it will continue to achieve the objectives of the Mining Charter at all
times. Furthermore, no assurance can be given that the Company`s ownership
interests in its underlying assets will not change materially, or that the
extent and composition of its BBBEE partners will not change from time to time.
Non-compliance with any specific condition contained in a mineral right
regarding HDSA ownership may result in enforcement action and could ultimately
result in the withdrawal of the mineral right by the South African Minister of
Mineral Resources. In addition, in seeking to comply with enhanced HDSA
participation obligations in the future, the Company may incur significant costs
or be required to enter into a transaction on unfavourable terms.
SOME OF THE PROPERTIES ON WHICH THE GROUP CONDUCTS ITS MINING OPERATIONS MAY BE
SUBJECT TO LAND CLAIMS
Certain of the areas over which mineral rights have been granted to the Company
are the subject of land claims in terms of the South African Restitution of Land
Rights Act, 1994 by indigenous former inhabitants which if successful or if
settled could result in significant costs or burdens for the Company. Generally
a claim is made only to the surface rights attaching to the land and not to the
mineral rights as well, however, the legal position on the question whether a
claim under the South African Restitution of Land Rights Act could include
mineral rights is not clear. South African case law decided before the MPRDA
took effect indicates that a claim under the South African Restitution of Land
Rights Act may include mineral rights. The substantial change to the South
African mining and mineral law regime brought about by the MPRDA may arguably
prevent a claim in respect of the mineral rights. If a land claim is settled in
favour of the claimants this should not stop mining or prospecting operations as
the mineral rights holder has statutory rights relating to accessing the land
but there may be a delay while access terms and conditions are negotiated with
any new land owner. The Company should receive fair value compensation from the
South African Government for any land or mineral rights which it owns which are
given to claimants, although the amount of such compensation will form part of
any settlement negotiations and may not match the values attributed by the
Company thereto. Settlement of a land claim over an area for which the Company
holds mining rights but no surface rights may nevertheless require the Company
to participate in the settlement and to find and fund alternative land for the
claimants the interests of securing the mining areas.
HIV/AIDS COULD AFFECT THE GROUP`S PERSONNEL AND HAVE AN IMPACT ON THE OPERATION
OF THE GROUP`S BUSINESS
South Africa has one of the highest reported HIV infection rates in the world
and according to UNAIDs (2006) the AIDs epidemic in South Africa is growing
faster than anywhere else in the world. The exact effect of increased mortality
rates due to AIDS-related deaths or the costs of introducing and maintaining
treatment for HIV on the cost of doing business in South Africa and on the South
African economy is unclear at this time, however, it is predicted that by 2015
eight out of nine deaths on mines will be due to AIDs-related diseases (Fourie
2006).
The two most significant economic impacts of HIV/AIDs for the Group are
reduction in labour supply and increase in labour cost. The Group could lose
revenue due to high absenteeism as a result of illness, time off to attend
funerals, time spent in training of new labour and high labour turnover. The
loss of skills along with increased absenteeism, increased staff turnover, loss
of tacit knowledge and declining morale as a result of HIV/AIDs will contribute
to the declining levels of productivity.
POLITICAL, SOCIAL AND ECONOMIC CONDITIONS IN SOUTH AFRICA MAY ADVERSELY AFFECT
THE GROUP`S BUSINESS, RESULTS OF OPERATION, FINANCIAL CONDITION AND/OR GROWTH
PROSPECTS
As all of the Group`s revenue generating assets are currently located in South
Africa, the Group`s operations are dependant on the economic and political
conditions prevailing in South Africa. Accordingly, the Company is subject to
the risks associated with conducting business in and with a foreign country,
including the risks of changes in the country`s laws and policies (including
those relating to taxation, royalties, acquisitions, disposals, imports and
exports, currency, environmental protection, management of natural resources,
exploration and development of mines, labour and safety standards, and
historical and cultural preservation). The costs associated with compliance with
these laws and regulations are substantial, and possible future laws and
regulations as well as changes to existing laws and regulations could impose
additional costs on the Group, require the Group to incur additional capital
expenditures and/or impose restrictions on or suspensions of the Group`s
operations and delays in the development of its assets.
Further, these laws and regulations may allow government authorities and private
parties to bring legal claims based on damages to property and injury to persons
resulting from the environmental, health and safety impacts of the Group`s past
and current operations and could lead to the imposition of substantial fines,
penalties or other civil or criminal sanctions.
FUTURE NATIONALISATION OF MINES IN SOUTH AFRICA COULD HAVE A SIGNIFICANT IMPACT
ON THE GROUP`S BUSINESS
A faction of the ruling political party in South Africa, the youth league of the
African National Congress, has recently called for the nationalisation of mines
in South Africa. The government of South Africa has publicly stated, in response
to these calls, that there is no present intention to consider nationalisation
or to change the existing government policy on this issue. However, there can be
no assurance that the position of the South African government regarding the
issue of nationalisation of will not change in the future.
Risks relating to the ORDINARY Shares
THE PRICE OF THE ORDINARY SHARES WILL FLUCTUATE
The market price of the Ordinary Shares could be subject to significant
fluctuations. The fluctuations could result from national and global economic
and financial conditions, the market`s response to the Placing, the plans and
proposals of the South African or another government with respect to economic
conditions, market perceptions as to whether or when the Company will be able to
pay dividends on the Ordinary Shares and various other factors and events,
including liquidity of financial markets, regulatory changes affecting the
Company`s operations, variations in the Company`s operating results or business
developments of the Company and/or its competitors. Stock markets have from time
to time experienced significant price and volume fluctuations that have affected
the market prices for securities and which may be unrelated to the Group`s
operating or performance prospects. Furthermore, the Company`s operating results
and prospects from time to time may be below the expectations of market analysts
and investors. Any of these events could result in a decline in the market price
of the Ordinary Shares.
THERE CAN BE NO GUARANTEE THAT THERE WILL BE SUFFICIENT LIQUIDITY IN THE
ORDINARY SHARES
The fact that the Ordinary Shares will be traded on AIM, the JSE and the ASX
should not be taken as implying that there will be a `liquid` market in the
Ordinary Shares, and an investment in the Ordinary Shares may be difficult to
realise. In addition, the price at which the Ordinary Shares will be traded and
the price at which investors may realise their investment will be influenced by
a large number of factors, some specific to the Group and its operations and
some which may affect listed companies generally.
The market for shares in small to medium size public companies, such as the
Company, is less liquid than for larger public companies. The Group is aiming to
achieve capital growth and, therefore, Ordinary Shares may not be suitable as a
short-term investment; a prospective investor should not consider such purchase
unless he is certain he will not have to liquidate his investment for an
indefinite period of time. The share price may be subject to greater fluctuation
on small volumes of shares, and thus the Ordinary Shares may be difficult to
sell at a particular price. The value of the Ordinary Shares may go down as well
as up. The market price of the Ordinary Shares may not reflect the underlying
value of the Company`s net assets. Investors may therefore realise less than
their original investment or sustain a total loss of their investment.
CHANGES IN MARKET, POLITICAL OR ECONOMIC CONDITIONS COULD ADVERSELY AFFECT THE
PRICE OF THE ORDINARY SHARES
Market conditions, particularly those affecting resource companies, may affect
the ultimate value of the Company`s share price regardless of operating
performance. The Company could be affected by unforeseen events outside its
control, including, natural disasters, terrorist attacks and political unrest
and/or government legislation or policy. Further, market perception of mining
and exploration companies may change, which may impact on the value of the
Ordinary Shares and the ability of the Company to further raise funds by the
issue of further Ordinary Shares in the Company.
FUTURE ISSUES OR SALES OF ORDINARY SHARES COULD ADVERSELY AFFECT THE PRICE OF
THE ORDINARY SHARES
The Company may issue additional Ordinary Shares in the future, which may
adversely affect the market price of the Ordinary Shares. Significant sales of
shares by major shareholders or the public perception that an offering or sale
may occur could also have an adverse effect on the market price of the Ordinary
Shares.
DEFINITIONS
In addition to those terms otherwise defined in this document, the following
expressions have the following meaning unless the context otherwise requires:
AIM Admission the admission by the London Stock Exchange of
the Placing Shares to trading on AIM becoming
effective in accordance with the AIM Rules
AIM the AIM Market operated by the London Stock
Exchange
AIM Rules the current rules published by the London Stock
Exchange applicable to companies with a class
of listed securities admitted to trading on AIM
Announcement this announcement (including the appendix to
this announcement)
ASIC the Australian Securities & Investments
Commission
ASX ASX Limited (ACN 008 624 691), a company
registered under the Australian Corporations
Act and, where the context permits, the
Australian Securities Exchange operated by ASX
Limited
ASX Listing Rules the Listing Rules of the ASX and any other
rules of ASX which are applicable while the
Company is admitted the Official List of ASX
Australian the Corporations Act 2001 (Cth) of Australia
Corporations Act and any Class Orders issued by ASIC
A$ or Australian the lawful currency of Australia
Dollars
BBBEE Broad Based Black Economic Empowerment
Bookrunner J.P. Morgan Cazenove
certificated or in where a share or other security is not in
certificated form uncertificated form
CHESS the Clearing House Electronic Subregister
System
CIPRO the South African Companies and Intellectual
Property Registration Office
CREST the relevant system, as defined in the CREST
Regulations (in respect of which Euroclear UK &
Ireland Limited is the operator as defined in
the CREST Regulations)
Depositary Interests independent securities constituted under
or DIs English law and issued or to be issued by the
Depositary in respect, and representing on a 1
for 1 basis, underlying Ordinary Shares which
may be held or transferred through the CREST
system
DMR the South African Department of Mineral
Resources
European Economic Area the European Union, Iceland, Norway and
Liechtenstein
Evolution Evolution Securities Limited
FSA the UK Financial Services Authority
FSB the South African Financial Services Board
FSMA the Financial Services and Markets Act 2000
LIBOR London Interbank Offered Rate
London Stock Exchange the London Stock Exchange plc
or LSE
J.P. Morgan Cazenove J.P. Morgan Securities Ltd.
JSE JSE Limited, a public company incorporated with
limited liability under the laws of the
Republic of South Africa, with registration
number 2005/022939/06 and licensed as an
exchange under the South African Securities
Services Act, 2004 (No 36 of 2004), as amended,
often referred to as the "Johannesburg Stock
Exchange``
Macquarie Macquarie First South Advisers (Proprietary)
Limited
Managers J.P. Morgan Cazenove, Macquarie, Evolution and
Mirabaud
Mirabaud Mirabaud Securities LLP
MPRDA the South African Mineral and Petroleum
Resources Development Act, 2002 (No 28 of 2002)
NOMR New Order Mining Right
Ordinary Shares ordinary shares in the share capital of the
Company
Placee any person (including individuals, funds or
otherwise) by whom or on whose behalf a
commitment to acquire Placing Shares has been
given
Placing the placing of the Placing Shares with Placees
to be effected by the Managers on the terms and
subject to the conditions set out in this
Placing Announcement and the Placing Agreement
Placing Agreement the placing agreement dated 16 June 2010 among
the Company and the Managers in respect of the
Placing
Placing Price the price per Ordinary Share at which the
Placing Shares are placed, such price being
determined as part of the Bookbuild
Placing Shares up to 50,000,000 Ordinary Shares to be issued
pursuant to the Placing
Pounds Sterling, GBP the lawful currency of the United Kingdom
or GBP
Prospectus Directive the Directive of the European Parliament and of
the Council of the European Union 2003/71/EC
Regulatory Information one of the regulatory information services
Service approved by the London Stock Exchange for the
distribution to the public of AIM
announcements, the Companies Announcement
Platform in relation to announcements released
by the Company to the ASX and the Securities
Exchange News Service in relation to
announcements released to the JSE
Regulation S Regulation S under the Securities Act
Securities Act the US Securities Act of 1933, as amended
South African Rand the lawful currency of South Africa
Strate Strate Limited, a company duly registered and
incorporated in the Republic of South Africa
under registration number 1998/02224/06,
licensed as a central securities depository
under the South African Securities Services
Act, 2004 (No 36 of 2004)
United Kingdom or UK the United Kingdom of Great Britain and
Northern Ireland
United States or US the United States of America, its territories
and possessions, any state of the United States
and the District of Columbia
US Dollar the lawful currency of the United States
Johannesburg
17 June 2010
JSE Sponsor
Macquarie First South Advisers (Pty) Limited
Date: 17/06/2010 07:48:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
