| Wed 30 Jun 2010, 11:52 | | WWR - White Water Resources - Acquisition of prospecting and mining rights by |
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WWR
WWR
WWR - White Water Resources - Acquisition of prospecting and mining rights by
White Water Resources and withdrawal of cautionary
WHITE WATER RESOURCES LIMITED
Incorporated in the Republic of South Africa
(Registration number 1933/004523/06)
Share code: WWR ISIN: ZAE000130712
("White Water Resources" or "the company")
ACQUISITION OF PROSPECTING AND MINING RIGHTS BY WHITE WATER RESOURCES AND
WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
Shareholders are advised that agreement has been reached between White
Water Resources and East Rand Proprietary Mines Limited ("ERPM") whereby
White Water Resources, through a recently established special purpose
vehicle and wholly-owned subsidiary, Cubigraph (Proprietary) Limited
("SPV"), shall subject to the fulfilment and/or waiver of the conditions
precedent set out in paragraph 2.5 below, acquire prospecting and/or mining
rights ("Right(s)") from ERPM (``the acquisition``).
2. THE ACQUISITION
2.1 Nature of the ERPM business
ERPM, a wholly-owned subsidiary of DRDGOLD South African Operations
(Proprietary) Limited ("DRDGold SA"), is an underground mining
operation which was established on the Witwatersrand Basin, 25
kilometres to the east of Johannesburg, over a century ago. DRDGold SA
is 74% owned by DRDGOLD Limited ("DRDGold"), South Africa`s fourth
largest unhedged gold producer, 20% owned by black empowerment
partner, Khumo Gold SPV (Proprietary) Limited ("Khumo Gold"), and 6%
owned by the DRDSA Empowerment Trust ("the Trust").
2.2 Background to the acquisition
ERPM is:
- the holder of a valid prospecting right number 674/2007
("Prospecting Right"); and
- the applicant for a mining right (which application is still
pending) ("Mining Right") pursuant to and over the same area as a
lapsed prospecting right number 124/2006, which was held by ERPM
until 13 January 2010.
Mining in the underground mine complex of ERPM has been discontinued as a
result of rising underground water in the central basin (old mine
workings), which underground water is being monitored continuously. Water
plugs exist between the old mine workings and the areas held under the
Prospecting Right and the pending Mining Right issued by the Department of
Mineral Resources ("DMR") in terms of the Mineral and Petroleum Resources
Development Act, 2002 ("MPRDA") ("the extensions").
Details of the extensions are set out in the table below:
Mine parameters
Project SAMREC1 Mt g/t Target
Classification ounces
Extension 1 Inferred 33.6741 8.18 8 855 845
Extension 1 Indicated 2.7501 12.21 1 079 552
Extension 1 Measured 0.0783 12.04 30 295
Extension 2 Inferred 28.60 9.06 8 330 579
Total 65.10 9.04 18 296 272
Notes:
1. South African Code for Reporting of Exploration Results, Mineral
Resources and Mineral Reserves
2. Extension 1 refers to the area to be held under the pending Mining
Right and Extension 2 refers to the area currently held under the
Prospecting Right.
ERPM will endeavour to procure that:
- all rights, interests, liabilities and obligations which it holds in
the Prospecting Right be transferred to SPV; and
- once the Mining Right is granted to ERPM, all rights, interests,
liabilities and obligations which it holds in the Mining Right be
transferred to SPV.
2.3 Rationale for the acquisition
The extensions contain gold resources to the extent set out in the
table above.
Prior to the acquisition, White Water Resources did not own SAMREC
classified resources, nor did the company have the required
empowerment credentials on certain assets. The acquisition will
therefore contribute strategically to White Water Resources in two
ways; firstly, it will provide the company with a SAMREC recognised
resource, and secondly it will provide White Water Resources with the
requisite empowerment credentials to the Rights.
The board of directors of White Water Resources ("the Board") believes
that holding the Rights is beneficial to shareholders of the company.
2.4 Purchase consideration
The consideration payable to ERPM for the acquisition of the Rights,
which will be held as long-term assets, will be settled by White Water
Resources on behalf of SPV as follows:
White Water Resources shall issue:
- 74 million new ordinary shares in the share capital of White
Water Resources at a subscription price of R0.25 per share
("White Water Resources Consideration Shares") to ERPM; and
- 26 ordinary shares in the share capital of SPV at a par value of
R1.00 per share ("SPV Consideration Shares") to ERPM.
The White Water Resources Consideration Shares and the SPV
Consideration Shares are collectively hereinafter referred to as the
"Consideration Shares".
In the event of the DMR approving only the transfer of the Prospecting
Right to SPV or, alternatively, only the transfer of the Mining Right
to SPV pursuant to the granting thereof to ERPM, the consideration
payable to ERPM for the transfer of the relevant Right to SPV shall be
revised so that White Water Resources shall issue 37 million new
ordinary shares, being half of the 74 million White Water Resources
Consideration Shares, and the SPV Consideration Shares, to ERPM.
In the event that the approval for the transfer of both Rights to SPV
is granted, but such approvals are not granted simultaneously, the
White Water Resources Consideration Shares shall be issued in two
tranches of 37 million each upon approval of the transfer by the DMR
to SPV of the relevant Right.
Upon receipt of the Consideration Shares, ERPM shall declare a
dividend in specie and unbundle the Consideration Shares to DRDGold
SA, who in turn shall declare a dividend in specie and unbundle:
- the 74 million, or the 37 million White Water Resources
Consideration Shares, as the case may be, to DRDGold;
- 20 of the SPV Consideration Shares to Khumo Gold; and
- 6 of the SPV Consideration Shares to the Trust.
2.5 Conditions precedent and effective date
The acquisition is conditional upon the fulfilment and/or waiver of
the following conditions precedent before 1 December 2010:
- the obtaining of all requisite regulatory approvals and/or
consents for purposes of the acquisition, including, without
limitation the JSE Limited;
- approval by the DMR in terms of section 11 of the MPRDA of either
or both of:
- the transfer of the Prospecting Right to SPV;
- the granting of the Mining Right to ERPM and the subsequent
transfer thereof to SPV;
- approval of the acquisition by the boards of directors of White Water
Resources, ERPM, DRDGold SA, DRDGold and SPV, and by the trustees of
the Trust; and
- a shareholder`s agreement being entered into between White Water
Resources, Khumo Gold and the Trust.
3. PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
The tables below set out the unaudited pro forma financial effects of the
acquisition taking into account the issue of either 74 million, or 37
million White Water Resources Consideration Shares, respectively, as the
case may be, on White Water Resources` earnings per share, headline
earnings per share, net asset value per share and tangible net asset value
per share.
The unaudited pro forma financial effects have been prepared to illustrate
the impact of the acquisition taking into account the issue of either 74
million, or 37 million White Water Resources Consideration Shares, as the
case may be, on the reported financial information of White Water Resources
for the year ended 31 March 2010, had the acquisition occurred on 1 April
2009 for income statement purposes and on 31 March 2010 for balance sheet
purposes.
The unaudited pro forma financial effects have been prepared using
accounting policies that comply with International Financial Reporting
Standards and that are consistent with those applied in the audited results
of White Water Resources for the year ended 31 March 2010.
The unaudited pro forma financial effects, which are the responsibility of
the directors, are provided for illustrative purposes only and, because of
their pro forma nature may not fairly present White Water Resources`
financial position, changes in equity, results of operations or cash flow.
Pro forma financial effects contemplating the issue of 74 million White Water
Resources Consideration Shares
Before the After Percent
acquisition the age
acquisi change
tion (%)
Basic earnings per share (0.09) (0.08) 11.11
(cents)
Headline earnings per share (1.17) (0.97) 17.09
(cents)
Net asset value per share 7.20 10.16 41.11
(cents)
Tangible net asset value per 6.40 9.50 48.44
share (cents)
Weighted average number of 370 547 444 547 19.97
shares in issue (000`s)
Pro forma financial effects contemplating the issue of 37 million White Water
Resources Consideration Shares
Before the After Percent
acquisition the age
acquisi change
tion (%)
Basic earnings per share (0.09) (0.08) 11.11
(cents)
Headline earnings per share (1.17) (1.06) 9.40
(cents)
Net asset value per share 7.20 8.82 22.50
(cents)
Tangible net asset value per 6.40 8.09 26.41
share (cents)
Weighted average number of 370 547 407 547 9.99
shares in issue (000`s)
Notes:
1. The amounts in the "Before the acquisition" column have been extracted
from the audited results of White Water Resources for the year ended
31 March 2010.
2. The amounts in the "After the acquisition" column reflect the
financial effects of the acquisition on White Water Resources.
3. The effects on basic earnings per share and headline earnings per
share are calculated based on the assumption that the acquisition was
effected on 1 April 2009.
4. The effects on net asset value per share and tangible net asset value
per share are calculated based on the assumption that the acquisition
was effected on 31 March 2010.
4. CLASSIFICATION OF THE ACQUISITION
The acquisition is classified as a Category 2 announcement in terms of the
Listings Requirements of the JSE Limited.
5. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Further to the above, shareholders are advised that caution is no longer
required by shareholders when dealing in the shares of White Water
Resources.
30 June 2010
Sponsor
Merchantec Capital
Date: 30/06/2010 11:52:01 Produced by the JSE SENS Department.
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