| Thu 7 Oct 2010, 14:01 | | VIL - Village Main Reef Gold Mining Company (1934) Limited - Village Main Reef |
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VIL
VIL
VIL - Village Main Reef Gold Mining Company (1934) Limited - Village Main Reef
to acquire 74% of Consolidated Murchison Mine for R30 Million
Village Main Reef Gold Mining Company (1934) Limited
Incorporated in the Republic of South Africa
(Registration Number 1934/005703/06)
Share code on the JSE: VIL
ISIN: ZAE000007720
("Village" or the "company")
VILLAGE MAIN REEF TO ACQUIRE 74% OF CONSOLIDATED MURCHISON MINE FOR R30 MILLION
- 1.3million ounce equivalent life of mine gold deposit
- Elevates Village to a producing, cash positive mining entity
- Immediate cash generation of R605k per month
- BBBEE staff trust created to hold the remaining 26%
- Renewal of Cautionary
Village Main Reef (`Village`) today announced that it has entered into a binding
agreement, subject to certain conditions precedent, to purchase 74% of
Consolidated Murchison mine (`CMM`), a 1.3 million ounce equivalent gold
deposit, which produces both gold and antimony, from To The Point Growth
Specialists (`TTP`) for R30 million. The remaining 26% of the issued share
capital of CMM is held by a BBBEE staff trust for existing CMM employees.
Located near Gravelotte, in the Limpopo province, CMM is one of the largest
global producers of antimony and is situated on one of the largest known
antimony ore bodies. Together with antimony, the mine produces gold from its
three operating shafts, Athens, Monarch and Beta. The mine has a 1.3 million
ounce equivalent gold deposit which can be broken down into a South African
Mineral Resource Committee compliant resource of 750,272 ounces of gold at an
average grade of 2.45 grams per tonne (including 8,970 ounces in the measured
category), and 200,729 tonnes of antimony at an average grade of 2.10%.
Village will also acquire from TTP a Mine Management Agreement for an additional
consideration of R10 million. Village will consequently be appointed to manage
the mine for which CMM will pay Village a monthly fee of R605 000, immediately
making Village cash generative.
Village will also raise and then advance to CMM, R20 million in order to fund
further expansion of the mine.
`The R20 million injection will also self fund all of the mines` future working
capital requirements`, commented CEO of Village, Bernard Swanepoel.
The total purchase price of R40 million for the acquisition will be payable, at
the election of Village, partly or wholly, in cash or through the issue to TTP
of up to 18 million ordinary Village shares at a value of R220 South African
cents each. The issue price represents a premium of 8.9% to yesterday`s closing
Village share price of ZAR2.02 and a 2.5% discount to the 30-day volume weighted
average traded price of ZAR2.26 for Village shares on Wednesday, 6 October 2010.
The 74% investment has significant upside potential for Village shareholders if
the price is compared to the independent competent person`s valuation range,
carried out by Minxcon, of between R200m and R400m for CMM. Further value-add
potential may be found through the treatment of the high grade gold tailings
dam, likely improved antimony beneficiation and the exploration of the adjacent
properties.
`The transaction is in line with our stated strategy of acquiring a cash
generative asset and will enable Village to evolve our strategy to that of the
acquisition and transformation of mining assets into self sustaining mining
activities.` noted Swanepoel.
Under TTP`s cost reduction process, implemented over the last year, CMM has
turned the corner and returned to profitability, which Village believes to be
sustainable.
`The record high antimony and gold prices have also more than offset the effect
of the strong Rand,` added Swanepoel.
A circular containing full detail of the Transaction and a notice of a general
meeting of Village shareholders will be posted to Village shareholders in due
course. In the meantime, Village shareholders are advised to continue exercising
caution when dealing in Village securities until a full announcement is made.
Village has obtained irrevocable support from its 2 largest shareholders who
together carry 72.7% of Village`s shareholder vote.
ENDS
Please see SENS announcement to view conditions precedent and further detailed
legal aspects of the transaction at www.villagemainreef.com
7 October 2010
JSE Sponsor
Macquarie First South Advisers (Pty) Limited
Contacts:
Village CEO, Bernard Swanepoel, bernard@villagemainreef.co.za; 083 303 9922
Village COO, Dorian Wrigley, dorian@villagemainreef.co.za; 011 484 5005, 082
493 2278
Vestor, Media and Investor Relations, Louise Brugman, louise@vestor.co.za; 011
787 3015; 083 504 1186
Date: 07/10/2010 14:01:02 Produced by the JSE SENS Department.
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