| Thu 4 Nov 2010, 14:52 | | MVL - Mvela Resources - Sales of Gold Fields Shares |
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MVL
MVL
MVL - Mvela Resources - Sales of Gold Fields Shares
MVELAPHANDA RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1980/001395/06)
Share code: MVL
ISIN: ZAE000050266
("Mvela Resources" "the group" or the "company")
SALES OF GOLD FIELDS SHARES
1. Introduction
Shareholders are referred to Mvela Resources` Reviewed Results for the year
ended 30 June 2010 announced on 23 September 2010, wherein reference was
made to the distribution of the company`s residual shareholding in Gold
Fields Limited ("Gold Fields") after providing for unbundling related costs
and running costs.
Shareholders are advised that Mvela Resources has sold 10 million Gold
Fields shares into the open market, through a structured disposal
programme, arranged by Macquarie Securities Group, South Africa, which
matured on 3 November 2010. The average price per Gold Fields share which
Mvela Resources received is R106.63, resulting in proceeds for Mvela
Resources of R1.066 billion.
Pursuant to the sale, the company owns 22 218 653 Gold Fields shares which
will be distributed to its shareholders in terms of the previously outlined
unbundling strategy.
2. Nature and details of transaction
In terms of the structured disposal arrangement, the 10 million hedged Gold
Fields shares were split into five tranches of forward transactions of two
million Gold Fields shares each. Each forward transaction was overlain by
four discretely priced knock-out option transactions on 500,000 Gold Fields
shares each. The tranches closed out on 6 October, 13 October, 20 October,
27 October and 3 November 2010 respectively.
The forward transactions have been concluded at prices of R101.50 per Gold
Fields share and the knock-out options had strike prices of R97.75,
R100.25, R102.75 and R105.25 per Gold Fields share respectively and knock-
out barriers of R90.75, R93.25, R95.75 and R98.25 per Gold Fields share,
respectively.
In the event that the knock-out barriers were not breached during the term
of the option, Mvela Resources would receive an additional R10.25 per
option.
During the term of the structured disposal programme, two of the knock-out
barriers (at R98.25 per share and R95.75 per share) were breached and as a
result Mvela Resources did not receive the additional option payment on two
of the option tranches.
3. Rationale for the Transaction
The sale of the Gold Fields shares should provide Mvela Resources with
sufficient funds to cover its unbundling related costs and running costs
until conclusion of the unbundling process. Any residual cash will be
distributed to shareholders and further sales of Gold Fields shares are
therefore not anticipated by the company.
The structured disposal programme ensured the sale of a meaningful number
of Gold Fields shares into the market with minimal price disruption. The
average price received compared favourably with the 30 day VWAP of Gold
Fields to 3 November 2010 of R106.94 per share.
4. Categorisation of the Transaction
In terms of the Listings Requirements, the Transaction is categorised as
Category 2 transaction for Mvela Resources.
5. Illustrative Financial Effects of the Transaction
The unaudited pro forma financial effects set out below are included for
the purpose of illustrating the effect on Mvela Resources` Shareholders, of
the disposal of 10 million Gold Fields shares, on earnings ("EPS"),
headline earnings ("HEPS"), net asset value ("NAV") and net tangible asset
value ("NTAV") per Mvela Resources` ordinary share for the year ended 30
June 2010.
These unaudited pro forma financial effects:
- are the responsibility of the directors;
- are presented for illustrative purposes only and have not been reviewed
by auditors;
- may, because of their nature, not give a fair reflection of Mvela
Resources` financial results, changes in equity, cash flows or financial
position after the disposal of the 10 million Gold Fields shares; and
- do not necessarily represent or indicate sustainable earnings or future
financial positions.
Before After the Effect of
(1) sale of the sale of
10 10 million
million Gold Fields
Gold shares
Fields Percentage
shares change from
(2) (1) to (2)
Basic EPS (cents) (23) (56) (143.5)
Basic HEPS (cents) 10 25 150.0
NAV per share 6 177 6 188 0.17
(cents)
NTAV per share 6 177 6 188 0.17
(cents)
Notes:
The basis applied were: the Gold Fields shares were sold in five trances of
2 million each and the settlement dates were effectively 13 July, 20 July,
27 July, 3 August and 10 August 2009 respectively for purposes of
calculating earnings and headline earnings per ordinary share. The NAV and
NTAV per ordinary share were calculated as if the sale of the Gold Fields
shares were effective as at 30 June 2010.
1. The "Before" column is extracted from Mvela Resources` reviewed
financial results for the year ended 30 June 2010.
2. The "After the sale of 10 million Gold Fields shares" column is based
on Mvela Resources` reviewed financial results for the year ended 30
June 2010 after adjusting for the following material items:
Income statement
2.1 accounting for a loss of R122.8 million on the disposal of 10
million Gold Fields shares at a net selling value of R1.07
billion and the resultant tax impact of R33.3 million and the
reversal of deferred tax of R50.6 million;
2.2 accounting for additional interest receivable of R64.8 million as
the cash received from the disposal of the shares would have
earning interest of between 6% p.a. and 6.5% p.a., and the
resultant tax impact of R18.1 million;
2.3 accounting for the reduction of R13 million in dividends received
on the 10 million Gold Fields shares;
2.4 accounting for a reduction or R545 thousand in interest earned
due to a reduction in the dividends received and the resultant
decrease in the tax of R153 thousand.
Statement of financial position
2.5) accounting for the net proceeds of R1.07 billion will be invested
in an interest bearing account;
2.6) accounting for the disposal of the 10 million Gold Fields shares
by reducing the investment value by R1.04 billion and the resulting
tax impact of R33.3 million and the reversal of deferred tax of R29.7
million.
Johannesburg
4 November 2010
Sponsor:
J.P. Morgan Equities
Date: 04/11/2010 14:52:19 Produced by the JSE SENS Department.
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