| Wed 24 Nov 2010, 14:53 | | VIL - Village Main Reef Gold Mining Company (1934) Limited - Further |
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VIL
VIL
VIL - Village Main Reef Gold Mining Company (1934) Limited - Further
announcement regarding the acquisition of the consolidated Murchison operations
and withdrawal of cautionary announcement
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")
FURTHER ANNOUNCEMENT REGARDING THE ACQUISITION OF THE CONSOLIDATED MURCHISON
OPERATIONS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1 Introduction
Shareholders are referred to the announcement released on 7 October 2010
(the "Announcement") in which shareholders were advised that Village had
entered into binding agreements with To The Point Growth Specialists (Pty)
Limited and its affiliates ("To The Point"), in terms of which Village
will, subject to the fulfilment or waiver of certain suspensive conditions:
- indirectly acquire a 74% interest in Consolidated Murchison Mine (Pty)
Limited ("Cons Murch") from To The Point for a total consideration of
ZAR30 million ("Acquisition Consideration");
- acquire certain rights under a mine management agreement with Cons
Murch from To The Point for a total consideration of ZAR10 million
("Assignment Consideration"); and
- inject, by way of a convertible loan, ZAR20 million into Cons Murch
("Recapitalisation"),
hereinafter collectively the "Proposed Transaction".
2 Effective date and extension of time for fulfilment of certain suspensive
conditions
Shareholders are advised that the effective date of the Proposed
Transaction is now expected to be no later than three business days after
31 January 2011 or such later agreed date ("Amended Effective Date").
The Amended Effective Date results from the parties to the Cons Murch
Transaction (as defined in the Announcement) having extended the closing
date for fulfilment of the suspensive conditions relating to Stage I of the
Cons Murch Transaction from 30 November 2010 to 31 January 2011.
3 Recapitalisation
Under the terms of the Cons Murch Transaction agreement, Village has agreed
to contribute ZAR20 million to the recapitalisation of Cons Murch and to
provide Cons Murch with adequate financial support for a minimum of 12
months from completion of Stage I of the Cons Murch Transaction agreement.
Village intends to raise an amount of ZAR40 million to fund its working
capital requirements ("Capital Raising") over a period of six months from
the date of the general meeting of Village shareholders to be convened for
the purpose of approving, inter alia, the Proposed Transaction and the
Capital Raising.
The Capital Raising will be effected by way of an offer for subscription of
up to a maximum number of 20,500,000 Village ordinary shares ("Subscription
Shares") for cash at a subscription price of not more than a 10% discount
to the 30-day volume weighted average price at the time of the
subscription, subject to the condition that the allotment and issue of the
Subscription Shares will be made only to persons qualifying as public
shareholders and not to related parties, as defined in the Listings
Requirements of JSE Limited (the "JSE").
4 Financial effects of the Proposed Transaction and the Capital Raising
The unaudited pro forma financial effects have been prepared to show the
impact of the Proposed Transaction and the Capital Raising as if the
Proposed Transaction and the Capital Raising had occurred on 1 January
2010, for purposes of adjusting the pro forma consolidated statement of
comprehensive income, and on 30 June 2010, for purposes of adjusting the
consolidated pro forma statement of financial position. The unaudited pro
forma financial effects are presented for illustrative purposes only and,
because of their nature, may not fairly reflect Village`s results or
financial position going forward.
The unaudited pro forma financial effects have been prepared using
accounting policies that are consistent with International Financial
Reporting Standards and with the basis on which the historical financial
information has been prepared in terms of the accounting policies adopted
by Village.
The Directors of Village are responsible for the compilation, contents and
presentation of the unaudited pro forma financial effects.
Two sets of pro forma financial effects are presented to illustrate a range
of effects based on settlement of the consideration in respect of the
Proposed Transaction, of ZAR40 million ("Transaction Consideration") in two
alternative ways, at the election of Village:
- Alternative 1: Settlement of the Transaction Consideration through the
proposed issue of up to 18 181 818 Village ordinary shares that will
be allotted and issued to To The Point, a related party in terms of
the Listings Requirements of the JSE, in part or full settlement of
the Acquisition Consideration and the Assignment Consideration
("Consideration Shares").
- Alternative 2: Settlement of the Transaction Consideration partly in
cash, up to a maximum of ZAR5 million, and the balance through the
issue of Consideration Shares.
- Alternative 1: Transaction Consideration settled through the issue of
Consideration Shares.
Before After After After After % Change
(1) Capita Stage Stage reversa
l I (3) II and l of
Raisin III(4) stage I
g (2) (5)
A B C D E B/A C/B D/B E/B
EPS (9.44) (8.66) (3.59) (3.59) (29.87 8.3 58.5 58.5 (244.9)
(cents) )
HEPS (9.44) (8.66) (3.59) (3.59) (9.18) 8.3 58.5 58.5 (6.0)
(cents)
NAV per 20.34 33.06 56.07 56.07 23.33 62.5 69.6 69.6 (29.4)
share
(cents)
TNAV 4.33 18.22 42.13 42.13 9.39 320. 131. 131, (48.5)
per 8 2 2
share
(cents)
Weighte 251,29 271,77 289,96 289,96 289,960
d 7 8 0 0
average
number
of
shares
(`000)
Shares 260,39 280,87 299,05 299,05 299,058
in 4 6 8 8
issue
(`000)
Alternative 2: Transaction Consideration settled in cash of R5 million and the
balance through the issue of Consideration Shares.
Before After After After After % Change
(1) Capita Stage Stage revers
l I (3) II al of
Raisin and stage
g (2) III(4 I (5)
)
A B C D E B/A C/B D/B E/B
EPS (cents) (9.44) (8.66) (3.67) (3.67) (30.16 8.3 57.6 57.6 (248.3
) )
HEPS (9.44) (8.66) (3.67) (3.67) (9.30) 8.3 57.6 57.6 (7.4)
(cents)
NAV per 20.34 33.06 54.82 54.82 21.82 62.5 65.8 65.8 (34.0)
share
(cents)
TNAV per 4.33 18.22 40.77 40.77 7.78 320. 123. 123. (57.3)
share 8 8 8
(cents)
Weighted 251,297 271,77 287,68 287,68 287,68
average 8 7 7 7
number of
shares
(`000)
Shares in 260,394 280,87 296,78 296,78 296,78
issue 6 5 5 5
(`000)
Notes
1 Column A: Based on the published audited financial results of Village for
the six months ended 30 June 2010. These results include the accounting for
the reverse take-over of Lesego Platinum Mining Limited which was effective
prior to 30 June 2010.
2 Column B: Represents the unaudited pro forma financial position after the
Capital Raising. It assumes the issue of 20,481,311 Village shares at
ZAR1.95 per share, resulting in a net cash inflow of ZAR39.9 million after
transaction costs of ZAR0.1 million. No interest received benefit is
assumed for purposes of adjusting earnings as it is assumed that cash
proceeds will be used for working capital.
3 Column C: Represents the unaudited pro forma financial position after Stage
I of the Cons Murch Transaction, which includes the following:
i.) The acquisition of the Cons Murch Mine as defined in the Announcement.
ii.) The recognition of additional property, plant and equipment of ZAR52
million and a deferred tax liability of R14.6 million arising from a
provisional purchase price allocation exercise using a purchase
consideration of ZAR40 million and the preliminary fair values of the
assets and liabilities of the Cons Murch Mine, which includes ZAR51
million in terms of the Initial Agreed Recapitalisation as defined in
the Announcement.
iii.A non recurring income relating to a gain on purchase arising on the
Proposed Transaction. The gain on purchase is calculated at ZAR37.9
million, being the difference between the Transaction Consideration
and the fair value of the Cons Murch Mine assets and liabilities
acquired based on the preliminary purchase price allocation.
Iv.)A formal valuation of the Cons Murch Mine assets and liabilities will
be performed at the effective date of Stage I of the Cons Murch
Transaction. This and the eventual fair value of the Transaction
Consideration will impact the eventual fair value and nature of
identified assets, liabilities, goodwill and intangible assets, if
any, as applicable.
v.)Estimated transaction costs associated with the Proposed Transaction of
ZAR3.1 million, which is non recurring in nature.
4 Column D: Represents the unaudited pro forma financial position after
Stages II and III of the Cons Murch Transaction following the successful
Conversion and the Section 11 Consent as defined in the Announcement, which
will only be effective some time after Stage I of the Cons Murch
Transaction becomes effective. This position includes the assumption of a
rehabilitation liability and the receipt of ZAR25 million cash. Column E
reflects an alternative position to that reflected in this column D.
5 Column E: Represents the unaudited pro forma financial position of not
obtaining the Conversion or the Section 11 Consent, Cons Murch not electing
to continue as a contract miner for Metorex Limited ("Metorex") and Metorex
electing to purchase all the ordinary shares of Cons Murch for a
consideration of ZAR1. This results in a non recurring impairment cost of
ZAR60 million. This position reflects an alternative position to that
reflected under column D.
5. CIRCULAR
A circular containing details of the Proposed Transaction, the Capital Raising
and the preparation and assumptions of the unaudited pro forma financial
effects, and incorporating a notice of general meeting of Village shareholders
will be posted to Village shareholders in due course.
6. WITHDRAWAL OF CAUTIONARY
Shareholders are referred to the cautionary announcement dated 7 October 2010,
and are advised that as the financial effects of the Proposed Transaction have
now been released caution is no longer required to be exercised by shareholders
when dealing in Village ordinary shares.
Bryanston
24 November 2010
JSE Sponsor
Macquarie First South Advisers (Pty) Limited
Legal adviser
Werksmans Attorneys
Independent Expert
KPMG Services (Pty) Limited
Investor Relations
Vestor Media and Investor Relations
Date: 24/11/2010 14:53:00 Produced by the JSE SENS Department.
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