| Mon 16 May 2011, 8:00 | | PET - Petmin Limited - Investment in Red Crescent Resources and withdrawal of |
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PET
PET
PET - Petmin Limited - Investment in Red Crescent Resources and withdrawal of
cautionary announcement
PETMIN LIMITED
Incorporated in the Republic of South Africa
Registration Number 1972/001062/06
Share Code JSE: PET & ISIN: ZAE000076014
Share Code AIM: PTMN
("Petmin" or "the Company")
INVESTMENT IN RED CRESCENT RESOURCES AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Petmin is pleased to announce that it has successfully entered into a
transaction on 13 May 2011 with Red Crescent Resources Limited ("RCR"), a
mineral exploration and development company focused on base metals development
in Turkey and listed on the TSX (TSX: RCB), to subscribe for shares in RCR and
to subsequently invest directly in RCR`s Sivas Copper Project in central
Turkey.
The Sivas Copper Project will be explored and developed in RCR Quantum Mining
A.S., ("RCR Quantum"), which is 75% owned by RCR`s Turkey-based subsidiary,
Red Crescent Resources Holding A.S. ("RCRH") and 25% owned by Gensay (a
Turkish controlled entity).
Petmin and RCRH will jointly be responsible for the management of the Sivas
Copper project.
DESCRIPTION OF THE INVESTMENT
Petmin has entered into a Memorandum of Understanding ("MOU") with RCR to
subscribe, through a private placement, for 9,280,000 (nine million two
hundred and eighty thousand) RCR common shares at an issue price of CAD$ 0.50
per share which will constitute, after their issue, 10.1% of RCR for a total
investment of CAD$ 4.64 million ("Equity Investment").
Petmin has also agreed to fund the exploration of RCR Quantum via a three-and-
a-half year program, in up to four conditional tranches, amounting to a
maximum of CAD$ 17 million to earn up to a 37.5% interest in RCR Quantum (the
"Earn-In Investment").
The Sivas Copper Project is located in the Sivas region of north east Central
Turkey. It is located approximately 650km North West of Red Crescent`s other
primary asset, the Hakkari Zinc Project, and 400km north east of Red
Crescent`s other base metal project Tufanbeyli Zinc Project, at Adana, Turkey.
Petmin will have the right at all times to swap its stake in RCR Quantum for a
stake in RCR at values to be agreed upon at the time.
RATIONALE
Ian Cockerill, Executive Chairman of Petmin, commented:
"The earn-in investment into the Sivas project represents an early-stage, low-
risk and cost-effective entry into a potentially highly- prospective and
scalable copper venture that meets our project investment criteria. It
represents further progress on our stated intention of investing in a suite of
commodities used specifically in the `urbanisation and infrastructure
development space`, and in expanding our global footprint.
"Our Business of Tomorrow growth strategy is to significantly increase the
size of the company through organic and acquisitive growth, in order to
deliver sustainable value to our stakeholders by focusing on a combination of
cash-producing assets, near cash projects and targeted exploration programmes.
The Sivas copper project has the potential to add significant value to our
growing pipeline of projects"
THE TRANSACTION
Subject to the conditions precedent below Petmin will subscribe for 9 280 000
shares in RCR, at CAD$0.50 per share, representing 10.1% of the issued share
capital in RCR for a total investment of CSD$4.64 million in RCR.
Petmin further agreed to fund the exploration of RCR Quantum via a three and
half year, up to four tranches, conditional exploration programme up to a
maximum of CAD$17million and to earn up to a 37.5% interest in RCR Quantum,
equaling RCR`s interest at the end of the Earn-In period.
RCR will utilise CAD$ 3 million of the funds received via the Equity
Investment on the Sivas Project.
The MOU agreement defines a work plan for exploration in four tranches for the
delineation of the potential mineralisation to produce a target NI 43-101-
compliant resource base of 150Mt at a grade of >1% Cu, of which 20% will be in
the Measured category, 40% Indicated, and 40% in the Inferred category.
Petmin will invest in RCR Quantum in four conditional tranches as follows:
Tranche 1
Once RCR Quantum has delineated an Inferred resource of 20Mt at more than 1%
Copper per ton, Petmin will invest CAD$1 million for 5% of RCR Quantum which
will be used for the further delineation of the resource.
Tranche 2
Once RCR Quantum has delineated an Inferred resource of 30Mt at more than 1%
Copper per ton, Petmin will invest CAD$3 million for an additional 10% of RCR
Quantum, which will be used for further resource delineation.
Tranche 3
Once RCR Quantum has delineated a resource of 75Mt at more than 1% Copper per
ton of which -
10% is designated as Measured Resource;
30% is designated as Indicated Resource;
60% is designated as Inferred Resource,
Petmin will invest, at its sole discretion, CAD$8 million for a further 16% of
RCR Quantum which will be used for further resource delineation and for the
completion of a pre-feasibility study ("PFS").
Tranche 4
Once RCR Quantum has delineated a resource of not less than 150 million tons
at more than 1% per ton, of which -
20% is designated as Measured Resource;
40% is designated as Indicated Resource;
40% is designated as Inferred Resource, and
RCR Quantum has completed the pre-feasibility study, and Petmin, at its sole
discretion, is satisfied that this study indicates a viable project, Petmin
will invest CAD$5 million for a further 6.5% of RCR Quantum (bringing Petmin`s
total direct interest in RCR Quantum to 37.5%).
Measured Resource, Indicated Resource and Inferred Resource referred to above
bear the same meanings ascribed to those terms in the definitions and
guidelines of the Canadian Institute of Mining, Metallurgy and Petroleum
reporting codes.
At each investing point, Petmin will have the option to cease investing should
the drilling or feasibility results not meet its stipulated outcomes.
Post the successful completion of the PFS, a Bankable Feasibility Study will
be commissioned and financed pro-rata according to the parties` direct
shareholding in RCR Quantum at that time.
FINANCIAL EFFECTS
The effects on Petmin`s basic earnings per share, headline earnings per share
and net asset value per share of the Equity Investment are outlined below. The
Earn-in Investment has not been accounted for below as the board does not
consider it as having an effect on the current or near future financial
position of Petmin, will not present a fair disclosure currently, is not
certain, (due to the fact that the investments are all contingent on unknown
future results and events) and announcements with the financial effects
thereof will be made at the time the investments are made in future.
The table below sets out the pro forma financial effects of the Equity
Investment, based on Petmin`s published audited results for the year ended 30
June 2010. The financial effects are presented for illustrative purposes only
and because of their nature may not give a fair reflection of the Company`s
results, financial position and changes in equity after the transaction.
It has been assumed for purposes of the pro forma financial effects that the
transaction took place with effect from 1 July 2009 for income statement
purposes and 30 June 2010 for balance sheet purposes. The directors of Petmin
are responsible for the preparation of the financial effects.
Notes 1 2
Before Investment
in RCR
Basic earnings per ordinary share (cents) 19.09 (0.25)
Headline earnings per share (cents) 19.09 (0.25)
Weighted number of shares in issue 564,135,339 -
Net asset value per share (cents) 215.19 -
Total shares in issue at 30 June2009 576,908,188 -
3 4
Pro Forma % Change
After
Basic earnings per ordinary share (cents) 18.84 (1.3%)
Headline earnings per share (cents) 18.84 (1.3%)
Weighted number of shares in issue 564,135,339 -
Net asset value per share (cents) 215.19 -
Total shares in issue at 30 June2009 576,908,188 -
Notes:
1. This column represents the "Before" financial information, which has been
extracted, without adjustment, from the published audited consolidated results
of Petmin for the twelve months ended 30 June 2010.
2. This column reflects the effect of the investment in RCR of CAD$ 4, 64
million with CAD$/Rand exchange rate of 0.1363.
3. This column reflects the effect after the investment by Petmin in RCR.
4. This column reflects the percentage change the above transaction has on the
performance per ordinary share of Petmin.
The assumptions used above are:
- Earnings remain constant;
- Interest rates on cash utilised assumed to be 6% per annum and the
investment in RCR is 100% cash;
- No adjustments have been made for taxation effects;
- The direct costs and the benefits obtained from the potential Earn-In equity
into RCR Quantum have not been quantified as it is impossible to quantify at
this point of time.
CONDITIONS PRECEDENT
The Transaction is subject to:
- The fulfilment of all the normal statutory approvals, including those of the
JSE, TSX and SARB; and
- The MOU is to be encapsulated in formal agreements and the board of
directors of each Party have approved and/or ratified the entering into and
implementation of these formal agreements.
CATEGORISATION, JSE LISTINGS REQUIREMENTS
The Equity Investment into RCR does not constitute a reportable transaction,
but the total transaction once implemented in full will constitute a Category
2 transaction under Section 9 of the JSE Listings Requirements and the board
has decided to comply with the Category 2 requirements so as to afford
shareholders full disclosure of the transaction.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 3 May 2011, and
are advised that as the contents referred to therein have ceased to have any
relevance or effect on the Company, caution is no longer required to be
exercised by shareholders when dealing in their securities.
Johannesburg
16 May 2011
Corporate Advisor and Sponsor
River Group
Enquiries:
Petmin
Jan du Preez
+27 11 706 1644
Nominated Advisor (AIM)
Numis Securities Limited
John Harrison
+44 207 260 1000
Sponsor and Corporate Advisor (JSE)
River Group
Andrew Lianos
+27 834 408 365
Date: 16/05/2011 08:00:04 Produced by the JSE SENS Department.
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