| Fri 24 Jun 2011, 17:13 | | MML - Metmar - Announcement regarding the acquisition by Metmar of a further 60 |
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MML
MML
MML - Metmar - Announcement regarding the acquisition by Metmar of a further 60
percent interest in Eastern Belt Chrome Mines (Pty) Ltd and further cautionary
announcement
METMAR LIMITED
Incorporated in the Republic of South Africa
(Registration number 1998/007269/06)
Share code: MML
ISIN code: ZAE000078747
("Metmar" or "the Company")
ANNOUNCEMENT REGARDING THE ACQUISITION BY METMAR OF A FURTHER 60 PERCENT
INTEREST IN EASTERN BELT CHROME MINES (PROPRIETARY) LIMITED ("EASTERN BELT
CHROME") AND FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement included in the audited abridged
financial results for the year ended 28 February 2011 published by Metmar
on SENS on Thursday, 19 May 2011 and in the press on Friday, 20 May 2011,
Metmar shareholders ("Shareholders") are advised that Metmar, through its
wholly-owned subsidiary, Metmar Investments and Resources (Proprietary)
Limited ("the Purchaser"), has entered into sale of shares and claims
agreements on 23 June 2011 ("the Agreements") with each of, inter alia,
Oostermoed Beleggings 201 (Proprietary) Limited, Payloads Investments
(Proprietary) Limited, Lephatsi Investments (Proprietary) Limited and the
Trustees for the time being of the Ferguson Family Trust (collectively,
"the Sellers") and Eastern Belt Chrome (the "Parties"), in terms of which
the Purchaser will, purchase a further 60 percent interest in Eastern Belt
Chrome from the Sellers on the terms and conditions set out below ("the
Transaction").
Metmar currently holds a 20 percent interest in Eastern Belt Chrome, a
holding company which owns 51% in Steelpoort Chrome Mines (Proprietary)
Limited ("SCM") and 49.9% in Bolepu Holdings (Proprietary) Limited
("Bolepu"). Bolepu owns 40% of Sefateng Chrome (Proprietary) Limited
("Sefateng"). From its investment in Eastern Belt Chrome, Metmar has
acquired the offtake of chrome ore from Sefateng for the mining operations
at Swartkoppies mine and the entire offtake with SCM for all chrome ore
from the future mining operations at the Goudmyn mine. These mines are
located in the Steelpoort area.
2. Rationale for the Transaction
Sefateng holds a 40 million metric ton LG6 deposit of which 2.5 million
metric tons is opencast material. Sefateng is currently mining under a
small scale mining permit at a rate of 20 000 metric tons per month, for
which Metmar derives annuity marketing income. To date Metmar has
successfully exported in excess of 50 000 metric tons of chrome ore. Once
the mining right has been approved, the intention is to ramp production up
to 40 000 metric tons per month. In order to improve profitability,
consideration will be given to beneficiation of the material at a later
stage.
SCM holds a 770 000 metric ton LG6 deposit and all material is open cast.
These volumes of supply will make Eastern Belt Chrome a major South African
chrome player.
Following the re-structure of Metmar`s business, approved in a board
meeting on 16 February 2011, Metmar will have three distinct businesses
within the Company, each with their own areas of internal expertise, being
Metmar Investments and Resources, Metmar Trading and Metmar Polychem. The
Purchaser will focus on consolidating existing investments/projects and
will identify key investments, of which chrome has been identified as one.
Security of supply is one of the core drivers for the business success of
Metmar and investment in the supply chain to obtain ownership of resources
is Metmar`s strategy going forward.
Demand for chrome and future ore from South Africa will continue to remain
strong, as depleting reserves elsewhere around the globe support the export
of South African chrome and the future thereof, to consumers globally.
3. Consideration
The aggregate purchase price payable by the Purchaser to the Sellers will
be an amount of R61 408 559.37 ("the Purchase Price"), which amount shall
be settled as follows:
3.1 R56 259 439.39 will be paid by the Purchaser to the Sellers in cash by
no later than 15 September 2011; and
3.2 R5 149 119.98 in twenty four equal monthly instalments commencing on
30 May 2011 and thereafter on the last business day of every
subsequent month.
4. Conditions precedent
The Transaction is subject to the fulfilment of the following conditions
precedent by no later than 15 September 2011, or such later date as the
parties may agree in writing:
4.1 the unconditional consent (if required) of the Competition Commission
in respect of the implementation of each of the Agreements; and
4.2 each of the Agreements becoming unconditional in accordance with its
terms.
5. Effective Date
The Transaction will be effective from the date of signature of the
Agreements, being, 23 June 2011.
6. Pro forma financial effects of the Transaction and further cautionary
Shareholders are advised to continue to exercise caution when dealing in
the Company`s securities until such time as a further announcement
containing the pro forma financial effects of the Transaction is published.
7. Memorandum of incorporation ("MOI")
Metmar undertakes that the MOI of Eastern Belt Chrome will conform to
Schedule 10 of the JSE Limited Listings Requirements, as required.
Johannesburg
24 June 2011
Sponsor
One Capital
Date: 24/06/2011 17:13:01 Produced by the JSE SENS Department.
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