| Tue 13 Sep 2011, 8:54 | | PET - Petmin Limited - Petmin sells SamQuarz silica mine and withdrawal of |
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PET
PET
PET - Petmin Limited - Petmin sells SamQuarz silica mine and withdrawal of
Cautionary
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")
Petmin sells SamQuarz silica mine and withdrawal of Cautionary
Petmin has sold its SamQuarz silica mine in Mpumalanga for R259 million in cash,
an average net return of 45% year on year after tax, for the six years since it
acquired the operation for R85 million.
The sale of SamQuarz (Pty) Ltd to Thaba Chueu Mining (Pty) Limited, a subsidiary
of Spain`s Grupo Ferroatlantica SL, was agreed to at a Petmin board meeting on
Monday 12 September 2011. The final purchase price may be adjusted upwards to
around ZAR 270 million once final approval is secured from the Competition
Commission and Department of Mineral Resources.
SamQuarz, near Delmas, is the largest producer of high quality silica in South
Africa and a key supplier to the South African clear glass and metallurgical
industries. It has stable production of 1.1 million tonnes per annum and a life
of mine in excess of 40 years.
Bradley Doig, Petmin Chief Operating Officer, said: "The sale of SamQuarz for a
305% overall return is consistent with Petmin`s reputation for delivering
superior value to shareholders.
We acquire good undervalued and or underperforming assets, operate them
efficiently, and use the proceeds of a well timed sale to invest in high
potential exploration and development projects."
Petmin`s return on SamQuarz will pay for and fund current projects and new
investments aligned to its focus on commodities which support infrastructure
development and which are being used in the steel value chain.
Petmin`s investments this year include a 50% stake in a Liberian iron ore joint
venture, an entry into Turkish copper (potentially securing up to 37.5%), and a
phased investment in Canadian iron sands (potentially securing up to 40%).
Petmin has joint management control in all of the above projects.
These projects provide Petmin with significant potential optionality and are
clearly representative of Petmin`s strategy to diversify geographically into
those commodities that are consumed in the steel value chain, specifically in
infrastructure development and urbanization.
NOTES
The sale is subject to normal warranties applicable to a transaction of this
nature. At 30 June 2011, SamQuarz has been accounted for as a non current asset
held for sale in terms of IFRS 5 and the comparatives have been re stated
accordingly.
RATIONALE AND USE OF PROCEEDS
Petmin has a history of delivering superior returns to shareholders by cost
effectively purchasing and developing assets and disposing of them for superior
returns, returning value to shareholders and reinvesting the gains in new
assets. Petmin acquired SamQuarz as an underperforming asset and restructured
the business into a long term, sustainable, reliable cash producing asset. The
cash flows from SamQuarz provided Petmin with a stable base from which to build
on its growth strategy.
The disposal will provide Petmin with significant cash resources to be deployed
in accelerating the Business of Tomorrow strategy and funding the various
project development requirements in Petmin`s pipeline of projects.
FINANCIAL EFFECTS
The effects on Petmin`s basic earnings per share, headline earnings per share
and net
asset value per share are outlined below.
The table below sets out the pro forma financial effects of the disposal of
SamQuarz, based on Petmin`s published reviewed results for the year ended 30
June 2011. 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 2010 for income statement
purposes and 30 June 2011 for balance sheet purposes. The directors of Petmin
are responsible for the preparation of the financial effects.
Before Change After Change
(1) (2) (3) (4)
Profit (Loss) per share (cents) 17.50 4.47 21.97 26%
Headline profit (loss) per
share (cents) 17.50 -2.54 14.96 -15%
Weighted number of shares
in issue 576,908,188 - 576,908,188 -
Net asset value per
share (cents) 228.31 7.01 235.32 3%
Net tangible asset value per
share (cents) 227.99 7.01 235.00 3%
Total shares in issue at
30 June 2010 576,908,188 - 576,908,188 -
Notes:
1. This column represents the "Before" financial information, which has been
extracted, without adjustment, from the published reviewed consolidated
results of Petmin for the twelve months ended 30 June 2011.
2. This column reflects the effect of the sale
3. This column reflects the effect after the sale
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 sale is
100% cash;
- Taxation has been accounted for at the standard rates for both income tax
and capital gains tax.
CONDITIONS PRECEDENT
The transaction is subject to fulfilment of all the normal statutory approvals;
and the Sale is specifically subject to the following key conditions:
- By 9 December 2011, the Sale being unconditionally or conditionally
approved by the Competition Authorities in terms of the South African
Competition Act;
- By 31 March 2012, the Sale and all agreements and transactions contemplated
having been unconditionally or conditionally approved by the South African
Minister of Minerals and Energy in terms of section 11 of the Mineral and
Petroleum Resources Development Act (MPRDA).
CATEGORISATION, JSE LISTINGS REQUIREMENTS
- The disposal of SamQuarz constitutes a Category 2 transaction under Section
9 of the JSE Listings Requirements and a `substantial transaction` under
Rule 12 of the AIM rules.
WITHDRAWAL OF CAUTIONARY
- Shareholders are referred to the cautionary announcement dated 5 August
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
13 September 2011
Enquiries:
Petmin
Bradley Doig (COO)
+27 824 597 818
Jonathon Rees (media)
+27 76 185 1827
Nominated Advisor (AIM)
Numis Securities Limited
John Harrison
+44 207 260 1000
Corporate Broker (AIM)
Numis Securities Limited
James Black
+44 207 260 1000
Sponsor and Corporate Advisor (JSE)
River Group
Andrew Lianos
+27 834 408 365
Date: 13/09/2011 08:54:46 Produced by the JSE SENS Department.
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