| Tue 15 Nov 2011, 10:52 | | MMH - Miranda Mineral Holdings Limited - Voluntary - Update to shareholders |
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MMH
MMH
MMH - Miranda Mineral Holdings Limited - Voluntary - Update to shareholders
Miranda Mineral Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/001940/06)
Share code: MMH ISIN: ZAE000074019
("Miranda" or "the Company")-
UPDATE TO SHAREHOLDERS
Introduction
The South African based mineral exploration and development company,
Miranda, has today provided a further update to shareholders as a result of
investigations that are underway into several matters of the Company,
including a detailed review and verification of some of the Company`s
existing assets. This was conducted following a review by the current
board of directors of the Company ("Board") and current executive
management team, over recent months, and follows announcements previously
made in September and October 2011.
Rozynenbosch Prospecting Right
On 6 October 2011 shareholders were informed that the Board had obtained
material information regarding the Company`s prospecting right
("Prospecting Right") for its Rozynenbosch lead, silver and zinc deposit
located in the Northern Cape Province of South Africa. The original
application for the conversion of the old order Prospecting Right was
submitted on 28 April 2005 before Miranda listed on the JSE Limited on 19
December 2005. The Department of Minerals and Energy ("DMR") has informed
the Company that the application was refused as far back as 5 July 2006.
In a letter sent by the DMR on 19 October 2011, the DMR unequivocally
confirmed to the Company that it had previously advised the Company and its
attorneys on numerous occasions that the appeal against the refusal of the
Prospecting Right was finalised on 26 March 2007 and was unsuccessful, and
that the appeal file was closed accordingly. It is unclear why the
correspondence from the DMR had not previously been made available to the
Board or the new executive management team. The Company`s current
attorneys have been briefed and the Board is taking legal advice on the
matter. Shareholders will be kept informed of any material developments
regarding the issue.
It has also been brought to the Board`s attention that a law firm
purporting to act for the Company had lodged a R11 billion compensation
claim against the DMR following the loss of the Prospecting Right, without
the express authorisation of the Board and despite any reasonable prospect
of success. The firm has informed Miranda that it had received legal
opinion from Senior Counsel and that Miranda would at best be entitled to
the amount spent on the Prospecting Right. Miranda has spent less than R1
million on the old order Prospecting Right and the Board does not currently
believe there is any merit and benefit in pursuing the unauthorised
compensation claims.
Sesikhona
Shareholders are referred to the announcement dated 14 December 2010
wherein the Company reported that in respect of its Sesikhona property, a
total resource of 5.4 million gross in situ tonnes was declared by Mr PC
Meyer in September 2007. Under the Company`s executive management at the
time, this resource calculation applied no modifying factors, besides a 15%
geological loss, and therefore declared no classification for the resource.
Venmyn Rand (Pty) Limited ("Venmyn") estimated a resource of 4.4 million
total tonnes in situ, applying geological losses of 15% and a seam
thickness cut-off of 0.5m. The resource was classed to be in the measured
category. The valuation, undertaken by Venmyn, was based upon a reserve and
mine plan prepared by Stefanutti Stocks Mining Services, a division of
Stefanutti Stocks (Pty) Limited ("Stefanutti Stocks"), as at June 2010. The
valuation result was that the fair value of the Sesikhona project was
R120.8 million with total saleable tonnes of 3.6 million tonnes. Miranda
Coal`s attributable value in the Sesikhona prospect was therefore R88.2
million, and the anticipated life of mine (LOM) for the Sesikhona project
was estimated at five years.
In 2011, the Board requested that Venmyn conduct an indicative and
independent mineral asset valuation on the Sesikhona project. Venmyn has
now estimated a resource of 2.07 million tonnes (previously: 3.6 million
saleable tonnes) and the resource is classified in the measured category.
The fair value of the Sesikhona project is now therefore R56.8 million
(previously: R120.8 million). Miranda Coal`s attributable value is R41.5
million (previously: R88.2 million), and the anticipated LOM for the
project is four years.
Miranda has incurred expenditure of approximately R16.5 million in
preparing to mine the Sesikhona asset and the costs have been capitalised
on the Company`s balance sheet. The adverse downward revision in terms of
resources and valuation had not previously taken into account the mined out
areas at Sesikhona; and now reflects the latest information made available
to the Board by Venmyn.
The Board is evaluating all options available to the Company on how best to
optimally realise the current attributable value of the asset.
As previously reported, Stefanutti Stocks, were engaged as subcontractors
to mine the Sesikhona asset. During September 2010, mining activity was
halted due to a mining dispute occuring under the previous executive
management of the Company, and the parties have referred the matter for
arbitration. The pre-arbitration meeting was held on 3 November 2011, and
the arbitration hearing has been set for 16 April 2012. Shareholders will
be updated as soon as new information comes to light.
Boschhoek
Shareholders are further advised that the Prospecting Right that was
awarded to Applewood Trading 3 (Pty) Limited ("Applewood"), which is a 72%-
owned subsidiary of Miranda Coal, is being challenged by the Minister of
Defence. The Minister of Defence is seeking relief to interdict Applewood
from proceeding with any prospecting activities and to have the DMR award
of the Prospecting Right to Applewood, reviewed. The Minister of Defence is
taking the position that the property was previously used for military
training and that there are sufficient risks associated with unexploded
ordinances on the property. It is uncertain whether Miranda will
successfully defend the Prospecting Right and the Board has resolved to
enter into direct negotiations with the Ministry of Defence in an attempt
to settle the dispute.
Uithoek
Shareholders are also advised that Miranda has received notification of the
termination of a joint-venture and compensation access agreement in place
with the Simpson family, regarding the Uithoek property. The mining rights
are not currently owned by Miranda and, therefore, in order for the Company
to ensure tenure, a section 11 transfer in terms of the Mineral and
Petroleum Resources Development Act (MPRDA) No 28 of 2002 must occur. In
anticipation of the ceding of the prospecting right and mining right to
Miranda, the Company had previously made good faith monthly royalty
payments to the Simpson family, which were to have been offset against
future royalties` payable on mining. Under the previous executive
management, the Company had negotiated an agreement that imposed financial
obligations on Miranda without defined obligations on the counterparty. The
Board is seeking legal advice on how best to proceed and therefore reserves
its rights in this regard.
Venmyn hereby confirms that it is an independent registered Competent
Person/Valuator and have reviewed and approved this release. Information
concerning the Sesikhona Project is compliant with the Samrec and Samval
Code.
Shareholders are referred to the Company website www.mirandaminerals.com
for additional information, including a questions and answers section that
will be posted in due course.
Johannesburg
15 November 2011
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
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