| Mon 30 Jan 2012, 16:24 | | WGR - Witwatersrand Consolidated Gold Resources Limited - Press |
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WGR
WGR
WGR - Witwatersrand Consolidated Gold Resources Limited - Press
announcement
Witwatersrand Consolidated Gold Resources Limited
(Incorporated in the Republic of South Africa)
Registration Number 2002/031365/06
JSE Code: WGR
ISIN: ZAE000079703
TSX Code: WGR
CUSIP Number: S98297104
("Wits Gold")
Press announcement
Wits Gold together with Pan African Resources to acquire the operating
Evander Gold Mine from Harmony for ZAR1.7 billion
Witwatersrand Consolidated Gold Resources Limited (`Wits Gold`) and Pan
African Resources plc (`Pan African`), collectively the `Consortium`
announced today that they have entered into an agreement with Harmony Gold
Mining Company Limited (`Harmony`) to acquire 100% of Harmony`s interest in
Evander Gold Mines Limited (`Evander`), in a 50/50 joint venture, for a
total Transaction consideration of ZAR1.7 billion (C$210 million 1) less
any distributions made by Evander to Harmony prior to the closing date of
the Transaction.
The Transaction represents an attractive value proposition to the
Consortium and will provide Wits Gold with an immediate increase in
attributable gold resources and reserves. Undertaking this Transaction as a
Consortium has created the opportunity for Wits Gold to bid for a better
quality asset, at a lower risk and financial exposure to the company.
Located in a sub-basin outside the main Witwatersrand Basin in South
Africa, the Evander gold field has historically produced in excess of 48Moz
of gold at an average grade of 7g/t. Well known to both management teams,
the mine comprises, amongst others the operating 8 shaft, three development
projects (Evander South, Rolspruit and Poplar), the Kinross metallurgical
plant and the Libra surface tailings project. The mine was recently
returned to profitability with production of 27,500 ounces at a cash cost
of ZAR208,597/kg (US$909/oz) in the latest quarterly figures reported by
Harmony.
The board of directors of Wits Gold believes that the Transaction further
represents an opportunity for Wits Gold to move from an exploration
specialist to an emerging mid-tier gold producer, with related cash flows.
The Transaction represents the first step into delivering into Wits Gold`s
new strategy with this move to producer status, while the cash generated
may be utilised to fund part of Wits Gold`s advanced development projects.
The purchase consideration of ZAR1.7 billion (C$210 million)1, less any
distributions made by Evander to Harmony between 1 April 2012 and the
closing date of the Transaction ("Closing Date") by way of dividends,
capital reduction or share repurchases, will be payable as follows:
- ZAR1.4 billion (C$181 million)1 less certain distributions, in cash on
the Closing Date of the Transaction;
- Four cash payments of ZAR25 million (C$3.2 million)1 each, payable
quarterly and commencing three months after the Closing Date, amounting to
a total of ZAR100 million;
- A further ZAR100 million (C$12.9 million)1 payable 19 months after
Closing Date, provided the average rand gold price exceeds ZAR410,000 per
kg* over the 12 preceding months. This payment can be made in either cash
or shares (or a combination of both) at the election of the Consortium and
should the Consortium elect to make payment wholly or partially in shares,
each of Pan African and Wits Gold will issue shares to Harmony in equal
value proportions; and
- ZAR100 million (C$12.9 million)1 payable 31 months after Closing Date,
provided the average rand gold price exceeds ZAR450,000 per kg* during the
preceding 12 months. This payment can be made in either cash or shares (or
a combination of both) at the election of the Consortium and should the
Consortium elect to make payment wholly or partially in shares, each of Pan
African and Wits Gold will issue shares to Harmony in equal value
proportions.
* No payment will be due if the average gold price for the period was not
achieved
The individual Consortium members intend utilising a combination of debt,
equity and operational cash flows to settle the Transaction consideration.
The Consortium will benefit from Pan African`s specialist operational skill
set and from Wits Gold`s specialist exploration expertise, as well as the
mining experience of both companies` Chief Executive Officers. The
Consortium will jointly control and manage the operations through a
steering committee with equal representation from both companies.
Philip Kotze, CEO of Wits Gold commented: "This Transaction allows Wits
Gold to become a producer overnight and the cash generated from this
operation will be utilised to partly fund our growth projects. Forming a
partnership with Pan African has enabled both companies to make an offer
for a better quality operating asset with significant upside potential. We
look forward to working together with our partners to provide the best
value for all our shareholders".
Please refer to the detailed SENS announcements released by each of the
companies earlier today for further details of the Transaction.
1. Exchange rates quoted as at close of business 27 January 2012 of
C$1.00:ZAR7.74
2. Reserves and Resources quoted from Harmony 2011 Annual Report which is
SAMREC and JORC compliant.
Johannesburg
30 January 2012
JSE Sponsor to Wits Gold Limited
PricewaterhouseCoopers Corporate Finance (Pty) Limited
For further information contact:
Philip Kotze
CEO: Wits Gold
+27 11 832 1749
Hethen Hira
Executive, Investor Relations: Wits Gold
+27 11 832 1749
Russel and Associates: Nicola Taylor
+27 11 880 3924
For and on behalf of Wits Gold
Transaction adviser and JSE Transaction Sponsor
Macquarie First South Capital (Pty) Limited
NOTES:
About Pan African
Pan African is a South African based precious metals mining group that
produces approximately 100,000 ounces of gold and 12,000 ounces of Platinum
Group Metals per annum, with a focus on low costs and high margin. The
company is focused on increasing productivity through stringent efficiency
and safety improvements. Recently the company announced that headline
earnings per share for the six months ended 31 December 2011 are expected
to be between 83 per cent and 93 percent higher than the 0.52 pence per
share generated for the six months ended 31 December 2010, due to the
current gold price and also as a result of managements operational
improvements and cost control at their gold producing asset, Barberton. The
company has recently commissioned the Phoenix chrome tailings retreatment
plant that extracts Platinum Group metals from chrome tailings and is
planning to build a 1.2Mt per annum gold tailings retreatment plant at its
Barberton Mining Operations.
About Wits Gold
Wits Gold is a gold and uranium company which holds 14 new order
Prospecting Rights over 1,195km2 in the southern Free State, Potchefstroom
and Klerksdorp goldfields of the Witwatersrand Basin. The Company is
currently focused on fast-tracking the development of its shallow DBM
Project in the southern Free State goldfield, where a pre-feasibility study
is currently in progress. The acquisition of the share in Evander Gold
Mines will result in Wits Gold becoming South Africa`s newest gold
producer, and delivers into the Company`s strategy to acquire producing
assets with growth potential.
FORWARD LOOKING STATEMENTS
Certain statements in this news release may constitute forward-looking
information within the meaning of securities laws. In some cases, forward-
looking information can be identified by use of terms such as "may",
"will", "should", "expect", "believe", "plan", "scheduled", "intend",
"estimate", "forecast", "predict", "potential", "continue", "likely",
"anticipate" or other similar expressions concerning matters that are not
historical facts. Forward-looking information may relate to management`s
future outlook and anticipated events or results, and may include
statements or information regarding the future plans or prospects of the
Company. Forward looking information in this release includes, but is not
limited to, statements regarding details of the Consortium, the terms and
conditions of the Transaction, the Acquisition Agreement, the Sale of
Business Agreement, the Shared Services Agreement, and anticipated timing
and benefits of the Transaction.
Forward-looking information involves known and unknown risks, uncertainties
and other important factors that could cause the actual results,
performance or achievements of the companies to be materially different
from the future results, performance or achievements expressed or implied
by such forward looking information. Such risks, uncertainties and other
important factors include among others: not satisfying the conditions
precedent, including receipt of all necessary approvals, including all
regulatory and shareholder approval; economic, business and political
conditions in South Africa; decreases in the market price of gold; hazards
associated with underground and surface gold mining; the ability to attract
and retain qualified personnel; labor disruptions; changes in laws and
government regulations, particularly environmental regulations and mineral
rights legislation including risks relating to the acquisition of the
necessary licences and permits; changes in exchange rates; currency
devaluations and inflation and other macro-economic factors; risk of
changes in capital and operating costs, financing, capitalisation and
liquidity risks, including the risk that the financing required to fund the
Transaction and all currently planned exploration and related activities
may not be available on satisfactory terms, or at all; and the ability to
maximize the value of any economic resources. These forward-looking
statements speak only as of the date of this news release.
You should not place undue importance on forward-looking information and
should not rely upon this information as of any other date. The companies
undertake no obligation to update publicly or release any revisions to
these forward-looking statements to reflect events or circumstances after
the date of this document or to reflect the occurrence of unanticipated
events except where required by applicable laws.
Date: 30/01/2012 16:24:11 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
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implicitly, represent, warrant or in any way guarantee the truth, accuracy or
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employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
