| Mon 13 Feb 2012, 8:30 | | VIL - Village Main Reef Limited - Acquisition of DRDGOLD`S interest in |
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VIL
VIL
VIL - Village Main Reef Limited - Acquisition of DRDGOLD`S interest in
Blyvooruitzicht Gold Mining Company Limited ("Blyvoor") and withdrawal of
cautionary
Village Main Reef Limited
(formerly known as Village Main Reef Gold Mining Company (1934) Limited)
(Registration number 1934/0057034/06)
Share Code: VIL
ISIN: ZAE000154761
("Village")
ACQUISITION OF DRDGOLD`S INTEREST IN BLYVOORUITZICHT GOLD MINING COMPANY LIMITED
("BLYVOOR") AND WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
Shareholders of Village ("Shareholders") are referred to the joint
cautionary announcement ("joint cautionary announcement") by DRDGOLD
Limited ("DRDGOLD") and Village published on SENS on 8 November 2011 which
set out the terms of the proposed acquisition ("Proposed Acquisition") by
Village of DRDGOLD`s entire interest in Blyvoor, comprising all amounts
owed to DRDGOLD by Blyvoor ("Sale Claims") and all the ordinary shares in
Blyvoor held by DRDGOLD ("Sale Shares").
Shareholders are hereby advised that a binding agreement ("Agreement") has
now been concluded between Village, DRDGOLD, Blyvoor and Business Venture
Investments No 1557 (Proprietary) Limited (a wholly owned subsidiary of
Village)("Purchaser"), in relation to the Proposed Acquisition.
The Proposed Acquisition is divided into 2 parts, viz. the Part A Sale and
the Part B Sale. In terms of the Part A Sale, the Sale Claims are sold to
the Purchaser and in terms of the Part B Sale, the Sale Shares are sold to
the Purchaser.
The rationale for the Proposed Acquisition was set out in the joint
cautionary announcement.
2. DETAILS OF THE PROPOSED ACQUISITION
2.1 Purchase Consideration
The purchase consideration payable for the Sale Claims shall be
discharged by the Purchaser, by Village issuing 85 714 286 new
ordinary shares in Village ("Village Shares") at an issue price of
R1.75 per Village Share ("Consideration Shares") and the purchase
consideration payable for the Sale Shares shall be discharged by the
Purchaser paying a cash amount of R1, in aggregate.
2.2 Part A Sale
The Part A Sale is subject to the fulfilment or waiver (if
applicable), of certain conditions precedent ("Part A Conditions
Precedent").
Upon fulfilment, or waiver (if applicable), of the last of the Part A
Conditions Precedent ("Part A Closing Date"), DRDGOLD will:
2.2.1 transfer the Sale Claims to the Purchaser and Village will issue
the Consideration Shares to DRDGOLD, on the basis that 65 714 286
of the Consideration Shares will be held directly by DRDGOLD
whilst the remaining 20 000 000 Consideration Shares ("Escrow
Shares") will be held by an escrow agent as nominee for DRDGOLD
pending the outcome of the Part B Conditions Precedent (as
defined and set out in paragraph 2.3 below);
2.2.2 appoint the Purchaser as its agent to render the corporate
services on behalf of DRDGOLD under the existing Corporate
Services Management Agreement between DRDGOLD and Blyvoor ("Agent
Appointment"); and
2.2.3 cede to the Purchaser its rights to receive any dividend declared
by Blyvoor in respect of the Sale Shares ("Dividend Cession").
2.3 Part B Sale
The Part B Sale is subject to the fulfilment, or waiver (if
applicable), of the following conditions precedent ("Part B Conditions
Precedent"):
2.3.1 by not later than 17h00 on the second anniversary of the
signature date of the Agreement, the Department of Mineral
Resources ("DMR") has granted the conversion of Blyvoor`s old
order mining right and the new order mining right has been
notarially executed and registered in the Mining Titles Office
("Conversion"); and
2.3.2 by not later than 17h00 on the third anniversary of the signature
date of the Agreement, the DMR has unconditionally approved the
transfer of DRDGOLD`s interest in Blyvoor to the Purchaser in
terms of section 11 of the Mineral & Petroleum Resources
Development Act, No 28 of 2002 or conditionally approved it on
terms and conditions which each of DRDGOLD and the Purchaser
confirms to be acceptable ("Section 11 Approval").
Upon fulfilment of the Part B Conditions Precedent, the Escrow Shares
together with any accrued dividends thereon will be released to DRDGOLD and
the Sale Shares will be transferred to the Purchaser.
The Agreement provides for the possibility that Conversion fails to take
place, or that Conversion takes place but Section 11 Approval is not
obtained.
In the event that either of these circumstances occurs, the Agreement
envisages a number of outcomes which are primarily determined by reference
to the reasons for the failure of the Conversion and/or the failure to
obtain Section 11 Approval.
The outcomes set out in the Agreement determine whether:
- the sale of the Sale Shares is implemented and the Sale Shares are
transferred to the Purchaser;
- a portion of the Sale Claims revert to DRDGOLD;
- the Escrow Shares together with any accrued dividends thereon are
released to DRDGOLD or to the Purchaser;
- the Agent Appointment continues or is terminated; and/or
- the Dividend Cession is cancelled.
In the unlikely event that Conversion is refused during the interim period
(i.e. the period commencing on the earlier of (i) 2 May 2012 and (ii) the
Part A Closing Date and terminating on a date occurring 6 (six) months
thereafter), the Proposed Acquisition will be unravelled and restitution
will take place.
Shareholders will be informed of the relevant outcome should either of the
circumstances contemplated above occur.
3. FINANCIAL EFFECTS
The pro forma financial information set out below has been prepared for
illustrative purposes only, to provide information on how the Acquisition
may have impacted on the historical results and financial position of
Village.
The loss and headline loss per share figures illustrate the possible
financial effects if the Proposed Acquisition had taken place on 1 April
2010, whilst the net asset and net tangible asset per share figures have
been based on the assumption that the Proposed Acquisition had taken place
on 30 June 2011.
Because of its nature, the pro forma financial information may not give a
fair reflection of Village`s financial position after the Proposed
Acquisition, or the effect of the Proposed Acquisition on Village`s future
earnings.
The calculation of the pro forma financial information is the
responsibility of the directors of Village.
Before the After the Percentage
Proposed Proposed change
Acquisition Acquisition
Loss per Village share (cents) (297.49) (338.10) -13.7%
Headline loss per Village share (81.88) (65.73) 19.7%
(cents)
Net asset value per Village share 201.66 199.13 -1.3%
(cents)
Net tangible asset value per Village 192.45 175.52 -8.8%
share (cents)
Notes and assumptions:
1 The amounts set out in the "Before the proposed acquisition" column
have been extracted from the audited financial results of Village for
the fifteen months ended 30 June 2011.
2 The adjustments to the "Before the proposed acquisition column" have
been extracted from the financial statements of Blyvoor for the 15
months ended 30 June 2011.
3 Proposed Acquisition costs are estimated to amount to R2.1 million.
4 With the exception of transaction costs, all adjustments have a
continuing effect.
CLASSIFICATION OF THE PROPOSED ACQUISITION AND WITHDRAWAL OF CAUTIONARY
In terms of the Listings Requirements of the JSE Limited, the Proposed
Acquisition is categorised as a Category 2 transaction. Accordingly, approval by
Village shareholders is not required. Village shareholders are advised that
caution is no longer required to be exercised by shareholders when dealing in
their securities.
13 February 2012
Sponsor
Java Capital
Attorneys
Cliffe Dekker Hofmeyr Incorporated
Investor relations
Vestor
Date: 13/02/2012 08:30:40 Produced by the JSE SENS Department.
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