| Tue 26 Jun 2012, 9:00 | | MRI - Mine Restoration Investments Limited - Abridged listing particulars in |
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MRI
MRI
MRI - Mine Restoration Investments Limited - Abridged listing particulars in
relation to the listing of Mine Restoration Investments Limited
MINE RESTORATION INVESTMENTS LIMITED
(formerly Capricorn Investment Holdings Limited)
(Registration Number 1987/004821/06)
("MRI" or "the Company")
Share code: MRI ISIN: ZAE000164562
ABRIDGED LISTING PARTICULARS IN RELATION TO THE LISTING OF MINE RESTORATION
INVESTMENTS LIMITED
The directors of MRI are pleased to advise that the JSE Limited ("JSE")
approved the listing of the ordinary shares of the Company on the AltX under
the abbreviated name "MineResI", share code "MRI" and ISIN ZAE000164562. The
listing of the ordinary shares on AltX took effect from the commencement of
business on 25 June 2012.
The Company issued a reverse-listing circular to shareholders, including
revised listing particulars, on 2 April 2012. An abridged account of the
listing particulars prepared in terms of the Listings Requirements ("the
Listings Requirements") of the JSE is as follows:
1. INTRODUCTION AND RATIONALE
The Company acquired 100% of the shares and claims against WUC for a purchase
consideration of GBP 4 500 000 (R58 044 600). GBP 1 814 711 (R23 407 594) of
the purchase consideration was paid in cash while the remaining GBP 2 685 289
(R34 637 006) was settled by the issue of 182 300 030 new ordinary shares at a
price of 19 cents per share. The cash element of the purchase consideration
was settled by way of the Specific Share Issue, totalling R40 000 000, which
was fully subscribed.
The reason for the WUC Acquisition is to provide shareholders of the Company
with an opportunity to participate in an operating business instead of an
inactive cash-shell. The Company`s strategy is to generate attractive returns
by targeting opportunities in South Africa that focus on providing solutions
to the waste that occurs from coal mining (coal fines), as well as Acid Mine
Drainage (AMD).
In addition, the listing is expected to:
* Enhance the profile and credibility of WUC as a leading coal briquetting
company and as a solution provider for AMD.
* Raise awareness of both the coal briquetting and AMD projects and more
generally to raise awareness with investors and members of the general
public.
* Position WUC in such a way as to attract and retain key human resources
by means of the implementation of a share incentive scheme in the
foreseeable future.
* Increase its capital base in order to take advantage of future growth
opportunities.
* Provide management, staff, selected black economic empowerment investors,
financial institutions and associates the opportunity to participate
directly in the equity of WUC.
* Facilitate the raising of funding necessary to allow the Company to fund
future strategic projects.
* Position the Company for a second round of capital-raising for the AMD
Project.
2. BUSINESS DESCRIPTION
WUC was incorporated as a private company on 17 January 2006 in South Africa
and was initially established to address the unique challenges presented by
the existence of Acid Mine Drainage in underground voids and its effects on
potable water sources in environmentally-sensitive areas. The AMD Project
arose from the request by the Department of Water Affairs and Forestry
("DWAF") to develop a solution to the AMD project and is currently awaiting
approval from the DWAF.
In addition, WUC developed proprietary technology in respect of a Coal
Briquetting Project. This project has already started, and production is
expected to start within 9 months followed by a three month commissioning and
ramp-up period to full production.
COAL BRIQUETTING PROJECT
Coal fines are an environmental hazard due to the adverse effects caused by
this by-product. To date the only viable solution to these coal fines is the
briquetting solution. Previously, briquetting has not been a viable option
due to the problems encountered with the process. However, with recent
progress in the briquetting methodology used, briquetting is now not only an
environmental solution but a profitable business.
Whilst conceptually simple, the coal industry has seen its fair share of
binders and briquetting processes over the years. Whilst there are success
stories, many attempts have failed. The problem usually lies with the binder.
In the past, binders either altered the characteristics of the coal
(increasing ash or reducing the calorific value) or they simply could not
withstand the rigors of transportation - including the long term exposure to
weather. WUC has an understanding of the briquetting process and knowledge of
the cohesive and repulsive forces between solids, the adhesion of binders,
heat transfer characteristics, heat effects on surface properties, and the
rheological behaviour of particulate masses inside the briquetter.
Off-take agreements have been established and signed between WUC and Leeuw
Mining (who previously owned Vaalkrantz Anthracite Collieries - now owned by
Keaton Energy), which is generating the coal fines. The mine reserves comprise
good quality bituminous coal and high-grade anthracite. The quality of the
material makes it highly sought after in the metallurgical industry.
The capacity of the briquetting plant is 8 000 t/m but the forecast assumes a
maximum processing of 5 000 t/m. The plant will process coal fines from both
the existing fines stockpiles and the monthly Run of Mine fines production.
It is the intention of WUC to use this plant as a demonstration plant for its
technology and to expand its Briquetting Project to other coal mines in the
future.
ACID MINE DRAINAGE PROJECT
As a result of gold mining operations in South Africa`s Witwatersrand Basin
over the last century, underground voids have been created and have filled
with water that has become contaminated (known as Acid Mine Drainage). This
contaminated water has had a dramatic impact on ground water conditions in the
Witwatersrand Basin.
The threat posed by AMD is severe; not only to the surrounding residential and
agricultural communities who rely on the rivers as a source of potable water
and irrigation but also, potentially, to the Sterkfontein Caves (which form
part of the 3.5 million year old Cradle of Humankind World Heritage Site).
This site could be flooded and irreversibly damaged, unless the seepage of the
contaminated water is effectively addressed.
Accordingly, a principle was enforced in a directive from the Department of
Water Affairs and Forestry (DWAF) that mining houses will not be allowed to
close any further operations in the area until the affected water has been
satisfactorily rehabilitated.
Consequently, several mining houses have formed environmental corporations in
close consultation with the relevant government authorities. The function of
these entities is to develop and implement a sustainable solution to the long-
term mine water recharge and decant issues in the Witwatersrand area.
WUC has been contracted to develop and implement the integrated water
management and treatment strategy on behalf of the environmental corporations.
The technology chosen by WUC for use in its solutions is CSIR`s Alkaline
Barium and Calcium process selected on weighted, pre-determined selection
criteria, which included product quality, by-product generation, waste
generated, water recovery, scale-ability, operability, flexibility and
availability, capital cost, footprint area and first fill, operating cost and
technology rights and license fees.
The water will be treated to potable/drinking water standards. It is proposed
that the potable water be sold to bulk water distributors, such as Rand Water,
although no agreements have yet been signed in this regard. Some of the water
will be distributed to the mines for their mining and process-related use. It
is further proposed that the balance of the water will be conveyed to Rand
Water`s Klipriviersberg Reservoir in Alberton for further distribution to
potable users.
The estimated cost of the WUC Water Reclamation Project is approximately R1.88
billion and will only commence once WUC has received approval from the DWAF
and has published the environmental impact assessment. It should be noted
that the DBSA and IDC have already provided funding to WUC for the feasibility
study and have a first right of refusal for a portion of the R1.88 billion
funding.
In addition to water, WUC will also generate revenues from the sale of by-
products, which include green certificates for carbon dioxide that is reused
in the treatment process, the sale of sulphuric acid and carbon dioxide sales.
No agreements have yet been signed in this regard.
The AMD Project provides:
* Individual mines with an integrated solution to an otherwise open-ended
liability;
* Government with a Regional Closure Strategy;
* Communities with much needed additional water; and
* Shareholders with a sound investment opportunity.
3. CONSOLIDATED FORECAST STATEMENT
The summarised forecast statements of comprehensive income relating to Mine
Restoration Investments Limited for the years ending 28 February 2013 and 28
February 2014, the preparation of which is the responsibility of the directors
of Mine Restoration Investments, are set out below.
R`000 Forecast for Forecast for
the year the year
ending ending
28 February 28 February
2013 2014
Revenue 6 120 43 200
Operating costs (3 822) (19 199)
Other costs (8 126) (9 165)
(Loss)/Profit from (5 828) 14 836
operations
Finance expense (1 067) (4 267)
Finance income 395 549
(Loss)/profit before (6 500) 11 118
taxation
Taxation 1 820 (3 113)
Net (loss)/profit for the (4 680) 8 005
year
Attributable to:
Equity holders of Mine (2 387) 4 083
Restoration Investments
Non-controlling shareholders (2 293) 3 922
(Loss)/earnings per share (0.52) 0.90
(cents)
Diluted (loss)/earnings per (0.52) 0.90
share (cents)
Headline (loss)/earnings per (0.52) 0.90
share (cents)
Diluted headline (0.52) 0.90
(loss)/earnings per share
(cents)
Weighted average number of 455 695 455 695
shares in issue (`000)
Diluted weighted average number of 455 695 455 695
shares in issue (`000)
Profit Forecast Assumptions:
Factors that the directors can influence
Revenue: Forecast production volumes are based on an average monthly
production from the plant and briquetting machinery of 5 000 tonnes per month
("Average Production"). However, the directors are of the view that the
Average Production is approximately 62.5% of the average maximum production
capacity of the plant and briquetting machinery.
Production is forecast to commence nine months after 1 March 2012. The first
month of operations is forecast to run at 20% of the Average Production, the
second month at 50% of the Average Production. Average Production is forecast
to be achieved during February 2013.
Operating costs: Forecast operating costs of R294.31 per ton of briquette
produced have been assumed. Included in this figure are costs in respect of
salaries and wages, insurance, maintenance and utility costs.
Other costs: Depreciation charges relate to the proposed R13.9 million of
capital expenditure in respect of property, plant and equipment. Included in
this amount is an allowance for additional spare parts of R0.5 million, and an
escalation allowance of 5% of the total capital expenditure. Amortisation
charges of R6.0 million relate to the Anthracite Briquetting Project
intangible asset.
Finance expense: Forecast finance expenses relate to the loans of R22.5
million. The forecast interest rates are as follows:
? Development Bank of Southern Africa Limited loan - 25% pa;
? Mintails South Africa (Proprietary) Limited, Rand Uranium (Proprietary)
Limited and West Wits Mining Limited - 8% pa;
? The remainder of the loans from Industrial Development Corporation of
Southern Africa Limited, Central Rand Gold Limited, Harmony Gold Limited and
the West Basin Environmental Corporation are non-interest bearing loans.
Finance income: Forecast finance income in respect of cash balances is
forecast to accrue at a rate of 4.9% per annum.
Taxation: For the year ended 28 February 2013 and 28 February 2014 a corporate
tax rate of 28% was forecast.
Factors that the directors cannot influence
Revenue: In terms of an off-take agreement with the coal mine it has agreed to
pay a price per ton of briquettes produced at the spot price for thermal coal
FOB RB1 ("Spot Price of thermal coal") determined on the day that the
briquettes leave the plant, less 15%. A price of R720 per ton has been assumed
for the forecast period as the average coal price during 2011 was
approximately USD112 per ton, while the average exchange rate during the same
period was approximately R7.562:USD1.00, thereby resulting in an average coal
price of R847 per ton. After taking into account the 15% discount, the price
used is R720 per ton.
General: Interest rates and exchange rates will not vary materially in the
forecast periods. Trading conditions are not expected to vary materially in
the forecast periods.
The forecast financial statements do not account for any financial information
related to the Acid Mine Drainage project that the Company is pursuing as it
is uncertain when this project will commence and any costs incurred in
relation thereto will be capitalised.
4. SHARE CAPITAL
At present, the Company has 1 000 000 000 authorised shares and following the
completion of the transactions has a total of 455 695 274 no par value shares
in issue.
5. NAME CHANGE
In order to better reflect the Company`s corporate identity after the
implementation of the Acquisition, the Company changed its name to Mine
Restoration Investments Limited. The abbreviated name of the Company on the
JSE is MineResI (JSE code MRI). The former name of the Company will be
reflected on documents of title and announcements for a period of one year.
6. DIRECTORS
The Company reconstituted its board of directors pursuant to the Transactions
in order to bring more coal mining, engineering and water treatment experience
to the board and to comply with the Act and King III.
The name, age, nationality, capacity and business address of each of the
directors of MRI are set out below:
Name Business address Capacity
Quinton George Block F Non-Executive
(39) The Terraces Chairman
Steenberg Office Park
Cape Town
Jaco Schoeman Unit 25, Block C Group
(37) Eco Fusion Executive
320 Witch-Hazel Avenue Officer
Technopark, Centurion.
James Herbst First Floor, East Wing Non-Executive
(41) 146a Kelvin Drive Director
Woodmead
Stephen First Floor, East Wing Independent
Tredoux (51) 146a Kelvin Drive Non-Executive
Woodmead Director
Michelle van Unit 25, Block C Financial
den Berg (32) Eco Fusion Director
320 Witch-Hazel Avenue
Technopark, Centurion.
Charles Pettit Block F Non-Executive
(30) The Terraces Director
Steenberg Office Park
Cape Town
Sandile Swana Block 3 Independent
(43) Visiomed Office Park Non-Executive
269 Beyers Naude Drive Director
Northcliff
Anthon Meyer 21b Phinda str Lead
(58) Moreletta Park Independent
Pretoria. Non-Executive
Director
Chris Roed 25 Boston Road Independent
(45) Bellville Non-Executive
Cape Town Director
7530
All the above-mentioned directors are South African, apart from Mr C Pettit
who is British.
7. PROSPECTS FOR MRI
Briquetting Project
The coal-mining industry is highly concentrated with five companies accounting
for 85% of saleable coal production.
Production is concentrated in large mines, with 11 mines accounting for 70% of
the output. South African coal for local electricity production is among the
cheapest in the world. The beneficiation of coal, particularly for export,
results in more than 65Mt of coal discards being produced every year.
By international standards, South Africa`s coal deposits are relatively
shallow with thick seams, which make them easier and, usually, cheaper to
mine. At the present production rate there should be more than 50 years of
coal supply left.
The Briquetting Project processing facility will be located immediately
adjacent to the washing plant where there is already infrastructure, which
will significantly reduce the capital costs that WUC would ordinarily require
for a project of this magnitude.
WUC will also make use of the already established distribution network of
Leeuw Mining, with which an off-take agreement to sell the briquettes is in
place. The briquettes will form a small percentage of the coal mine`s total
marketed anthracite. There are opportunities to tap into other operational
and financial synergies that would further reduce the operational costs of
WUC.
AMD Project
Any growth, be it population or economic, would rely on additional
augmentation schemes to provide water for the growing need. The WUC project is
situated in the Gauteng province, the largest consumer of water in South
Africa, and it is therefore prudent to evaluate the demand for water in this
area.
WUC owns 20% of the intellectual property of the Alkaline , Barium and Calcium
process which will be used in the water treatment plant and will own any
improvements and/or additional patents. Furthermore, the company has
established strong networks, credibility and has obtained strong support from
the active mines within the area. These relationships put WUC in a strong
position to secure off-take contracts with these mines for the provision of
water for drinking (potable) and industrial use.
Johannesburg
26 June 2012
Designated Advisor
Arcay Moela Sponsors (Proprietary) Limited
(Registration number 2006/033725/07)
Date: 26/06/2012 09:00:01 Produced by the JSE SENS Department.
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