| Thu 26 Jul 2001, 0:00 | | Otr Mining Limited - Announcement |
|
OTR MINING LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1995/006508/06)
("OTR" or "the company")
ACQUISITION BY OTR OF 25% OF THE shares in and 25% of the claims against RK
NUMBER 1 (PTY) LTD ("RK1")
1. Introduction
Further to the cautionary announcements dated 18 October 2000, 14 December
2000, 5 April 2001, 24 May 2001, 6 July 2001, and the interim financial
results dated 2 July 2001,
LPC Manhattan Sponsors (Pty) Ltd is authorised to announce that OTR and GB
Mining and Exploration SA (Pty) Ltd ("GB Mining") have agreed to extend the
RK1 option period. The period has been extended by six months to 31 December
2001 for OTR to purchase 25% of the entire issued share capital in and 25%
of the claims against RK1 ("the acquisition").
2. Nature of business and acquisition
The rescue package of August 2000 allowed OTR to focus its attention on the
exploration of Palmietfontein for platinum group metals ("pgm"). During May
2000, GB Mining entered into an agreement with Britsaf, a wholly-owned
subsidiary of OTR. The terms were that GB Mining was to seek out pgm cash
flow opportunities and undertake feasibility studies on behalf of Britsaf.
GB Mining has identified and investigated a tailings dump that contains pgm.
The dump is situated in the Kroondal district of the North West Province. In
addition, GB Mining has acquired certain current arisings with a life
expectancy of some 20 years in the same district. Mr Keith Bright has been
appointed project director of RK1 and to the board of GB Mining.
3. Rationale
The current financial position of OTR is that within months, the company
would consider either bringing a partner into its exploration project,
Palmietfontein, or an outright sale thereof. It is envisaged that the
acquisition will allow OTR to participate in cash flows from the project
within eight months of commencement of plant construction. Such cash flows
could be used to fund further exploration at Palmietfontein and/or other pgm
joint ventures.
4. Salient terms of the acquisition
OTR's 25% interest in RK1, making it the largest shareholder in RK1, will be
paid for by the issue to consortium members, which includes GB Mining, of
the existing 11 000 000 shares held in treasury, a further 17 750 000 new
OTR shares at 23,7 cents each and a loan amounting to R610 000. The total
amount of the loan will be repaid in cash within three days of the OTR
shareholders voting in favour of participation in the RK1 project.
5. Financial effects
Final production parameters and recovery factors are still being finalised.
This, in addition to the lead-time required to commission the plant, makes
it currently impractical to provide meaningful financial estimates. The
forthcoming circular will include such estimates.
6. Prospects
The directors of OTR believe that the platinum mining sector will continue
to generate excellent mining returns over the next few years. Furthermore,
recycling of tailings residues for pgm greatly reduces the risk profile of
OTR's current exploration-only business.
7. Conditions precedent
The acquisition is subject to the following suspensive conditions:
* approval of the ordinary shareholders of OTR in general meeting before 31
December 2001;
* approval of the transaction by the JSE Securities Exchange South Africa
("JSE"); and
* RK1 acquiring the dumps from GB Mining prior to the general meeting of
ordinary shareholders of OTR referred to above.
8. Documentation
A circular subject to JSE approval, incorporating a notice to convene a
general meeting of shareholders and setting out full details of the
acquisition, is currently being prepared. Whilst certain additional
negotiations are still proceeding, it is planned to mail the circular to
shareholders in due course.
9. Proposed extension of the expiry date of the OTR options
The circular, in respect of the extension of the expiry date of the options,
is being finalised and, on approval by the JSE, will be posted to
shareholders and to option holders for consideration at a general meeting
within approximately one week from the date of this announcement.
Fourways
27 July 2001
Sponsor
LPC Manhattan Sponsors (Pty) Ltd
(Registration number 1999/024792/07)
Attorney
FRRW
Fluxman Rabinowitz - Raphaely Weiner Inc. Attorneys
www.frrw.co.za
