| Tue 31 Jul 2001, 0:00 | | Mazal Mining - Raising Of Funding And Conversion O |
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MAZAL MINING AND EXPLORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
("Mazal" or "the Company")
RAISING OF FUNDING AND CONVERSION OF LOANS
1. INTRODUCTION
Further to the cautionary announcement issued on 12 July 2001, BoE Merchant
Bank, a division of BoE Bank Limited, is authorised to announce that a
written agreement has been concluded between Mazal and Ore Vest Plc ("Ore
Vest"), whereby Ore Vest will be issued with Mazal shares for a cash
injection of R9.45 million ("the specific issue of shares for cash").
In addition, agreement has been reached between Mazal and five of its major
shareholders whereby their shareholder's loans will be converted into equity
("the conversion of loans").
2. THE SPECIFIC ISSUE OF SHARES FOR CASH
2.1 Salient Terms of the Agreement
In terms of the Ore Vest agreement, Ore Vest, a newly listed mineral
resource investment company that is registered and incorporated according to
the laws of the United Kingdom, will receive 27 million shares through a
specific issue of shares for cash. The shares shall be allotted and issued
to Ore Vest, on a pro rata basis in line with payments received, at an issue
price of 35 cents per share.
The issue price represents a discount of 9% to the weighted average traded
price over a 30 day period, prior to agreement being reached on 12 July
2001.
The purchase consideration of R9.45 million shall be payable as follows:
- R2 million shall be paid in 4 equal instalments of R500 000 per
instalment over a four week period commencing 17 July 2001;
- an additional R2 million shall be paid by Ore Vest to the Company by no
later than 31 August 2001, such payment being the final payment due for the
Company to acquire the mineral rights which it owns; and
- the balance of the monies shall be paid to the Company within no later
than six months after the effective date of 24 July 2001.
Ore Vest has also secured a nine month option to acquire 55 million shares
at 50 cents each from three major shareholders.
Ore Vest has the right to appoint three members to the Mazal Board of
Directors.
2.2 Rationale
The specific issue of shares for cash will enable Mazal to raise sufficient
funds to complete the following:
- the bulk sampling and competent person's report;
- Paardeberg East upgrade in plant and machinery, thereby effectively
doubling throughput;
- commission a leading process engineering firm to effect the necessary
upgrade and optimisation to the plant on site; and
- commence a valuation of the reserves of Mazal's MK2, MK3 and MK4
Kimberlite pipes; and
- the payment of existing creditors.
2.3 Financial effects
The financial effects of the specific issue of shares for cash, set out in
the table below, are based on:
- the loss and headline loss per share calculated for the interim period
ended 31 December 2000, assuming the specific issue of shares had been in
effect for the entire period resulting in the weighted average number of
shares in issue for the six month period ended 31 December 2000 being 207
000 000 shares;
- the purchase consideration of R9.45 million would earn interest at 10%
per annum over this interim period, which interest would not have attracted
income tax due to the Company being in a loss making position; and
- the net asset value and net tangible asset value per share have been
calculated assuming the specific issue had been effected on 31 December 2001
and as a result the issued number of shares as at this date was 207 000 000.
Per Mazal ordinary share Before After Change
the issue the issue (%)
(cents) (cents)
Loss and headline loss per share (2,05) (1,56) 24,0
Net asset value and net tangible
asset value per share 6,97 10,62 52,4
3 THE CONVERSION OF LOANS
In terms of the Ore Vest agreement, loans to the value of approximately R8
508 058 which consists of capital and interest up to 30 June 2001, will be
converted to ordinary shares of a nominal value of 1 cent each at a share
price of 35 cents per share. A separate written agreement between the
relevant shareholders and the Company in respect of the conversion of loans
will be signed in due course.
The conversion of certain shareholders' loans to equity will assist the
company to strengthen its balance sheet by reducing its debt exposure.
3.1 Financial effects
The financial effects of the conversion of the loans, set out in the table
below, are based on:
- the loss and headline loss per share calculated for the interim period
ended 31 December 2000, assuming the specific issue of shares, pursuant with
the conversion of loans, had been in effect for the entire period resulting
in the weighted average number of shares in issue for the six month period
ended 31 December 2000 being 204 308 736 shares;
- the assumption that the converted loans would save interest at 10% per
annum over this interim period, which interest would not have attracted
income tax due to the Company being in a loss making position; and
- the net asset value and net tangible asset value per share have been
calculated assuming the specific issue had been effected on 31 December 2001
and as a result the issued number of shares as at this date was 204 308 736.
Per Mazal ordinary share Before After Change
the issue the issue (%)
(cents) (cents)
Loss and headline loss per share (2,05) (1,60) 21,9
Net asset value and net tangible
asset value per share 6,97 10,30 47,8
4 THE COMBINED FINANCIAL EFFECTS
The combined financial effects of the Ore Vest specific issue of shares for
cash and the conversion of the loans, set out in the table below, are based
on:
- the loss and headline loss per share calculated for the interim period
ended 31 December 2000, assuming both specific issues of shares, had been in
effect for the entire period resulting in the weighted average number of
shares for the six month period ended 31 December 2000 being 231 308 736
shares;
- the issue of shares for cash and the converted loans would earn interest
and save 10% per annum over this interim period, which interest would not
have attracted income tax due to the Company being in a loss making
position; and
- the net asset value and net tangible asset value per share have been
calculated assuming both specific issues of shares had been effected on 31
December 2001 and as a result the issued number of shares as at this date
was 231 308 736.
Per Mazal ordinary share Before After Change
the issue the issue (%)
(cents) (cents)
Loss and headline loss per share (2,05) (1,21) 41,0
Net asset value and net tangible
asset value per share 6,97 13,18 89,2
5 CONDITIONS PRECEDENT
The Ore Vest agreement and the conversion of loans are subject, inter alia,
to the following conditions precedent:
- approval of the specific issue for cash by the JSE Securities Exchange SA
and the Securities Regulation Panel on Takeovers and Mergers;
- approval by the shareholders of Mazal in general meeting; and
- approval by the South African Reserve Bank.
6 DOCUMENTATION
A circular, containing details about the Ore Vest agreement, the conversion
of loans and a notice convening a general meeting of the company for the
approval thereof is in the process of being prepared and will be sent to
shareholders in due course.
Johannesburg
31 July 2001
Merchant Bank Sponsor
BoE Merchant Bank,A division of BoE Bank Limited BoE SecuritiesMember of
the JSE Securities Exchange SA
