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Zenith Concessions Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/009012/06)
Share code: ZNT ISIN: ZAE000009064
("Zenith" or "the company")
Announcement to shareholders regarding:
- the increase in the authorised share capital of Zenith;
- a specific authority to issue shares for cash;
- a general authority to issue shares for cash;
- the acquisition of mining rights ("the acquisition"); and
- a waiver of the requirement to make a mandatory offer to
minority shareholders of Zenith,
(collectively, "the proposals")
1. Introduction and rationale for the proposals
Benefique Capital is authorised to announce that Zenith is being
recapitalised and acquiring operating assets subject to the fulfilment of
the conditions precedent set out in paragraph 2.5 below.
Currently, the listing of the Zenith shares on the Venture Capital Market
of the JSE Securities Exchange South Africa ("JSE") is suspended. Following
the successful implementation of the proposals, application will be made to
the JSE to have the suspension lifted.
The reconstituted board of Zenith has embarked on the proposals in order
to recapitalise Zenith and to acquire a viable project in order to enhance
the future prospects of the company.
2. The proposals
2.1 The increase in the authorised share capital
In order to give effect to the recapitalisation of Zenith and the
acquisition, it is proposed that the authorised share capital of the company
be increased from 100 000 000 ordinary shares of one cent each to 1 000 000
000 ordinary shares of one cent each.
2.2 A specific authority to issue shares for cash
Since the reconstitution of the board of Zenith, the company has been
provided with financial support by way of loan accounts by two of the
directors and material shareholders, namely D C Bird and S D Crossland. It
is proposed that these loan accounts are capitalised by the issue of new
Zenith shares at an issue price of one cent per share.
In addition the company will require further capital in the amount of R2
500 000. It is proposed that this capital is raised by the issue of new
Zenith shares at an issue price of two cents per share. The cash raised will
be used, inter alia, to acquire the equipment necessary for the mining
operations.
2.3 A general authority to issue shares for cash
The board of the company will seek a general authority to issue shares for
cash in accordance with the rules and requirements of the JSE so that
further funding for the company can be raised from time to time.
The purpose of the issue of shares in terms of paragraphs 2.2 and 2.3
above is to recapitalise Zenith.
2.4 The acquisition of mining rights
Mafikeng Diamonds (Proprietary) Limited is the holder of a mining lease over
the Setlopo alluvial diamond deposit. Mr Giglio Carlo Maria Rader ("Rader")
has entered into a mining contract with the lease holder to retreat fine
tailings (slimes) dumps. Zenith has entered into an acquisition agreement
with Rader whereby Rader will cede his rights under the mining contract.
The purchase consideration for the cession of these mining rights is R1
000 000 and will be settled as follows:
2.4.1 An amount of R500 000 will be paid in cash as follows:
- R150 000 which will be payable on the recapitalisation of Zenith; and
- the balance of R350 000 will be paid over a period of 28 months in equal
monthly payments commencing only once production has started on the mine and
diamonds are being recovered.
2.4.2 The balance of R500 000 will be settled by the issue of new Zenith
shares at an issue price of two cents per share and will be payable to Rader
within three months of the recapitalisation.
2.5 Rader has provided the warranties that are usual for a transaction of
this nature and this acquisition is subject to the following conditions
precedent:
- the conclusion of satisfactory due diligence by Zenith into the existence
and viability of the mining rights;
- the approval of the acquisition by the shareholders of Zenith in general
meeting;
- obtaining the approvals of the JSE, the Securities Regulation Panel ("the
SRP") as well as the approval from any other regulatory body insofar as may
be necessary;
- the consent of Mafikeng Diamonds (Proprietary) Limited to the cession of
the mining rights by Rader to Zenith; and
- the lifting of the suspension of the listing of Zenith shares on the JSE.
2.6 As a result of the recapitalisation of Zenith and the acquisition of the
mining rights, there will be a change in control of Zenith as defined by the
SRP Code on Take-overs and Mergers ("the Code"). In terms of the Code, a
mandatory offer is required to be made to the shareholders of Zenith to
acquire their Zenith shares. The proposals are conditional upon the
shareholders of Zenith waiving their rights to this mandatory offer.
3. Financial effects of the recapitalisation and acquisition
The financial effects of the recapitalisation and acquisition will be
disclosed in the announcement to shareholders containing the audited
financial results of the company for the year ended 30 June 2001 which will
be published in the press shortly.
4. Documentation
A circular containing details of the proposals and convening a general
meeting of Zenith shareholders will be posted to shareholders within 28 days
of this announcement or such later time as may be agreed to by the JSE and
SRP.
Cape Town
25 September 2001
Corporate advisor and sponsor
Benefique Capital
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