| Tue 30 Oct 2001, 0:00 | | President Steyn Gold Mines Limited - Announcement |
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President Steyn Gold Mines Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/014461/06)
Share code: PGD; ISIN code: ZAE000026654
("PSGM")
ANNOUNCEMENT REGARDING THE DISPOSAL OF THE PRESIDENT STEYN GOLD MININING
OPERATIONS AND THE TM TRAINING CENTRE
1. INTRODUCTION
Further to the cautionary announcements dated 11 September 2001 and 26
October 2001, Argil Corporate Finance (Proprietary) Limited is authorised to
announce that Heads of Agreement ("the agreement"), dated 26 October 2001,
has been reached between PSGM and Thistle Mining Incorporated ("Thistle"), a
company listed on the Toronto Stock Exchange ("TSE"), in terms of which PSGM
will dispose of:
its shares in Mindserv (Pty) Limited ("Mindserv"), including its wholly
owned subsidiary President Steyn Gold Mines (Free State) (Pty) Limited
("PSGM Free State") in which the gold mining operations are conducted;
its shares in TM Training Initiative (Pty) Limited ("TMTI"), and
its claims against Mindserv, PSGM Free State and TMTI (jointly referred to
as "the Companies").
Mindserv and TMTI are wholly owned subsidiaries of PSGM. It is anticipated
that the abovementioned transaction (referred to below as "the disposal"),
subject to the conditions precedent set out below, will be with effect from
1 January 2002 ("the effective date").
PSGM Free State is a gold mining company and carries on production in the
Welkom and Odendaalsrus area, operating the following shafts: President
Steyn 1 and 2, Freddies 7 and 9 and Lorraine 3. The mine also operates a
gold processing plant in Welkom and is thus self sufficient regarding gold
treatment. TMTI is a mining and technical college providing technical
occupational training to many of the mines in the Free State area. Thistle
has agreed to the spirit and principle of the TMTI initiative and has
undertaken to continue its work.
2. RATIONALE FOR THE DISPOSAL
PSGM management's paramount objective is to create and unlock shareholder
value. They continue to focus on growing shareholders' value through
broadening its activity base. The objective is to enhance future cash flow
and growth by the development and implementation of unique value adding
projects such as the PCF based continuous mining technology and the PGM
extraction venture referred to in the quarterly results published on 26
October 2001. PSGM's continued focus on gold mining activities, PGM and
other technology driven projects should result in annuity income aided by
attractive blue-sky prospects.
Should the disposal as set out above become unconditional and therefore
concluded, it is the intention of PSGM to utilise a portion of the disposal
proceeds to fund further development of the PCF controlled rock breaking and
continuous mining process in conjunction with Brandrill Limited, continue to
investigate and invest in other mining technology projects such as the PGM
extraction project, and to fund other mining opportunities such as the offer
to Anglogold Limited for the Matjhabeng mine.
PSGM will also consider declaring a special dividend to its shareholders.
Further details in respect of such special dividend will be set out in the
circular to shareholders mentioned below.
3. DISPOSAL CONSIDERATION
The disposal consideration payable by Thistle to PSGM in terms of the
agreement will be an amount of US$ 32 050 000 in cash on the effective date.
The disposal consideration was negotiated on an armslength basis, after
Thistle conducted a discounted cash flow valuation of the Companies.
4. OTHER PAYMENTS
Thistle will pay PSGM a monthly royalty in cash for a period of 60 months
from the effective date. The monthly royalty payment will be calculated on
the formula of US$ 8 per ounce of gold produced by PSGM Free State on a
monthly basis.
Furthermore, an amount equal to the net profits after tax of the Companies
for the period 19 September 2001 until the effective date shall accrue to
PSGM by way of a dividend, payable within 30 days after determination
thereof by the auditors.
5. FINANCIAL EFFECTS
The pro forma financial effects on the headline earnings, attributable
earnings, net asset value and tangible net asset value per PSGM ordinary
share, before and after the disposal and other payments, are set out below:
Notes Before After Change
Per PSGM ordinary share (cents) (cents) (%)
Headline earnings 1 3,0 3,0 -
Attributable earnings 2 2,1 7,3 247,6
Net asset value 3 57,3 62,5 9,1
Net tangible asset value 3 23,2 62,5 169,4
Notes:
Based on the unaudited interim results for the six months ended 30 June
2001. The amount in the "After" column represents the headline earnings that
would have accrued per PSGM ordinary share had the disposal been effective 1
January 2001, the interest income resulting from the disposal consideration
and other payments been effected at an average notice deposit rate of
interest of 10% per annum, and the monthly royalty payment been received.
Based on the unaudited interim results for the six months ended 30 June
2001. The amount in the "After" column represents the attributable earnings
that would have accrued per PSGM ordinary share had the disposal been
effective 1 January 2001, the interest income resulting from the disposal
consideration and other payments been effected at an average notice deposit
rate of interest of 10% per annum, and the monthly royalty payment and the
dividend been received..
Based on the unaudited net asset value and tangible net asset value as
disclosed in the interim results for the six months ended 30 June 2001.
The financial effects per PSGM ordinary share, before and after the disposal
and other payments, was calculated using 503 380 000 PSGM ordinary shares,
being the weighted average PSGM ordinary shares in issue for the six month
period ended 30 June 2001.
An exchange rate of R9:US$1 was used in calculating the financial effects.
6. CONDITIONS PRECEDENT
The disposal and other payments are subject to the following conditions
precedent:
By no later than 15 November 2001:
the preparation and signing of a Sale and Purchase agreement, which will
supersede and replace the agreement; and
Thistle furnishing commitment letters from its financiers to make payment in
terms of the agreement.
By no later than 28 November 2001:
Thistle completing a due diligence review of the Companies to its
satisfaction;
the receipt of written agreement to release all securities granted by PSGM
and its directors for and on behalf of the obligations of the Companies;
negotiate and enter into an agreement between PSGM and PSGM Free State in
respect of certain excluded assets, being the Freddies waste dump and dam
and ore stock pile; and
negotiate and enter into an agreement between PSGM and PSGM Free State in
respect of the implementation of a continuous mining system at the five
operating mine shafts of PSGM Free State.
By no later than 31 December 2001:
approval by the PSGM shareholders of the disposal in accordance with Section
228 of the Companies Act, Act 61 of 1973, as amended, and in compliance with
the listing requirements of the JSE Securities Exchange South Africa ("JSE")
and the rules and regulations of the Securities Regulation Panel ("SRP");
and
the approval of all regulatory authorities including the SRP, JSE, South
African Reserve Bank, Competition Commission, Toronto Stock Exchange and the
Ontario Securities Commission.
If any condition as set out above is not fulfilled on the relevant date, the
parties may agree upon an extended date.
7. Other arrangements
Save as detailed in this announcement:
no arrangements, undertakings or agreements have been made between Thistle,
the Companies and PSGM or persons acting in concert with any of them in
relation to PSGM shares;
no arrangements or undertakings (including compensation arrangements) which
have any connection with or dependence on the disposal or other payments
exist between Thistle, or any person acting in concert with them, and any
director of PSGM or the Companies or any person who was a director of PSGM
or the Companies within the preceding twelve months; and
Thistle, or any person acting in concert with them, do not own or control
any shares in PSGM, or hold any options to purchase any PSGM shares.
8. Notice of general meeting and circular to shareholders
Subject to those conditions precedent which require fulfilment by 28
November 2001 being met, a circular containing full details of the disposal
and other payments, and giving notice of a general meeting at which the
ordinary resolutions required to implement the disposal will be proposed,
will be posted to shareholders by no later than 30 November 2001.
Johannesburg
30 October 2001
Corporate adviser Sponsor Legal adviser
Argil Corporate Finance BOE Securities Hofmeyr, Herbstein & Gihwala
