| Mon 9 Dec 2002, 9:07 | | Southern Mining Announces A Summary Of The Terms O |
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Southern Mining Announces a Summary of the Terms of the Disposal of Corridor
Sands
SOUTHERN MINING CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1996/014149/06)
JSE Code SMC
ISIN ZAE000029799
("Southern Mining" or "the Company")
Press Release
Southern Mining is pleased to announce that it has entered into an agreement
with WMC Limited of Australia under which WMC Resources Ltd ("WMCR") will
acquire all of Southern Mining`s interests in the Corridor Sands Project in
southern Mozambique, which Southern Mining currently holds indirectly in
Corridor Sands Limitada ("CSL"). This sale is conditional upon the fulfillment
of certain conditions precedent, which include the approval of the disposal by
Southern Mining shareholders in general meeting. Further details will be
announced shortly.
The purchase consideration for the sale is made up of three components:
An immediate payment to Southern Mining of 14 080 604 shares in WMC Limited,
which effectively equates to an equal number of shares in Alumina Ltd and in
WMCR (the two companies to be listed on the Australian Stock Exchange) following
the demerger of WMC Limited. The value of this element of the transaction at the
share prices and exchange rates at the close of business in Australia on
Thursday 5th December is approximately US$68 million; and
A payment of up to US$25m payable by 31st December 2003. This amount will be
reduced by any proportion of CSL that may be sold by WMCR before then (for
example if 60% were to be sold, this payment will be reduced by 60% to US$10.0
million); and
A payment calculated as a 50/50 profit share on any sale of part or all of CSL
by WMCR, using a base cost of US$62,5 million (for example, if 60% of CSL were
sold for US$70 million, this payment would be US$16,25 million).
Included in the sale is the option previously granted to the Industrial
Development Corporation of South Africa Limited (the IDC) in terms of which the
IDC may acquire a 10% direct interest in CSL.
Southern Mining also currently holds approximately R225 million in cash, most of
which (US$18,5 million) is held in US dollars. It is intended that the value of
the sale of CSL (together with the group`s cash holdings) will be distributed to
Southern Mining shareholders by liquidating the Company and paying liquidation
dividends.
It is envisaged that the first liquidation dividend, which is expected to be
declared during the first quarter of 2003, will comprise the proceeds from the
realization of the 14 million WMCR and Alumina shares (described in 1. above),
together with the bulk of the group`s existing cash holdings. The Company will
only retain sufficient cash for administrative and regulatory requirements until
the payment of the final liquidation dividend.
On the assumption that WMCR does not on-sell any stake in CSL to another party,
Southern Mining will realize a further US$25 million in December 2003 and such
amount will be declared to shareholders as a final liquidation dividend during
the first quarter of 2004. Assuming further that the current Rand/US$ exchange
rate remains stable, these liquidation dividends should be in the order of the
amounts shown below:
Assumptions:
US$=R 9,15
No. of Southern Mining shares, fully 93,9
diluted
Liquidation Dividends:
First Liquidation Dividend First quarter 2003
US$ m Rand m R/share
Estimated proceeds from the sale of WMCR 68,0 622,2 6,63
and Alumina shares
Other cash available in Southern Mining 22,9 209,5 2,23
Total available for distribution 90.9 831.7 8,86
Second Liquidation Dividend First quarter 2004
US$ m Rand m R/share
For example, Payment 2, from sale of CSL 25,0 228,8 2,44
Clearly, Southern Mining shareholders have an interest in WMCR realizing maximum
value in a potential on-sale of a stake in CSL during 2003. Using the examples
set out in points 2 and 3 above, Southern Mining would realize a total of
US$26,25 million (as opposed to US$25 million should WMCR retain 100% of CSL).
Rob Still, CEO of Southern Mining stated "Southern Mining has carefully
considered all of its alternatives and believes that by concluding the current
transaction with WMC, it has achieved its objective of acting as a catalyst for
the development of the Corridor Sands Project and is achieving maximum value for
its shareholders".
He further added that " Corridor Sands is a world class asset which will take
its place in time as one of the great mines of the world and the premier
supplier of titanium feedstocks during the 21st century". He paid tribute to WMC
Resources for its long term vision and strategy in securing 100% of this great
ore body and looked forward to its expeditious development.
Rob Still concluded by noting that selling Corridor Sands had been a difficult
decision to make. He also paid tribute to the small SMC staff of 6 who had
inherited a virtually insolvent company in 1988 and would shortly be
distributing over R1 billion to shareholders and to Mr Anton Esterhuizen, the
geologist who had discovered this world-class ore body.
Date: 09/12/2002 07:30:44 AM Produced by the JSE SENS Department
