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OTR Mining Limited
(Incorporated in the Republic of South Africa)
(Registration number 1995/006508/06)
Share code: OTR ISIN: ZAE000025830
Share code: OTRO ISIN: ZAE000033056
("OTR" or "the company")
SPECIFIC REPURCHASE OF SHARES AND OPTIONS, SPECIFIC ISSUE OF SHARES FOR CASH,
AND ACQUISITION OF ASSETS, CHANGE IN CONTROL AND WAIVER OF MANDATORY OFFER
Introduction
Shareholders are referred to the announcement of 22 July 2002 regarding inter
alia a specific issue of shares for cash, the renewal of the Palmietfontein
option and the acquisition of a 10% stake in the RK1 project (an unincorporated
joint venture partnership).
OTR has thus far only succeeded in renewing the option in respect of 25% of the
mineral rights to Palmietfontein and as such does not control an asset in terms
of the Listings Requirements of the JSE Securities Exchange South Africa ("the
JSE").
As a result the agreement with GB Mining and Exploration SA (Proprietary)
Limited ("GB Mining") has been amended to provide for the following indivisible
transaction ("the transaction"):
- The conversion of R 2 466 000 of debt owing by OTR to GB Mining to be
converted to equity;
- The provision of a further R 1220 000 of working capital to OTR by GB Mining;
- The acquisition by OTR of the Tailings Dump situated on portions 92,93 and 94
of the farm Kroondal ("the Kroondal" dump") and the cession of the Mineral
Rights thereto from GB Mining for a consideration of R 3 414 000 with effect
from 1 March 2003.
OTR will issue 177 500 000 ordinary OTR shares at 4 cents per share in
settlement of the above.
GB Mining will, in addition, on approval of the above transaction, settle an
amount of R 610 000 that it owes OTR.
The specific repurchase of OTR shares and options refers to the partial non
performance by the Consortium which sold Britsaf Trading and Investment Company
(Proprietary) Limited to OTR, as approved by shareholders on 16 August 2000. The
Consortium did not provide the cash as agreed. OTR`s only remedy was to reduce
the number of shares it issued to the Consortium. 11 000 000 OTR shares and 5
500 000 options were erroneously issued and listed, but were never released to
the Consortium. The JSE has ruled that these shares and options must be
cancelled after effecting a specific repurchase ("the specific repurchase").
The Kroondal Dump
The Kroondal Dump is approximately 500 000 tons in extent. The dump contains
Platinum Group Metals (pgm`s"). Material from the dump is retrieved by front end
loader and transported to Aquarius Platinum`s KPM plant where the pgm`s are
recovered and sold. The life of the dump at the contractual feed rate is some 4
years. GB Mining will initially operate the dump on OTR`s behalf for a fee of
R180 000 per month in terms of a management agreement.
Rationale for the transaction
Without the injection of cash and the acquisition of a revenue earning asset,
the future of both OTR and its listing would be in jeopardy. This transaction
achieves the "rescue" objectives and enables OTR to earn income whilst
investigating other opportunities to expand.
Change in control and waiver of mandatory offer
Implementation of the transaction will result in a change in control of OTR as
GB Mining will own 77% of OTR`s issued share capital.
Shareholders will be asked to waive their right, in terms of Rule 8 of the SRP
Code, to a mandatory offer of 4 cents per OTR share.
Suspensive conditions
The transaction and the specific repurchase are subject to the following
conditions:
- The approval by the necessary regulatory authorities including, inter alia,
the JSE and the Securities Regulation Panel ("the SRP") for the transaction and
for the specific repurchase, and of the documentation to shareholders. In this
regard the JSE has ruled that if the circular to shareholders is not posted by
14 February 2003 the listing of OTR will be suspended until such time as the
transaction is approved by shareholders;
- The approval by shareholders in general meeting of the transaction and the
specific repurchase;
- The approval of option holders to the specific repurchase of the options;
- The waiver, by those shareholders entitled to vote, to their right to a
mandatory offer of 4 cents per share in terms of Rule 8 of the SRP code on Take-
overs and Mergers.
- Approval by the JSE of the shares to be listed in settlement of the
transaction; and
- The registration of the Special Resolutions required inter alia for the
specific repurchase of the 11 000 000 OTR shares and 5 500 000 OTR options.
Financial effects
The specific repurchase of the 11 000 000 OTR shares has no financial effect as
the increase in share capital and share premium on their issue was never
accounted for.
The financial effects of the specific repurchase of the options and the
transaction are set out in the table below:
Before After the After the %
repurchase repurchase Change
of the of the
options options and
(cents per the
share) (cents per transaction
share) (cents per
share)
Earnings (62.8) (62.8) (12.9) 79.6
Headline (10.2) (10.2) (0.9) 94.1
earnings
Net asset (4.1) (4.1) 2.4 >100
value
Tangible net (4.1) (4.1) 2.4 >100
asset value
Fully diluted (35.1) (37.3) (10.7) 69.5
earnings
Fully diluted (5.7) (6.4) (0.3) 94.7
headline
earnings
Fully diluted (2.3) (3.9) 8.9 >100
net asset
value
Fully diluted (2.3) (3.9) 8.9 >100
tangible net
asset value
Shares in 52 764 586 52 764 586 230 264 586
issue (`000)
Fully diluted 94 529 172 89 029 172 266 529 172
shares in
issue (`000)
Notes:
1. The figures in the "before" column have been extracted from the published
audited financial statements of OTR for the year ended 31 August 2002.
2. The figures in the "after the repurchase of the options" column indicates
the pro-forma effect that the repurchase of the options would have had on OTR`s
published information.
3. The figures in the "after the repurchase of the options and the
transaction" column indicates the pro-forma effect that the repurchase of the
options and the implementation of the transaction would have had on OTR`s
published information. The earnings related numbers have been based on the
assumption that the transaction was implemented with effect from 1 September
2001 and the asset value related numbers have been based on the assumption that
the transaction was implemented on 31 August 2002.
4. The "fully diluted" figures assume that the options were exercised, and the
exercise price paid on 1 September 2001.
Documentation
A circular to OTR shareholders and option holders, incorporating notices of
general meetings of shareholders and option holders will, subject to approval by
the regulatory authorities, be posted on or about 14 February 2003.
Fourways
17 January 2003
SPONSOR
Sasfin Bank Limited
Date: 17/01/2003 05:36:18 PM Produced by the JSE SENS Department
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