| Mon 17 Feb 2003, 16:08 | | Metorex - Acquisition And Further Cautionary |
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Metorex - Acquisition and further cautionary
METOREX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1934/005478/06)
Share code: MTX ISIN: ZAE 000022745
Issuer code: MEMTX
("Metorex" or "the Company")
The acquisition of an effective 54 per cent interest in the assets and
liabilities of the ETC division of Avgold Limited and further cautionary
announcement
1. INTRODUCTION
Further to the cautionary announcements published in the press on 3 December
2002 and 10 January 2003 ("the cautionary announcements"), Investec Bank Limited
is authorised to announce that Metorex, Millenium Consolidated Investments
Limited ("MCI") and Crew Development Corporation Inc. ("Crew") ("the
Consortium") have concluded an agreement with Avgold Limited ("Avgold") ("the
acquisition agreement"), in terms of which the Consortium has, subject to
certain conditions precedent, effectively acquired the assets and liabilities,
excluding any gold hedge agreements, of the ETC division ("ETC") of Avgold with
effect from the date on which the last condition precedent is fulfilled ("the
ETC acquisition").
2. THE ETC ACQUISITION
2.1 Metorex has, as a member of the Consortium, participated in the ETC
acquisition, in accordance with its stated strategic objective of seeking to
acquire new, longer-life projects to supplement its existing mining portfolio.
2.2 In terms of the acquisition agreement, the Consortium has, through
Barberton Mines Limited ("Newco"), subject to the fulfilment of the conditions
precedent referred to in paragraph 5 below, acquired ETC for a cash
consideration of R300 million ("the ETC purchase consideration").
2.3 The ETC purchase consideration will be funded by Newco as follows:
- R150 million in interest bearing debt;
- R120 million funded by Metorex; and
- R30 million funded by Crew.
The R120m funded by Metorex and the R30 million funded by Crew will be in the
form of shareholders` loans. Prior to any shareholders` distributions to the
Consortium members by Newco both the interest bearing debt and shareholders`
loans will be repaid.
2.4 Metorex`s shareholders` loan to Newco will comprise R30 million from
internal cash resources and R90 million to be raised by the placing of new
Metorex shares with institutional investors ("the Metorex placing shares")
2.5 The shareholdings of the Consortium members in Newco will be as follows:
- Metorex 54%;
- Crew 20%; and
- MCI 26%.
3. RATIONALE FOR THE ETC ACQUISITION
3.1 The ETC acquisition is expected to be both value and earnings enhancing
for Metorex over the medium to long term.
3.2 The ETC acquisition will enhance the diversification and growth of
Metorex`s current mining portfolio whilst simultaneously bolstering Metorex`s
exposure to gold revenues.
3.3 The ETC acquisition will create a mining vehicle with significant Black
Economic Empowerment ("BEE") credentials through the shareholding of MCI.
Metorex is committed to making significant progress in fulfilling the
empowerment requirements outlined in the recently published mining charter and
the Minerals and Petroleum Resources Development Act, Act 28 of 2002.
3.4 The Metorex share placing is expected to result in increased liquidity in
Metorex shares.
4. SALIENT INFORMATION ON ETC
4.1 Background information
ETC is a South African-based Greenstone gold mining operation, situated in the
Magisterial District of Barberton, in the Mpumalanga Province, some 370
kilometres east of Johannesburg.
ETC operations currently comprise three operating mines, namely Sheba Mine, New
Consort Mine and Fairview Mine, currently producing approximately 100 000 ounces
of gold per annum.
4.2 Salient features
The table below summarises the salient features of ETC:
6 months 12 months 12
31 30 June months
December 2002 30 June
2002 2001
Ore milled Tonnes 162 748 315 523 309 506
Gold sold Kg 1 486 2 805 2 842
Yield G/t 9.13 8.89 9.18
Cash cost R/kg 71 097 69 805 58 698
As at 30 June 2002 the reported gold reserves of ETC amounted to 8 950 kilograms
(proved) and 9 394 kilograms (probable). Measured, indicated and inferred gold
resources (exclusive of gold reserves) totalled 27 355 kilograms.
5. CONDITIONS PRECEDENT
The ETC acquisition is subject to the fulfilment of the following conditions
precedent, the:
5.1 granting of the requisite regulatory approvals, including inter-alia the
Competition Commission;
5.2 assignment of the Biox License agreement between Avgold and Biomin
Technologies SA to Newco; and
5.3 approval of the ETC acquisition by a simple majority of Metorex`s
shareholders in general meeting.
The JSE Securties Exchange SA ("JSE") and the London Stock Exchange ("LSE") will
be required to approve the documentation to be sent to Metorex shareholders and
the listing of the Metorex placing shares on the JSE and the LSE.
6. CIRCULAR TO METOREX SHAREHOLDERS
A circular to Metorex shareholders containing the details of the ETC acquisition
and notice of general meeting will be posted to Metorex shareholders in due
course.
7. PRO-FORMA FINANCIAL EFFECTS
In light of the fact that Metorex is expected to release its interim financial
results for the six-month period ended 31 December 2002 on or about Thursday, 20
February 2003 ("interim results") the pro-forma financial effects of the ETC
acquisition on Metorex ("pro-forma financial effects") will be published
simultaneously with the interim results.
8. FURTHER CAUTIONARY ANNOUNCEMENT
Metorex shareholders are referred to the cautionary announcements and are hereby
advised to continue to exercise caution until such time as the pro-forma
financial effects have been published.
Sandton
17 February 2003
Merchant bank Sponsor Legal adviser
Investec Corporate Barnard Jacobs Mellet Bowman Gillfillan
Finance Corporate Finance (Pty)
Limited
Date: 17/02/2003 03:30:03 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
