| Thu 27 Nov 2003, 18:15 | | Mvelaphanda Resources Limited - Acquisition by Mve |
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Mvelaphanda Resources Limited - Acquisition by Mvelaphanda Resources of certain
rights from Mvelaphanda Holdings
MVELAPHANDA RESOURCES LIMITED
(Registration Number: 1980/001395/06)
(Share Code: MVL ISIN: ZAE000050266
("Mvela Resources" or "the company")
Acquisition by Mvelaphanda Resources of certain rights from Mvelaphanda Holdings
Introduction and rationale
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited is authorised to
announce that in the interests of facilitating a successful equity capital
raising to pursue the recently announced acquisition by Mvela Resources Limited
("Mvela Resources" or "the company") of a 15% beneficial interest in GFI South
Africa Limited, a wholly owned subsidiary of Gold Fields Limited ("Gold Fields")
and to simplify the existing relationship between Mvela Resources and
Mvelaphanda Holdings (Proprietary) Limited ("Mvela Holdings"), an agreement has
been reached between Mvela Resources and Mvela Holdings in terms of which Mvela
Resources will acquire certain rights from Mvela Holdings with effect from
30 September 2003 ("the transaction").
The consideration payable by Mvela Resources to Mvela Holdings in terms of the
transaction will be satisfied by the issue of 2 550 000 new Mvela Resources
ordinary shares to Mvela Holdings on or about 4 December 2003.
Terms of Agreement
In terms of the agreement, Mvela Resources will acquire the following rights
from Mvela Holdings with effect from 30 September 2003:
10% of the company"s participating interest in respect of the joint venture
between the company and Southern Era Resources Limited, constituted to
investigate the mineral potential of the mineral rights on the properties
Dwaalkop 455 KS, Rooibokbult 121 KS and the northern portion of Turfpan 122 KS;
10% of the company"s right to purchase up to 15% but not less than 5% of the
interest of GFL Mining Services Limited ("GFL") in certain projects in respect
of which GFL and any entity which controls, is controlled by or is under the
common control with GFL secures any right, title or interest on the African
continent for the five year period commencing on 1 March 2002 to prospect for
precious metals or to participate in the financing, construction, development or
operation of any precious metal mine flowing from such prospecting; and
Mvela Holdings entitlement to retain a carried interest to bankable feasibility
of not less than 5% and not more than 10% of Mvela Resources" interest in any
mining project, anywhere in the world, excluding mining projects relating to
energy or to the agreement in terms of which Trans Hex Group Limited agreed to
allot and issue to Mvelaphanda Diamonds (Proprietary) Limited, a subsidiary of
Mvela Holdings, 16 000 000 unsecured participating convertible debentures ("the
excluded projects"), referred by Mvela Holdings to and accepted by Mvela
Resources for a period of five years commencing on 23 October 2001 ("future
participation rights").
The acquisition of the future participation rights from Mvela Holdings does not
effect the remaining obligations of Mvela Holdings to offer to Mvela Resources,
any mining project, anywhere in the world other than the excluded projects,
offered to Mvela Holdings by a third party for the remainder of the 5 year
period which commenced on 23 October 2001. However, Mvela Holdings will not be
entitled to retain a carried interest in the said projects.
Financial effects
The pro forma financial effects of the transaction set out below, are based on
the historical financial results of Mvela Resources for the 6 months ended 31
March 2003 which have been adjusted to account for the implementation of the
scheme of arrangement in terms of Section 311 of the Companies Act No.61 of 1973
as set out in the circular issued to Mvela Resources linked unit holders on 26
September 2003 and the details of the agreement between Gold Fields and Mvela
Resources in terms of which a wholly owned subsidiary of Mvela Resources ("Mvela
Gold") will effectively acquire a 15% beneficial interest in the South African
gold mining assets and business operations of Gold Fields.
The pro forma earnings do not necessarily represent or indicate sustainable
earnings or future profits. Accordingly, the pro forma financial effects have
been prepared for illustrative purposes to show the effect of the transaction on
the financial performance and position of Mvela Resources.
Before the After the
transaction transaction
(cents)1 (cents) 2,3 % change
Loss per ordinary share (16) (59) (268.8%)
Headline loss per ordinary (19) (63) (231.6%)
share
Net asset value per ordinary 1 785 1 752 (1.8%)
share
Net tangible asset value per 1 691 1 661 (1.8%)
ordinary share
Number of ordinary shares in 139 387 280 141 937 280 1.8%
issue
Weighted average number of 137 014 154 139 564 154 1.9%
ordinary shares in issue
Notes:
Extracted without adjustment from the detailed cautionary announcement in terms
of which Gold Fields and Mvela Resources announced full details of their
agreement in terms of which a wholly owned subsidiary of Mvela Resources ("Mvela
Gold") will effectively acquire a 15% beneficial interest in the South African
gold mining assets and business operations of Gold Fields.
The effect on earnings and headline earnings per ordinary share, after the
transaction, is based on the following assumptions:
The transaction was effective 1 October 2002;
2 550 000 shares were issued to Mvela Holdings as consideration in terms of the
transaction on 1 October 2002 using the ruling price of Mvela Resources ordinary
shares as at 24 November 2003, being R24 per share; and
The rights acquired in terms of the transaction were expensed in accordance with
Mvela Resources" accounting policy in respect of exploration and investment in
concession areas resulting in a write-off of R61.2 million.
The effect on net asset value per ordinary share and net tangible asset value
per ordinary share is based on the following assumptions:
The transaction was effective 31 March 2003;
2 550 000 shares were issued to Mvela Holdings as consideration in terms of the
transaction on 31 March 2003 using the ruling price of Mvela Resources ordinary
shares as at 24 November 2003, being R24 per share; and
The rights acquired in terms of the transaction were expensed in accordance with
Mvela Resources" accounting policy in respect of exploration and investment in
concession areas.
Conditions Precedent
The agreement is subject to obtaining approval by the JSE Securities Exchange.
Opinions and Recommendations
As Mvela Holdings is a related party to Mvela Resources due to its material
shareholding therein, the directors have appointed PricewaterhouseCoopers
Corporate Finance (Proprietary) Ltd, to express a fair and reasonable opinion as
to whether or not the terms of the transaction are fair and reasonable to
shareholders.
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited has considered
the terms and conditions of the transaction together with the rationale for the
transaction and has expressed an opinion that the transaction is fair and
reasonable to the Mvela Resources shareholders. The opinion will be available
for inspection at Mvela Resources" registered office from 27 December 2003.
The directors of Mvela Resources have considered the terms and conditions of the
transaction as well as the opinion of the independent adviser, and are of the
opinion that the terms and conditions of the transaction are fair and reasonable
to shareholders.
Johannesburg
28 November 2003
Independent adviser and sponsor
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
