| Fri 12 Dec 2003, 17:10 | | Fulfillment Of Conditions Relating To The Acquisit |
|
Zenith - Fulfillment Of Conditions Relating To The Acquisition Of Jigmining
(Pty) Ltd And Withdrawal Of Cautionary
Zenith Concessions Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/009012/06)
Share code: ZNT ISIN: ZAE000009064
("Zenith" or "the company")
ANNOUNCEMENT REGARDING THE FULFILLMENT OF CONDITIONS RELATING TO THE ACQUISITION
OF JIGMINING (PTY) LTD ("JIGMINING") AND WITHDRAWAL OF CAUTIONARY
1. Introduction
Further to the cautionary announcements dated 3 September 2003 and 16 October
2003 ("the previous announcements") regarding the reverse acquisition ("the
acquisition") by Zenith of Jigmining, Radagast Capital (Pty) Ltd has been
authorised to announce the following:
(i) the condition relating to the verification of the warranted net asset value
of Zenith has now been fulfilled; and
(ii) the condition relating to the securing of a R15 million funding agreement
has been waived by the vendors, an agreement having been reached between
Rotocompactors (Pty) Ltd ("Roto"), a related party to Jigmining, in terms of
which Roto will provide interim funding in the amount of R10 million for the
continued expansion of Jigmining. Shareholders are advised that the funding
arrangements, which have been incorporated in the profit forecast set out in
paragraph 4 below, will impact the rate of growth of Jigmining only and not its
ability to meet its working capital requirements. Negotiations with financial
institutions in respect of securing additional funding are continuing.
The above conditions having been met, the acquisition is, subject to the
conditions set out in paragraph 5 below, deemed to be effective as at 31 October
2003. As stated in the previous announcements, it is the intention of the
company to apply for a listing on the Alternative Exchange ("AltX"). Radagast
Capital is currently preparing the relevant documentation in support of the
company"s application to list on AltX and shareholders will be advised as to the
outcome of this application. Shareholders should note, however, that the final
listing of the company is at the discretion of the JSE Securities Exchange South
Africa ("JSE") and is contingent upon the JSE"s assessment of the suitability
for listing of the company after the acquisition.
2. Change of name and reconstitution of the board of directors
It is proposed that, on approval by shareholders of the proposed acquisition,
Zenith will change its name to Jigmining Holdings Limited. The board of
directors will be reconstituted to reflect the change in control and Messrs. J
Jonck, N van Huyssteen and D Steyn will join the board in executive capacities.
Mr K Gribnitz will remain on the board in a non-executive capacity, whilst
Messrs. J Nel and P du Preez and Ms P Byrne will resign as non-executive
directors.
3. Financial effects
The table below sets out, for illustrative purposes only, the pro forma
financial effects of the acquisition on the audited financial statements of
Zenith for the year ended 30 June 2003. The pro forma earnings figures
illustrate the possible financial effects if the transaction had been undertaken
on 1 July 2002, whereas the pro forma net asset value figures illustrate the
possible financial effects if the transaction was effected on 30 June 2003. Due
to their nature, the pro forma financial effects may not give a fair reflection
of Zenith after the transaction.
Actual Pro forma % Change Pro forma % Change
before the after the (Column after the (Column C
restructu- restructu- B vs. restructurin vs.
ring and ring(1) and Column g and after Column B)
the before the A) the
acquisition acquisition acquisition
(Column A) (Column B) (2)
(Column C)
Net asset value (1.1) 0.1 >100% 1.6 >100%
per share (cents)
Net tangible (1.2) 0.0 >100% 2.0 >100%
assets value per
share (cents)
Earnings/(loss) (1.6) (0.1) >100% 0.6 >100%
per share (cents)
Headline earnings/ (1.6) (1.8) -13% 0.1 >100%
(loss) per share
(cents)
Average and 132,776 120,276 -9% 601,380 >100%
weighted average
number of
shares(3) (`000)
Notes:
Details of the restructuring of Zenith"s balance sheet are set out in the
announcement dated 4 August 2003 detailing the change in control of Zenith and
relate, inter alia, to:
The return and cancellation of 25 million shares in terms of a contract
negotiated by the previous board; and
The writing-off of directors" loans amounting to R2.1 million at 30 June 2003.
The gain arising from the write-off was credited to income.
Audited interim financial results of Jigmining for the eight months to 31
October 2003 were used in calculating the pro forma effects of the acquisition,
the following adjustments being taken into account:
* Shareholders" loan accounts to the value of R20 million were capitalised
against share capital and share premium as per the agreement between Zenith and
the vendors of Jigmining;
* Given that the acquisition consideration is less than the fair value of
Jigmining"s assets and liabilities, a provision for negative goodwill in the
amount of R6.5 million, which will be amortised over 20 years, was made. A pro
rata provision was accordingly credited to the income statement; and
* Owing to the capitalisation of the shareholders" loan accounts, interest due
to the shareholders in the amount of R2.1 million was written back in the income
statement.
The average and weighted average number of ordinary shares is based on the
issued ordinary share capital after the consolidation of the shares on a 2:1
basis. Before the cancellation of the 25 million shares, the share
consolidation and the acquisition of Jigmining, the issued share capital
amounted to 265,551,884 shares.
4. Profit forecast
In order to provide shareholders with financial information relating to the
prospects of Jigmining, forecasts for the years ended February 2004 and February
2005 are set out below. It is envisaged that Zenith will change its year-end
from 30 June to 28 February, the current financial year-end of Jigmining. The
forecasts have been reviewed by Compendium (Pretoria) Incorporated, the auditors
of Zenith, whose report is available for inspection at the registered office of
Zenith.
Projected Income Statements February 2004 February 2005
(R"000) (R"000)
Beneficiation income 23,325 72,865
Cost of beneficiation (14,461) (33,232)
Gross profit 8,864 39,633
Operating costs (6,030) (12,109)
Earnings before interest and 2,834 27,525
taxation
Amortisation of negative - 324
goodwill
Interest paid (2,653) (1,015)
Earnings before taxation 181 26,835
Taxation 1,562 (6,399)
Earnings after taxation 1,743 20,436
Shares in issue (`000) 601,380 601,380
Earnings per share (cents) 0.3 3.4
Headline earnings per share 0.3 3.4
(cents)
Notes:
Revenue increases are based on the commissioning of two new
plants (consisting of a combined total of 12 new jig units)
in February 2004 and September 2004, respectively.
Provision has been made for an average monthly production
capacity of 15,000 (2005: 16,500) tons per new jig unit.
No increase in output levels was assumed in respect of units
already in production. An increase of 5% in both selling
price and direct material handling costs was taken into
account.
An effective interest rate of 12% per annum was used in the
projections.
Gross profit percentage improvements are due to increased
production and lower operating cost increases.
Operating costs have been projected to increase at a rate of
15% per annum.
5. Conditions precedent
The acquisition remains subject to the normal conditions precedent applicable to
a transaction of this nature, which conditions are indivisible and include,
inter alia, the following:
* approval by the requisite regulatory authorities, including the JSE, the LAC
and the Securities Regulation Panel ("SRP"), to the extent required;
* approval by the requisite majority of Zenith shareholders, at a general
meeting convened for the purpose, of resolutions relating, inter alia, to the
specific repurchase and cancellation of shares, the consolidation of the
company"s share capital, an increase in the authorised and issued share capital,
approval of the acquisition and the issue of shares to the vendors.
6. Circular to shareholders
Subject to the approval by the LAC for the reverse-listing of Jigmining on AltX,
a circular, which is subject to the approval of the JSE and the SRP, and which
will contain full details of the acquisition and incorporate revised listing
particulars and a notice of a general meeting of Zenith shareholders, will be
prepared and posted to shareholders.
7. Withdrawal of cautionary announcement
Following the publication of this announcement, the cautionary announcement has
been withdrawn and shareholders need no longer exercise caution when dealing in
the company"s securities on the JSE.
Pretoria
12 December 2003
Corporate Advisors Restructuring Advisor Sponsor
Radagast Capital Gandalf Trust LPC Manhattan
(Proprietary) Limited Sponsors (Pty)
Ltd
Date: 12/12/2003 05:01:07 PM Produced by the JSE SENS Department
