| Wed 16 Mar 2005, 12:25 | | ACQUISITION OF MIRANDA MINERALS |
|
Proper - Acquisition of Miranda Minerals (Pty) Ltd, investment by a BEE
consortium and further cautionary announcement
PROPER GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1998/001940/06)
Share code PRO ISIN ZAE000027181
(`Proper` or `the company` or `the group`)
ACQUISITION OF MIRANDA MINERALS (PTY) LTD, INVESTMENT BY A BEE CONSORTIUM AND
FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 25 February 2005, River Sponsors
and Radagast Capital are authorised to announce that Proper has entered into an
agreement with Pacific Breeze Trading 62 (Pty) Ltd (`Pacific` or `the BEE
investor`) and the shareholders of Miranda Minerals (Pty) Ltd (`Miranda`) (`the
vendors`), the implementation of which will result in Proper being transformed
into an empowered mining exploration group (`the transaction`). The transaction
consists of:
- a specific issue by Proper of 45 million ordinary shares at 6 cents per
share (`cps`) to Pacific for a cash consideration of R2.7 million (`the BEE
subscription`), and
- the acquisition of the entire authorised and issued share capital of
Miranda for a consideration of R22 815 561 to be settled by the issue of 77
984 692 shares in the company at an issue price of 29 cps (`the
acquisition`).
The BEE subscription and acquisition are interdependent. The transaction is
subject to the fulfillment of certain suspensive conditions as set out in
paragraph 7 and will entail the transfer of Proper to the `Other Mineral
Extractors and Mines` sector of the JSE Securities Exchange South Africa (`the
JSE`) lists, subject to JSE approval.
2. The BEE subscription
Pacific shall represent the interests of a consortium of investors and shall
qualify as a Black Economic Empowerment (`BEE`) entity in terms of the criteria
stipulated in the Minerals and Petroleum Resources Development Act 2002 and the
Broad-based Socio Economic Charter for the Mining Industry. Mr Thabo Mokgatlha
(CA(SA)) and Ms Nonkqubela Mazwai (MBA) have agreed to put together the
consortium. Mr Mokgatlha has extensive experience at board level in the mining
industry. Ms Mazwai is CEO of Motjoli Resources and serves on the board of the
Central Energy Fund. She has extensive experience in mining policy analysis,
strategy and implementation.
A number of potential consortium members have been identified and initial
expressions of interest have been obtained. It is the intention that certain
consortium members will play an active role in the group`s activities. To this
extent the consortium will make available resources and expertise to assist
during the last phase of Miranda`s application for prospecting permits (deadline
of 30 April 2005). Implementation of the transaction will see Pacific obtaining
an interest of 29.3% in Proper and will qualify Proper as an empowered company.
3. Rationale for the transaction
Proper is presently listed in the `Financials, Speciality and Other Finance`
sector of the JSE as an investment management and holding company. It was
announced before that corporate restructuring specialists, Gandalf Trust
(`Gandalf`), acquired control of Proper in October 2003 in order to restructure
and consider new opportunities for the struggling group. The published
financial results for the 12 months ended 31 August 2004 detailed the extensive
operational difficulties of the group, reflected its ongoing restructuring and
highlighted that Gandalf was assisting the board in examining different options
for the company. The board is of the opinion that the proposed transaction will
assist in restoring the fortunes of the company.
4. New nature of business of Proper
Subject to the fulfillment of the conditions precedent, Proper will continue as
an investment management and holding company, but with the main business of its
subsidiary, Miranda, being mining exploration. Proper`s name will be changed to
reflect the new nature of business of the group.
Miranda acquired the mineral rights to 894 mining properties from Gold Fields in
1999 and 2000, the bulk of which it still owns today and which forms its main
asset. These mineral rights include in most cases all diamonds, sand, stone and
clay as well as in many instances coal and base metals, but exclude gold and
precious metals in most cases. The mining properties are spread fairly wide
geographically and are located from the Northern Cape through the North West
Province, Free State and Gauteng to Mpumalanga. The most immediate attention
from an exploration perspective will in all likelihood be focused on base
metals, diamonds, coal, magnesite and clay. The lodging of applications for
prospecting permits on the most promising of the properties and projects is
presently in the process of being completed.
The deposits have been subjected to varying degrees of surveying, sampling and
drilling during the last number of decades, but exploration activity was mostly
halted before identifying proven reserves. With the unbundling of Gold Fields
in the mid-1990s, these deposits have not been closely considered from a
commercial feasibility perspective for at least a decade (and the majority of
them for considerably longer given Gold Fields` strategic emphasis since the
1980s on large scale precious metal projects). An opportunity has been
identified by Proper and Miranda to unlock value from these deposits given the
combination of changed market conditions, with industrial demand for minerals at
record levels locally and internationally, the development of new exploration
and mining techniques to prove and mine reserves and a new mining legislation
regime that accommodates smaller scale empowered mining operations. Miranda
intends to unlock value through its exploration activities. Funding for
projects will be considered on a case-by-case basis.
5. Financial effects of the transaction
The financial effects of the transaction, which will include a profit forecast,
will be announced upon conclusion of the due diligence procedures and completion
of a JSE-approved Competent Person`s Report, as referred to in paragraph 7, and
the finalisation of the consortium members in terms of the BEE subscription
referred to in paragraph 2.
6. Change of control and waiver of mandatory offer
Approval and implementation of the transaction will result in a change of
control of Proper to the vendors, which would, in the normal course, give rise
to a mandatory offer to the minority shareholders of the company in terms of the
Securities Regulation Code on Takeovers and Mergers (`the Code`). Application
will be made to the Securities Regulation Panel (`SRP`) for dispensation to
request a waiver of this obligation by the independent minority shareholders in
terms of Rule 8.7 of the Code.
7. Conditions precedent
The acquisition is subject to the normal conditions precedent applicable to a
transaction of this nature, which conditions are indivisible and include, inter
alia, the following:
- completion of due diligence investigations into the affairs of Miranda by
the company and the BEE investor;
- lodging of the applications for prospecting permits by Miranda by no later
than 30 April 2005 for prospecting and exploration on a minimum number of
identified, potentially commercially feasible projects (one project may
encompass a number of different properties);
- delivery by Miranda of a JSE-approved Competent Person`s Report
substantiating a value in excess of R22 million on at least one of
Miranda`s mineral resources;
- approval by the requisite majority of Proper`s shareholders at a general
meeting convened for the purpose, of resolutions relating, inter alia, to:
- the sale of Proper`s remaining subsidiaries to Gandalf;
- the BEE subscription, the acquisition and the issue, allotment and
listing of the shares in terms thereof;
- a change of name, transfer of sector and reconstruction of the board;
and
- a renewable five-year management contract between Miranda and the
vendors, the terms and conditions of which are to be agreed upon
between Proper, the BEE investor and the vendors; and
- approval by the requisite regulatory authorities, including the JSE
and the SRP to the extent required;
8. Circular to shareholders
Shareholders should note that the final listing of the company is at the
discretion of the JSE and is contingent upon the JSE`s assessment of the
suitability for listing of the company after the acquisition. A circular to
shareholders will be prepared and posted in due course.
9. Further cautionary announcement
As the implementation of the transaction may have a material effect on the price
at which the company`s securities trade on the JSE, shareholders are advised to
continue exercising caution when dealing in the company`s securities until a
further announcement is made.
Pretoria
16 March 2005
Sponsor Corporate Advisor Restructuring Advisor
River Sponsors (Pty) Ltd Radagast Capital (Pty) Ltd Gandalf Trust
Date: 16/03/2005 12:06:53 PM
Produced by the JSE SENS Department
