| Tue 22 Mar 2005, 9:13 | | Lonmin plc - Acquistion |
|
Lonmin plc - Acquistion
Lonmin plc
Share, share: LON
Isin: GB0031192486
SOUTHERN PLATINUM
March 22, 2005
LONMIN PLC AND SOUTHERN PLATINUM CORP ANNOUNCE A CASH BID
BY LONMIN TO ACQUIRE SOUTHERN PLATINUM
LONDON and TORONTO - March 22, 2005 -- Lonmin Plc (`Lonmin`) and Southern
Platinum Corp. (`Southern Platinum`) announce that they have entered into an
agreement pursuant to which Lonmin will offer to acquire the outstanding common
shares of Southern Platinum for a cash consideration of C$2.66 per common share.
The offer values Southern Platinum at US$190 million.
The Board of Directors of Southern Platinum has, upon the recommendation of a
special committee of its directors established to consider the Lonmin offer,
unanimously approved the Lonmin proposal and will recommend that shareholders
accept the offer. The Board and officers of Southern Platinum have agreed to
tender their shares to the offer. Southern Platinum`s financial advisor, RBC
Capital Markets, has advised the Board that the consideration being offered
under the Lonmin proposal is fair from a financial point of view to Southern
Platinum shareholders.
`The offer by Lonmin provides Southern Platinum shareholders with a premium for
their investment, payable in cash,` said Brad Mills, Chief Executive of Lonmin.
`It also alleviates concerns about their company`s uncertain operations and
financial position. Discussions have been held with Southern Platinum`s bankers
who have agreed to consider granting deferment in the event of Messina being in
breach of financial covenants until the conclusion of the acquisition by
Lonmin.`
The benefits of the Lonmin offer for Southern Platinum shareholders include:
* A 39% premium over the closing share price on November 23, 2004, the last
trading day prior to Southern Platinum`s announcement that it was in continuing
discussions with its lenders to arrange the restructuring of the Messina project
debt facility and that in parallel, Southern Platinum was in discussions with
various other parties, including major platinum companies, to replace or
eliminate its syndicated project debt facility;
* 100% cash consideration and low transaction execution risk; and
* A solution to the operating and financial risks facing Southern Platinum and
its shareholders.
`The Board of Directors of Southern Platinum has pursued and considered several
investment and financing alternatives to address Messina`s current debt service
obligations and short-term working capital deficiencies and has concluded that
the offer from Lonmin is in the best interests of Southern Platinum and its
shareholders,` said Dr. Christopher Jennings, Chairman of Southern Platinum.
Southern Platinum owns 91.5% of Messina Limited, a company listed on the JSE
Securities Exchange. Messina Limited operates the Messina platinum mine on the
Eastern Limb of South Africa`s Bushveld complex, approximately 250 kilometers
from the Lonmin Platinum operations. The Messina lease area has a strike length
of 23 kilometers with an attributable PGM resource of about 20 million ounces
(5PGE+Au).
Current mining operations at Messina are underway on a strike length of four
kilometers and in 2004 Messina produced about 86,300 ounces of 5PGE+Au of which
platinum production is estimated at 45,000 ounces. Lonmin sees potential for
Messina`s platinum production to rise to 75,000 ounces per year. In the opinion
of Lonmin, sustained production at this level will require additional
expenditure of about US$75 million over a period of three years on shaft
deepening, underground developments, mechanised mining and processing capacity.
After the completion of the acquisition, Lonmin plans to examine the viability
of additional production from the remainder of the Greater Messina resource
base.
Lonmin also announces that it has reached agreement with Impala Platinum
Holdings Limited (`Implats`) to acquire the Messina concentrate off-take
contract for US$15 million in cash plus deliveries of fixed quantities of metals
in concentrate to Implats for approximately 16 months from February 1, 2005,
conditional on the successful acquisition of Southern Platinum. Lonmin expects
to smelt and refine Messina concentrate from mid 2006 onwards.
Lonmin is capitalised at US$2.8 billion and has proven expertise in platinum
mine management in South Africa. Benefits of the transaction for Lonmin
include:
* An improvement in the near-term performance of the Messina mine through the
application of Lonmin`s financial resources and extensive operating skills;
* Removal of smelting value leakage through the purchase of the off-take
contract from Implats;
* Considerable synergies through smelting the higher copper/nickel Messina
concentrate at Lonmin Platinum and through rationalisation of head office costs;
and
* Future growth through the maximisation of the Greater Messina resource base.
The total cost of the acquisition of Southern Platinum will be US$263 million
comprising the equity value of US$190 million, acquired debt of US$58 million
and the Implats contract of US$15 million. Lonmin will fund the acquisition
using existing banking facilities. While this will result in higher debt,
increasing gearing to 43%, Lonmin expects its interest cover to remain at more
than 10 times, a level with which the Board is comfortable in the current
environment. The transaction is expected to be both earnings and cash flow
accretive from fiscal 2007 onwards when the benefits of smelting the Messina
concentrate will fully accrue. In both fiscal 2005 and 2006, it will be
marginally dilutive to earnings and cash flow excluding amortisation of goodwill
and transaction costs.
.
At September 30, 2004, Southern Platinum had net assets of US$148 million. It
reported an EBITDA loss of US$10 million and a net loss after tax of US$26
million in the nine months to September 30, 2004. Southern Platinum reported a
positive operating profit at Messina for November 2004. Industrial action during
the current quarter has negatively impacted Messina`s production build up and
cash flow.
The transaction will be subject to customary conditions including that a minimum
of 66 2/3% of Southern Platinum shares, on a fully diluted basis, are tendered
to the take-over bid. The agreement between Southern Platinum and Lonmin
provides that a break fee of C$6 million will be payable to Lonmin in certain
circumstances. The transaction is also subject to regulatory requirements in
both Canada and South Africa. The offer document is expected to be filed with
the Canadian securities regulators and mailed to shareholders within 15 business
days. Regulatory approval and completion of the transaction is expected within
90 days after the filing of the offer.
Lonmin is being advised by BMO Nesbitt Burns Inc., as lead advisor, and JPMorgan
Cazenove Limited.
Southern Platinum is being advised by RBC Capital Markets.
Information on Lonmin Plc - See Appendix 1 or visit - http://www.lonmin.com
Information on Southern Platinum Corp - visit - http://www.southplats.com
Conference Calls
Lonmin and Southern Platinum management will host joint teleconferences today,
March 22, 2005.
Newswire Services
08:00hrs (London) 10:00hrs (South Africa)
Interested Parties should call:
UK callers: 020 8609 0205
International callers: +44 20 8609 0205
Pin number: 282 782#
Members of the Press
12:00hrs (London) 14:00hrs (South Africa) 07:00hrs (Toronto)
Interested Parties should call:
UK callers: 020 8609 0205
International callers: +44 20 8609 0205
Pin number: 282 782#
Investors and analysts
14:00hrs (London) 16:00hrs (South Africa) 09:00hrs (Toronto)
Interested Parties should call:
UK callers: 020 8609 0205
Canadian callers: 1866 270 8076
International callers: +44 20 8609 0205
Pin number: 282 782#
A presentation summarising this transaction will be available on Lonmin`s
website, one hour before the Investor teleconference call at www.lonmin.com.
Forward Looking Statement:
This announcement includes forward-looking statements. All statements other
than statements of historical fact included in this announcement, including
without limitation those regarding Lonmin`s plans, objectives and expected
performance, are forward-looking statements. Lonmin has based these forward-
looking statements on its current expectations and projections about future
events, including numerous assumptions regarding its present and future business
strategies, operations, and the environment in which it will operate in the
future. Forward-looking statements generally can be identified by the use of
forward-looking terminology such as `ambition`, `may`, `will`, `expect`,
`intend`, `estimate`, `anticipate`, `believe`, `plan`, `seek` or `continue` or
negative forms or variations of similar terminology.
Such forward-looking statements involve known and unknown risks, uncertainties,
assumptions and other factors related to Lonmin, including, among other factors:
(1) the risk that the businesses of Lonmin and Southern Platinum will not be
integrated successfully; (2) material adverse changes in economic conditions
generally or in relevant markets or industries in particular; (3) fluctuations
in demand and pricing in the mineral resource industry and fluctuations in
exchange rates; (4) future regulatory and legislative actions and conditions
affecting Lonmin`s and Southern Platinum`s operating areas; (5) obtaining and
retaining skilled workers and key executives; and (6) acts of war and terrorism.
Forward-looking statements involve risks, uncertainties and assumptions. Actual
results may differ materially from those expressed in forward-looking
statements. Given these risks, uncertainties, and assumptions, you are
cautioned not to put undue reliance on any forward-looking statements. In
addition, the inclusion of such forward-looking statements should under no
circumstances be regarded as a representation by Lonmin that Lonmin will achieve
any results set out in such statements or that the underlying assumptions used
will in fact be the case. Other than as required by applicable law or the
applicable rules of any exchange on which Lonmin`s securities may be listed,
Lonmin has no intention or obligation to update any forward-looking statements
included in this announcement after the release of this announcement.
For Further Information:
Lonmin Plc
John Robinson, Chief Financial Officer - +44 20 7201 6032
Albert Jamieson, Vice President, Business Development - +27 11 516 1323
Jack Jones, Vice President, Business Development - +44 20 7201 6007
Southern Platinum Corp.
Patrick Evans, President and CEO - (416) 359-9282
Media Enquiries:
Lonmin Plc, United Kingdom
Nadja Vetter
Anthony Cardew
Cardew Group - +44 20 7930 0777
South Africa
Nicholas Williams
Johannes van Niekerk
College Hill - +27 11 447 3030
Canada
John Lute
Lute & Company - +416 929 5883 ext 222
APPENDIX 1
INFORMATION ON LONMIN PLC
Lonmin is the third largest and the lowest cost primary platinum producer in the
world from its operations on South Africa`s Bushveld Igneous Complex, Lonmin
Platinum. It has an 82% interest in these assets which produce over 900,000
ounces of Platinum per annum. The remaining 18% is owned by Incwala Resources, a
black economic empowerment group.
Lonmin Platinum operates three mines, a smelter, base metals refinery and
precious metals refinery. Lonmin markets 100% of the metals produced through a
wholly owned subsidiary, almost entirely on long term contracts.
The mines, smelter and base metals refinery are located in the Marikana district
to the east of the town of Rustenburg in the North West Province of South
Africa. Two Platinum -bearing reefs of UG2 and Merensky are mined simultaneously
in the lease area over a strike of some 27 kilometers at an average depth of 360
meters. Underground mining predominates, although open cast mining is being
carried out at all three mines. The precious metal refinery is situated in
Brakpan in the Gauteng Province.
Lonmin and Black Economic Empowerment (BEE)
In 2003 the South African Government`s Department of Minerals and Energy (`DME`)
unveiled its Charter for Broad-Based Socio Economic Development in the Mining
Industry. Lonmin and Lonmin Platinum are fully committed to this and the South
African Government`s objectives for BEE in general.
In December 2004, Lonmin Platinum submitted its application for the conversion
of its mining licenses to DME; this includes plans to achieve various targets
for employment equity, women in mining, procurement, human resource development,
social investment, etc.
In September 2004, Lonmin was instrumental in creating Incwala Resources, a
company which is owned, managed and controlled by Historically Disadvantaged
South Africans (`HDSA`). Incwala has some 50,000 HDSA beneficiaries. Incwala
owns 18% of Lonmin Platinum, empowering it with BEE ownership credits in terms
of the Charter.
Lonmin`s vision is to create value by the discovery, acquisition, development
and marketing of mineral and metals, but at the same time respecting the
communities and nations that host its operations and conducts its business in a
sustainable, socially and environmentally responsible way.
End
Date: 22/03/2005 09:00:49 AM
Produced by the JSE SENS Department
