| Thu 7 Jul 2005, 9:05 | | Proper - Lifting Of Suspension, Transaction Update |
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Proper - Lifting Of Suspension, Transaction Update 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`)LIFTING OF SUSPENSION, TRANSACTION UPDATE AND FURTHER CAUTIONARY ANNOUNCEMENT
LIFTING OF SUSPENSION
The board is pleased to announce that the JSE Limited (`the JSE`) has agreed to
lift the suspension on trading in Proper`s securities listed on the JSE witheffect from the opening of the market on Friday, 8 July 2005.
TRANSACTION UPDATE
1. Introduction
Further to the announcements dated 25 February 2005, 16 March 2005 and thesimultaneous interim financial results announcement dated 6 July 2005, the board
is also pleased to update shareholders on the progress made in transforming
Proper into an empowered mining exploration group. This is to be achieved,
subject to regulatory and shareholder approval, by way of:- a specific issue by Proper of 45 million ordinary shares at 6 cents per
share (`cps`) to Pacific Breeze Trading 62 (Pty) Ltd (`Pacific`) for a cash
consideration of R2.7 million (`the BEE subscription`); and
- the acquisition of the entire share capital of Miranda Minerals (Pty) Ltd (`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`) (collectively `the transaction`).
2. The BEE subscriptionPacific is majority-owned by Historically Disadvantaged South Africans as
defined in the Minerals and Petroleum Resources Development Act 2002 (`the
Mining Act`) and the Broad-based Socio Economic Charter for the Mining Industry.
Mr Thabo Mokgatlha, the chairman of Pacific, is presently in the process offinalising negotiations with an underwriter for the BEE subscription, in terms
of which Pacific will obtain an interest of 29.3% in Proper after implementation
of the transaction. Motjoli Resources will no longer form a part of the
consortium. It is envisaged that the underwriter will also become a strategicpartner to Pacific and will assist Pacific in playing an active role in the
activities of the new mining exploration group.
3. Prospecting permits
Miranda and Proper identified a total of around 70 potentially commerciallyfeasible projects out of Miranda`s portfolio of mineral rights originally
acquired from Gold Fields of South Africa during the period 1999 to 2000.
Applications for `new order` permits for the prospecting and exploration of
these projects were lodged with the Department of Minerals and Energy (`theDME`) by 30 April 2005. To date, a total of 40 of these applications,
encompassing around 140 different properties, have been accepted. Miranda is
currently compiling the Environmental Management Programs on these projects for
submission to the DME. All remaining applications were completed in accordancewith the Mining Act and the management of Miranda does not foresee any major
delays in receiving these acceptances.
The projects for which prospecting permits have been approved include a wide
variety of minerals, ranging from sand, stone, clay, base minerals, magnesite,andalusite, fluorspar and coal to diamonds and gold and are spread throughout
the Northern Cape, North West Province, Gauteng and Mpumalanga. A number of
local and overseas mining entities have already expressed an interest to
participate in a variety of the projects.4. Competent Person`s Report (`CPR`)
The first CPR, which was prepared on a clay deposit in the North West Province,
has been approved by SAMREC and the JSE. The CPR fulfills the suspensive
condition of substantiating a project value in excess of R22 million on thebasis of the estimated in situ value of the deposit identified in the CPR and a
conservative estimation of the percentage share of revenue Miranda expects to
secure.
5. Pro forma financial effectsThe table below sets out, for illustrative purposes only, the pro forma
financial effects of the acquisition on the audited annual financial statements
of Proper for the 12 months ended 31 August 2004. The pro forma earnings
figures illustrate the possible financial effects if the transaction had beenundertaken on 1 September 2003, whereas the pro forma net asset value figures
illustrate the possible financial effects if the transaction was effected on 31
August 2004. Due to their nature, the pro forma financial effects may not give
a fair reflection of Proper after the transaction. Notes Audited, Pro forma, % change
Before the After the
transaction transaction
(1) (2)Net asset value per share (3) 0.1 16.5 >400%
(cents)
Net tangible assets value 0.1 1.8 >400%
per share (cents)Earnings/(loss) per share (4) 21.1 4.3 -80%
(cents)
Headline earnings/(loss) (0.6) (0.2) +67%
per share (cents)Average and weighted (5) 30 746 153 731 +400%
average number of
consolidated shares (`000)
Notes:(1) Per Proper`s reported audited annual financial statements for
the 12 months ending 31 August 2004
(2) Pro forma figures incorporate Miranda`s audited annual financial
statements for the 12 months ending 28 February 2005 and the effectsof the acquisition and the BEE subscription
(3) Pro forma figures reflect an intangible asset at the minimum CPR
value of R22 million and a cash inflow of R2.7 million from the BEE
subscription(4) Pro forma figures assume an interest rate of 6% and a tax rate
of 29%
(5) Reflects the increase in issued shares in terms of the
acquisition and the BEE subscriptionThe table below sets out the detailed pro forma balance sheet of Proper after
the transaction on the basis of the assumptions given above.
Pro forma balance sheet Pro forma after the
transaction (R`000)
ASSETS
Non-current assets 23 239
Fixed assets 200Intangible assets 22 661
Loans receivable 378
Current assets 2 701
Receivables and deposits 2Cash and cash equivalents 2 699
Total assets 25 940
EQUITY AND LIABILITIES
Capital and reserves 25 354Issued capital 1 537
Share premium 29 952
Accumulated loss (6 135)
Non-current liabilities 584Long-term liabilities 243
Group and shareholder`s loans payable 341
Current liabilities
Accounts payable 2Total equity and liabilities 25 940
6. Change of name and transfer of sector
Upon approval and implementation of the transaction, and in order to reflect its
new nature of business more accurately, the name of Proper will be changed toMiranda Mineral Holdings Limited, with Miranda Minerals (Pty) Ltd as its wholly-
owned subsidiary. Application has been made to transfer the new group to the
`Other Mineral Extractors and Mines` sector of the JSE.
7. Approval by and circular to shareholdersShareholders 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, which will include a notice of a general meetingwhere shareholders will be asked to approve the resolutions required to
implement the transaction, is being prepared. The controlling shareholder,
Gandalf Trust (which, through its nominee Strider Holdings (Pty) Ltd, holds its
interest in Proper on behalf of executive chairman, Karl Gribnitz, and non-executive director, Jan Nel), has already given an irrevocable undertaking to
vote in favour of the transaction.
FURTHER CAUTIONARY ANNOUNCEMENT
As the implementation of the transaction may have a material effect on the priceat 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.
Pretoria6 July 2005
Sponsor Corporate Advisor Restructuring
Advisor
River Sponsors (Pty) Ltd Radagast Capital (Pty) Ltd Gandalf TrustDate: 07/07/2005 07:30:07 AM Produced by the JSE SENS Department
