Palabora Mining Company Limited - Closure Of The Z
PAM
PAM
Palabora Mining Company Limited - Closure Of The Zirconium Basic Sulphate
("ZBS") Plant
PALABORA MINING COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1956/002134/06
JSE code: PAM; ISIN: ZAE000005245
("Palabora" or "the company")
CLOSURE OF THE ZIRCONIUM BASIC SULPHATE ("ZBS") PLANT
Shareholders are referred to the 2004 Annual Report, Interim Report of 30 June
2005 and reviewed Preliminary Results for the year ended 31 December 2005
wherein it was reported that Maxima Investment Consolidated (Maxima) defaulted
on its agreement relating to the purchase of the ZBS plant and the value of the
plant was written off.
Subsequent to these events, Lisinfo 122 expressed interest in the plant and a
Memorandum of Agreement was signed. At 31 December 2005, negotiations for the
sale were still in progress and the fair value of the expected sale amounted to
R25 million. For this reason, the plant was re-classified as a non-current asset
held for sale at the lower of its cost price and fair value less disposal costs.
In November 2005, Lisinfo 122 entered into partnership with NCP Chemicals (NCP)
for the purchase of the plant. The Board of NCP approved the purchase of the
plant at its meeting on 15 December 2005, subject to further approval of the
sale and service agreements. During this process, the following complications
arose, amongst others:
* Palabora would have to cede its surface rights for the land on which the plant
is located instead of leasing it;
* Environmental liability could still remain with Palabora even after the plant
had been sold; and
* Various regulatory requirements.
Given the foregoing, the Board has resolved that, due to the many risks
associated with the sale process, the plant will be closed. The balance of the
Non-current asset classified as held for sale (ZBS plant) of R25 million will be
written off.
Phalaborwa
15 February 2006
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Pty) Ltd
Date: 15/02/2006 03:54:05 PM Produced by the JSE SENS Department
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