| Tue 9 May 2006, 15:50 | | Sallies - Salient Details of the Proposed Acquisit |
|
SAL
SAL
Sallies - Salient Details of the Proposed Acquisition of Buffalo Fluorspar
SALLIES LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1903/001879/06
JSE Share Code: SAL
ISIN: ZAE000022588
("the Company")
SALIENT DETAILS OF THE PROPOSED ACQUISITION BY THE COMPANY OF BUFFALO FLUORSPAR
1. Introduction
Further to the cautionary announcements dated 9 February 2006, 11 March 2006
and the comprehensive rights offer announcement dated 28 February 2006,
shareholders are advised that the Company is continuing with:
* its due diligence review process; and
* the related negotiations with Intercoal Mining (Proprietary) Limited
("Intercoal"),
pertaining to the proposed acquisition from Intercoal of 100% of the issued
share capital of Transvaal Mining and Finance Company Limited ("TMFCL") -
which trades under the name of "Buffalo Fluorspar" (defined for purposes of
this announcement as "the acquisition").
Buffalo Fluorspar is a dormant fluorspar deposit located in the Limpopo
Province which was historically operated by the Gencor Group until its
placement into "care and maintenance" in 1994. The salient underlying assets
of Buffalo Fluorspar essentially comprise mineral rights and a dormant
fluorspar extraction plant. The relevant rights are:
* Portions 10 and 11 (both Portions of Portion 8), the remaining Portion of
Portion 8 (a Portion of Portion 3) as well as the remainder, respectively
of the Farm Buffelsfontein 347 KR District Potgietersrus, being in
aggregate an area of some 717,4728 hectares; and
* Portion 7 (a Portion of Portion 2) of the Farm Buffelsfontein 647 KR
District Potgietrsrus, which is 1,7131 hectares in extent.
2. Rationale for the acquisition and directors" opinion
Sallies has a stated objective of expanding its fluorspar mining and
production activities both organically and by acquisition.
Subject to the successful completion of the due diligence review and related
negotiations, the Sallies Board is of the opinion that implementing the
Buffalo acquisition should be value accretive to Sallies shareholders.
3. Purchase Price
In terms of the conditional purchase agreement, signed on 15 March 2006,
Sallies will be entitled to acquire the entire issued share capital of TMFCL
from Intercoal for an aggregate amount of R65 million in cash, which amount
will, subject to the successful fulfillment of the conditions precedent set
out below, become payable by not later than the closing date set out in the
agreement, which is 10 July 2006.
4. Conditions precedent
The acquisition is subject to, inter alia, the conducting of a due diligence
review on TMFCL. This due diligence review is currently being conducted by
Sallies as well as the independent geological and techno-economic consultants
to Sallies, RSG Global (Proprietary) Limited.
5. Stone Aggregate resource
Sallies has agreed that Intercoal shall retain the ownership of all the Stone
Aggregate on the property. Furthermore:
* in the event of Sallies conducting any future "virgin" mining on the
property, Intercoal shall be entitled, without payment of any consideration
to Sallies, to one half of the aggregate waste stream of the Dense Media
Separation plant, as calculated by a monthly survey as well as being able
to remove such Stone Aggregate for its own benefit; and
* for the aforementioned purposes Intercoal shall also be entitled at its own
expense to register a Notarial Lease Agreement against the title deeds of
the property and to enjoy access to the property, as well as the necessary
amenities which include, inter alia, the current Stone Aggregate site
offices, requisite water supplies for its operations and certain limited
housing for its employees.
6. Current status of the due diligence review
As indicated in paragraph 4 above, Sallies is currently conducting a due
diligence review on the Buffalo Fluorspar deposit. In this regard the
following material steps have been taken;
*the slimes dams located on the Buffalo property have been drilled and
samples have been delivered to an independent laboratory for analysis in
order to be able to confirm the in-situ grade;
*the slimes dams have been surveyed and density tests are currently being
conducted after which the resource contained in the slimes dams will be
calculated; and
*the fluorspar extraction plant has been re-commissioned and is currently
processing batches of material, the objective of which is to be able to
calculate the expected recovery.
The completion of the above material steps forming part of the due diligence
review is expected to be during June 2006. In the event that the acquisition
becomes unconditional the results of the due diligence review will be
included within the relevant circular to Sallies shareholders (in the form of
a Competent Persons" Report).
7. Financial effects
The operations of Buffalo Fluorspar have been dormant for approximately the
last 12 years and accordingly no trading results are available for that
period. Comprehensive details relating to the acquisition remain subject to
the outcome of the due diligence review and accordingly it is not possible to
quantify any pro forma financial effects at this time.
In the event that the acquisition becomes unconditional and once more
comprehensive financial and/or techno-economic information attaching to
Buffalo Fluorspar becomes available these will be published in a further
announcement as well as in a circular to shareholders.
8. Regulatory requirements
To the extent required, the acquisition is subject to the requisite approval
being obtained from:
* Sallies shareholders in general meeting; and
* the Competition Authorities.
9. Further cautionary
Given the uncertainties surrounding fulfilment of the conditions precedent,
Sallies shareholders are advised to continue to exercise caution when dealing
in the company"s securities until a final announcement can be made.
Johannesburg
9 May 2006
Sponsor
Ernst & Young Sponsors (Pty) Ltd
(Registration number 2000/031843/07)
Date: 09/05/2006 03:50:11 PM Produced by the JSE SENS Department
