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GVM
GVGVM
GVM - GVM - Heads of Agreement reached to acquire Kelso Mining Limited
GVM Metals Limited
(Previously, "Golden Valley Mines Limited")
(Incorporated and registered in Australia)
Registration number ACN 008 905 388
Share code on the Australian Stock Exchange Limited: GVM & ISIN:
AU000000GVM1
Share code on the JSE Limited: GVM ISIN: AU000000GVM1
Share code on the Alternative Investment Market: GVM & ISIN: AU000000GVM1
("GVM" or "the Company")
Heads of agreement reached to acquire Kelso Mining Limited
Introduction
GVM today announces that it has agreed terms for the acquisition of Kelso
Mining Limited (`Kelso`) whose principal asset is the right to acquire 70%
of the issued share capital of Coal of Africa Limited (`CoAL`). CoAL is a
South African company that owns the Mooiplaats coal project and surrounding
New Order prospecting rights. The properties owned by CoAL are located
within 2 kilometres of the Camden Power Station near Ermelo and are beside
the main rail line to the Richards Bay export coal terminal.
A Competent Persons Report (`CPR`) on the CoAL properties is currently
being prepared by SRK Consulting and it is a condition of the Kelso
acquisition of CoAL that the CoAL properties contain a JORC and SAMREC
compliant resource in excess of 450 million tonnes of coal. The CPR is
expected to be made available by April 2007.
Conditions precedent to the acquisition of Kelso
The terms of the CoAL agreement contain a number of preconditions including
regulatory and Kelso shareholder consent and the completion of due
diligence satisfactory to the Company. As well as the precondition to the
JORC and SAMREC status of the resources, the transaction is to complete 90
days after South African Ministerial consent to the transfer of New Order
Mining Title.
Kelso also owns the Itawes nickel project located in the northern Mindanao
province in the Philippines. Whilst the Mineral Production Sharing
Agreement is expected to be granted by the Department of Environment and
Resources shortly, GVM will have the right to sell the Itawes project back
to the Itawes vendors for a nominal consideration, whilst retaining a
minority interest, should the CoAL transaction not close and/or the Mineral
Production Sharing Agreement not be granted.
Following completion of the acquisition, should GVM decide to exercise the
option to acquire 70% of CoAL, the consideration will be GBP30 million of
which a GBP3 million deposit has already been paid by Kelso The balance is
payable as to GBP17 million on completion in cash and the balance in cash
12 months thereafter. The CoAL agreement is not expected to be completed
for at least four months to allow time for the completion of the Competent
Person`s Report and to receive relevant regulatory consents.
The Company will provide further technical details regarding the potential
resources, development, production or other indicative technical data when
SRK Consulting report is completed.
Purchase consideration for the acquisition
The maximum consideration for the Kelso acquisition is approximately GBP10
million. This consideration is made up as follows:
An initial consideration of GBP3.7 million, comprising cash of GBP2 million
and GBP1.7 million in new GVM shares to be issued at its mid-market price
with but within a minimum and maximum price range of 20-30 pence per share;
Subject to completion of the CoAL acquisition, a deferred consideration
GBP4 million in new GVM shares to be issued at its mid-market price with a
minimum and maximum price range of 20-30 pence per share; and
Subject to completion of both the CoAL acquisition and receipt by the
Itawes project of its Mineral Production Sharing Agreement, an additional
deferred consideration of GBP2.2 million of which GBP1.5 million is payable
in cash and the balance in new GVM shares to be issued at its mid-market
price with a minimum and maximum price range of 20-30 pence per share.
Circular to shareholders
Once final agreements have been executed, the required documentation and
notice of a general meeting of shareholders in compliance with the Listing
Rules of the Australian Stock Exchange will be prepared and will be posted
to shareholders in due course. This is expected by no later than 31 March
2007.
7 February 2007
South African Sponsor
PricewaterhouseCoopers Corporate Finance
Date: 07/02/2007 10:15:01 Produced by the JSE SENS Department.
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