| Wed 21 Feb 2007, 17:01 | | GBG - Great Basin- Introduction of broad-based BEE |
|
BG GFI
GBG
GBG - Great Basin- Introduction of broad-based BEE shareholding and cautionary
Great Basin Gold Limited
(Incorporated in Canada and registered as an External Company in South Africa)
(External Company Registration number 2006/021304/10)
Share code: GBG & ISIN: CA3901241057
("Great Basin Gold")
Gold Fields Limited
Registration number (1968/004880/06)
Share code: GFI ISIN: ZAE000018123
("Gold Fields")
INTRODUCTION OF BROAD-BASED BLACK ECONOMIC EMPOWERMENT SHAREHOLDING IN GREAT
BASIN GOLD AND CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
T-Corp is authorised to announce that Great Basin Gold has entered into an
agreement in principle dated 21 February 2007 ("the agreement") for the
introduction of black equity ownership into Great Basin Gold, in terms of
which Tranter Gold (Proprietary) Limited ("Tranter"), the shares of which are
held by a broad-based Black Economic Empowerment ("BEE") consortium ("the BEE
consortium"), will acquire an effective 26% interest in Great Basin Gold`s
South African operations ("the BEE interest") through the proposed transaction
structure as set out in paragraph 8.2 below ("the proposed transaction"). In
terms of the agreement, Tranter will, either directly or through a new company
to be incorporated ("Newco"), acquire the BEE interest for a purchase
consideration of R260 million ("the purchase consideration"). It is intended
that Tranter will ultimately hold the BEE interest via a direct shareholding
into Great Basin Gold with a view to creating a fully Black owned and managed
operational gold mining company.
The proposed transaction will result in Great Basin Gold achieving an
effective 26% BEE equity interest in its South African operations, comprising
predominantly the Burnstone gold project ("the Burnstone project"), as
required in terms of the Broad Based Black Economic Empowerment Act, No. 53 of
2003, as amended ("the BEE Act"), the Codes of Good Practice on Broad-Based
BEE published by the Department of Trade and Industry ("the Codes of Good
Practice"), the Broad-Based Socio Economic Empowerment Charter for the South
African Mining Industry ("the Mining Charter"), and the relevant provisions of
the Minerals and Petroleum Resources Development Act, 2002 ("MPRDA"). Further
details of the Burnstone project are set out in paragraph 2 below.
Implementation of the proposed transaction is subject to, inter alia, the
fulfilment of the conditions precedent as set out in paragraph 9 below.
2. BACKGROUND TO GREAT BASIN GOLD
Great Basin Gold is an international gold mining company in the business of
acquiring ownership of, and exploring and developing, precious metals
deposits. For the past three years, GBG has focused on the development of two
projects:
- The Hollister Development Block project ("the HDB project"):
The HDB project is located on the Hollister Property on the Carlin Trend
in Nevada, United States of America, which consists of 924 unpatented
claims, covering 69 square kilometers, and hosts a number of high-grade
gold-silver vein systems, as well as a number of other exploration
targets. The HDB project constitutes approximately 5% of the Hollister
Property, and GBG retains a 100% interest, subject to royalties, in the
remaining 95% of the Hollister Property, and plans to carry out further
exploration on this property once activities have advanced on the HDB
project; and
- The Burnstone project:
The Burnstone project, with a total envisaged capital cost of
approximately R1.0 billion, is located in the Witwatersrand Basin in the
Balfour area in South Africa and hosts gold within the Kimberley Reef.
The project, which encompasses approximately 30,000 hectares, is at an
advanced exploration stage. The development of the access decline has
progressed to 520 metres from the portal as at 15 February 2007.
Implementation of the proposed transaction will enable Great Basin Gold to
submit its application to the Department of Minerals and Energy ("the DME")
for a new order mining right in respect of the Burnstone project.
It is anticipated that Tranter will have exposure to the international asset
base of Great Basin Gold and not be limited to participation at the Burnstone
project level.
3. RATIONALE FOR THE PROPOSED TRANSACTION
Great Basin Gold supports the South African Government`s BEE initiatives
intended to redress historical social and economic inequalities in South
Africa, and recognises the importance of BEE as a key driver of sustainable
growth and positive transformation in South Africa. Great Basin Gold embraces
the principles of transformation as a strategic imperative to its operations
going forward, and has made significant progress in addressing the
requirements of key pillars of transformation as detailed in the Mining
Charter.
Great Basin Gold is committed to achieving effective and sustainable black
economic empowerment of its South African operations through the proposed
transaction. As part of Great Basin Gold`s BEE ownership strategy, the board
of directors of Great Basin Gold has sought partners that will assist it in,
inter alia, enhancing its growth prospects and making a positive contribution
to Great Basin Gold`s operational activities going forward. Furthermore, it
is Great Basin Gold`s intention to embrace the broad-based principles of BEE
as the foundation of its BEE ownership strategy, ensuring that the benefits
arising from the proposed transaction will accrue to a broad-base of
beneficiaries including the communities in the areas surrounding the Burnstone
project.
Great Basin Gold has undertaken to include its new order prospecting rights in
the proposed transaction in order to create an operative BEE company from the
outset.
4. PRINCIPLES OF THE PROPOSED TRANSACTION
In structuring the proposed transaction, Great Basin Gold has developed a set
of key objectives aimed at sustainable, broad-based empowerment to ensure
that:
- the BEE consortium is broad based;
- economic benefits and voting rights are transferred to the BEE
consortium from the inception of the proposed transaction, thereby
ensuring that the ownership requirements of the Codes of Good Practice
and the Mining Charter are met;
- support is provided to Tranter to assist in its growth and development
strategy of becoming a sustainable Black owned and managed
operational gold mining company;
- the BEE consortium or its approved successors remain shareholders of
Great Basin Gold for at least three years; and
- the proposed transaction is sustainable and value enhancing for the BEE
consortium.
5. INFORMATION RELATING TO TRANTER
Tranter is a private broad-based BEE company, formed by a group of Black South
African businessmen ("the founding partners"), who have brought together
various historically disadvantaged women`s and community based organisations
for the initial purpose of acquiring and holding an effective interest in
Great Basin Gold`s South African operations. The shareholding structure of
Tranter is set out as follows:
PLEASE REFER TO THE PRESS ANNOUNCEMENT TO BE PUBLISHED TOMORROW (Thursday, 22
February 2007) for the diagram which illustrates the shareholding structure of
Tranter.
It is Tranter`s strategy to become an active operating company in the gold
mining sector. Great Basin Gold has undertaken to assist with this strategy
by, inter alia, providing Tranter with access to certain of its new order
prospecting rights, seeking further joint venture opportunities, and providing
administrative support. Tranter will appoint a Chief Operating Officer
together with other technical staff as required.
6. THE NET SMELTER ROYALTY
In terms of a prospecting agreement dated 17 October 2000 ("the prospecting
agreement"), Southgold Exploration (Proprietary) Limited ("Southgold"), a 100%
owned subsidiary of Great Basin Gold and the current owner of the Burnstone
project, obtained an option to acquire mineral rights in the Balfour area in
South Africa from GFL Mining Services Limited ("GFL"), a 100% owned subsidiary
of Gold Fields, and Randex Limited, and in October 2003, Southgold acquired
these mineral rights, which today form a major portion of the Burnstone
project. The purchase price payable by Southgold in terms of the prospecting
agreement comprised an upfront cash payment and an additional consideration to
be paid, tiered to the gold price, based on the net smelter revenue realised
from the sale of gold production from the related mineral rights ("the net
smelter royalty).
Gold Fields, GFL, Great Basin Gold and Tranter ("the parties") have entered
into a heads of agreement in respect of the net smelter royalty in terms of
which, inter alia, Southgold will pay to GFL an amount of R80 million in full
and final settlement of the net smelter royalty. GFL will simultaneously
donate an amount of R80 million to Tranter, to be utilised by Tranter as
follows:
- R70 million to be used by Tranter for the purposes of partly funding
the proposed transaction ("the Tranter capital funding"), and
- the balance of R10 million to be retained by Tranter to be utilised
exclusively for the establishment, administration and day-to-day
operational costs of Tranter in respect of its strategy to become an
operational company ("the Tranter operational funding")
(collectively, "the net smelter royalty transaction").
The definitive agreement, to be concluded between the parties by 28 February
2007 in respect of the net smelter royalty transaction, will be conditional
upon the fulfilment of, inter alia, the following conditions precedent:
- the necessary regulatory approvals being obtained, including, inter
alia, to the extent necessary:
approval from the South African Reserve Bank;
approval from the JSE Limited ("the JSE");
approval from the Competition Authorities, as may be required in terms of
the Competition Act, 1998; and
- written confirmation from the DME that Tranter is an Historically
Disadvantaged South African ("HDSA") company, as defined in the Mining
Charter, and that the DME is satisfied with the net smelter royalty
transaction for purposes of the conversion of the old order mining
rights relating to the Burnstone project to new order mining rights
under the MPRDA, and the retention of the new order mining rights by
Great Basin Gold.
7. PURCHASE CONSIDERATION
The purchase consideration payable for the BEE interest is R260 million, to be
settled partly through the Tranter capital funding, in terms of the net
smelter royalty transaction, of R70 million, and the balance of R190 million
will be payable in cash. Based on the 60 day volume weighted average price of
R13.04 per Great Basin Gold share, a total of 19 938 650 new Great Basin Gold
shares will be issued to Tranter.
The purchase consideration will be utilised for the development of the
Burnstone project in South Africa.
8. TERMS OF THE PROPOSED TRANSACTION
8.1 Strategic partner
Great Basin Gold and Tranter are currently in discussions with a potential
strategic facilitating partner ("the facilitating partner") to participate as
an investor in the proposed transaction, in which event Newco will be formed,
in which it is envisaged that Tranter will own at least a 51% interest and the
facilitating partner will own the remaining interest. In terms of the flow
through principle as set out in the Codes of Good Practice, Newco will be
considered to be 100% empowered, as Tranter will hold more than 50% of the
shares in Newco.
8.2 Proposed transaction structure
In terms of the agreement, Tranter or Newco will subscribe for 19 938 650 new
Great Basin Gold shares, which, after the allotment and issue of such new
shares, will constitute 14.1% of the entire issued share capital of Great
Basin Gold on a fully diluted basis, which, in terms of the relative
valuations of the Burnstone and HDB projects, equates to an effective interest
of at least 26% in the Burnstone project.
In the event that the conditions precedent to the proposed transaction, as set
out in paragraph 9 below, are not able to be satisfied and the proposed
transaction is not able to be implemented through the structure as set out
above, Great Basin Gold and Tranter may elect to structure the proposed
transaction in one of the following alternative ways:
- through the subscription by Tranter or Newco for such number of new
shares in Southgold ("the Southgold shares") as will, after the
allotment and issue of such new shares, constitute 26% of the entire
issued share capital of Southgold; or
- through the subscription by Tranter or Newco for the Southgold shares
with an option to convert some or all of the Southgold shares into
new Great Basin Gold shares, which conversion ratio will be at a rate
that will provide Tranter with at least the BEE interest.
The shares to be acquired by Tranter or Newco will be subject to such
terms and conditions as may be agreed between Great Basin Gold, Southgold
and Tranter, but will include, inter alia:
- the shares acquired by Tranter or Newco will rank pari passu with the
existing ordinary shares in either Southgold or Great Basin Gold, as the
case may be;
- the shares acquired by Tranter or Newco will be subject to a lock-in
period of at least three years ("the lock-in period");
- neither Tranter or Newco nor any BEE consortium member will be entitled
to encumber or dispose of its interest in Great Basin Gold for the
duration of the lock-in period without the prior written approval of
Great Basin Gold;
- in addition, no BEE consortium member will be entitled to encumber or
dispose of its respective shareholding in Tranter nor will there be
any change in control in any BEE consortium member for the duration of
the lock-in period, without the prior written approval of Great Basin
Gold; and
- Tranter or Newco will be obliged to ensure that it maintains its
status as a BEE entity for the duration of the lock-in period.
9. CONDITIONS PRECEDENT
The proposed transaction is subject to and conditional upon the fulfilment of,
inter alia, the following conditions precedent, by 30 June 2007:
- the satisfactory conclusion by Great Basin Gold of a due diligence
investigation into the business and affairs of Tranter and the
members of the BEE consortium;
- the required regulatory approvals being obtained for the proposed
transaction in Canada, South Africa and any other relevant
jurisdiction, including:
- approval from the South African Reserve Bank, to the extent that
such approval is necessary;
- approval from the Toronto Stock Exchange, the American Stock
Exchange and the JSE;
- approval from the Competition Authorities in terms of the Competition
Act, 1998 to the extent that such approval is necessary; and
- approvals from the directors of Great Basin Gold and Tranter; and
- Tranter securing the necessary funding for the proposed transaction
on commercially acceptable terms.
10. OVERVIEW OF THE BEE CONSORTIUM
10.1 Founding partners
The founding partners of Tranter are Sipho Nkosi, Humphrey
Mathe, Mxolisi Mgojo and Joshua Ngoma.
Abridged curriculum vitae of the founding partners are set out
below:
10.1.2 Sipho Nkosi
Sipho was the founder of Eyesizwe Coal (Proprietary) Limited ("Eyesizwe") and
is currently the Chief Executive Officer Designate of Exxaro Resources Limited
("Exxaro"). He has experience in the mining sector both locally and
internationally, having previously worked as the country manager and Chief
Executive Officer of ABB Alstom Power (SA) and in marketing with Anglo Coal
and Ingwe Collieries Limited (now BHP Billiton Energy Coal). Sipho is the
chairman of Eyesizwe Holdings (Proprietary) Limited ("Eyesizwe Holdings") and
is a director of Great Basin Gold, Anooraq Resources Corporation, Sanlam
Limited and Igoda Coal (Proprietary) Limited, a joint venture with Sasol
Mining (Proprietary) Limited ("Sasol Mining"), as well as serving on a number
of Exxaro subsidiary boards. In addition, he is a council member of the
Chamber of Mines, and the chairman of the South African National Energy
Association and the South African representative on the World Energy Council.
10.1.2 Humphrey Mathe
Humphrey is a qualified geologist and the Executive General Manager of
Corporate Services at Exxaro. He has in excess of 30 years experience in the
mining industry having been the Chief Operating Officer and an executive
director of Eyesizwe, a senior geologist for Shell Minerals and the chief
exploration geologist at West Rand Consolidated Mines Limited and Harmony Gold
Mining Company Limited. Humphrey is a director of Ferret Mining and
Environmental Services (Proprietary) Limited ("Ferret Mining"), Zaico
(Proprietary) Limited (the BEE partner to Namakwa Diamond Company NL) and Wits
Consolidated Gold Resources (Proprietary) Limited, as well serving as a non-
executive on the South African Diamond Board and as the chairman of its
Technical Committee and the Section 59 Committee. He also serves on the
Investment Committee of the New Africa Mining Fund, as well as on a number of
Exxaro subsidiary boards.
10.1.3 Mxolisi Mgojo
Mxolisi is a founding member of Eyesizwe and a director of Eyesizwe Holdings.
He is currently the Executive General Manager of Base Metals and Industrial
Minerals at Exxaro and was previously the group marketing manager at Eyesizwe.
Mxolisi also has experience in banking and finance, having worked at Nedbank
Limited ("Nedbank") and Societe Generale. He is also a director of Le Carbone
SA (Proprietary), and serves on a number of Exxaro subsidiary boards.
10.1.4 Joshua Ngoma
Joshua is a qualified mining engineer registered with the Engineering Council
of South Africa and is currently the Group Manager: New Mining Technologies at
Anglo Platinum Limited. Joshua has extensive experience in various mineral
commodities and has previously worked at Zambia Consolidated Copper Mines
Limited, Cementation Mining, De Beers Consolidated Mines Limited, Sasol
Mining, and at Eyesizwe, initially as group technical manager, then as general
manager of the New Clydesdale export mine and ultimately as general manager of
the Matla Colliery. Joshua is a fellow of the South African Institution of
Mining and Metallurgy ("SAIMM") and a Millennium Life Member of both the South
African Society of Professional Engineers and the International Society of
Professional Engineers, as well as serving on various professional bodies in
South Africa, including the Engineering Council of South Africa`s Professional
Advisory Committee on Mining Engineering and SAIMM, where he is currently the
junior vice-president. He is also a director of Ferret Mining.
10.2 Sidima Investments (Proprietary) Limited ("Sidima")
Sidima is 100% owned by black women, and focuses on the sustainable
development of black women from all levels of society and the communities
directly affected by the companies in which it invests. Sidima`s primary
objective is to participate actively in its investments. The shareholders of
Sidima comprise:
- Juliet Mxhakaza, the leader and initial founder of Sidima. Juliet
has worked in teaching and training for many years and is currently
the Business Development Director for Amazwi Power Products
(Proprietary) Limited, an engineering company producing mining
equipment and power generation products;
- Morongwe Malebye, the Managing Director of Babcock Ntuthuko
Engineering (Proprietary) Limited, an empowered company that provides
maintenance and engineering services to Eskom Boiler divisions and
the petrochemical industry. Morongwe is an elected mentor on the Allan
Gray Orbis foundation, participates in the SciBono for Girl Learners
initiative and is a member of the Black Women`s Association;
- Xoliswa Madikizela, who worked as a teacher for a number of years,
teaching mathematics and biology/natural science in the schools in
and around Cape Town`s poor and informal township settlements.
Xoliswa currently runs her own small cafeteria business and continues
to teach young children from poor communities during weekends;
- Nobuhle Chonco, who has been actively involved in community and
social work throughout her life and is currently head of the Community
Services Division of Vodacom (Proprietary) Limited; and
- Thandi Nhlapo, an executive in the procurement department of Total
South Africa.
10.3 Abrina 387 (Proprietary) Limited ("Abrina")
Abrina, a company that provides consulting services to the mining industry,
was founded in 2005 by Sam Louw, who has vast experience in the mining
industry and was instrumental in the development and implementation of the
transition of the MPRDA. The shareholders of Abrina comprise:
- Sam Louw, the founder of Abrina. Sam has been the whip of Minerals
and Energy since 1994 and, as such, is highly skilled in the industry
and a respected negotiator in crucial matters relating to the mineral
issues of South Africa;
- Yvonne Louw, a qualified nurse who completed her training at Livingstone
Hospital and has been involved in community related health issues
ever since. Yvonne is presently actively involved in the Cancer
Association of South Africa as a volunteer, and is also a founder of
the Early Learning Centre in Wilgeboom Farm in Potchefstroom;
- Portia Letsapa, a registered nurse and midwife who is currently
practising as a nurse educator. Portia is involved in the community
service division of Ubuntu Family Centre Church;
- Gail Bent, who is presently teaching at the Secondary School at Promosa
Potchefstroom. Gail takes care of the orphans at the Phumulelo
Centre, counsels HIV infected and affected people at the Promosa
Clinic, supervises at the Promosa Secondary School Hostel, and
runs a soup kitchen for street children;
- Dolly Molebatse, a community care giver and specialist in community
projects, including beads, sowing and agricultural projects; and
- Eskay Mineral Resources and Development Trust.
10.4 Malibongwe Women`s Development Organisation ("Malibongwe")
Malibongwe is a non-government, non-profit organization that is committed to
socially and economically developing and empowering South African women, with
an emphasis on previously disadvantaged women in both rural and urban areas.
Malibongwe currently runs a number of community projects such as home based
care for HIV/AIDS sufferers, caring for HIV/AIDS orphans and income generation
for women. The profits that accrue to Malibongwe are used for the sole
benefit of its development projects. Malibongwe is chaired by Ms Bertha
Gxowa, an esteemed leader of the Women`s Rights Movement and a community
builder since the 1950`s.
10.5 Professor Taole Mokoena
Professor Mokoena is a medical graduate of the University of Natal, and a PhD
graduate of the University of Oxford. He is currently the head of department
of surgery at the University of Pretoria and Kalafong Hospital, and is active
in academic and professional leadership having served at different times on a
number of national academic and professional bodies including, inter alia, the
South African Medical Association and the Health Professions Council of South
Africa disciplinary committee, as well as on the Task Team for Transformation
for the Ministry of Health. Professor Mokoena has also served in a number of
business leadership roles at different times including, inter alia, as a
director of Johnnic Holdings Limited, M-Cell Limited, Eyesizwe, and Network
Healthcare Holdings Limited.
10.6 Connie Nkosi
Connie Nkosi is well known entrepreneur, business strategist and marketing
specialist with an excellent track record in business. Her career started in
marketing and advertising and she is currently a BEE policy advisor based on
her experience as one of the founders of the Black Management Forum. Connie
was also the first retail banking executive for Nedbank in Soweto and is
currently a non executive director of Pick `n Pay Limited and Primeserv Group
Limited and the non-executive chairperson of First Technology (Proprietary)
Limited, as well as having served on a number of international company boards,
including British American Tobacco, Lonrho Africa plc and CollegeHill. She is
also a founding shareholder of Lidonga Group Holdings (Proprietary) Limited, a
women`s empowerment company.
10.7 The Burnstone Trust
The Burnstone Trust is to be established in order to benefit the communities
surrounding and impacted by the Burnstone project. A number of empowerment
projects and sustainable organisations, in and around the Burnstone project
area, have been identified as potential beneficiaries of the Burnstone Trust
on a sustainable basis.
11. CAUTIONARY ANNOUNCEMENT
Great Basin Gold shareholders are advised to exercise caution when dealing in
their shares until further details in relation to the proposed transaction are
made available, including the financial effects and the salient dates and
times for implementation of the proposed transaction.
For more information on the proposed transaction, please contact Great Basin
Gold (Ferdi Dippenaar at ferdid@gbgold.co.za or on 082-807-3684) or Tranter
(Sipho Nkosi at Sipho.Nkosi@exxaro.com or on 083-625-7703).
21 February 2007
Sandton
Corporate advisor to Great Basin Gold
T-Corp
Sponsor
Nedbank Capital
Corporate law advisor to Great Basin Gold
Falcon Attorneys Inc
Corporate advisor to Tranter
PricewaterhouseCoopers Corporate Finance
Independent expert
Venmyn Rand
Date: 21/02/2007 15:30:00 Produced by the JSE SENS Department.
