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Wescoal Holdings Limited - Announcement Of Agreements Entered Into By Subsidiaries Of Wescoal And Withdrawal Of Cautionary Announcements

Release Date: 31/07/2012 07:05:00      Code(s): WSL     
WESCOAL HOLDINGS LIMITED 
(Incorporated in the Republic of South Africa) 
(Registration number 2005/006913/06) 
JSE Share code: WSL & ISIN: ZAE000069639 
("Wescoal" or "the Company")

ANNOUNCEMENT OF AGREEMENTS ENTERED INTO BY SUBSIDIARIES OF WESCOAL: 
- WESCOAL MINING (PTY) LTD ("WESCOAL MINING") TO ACQUIRE A PROSPECTING RIGHT 
OVER VLAKLAAGTE; 
- WESCOAL MINING TO SELL ITS VLAKLAAGTE MINING RIGHT TO XSTRATA SOUTH 
AFRICA (PTY) LTD ("XSTRATA");  
- WESCOAL MINING TO BUY THE ELANDSPRUIT MINING RIGHT FROM XSTRATA; AND 
- BLANFORD 006 (PTY) LTD ("BLANFORD") TO PURCHASE THREE PROPERTIES FROM 
XSTRATA, 
 
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENTS 
  
1. INTRODUCTION 
 
Shareholders are referred to the cautionary announcement dated 5 July 2012. 
 
Shareholders are advised that on 30 July 2012, Wescoal and its subsidiaries entered into the following 
agreements: 
 
- Wescoal Mining entered into an agreement with Wescoal Exploration (Pty) Limited ("Wescoal 
Exploration") to acquire its Vlaklaagte prospecting right, and any subsequent mining right to which 
such prospecting right is converted ("the Vlaklaagte acquisition");  
 
- Wescoal Mining entered into an agreement with Xstrata in which the parties agreed that Wescoal 
Mining would sell its Vlaklaagte mining right to Xstrata ("the Vlaklaagte disposal"); 
 
- Wescoal Mining entered into an agreement with Xstrata in which the parties agreed that Xstrata 
would sell its Elandspruit mining right to Wescoal Mining ("the Elandspruit acquisition"); and 
 
- Blanford entered into an agreement with Xstrata to purchase three properties comprising the bulk of 
the surface rights on which the Elandspruit mining operations will be conducted ("the Duiker 
Properties acquisition"). 
 
The Vlaklaagte acquisition and Vlaklaagte disposal are interconditional. 
The Vlaklaagte disposal and the Elandspruit acquisition are not interconditional, but have a common 
condition precedent which is detailed in 3.4.1.

2. BACKGROUND INFORMATION ON THE VLAKLAAGTE ACQUISITION 
 
2.1. The Vlaklaagte Prospecting Right 
  
"The Vlaklaagte Prospecting Area" comprises portions 1, 2, 4, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 
40, 41, and the remaining extent of portion 3 and the remaining extent of the farm, but excluding 
mineral areas 2 and 3, all of the farm Vlaklaagte 330 J.S. situated in the Magisterial District of Witbank, 
Mpumalanga Region, Mpumalanga Province, measuring 192.93709 hectares ("Farm"). The Vlaklaagte 
Prospecting Area covers an undeveloped export quality thermal coal deposit with a measured 
resource of approximately 25, 5 million tons and is situated 15 km from Witbank contiguous to the 
Xstrata Tweefontein colliery.  
 
"The Vlaklaagte Prospecting Right" is a notarial prospecting right granted by the Minister of Mineral 
Resources of South Africa ("Minister") in respect of coal in, on and under the Vlaklaagte Prospecting 
Area, which prospecting right is to be transferred to Wescoal Mining with the consent of the Minister. 
  
2.2. Rationale for the Vlaklaagte acquisition 
 
The Vlaklaagte Prospecting Right has been acquired for purposes of on-sale to Xstrata. 
 
2.3. Details of the Vlaklaagte acquisition 
  
2.3.1. Wescoal Mining holds 60% of the issued shares of Wescoal Exploration, and Proudafrique 
147 (Pty) Limited ("Proudafrique") holds 40%. 
 
2.3.2. Wescoal Mining agreed to acquire the Vlaklaagte Prospecting Right from its subsidiary, 
Wescoal Exploration, for R60 million, exclusive of VAT, payable as follows: 
 
2.3.2.1 on the effective date, Wescoal Mining will pay Wescoal Exploration R33,4 million; 
 
2.3.2.2 the balance of R26, 6 million shall be payable on or before the second anniversary of the 
effective date. 
 
2.3.3. Wescoal Exploration will declare a dividend from the proceeds of the sale. Proudafrique will 
utilise a portion of the funds received to acquire 14 285 714 Wescoal ordinary shares at an 
agreed issue price of 70 cents per Wescoal share. Trading in the above shares will be 
restricted for a two year period.   
 
2.3.4. Wescoal Mining undertakes to pay Proudafrique a royalty fee of R5 per ton of saleable coal 
mined at Elandspruit or any other resource acquired utilizing the proceeds of the sale of the 
Vlaklaagte mining right. 
 
2.3.5. Should Wescoal Mining not utilize the proceeds of the Vlaklaagte disposal to acquire any other 
right within two years of the effective date of the Vlaklaagte disposal, then Wescoal Mining 
shall pay Proudafrique R13,5 million in full and final settlement of its right to claim the royalty 
in 2.3.4 above. 
 
2.3.6. Wescoal Mining and Wescoal Exploration gave each other warranties and indemnities that are 
customary in transactions of this nature. 

2.3.7. The Vlaklaagte acquisition is a related party transaction in terms of the JSE's Listings 
Requirements. 

2.4. Conditions precedent to the Vlaklaagte acquisition 
 
2.4.1. The Vlaklaagte acquisition will be subject to the fulfilment of the following conditions precedent 
by not later than 31 July 2013:  
 
- a circular to the shareholders of Wescoal to the extent required by the JSE Limited ("JSE") 
and approval by the Takeover Regulation Panel ("TRP");  
- approval of the related party Vlaklaagte acquisition by the shareholders of Wescoal if and 
to the extent required by the JSE, TRP and Companies Act,2008; 
- the Vlaklaagte Mining Right being granted to Wescoal Mining in accordance with the 
Mineral and Petroleum Resources Development Act, 2002 ("MPRDA"); 
- Wescoal Mining concluding the Vlaklaagte disposal with Xstrata; 
- to the extent required, approval by the Competition Authorities; and 
- Ministerial consent for the section 11 application by Wescoal Mining. 
  
2.5 Financial effects 
 
 The Vlaklaagte acquisition and disposal are interconditional, therefore the financial effects have been 
combined, refer to paragraph 3.5 below. 
 
3. BACKGROUND INFORMATION ON THE VLAKLAAGTE DISPOSAL 
 
3.1. The Vlaklaagte Mining Right 
 
"The Vlaklaagte Mining Right" is the right to mine for coal in, on and under the Vlaklaagte Prospecting 
Area to be held by Wescoal Mining if and when its application for a mining right in terms of section 22 
of the MPDRA and made pursuant to the Vlaklaagte Prospecting Right has been granted by the 
Minister. 
 
3.2. Rationale for the Vlaklaagte disposal 
 
The disposal of the Vlaklaagte Mining Right is in line with Wescoal's stated goal of securing and 
retaining only high quality coal resources that can be mined by the opencast method to increase 
production and sustainability. 
 
The Vlaklaagte Mining Right is an underground resource that would require extensive capital 
expenditure to bring to full production which, in Wescoal's instance, would be prohibitive. As 
Vlaklaagte is contiguous to the Xstrata Tweefontein Complex, the most sensible economic model is for 
Xstrata to exploit the resource directly from its contiguous operations requiring minimal capital 
investment and infrastructure spend. 
 
3.3. Details of the Vlaklaagte disposal 
  
3.3.1. Wescoal Mining agreed to dispose of the Vlaklaagte Mining Right to Xstrata for R 81 120 000, 
exclusive of VAT. 
 
3.3.2. If by the seventh business day after the effective day ("closing date"), the Elandspruit 
acquisition has become effective, partial set-off shall be applied between the respective 
purchase prices of the two transactions, as further detailed in 4.3.2.

3.3.3. If by the closing date, the Elandspruit acquisition has not become effective, Xstrata shall pay 
the purchase price for the Vlaklaagte Mining Right to Wescoal Mining in cash on the closing 
date. 
 
3.3.4. During the period from the signature date to the closing date, Wescoal Mining shall not 
dispose of or encumber the Vlaklaagte Mining Right, shall keep it in good standing and Xstrata 
shall be entitled to commence drilling boreholes on the Vlaklaagte Mining Area for future 
mining purposes. 
 
3.3.5. Wescoal Mining and Xstrata gave each other warranties and indemnities that are customary in 
transactions of this nature. 
 
3.4. Conditions precedent to the Vlaklaagte disposal 
 
3.4.1. The Vlaklaagte disposal will be subject to the fulfilment, within sixty business days from 
signature, of the condition precedent in the Elandspruit acquisition agreement, namely that 
Xstrata has obtained a written waiver by ARM Coal (Pty) Limited ("ARM Coal") in favour of 
Wescoal Mining and Xstrata, of ARM Coal's right of first refusal in relation to the sale by 
Xstrata of the Elandspruit Mining Right.  
 
3.4.2. The Vlaklaagte disposal will be subject to the fulfilment of the following further conditions 
precedent by not later than 30 November 2012:  
 
- a circular to the shareholders of Wescoal and approval thereof by the JSE, to the extent 
required in terms of the JSE Listings Requirements ; 
- approval of the disposal by the shareholders of Wescoal to the extent required by the JSE 
Listings Requirements and by Wescoal in its capacity as sole shareholder of Wescoal 
Mining, pursuant to section 112 of the Companies Act, 2008; 
 
3.4.3. The Vlaklaagte disposal will furthermore be subject to the fulfilment of, inter alia, the following 
conditions precedent by not later than 14 December 2012: 
 
- the Vlaklaagte Mining Right being granted to Wescoal Mining  in accordance with the 
MPRDA; 
- to the extent required, approval of the implementation of the disposal by the Competition 
Authorities; 
- Wescoal Mining obtaining Ministerial consent for the transfer of the Vlaklaagte Mining 
Right to Xstrata in terms of section 11 of the MPRDA. 
 
3.5 Financial effects  
 
The pro forma financial effects are the responsibility of the company's directors and have been 
prepared for the purposes of illustrating how the Vlaklaagte disposal and Vlaklaagte 
acquisition would have affected the relevant financial results and position of Wescoal for the 
historical financial period indicated and on a pro forma basis. Accordingly, such effects do not 
necessarily represent a true reflection of the financial effects of the Vlaklaagte disposal and 
Vlaklaagte acquisition on Wescoal's current and future earnings. 

The table below sets out the unaudited pro forma financial effects of the Vlaklaagte disposal 
and Vlaklaagte acquisition on the earnings, headline earnings, net asset value and tangible net 
asset value per Wescoal share:
                                                         Before
                                                    (cents) (1)   After (cents) (2) (3) (4)   Change (%)   
Earnings per share (cents)                                 13.1                        32.9      151.15%   
Headline earnings per share (cents)                        11.4                        10.4      (8.77)%   
Net asset value per share (cents)                         99.45                      124.86       25.55%   
Tangible net asset value per share (cents)                56.05                       85.17       51.95%   
Weighted average number of shares in                    157 931                     172 217                
issue (000)                                                                                               
Total shares in issue (000)                            157 931                     172 217                

Notes: 
 
1) The "Before" column has been extracted without adjustment from the published reviewed 
results for the year ended 31 March 2012. 
2) The earnings and headline earnings per share were calculated as if the Vlaklaagte 
acquisition and Vlaklaagte disposal took place on 1 April 2011. 
3) The net asset value and net tangible asset value per share were calculated as if the 
Vlaklaagte acquisition and Vlaklaagte disposal took place on 31 March 2012. 
4) The "After" column has been adjusted for the following: 
a) profit on the Vlaklaagte disposal for an amount of R18,2 million by Wescoal Mining; 
b) profit on the Vlaklaagte acquisition of R59,8 million by Wescoal Exploration; 
c) net dividend payment of R15 million to the shareholders of Wescoal Exploration; 
d) royalties of R13,5 million to be paid by Wescoal Mining to Proudafrique; 
e) the issue of 14 285 714 Wescoal ordinary shares at 70 cents per share to 
Proudafrique.  
  
4. BACKGROUND INFORMATION ON THE ELANDSPRUIT ACQUISITION 
 
4.1. The Elandspruit Mining Right 
  
"The Elandspruit Mining Area" comprises mineral area no. 7 of mineral area no. 5 situated on portion 
29, mineral area no. 8 of mineral area no. 6 situated on portions 30, 32, 33, 34, 35 and 40, all of the 
farm Elandspruit 291 J.S. situated in the Administrative District of Middelburg, Mpumalanga Region, 
Mpumalanga Province, measuring 538,3149 hectares. The Elandspruit Mining Area covers an 
undeveloped export quality thermal coal deposit with a measured resource of approximately 30, 5 
million tons and is situated 9 km from Middelburg contiguous to the Shanduka Graspan colliery.  
 
"The Elandspruit Mining Right" is the right granted to Duiker Mining (Pty) Limited ("Duiker"), a wholly-
owned subsidiary of Xstrata, to mine for coal in, on and under the Elandspruit Mining Area. 
Implementation of the transfer of this right from Duiker to Xstrata is being finalised. 
  
4.2. Rationale for the Elandspruit acquisition 
 
The acquisition of the Elandspruit asset, an opencast resource, is in line with Wescoal's stated goal of 
securing high quality coal resources that can be mined by the opencast method to increase production 
and sustainability.  
 
The farm Elandspruit 291JS has an existing mining right with a resource of 30,5 million tons and when 
mining commences will be a further step to the Wescoal objective for its various operations to produce 
4 million tons of coal per annum. Furthermore, the sustainability of Wescoal's mining operations will 
increase by 12 to 15 years and Wescoal will strive to commence mining by late 2013 or early 2014.
4.3. Details of the Elandspruit acquisition 
  
4.3.1. Wescoal Mining agreed to purchase the Elandspruit Mining Right from Xstrata for R93 810 
000, exclusive of VAT. 
 
4.3.2. If the effective date of this acquisition is 31 July 2013, and the Vlaklaagte disposal has become 
effective by the closing date, set-off shall be applied between the respective purchase prices 
of the two transactions and as the sale price of the Vlaklaagte disposal is less than the 
purchase price of the Elandspruit acquisition, Wescoal Mining shall pay the balance to Xstrata 
in cash. 
 
4.3.3. If the effective date is not 31 July 2013 but a later date, Wescoal Mining shall pay the 
purchase price to Xstrata in cash on the closing date. 
 
4.3.4. During the period from the signature date of the agreement to the closing date thereof, Xstrata 
shall not dispose of or encumber the Elandspruit Mining Right, shall keep it in good standing 
and Wescoal Mining shall be entitled to commence drilling boreholes on the Elandspruit 
Mining Area for future mining purposes. 
 
4.3.5. Wescoal Mining and Xstrata gave each other warranties and indemnities that are customary in 
transactions of this nature. 
 
4.4. Conditions precedent to the Elandspruit acquisition 
  
4.4.1. The Elandspruit acquisition will further be subject to the fulfilment of the condition precedent by 
not later than 60 business days after the signature date, that Xstrata has obtained a written 
waiver by ARM Coal of its right of first refusal in relation to the sale by Xstrata to Wescoal 
Mining of the Elandspruit Mining Right. 
 
4.4.2. The Elandspruit acquisition will further be subject to the fulfilment of the condition precedent by 
no later than 28 September 2012, that Wescoal Mining has provided Xstrata with written 
confirmation that it is satisfied with the geological data provided by Xstrata relating to the 
Elandspruit Mining Area. 
 
4.4.3. The Elandspruit acquisition will further be subject to the fulfilment of the following conditions 
precedent by not later than 30 November 2012:  
 
- a circular to the shareholders of Wescoal and approval thereof by the JSE, to the extent 
required by the JSE Listings Requirements; 
- approval of the acquisition by the shareholders of Wescoal if and to the extent required by 
the JSE Listings Requirements. 
 
4.4.4. The Elandspruit acquisition will further be subject to the fulfilment of the following conditions 
precedent by not later than 14 December 2012: 
 
- execution of a notarial deed of cession between Duiker and Xstrata to give effect to the 
transfer by Duiker to Xstrata of the Elandspruit Mining Right and such cession being 
lodged for registration with the Mining Titles Office; 
- to the extent required, approval of the implementation of the transaction by the 
Competition Authorities;
 
- Xstrata obtaining Ministerial consent for the transfer of the Elandspruit Mining Right to 
Wescoal Mining in terms of section 11 of the MPRDA. 
 
4.4.5. The Elandspruit acquisition will further be subject to, inter alia, the fulfilment of the condition 
precedent by no later than 30 July 2013, that Xstrata has provided Wescoal Mining with 
satisfactory evidence that both: 
- the objection filed to the application for the water use license lodged by Xstrata in respect 
of the Elandspruit Mining Right; and 
- the appeal filed by Bezuidenhoutshoek Farm and others, in terms of section 96 of the 
MPRDA, against the approval by the DMR of Duiker's Environmental Management 
Programme in respect of the Elandspruit Mining Right, 
have been withdrawn or fully and finally dismissed. 
  
4.5 Financial effects  
 
The pro forma financial effects are the responsibility of the company's directors and have been 
prepared for the purposes of illustrating how the Elandspruit acquisition would have affected 
the relevant financial results and position of Wescoal for the historical financial period 
indicated and on a pro forma basis. Accordingly, such effects do not necessarily represent a 
true reflection of the financial effects of the Elandspruit acquisition on Wescoal's current and 
future earnings. 

The table below sets out the unaudited pro forma financial effects of the Elandspruit 
acquisition on the earnings, headline earnings, net asset value and tangible net asset value 
per Wescoal share:
                                                      Before              After       Change (%)
                                                   (cents)(1)     (cents)(2)(3)
                                                                            (4)

Earnings per share (cents)                              13.1              13.1                -
Headline earnings per share (cents)                     11.4              11.4                -
Net asset value per share (cents)                      99.45             99.45                -
Tangible net asset value per share (cents)             56.05            (3.35)        (105.97)%
Weighted average number of shares in issue (000)    157 931           157 931
Total shares in issue (000)                         157 931           157 931

Notes: 
1) The "Before" column has been extracted without adjustment from the published reviewed 
results for the year ended 31 March 2012. 
2) The earnings and headline earnings per share were calculated as if the Elandspruit 
acquisition took place on 1 April 2011. 
3) The net asset value and net tangible asset value per share were calculated as if the 
Elandspruit acquisition took place on 31 March 2012. 
4) The "After" column has been adjusted for the increase in intangible assets relating to the 
Elandspruit acquisition for an amount of R93,8 million and the decrease in cash of R93,8 
million.

5. BACKGROUND INFORMATION ON THE DUIKER PROPERTIES ACQUISITION 
 
5.1. The properties 
 
The three properties to be acquired from Xstrata ("the Duiker Properties") are as follows: 
- Portion 30/29 of Farm Elandspruit 291 JS District Middelburg, Mpumalanga in extent 
85.6532 Ha; 
- Portion 36/31 of Farm Elandspruit 291 JS District Middelburg, Mpumalanga in extent 
42.8266 Ha; 
- Portion 40/23 of Farm Elandspruit 291 JS District Middelburg, Mpumalanga in extent 
41.0188 Ha. 
 
The Duiker Properties are still registered in the name of Duiker, but Xstrata has previously acquired 
the right of ownership of the Duiker Properties from Duiker. The Duiker Properties are in the process of 
being transferred to Xstrata. 
 
5.2. Rationale for the Duiker Properties acquisition 
 
The Duiker properties comprise the bulk of the surface rights required to conduct mining operations on 
the Elandspruit resource. Going forward, Wescoal Mining intends acquiring all properties affected by 
Wescoal mining activity so as not to have third party influence on operations. 
 
5.3. Details of the Duiker Properties acquisition 
 
5.3.1. Wescoal Mining agreed to purchase the Duiker Properties from Xstrata for R3.4 million, 
exclusive of VAT. 
 
5.3.2. The effective date will be the date upon which all the conditions precedent have been fulfilled. 
 
5.3.3. Wescoal Mining and Xstrata gave each other warranties and indemnities that are customary in 
transactions of this nature. 
  
5.4. Conditions precedent to the Duiker Properties acquisition 
 
5.4.1. The Duiker Properties acquisition will be subject to the fulfilment of the conditions precedent 
by not later than 31 July 2013, that the registration of transfer of the Duiker Properties into the 
name of Xstrata has been completed and that the Elandspruit acquisition has become 
operative. 
 
5.4.2. Should the Elandspruit acquisition become operative, but the registration of transfer of the 
Duiker Properties has not yet been completed, Duiker shall be the seller of the Duiker 
Properties. 
  
5.5 Financial effects 
 
The pro forma financial effect of the Duiker Properties acquisition on the earnings, headline earnings, 
net assets and net tangible assets per share of Wescoal are below 3% and are considered 
insignificant.
6. CATEGORISATION  
 
6.1 The Vlaklaagte acquisition is a related party transaction as defined by the JSE Listings Requirements and 
requires a circular to be issued to shareholders. 
 
6.2 The Vlaklaagte disposal is a category 1 transaction as defined by the JSE Listings Requirements and 
requires a circular to be issued to shareholders. 
 
6.3 The Elandspruit acquisition is a category 1 transaction as defined by the JSE Listings Requirements 
and requires a circular to be issued to shareholders. 
 
6.4 The Duiker Properties acquisition is a category 2 transaction as defined by the JSE Listings 
Requirements. 
 
7. COMMUNICATION  
 
Shareholders will be notified once the above documents are posted. 
 
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT   
 
Shareholders are referred to the cautionary announcement dated 5 July 2012 and all the cautionary 
announcements referred to therein, in light of the announcement in paragraphs 1-7 above, 
shareholders are advised that caution is no longer required to be exercised by shareholders when 
dealing in the company's securities.  

9. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT RELATING TO PROPOSED ACQUISITION 
OF PEGASUS 
 
Shareholders are referred to the detailed announcement dated 28 November 2011 and the cautionary 
announcement dated 5 July 2012, relating to the proposed acquisition by Wescoal of 51% of the 
issued ordinary share capital of EZIM from HSTI 17 Proprietary Limited ("HSTI") in respect of the 
Pegasus project. The Pegasus Project is an undeveloped export quality thermal coal deposit with a 
measured resource of approximately 15 million tons near Witbank. 

Wescoal has decided to terminate discussions regarding Pegasus after it became apparent that there 
remain too many uncertainties regarding the potential acquisition. The board feels it is prudent to 
withdraw from discussions until such time that the prospects of concluding the transaction improve.  
Shareholders are advised that caution is no longer required to be exercised by shareholders when 
dealing in the company's securities.  
 
Corporate adviser & Sponsor to Wescoal Legal Advisers to Wescoal 
Exchange Sponsors KWA Attorneys 
 
Legal Advisers to Xstrata 
Baker & McKenzie 
  
Johannesburg 
30 July 2012


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