DELTA EMD LIMITED - Settlement of the Pappas Quarry waste disposal facilityRelease Date: 17/11/2015 15:45:00 Code(s): DTA
Delta EMD Limited
(Incorporated in the Republic of South Africa)
Registration number 1919/006020/06
Share code: DTA
("Delta" or "the Group")
SETTLEMENT OF THE PAPPAS QUARRY WASTE DISPOSAL FACILITY
Shareholders are referred to the Group?s statement of unaudited
results for the six months ended 27 June 2015 released on the Stock
Exchange News Service of the JSE Limited on 14 July 2015, and to the
disclosure therein related to an obligation arising under an agreement
for the disposal of plant residue at a landfill site.
Shareholders are advised that the referred obligation arises under a
1985 Supply Agreement between Delta E.M.D. (Proprietary) Limited
("Delta EMD") (a subsidiary of Delta) and Manganese Metal Company
("MMC"), and a 2003 Addendum thereto (the "MMC Agreement").
The MMC Agreement provided for the disposal of Delta EMD?s plant
residue at Pappas Quarry, a waste disposal facility developed,
maintained and operated by MMC, and located at ERF 1517, West Acres,
Extension 12, Nelspruit ("the Pappas Quarry WDF").
The MMC Agreement obligated Delta EMD to pay to MMC a portion of the
annual operating costs, and eventual rehabilitation and restoration
costs, incurred by MMC in connection with the Pappas Quarry WDF.
Delta EMD?s portion of such costs is determined with reference to the
volumes of residue disposed by each of Delta EMD and MMC, and
As detailed immediately below Delta has: i) provided annually for an
estimated portion of the eventual costs to be incurred by MMC
rehabilitating and restoring the site (as estimated by Golder
Associates annually), and ii) expensed annually the amounts paid each
year to MMC under the MMC Agreement toward annual operating costs:
Year Closure Provision (R) Annual Expense (R)
2009 7 228 038 1 914 268
2010 7 981 234 1 126 090
2011 7 261 800 1 448 555
2012 8 108 079 1 601 243
2013 7 293 880 1 719 131
2014 7 304 133 1 068 305
With the winding up of the Group?s business, the Board determined to
provide as at 27 December 2014 for both: i) a portion of the costs
MMC was likely to incur in connection with the rehabilitation and
restoration of the Pappas Quarry WDF (R7 304 133), and ii) a portion
of the net present value of the future holding costs MMC was likely
to incur following rehabilitation and restoration (R15 000 000). The
provisions were determined with reference to reports prepared by
During June 2014 Delta EMD initiated discussions with MMC to explore
the payment of a lump sum in settlement of any remaining obligations
under the MMC Agreement. On the basis of the historical reports
prepared by Golder Associates and provided to Delta EMD by MMC, Delta
EMD offered to pay MMC R22 500 000 in full settlement of any
remaining contractual obligation under the MMC Agreement.
By letter dated 1 September 2015 MMC provided Delta EMD additional
due diligence information suggesting that the Pappas Quarry WDF
closure and holding costs most likely would exceed earlier estimates.
The Group has undertaken a detailed review of the additional due
diligence information provided by MMC and has engaged with MMC to
identify opportunities to resolve any remaining obligations or
liabilities relating to the Pappas Quarry WDF.
Delta EMD and MMC have reached agreement pursuant to which: i) Delta
EMD will pay into escrow R37.5 million; ii) MMC will be permitted to
withdraw from the escrow for reimbursement of any capital
expenditures made by MMC relating to the remediation, rehabilitation
and/or closure of the Pappas Quarry WDF; and, iii) MMC will
release, and will defend, indemnify and hold harmless, the Group from
and against any and all obligations or liabilities the Group might
now or hereafter have with respect to the Pappas Quarry WDF.
17 November 2015
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Date: 17/11/2015 03:45:00 Supplied by www.sharenet.co.za
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