CHROMETCO LIMITED - Financial effects and withdrawal of cautionary announcement

Financial effects and withdrawal of cautionary announcement

Chrometco Limited
(Incorporated in the Republic of South Africa)
(Registration number 2002/026265/06)
Share code: CMO ISIN: ZAE000070249
("Chrometco" or "the company")

FINANCIAL EFFECTS PERTAINING TO THE ACQUISITION OF GEOLOGICAL
DRILL DATA, DRILL CORE AND ABANDONMENT OF PROSPECTING RIGHT IN
FAVOUR OF CHROMETCO AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1. Introduction and terms

Shareholders are referred to the announcement released on SENS
on 13 August 2012 wherein Chrometco entered into a Sale
Agreement (“the Agreement”) with NKWE Platinum (South Africa)
Proprietary Limited and one of its subsidiaries (”NKWE”) and
Realm Resources Limited (“REALM”). NKWE and REALM (“the
Sellers”) have agreed to cancel a current farm-in agreement in
favour of selling mineral rights as well as historical drill
core and geological data to Chrometco (“the Acquisition”).


2. Financial effects
The unaudited pro-forma financial effects of the Acquisition,
based on the published audited group results of Chrometco
Limited “Chrometco” for the year-ended 29 February 2012 are
set out below. The unaudited pro-forma financial effects have
been prepared for illustrative purposes only to provide
information on how the Acquisition may have impacted on the
results and financial position of Chrometco. Preparation of
the unaudited pro-forma financial effects is the
responsibility of the directors. Due to their nature, the pro-
forma financial effects may not fairly present Chrometco`s
financial position after the Acquisition or the effect on
future earnings:

                            (1)           (2)(4)
                            Audited       Adjustments
                            financial     before the
                            information   Acquisition
                            29 February
                            2012
Earnings/(loss)
(cents per share)                 53.24        (17.95)

Headline earnings/(loss)
(cents per share)                (9.01)           2.18
Net asset value (cents
per share)                       93.61           (1.05)

Net tangible asset value
(cents per share)                12.47           (1.95)


Weighted average number    184 928 683      90 000 000
of shares in issue
Number of shares in
issue                      184 928 683      90 000 000


                                 (3)(5)
                                  After         Change%
                           Acquisitions

Earnings(cents per
share)                           35.29          (33.71)

Headline profit
(cents per share)               (6.84)            24.17

Net asset value (cents
per share)                       92.56           (0.79)

Net tangible asset
value (cents per share)          10.52          (15.63)

Number of shares in
issue                      274 928 683            10.81


Notes:

1. The “audited financial information” earnings and headline
earnings per share have been extracted without adjustment from
the audited, published financial statements of Chrometco. The
“audited financial information” net asset value and net
tangible asset value per share have been calculated from the
financial information presented in the published audited
financial results of Chrometco.

2. The “adjustments before the Acquisition” earnings and
headline earnings per share have been adjusted to take into
account the IFRS effect of issuing 90 million shares in lieu
of the acquisition of the identifiable net assets of NKWE
(geological data, drill core and PGM prospecting rights with
an independently determined combined fair value of R 18.7
million). The transaction has been accounted for as a business
combination in terms of IFRS 3 – Business Combinations. The
adjustments do not take into account the expected positive
financial effect that the geological data may have on the
current resource estimate of Chrometco’s chromite resource.
The adjustments take transaction costs of R1.5 million,
intangible asset related amortisation expenses of R623,333 as
well as a gain on bargain purchase of R700,000 into account.
The gain on bargain purchase arises due to the fact that the
fair value of the identifiable net assets acquired exceeds the
fair value of the purchase consideration transferred under the
transaction. These adjustments result in the “adjustments
before the Acquisition” financial information reflecting the
financial position of Chrometco as if the Acquisition had
taken place on 1 March 2011.

3. The earnings and headline earnings per share included in
the “after Acquisition” column have been adjusted for the
following:
a.the IFRS effect of issuing 90 million shares in lieu of the
acquisition of the identifiable net assets of NKWE (being the
geological data, drill core and PGM prospecting rights with an
independently determined combined fair value of R 18.7
million).
b.transaction costs of R1.5 million.
c.gain on bargain purchase of R700,000.
d.amortisation expense of R623,333 relating to the
amortisation charge for the year on the fair value of the
intangible assets acquired under the transaction.


4. The “adjustments before the Acquisition” net asset value
and net tangible asset value per share have been adjusted to
take the IFRS effect of issuing 90 million shares in lieu of
the acquisition of the identifiable net assets of NKWE
(geological data, drill core and PGM prospecting rights with
an independently determined combined fair value of R 18.7
million). The transaction has been accounted for as a business
combination in terms of IFRS 3 – Business Combinations. The
adjustments do not take into account the expected positive
financial effect that the geological data may have on the
current resource estimate of Chrometco’s chromite resource.
The adjustments take transaction costs of R1.5 million,
intangible asset related amortisation expenses of R623,333 as
well as a gain on bargain purchase of R700,000 into account.
The gain on bargain purchase arises due to the fact that the
fair value of the identifiable net assets acquired exceeds the
fair value of the purchase consideration transferred under the
transaction. These adjustments result in the “adjustments
before the Acquisition” financial information reflecting the
financial position of Chrometco as if the Acquisition had
taken place on 29 February 2012.

5. The net asset value and net tangible asset value per share
included in the “after Acquisition” column have been adjusted
for the following:
a.the IFRS effect of issuing 90 million shares in lieu of the
acquisition of the identifiable net assets of NKWE (being the
geological data, drill core and PGM prospecting rights with an
independently determined combined fair value of R 18.7
million).
b.transaction costs of R1.5 million.
c.gain on bargain purchase of R700,000.
d.amortisation expense of R623,333 relating to the
amortisation charge for the year on the fair value of the
intangible assets acquired under the transaction.

3. Withdrawal of cautionary announcement

Having regard to the disclosure of the financial effects
above, shareholders are advised that they no longer need to
exercise caution when dealing in the company’s securities.


24 August 2012

Designated Advisor
Sasfin Capital
(A division of Sasfin Bank Limited)

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