eXtract GROUP LIMITED - Conclusion of binding term sheet with Tharisa Minerals and further cautionary

Conclusion of binding term sheet with Tharisa Minerals and further cautionary

EXTRACT GROUP LIMITED
(previously Eqstra Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/011672/06)
JSE share code: EXG       ISIN: ZAE000223202
(“eXtract” or “the Company”)


CONCLUSION OF BINDING TERM SHEET WITH THARISA MINERALS AND FURTHER CAUTIONARY


1.     INTRODUCTION

       Shareholders are referred to the joint announcement released on SENS by eXtract and enX Group Limited on
       18 April 2017, wherein eXtract shareholders were, inter alia, advised that Tharisa Minerals Proprietary
       Limited (“Tharisa”) had notified eXtract of its intention to pursue an owner-operator model. Shareholders
       are also referred to the announcement released on SENS by Tharisa plc on 11 May 2017.

       Shareholders are advised that MCC Contracts Proprietary Limited (“MCC”) (a wholly-owned subsidiary of
       eXtract) has concluded a binding term sheet with Tharisa in terms of which Tharisa will acquire MCC’s
       existing equipment, strategic components, site infrastructure and spare parts at the Tharisa Mine, 35km east of
       Rustenburg (the “Tharisa mine”) together with additional excess assets not situated at the Tharisa mine (the
       “Tharisa assets”) as a going concern for an aggregate consideration of R303 468 428 (exclusive of VAT) (the
       “Tharisa transaction”).

2.     RATIONALE

       The Tharisa transaction forms part of eXtract’s strategy to exit certain contract mining contracts and to
       dispose of all excess assets, as more fully detailed in the announcement released on SENS on 18 April 2017.
       The proceeds of the Tharisa transaction will be used to repay a portion of eXtract’s South African bank debt.

3.     SALIENT TERMS OF THE THARISA TRANSACTION

       The Tharisa transaction remains subject to the fulfilment of the following conditions precedent:

       -       to the extent necessary, approval by the South African Competition Authorities for the
               implementation of the Tharisa transaction is granted;
       -       eXtract obtains irrevocable undertakings from at least 35% of eXtract shareholders to vote in favour
               of the shareholder resolutions required to approve the transaction by 15 May 2017 and, subsequently,
               irrevocable undertakings from more than 50% of eXtract shareholders to vote in favour of the
               shareholder resolutions required to approve the transaction by 31 May 2017;
       -       all relevant shareholder approvals required in terms of the JSE Listings Requirements being obtained
               by eXtract;
       -       a substantive written agreement in respect of the Tharisa transaction being concluded between the
               parties;
       -       Tharisa approving the terms and conditions of the third-party service provider lease agreements,
               which will be assigned to Tharisa pursuant to the Tharisa transaction;
       -       Tharisa concluding new third party service agreements with certain of MCC’s service providers at the
               Tharisa mine; and
       -       Tharisa obtaining the requisite approvals from its bankers to implement the Tharisa transaction.

       Save as indicated above, the conditions precedent must be fulfilled or waived, as the case may be, by
       30 September 2017.

       The Tharisa assets will be disposed of by MCC with effect from the first business day after the above
       conditions precedent have been fulfilled or waived, as the case may be (the “effective date”). R250 million of
       the purchase consideration for the Tharisa assets will be paid to eXtract within 30 days of the fulfilment or
       waiver of the last of the Tharisa conditions to be fulfilled or waived (the “initial payment date”). The
       balance of the purchase consideration for the Tharisa assets will be paid to MCC in 6 equal instalments on the
       last working day of the six months after the initial payment date (less R24 163 032 relating to
       de-establishment costs and leave and severance pay deductions). The purchase consideration for the Tharisa
       transaction net of costs and deductions is R279 305 396.

       All MCC employees deployed at the Tharisa mine on the effective date will be transferred to and employed by
       Tharisa in accordance with section 197 of the Labour Relations Act, No. 66 of 1995 with effect from the first
       day of the month following the effective date.

       The existing mining works contract between Tharisa and MCC will automatically terminate on the effective
       date and the Tharisa assets located at the Tharisa mine will be delivered to Tharisa on the effective date.

4.     CATEGORISATION OF THE THARISA TRANSACTION

       The Tharisa transaction is categorised as a category 1 transaction in terms of the JSE Listings Requirements
       for eXtract and accordingly requires shareholder approval. The Tharisa transaction forms part of the excess
       asset disposal, which is classified as a category 1 transaction in terms of the JSE Listings Requirements. A
       circular detailing the terms of the excess asset disposal, including the Tharisa transaction, and incorporating a
       notice convening a general meeting of eXtract shareholders will be posted to eXtract shareholders in due
       course.

5.     FINANCIAL INFORMATION AND FURTHER CAUTIONARY

       Shareholders are advised that a further announcement setting out the financial information pertaining to the
       excess asset disposal, including the Tharisa transaction, will be released on SENS in due course.

       Shareholders are advised to continue to exercise caution when dealing in the securities of eXtract until such
       further announcements are made.

11 May 2017


Sponsor
Java Capital

Corporate advisor
BSM Black
Date: 11/05/2017 09:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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