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VIL - Village - Acquisition by Village of a controlling intersets in Lesego
Platinum
Village Main Reef Gold Mining Company (1934) Limited
("Village")
(Incorporated in the Republic of South Africa)
(Registration Number: 1934/005703/06)
JSE Code: VIL ISIN: ZAE000007720
ACQUSITION BY VILLAGE OF A CONTROLLING INTEREST IN LESEGO PLATINUM LIMITED
("Lesego") AND THE PHOSIRI PLATINUM PROJECT ("Phosiri" or "the Project") AND
RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the SENS announcement issued on the 29th January 2010,
shareholders are advised that Village has concluded further binding
agreements with certain additional shareholders in Lesego and certain
affiliated entities in the Project. The binding agreements represent an
added attributable inferred resource of 3.8m ounces of platinum group
metals (3PGMs plus gold) for an additional purchase consideration of
R95,350,689 to be settled through the issue of an additional 47,675,344
ordinary shares in Village at a share price of 200 South African cents per
shares.
In total, Village has concluded binding agreements to acquire, subject to
the fulfilment of certain conditions precedent, a controlling interest in
Lesego and certain affiliated entities that together own 76.6% of the
Project`s inferred resource for a total purchase consideration of
R506,832,031 ("the Proposed Transaction"). The purchase consideration will
be settled through the issue of 253,416,015 ordinary shares in Village at a
share price of 200 South African cents per share.
2. RATIONALE FOR THE ACQUISITION
The Proposed Transaction :
- will deliver operational control to Village of a potentially world
class platinum asset at an attractive valuation relative to its
platinum peers. The Proposed Transaction will increase Village`s
attributable inferred resource to 21.3 million ounces of platinum
group metals (3PGMs plus gold);
- will enable Village to leverage the benefits of R142m of existing
capital already raised by Lesego from the Industrial Development
Corporation of South Africa ("IDC"), to provide for the full funding
requirements of the Project to the bankable feasibility study stage
("BFS"); and
- is in line with Village`s strategy to acquire and develop a portfolio
of precious metals mining assets.
3. OVERVIEW OF LESEGO AND THE PROJECT
Situated approximately 300km north east of Johannesburg between the Anooraq
Bokoni mine (ex Anglo Platinum Atok mine) and the Lonmin Limpopo mine, the
Project has been developed by Lesego since 2005.
Phosiri is a potential world class platinum project with a total inferred
resource of 27.8m platinum group metal ounces (3PGMs plus gold) at a high
grade averaging 6.43g/t 3PGMs plus gold. The Merensky and UG2 reefs which
comprise the resource are relatively wide at 1.47 meters and 1.18 meters
respectively, with reasonably low dip of less than 12 degrees. The
combination of ounces, grades and reef widths present a potentially
lucrative next generation mining operation.
In February 2010, Lesego commenced work on the BFS for the Project which is
expected to be completed in three years, probably by the end of 2012.
An independent Competent Persons Report ("CPR") compliant with the South
African Code for Reporting of Exploration Results, Mineral Resources and
Mineral Reserves ("SAMREC") is currently being updated by Venmyn Rand (Pty)
Limited ("Venmyn") and is expected to be completed by the middle of March
2010. The original SAMREC-compliant CPR prepared by Andy Clay on behalf of
Venmyn dated 26 March 2008 is available for review on www.lesego.com
together with additional information regarding the Project and Lesego.
4. TERMS OF THE PROPOSED TRANSACTION
In terms of the Proposed Transaction Village will, with effect from the
date of the fulfilment of the various conditions precedent, acquire the
direct and indirect interests in Lesego of the following shareholders of
Lesego, Umbono Capital Partners (Pty) Ltd ("Umbono"), Minex Projects (Pty)
Ltd ("Minex"), Sun Platinum Holdings Ltd ("Sun"), and Jay and Jayendra
(Pty) Ltd ("J&J"), who collectively own 72% of Lesego. In addition, Village
will acquire the entire share capital of Nebavest 69 (Pty) Ltd, that owns
an effective 55% interest in the Eerste Regt prospecting right from Sekoko
Resources (Pty) Ltd, the Ncholo Trust, Mr Thulo Mogotsi, Cream Magenta 42
(Pty) Ltd, Nasidima Investment Holdings (Pty) Ltd and Umbono.
Post implementation of the Proposed Transaction, Village will directly
- hold 72% of Lesogo, with the balance being held by the IDC; and
- hold 55% of Sweet Sensation (Pty) Ltd ("Sweet Sensation"), which holds
the Eerste Regt prospecting right.
With Lesego`s 45% holding in Sweet Sensation, the company will effectively
hold 87.4% of the Eerste Regt Prospecting Right.
If the Proposed Transaction is concluded, To The Point Growth Specialists
(Pty) Ltd, the current majority shareholder of Village, with 41.7% of the
Company, prior to the Proposed Transaction, will become entitled to a
success fee for the deal initiation and advisory work on the transaction,
equal to 1% of the total value of the Proposed Transaction. The success fee
will be paid in ordinary shares in Village, at a share price of 200 South
African cents per share.
5. CONDITIONS PRECEDENT TO THE PROPOSED TRANSACTION
The Proposed Transaction is subject to the fulfilment of, inter alia, the
following conditions precedent:
- Village having obtained all regulatory approvals, including, but not
limited to, the approval of the Securities and Regulation Panel
("SRP") and the JSE Limited ("JSE"), necessary to give effect to the
Proposed Transaction;
- the shareholders of Village passing in a general meeting such
resolutions as may be necessary for the Proposed Transaction to
proceed; and
- Village obtaining its shareholder approval and waiver of the
requirement for the various sellers to make a mandatory offer to the
minorities of Village in terms of the Securities Regulation Code on
Take-overs and Mergers ("the SRP Code") in a general meeting.
6. RELATED PARTY TRANSACTION
The Umbono group currently holds approximately 13% of the issued shares of
Village. Accordingly, the Proposed Transaction will be categorised as a
related party transaction in terms of the Listings Requirements of the JSE
("JSE Listings Requirements"). The board of Village has appointed KPMG
Services (Pty) Ltd to provide the board with a fairness opinion regarding
the Proposed Transaction. The fairness opinion and the statement of the
board regarding the Proposed Transaction will be included in the circular
to shareholders referred to in 9.
7. CHANGE OF CONTROL AND WAIVER OF MANDATORY OFFER
Implementation of the Proposed Transaction will result in the various
sellers acquiring more than 35% of the issued shares of Village and,
accordingly, an affected transaction will have occurred. At the general
meeting to approve the Proposed Transaction, Village shareholders shall be
asked to waive the requirement of a mandatory offer that would otherwise
apply in terms of Rule 8 of the SRP Code. An application will then be
lodged with the SRP seeking dispensation in terms of Rule 8.7 of the SRP
Code, which deals with the obligation to make a mandatory offer.
8. PRO-FORMA FINANCIAL EFFECTS
The financial effects of the Proposed Transaction are in the process of
being finalised and a further announcement will be published in due course.
9. DOCUMENTATION
A circular containing full details of the Proposed Transaction and
incorporating a notice of general meeting of shareholders and revised
listing particulars will be posted to Village`s shareholders in due course
10. RENEWAL OF CAUTIONARY STATEMENT
As the pro forma financial effects of the Proposed Transaction have not yet
been communicated to shareholders, shareholders are advised to continue
exercising caution in trading their shares until the publication of such
information.
Johannesburg
11 March 2010
Investment Bank and Sponsor
Investec Bank Limited
Legal advisor to Village
Werksmans Incorporating Jan S. De Villiers
Contacts:
Director, Village Main Reef Gold Company,
Bernard Swanepoel, bernard@2tp.co.za; 0833039922
Vestor, Media and Investor Relations
Louise Brugman, louise@vestor.co.za; 083 504 1186
Date: 11/03/2010 09:22:01 Supplied by www.sharenet.co.za
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