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Goldway Capital Investment Limited - Second Supplementary Bidder's Statement
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7
OF THE MARKET ABUSE REGULATION (596/2014/EU) AS THE SAME HAS BEEN RETAINED IN
UK LAW AS AMENDED BY THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI
2019/310). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
FOR IMMEDIATE RELEASE
Goldway Capital Investment Limited
(Incorporated in Hong Kong)
CR No. 3294426
Off-market takeover offer for all of the
ordinary shares in:
MC Mining Limited
Previously Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000MCM9
JSE share code: MCZASX/AIM code: MCM
14 March 2024
Goldway Capital Investment Limited - Second Supplementary Bidder's Statement
Goldway Capital Investment Limited (company registration number 3294426) (Goldway) refers to its
bidder's statement dated 2 February 2024 and first supplementary bidder's statement dated 15
February 2024 in relation to its off-market takeover offer for all of the ordinary shares in MC Mining
Limited ACN 008 905 388 (ASX: MCM) (MCM).
In accordance with section 647(3)(a)(ii) of the Corporations Act 2001 (Cth), a copy of Goldway's
second supplementary bidder's statement dated 14 March 2024 (Second Supplementary Bidder's
Statement) is enclosed.
A copy of the Second Supplementary Bidder's Statement has today been lodged with the Australian
Securities and Investments Commission and served on MCM
Second Supplementary Bidder's Statement
ACCEPT
Offer by
Goldway Capital Investment Limited
CR No. 3294426
to acquire all of your ordinary shares in
MC Mining Limited ACN 008 905 388
for
A$0.16 cash per MCM Share
TO ACCEPT THE OFFER YOU MUST
Complete and sign the Acceptance Form accompanying the Bidder's
Statement and return it to the address set out on the form before the
Offer closes.
This is an important document and requires your immediate attention.
If you are in any doubt about how to deal with this document, you should contact your legal, financial,
tax or other professional advisor immediately.
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Second Supplementary Bidder's Statement
1. Introduction
This document is the second supplementary bidder's statement (Second Supplementary
Bidder's Statement) to the bidder's statement dated and lodged with ASIC on 2 February
2024 (Original Bidder's Statement) and to the first supplementary bidder's statement dated
and lodged with ASIC on 15 February 2024 (First Supplementary Bidder's Statement),
issued by Goldway Capital Investment Limited (company registration number 3294426)
(Goldway) in relation to its off-market takeover bid for all of the ordinary shares in MC Mining
Limited ACN 008 905 388 (MCM).
This Second Supplementary Bidder's Statement is given pursuant to Division 4 of Part 6.5 of
the Corporations Act 2001 (Cth) (Corporations Act) in compliance with the requirements of
section 643 of the Corporations Act.
This Second Supplementary Bidder's Statement supplements and should be read together
with the Original Bidder's Statement and the First Supplementary Bidder's Statement. Unless
the context otherwise requires, terms defined in this Second Supplementary Bidder's
Statement have the same meaning as in the Original Bidder's Statement.
This Second Supplementary Bidder's Statement is dated 14 March 2024 and was lodged with
ASIC and given to ASX on that date. Neither ASIC, nor the ASX, nor any of their respective
officers takes any responsibility for the content of this Second Supplementary Bidder's
Statement.
This is an important document and requires your immediate attention.
If you are in any doubt about how to deal with this document, you should contact
your legal, financial, tax or other professional advisor immediately.
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2. Observations on the Target's Statement
On 4 March 2024, MCM published its target's statement in response to Goldway's bid for
MCM (Target's Statement). Goldway would like to make some observations about the
Target's Statement. Goldway expresses our overall disappointment that the MCM
Independent Board Committee (IBC) has decided not to recommend that MCM Shareholders
accept Goldway's Offer. Goldway believes that the Offer represents an attractive, certain exit
price, which MCM Shareholders should consider against several key points that call into
question the Target's Statement view on the value of MCM.
The IBC has made statements that "IBC believes that the Bidder values the Target at
substantially more than the current A$0.16 Offer Price". The IBC is incorrect.
Breach of Corporations Act
As an initial key observation, Goldway wishes to highlight that the Target's Statement did
not include the independent expert report (IER). Whilst the IBC has made a
recommendation of DO NOT ACCEPT the Offer, MCM Shareholders currently do not
have the benefit of an independent assessment of the Offer. Given that Goldway's voting
power in MCM is more than 30%, the Corporations Act 2001 (Cth) (Act) mandates that an
independent expert report must accompany the Target's Statement. MCM has breached the
Act by failing to include the IER within the statutory timeframe. As this is a strict liability
provision, MCM may be liable for a penalty. Further details are set out below in section 5.
Goldway is of the view that the delay in the IER, in breach of the Corporations Act, materially
prejudices the Offer and the ability of MCM Shareholders (who have not yet accepted the
Offer) to assess the Offer with the benefit of an IER.
Responses to specific statements in the Target's Statement
To assist MCM Shareholders in deciding whether to accept the Offer, Goldway wishes to
outline the further points set out below in deciding whether to accept the Offer.
Reasons given by the Goldway response and additional reasons why
Independent Board Committee you should ACCEPT the Offer
(IBC) to not accept the Offer
The Offer Price does not take Due to its underperformance, the Vele Aluwani
cognisance of the significant value Colliery (Vele) has been under care and
attributable to the Target's assets maintenance since January 2024. It came to
… the recently recommissioned Goldway's attention that the Target's Statement only
Vele Aluwani Colliery has semi-soft referred to Vele downscaling operations while it
coking and thermal Coal Reserves progresses a production optimisation strategy which
of over 324 million tonnes (in situ) is inconsistent with the current status of Vele.
Downscaling refers to reduced operations, which is
wholly inconsistent and misleading in the context of
zero production operations when a mine is under
care and maintenance. There has been no disclosure
of the closure and on-going care and maintenance
costs of Vele being under care and maintenance and
this represents material misinformation or materially
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Reasons given by the Goldway response and additional reasons why
Independent Board Committee you should ACCEPT the Offer
(IBC) to not accept the Offer
incomplete information in the market which is
compromising proper price discovery.
Vele has operated for only 16 months after the first
opencast coal was realised in September 2022. As
highlighted by MCM's Target Statement, the API4
coal price was around US$350/t at the time it was
recommissioned and has failed to remain viable.
The Offer Price does not take The Uitkomst Colliery (Uitkomst) has been unable
cognisance of the significant value to consistently produce positive cashflow for
attributable to the Target's assets MCM. When cashflow positive, the cash generated
… the cash generative Uitkomst from Uitkomst is immaterial and insufficient to cover
Colliery has a 15-year LOM and the the administrative and corporate costs of MCM.
recently completed Operation
MCM Shareholders should be aware that despite the
Phenduka optimisation initiative
optimistic outlook of the IBC, an investment in MCM
increased monthly ROM coal
remains subject to significant risks.
production from an average of
42,000t to approximately 47,000t as By ACCEPTING the Offer, MCM Shareholders can
well as significantly improving the realise certain cash value and avoid inherent risks
colliery's cost profile and uncertainties in holding shares in a listed
company, as well as company specific risks.
Unfortunately, MCM has breached the Act by failing
to include the IER within the statutory timeframe.
The Offer Price is opportunistically The Makhado Project has been at Definitive
timed to deprive Target Feasibility Study (DFS) status and "shovel ready"
Shareholders of future potential for over a decade and has never produced any
value - The Offer takes advantage coal. As highlighted in the Bidder's Statement, MCM
of the completion of the updated has raised approximately US$500m in debt and
Life of Mine plan for Makhado equity since 2010 and has failed to advance this
asset past DFS stage. In comparison to the DFS
announced in June 2013, the net present value
(NPV) and production rate of Makhado has
decreased significantly. The 2013 feasibility had a
12.6Mtpa Run of Mine (ROM) and the latest iteration
is 4Mtpa. The NPV in 2013 was R6.79billion
(US$697m), applying a discount rate of 8%. In
comparison, the most recent DFS states a NPV of
R6.8bn (US$361m) at a 6% discount rate and
R4.0bn (US$212m) at a 10% discount rate. 1 Applying
1 Source: Public announcements made by MCM on 19 June 2013 (https://www.mcmining.co.za/investors-and-
media/announcements/2013) and 30 June 2023 (https://www.mcmining.co.za/investors-and-media/announcements/2023).
Page 4
Reasons given by the Goldway response and additional reasons why
Independent Board Committee you should ACCEPT the Offer
(IBC) to not accept the Offer
the same discount rate, the NPV of the Makhado
Project has decreased significantly since June 2013.
The Offer Price is opportunistically The coal industry is producing at strong margins
timed to deprive Target and MCM's asset are not competitive from a cash
Shareholders of future potential cost perspective. Whilst the API4 thermal coal price
value - The Offer takes advantage has fallen from the peak of approximately US$400/t,
of the Target's short term financial the current price of approximately US$120/t is well
performance, and resulting share above the long-term average. Similarly, the Australia
price weakness premium coking coal price is trading at healthy levels
above US$300/t.2 The Qld Premium Hard Coking
Coal (PHCC) price has tripled from US$103/t on 1
January 2021.
The poor financial performance of MCM is the result
of:
(a) the high cost and sub-scale nature of MCM's
producing assets;
(a) persistent operational challenges in relation
to rail and logistics, as well as reliant access
to power;
(b) excessive administrative and corporate costs;
and
(c) on-going interest payments on increasing
debt position.
The Offer is not opportunistic. Goldway believes it
is in the best interests of MCM Shareholders to
privatise MCM.
Unfortunately, MCM has breached the Act by failing
to include the IER within the statutory timeframe.
The Offer Price is opportunistically If successful with its Offer, Goldway will be required
timed to deprive Target to inject considerable capital into MCM to remain
Shareholders of future potential solvent.
value - The IBC believes that the
In response to the statement regarding the Bidder's
Bidder values the Target at
current view on the valuation of the Target, since the
substantially more than the current
Initial NBIO Proposal dated 5 September 2023, the
A$0.16 Offer Price
following events have occurred in the past months:
(a) MCM's net debt position has significantly
increased from US$1m to US$6.7m by 31
December 2023;
2 Source: S&P Global.
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Reasons given by the Goldway response and additional reasons why
Independent Board Committee you should ACCEPT the Offer
(IBC) to not accept the Offer
(b) MCM issued an additional 8.2 million shares
to management; and
(c) MCM has put Vele under care and
maintenance in January 2024.
These factors and costs have had a significant
impact on the valuation of Target which is reflected in
the $0.16 Offer Price, which Goldway believes
represents an attractive, certain exit price in cash.
Unfortunately, MCM has breached the Act by failing
to include the IER within the statutory timeframe.
The Offer Price does not fairly There is no guarantee that the growth initiatives
value the Target - The Offer will be successful or result in a cashflow positive
appears to attribute little or no value position and profitability.
to the Target's exploration and
Since acquiring the Greater Soutpansberg region
development projects
(GSP) in 2012, the assets have remained dormant
and subject to on-going impairments by MCM. Like
the Makhado Project and Vele, the GSP is a
considerable distance from the nearest port and its
future viability is adversely impacted by persistent
power and rail issues.
MCM Shareholders should be aware that despite the
optimistic outlook of the IBC, an investment in MCM
remains subject to significant risks.
Unfortunately, MCM has breached the Act by failing
to include the IER within the statutory timeframe.
The IBC believes that the Target's The IBC are all long-term directors of MCM and
market capitalisation does not have never bought a share in YOUR company,
reflect the significant value of its despite their view that MCM is significantly
projects, particularly the Makhado undervalued. In contrast, the Bidder Parties have
steelmaking HCC project and the invested considerable capital in MCM. In September
three GSP project areas. … An 2022, MCM announced a $40m entitlement offer with
equity raise in the form of a rights approximately A$30.3m contributed by the Bidder
issue would only be dilutive to Parties. Since completion of the entitlement offer in
those shareholders who do not the December 2023 quarter, administration and
follow their rights. An equity corporate costs have totalled approximately
placement outside of permissible A$15m (US$9.8m).
ASX Listing Rules thresholds would
MCM's persistent cash burn and excessive
require shareholder approval.
spending continues to be funded by MCM
Shareholders.
Page 6
Reasons given by the Goldway response and additional reasons why
Independent Board Committee you should ACCEPT the Offer
(IBC) to not accept the Offer
You may consider that there is Goldway notes the:
potential for a superior proposal to
(a) non-binding indicative offer (NBIO) received
emerge by MCM from Vulcan Resources (Vulcan) as
announced by MCM on 11 March 2024; and
(b) the subsequent announcement from MCM on
12 March 2024 that Vulcan will not proceed
with a formal offer.
The Vulcan NBIO lasted 1 day.
Further details of Goldway's observations on the
Vulcan NBIO are set out below in section 3.
As at the date of this Second Supplementary Bidder's
Statement, Goldway's Offer is the only offer
capable of acceptance.
The Offer provides certainty of value in the form
of cash consideration for your MCM Shares.
3. Vulcan NBIO
Despite Vulcan advising that it will not proceed with a formal offer (as announced by MCM on
12 March 2024), Goldway wishes to make the following observations on the Vulcan NBIO:
(a) the NBIO was not capable of acceptance by MCM Shareholders;
(b) the NBIO was a non-binding proposal and there was no certainty that it would
result in a binding offer (which has subsequently been the case as announced
on 12 March 2024);
(c) the NBIO stated that Vulcan's proposal was subject to a number of customary
conditions, including completion of due diligence;
(d) the NBIO contained few details on what conditions would apply to Vulcan's
proposed offer so it would have been difficult for MCM Shareholders to assess
the likelihood of such conditions being satisfied in order for the proposed offer
to be successful (if it was made); and
(e) even if the proposal from Vulcan did result in a binding offer, there would be no
guarantee (i) of what the offer price would be, or (ii) that such offer would be
implemented.
Goldway wishes to highlight that any future NBIOs, that may be received by MCM, will not be
capable of acceptance until a formal offer has been made. In light of Vulcan not
proceeding with a formal offer, Goldway considers the likelihood of a superior
proposal emerging from a third party to be low.
Goldway's Offer is currently the only offer capable of acceptance.
Page 7
The Offer provides certainty of value in the form of cash consideration for your MCM
Shares. If Goldway's Offer closes or lapses and there is no formal offer from any other
bidder, MCM Shareholders will risk losing the opportunity to obtain value for their MCM
Shares.
4. Offer condition - No material adverse change
Goldway is investigating whether the no material adverse change condition (as set out in
Section 13.9(c) of the Original Bidder's Statement) (MAC Condition) is capable of being
satisfied in light of (i) Vele being under care and maintenance since January 2024 (which was
not disclosed to the market at the relevant time), coupled with (ii) Goldway's concerns
regarding the current cash position of MCM.
Goldway notes that MCM's cash position was disclosed to be approximately USD
$3,366,000 as at 31 December 2023 and that MCM has been historically cash negative
each quarter at a rate of between USD $2,000,000 - $3,000,000. The fact that a key
producing asset of MCM, Vele, is now under care and maintenance will result in both
loss of revenue, incur shutdown costs and on-going care and maintenance costs.
In the event that the MAC Condition is breached or cannot be satisfied, Goldway does
not intend to waive this condition.
5. Independent Expert Report
Given that the bidder's voting power in MCM is above the statutory threshold of 30% or more,
section 640 of the Act requires the Target's Statement given to MCM Shareholders to include,
or be accompanied by, an IER that states whether the Offer is fair and reasonable and gives
the reasons for forming that opinion. Pursuant to the Joint Bid Deed and the Bidder's
Statement, Goldway has a relevant interest of approximately 64.30% in MCM (262,290,952
MCM Shares).
The Target's Statement did not include an IER but instead advised that a supplementary
target's statement with an IER will be sent to MCM Shareholders around 18 March 2024.
Accordingly, MCM has breached section 640 of the Corporations Act which:
(a) is an offence of strict liability meaning that a party may be found guilty of an offence
regardless of fault;
(b) involves a possible penalty of 600 penalty units for a body corporate (equating to
$187,800); and
(c) means that MCM Shareholders who are awaiting the IER before making a decision
on the Offer (assuming that the IER is lodged / dispatched to MCM Shareholders on
or around 18 March 2024) will have less than three (3) weeks to decide whether to
accept the Offer before the Offer closes which is scheduled to occur at 7.00pm
(Sydney time) / 10.00am (SA time) on Friday, 5 April 2024.
6. Consents and approval of the Second Supplementary Bidder's
Statement
Page 8
This Second Supplementary Bidder's Statement includes statements which are made in or
based on statements made in, documents lodged with ASIC or given to ASX. Under the terms
of ASIC Corporations (Takeover Bids) Instrument 2023/683, the parties making those
statements are not required to consent to, and have not consented to, inclusion of those
statements in this Second Supplementary Bidder's Statement. If you would like to receive a
copy of any of those documents, or the relevant parts of the documents containing the
statements (free of charge), during the Offer Period, please call the relevant Goldway Offer
Information Line. Goldway will provide these within 2 Business Days of the request.
A copy of this document was lodged with ASIC on 14 March 2024. This Second
Supplementary Bidder's Statement prevails to the extent of any inconsistency with the
Original Bidder's Statement or the First Supplementary Bidder's Statement. Neither ASIC nor
any of its officers takes any responsibility for the contents of this Second Supplementary
Bidder's Statement.
Authorisation
This Second Supplementary Bidder's Statement has been approved by a resolution passed
by the sole director of Goldway.
Signed for on behalf of
Goldway Capital Investment Limited
Mr Jun Liu
Sole Director
Date: 14 March 2024
Page 9
Date: 14-03-2024 09:00:00
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