Wrap Text
Proposed R1.15 billion Rights Offer and Debt Restructuring and renewal of cautionary
announcement
Copper 360 Limited
(Incorporated in the Republic of South Africa)
Registration number 2021/609755/06
JSE Share Code: CPR
ISIN: ZAE000318531
("Copper 360" or "the Company")
PROPOSED R1.15 BILLION RIGHTS OFFER AND DEBT RESTRUCTURING AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
1. Introduction
Copper 360 is in a process of restructuring, the aims of which are 3-fold: raise sufficient funding for short- and
medium-term growth, reduce the debt burden to improve profitability, and mine several orebodies that have
achievable growth potential.
The board of directors of Copper 360 is pleased to announce that the Company has entered into a series of
agreements regarding the recapitalization of the Company and the restructuring and conversion of long-term
debt instruments on its balance sheet and the reduction of revenue-based royalty payments ("debt conversion").
In terms of these agreements the Company will undertake a rights offer of R1.15 billion at an issue price of 50
cents per ordinary share ("the Recapitalisation Issue Price"). The Rights Offer will comprise new equity of R400
million and the debt conversion to a maximum of R750 million.
The R1.15 billion of new ordinary shares will be offered to existing shareholders ("Shareholders") through a
combined claw-back offer ("the Claw-Back Offer") and rights offer ("the Rights Offer"). Any rights not taken up
by existing Shareholders have been underwritten in the amount of R260 million in respect of the new equity and
fully underwritten in respect of the debt conversion.
2. The Equity Capital Raise
The Company intends to raise new equity in the amount of R400 million from existing Shareholders at a price of
50 cents per ordinary share ("Equity Capital Raise"). The Equity Capital Raise has been underwritten by clients of
and funds managed by Differential Capital Proprietary Limited ("Differential" or "the Underwriter") in the amount
of R260 million. The minimum subscription for the Equity Capital Raise will be R350 million.
The Equity Capital Raise will be implemented as follows:
Through a first recapitalisation subscription by the allotment and issue, at the Recapitalisation Issue Price, by the
Company , and the subscription by the Underwriter for 280 million ordinary shares ("the First Recapitalisation
Subscription Shares") against the payment by the Underwriter to the Company of a cash amount of R140 million,
by not later than 8 September 2026, which allotment, issue and subscription shall be subject to and in
anticipation of the obligation of the Company to undertake and complete the Claw-Back Rights Offer.
Through a second recapitalisation subscription by the allotment and issue, at the Recapitalisation Issue Price, by
the Company of a maximum of 520 million ordinary shares ("the Second Recapitalisation Subscription Shares"),
and the subscription by the Underwriter for a maximum of 240 million shares, being the number of shares not
taken up by existing Shareholders in the Rights Offer, against the payment by the Underwriter to the Company of
a cash amount in a maximum of R120 million, by not later than three business days after the closing of the Rights
Offer.
In addition to the underwriting commitment, the Issuer has received irrevocable undertakings for subscription in
the Rights Offer for an additional R90 million.
The Equity Capital Raise will result in the issue of 800 million new ordinary shares. At minimum subscription the
Equity Capital Raise will result in the issue of an additional 700 million new ordinary shares.
3. Debt Conversion
The Company and its subsidiaries have historically issued various debt instruments and instruments with
preferential rights to cash flow. These include:
"Class A Preference Shares" being the 425 000 Class A perpetual preference shares issued by Cape Copper Oxide
Proprietary Limited("CCO"), a 100% held subsidiary of the Company, entitling the holders thereof cumulatively to
8.82% of the earnings before interest, tax, depreciation and amortisation of CCO. The following related parties are
holders of these instruments: R Smith, JP Nelson and LAS du Plessis;
"Class B Preference Shares" being the 500 000 Class B perpetual preference shares issued by CCO, entitling the
holders thereof cumulatively to 8.0% of the earnings before interest, tax, depreciation and amortisation of CCO.
The following related parties are holders of these instruments: R Smith, JP Nelson and JAMS Investments
Proprietary Limited, an associate of LAS du Plessis;
"Class C Preference Shares" being the 10 Class C perpetual preference shares issued by CCO, entitling the
holders thereof cumulatively to 5% of the earnings before interest, tax, depreciation and amortisation of CCO;
"Copper Notes" being the debt instruments issued by the Company to several long-term investors with a
repayment term of 5 years and a coupon linked to the LME copper price, R Smith and LAS du Plessis hold Copper
Notes as investors;
"Royalty Notes" being the short-term debt instruments issued by the Company which entitle the holders thereof
to a revenue royalty based on the revenue produced by the Company's Modular Flotation Plant. Darmane
Investment Proprietary Limited, an associate of M Golding is an investor in the Royalty Notes;
"Shareholder Loans" being collectively the loans, as at the debt restructure date, due and owing by the Company
to those of its Shareholders who have lent and advanced money to it, JP Nelson, SA Hayes, R Smith and LAS du
Plessis;
"SHIP Founders Royalty" being the royalty agreement entered into by Shirley Hayes-IPK (Proprietary) Limited, a
subsidiary of the Company ("SHIP") in 2010, in terms of which the SA Hayes is entitled to a revenue royalty of 1.5%
of the resource owned by SHIP; and
"3 Plant Royalty" comprising a royalty based on a share of revenue of collectively Modular Flotation Plant 1,
Modular Flotation Plant 2 and the SX-EW Plant. Wheatfield Estate Foundation Trust and Basfour 2309 Proprietary
Limited, associates of M Golding, and LAS du Plessis are investors in the 3 Plant Royalty.
The Class A Preference Shares, Class B Preference Shares, Class C Preference Shares, Copper Notes, Royalty Notes,
Shareholder Loans, SHIP Founders Royalty and 3 Plant Royalty are collectively referred to as the Debt Instruments.
The Company has reached agreement with the holders of the Debt Instruments ("the Debt Instrument Holders")
in terms of which the parties have agreed to the conversion and/or amendment, as the case may be, of the Debt
Instruments in return for the issue by the Company of ordinary shares. The debt restructure includes the full and
final settlement, payment and extinction of amounts due and owing by the Company and its subsidiaries to the
Debt Instrument Holders, save for remaining royalties as detailed below, by the allotment and issue by the
Company to the Debt Instrument Holders of ordinary shares, subject to the terms of the Rights Offer.
Ordinary shares to be issued to the Debt Instrument Holders will be offered to the existing Shareholders in terms
of the Rights Offer, and any rights not taken up by the existing Shareholders will result in the compulsory
conversion of the Debt Instruments into ordinary shares. The debt conversion is therefore fully underwritten by
the holders of the respective Debt Instruments.
The debt conversion will result in the issue of a maximum of 1.5 billion new ordinary shares.
In terms of the Debt Restructuring, and subject to rights being taken up by existing shareholders in terms of the
Rights Offer, all of the holders of the Class A Preference Shares, all of the holders of the Class B Preference Shares,
all of the holders of the Class C Preference Shares, all of the holders of the Copper Notes, all of the holders of
Shareholder Loans and all of the holders of the 3 Plant Royalty have irrevocably committed to convert their
instruments into ordinary shares.
Save for Darmane and Diaruk who have elected to maintain the outstanding capital balance of their royalty notes
and have entered into payment plans with the Company in respect thereof, all of the holders of the Royalty Notes
have irrevocably committed to convert their instruments into ordinary shares.
The holder of the SHIP Founders Royalty has irrevocably committed to a permanent reduction in the royalty rate
from the existing 1.5% to 0.5% in exchange for ordinary shares.
Following the conversion of the Debt Instruments, there will be no future preferential rights, preferential dividends,
royalties or payments due or payable to the Debt Instrument Holders, save for the 0.5% royalty on the SHIP
Founders Royalty. Toitco, Tide Shift and Dorado, have elected to retain their rights to revenue royalties on the
Company's modular flotation plant one, Darmane Investments and Diaruk have agreed to reduce their rights to
revenue royalties on the Company's modular flotation plant one to 0.25% and 0.083% respectively. As a result of
the Debt Restructure the Company has reduced the overall charge related to Debt Instruments from
approximately 9.8% on current revenue and operations to 0.7% once 100 000 milled tonnes per month is achieved.
4. Rationale for the Equity Raise
The Company's transition from an exploration company to a copper producing junior miner requires additional
capital. The capital secured through the Claw-Back Offer and the Rights Offer will not only enable the sustainable
long-term profitability of the Company, but will also provide the growth capital required to enable the Company to
grow in stages, initially reaching 40,000 milled tonnes per month within 12 to 18 months, with further growth to
60,000 milled tonnes per month within 24 months.
5. Rationale for the Debt Conversion
The Company balance sheet has been heavily geared for some time. It became apparent that not only the gearing
level but also the funding cost of the Debt Instruments were unsustainable and made the Company's ordinary
shares unattractive as an investment. The restructuring of the Debt Instruments creates a stronger balance sheet,
geared for growth; and results in a simplified capital structure with the rewards of profitable trading largely falling
to ordinary shareholders.
6. Small Related Party Transactions
The following Debt Conversions by related parties are classified as small related party transactions in terms of
the JSE Listings Requirements:
- The conversion of the SHIP Founders Royalty;
- The conversion by R Smith and LAS du Plessis of their respective investments held in the Copper Notes;
- The conversion by Darmane Investments of its investment in the Royalty Notes
- The conversion by Darmane and LAS du Plessis of their respective investments held in the 3 Plant Royalty; and
- The conversion by JP Nelson of his indirect interest in the Energy 360 loan.
7. Fairness Opinions in respect of small related party transactions
The board of directors of the Company will procure fairness opinions in respect of the small related party
transactions but believe the reduction of the ongoing royalty rates and conversion of the Debt Instruments, as
described above to be both fair and reasonable and in the best interests of the Company.
8. Changes to the Board
Following completion of the Rights Offer, the Underwriter will have the right to nominate up to 4 non-executive
directors, of which the majority will be independent, to the board of Copper 360.
The Board has adopted the terms of reference of a newly formed Investment Committee that will have oversight,
inter alia, of capital projects, commitments and new developments. The Investment Committee will comprise a
majority of independent non-executive directors.
9. Pro Forma Financial Effects
Pro forma financial effects of the debt conversions will be presented on a voluntary basis to shareholders as part
of the Rights Offer circular.
10. Conditions Precedent
The proposed Claw-Back Rights Offer and the Rights Offer are subject to the conditions precedent that:
- The JSE approves the circular to shareholders setting out full details of both the Claw-back Offer and the
Rights Offer;
- The Shareholders in general meeting approve the increase of the Company's Authorised Share Capital by not
less than 3,500,000,000 ordinary shares. Shareholders holding 75.4 % of the shares entitled to vote have
provided irrevocable undertakings to vote in favour of the increase in share capital; and
- Shareholders holding, in the aggregate, not fewer than 50% of the ordinary shares on the day on which the
Rights Offer will be made, will irrevocably and in writing have waived their entitlements (if applicable) to
receive a mandatory offer from the Underwriter in respect of their cumulative acquisition of 35% or more of
the shares of the Company. Shareholders holding approximately 65% of the issued share capital not held by
the Underwriter have provided waivers, to the extent required.
11. Prospects
The proposed equity raise and debt restructure not only alleviate the Company's liquidity constraints but afford
the Company the growth capital required to create sustainable processing capacity and complete the associated
mine development.
The proceeds from the First Recapitalisation Subscription provide the Company with sufficient funding to
complete the development of the Rietberg mine and commence the start-up of a second mine and also allows the
completion of the second modular flotation plant, which will create total processing capacity of 40,000 milled
tonnes per month.
The conversion of the Debt Instruments results in a balance sheet with modest gearing. The additional equity
secured from the Rights Offer, creates capital adequacy and will be available for further mine development, the
building of a third modular flotation plant and the re-commissioning, following upgrades, of the SX-EW plant.
12. Rights Offer Circular and Revised Listing Particulars
A circular containing details of the Rights Offer will be issued to Shareholders in due course.
Revised listing particulars will be published following completion of the Rights Offer.
13. Further cautionary announcement
Shareholders are advised to continue to exercise caution until such time as the Rights Offer Circular and related
timetables are published.
Stellenbosch
5 September 2025
Designated Advisor and Corporate Advisor: Bridge Capital Advisors Proprietary Limited
Date: 05-09-2025 09:27:00
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