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Acquisition Of Coza Mining Proprietary Limited
AFRIMAT LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2006/022534/06)
Share code: AFT
ISIN: ZAE000086302
(“Afrimat” or “the Company”)
ACQUISITION OF COZA MINING PROPRIETARY LIMITED
1. INTRODUCTION
Shareholders are advised that on 17 August 2020, the Company entered into a Sale of Shares
agreement (“Agreement”) with the Sellers (as listed below), in terms of which the Company will
purchase 100% of the issued ordinary shares of Coza Mining Proprietary Limited (“Coza”)
(“Assets”) from the Sellers for a purchase consideration of R300,0 million, subject to adjustment
(“Purchase Consideration”) (“Acquisition”).
The Vendors (“Sellers”) involved in the Acquisition are:
• Niel Claassens;
• Boundless Information Systems Trust;
• Kesavan Naidoo;
• Zungu Investment Company Proprietary Limited;
• Ingede Holdings Proprietary Limited;
• Caltal Trust; and
• Oakwood Trading 21 Proprietary Limited.
2. DESCRIPTION OF THE ASSETS
Coza is a company domiciled in the Republic of South Africa. The principal activities of the
Company are the exploration and prospecting for potential mining of iron ore and manganese in
the Northern Cape.
3. RATIONALE FOR THE ACQUISITION
As part of its bulk commodities growth strategy, Afrimat has explored numerous opportunities in
the Northern Cape with specific focus of augmenting its existing footprint.
Coza has three projects, namely; Jenkins, Driehoekspan and Doornpan.
The opportunity presents the following:
• Securing a significant high quality iron ore resource close to the current Demaneng
operation;
• Close proximity to existing operations to leverage existing resources;
• Asset includes possible manganese resource for further exploration;
• Execution of a product supply agreement for the supply of direct shipping ore to
ArcelorMittal South Africa; and
• Possible expansion opportunities due to increased resource size at Driehoekspan and
Doornpan.
4. PAYMENT OF THE PURCHASE CONSIDERATION
The Purchase Consideration is payable by Afrimat to the Sellers, in cash. The breakdown of the
material payment terms are set out below:
• 65% of the Purchase Consideration upon the fulfilment of the following conditions relating
to Farm Morokwa 672 and Farm Jenkins (together, “Farm Jenkins”):
o written acknowledgement of receipt by the DMRE of the application to the Minister
of the DMRE pursuant to section 11 of the Mineral and Petroleum Resources
Development Act No. 28 of 2002, to obtain the consent for the proposed disposal
of a controlling interest in Coza (“Section 11 Application”);
o proof of submission of the Water Use License (“WUL”) application to the
Department of Human Settlements, Water and Sanitation (“DHSWS”),
(together the “Initial Payment Conditions”); and
o granting by the Minister of the Department of Mineral Resources and Energy
(“DMRE”) of the mining rights to mine for iron ore and manganese on the Farm
Jenkins to Coza (“Jenkins Condition”);
• 15% of the Purchase Consideration upon the fulfilment of the following conditions relating
to Remainder of Farm Driehoekspan 435 and the Remainder of Portion 1 and 2 of the
Farm Thaakwaneng 675 (“Farm Driehoekspan”) and Portion 1 and 2 of the Farm 445
(Doornpan) (“Farm Doornpan”):
o the Initial Payment Conditions; and
o granting by the Minister of the DMRE of the mining rights to mine for iron ore and
manganese on Farm Driehoekspan and Farm Doornpan (“Driehoekspan and
Doornpan Conditions”); and
• 20% of the Purchase Consideration upon fulfilment of the condition that the Minister of the
DMRE approves the disposal of the controlling interest in Coza, pursuant to the Section
11 Application (“Final Payment Condition”).
The Purchase Consideration is subject to adjustment based on a formula set out in the
Agreement.
5. CONDITIONS
The provisions of the Agreement are subject to the fulfilment or waiver of certain outstanding
suspensive conditions (“Suspensive Conditions”), none of which are material.
The sale and transfer of the Assets is subject to the fulfilment of the outstanding Initial Payment
Conditions, the Jenkins Condition, the Driehoekspan and Doornpan Conditions and the Final
Payment Condition (together, the “Transaction Conditions”). Shareholders are advised that in
respect of the Driehoekspan and Doornpan Conditions, the mining right of Farm Doornpan has
been granted and executed.
A Mining Contractor’s Agreement has been concluded between Afrimat (or its nominee) and Coza
appointing Afrimat as mining contractor, whereby Afrimat will acquire effective operational control
of the mining operations from the first day of the month following the month which the Jenkins
Condition is fulfilled and accordingly the mining right is granted. If all the Transaction Conditions,
save for the Jenkins Conditions, are not fulfilled within 24 (‘twenty four’) months from the date on
which the last of the outstanding Suspensive Conditions have been fulfilled or waived, as the case
may be (“Transaction Date”), Afrimat shall continue conducting mining operations in accordance
with the provisions of the Mining Contractor’s Agreement, on an exclusive basis for the duration of
the mining right. If the reason for non-fulfilment of the Transaction Conditions within the period of
24 (‘twenty four’) months from the Transaction Date is due to the fact that the Jenkins Conditions
have not been fulfilled, Afrimat may elect to terminate the Agreement.
6. EFFECTIVE DATE OF THE ACQUISITION
The operational effective date where Afrimat will acquire effective operational control of the mining
operations through its appointment as mining contractor in terms of the Mining Contractor’s
Agreement (subject however to the overall control of the operations continuing to vest in Coza until
the Final Payment Condition has been fulfilled) will be the first day of the month following the month
in which the Jenkins mining right is granted, provided that a proof of submission of the WUL
application to the DHSWS has been received and the DMRE has acknowledged receipt of the
Section 11 Application.
The effective date for the transfer of the Assets will be the first business day immediately following
the day on which the Final Payment Condition has been fulfilled.
7. FINANCIAL INFORMATION
Per the 31 December 2018 annual financial statements, the negative equity balance of Coza is
R87,5 million, including a loan owing to shareholders of R80,0 million. A settlement agreement has
been entered into by the shareholders, whereby the loan will be settled as part of the Purchase
Consideration payable. The profit after tax attributable to the Assets for the year ended 31
December 2018, was R4,4 million, which was prepared in terms of IFRS. The profit after tax of
2018 is attributable to a reversal of previously recognised finance costs on the shareholders loan
as referred to earlier in this paragraph.
The Company is satisfied with the quality of the annual financial statements of Coza, however,
shareholders are cautioned that they are unaudited.
8. WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT
The Agreement contains representations and warranties by the Sellers in favour of the Company
and by the Company in favour of Sellers, which are standard for a transaction of this nature.
9. CLASSIFICATION OF THE ACQUISITION
The Acquisition constitutes a category 2 transaction in terms of the JSE Limited Listings
Requirements.
10. OTHER
The Company confirms, for purposes of paragraph 9.16 of the JSE Limited Listings Requirements
that nothing in the constitutional documents of Coza will, in any way, frustrate or relieve the
Company from compliance with the JSE Limited Listings Requirements.
Cape Town
17 August 2020
Sponsor
PSG Capital
Date: 17-08-2020 02:30:00
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