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Sale of Shares and Option Agreement Entered into to Dispose of Minority Shareholding in Trustco Resources to RVF
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
NSX share code: TUC
JSE share code: TTO
OTCQX share code: TSCHY
ISIN Number: NA000A0RF067
(“Trustco” or “the Company”)
SALE OF SHARES AND OPTION AGREEMENT ENTERED INTO TO DISPOSE OF A MINORITY
SHAREHOLDING IN TRUSTCO RESOURCES TO RISKOWITZ VALUE FUND
1. Introduction
Trustco shareholders (“Shareholders”) are advised that Trustco Business Developments (Pty) Ltd
(“TBD”), a wholly owned subsidiary of Trustco and Riskowitz Value Fund LLP (“RVF”) (“the Parties”)
entered into a sale of share and option agreement (“Agreement”) on 20 March 2020 (“Signature
Date”) in terms of which:
1.1 RVF will acquire 52 shares (“Sale Shares”) amounting to 1.3% of the issued share capital of
Trustco Resources (Pty) Ltd (“Trustco Resources”), a wholly owned subsidiary of TBD; and
1.2 RVF will be granted an option (“Option”) to acquire up to a further 148 shares (“Option Shares”)
amounting to 3.7% of the issued share capital of Trustco Resources.
(The disposal of the Sale Shares and granting of the Option collectively (“the Transaction”)).
Should RVF not exercise the Option within a 6 month period (“Option Period”) from the Signature
Date of the Agreement, the Option shall lapse unless the Option Period is extended via written
agreement between the Parties.
2. Description of the business conducted by Trustco Resources
Trustco Resources is the holding company for the Namibian, Mauritius and Sierra Leone mining
operations in the resources segment. The resources segment was established to pursue opportunities
within the natural resources sector in general, however since its inception, Trustco Resources’ focus
has been on the diamond industry.
Over the past four years, Trustco Resources has acquired three business ventures in the diamond
sector, the first being the Huso Transaction. Huso holds 100% interest in two Namibian subsidiaries
which form part of a vertically integrated diamond business. It comprises of NNDC which is a diamond
mining operation in the Kunene region and Morse which is a diamond cutting and polishing factory
located in Windhoek.
In 2017, Trustco Resources acquired a 51% interest in Meya Mining which operates a diamond mine
in Sierra Leone. Its interest in Meya Mining has subsequently, in 2019, been increased to 65% after
Meya Mining secured a 25-year large scale mining licence from the government of Sierra Leone. The
exploration results to date, which are reviewed and signed off by SRK Consulting Canada, the
Competent Person, indicate that the Meya mining licence holds exceptional geo economic potential.
Meya is now transitioning into commercial production.
3. Salient terms and conditions of the Agreement
The salient terms and conditions of the Agreement are as follows:
3.1 RVF will acquire the Sale Shares for a purchase consideration of USD 4 550 000 (NAD 79 261
000) (“Purchase Consideration”). The Purchase Consideration will be paid in cash on or before
the 20th of March 2020.
3.2 Should RVF exercise the Option within the Option Period, the price per Option Share shall be
USD 87 500 (NAD 1 524 250) (“Option Consideration”). The total amount to be paid by RVF,
in cash, should the Option be exercised will be the Option Consideration multiplied by the
number of Option Shares RVF elects to exercise (“Total Option Consideration”).
Hence should RVF elect to acquire all 148 Option Shares, the Total Option Consideration shall
be USD 12 950 000 (NAD 225 589 000 million).
3.3 The transaction would not constitute a change in control of the Company or in Trustco
Resources.
3.4 RVF will be entitled to nominate a non-executive director to the board of Trustco Resources.
In addition to the salient terms set out above, the Agreement contains warranties which are standard
for a transaction of this nature.
4. Rationale for the Transaction
TBD is entering into the Transaction as it will allow for an injection of capital into Trustco Resources
which capital will be used for the purposes set out in paragraph 6 below.
5. Effective date and closing date
The effective date (“Effective Date”) of the Transaction shall be the later of 20 March 2020 or payment
of the Purchase Consideration.
The closing date (“Closing Date”) of the Transaction shall be the 5th business day after the fulfilment
of the conditions precedent (“Conditions Precedent”) set out in paragraph 7 below.
6. Application of the Purchase Consideration
The Purchase Consideration and the Total Option Consideration shall be used by TBD to inject capital
into Trustco Resources to:
6.1 enable upgrades of the mine infrastructure, plant and equipment in Namibia as well as Sierra
Leone;
6.2 accelerate development of its mining operations and transition into commercial production;
and
6.3 Unlock further equity and debt opportunities
7. Conditions precedent
The Transaction is subject to the fulfilment or waiver of the following Conditions Precedent on or
before the Effective Date, or such longer period as the parties may agree upon:
7.1 The Parties obtaining all regulatory approvals required for the execution of the Transaction;
7.2 The Parties obtaining approval from their respective boards of directors and in so far as it may
be required, from their respective shareholders. Both Parties will on the Completion Date
provide the other party with written notification of the corporate and regulatory approvals
obtained; and
7.3 The Purchaser has effected full payment of the Purchase Consideration.
8. Financial information
The book value of the net assets that are the subject of the Transaction at 30 September 2019 was
NAD 1 080 million. The profit after tax attributable to the net assets that are the subject of the
Transaction for the 6 months ended 30 September 2019 was NAD 931 million.
The above financial information has been extracted from the interim results of Trustco Resources for
the six months ended 30 September 2019 which were prepared in terms of International Financial
Reporting Standards.
9. Classification of the Transaction
RVF and its associates are material shareholders of Trustco owning approximately 24% of the issued
share capital of Trustco and thus considered to be a related party to Trustco in terms of paragraph
10.1(b) (i) of the Listings Requirements of the JSE Limited ("JSE Listings Requirements").
The Transaction is therefore considered to be a category 2 related party transaction in terms of section
10 of the JSE Listings Requirements requiring a fairness opinion to be prepared by an independent
expert and the approval of Trustco shareholders via an ordinary resolution, excluding any related
parties.
RVF and its associates will be excluded from voting on the Transaction.
A circular containing full details of the Transaction as well as a notice to convene a general meeting of
Shareholders in order to consider and, if deemed fit, to pass with or without modification, the
resolutions necessary to approve and implement the Transaction, will be made available to
Shareholders in due course.
10. Exchange rate
All amounts were converted at the NAD/USD exchange rate of 17.42 at the close of business on 19
March 2020.
Windhoek, Namibia
20 March 2020
Komada Holdings (Pty) Ltd
Company Secretary: Trustco Group Holdings Limited
JSE Sponsor
Vunani Sponsors - Johannesburg
NSX Sponsor
Simonis Storm Securities Proprietary Limited – Namibia
OTCQX Sponsor
J. P Galda – New York
Date: 20-03-2020 04:45:00
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