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Petra Mining Limited - Further Announcement

Release Date: 17/08/2005 08:30
Code(s): PET
Wrap Text

Petra Mining Limited - Further Announcement PETRA MINING LIMITED (Incorporated in the Republic of South Africa) (Registration number 1972/001062/06) Share code: PET ISIN: ZAE000010237 ("Petmin" or "the Company") FURTHER ANNOUNCEMENT REGARDING THE ACQUISITION OF SPRINGLAKE HOLDINGS (PROPRIETARY) LIMITED, BEE STATUS UPDATE AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT 1. Introduction Shareholders are referred to the acquisition announcement published on SENS and in the press dated 25 May 2005 ("the announcement"), whereby Petmin announced the acquisition of the entire issued share capital and claims on loan account in Springlake Holdings (Proprietary) Limited ("Springlake") for R108 236 000 to be settled by the issue of 175 810 000 Petmin shares at 60 cents per share and R2 750 000 payable in cash. 2. Conclusion of the due diligence review and the Competent Person"s Report Referring to paragraph 4 of the announcement, the due diligence review and Competent Person"s Report have now been completed. The fair value of the Springlake mining assets has been confirmed by KPMG Inc. and Snowden Mining Industry Consultants (Proprietary) Limited ("Snowden") at R150,6 million, and the cost of the Springlake acquisition, including estimated transaction costs, is R113,2 million. Included in the acquisition cost is a contingent payment of R26,5 million payable if the profit warranty of R53,6 million for the 28 months from 1 March 2005 to 30 June 2007 is met. The fair value of the Springlake mining assets has been taken into account to determine the net tangible asset value per share and the net asset value per share, however, the profit warranty has not been taken into account in calculating the pro forma financial effects on the earnings per share and headline earnings per share, which have been calculated in paragraph 3 below. 3. Pro forma financial effects of the Springlake acquisition on Petmin After the
Springlake Before (1) acquisition (2) % Published Pro forma Change Earnings per share (cents) 1.12 1.842 64 Headline earnings per share (cents) 1.12 1.842 64 Diluted earnings per share (cents) 0.92 2.743 197 Diluted headline earnings per share (cents) 0.92 2.743 197 Net asset value per share (cents) 52.55 66.384 26 Net tangible asset value per share (cents) 52.55 64.144 22 Number of shares in issue ("000) 186 0004 321 7234 73 Weighted average number of shares in issue ("000) 165 0003 300 7233 82 1. The "Before" financial information has been extracted, without adjustment from the published, reviewed interim results of Petmin for the six months ended 31 December 2004. 2. Earnings and headline earnings per share have been adjusted to include the audited income and expenditure relating to Springlake, pro rated for a six month period and additional depreciation relating to plant and mining equipment and amortisation of mineral rights for a six month period arising due to the allocation of the purchase price in terms of IFRS 3 (AC140): (Business Combinations) and the excess of the purchase consideration over the net asset value of Springlake at fair value. Headline earnings per share has not been adjusted for the excess of the net asset value of the Springlake acquisition over the purchase consideration. 3. Diluted earnings and headline earnings per share have been calculated by including the dilutionary effect of the 31 million options at an estimated strike price of 49 cents per option (calculated using the weighted average traded price of Petmin"s shares on the JSE for the 30 days prior to 31 December 2004 less a 10% discount). These options were in issue at 31 December 2004, but have subsequently lapsed. 4. Net asset and net tangible asset value per share have been adjusted to include the assets and liabilities of Springlake, at fair value, and the capitalisation of the estimated transaction costs of R5 million, the issue of the initial consideration shares at the issue price, the raising of the contingent consideration arising as a result of the business combination, the settlement of the cash portion of the purchase price and the transaction costs, the excess of the net asset value of the Springlake acquisition over the purchase consideration ,raising of deferred taxation in respect of plant and mining equipment and mineral rights at 29% arising due to the allocation of the purchase price in terms of IFRS 3 (AC140) : (Business Combinations) and the settlement of that portion of the transaction costs to be settled through the issue of shares at the issue price. The effect of the issue of the additional 44 253 334 ordinary shares following the fulfilment of Springlake"s profit warranty is to reduce the net asset value and net tangible asset value per share by 6 cents per share. 4. Resources statement Snowden have concluded on the reserves and resources of Springlake as follows: Springlake Colliery ("the colliery") "The colliery has mined anthracite for 29 years and Snowden believes that the colliery has a suitable underground infrastructure to continue mining operations and potentially expand production within the limitations of the current infrastructure. Sufficient capital expenditure has been identified to sustain future production. Snowden further believes that the colliery will continue to produce at around 600 kt per annum from the underground operations for at least another 10 years. In addition, contractor operations in the Lentedal open pit, situated in close proximity of the wash plant, will guarantee sustainable production at around 500 kt per annum for another eight years." Somkhele Anthracite Project ("Somkhele") "Snowden believes that Somkhele will be able to produce anthracite at the planned production rate of 500kt per annum. The combined life of mine for Areas 1 and 2 at this production rate is at least 10 years. Operating costs and capital expenditure were determined by Springlake in sufficient detail to achieve the planned production." (Source: Snowdens: Competent persons report on the South African mineral assets of Springlake Holdings (Proprietary) Limited, 29 May 2005) 5. Black Economic Empowerment In the announcement details were given regarding the establishment of an anchor Black Economic Empowerment ("BEE") consortium. The board is pleased to announce that Popcru Mining Investment (Proprietary) Limited ("POPCRU") has acquired 8 333 333 shares in Petmin. POPCRU has in excess of 80 000 Historically Disadvantaged South African members and Petmin welcomes POPCRU as a significant broad based empowerment shareholder. 6. Circular to shareholders A circular to shareholders containing details of the Springlake acquisition is currently being prepared and will be circulated to shareholders within 21 days of this announcement. 7. Withdrawal of cautionary announcement With the publication of this pro forma financial information, shareholders need no longer exercise caution when dealing in the company"s securities. PRETORIA 16 August 2005 Corporate Advisor and Sponsor RIVER GROUP Reporting Accountants KPMG BEE Facilitator New Africa Mining Fund Managed by Decorum Capital Partners (Pty) Ltd Independent Professional Expert to Petmin shareholders KPMG Transaction Attorneys CLIFFE DEKKER Competent Person to Springlake SNOWDEN Date: 17/08/2005 08:30:15 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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