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PET - Petmin Limited - Conclusion of the acquisition of a 25% interest in Veremo
Holdings Limited ("Veremo") and renewal of cautionary announcement
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
JSE code: PET & AIM code: PTMN
ISIN: ZAE000076014
("Petmin" or "the Company" or "the Group")
CONCLUSION OF THE ACQUISITION OF A 25% INTEREST IN VEREMO HOLDINGS LIMITED
("VEREMO")
RENEWAL OF CAUTIONARY ANNOUNCEMENT
1. CONCLUSION OF THE ACQUISITION OF A 25% INTEREST IN VEREMO) ("Transaction")
Further to the press announcement of 6 November 2007, Petmin is pleased to
announce that, following the fulfillment of the conditions precedent to the
Transaction Petmin now holds a 25% interest in Veremo Holdings Limited.
The balance (75%) of the equity in Veremo is held by Framework Investments
Limited ("Framework"), a wholly owned subsidiary of Kermas Limited (jointly "the
Kermas Group"), a substantial indirect shareholder in Samancor Chrome Limited,
South Africa`s second largest producer of ferrochrome.
Petmin has settled the balance of its obligations in terms of the Transaction,
through the payment of R4,275,000.00 in cash and the issue of the 7,077,586 new
Petmin ordinary shares of ZAR 0.25, at an average issue price of ZAR 4.50 per
share ("the shares"), representing a premium of 25% to the volume weighted
average share price on 31 October 2007 being the date upon which the Transaction
was concluded.
The Company has applied for the shares to be admitted to trading on the JSE and
AIM, which is expected to occur on Friday, 30 May 2008. The issue of the shares
represents an increase of 1.34% in the issued share capital of Petmin and after
the issue, Petmin will have 535,541,188 shares in issue.
2. DESCRIPTION OF THE VEREMO IRON PROJECT
Veremo holds the prospecting rights to a substantial polymetallic Mineral
Resource with an estimated 60.42% FESquaredOCubed (wt%) and 14.22% TiOSquared
(wt%), located on the Eastern Limb of the Bushveld Complex in South Africa`s
Mpumalanga Province, near Stoffberg. Test work has shown the resource to be
suitable for the production of high quality pig-iron.
The resource forms part of the Magnetite Layer 21 of the Upper Zone of the
Bushveld Complex, and is particularly well-developed in the area, outcropping on
surface, and with thickness of up to 60 metres having been encountered in a
comprehensive drilling programme.
To date, 90 holes have been drilled, equating to some 6 000 metres. The average
depth per drill hole over all the holes drilled is 32 metres. In addition, 306
trenches and 15 deep pits have been excavated to expose the weathered portion of
the resource and determine outcrop positions.
The updated 2008 Mineral Resource for the Project, as endorsed by Snowden Mining
Industry Consultants, and published during February 2008 is as follows:
Classification Weathering Tons Fe SiO2 TiO2(%) V2O5 SG
(Mt) (%) (%) (%)
Indicated Fresh 797.5 42.05 15.13 14.09 0.015 4.22
Resource Weathered 123.8 43.00 13.67 14.64 0.016 4.16
Measured Weathered 11.6 48.98 5.03 18.38 0.23 3.85
Resource
Total Resource 933.0 42.26 14.22 14.22 0.15 4.21
The Mineral Resource has been reported in accordance with guidelines of the
South African Code for the Reporting of Mineral Resources and Mineral Reserves
(the SAMREC Code, 2007) and can be viewed at the offices, or downloaded at
www.petmin.co.za
This announcement has been approved by Mr George Gilchrist BSc (Hons) Geology,
Pr Nat, MGSSA of Snowden Mining Industry Consultants.
The thickness of the deposit from south to north is, on average, 44.39 metres.
Mining consultants are currently developing an initial 25-year mine plan (to
support the production of 700 000 tonnes of pig iron and titanium bearing slag
of approximately 300,000 tonnes). Extensive test work has been undertaken to
determine the optimum metallurgical process for the production of pig iron from
the resource.
3.DEVELOPMENT OF THE VEREMO IRON PROJECT
The essential terms and conditions of the agreement between Petmin and the
Kermas Group are as follows:
1 Finalise a strategic plan to maximise the long term value of the Project.
This may result in a separate listing of Veremo.
2 Framework to fund (or procure funding for) and develop the Project on
normal commercial terms.
3 Framework will provide (or procure the provision of) all the funding
required (development and working capital) to produce at least 700,000 tonnes of
pig iron per annum within 48 months from 30 April 2008 (commencement date).
Petmin has no obligation to fund the development of the Project up to this level
of production and will suffer no dilution of its shareholding in Veremo as a
consequence of the funding provided (or procured) by Framework.
4 Framework has warranted that Veremo will for the first three years from the
commencement date, distribute a dividend of at least R65,000,000 (sixty-five
million rands) per year in cash to Petmin.. The Kermas Group will pay to Petmin
any shortfall between actual distributions made by Veremo and the amount of
R65,000,000 (sixty-five million rands) per year for three years.
5 In the event that production is increased above 700,000 tonnes of pig iron
per annum and should funding be required from Veremo shareholders, then Petmin
will be obliged to fund its pro rata share of the additional capital
requirements; and
6 Petmin, currently the largest producer of anthracite and silica in South
Africa, will be granted an irrevocable first right of refusal to supply, from
its production facilities, all anthracite and all silica that may be required by
the Veremo Project for a period of five years from first production on terms at
least as favorable as those which Veremo is able to obtain from other suppliers.
4.RATIONALE AND CONCLUSION
The Transaction represents a further step in the development of Petmin into a
multi-commodity minerals business with a particular emphasis on industrial
minerals, bulk commodities and base metals that are either cash-producing and/or
near-cash producing. The Kermas Group is a substantial international partner
with a proven ability to manage large projects and Petmin is particularly
pleased to partner the Kermas Group in developing an important South African
asset with significant guaranteed returns to Petmin`s shareholders.
5.TABLE OUTLINING THE FINAL STRUCTURE
For a table outlining the final structure of the Company following this
transaction, please visit the Company`s website, www.petmin.co.za
6.RENEWAL OF CAUTIONARY
Further to the cautionary announcement dated 23 April 2008, shareholders are
advised that negotiations are still in progress which, if successfully
concluded, may have a material effect on the price of Petmin`s securities.
Accordingly, shareholders are advised to continue exercising caution when
dealing in the Company`s securities until a full announcement is made.
Johannesburg
23 May 2008
Secretary and Sponsor - JSE
River Sponsors (Pty) Limited
Consultants
Snowden Mining Industry Consultants
Attorneys
Cliffe Dekker Inc.
Enquiries:
Petmin
Bradley Doig (COO) +27 824 597 818
Russell & Associates
Shelagh Blackman or Charmane Russell
+27 11 880 3924
Numis Securities Limited
John Harrison +44 207 260 1000
Nick Stamp +44 207 260 1000
Parkgreen Communications
Justine Howarth +44 207 851 7480
Date: 23/05/2008 13:00:03 Supplied by www.sharenet.co.za
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