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KEH - Keaton Energy Holdings Limited - Keaton Energy to acquire export foothold
Keaton Energy Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/011090/06)
JSE share code: KEH ISIN: ZAE000117420
("Keaton Energy" or "the company")
KEATON ENERGY TO ACQUIRE EXPORT FOOTHOLD
Johannesburg, South Africa. 14 February 2011. Keaton Energy Holdings Limited
(Keaton Energy; JSE: KEH; www.keatonenergy.co.za) announced today that it plans
- in a two-stage transaction - to refinance and acquire a 74% interest in South
African export coal producer Leeuw Mining and Exploration (Pty) Limited (LME).
The transaction will result in Keaton Energy acquiring an export foothold; a
new major shareholder in Plusbay Limited (Plusbay), an affiliate of Gunvor Group
Limited (Gunvor; www.gunvorgroup.com) one of the world`s leading energy trading
companies; and will also safeguard more than 400 jobs in LME`s operations.
LME`s founding shareholder JPI Leeuw and Associates (Pty) Limited (JPI) will
remain a 26% shareholder in LME.
Keaton Energy Managing Director Paul Miller said: "This transaction will be
good for Keaton Energy shareholders; provide a partial exit for existing LME
shareholders to, in part, pursue other mining initiatives; and contributes
significantly to the economy of Northern Kwazulu-Natal.
It will give Keaton Energy a controlling interest in an existing mining
operation; significantly increase its portfolio of advanced development
projects; provide vital access to export markets and a wider customer base;
and will mark a major step towards Keaton Energy`s objective of becoming a
mid-tier coal producer with a diverse range of projects to complement our
major Vanggatfontein and Sterkfontein projects in Mpumalanga."
The transaction consideration will be settled through the issue of new Keaton
Energy shares, and R10 million in cash through the settlement of an existing
loan to LME.
The transaction - which is subject to relevant regulatory approvals and
fulfillment of various conditions precedent - will also see Geneva-based
energy trader Gunvor, through its affiliate Plusbay, become a key shareholder
in Keaton Energy, with the intention to obtain a seat on the Keaton Energy
Board.
Commenting on the transaction, Filippo Faralla, Gunvor`s Coal Manager in South
Africa, said: "The transaction continues our expansion by sector and geography.
It marks our entry into South African coal production and complements our
growing non-oil energy business, and is another significant step in our
development as a leading integrated energy company."
David Salter, Keaton Energy`s Chairman, welcomed Gunvor`s introduction into
the company as a mark of approval and said: "It is pleasing that Gunvor has
recognised the achievements of Keaton Energy`s management since listing and
is joining with us to develop Keaton Energy into a robust and sustainable
South African coal producer."
Willy Leeuw, Chief Executive Officer of LME, said, "the team at LME have worked
hard over a period of eight years to take a portfolio of prospecting projects up
the value curve right through to producing coal for export. We look forward to
partnering with Keaton Energy and Gunvor to take the company and its Kwazulu-
Natal projects to the next stage of development."
LME owns and operates the Vaalkrantz Anthracite Colliery (Vaalkrantz) near
Vryheid in South Africa`s Kwazulu-Natal province. Vaalkrantz has been in
production since 2003.
In addition, LME has:
* a 207 000tpa participation in Richards Bay Coal Terminal`s (RBCT) Quattro
export programme and a dedicated railway siding facility near Vaalkrantz;
* a number of new order prospecting and mining rights over other Kwazulu-
Natal coal properties, including:
* the Koudelager anthracite project, which will provide a future run-of-mine
anthracite supply to the existing Vaalkrantz plant;
* the Braakfontein thermal coal project, near Newcastle;
* the Balgray anthracite project near Utrecht; and
* the Mpati anthracite project near Dundee.
Refinancing
In terms of the refinancing of LME, Keaton Energy will acquire:
* various loans and claims in LME from Anglo Operations Limited, acting
through its Anglo American Thermal Coal Division, (AOL) for R47 million, to
be settled by the issue of 10 444 444 new Keaton Energy ordinary shares at
R4.50 per share; and
* 40 preference shares in LME from Anglo Khula Mining Fund (Proprietary)
Limited (AKMF) for R8 million, to be settled by the issue of 1 777 778
Keaton Energy ordinary shares at R4.50 per share.
The total consideration for the acquisition of the AOL loans and claims and the
AKMF preference shares is R55 million. AOL and AKMF will then dispose of their
Keaton Energy ordinary shares to Plusbay.
Acquisition
In terms of the acquisition of 74% of LME, Keaton Energy will acquire:
* 54% from JPI and 10% from Anglo American Zimele Limited (Anglo Zimele) for
14 177 778 and 2 444 444 new Keaton ordinary shares respectively, at a
price of R4.50 per share, with a resulting total purchase consideration of
R74.8 million.
* 10% through the settlement of a R10 million short-term convertible loan
recently provided to LME by Keaton Energy.
JPI and Anglo Zimele will then dispose of their Keaton Energy ordinary shares to
Plusbay.
Queries:
James Duncan
Russell and Associates
+27 11 880-3924 (office)
+27 82 892 8052 (mobile)
james@rair.co.za
Disclaimer:
All statements in this media release, other than historical facts, that
address exploration activities and mining potential are forward-looking
statements. Although Keaton Energy believes the expectations expressed in
such forward-looking statements are based on reasonable assumptions, such
statements should not in any way be construed as guarantees of future
performance. Factors that could cause developments to differ materially from
those expressed include exploration results, technical analysis and lack of
availability to the company of necessary capital to progress its projects.
The company is subject to specific risks inherent in the exploration and mining
business and general economic and business conditions.
Sponsor
Nedbank Capital
Bryanston
14 February 2011
Date: 14/02/2011 16:32:02 Supplied by www.sharenet.co.za
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