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TSX - Trans Hex Group Limited - Acquisition of Namaqualand Mines and

Release Date: 06/05/2011 11:07
Code(s): TSX
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TSX - Trans Hex Group Limited - Acquisition of Namaqualand Mines and cautionary announcement Trans Hex Group Limited (Incorporated in the Republic of South Africa) (Registration number: 1963/007579/06) Share code: TSX ISIN: ZAE000018552 ("Trans Hex" or the "Company") ACQUISITION OF NAMAQUALAND MINES AND CAUTIONARY ANNOUNCEMENT 1. Introduction Trans Hex is pleased to announce that an agreement with De Beers Consolidated Mines Limited ("DBCM") was signed on 6 May 2011 (the "Signature Date") in terms of which, and subject to certain conditions precedent, its 50% held associate, Emerald Panther Investments 78 (Proprietary) Limited (the "Purchaser"), will acquire assets and liabilities relating to Namaqualand Mines ("Namaqualand Mines"), a division of DBCM (the "Proposed Transaction"). 2. The proposed transaction 2.1 Background to the proposed transaction In August 2010, following a strategic review of its mining operations, DBCM initiated a competitive disposal process in respect of Namaqualand Mines. After a rigorous selection process, taking into account a number of selection criteria including access to funding, technical capability, including a proven track record, commitment to the Namaqualand region and broad based black economic empowerment, the Purchaser was selected to enter into negotiations with DBCM in relation to the acquisition of Namaqualand Mines. The shares in the Purchaser are beneficially owned as to: a. 50% by Trans Hex; b. 34% by RECM and Calibre Limited ("RAC"), an investment company listed on the JSE Limited ("JSE"); and c. 11% by Dinoka Investment Holdings (Proprietary) Limited ("Dinoka"). The remaining 5% interest in the Purchaser has been allocated to broad-based, historically disadvantaged groups of persons, the precise nature of which still has to be determined. Members of Trans Hex`s management team hold all of the issued shares of Dinoka, with the majority being held by historically disadvantaged South Africans. Certain aspects relating to the shareholding of the Purchaser have not been finalised. The shareholding structure of the Purchaser is therefore subject to change. 2.2 Description of assets and liabilities to be acquired The Purchaser will acquire a diamond prospecting right, mining rights, mining and processing equipment, certain immovable properties and infrastructure relating to Namaqualand Mines. The Purchaser will also assume liabilities relating to Namaqualand Mines and the environmental rehabilitation liability associated therewith will be transferred to the Purchaser pursuant to the Mineral and Petroleum Resources Development Act, No. 28 of 2002 ("MPRDA"). The Purchaser will continue to support the sustainability initiatives started and developed by DBCM. These initiatives should help to create alternative employment and a resultant sustainable economy in the region. They include, inter alia, the lease of lands to South Africa National Parks, abalone and oyster farms and wind farms. 2.3 Rationale for the proposed transaction Namaqualand Mines is located on the West Coast of South Africa, close to Trans Hex`s Baken alluvial mining operations. The Company therefore already has a regional presence and extensive local knowledge. In addition, Trans Hex is an experienced alluvial diamond mining operator in respect of similar deposits. Trans Hex has a dynamic approach to mining and a cost base in relation to alluvial diamond mining that is well aligned to the Namaqualand alluvial deposit. 2.4 Value of the transaction The Proposed Transaction is valued at R225 million, which the Purchaser will discharge by paying over a cash amount to DBCM and assuming the liabilities relating to Namaqualand Mines, including the environmental rehabilitation liability. The assets and liabilities will be transferred to the Purchaser pursuant to the MPRDA. In addition, the Purchaser will contribute R10 million towards costs associated with ongoing environmental rehabilitation activities to be undertaken by DBCM in relation to Namaqualand Mines between the Signature Date and the Effective Date of the Proposed Transaction. 2.5 Conditions precedent The Proposed Transaction is subject to the fulfillment or, where applicable, waiver of, inter alia, the following conditions precedent: a. the unconditional written approval of the relevant Competition Authorities in terms of the Competition Act, No 89 of 1998; b. DBCM being satisfied that the guarantee provided by the Purchaser to the Department of Mineral Resources ("DMR") has the effect that the environmental rehabilitation liability in Namaqualand Mines is transferred to the Purchaser; c. that all necessary statutory and regulatory approvals required for entering into and implementing the Proposed Transaction have been duly given, including approval from the DMR for the purposes of the transfer of the mining rights and prospecting right to the Purchaser; d. DBCM being satisfied that the Purchaser meets the equity ownership requirements of the broad based socio-economic empowerment charter developed under the MPRDA; e. the parties reaching agreement with the DMR in relation to the DMR`s interest in Namaqualand Mines; f. the approval of the Proposed Transaction by Trans Hex shareholders in accordance with the JSE Listings Requirements; and g. the approval of the Proposed Transaction by the shareholders and the board of directors of DBCM. 2.6 Effective date It is expected that the Proposed Transaction will be implemented ten business days after the fulfillment or, where appropriate, waiver of all of the conditions precedent set out above. It is contemplated that the conditions precedent will be fulfilled or waived within 6 to 12 months of this announcement. 3. Circular to Trans Hex shareholders The Proposed Transaction is a Category 1 transaction in terms of the JSE Listings Requirements. In addition, in terms of Section 10 of the JSE Listings Requirements, the Proposed Transaction is a related party transaction in that: a. the shareholders of Dinoka are principal executive officers of the Company; b. Dinoka is a material shareholder in the Purchaser; and c. RAC is an associate of Regarding Capital Management (Pty) Limited, which currently holds a 27% interest in Trans Hex. As a Category 1 and related party transaction in terms of the JSE Listings Requirements, Trans Hex shareholder approval of the Proposed Transaction and an independent expert`s opinion relating to the fairness thereof are required. A circular containing details of the Proposed Transaction and incorporating a fairness opinion and a notice of general meeting will therefore be posted to Trans Hex shareholders in due course. 4. Cautionary announcement Certain aspects of the Proposed Transaction, as well as the pro forma financial effects, have not been finalised. As a result, shareholders are advised to exercise caution when dealing in the Company`s securities until further information is released. For and on behalf of the board Cape Town 6 May 2011 Transaction Advisor QuestCo (Pty) Limited Attorneys Bowman Gilfillan Inc. Sponsor Rand Merchant Bank (A division of FirstRand Bank Limited) Date: 06/05/2011 11:07:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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