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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
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