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VIL - Village Main Reef Limited - Disposal of 47 065 916 common shares in the

Release Date: 22/07/2011 08:37
Code(s): VIL
Wrap Text

VIL - Village Main Reef Limited - Disposal of 47 065 916 common shares in the share capital of First Uranium Corporation Village Main Reef Limited (formerly known as Village Main Reef Gold Mining Company (1934) Limited) (Registration number 1934/0057034/06) Share Code: VIL ISIN: ZAE000154761 ("Village") DISPOSAL OF 47 065 916 COMMON SHARES IN THE SHARE CAPITAL OF FIRST URANIUM CORPORATION INTRODUCTION Shareholders are advised that an agreement has been entered into between Village and AngloGold Ashanti Limited (Registration Number 1944/017354/06)("AngloGold") in terms of which Village has sold and ceded to Angolgold 47 065 916 common shares (the "Sale Shares") in the issued share capital of First Uranium Corporation (Registration Number C0777384) ("FIU") comprising 19.786% of the issued and outstanding share capital of FIU as at the date of signature of the agreement (the "Signature Date") for a purchase price of R4,36 per Sale Share or CAD0.6 (60 Canadian cents) per Sale Share, based upon an agreed CAD to Rand exchange rate of R7.2615 to CAD1 (one Canadian Dollar), amounting to in aggregate a purchase price of (R205 061 500 (the "Purchase Price")("the Transaction"). The Transaction will take place 5 business days after the Signature Date (the "Settlement Date"). Ownership of and risk in, and benefit attaching to the Sale Shares will, against payment of the Purchase Price pass to AngloGold on the Settlement Date. BACKGROUND INFORMATION Established in December 2006, FIU has sought to become a significant, low cost producer of gold and uranium through the expansion of its underground developments to feed the new gold and uranium plants at the Ezulwini Mine and through the expansion of the plant capacity of Mine Waste Solutions, a tailings treatment facility which neighbours the Buffelsfontein Gold Mine. Village acquired a 25.5% equity interest in FIU and a holding of 392 874 Rand denominated secured convertible notes having a face value of R1 000 per note issued by a wholly owned subsidiary of FIU (the "FIU Notes"), as part of the recently concluded transaction with Simmer & Jack Mines Limited (Registration Number 1924/007778/06) ("Simmers"). RATIONALE FOR THE TRANSACTION As indicated in Village`s operational update released over the Securities Exchange News Service of the JSE Limited ("SENS") on 29 June 2011, a board committee had been established to evaluate alternatives to realising value from Village`s investment in FIU or to oversee the process of distributing Village`s investment in FIU to Village shareholders. The Transaction is a part realisation of value in the FIU investment in accordance with that stated strategy. The proceeds of the Purchase Price will be used to pay down current debt of Village. PURCHASE PRICE AND SETTLEMENT Each party shall procure by performing to and instructing its CSDP that settlement of the Sale Shares and the Purchase Price shall take place on the Settlement Date through the facilities of STRATE Limited. WARRANTIES AND UNDERTAKINGS - Village has undertaken to and in favour of AngloGold for the period expiring on 30 November 2011, in respect of its remaining 13 556 737 common shares in FIU (being the FIU shares beneficially owned by Village following the sale of the Sale Shares (the "Remaining FIU Shares"))and 31 October 2011 in respect of its FIU Notes (the "Lock-Up Period") to lock-up the Remaining FIU Shares and FIU Notes. - Village has also granted to AngloGold rights of first refusal to acquire the Remaining FIU Shares and FIU Notes, which right of first refusal is effective from the date of expiry of the Lock-Up Period and indefinitely thereafter. - Village has undertaken not to dispose of its remaining FIU shares and FIU Notes until after the sixtieth day after the Settlement Date. - Village has given warranties as are normal in transactions of this nature regarding the Sale Shares. CLASSIFICATION OF TRANSACTION The Transaction is classified as a Category 2 transaction in terms of the Listings Requirements of the JSE. FINANCIAL EFFECTS The pro forma financial information set out below has been prepared for illustrative purposes only, to provide information on how the Transaction may have impacted on the historical results and financial position of Village. The earnings and headline earnings per share figures illustrate the possible financial effects if the Transaction had taken place on 1 June 2010, whilst the net asset and net tangible asset per share figures have been based on the assumption that the Transaction had taken place on 31 December 2010. Because of its nature, the pro forma financial information may not give a fair reflection of Village`s financial position after the Transaction, or the effect of the Transaction on Village`s future earnings. The calculation of the pro forma financial information is the responsibility of the directors of Village. Before After the Percentage After the Percentage acquisition change Transaction change of the sale assets and
liabilities from Simmers1,2 Earnings per (2.78) (59.36) Village share (cents)
(2 035)% (36.75) 38% Headline (2.78) (59.39) earnings per Village share (cents) (2 036)% (36.78) 38% Net asset value 39.06 337.25 349.36 per Village share (cents) 763% 3.6%
Net tangible 17.70 317.30 322.79 asset value per Village share (cents) 1 693% 1.7% Notes and assumptions: 1 The "Before" column is based on the unaudited condensed consolidated statement of financial position of Village as at 31 December 2010 and unaudited condensed consolidated statement of comprehensive income of Village for the six months ended 31 December 2010 released on SENS on 29 March 2011. These results did not include the recent transaction concluded with Simmers in terms of which Village acquired certain assets and liabilities from Simmers ("the sale assets and liabilities"), the details of which are set out in the circular to Village shareholders issued on 2 March 2011. 2 The "After the acquisition of the sale assets and liabilities from Simmers" column presents the unaudited pro forma financial position after the acquisition of the sale assets and liabilities. 3 The "After the Transaction" column presents the unaudited pro forma financial position after the implementation of the disposal of the Sale Shares. 4 The cash proceeds received have been utilised to reduce finance costs at Village`s cost of borrowings of 13,5% per annum. 22 July 2011 Sponsor Java Capital Attorneys Cliffe Dekker Hofmeyr Investor relations Vestor Date: 22/07/2011 08:37:01 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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