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PET - Petmin Limited - Petmin sells SamQuarz silica mine and withdrawal of

Release Date: 13/09/2011 08:54
Code(s): PET
Wrap Text

PET - Petmin Limited - Petmin sells SamQuarz silica mine and withdrawal of Cautionary PETMIN LIMITED Incorporated in the Republic of South Africa Registration Number 1972/001062/06 Share Code JSE: PET & ISIN: ZAE000076014 Share Code AIM: PTMN ("Petmin" or "the Company") Petmin sells SamQuarz silica mine and withdrawal of Cautionary Petmin has sold its SamQuarz silica mine in Mpumalanga for R259 million in cash, an average net return of 45% year on year after tax, for the six years since it acquired the operation for R85 million. The sale of SamQuarz (Pty) Ltd to Thaba Chueu Mining (Pty) Limited, a subsidiary of Spain`s Grupo Ferroatlantica SL, was agreed to at a Petmin board meeting on Monday 12 September 2011. The final purchase price may be adjusted upwards to around ZAR 270 million once final approval is secured from the Competition Commission and Department of Mineral Resources. SamQuarz, near Delmas, is the largest producer of high quality silica in South Africa and a key supplier to the South African clear glass and metallurgical industries. It has stable production of 1.1 million tonnes per annum and a life of mine in excess of 40 years. Bradley Doig, Petmin Chief Operating Officer, said: "The sale of SamQuarz for a 305% overall return is consistent with Petmin`s reputation for delivering superior value to shareholders. We acquire good undervalued and or underperforming assets, operate them efficiently, and use the proceeds of a well timed sale to invest in high potential exploration and development projects." Petmin`s return on SamQuarz will pay for and fund current projects and new investments aligned to its focus on commodities which support infrastructure development and which are being used in the steel value chain. Petmin`s investments this year include a 50% stake in a Liberian iron ore joint venture, an entry into Turkish copper (potentially securing up to 37.5%), and a phased investment in Canadian iron sands (potentially securing up to 40%). Petmin has joint management control in all of the above projects. These projects provide Petmin with significant potential optionality and are clearly representative of Petmin`s strategy to diversify geographically into those commodities that are consumed in the steel value chain, specifically in infrastructure development and urbanization. NOTES The sale is subject to normal warranties applicable to a transaction of this nature. At 30 June 2011, SamQuarz has been accounted for as a non current asset held for sale in terms of IFRS 5 and the comparatives have been re stated accordingly. RATIONALE AND USE OF PROCEEDS Petmin has a history of delivering superior returns to shareholders by cost effectively purchasing and developing assets and disposing of them for superior returns, returning value to shareholders and reinvesting the gains in new assets. Petmin acquired SamQuarz as an underperforming asset and restructured the business into a long term, sustainable, reliable cash producing asset. The cash flows from SamQuarz provided Petmin with a stable base from which to build on its growth strategy. The disposal will provide Petmin with significant cash resources to be deployed in accelerating the Business of Tomorrow strategy and funding the various project development requirements in Petmin`s pipeline of projects. FINANCIAL EFFECTS The effects on Petmin`s basic earnings per share, headline earnings per share and net asset value per share are outlined below. The table below sets out the pro forma financial effects of the disposal of SamQuarz, based on Petmin`s published reviewed results for the year ended 30 June 2011. The financial effects are presented for illustrative purposes only and because of their nature may not give a fair reflection of the Company`s results, financial position and changes in equity after the transaction. It has been assumed for purposes of the pro forma financial effects that the transaction took place with effect from 1 July 2010 for income statement purposes and 30 June 2011 for balance sheet purposes. The directors of Petmin are responsible for the preparation of the financial effects. Before Change After Change
(1) (2) (3) (4) Profit (Loss) per share (cents) 17.50 4.47 21.97 26% Headline profit (loss) per share (cents) 17.50 -2.54 14.96 -15% Weighted number of shares in issue 576,908,188 - 576,908,188 - Net asset value per share (cents) 228.31 7.01 235.32 3% Net tangible asset value per share (cents) 227.99 7.01 235.00 3% Total shares in issue at 30 June 2010 576,908,188 - 576,908,188 - Notes: 1. This column represents the "Before" financial information, which has been extracted, without adjustment, from the published reviewed consolidated results of Petmin for the twelve months ended 30 June 2011. 2. This column reflects the effect of the sale 3. This column reflects the effect after the sale 4. This column reflects the percentage change the above transaction has on the performance per ordinary share of Petmin. The assumptions used above are: - Earnings remain constant; - Interest rates on cash utilised assumed to be 6% per annum and the sale is 100% cash; - Taxation has been accounted for at the standard rates for both income tax and capital gains tax. CONDITIONS PRECEDENT The transaction is subject to fulfilment of all the normal statutory approvals; and the Sale is specifically subject to the following key conditions: - By 9 December 2011, the Sale being unconditionally or conditionally approved by the Competition Authorities in terms of the South African Competition Act; - By 31 March 2012, the Sale and all agreements and transactions contemplated having been unconditionally or conditionally approved by the South African Minister of Minerals and Energy in terms of section 11 of the Mineral and Petroleum Resources Development Act (MPRDA). CATEGORISATION, JSE LISTINGS REQUIREMENTS - The disposal of SamQuarz constitutes a Category 2 transaction under Section 9 of the JSE Listings Requirements and a `substantial transaction` under Rule 12 of the AIM rules. WITHDRAWAL OF CAUTIONARY - Shareholders are referred to the cautionary announcement dated 5 August 2011, and are advised that as the contents referred to therein have ceased to have any relevance or effect on the Company, caution is no longer required to be exercised by shareholders when dealing in their securities. Johannesburg 13 September 2011 Enquiries: Petmin Bradley Doig (COO) +27 824 597 818 Jonathon Rees (media) +27 76 185 1827 Nominated Advisor (AIM) Numis Securities Limited John Harrison +44 207 260 1000 Corporate Broker (AIM) Numis Securities Limited James Black +44 207 260 1000 Sponsor and Corporate Advisor (JSE) River Group Andrew Lianos +27 834 408 365 Date: 13/09/2011 08:54:46 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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