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VIL - Village Main Reef Limited - Acquisition of DRDGOLD`S interest in

Release Date: 13/02/2012 08:30
Code(s): VIL
Wrap Text

VIL - Village Main Reef Limited - Acquisition of DRDGOLD`S interest in Blyvooruitzicht Gold Mining Company Limited ("Blyvoor") and withdrawal of cautionary 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") ACQUISITION OF DRDGOLD`S INTEREST IN BLYVOORUITZICHT GOLD MINING COMPANY LIMITED ("BLYVOOR") AND WITHDRAWAL OF CAUTIONARY 1. INTRODUCTION Shareholders of Village ("Shareholders") are referred to the joint cautionary announcement ("joint cautionary announcement") by DRDGOLD Limited ("DRDGOLD") and Village published on SENS on 8 November 2011 which set out the terms of the proposed acquisition ("Proposed Acquisition") by Village of DRDGOLD`s entire interest in Blyvoor, comprising all amounts owed to DRDGOLD by Blyvoor ("Sale Claims") and all the ordinary shares in Blyvoor held by DRDGOLD ("Sale Shares"). Shareholders are hereby advised that a binding agreement ("Agreement") has now been concluded between Village, DRDGOLD, Blyvoor and Business Venture Investments No 1557 (Proprietary) Limited (a wholly owned subsidiary of Village)("Purchaser"), in relation to the Proposed Acquisition. The Proposed Acquisition is divided into 2 parts, viz. the Part A Sale and the Part B Sale. In terms of the Part A Sale, the Sale Claims are sold to the Purchaser and in terms of the Part B Sale, the Sale Shares are sold to the Purchaser. The rationale for the Proposed Acquisition was set out in the joint cautionary announcement. 2. DETAILS OF THE PROPOSED ACQUISITION 2.1 Purchase Consideration The purchase consideration payable for the Sale Claims shall be discharged by the Purchaser, by Village issuing 85 714 286 new ordinary shares in Village ("Village Shares") at an issue price of R1.75 per Village Share ("Consideration Shares") and the purchase consideration payable for the Sale Shares shall be discharged by the Purchaser paying a cash amount of R1, in aggregate. 2.2 Part A Sale The Part A Sale is subject to the fulfilment or waiver (if applicable), of certain conditions precedent ("Part A Conditions Precedent"). Upon fulfilment, or waiver (if applicable), of the last of the Part A Conditions Precedent ("Part A Closing Date"), DRDGOLD will: 2.2.1 transfer the Sale Claims to the Purchaser and Village will issue the Consideration Shares to DRDGOLD, on the basis that 65 714 286 of the Consideration Shares will be held directly by DRDGOLD whilst the remaining 20 000 000 Consideration Shares ("Escrow Shares") will be held by an escrow agent as nominee for DRDGOLD
pending the outcome of the Part B Conditions Precedent (as defined and set out in paragraph 2.3 below); 2.2.2 appoint the Purchaser as its agent to render the corporate services on behalf of DRDGOLD under the existing Corporate
Services Management Agreement between DRDGOLD and Blyvoor ("Agent Appointment"); and 2.2.3 cede to the Purchaser its rights to receive any dividend declared by Blyvoor in respect of the Sale Shares ("Dividend Cession").
2.3 Part B Sale The Part B Sale is subject to the fulfilment, or waiver (if applicable), of the following conditions precedent ("Part B Conditions Precedent"): 2.3.1 by not later than 17h00 on the second anniversary of the signature date of the Agreement, the Department of Mineral Resources ("DMR") has granted the conversion of Blyvoor`s old order mining right and the new order mining right has been
notarially executed and registered in the Mining Titles Office ("Conversion"); and 2.3.2 by not later than 17h00 on the third anniversary of the signature date of the Agreement, the DMR has unconditionally approved the
transfer of DRDGOLD`s interest in Blyvoor to the Purchaser in terms of section 11 of the Mineral & Petroleum Resources Development Act, No 28 of 2002 or conditionally approved it on terms and conditions which each of DRDGOLD and the Purchaser
confirms to be acceptable ("Section 11 Approval"). Upon fulfilment of the Part B Conditions Precedent, the Escrow Shares together with any accrued dividends thereon will be released to DRDGOLD and the Sale Shares will be transferred to the Purchaser. The Agreement provides for the possibility that Conversion fails to take place, or that Conversion takes place but Section 11 Approval is not obtained. In the event that either of these circumstances occurs, the Agreement envisages a number of outcomes which are primarily determined by reference to the reasons for the failure of the Conversion and/or the failure to obtain Section 11 Approval. The outcomes set out in the Agreement determine whether: - the sale of the Sale Shares is implemented and the Sale Shares are transferred to the Purchaser; - a portion of the Sale Claims revert to DRDGOLD; - the Escrow Shares together with any accrued dividends thereon are released to DRDGOLD or to the Purchaser; - the Agent Appointment continues or is terminated; and/or - the Dividend Cession is cancelled. In the unlikely event that Conversion is refused during the interim period (i.e. the period commencing on the earlier of (i) 2 May 2012 and (ii) the Part A Closing Date and terminating on a date occurring 6 (six) months thereafter), the Proposed Acquisition will be unravelled and restitution will take place. Shareholders will be informed of the relevant outcome should either of the circumstances contemplated above occur. 3. FINANCIAL EFFECTS The pro forma financial information set out below has been prepared for illustrative purposes only, to provide information on how the Acquisition may have impacted on the historical results and financial position of Village. The loss and headline loss per share figures illustrate the possible financial effects if the Proposed Acquisition had taken place on 1 April 2010, whilst the net asset and net tangible asset per share figures have been based on the assumption that the Proposed Acquisition had taken place on 30 June 2011. Because of its nature, the pro forma financial information may not give a fair reflection of Village`s financial position after the Proposed Acquisition, or the effect of the Proposed Acquisition on Village`s future earnings. The calculation of the pro forma financial information is the responsibility of the directors of Village. Before the After the Percentage
Proposed Proposed change Acquisition Acquisition Loss per Village share (cents) (297.49) (338.10) -13.7% Headline loss per Village share (81.88) (65.73) 19.7% (cents) Net asset value per Village share 201.66 199.13 -1.3% (cents) Net tangible asset value per Village 192.45 175.52 -8.8% share (cents) Notes and assumptions: 1 The amounts set out in the "Before the proposed acquisition" column have been extracted from the audited financial results of Village for the fifteen months ended 30 June 2011. 2 The adjustments to the "Before the proposed acquisition column" have been extracted from the financial statements of Blyvoor for the 15 months ended 30 June 2011. 3 Proposed Acquisition costs are estimated to amount to R2.1 million. 4 With the exception of transaction costs, all adjustments have a continuing effect. CLASSIFICATION OF THE PROPOSED ACQUISITION AND WITHDRAWAL OF CAUTIONARY In terms of the Listings Requirements of the JSE Limited, the Proposed Acquisition is categorised as a Category 2 transaction. Accordingly, approval by Village shareholders is not required. Village shareholders are advised that caution is no longer required to be exercised by shareholders when dealing in their securities. 13 February 2012 Sponsor Java Capital Attorneys Cliffe Dekker Hofmeyr Incorporated Investor relations Vestor Date: 13/02/2012 08:30:40 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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