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Introduction of thebe mining resources as Sentula’s Strategic Black Economic Empowerment Partner
SENTULA MINING LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1992/001973/06)
Share code: SNU ISIN: ZAE000107223
(“Sentula” or “the Company”)
ANNOUNCEMENT RELATING TO THE INTRODUCTION OF THEBE MINING RESOURCES
(PROPRIETARY) LIMITED (“THEBE MINING RESOURCES”) AS SENTULA’S STRATEGIC BLACK
ECONOMIC EMPOWERMENT PARTNER
1. Background
Shareholders of Sentula (“Shareholders”) are referred to the announcements dated 2 March 2012
and 9 May 2012, relating to Sentula?s Broad-Based Black Economic Empowerment Transaction (“B-
BBEE Transaction”). In terms of the B-BBEE Transaction, Shanike Investments No 171 Proprietary
Limited (RF) (“BEE Co“) was established to acquire a 16.675% direct equity interest in Sentula
Contracting Proprietary Limited (“Sentula Contracting”), which holds Sentula?s South African mining
services businesses (being Benicon Opencast Mining (Proprietary) Limited, Classic Challenge
Trading (Proprietary) Limited, JEF Drill and Blast (Proprietary) Limited and Ritchie Crane Hire
(Proprietary) Limited). Following implementation of the B-BBEE Transaction on 9 May 2012, the
South African mining services businesses achieved an effective Black ownership of more than 25%
as measured in terms of the Department of Trade and Industry Codes of Good Practice (“DTI
Codes”).
On 17 September 2012, Sentula announced a further empowerment transaction with BEE Co, to
introduce BEE Co as a 26% shareholder in Sentula?s wholly-owned subsidiary Benicon Mining
(Proprietary) Limited (“Benicon Mining”), which holds Sentula?s Bankfontein coal project (“Bankfontein
Empowerment Coal Transaction”). The completion date for the Bankfontein Empowerment Coal
Transaction is expected to be in the final quarter of 2012, and will result in Benicon Mining achieving
26% Historically Disadvantaged South African ownership, as required in terms of the Broad-based
Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry (“Mining
Charter”).
2. Introduction of Thebe Mining Resources as a 40% shareholder in BEE Co
The shareholding of BEE Co currently comprises Sentula (1%), The Sentula Mining Empowerment
Trust (“Empowerment Trust”) (33%), Sentula Mining Employee Trust (“Employee Trust”) (33%) and
Anglo American Khula Mining Fund Proprietary Limited (“AAKMF”) (33%).
Shareholders were advised at the time of announcing the B-BBEE Transaction as well as at the time
of announcing the Bankfontein Empowerment Coal Transaction that Sentula, together with AAKMF,
were in the process of identifying a 'Strategic BEE Partner', which would be issued with an effective
40% of the issued share capital of BEE Co. Following the share issue by BEE Co to the Strategic
BEE Partner, the Employee Trust, the Empowerment Trust and AAKMF shareholdings would dilute,
with the resultant shareholding constituted as follows: Strategic BEE Partner (40%), the Employee
Trust (20%), the Empowerment Trust (20%), AAKMF (20%) and Sentula holding 1 share representing
0.0001%.
Sentula, together with AAKMF, is pleased to announce that it has selected Thebe Mining Resources
as its Strategic BEE partner (“the Proposed SBP Transaction”).
Following consultation with the JSE Limited, the Proposed SBP Transaction has been aggregated
with the B-BBEE Transaction, following which aggregation it is a Category 2 Transaction.
3. Overview of Thebe Mining Resources
Thebe Mining Resources represents the most recent initiative of Thebe Investment Corporation
(“Thebe”) in expanding its already diverse portfolio of investments into the mining and mining related
sector, an identified growth area for the Thebe group. Since Thebe Mining Resources? establishment
as a subsidiary of Thebe in 2010, Thebe Mining Resources has remained focused on identifying
sustainable mining investments and meaningful partnerships across various commodity groups,
including coal across the Southern African region. Thebe Mining Resources' unique empowerment
characteristics are enhanced by its ability to assess and structure the appropriate funding
complimentary to its own capital contribution, thus representing it as a compelling partner for South
African companies seeking to meaningfully comply with the objectives of the Mining Charter.
Thebe, currently with an investment portfolio in excess of R5.5 billion, is one of the pioneers of B-
BBEE in South Africa since its establishment in 1992. Its main shareholder, the Batho Batho Trust is
a community based organisation established to promote the social and economic development of
black people and woman. In line with Thebe's continued mission, Thebe Mining Resources strives to
be a truly South African trusted and respected company of integrity, actively managing mining
investments to optimise shareholder value, whilst providing sustainable benefit to the community.
4. Mechanics of the Proposed SBP Transaction
The Proposed SBP Transaction will be implemented as follows:
- Thebe Mining Resources, through its wholly-owned special purpose vehicle, Mainstreet 1057
Proprietary Limited (RF), will subscribe for ordinary no par value shares in the ordinary share
capital of BEE Co, constituting 40% of the entire issued share capital of BEE Co (“Subscription
Shares”) for a subscription price of R10 million.
- BEE Co will use the proceeds of Thebe Mining Resources' subscription to subscribe for one
ordinary no par value share in the ordinary share capital of Sentula Contracting at a subscription
price of R9 million, and one ordinary share with a par value of R1.00 in the issued ordinary share
capital of Benicon Mining for a subscription price of R1 million.
- The additional one ordinary no par value share in Sentula Contracting issued to BEE Co will
represent 0.025% of Sentula Contracting?s total issued share capital of 4001 ordinary no par
value shares, which means that BEE Co's shareholding of 16.675% in Sentula Contracting will
increase marginally to 16.7%. The additional one ordinary share with a par value of R1.00 in
Benicon Mining issued to BEE Co will represent 0.1% of Benicon Mining?s total issued share
capital of 1000 ordinary shares, which means that BEE Co's shareholding of 26% in Benicon
Mining will increase marginally to 26.1%.
- Thebe Mining Resource?s shareholding is subject to a lock-in period expiring on 28 February
2017 in line with the ownership measurement date of the DTI Codes, at the end of which period
Thebe Mining Resources shall be entitled to exchange its shares in BEE Co, at fair market
value, for shares in Sentula at the 30 day volume weighted average price and subject to the
requisite regulatory and shareholder approvals.
5. Transaction cost
As announced in the B-BBEE Transaction detailed terms announcement of 2 March 2012, the
estimated cost of implementing the B-BBEE Transaction, calculated in accordance with the statement
on share based payments in terms of International Financial Reporting Standards (“IFRS2”), was
R12.53 million. The introduction of Thebe Mining Resources as Sentula's Strategic BEE Partner
results in a further incremental once-off IFRS2 charge of R5.03 million. This IFRS2 cost will be
charged to Sentula's income statement as a once-off charge in the financial reporting period in which
the transactions become effective and does not represent a cash cost. The transaction
implementation expenses of the B-BBEE Transaction and Proposed SBP Transaction were,
respectively, approximately R7 million and R1.8 million.
6. Unaudited pro forma financial effects
The table below sets out the unaudited pro forma financial effects which illustrate the impact of the B-
BBEE Transaction and the Proposed SBP Transaction on the earnings per share (“EPS”), headline
earnings per share (“HEPS”), net asset value per share (“NAV”) and tangible net asset value per
share (“TNAV”) for the financial year ended 31 March 2012.
The unaudited pro forma financial effects are presented for illustrative purposes only and because of
their nature may not fairly present Sentula's financial position, changes in equity, results of operations
or cash flows after the B-BBEE Transaction and the Proposed SBP Transaction. The board of
directors of Sentula is responsible for the preparation of the unaudited pro forma financial effects.
It has been assumed for purposes of the unaudited pro forma financial effects that the B-BBEE
Transaction and the Proposed SBP Transaction took place with effect from 1 April 2011 for statement
of comprehensive income purposes, and on 31 March 2012 for financial position purposes.
Unaudited pro forma effects for the financial year ended 31 March 2012 after the B-BBEE
Transaction:
Before the B-BBEE After the B-BBEE
Percentage change (%)
Transaction Transaction
EPS (cents) (88.93) (92.29) (3.78 )
HEPS (cents) 21.71 18.35 (15.48 )
NAV per share (cents) 418.37 418.03 (0.08 )
TNAV per share (cents) 342.66 342.31 (0.10 )
Shares in issue (000's) 581,005 581,005
Weighted average number of 581,005 581,005
shares in issue (000's)
Diluted weighted average number 581,005 581,005
of shares in issue (000's)
Unaudited pro forma effects for the financial year ended 31 March 2012 after the Proposed SBP
Transaction:
Percentage
Total
After the B- After the change for
cumulative
BBEE Proposed SBP Proposed SBP
percentage
Transaction Transaction Transaction
change
only (%)
EPS (cents) (92.29) (93.47 ) (1.28) (5.11 )
HEPS (cents) 18.35 17.17 (6.43) (20.91 )
NAV per share (cents) 418.03 419.44 0.34 0.26
TNAV per share (cents) 342.31 343.72 0.41 0.31
Shares in issue (000's) 581,005 581,005
Weighted average number of 581,005 581,005
shares in issue (000's)
Diluted weighted average number 581,005 581,005
of shares in issue (000's)
Notes:
1. The “Before the B-BBEE Transaction” column has been extracted without adjustment from Sentula's audited
consolidated results for the year ended 31 March 2012.
2. The “After the B-BBEE Transaction” EPS and HEPS assumes:
a. the adjustment of the IFRS2 charge in respect of AAKMF of R12.531 million; and
b. payment of once-off implementation expenses of R7 million. This will not have a continuing effect on
Sentula’s financial results.
3. The “After the B-BBEE Transaction” NAV and NTAV assumes:
a. the payment of the once-off implementation expenses of R7 million; and
b. an equity contribution of R5 million from AAKMF.
4. The “After the Proposed SBP Transaction” EPS and HEPS assumes:
a. the adjustment of the IFRS2 charge in respect of Thebe Mining Resources of R5.028 million; and
b. payment of once-off implementation expenses of R1.8 million. This will not have a continuing effect on
Sentula’s financial results.
5. The “After the Proposed SBP Transaction” NAV and NTAV assumes:
a. the payment of the once-off implementation expenses of R1.8 million; and
b. an equity contribution of R10 million from Thebe Mining Resources.
7. Conditions Precedent
The Proposed SBP Transaction is subject to the fulfillment of the conditions precedent set out below
and will become effective on the first business day following the date on which the last of the
conditions precedent is fulfilled or waived:
- The Subscription Call Option Exercise Notice, in terms of which BEE Co is obliged to issue the
Subscription Shares to Thebe Mining Resources, is signed by representatives of Sentula and
AAKMF and delivered to BEE Co;
- The BEE Co Shareholders Agreement is entered into between the shareholders of BEE Co and
BEE Co, and becomes unconditional in accordance with its terms;
- The authorised share capital of Sentula Contracting is converted from 4,000 ordinary shares with
a par value of R1.00 each to 4,000 ordinary shares of no par value;
- The authorised share capital of Sentula Contracting is increased from 4,000 ordinary no par
value shares to 10,000 ordinary no par value shares;
- The authorised share capital of BEE Co is increased from 1,000 ordinary no par value shares to
1,500,000 ordinary no par value shares; and
- Each of the agreements relating to the Proposed SBP Transaction being entered into and
becoming unconditional in accordance with their terms.
The completion date for the Proposed SBP Transaction is expected to be before the end of the final
quarter of 2012.
Johannesburg
29 October 2012
Investment bank and transaction sponsor
The Standard Bank of South Africa Limited
Sponsor
Merchantec Capital
Attorneys and legal advisors
Edward Nathan Sonnenbergs Inc.
IR Advisors
College Hill
Financial adviser to the Anglo American Khula Mining Fund
Vunani Corporate Finance
Date: 29/10/2012 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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