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Renewal of cautionary and execution of transactional agreement to acquire PLA
Jubilee Platinum PLC
Registration number (4459850)
JSE share code: JBL
AIM share code: JLP
ISIN: GB0031852162
("Jubilee" or the "Company")
Not for release, publication or distribution in whole or in part in,
into or from any jurisdiction where to do so would constitute a
violation of the relevant laws or regulations of such jurisdiction.
JUBILEE EXECUTES TRANSACTIONAL AGREEMENTS TO ACQUIRE PLATINUM
AUSTRALIA LIMITED (“PLA”) (“THE TRANSACTION”)
AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to previous cautionary announcements
released on the Securities Exchange News Service (“SENS”) of the JSE
Limited (“JSE”) and through the Regulatory News Service (”RNS”)of the
London Stock Exchange (“LSE”), the most recent being on 19 February
2013.
The directors of Jubilee are pleased to announce that Jubilee has
executed the Implementation Deed and Supporting Transactional
Documents (“Transactional Agreements”) relating to the acquisition of
PLA by Jubilee(“Transaction”) to be effected by way of a scheme of
arrangement in terms of Australian law (“Scheme”).
HIGHLIGHTS
- The Transaction is a share based transaction whereby Jubilee
acquires all of the listed ordinary shares in PLA by offering to
current shareholders in PLA Jubilee share for every 2.593 PLA shares
held (“Enlarged Group”.)
- The combined entity of Jubilee and PLA will result in a
significant South African platinum group metals producer supported by
strong prospects for expansion through the development of its near
surface resources
- Jubilee is able to accelerate its Mine to Metals Strategy
through the Transaction which would include a fully operational
platinum mine and processing plant together with Jubilee’s
operational smelting operation
- Jubilee’s mines to metal strategy will be brought forward by
some 18 months and the resultant earlier cash flow will position the
company well to secure further opportunities in the near-term
- The input of Dilokong Chrome Mine tailings will enable the
Smokey Hills mine to be brought back into production at a more modest
output rate than previously designed thus extending mine life and
ensuring that mine production targets are more achievable
- The Enlarged Group would have exclusive right to the ConRoast
smelting process ("ConRoast"), enhancing earnings from its own
production and giving access to third party earnings by entering into
agreements to utilise ConRoast
- The Enlarged Group has a mission to access platinum-bearing
tailings, open up near-surface platinum-bearing chrome deposits and
develop smaller less capital intensive mining operations
- The Enlarged Group will have a 63% shareholding in the Tjate
project which is amongst the largest undeveloped platinum resources
in South Africa
Pursuant to the Scheme, if implemented, Jubilee will acquire all
PLA's ordinary shares through the issuance of Jubilee shares which
new shares (”Scheme Shares”) will be listed on the Australian Stock
Exchange (“ASX”) and an application will be made for the shares to be
admitted to trading on the AIM market of the LSE.
The Transaction brings together strongly complementary assets forming
an enlarged group consisting of operational mining and processing
assets and at surface platinum containing chrome tailings and surface
stocks, supported by a pipe-line of near surface platinum projects
which are all underpinned by the large Tjate platinum project.
The combination of these assets forms a unique platinum group metals
producer free of the burden of deep mining operations.
The Transaction offers a unique opportunity to the Jubilee
shareholder to acquire a shallow fully operational platinum mine and
processing plant, complemented by near surface platinum projects
valued at a significant premium to the Transaction value.
Leon Coetzer says “Jubilee has always been clear on its mission to
form a fully integrated Mine to Metals company by combining world
class platinum exploration assets with operational mines and refining
processes. This Transaction is driven both by the quality of assets
that are merged to form such an integrated company as well as the
opportunity offered to Jubilee shareholders in acquiring the assets
at such favourable terms. The Enlarged Group offers significant
value to both Jubilee and PLA shareholders in the formation of a
uniquely positioned platinum mining and processing company.”
1. Overview on PLA
PLA is an ASX listed exploration and mining company specialising in
platinum group elements. PLA owns 65.75% of the Smokey Hills Platinum
Mine, which is a shallow underground operation capable of producing,
at full design capacity, up to 80,000oz 4E PGM per annum. The mine
was placed on care and maintenance in June 2012, due to prevailing
low metal prices and pressure on securing further financing. The
current South Africa rand platinum price exceeds, by a significant
margin, the ruling rand value as at the time of placing the mine
under care and maintenance.
As separately announced by Jubilee on 14 December 2012, it is planned
to commence treating chrome tailings through the Smokey Hills
processing plant in first half of 2013 and if current metal prices
prevail, to restart underground mining operations during the second
half of 2013. The mine would be expected to ramp up to a production
level of approximately 60,000 oz PGM per annum in 2014.
PLA has two other advanced shallow PGM projects in South Africa, the
Rooderand Platinum Project (PLA earning 70% from Atla Mining) and the
Kalahari Platinum (PLA earning 49% from ARM platinum).
Following completion of a positive pre feasibility study, development
of the 4 Moz 4E PGM Rooderand Project is planned to commence as soon
as a Mining Right is issued, the issuance of the mining right is
subject to a current court interdict requesting the Department of
Mineral Resources to review the conditions under which it granted the
prospecting right for the property. Development envisages an initial
10 year life open pit operation, followed by a further 6 years of
treatment of low grade ore. This could be followed by a further 7
years of production from underground, producing 120,000 4E PGM ozs
per annum.
Following the completion of a positive definitive feasibility study,
development of the 6.7 Moz PGM open pit Kalahari Platinum Project it
is proposed to make application for a Mining Right in early 2013 with
a view to being in a position to commence development in late 2014.
The study envisages a production rate of 100,000 ozs PGM per annum.
2. Rationale for the Transaction
The Board believes that the combination of Jubilee’s exploration
assets, tailing retreatments assets, smelting process and current
operations and PLA’s portfolio of production, near term development
and exploration projects would result in a word class platinum group
with outstanding prospects in the current platinum arena.
The operations and intended near term operations are relatively
unique within the platinum sector as it combines operational assets
with shallow near term assets, which are underpinned by the large
underground Tjate Platinum mine project.
The Transaction creates an Anglo-Australian-South African platinum
metals-to-mining group with the potential to be a significant
producer within the industry.
With the exception of Tjate, all of the projects are near term with
relatively low capital requirements which the Board believe will
enable the Enlarged Group to fund from revenues and profit generated
from on-going production.
3. Principal terms and conditions of the Transaction
3.1 Scheme consideration
In terms of the Scheme it is proposed that Jubilee will, subject to
shareholder approval at a general meeting, acquire from eligible PLA
shareholders (“Scheme Shareholders”) all of the PLA ordinary shares
in issue, other than any PLA ordinary shares already held by it, or
by any person on behalf of or for the benefit of Jubilee (“Scheme
Shares”). As consideration Scheme Shareholders will receive fully
paid Jubilee shares in the form of Jubilee CHESS Depositary Interests
(“CDIs”), unless a Scheme Shareholder elects to receive Jubilee
shares in accordance with the terms of the Implementation Deed
(“Scheme Consideration”).
Certain PLA shareholders will be ineligible to receive the Scheme
Consideration, namely PLA shareholders whose registered address is a
place outside Australia and its external territories, New Zealand,
South Africa, United Kingdom, Germany, Switzerland, Hong Kong,
Singapore and Panama unless Jubilee and PLA are satisfied that such
country of residence permits the issue of Jubilee shares to such PLA
shareholder. Such shareholders entitlement will be sold on a
financial market on which Jubilee is listed and net cash proceeds
paid to each ineligible PLA shareholder.
3.2 Funding arrangements
The Transaction is a share based transaction whereby Jubilee acquires
all of the listed ordinary shares in PLA by offering current
shareholders in PLA, Jubilee shares at a proposed ratio of 1 Jubilee
share for every 2.593 PLA shares held. This results in a 64% holding
for existing Jubilee shareholders, in the combined assets of the
Enlarged Group, before any debt conversion.
Also as part of the Transaction, 50% of current debt held by the
senior creditor in PLA will be converted into equity in the enlarged
group valued at approximately AU$11.1 million (£7.5 million). This
conversion of debt to equity will result in an overall interest of
54.5% for existing Jubilee shareholders in the Enlarged Group. It
will also enhance the Enlarged Group’s balance sheet enabling the
group to target project financing for the development of its targeted
projects.
The Transaction value places a significant discount to the valuation
value of the PLA assets determined by an Independent Expert, Venmyn
Deloitte (Pty) Limited, a subsidiary of Deloitte Consulting (Pty)
Limited.
In terms of the Transactional Agreements Jubilee will procure project
funding for the re-commissioning of the Smokey Hills mine of at least
ZAR190 million by the date of the Jubilee shareholder meeting to
approve the Transaction. The project funding is targeted at project
level leveraging off the enhanced balance sheet of the Smokey Hills
mining project to minimise dilution of Jubilee shareholders.
3.3 Effective date
The effective date for the Transaction will be the effective date of
the Scheme, which is anticipated to be the date of Court approval of
the Scheme, the final Court date anticipated to be mid-May 2013.
The Company anticipates holding a general meeting of shareholders
early May 2013.
3.4 Warranties
The Implementation Deed contains warranties, representations and
related undertakings, underpinned by disclosure letters, as are
normal for a transaction of this nature.
3.5 Exclusivity arrangements and break fee
In terms of the Implementation Deed PLA has granted Jubilee standard
exclusivity arrangements from the date of signature of the
Implementation Deed and ending on the earlier of:
- the date on which the Implementation Deed is lawfully terminated
in accordance with its terms;
- the implementation date, being 10 business days after the Scheme
becomes effective; and
- 30 June 2013.
The exclusivity period may be extended if agreed to by both PLA and
Jubilee in writing.
Subject to certain terms and conditions, should either PLA or Jubilee
withdraw from the Transaction, such party will be required to pay the
other party a break fee in an amount of A$400 000.
3.6 Board appointments
In terms of the Implementation Deed PLA shall be entitled to nominate
two individuals to the board of Jubilee, subject to shareholder
approval.
3.7 Conditions precedent
- The implementation of the Transaction is subject to the fulfilment
or waiver (where applicable) of, inter alia, the following conditions
precedent:
- Jubilee shareholders, in general meeting, passing the resolutions
necessary to effect the Transaction;
- obtaining approval for the Transaction from the South African
Competition Commission;
- the ASX granting approval for the admission of Jubilee to the
Official List and for the Official Quotation of Jubilee CDIs;
- execution of the funding agreements in relation to the funding
arrangements as described in paragraph 3.1 above;
- the Scheme becoming effective; and
- obtaining approval from the JSE, AIM and ASX for the listing of the
Scheme Shares.
4 Pro forma financial effects
Jubilee is busy finalising the pro forma financial effects of the
Transaction. A further announcement in this regard will be made in
due course.
5 Categorisation of the Transaction and further documentation
The Transaction constitutes a Category 1 transaction in terms of the
JSE Listings Requirements. Accordingly, a circular containing full
detail of the Transaction and a notice of general meeting of Jubilee
shareholders will be posted to Jubilee shareholders in due course.
The general meeting will provide shareholders with the opportunity to
consider and, if deemed fit, pass, with or without modification, the
ordinary resolutions required to approve and implement the
Transaction.
6 Renewal of cautionary announcement
Jubilee shareholders are advised to continue to exercise caution when
dealing in the Company’s securities until a further announcement
containing the pro forma financial effects is made.
Johannesburg
25 February 2013
Contacts
Jubilee Platinum plc
Colin Bird/Leon Coetzer
Tel +44 (0) 20 7584 2155 / Tel +27 (0)11 465 1913
Andrew Sarosi
Tel +44 (0) 1752 221937
JSE Sponsor
Sasfin Capital, a division of Sasfin Bank Limited
Angela Teeling-Smith/Sharon Owens
Tel +27 (0) 11 809 7500
NOMAD
finnCap Ltd
Matthew Robinson/Ben Thompson – corporate finance
Joanna Weaving – corporate broking
Tel +44 (0) 20 7220 0500
Shore Capital Stockbrokers Limited (Joint Broker)
Jerry Keen/Edward Mansfield
Tel: +44 (0) 20 7 408 4090
Bishopsgate Communications Ltd
Nick Rome/Anna Michniewicz/Ivana Petkova
Tel +44 (0) 20 7562 3350
25 January 2013
Johannesburg
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 25/02/2013 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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