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Update on the Rio Tinto and Anglo American divestment, the BBBEE transaction and update to cautionary announcement
PALABORA MINING COMPANY LIMITED
(Incorporated in the Republic of South Africa)
Registration number – 1956/002134/06
JSE Code: PAM ISIN: ZAE000005245
("Palabora" or "the Company")
ANNOUNCEMENT PERTAINING TO:
• UNCONDITIONALITY OF RIO TINTO GROUP ("RIO TINTO") AND ANGLO SOUTH
AFRICA CAPITAL PROPRIETARY LIMITED'S ("ANGLO AMERICAN") BINDING
AGREEMENT ("RIO/ANGLO SALE AGREEMENT") TO SELL THEIR RESPECTIVE
EFFECTIVE SHAREHOLDINGS IN PALABORA ("RIO TINTO AND ANGLO AMERICAN
DIVESTMENT");
• UNCONDITIONALITY OF PALABORA'S BROAD-BASED BLACK ECONOMIC
EMPOWERMENT ("BBBEE") TRANSACTION ("BBBEE TRANSACTION");
• NOTICE OF ADOPTION OF RESOLUTION TO PROVIDE FINANCIAL ASSISTANCE;
AND
• UPDATE TO CAUTIONARY ANNOUNCEMENT.
1. RIO TINTO AND ANGLO AMERICAN DIVESTMENT
Shareholders of Palabora ("Shareholders") are referred to the announcements published on the
Stock Exchange News Service of the JSE Limited ("SENS") on 11 December 2012 and
28 December 2012, and the renewal of/update to cautionary announcements published on 12
February 2013, 27 March 2013, 13 May 2013, 1 July 2013 and 5 July 2013, regarding the
conclusion of the Rio/Anglo Sale Agreement between Rio Tinto, Anglo American and a
consortium of purchasers comprising South African and Chinese entities led by the Industrial
Development Corporation of South Africa SOC Limited and Hebei Iron & Steel Group Co. Ltd
("Consortium").
Shareholders are advised that it is Palabora's understanding that the Rio/Anglo Sale Agreement
has become unconditional and therefore effective following the fulfilment of the final remaining
suspensive conditions thereto, upon:
• the completion agreement governing the BBBEE Transaction becoming unconditional on
15 July 2013; and
• no material adverse change having occurred between the signature date of the Rio/Anglo
Sale Agreement and the date of the fulfilment of the suspensive condition referred to
above, being 15 July 2013.
As previously advised, the Consortium will accordingly be required to extend an offer to all
remaining Shareholders to acquire their shares in Palabora ("Mandatory Offer") upon the Rio
Tinto and Anglo American Divestment being completed and the Consortium acquiring a beneficial
interest in the relevant shares in Palabora. The Rio Tinto and Anglo American Divestment is
presently anticipated by Rio Tinto to be completed on or about 31 July 2013 ("Closing Date").
Pursuant to such Mandatory Offer, and subject to and in accordance with the requirements of the
Companies Act, 2008 ("Companies Act"), and the Fundamental Transactions and Takeover
Regulations contained in Chapter 5 of the Companies Regulations, 2011 ("Companies
Regulations"), as amended, Palabora understands that minority Shareholders are to be offered a
consideration of ZAR 110 per share in Palabora, plus a non-compounding escalation of 5% per
annum over the period from 1 July 2012 up until the closing date of the Rio Tinto and Anglo
American Divestment, being the Closing Date. Pursuant to a recent amendment to the Rio/Anglo
Sale Agreement, such escalation is now conditional on Palabora having maintained a threshold
cash balance up until 30 June 2013. Though the determination of whether such threshold cash
balance has been maintained is subject to an independent audit, Palabora, to the best of its
knowledge, is of the view that the threshold cash balance has been met. Should Palabora pay
any dividend prior to the Closing Date, the per share consideration payable to the remaining
Shareholders under the Mandatory Offer will be reduced by an amount equal to the per share
amount of such dividend/s.
This announcement does not constitute a firm intention announcement as contemplated in
Regulation 101(1) of the Companies Regulations to the Companies Act.
2. BBBEE TRANSACTION
Shareholders are referred to the announcements regarding the BBBEE Transaction published on
SENS on 1 July 2013 and 5 July 2013 wherein Palabora noted that the final suspensive condition
required to be fulfilled in order for the BBBEE Transaction to become unconditional was the
receipt by Palabora Copper Proprietary Limited ("Palabora Copper") of written confirmation of the
registration of the cession of Palabora's seven converted mining rights in Palabora Copper's
name in the Mineral and Petroleum Titles Registration Office ("MPTRO").
Palabora is pleased to announce that, on 15 July 2013, Palabora Copper received written
confirmation of the registration of the cession of these rights in Palabora Copper's name in the
MPTRO, and that the BBBEE Transaction has accordingly become unconditional and will, in
accordance with its terms, therefore be implemented on 1 August 2013.
As previously advised, Palabora's remaining old order mining right, which has not yet been
converted, will be transferred to Palabora Copper once it has been converted and the requisite
consent to its transfer to Palabora Copper has been obtained from the Department of Mineral
Resources ("DMR"). Palabora continues to engage with the DMR in order to achieve the
conversion of this right and its transfer to Palabora Copper. Shareholders will be kept apprised of
developments in this regard.
3. NOTICE OF ADOPTION OF RESOLUTION TO PROVIDE FINANCIAL ASSISTANCE
On 22 September 2005 Palabora entered into a facility agreement between, amongst others,
Palabora (as borrower) and certain lenders ("Facility Agreement"). As part of the BBBEE
Transaction, Palabora has sold and will transfer the majority of its assets and liabilities to
Palabora Copper. In order to give effect to the sale and transfer, the parties to the Facility
Agreement have, amongst other things, agreed to a transfer and/or novation of Palabora's rights
and liabilities under the finance documents (as described in the Facility Agreement) to Palabora
Copper ("Transfer"). Pursuant to the Transfer, Palabora is required to provide certain financial
assistance to Palabora Copper in connection with Palabora Copper's obligations under, amongst
other things, the Facility Agreement and a guarantee and indemnity provided by Palabora Copper
in favour of Berrywood Investments 6 Proprietary Limited (as security company for the lenders).
Shareholders are advised that a resolution of the Board of Directors of Palabora contemplated by
sections 45(2) and 45(3) of the Companies Act was adopted on 24 June 2013, in terms of which
Palabora is authorised to provide the financial assistance described in this paragraph of the
announcement. A copy of the resolution is available on Palabora's website at
http://www.palabora.com.
4. UPDATE TO CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the renewal of/update to cautionary announcements published on
SENS on 1 July 2013 and 5 July 2013 and are advised to continue exercising caution when
dealing in Palabora's securities until the circular containing the Mandatory Offer is posted to
Shareholders and a further announcement to this effect is made.
Phalaborwa
18 July 2013
Sponsor
One Capital
Date: 18/07/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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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,
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