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PLATFIELDS LIMITED - Acquisition of Gold Mining, Processing and Smelting Rights and Operations and Renewal of Cautionary Announcement

Release Date: 04/11/2013 17:29
Code(s): PLL     PDF:  
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Acquisition of Gold Mining, Processing and Smelting Rights and Operations and Renewal of Cautionary Announcement

Platfields Limited
Founded and registered on 13 March 2002
(Registration number 2002/005851/06)
Share code: PLL    ISIN: ZAE000151825
(“Platfields” or “the company”)

ACQUISITION OF GOLD MINING, PROCESSING AND SMELTING RIGHTS AND OPERATIONS
AND RENEWAL OF CAUTIONARY ANNOUNCEMENT

Terms of acquisition and background information
The board of directors of Platfields are pleased to announce that the
company has signed a binding term sheet dated 17 October 2013 with
Primrose Gold Mines Proprietary Limited (“the Vendor”) (Registration No.
1975/004700/07) (in business rescue), Mr KA Hart and Marula Minerals
Proprietary Limited (a wholly owned subsidiary of Platfields), to acquire
the business rights and operations relating to gold mining, gold
processing and gold smelting (“the transaction”) with effect from 17
October 2013 (“the effective date”) for a consideration of R3.2 million.
The consideration will be settled through the issue of 80 million new
shares at 4 cents per share. The transaction is zero rated for VAT but
should VAT be payable, this will be for the account of Platfields.

The business will operate under and to the extent of the Mining Right
held in favour of the Vendor.

The agreement is subject to the issue of the shares for the consideration
and approval by the Platfields board of directors. The agreement
provides for the nomination of two directors to the board of Platfields,
one being an executive director and the other an independent non-
executive director, details of which will be announced in due course.

The agreement also provides for Platfields to provide funding of
R3 000 000, which will be injected as a loan to Marula Minerals
Proprietary Limited for the repair and commencement of the Carbon In Pulp
(CIP), leaching and illusion sections of the gold processing plant for
the purpose of the gold tailing reprocessing operations.

The Vendor also holds surface assets being two mine dumps namely Waverley
and Stanhope, the combined quantity of the mine dumps is approximately
3 000 000 metric tonnes available for exploitation. Upon recommencement
of CIP, leaching and illusion sections of the gold processing plant, the
parties shall immediately implement mine dump reprocessing operations to
extract the residual gold contained therein for income generation
purposes.

The Vendor will be responsible for setting out a workable business plan
to execute the mining operation.

Undertakings
The Vendor has undertaken that the business operations are capable of
producing approximately 8 kilograms of gold per month upon the necessary
R3 000 000 loan funding being provided to repair the plant and commence
with the surface mining operations.

The business and its assets are not encumbered and there are no claims
against the business or its assets.
Nevertheless the agreement provides for the acquisition on an “as is”
basis.

Rationale
The board of Platfields considered it in the company’s best interests to
enter into this agreement in order to expand its mining interests into
other minerals and to introduce revenue and cash flow generating
operations to the company, ensuring the sustainability of the group.

In terms of the agreement Platfields has reserved the pre-emptive right
to acquire the Vendor’s asset base, including the property, mine and
surface rights, for a period of 6 months, renewable for 6 months
thereafter. Platfields will be required to finalise a technical
assessment within a three month period from the effective date. In the
event that the technical assessment proves approximately 1 000 000 (one
million) ounces of economically minable gold reserves or more, then
Platfields will be obliged to exercise its pre-emptive right. It is the
intention that the purchase price for the Vendor’s asset base will be
settled through this issue of new shares in Platfields.

In the event that the technical assessment proves less than 1 000 000
(one million) ounces of economically minable gold reserves, then
Platfields will exercise its pre-emptive right at its discretion. Should
the pre-emptive right not be elected, then Platfields will continue to
operate the business operations up to 28 February 2015 and thereafter the
parties will continue to operate the business operations as a joint
venture on an equal profit share basis.

Pro forma financial effects
The pro forma financial effects of the acquisition on Platfield’s loss
per share, headline loss per share, net asset value per share and net
tangible asset value per share for the six month period ended 31 August
2012 are set out below.

The pro forma financial information has been prepared for illustrative
purposes only, to provide information on how the transaction may have
impacted on the statement of financial position historical results and
financial position of Platfields.

Because of its nature, the pro forma financial information may not give a
fair reflection of Platfields’ financial position after the transaction,
or the effect of the transaction on Platfields’ future earnings.

The calculation of the pro forma financial information is the
responsibility of the directors of Platfields.


                                                  After the
                                         Before transaction          %
                                        (cents)     (cents)     change
Loss per
share                                    (0.91)       (0.83)    -8.79%
Headline loss per
share                                    (0.72)       (0.65)    -9.72%
Net asset value
per share                                 2.70         2.82      4.44%
Tangible net asset value                                        -9.32%
per share                                (4.29)       (3.89)

Notes and assumptions:
-   The figures set out in the “Before” column above have been extracted
    from the unaudited interim results for the six months ended
    31 August 2012
-   The figures set out in the “After the transaction” column above have
    been calculated applying the adjustments and assumptions which
    follow;
    -  The transaction is assumed to have been implemented on 1 March
       2012 for earnings and headline earnings per share purposes and
       on 31 August 2012 for net asset and tangible net asset value per
       share purposes. No earnings or losses have been assumed in
       relation to the business acquired as it has not operated in the
       past 12 months and no management accounts are available. No
       costs associated with the transaction have been assumed as these
       would be immaterial.
    -  The purchase consideration of R3,2 million is discharged by the
       issue of 80 million shares.
    -  The entire purchase consideration is assumed to be settled on
       1 March 2012 for earnings and headline earnings per share
       purposes and on 31 August 2012 for net asset and tangible net
       asset value per share purposes.
    -  The shares were issued at 4 cents per share.
    -  The weighted average number of shares in issue before the
       transaction is 790 million and there will be a weighted average
       number of shares of 870 million in issue after the transaction.
    -  No additional pro forma financial effects of any issue of
       additional shares under the general authority of the company
       have been shown.

Documentation
No circular to shareholders is required as the transaction is categorised
as a Category 2 transaction in accordance with the JSE Listings
Requirements.

Renewal of cautionary announcement
The Company remains in other negotiations and accordingly shareholders
are advised to continue to exercise caution when dealing in their
securities until a further announcement is made.

Update on suspension
The Company is busy finalising its audited results for the year ended
28 February 2013 and its interim results for the six months ended
31 August 2013, which are expected to be published on or before
30 November 2013.

4 November 2013

Sponsor
Arcay Moela Proprietary Limited

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