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Terms Announcement regarding a Disposal by VMR
VILLAGE MAIN REEF LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1934/0057034/06)
Share code: VIL ISIN: ZAE000154761
(“VMR” or “the Company”)
TERMS ANNOUNCEMENT REGARDING THE DISPOSAL BY VMR OF THE SHARES
AND CLAIMS IN CONS MURCH MINE (PROPRIETARY) LIMITED (“CONS MURCH”) AND
IN NEBAVEST 49 (PROPRIETARY) LIMITED TO STIBIUM MINING (PROPRIETARY)
LIMITED
1. INTRODUCTION
Further to the cautionary announcements published on the JSE Limited’s Stock Exchange
News Service (“SENS”) on 3 February 2014, 17 March 2014 and 5 May 2014, shareholders
of VMR ("VMR Shareholders") are advised that the following transaction has been entered
into, subject to the conditions precedent referred to in paragraph 4:
Disposal by VMR of:
1.1 59 (fifty nine) ordinary shares in the issued ordinary share capital of Nebavest 49
(Proprietary) Limited (“Nebavest”) (a wholly owned subsidiary of VMR) having a par
value of R1.00 (one rand) each, constituting 49.17% (forty nine point one seven
percent) of the entire issued share capital of Nebavest, to Stibium Mining (Proprietary)
Limited (“Stibium”)(a proprietary limited liability company incorporated in Australia);
1.2 50 (fifty) ordinary shares in the issued ordinary share capital of Cons Murch Mine
(Proprietary) Limited (“Cons Murch”), having a par value of R1.00 (one rand) each,
constituting 10% (ten percent) of the entire issued share capital of Cons Murch ;
1.3 49.17% (forty nine point one seven percent) of all amounts of any nature whatsoever
owing by Nebavest to VMR from any cause whatsoever, including by way of loan
account or otherwise, in contract or in delict, actual or contingent, and includes any
interest accrued thereon; and
1.4 all amounts of any nature whatsoever owing by Cons Murch to VMR from any cause
whatsoever, including by way of loan account or otherwise, in contract or in delict,
actual or contingent, and includes any interest accrued thereon.
The transactions referred to in paragraphs 1.1 to 1.4 are collectively hereinafter referred to
as "the First Phase Disposal".
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2. BACKGROUND AND RATIONALE
2.1. Stibium
Stibium is an Australian unlisted company focused on antimony. The acquisition of Cons
Murch will complement Stibium’s existing antimony projects in Australia and Kosovo, and
create a step change towards establishing Stibium as a major world producer of antimony.
Stibium’s management team has extensive technical experience in mining operations, with a
track record in mine development, financing and operational improvements.
Stibium anticipates listing on the AIM or Singapore market in 2015. It has mandated
Mirabaud Securities UK to raise acquisition finance, and is assisted by Bravura Capital as its
corporate advisor.
2.2 VMR
The disposal of Cons Murch is in line with our strategy to convert VMR from an operator of
diversified small mines into a resources investment company.
3. SALIENT TERMS OF THE DISPOSALS
3.1 VMR First Phase Disposal
VMR has entered into an agreement (“the Disposal Agreement”) with Nebavest, Cons Murch
and Stibium, regarding the First Phase Disposal and the Second Phase Disposal (referred to
in paragraph 3.3, on 20 May 2014.
3.2 Loan Agreement
Stibium, intends to advance a loan of up to USD 10,000,000 (ten million United States
Dollars) to Cons Murch for purposes of a recapitalisation of the Cons Murch Antimony and
Gold Mine’s (“the Mine’s) (operated by Cons Murch).
3.3 VMR Second Phase Disposal
Further to paragraph 3.1 above and subject inter alia to the conditions precedent referred to
in paragraph 4, VMR has entered into the Disposal Agreement to dispose of
3.3.1 61 (sixty one) ordinary shares in the issued ordinary share capital of Nebavest having
a par value of R1.00 (one Rand) each, constituting 50.83% (fifty point eight three
percent) of the entire issued share capital of Nebavest; and
3.3.2 50.83% (fifty point eight three percent) of all amounts of any nature whatsoever owing
by Nebavest to VMR from any cause whatsoever, including by way of loan account or
otherwise, in contract or in delict, actual or contingent, and includes any interest
accrued thereon
The transactions referred to in paragraph 3.3 are collectively hereinafter referred to as "the
Second Phase Disposal".
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3.4 Disposal considerations
3.4.1 First Phase Disposal Consideration
The disposal consideration for the First Phase Disposal is USD 8,370,431 (eight million three
hundred and seventy thousand four hundred and thirty one United States Dollars) in cash
("First Phase Disposal Consideration").
Stibium shall, subject to fulfilment or waiver, as the case may be of the relevant conditions
precedent, pay as follows:
a. a deposit of USD 200,000 (two hundred thousand United States Dollars) to VMR, within 5
(five) business days of the later of the (i) signature date of the Disposal Agreement or (ii)
fulfilment of certain of the First Phase Disposal conditions precedent;
b. an amount equal to a working capital shortfall, if a working capital shortfall exists (to be
determined by a formula contained in the Disposal Agreement), to Cons Murch on behalf
of VMR and Nebavest (with such payment to constitute part payment of the First Phase
Disposal Consideration); and
c. the balance of the First Phase Disposal Consideration after the working capital shortfall, if
applicable, has been determined.
At the signature date of the Disposal Agreement the parties recognise that there is a shortfall
in the financial provision for environmental rehabilitation required to be made by Cons Murch
in respect of its mining right and the prospecting right. It has been agreed that Stibium will
fund the initial USD 2,000,000 (two million United States Dollars) in cash where after VMR
will fund the remainder.
3.4.2 Second Phase Disposal Consideration
The disposal consideration for the Second Phase Disposal is USD 6,629,569 (six million six
hundred and twenty nine thousand five hundred and sixty nine United States Dollars) in cash
("Second Phase Disposal Consideration").
3.5 Effective Dates of the First Phase Disposal and the Second Phase Disposal
(“the Disposals”)
3.5.1 The effective date of the First Phase Disposal will be:
- if the last of the First Phase Conditions Precedent is fulfilled or waived, as the
case may be, on or before the 15th (fifteenth) day of a month, the first day of that
month;
- if the last of the First Phase Disposal conditions precedent is fulfilled or waived, as
the case may be, after the 15th (fifteenth) day of a month, the first day of the
month following the date on which the last of the First Phase conditions precedent
is fulfilled or waived, as the case may be.
3.5.2 The effective date of the Second Phase Disposal will be the 3rd (third) business day
after the date on which the Second Phase Disposal condition precedent is fulfilled.
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4. CONDITIONS PRECEDENT TO THE DISPOSALS
4.1 First Phase Disposal conditions precedent
The First Phase Disposal is subject to inter alia the following conditions precedent:
- by no later than 10 (ten) business days after the signature of the Disposal Agreement:
o the boards of directors of VMR and Stibium have approved and ratified the
agreements required to effect the First Phase Disposal and the Second Phase
Disposal ("Disposals");
o the boards of directors of Nebavest and Cons Murch have approved the transfer of
the shares in Nebavest and Cons Murch and have noted the cession of the Disposal
claims;
o VMR, Nebavest and Cons Murch (as the case may be) have procured the written
resignations of certain directors
o the trustees of Cons Murch Employee Share Trust (“BEE Trust”) has waived in
writing any pre-emptive rights which it may have in respect of the First Phase
Disposal and the Second Phase Disposal;
- obtaining the approvals of the regulators (The JSE Limited (“JSE”), the Takeover
Regulations Panel and the Competition Authorities, if applicable); and
- obtaining the approvals from VMR, Nebavest and Cons Murch shareholders for the
Disposals, if applicable.
4.2 Second Phase Disposal condition precedent
The Second Phase Disposal is subject to the following condition precedent:
- By no later than 2 years after the signature of the Disposal Agreement the written
consent must be obtained from the Minister in terms of Section 11 of the Mineral and
Petroleum Resources Development Act, No 28 of 2002, for the implementation of the
Second Phase Disposal.
5. PRO FORMA FINANCIAL EFFECTS OF THE DISPOSALS
The below mentioned unaudited pro forma financial effects are the responsibility of the board
of VMR and have been prepared for illustrative purposes only to provide information about
how the First Phase Disposal and the Second Phase Disposal might have affected the
historical value of VMR”s basic earnings per share (“EPS”), headline earnings per share
(“HEPS”), net asset value (“NAV”) net tangible asset value (“NTAV”) per share. Diluted EPS
and diluted HEPS. Due to their nature, the unaudited pro forma financial effects may not be
a fair reflection of the value of the shares in the Company after the implementation of the
Disposals, nor of their future value. The pro forma financial effects are based on the
published unaudited interim results of VMR for the 6 months ended 31 December 2013 and
have been prepared in a manner consistent in all respects with International Financial
Reporting Standards (“IFRS”), the accounting policies adopted by VMR as at 31 December
2013, and the Revised SAICA Guide on Pro Forma Financial Information and the Listings
Requirements of the JSE.
The unaudited pro forma financial effects of the Disposals on a VMR shareholder are set out
below -
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After % After %
Before Phase 1 change Phase 2 change
Disposal Disposal
cents cents % cents %
NAV per share 118.82 119.47 0.54% 118.06 -0.64%
NTAV per share 113.31 113.96 0.57% 118.06 4.20%
EPS 34.32 37.51 9.28% 38.73 12.86%
HEPS -14.40 -12.10 15.99% -9.29 35.47%
Diluted EPS 32.45 35.46 9.28% 36.62 12.86%
Diluted HEPS -15.19 -13.18 13.24% -10.36 31.78%
EPS from continuing 12.07 18.28 51.43% 16.49 36.62%
operations
HEPS from continuing 14.55 19.86 36.48% 19.65 35.05%
operations
Number of shares in 1 040 697 1 040 697 0% 1 040 697 0%
issue
Notes:
1. The “Before” financial information has been extracted from VMR’s Interim Results published on
31 December 2013.
2. The pro forma “After Phase 1 Disposal” and “After Phase 2 Disposal” financial information
comprises the “Before” financial information adjusted for the following principal assumptions:
a. for purposes of EPS, HEPS and diluted EPS and HEPS, both Phase 1 and Phase 2 of the
Disposals were affected on 1 July 2013; and for NAV and NTAV, the assumption that both
Phase 1 and Phase 2 of the Disposals were affected on 31 December 2013.
b. the exchange rate as at 31 December 2013 of USD1=R10.4878 and the six month average
exchange rate of USD1=R10.0609 were used to calculate the financial effects of the
Disposals;
c. The net proceeds were invested in a money market account at market related rates
d. VMR and Stibium fund their respective portions of shortfall in the rehabilitation trust funds
e. any working capital shortfall adjustments have been ignored
f. total costs directly attributable to the Disposals are expected to approximate R1.5 million
(excluding VAT) and have been expensed for purposes of the financial effects
6. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
VMR Shareholders are advised that the cautionary announcements concerning the
Disposals, referred to in paragraph 1 above, are hereby withdrawn.
7. CIRCULAR TO SHAREHOLDERS
The Disposals are classified as a Category 1 transaction in terms of the JSE Listings
Requirements. Shareholders will have to approve the Disposals, and a circular setting out
full details of the Disposals and including the notice of the general meeting of VMR
Shareholders is in process of being finalised. Further information and the salient dates and
times of the Disposals will be announced in due course.
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21 May 2014
Johannesburg
Sponsor
Bravura Capital (Pty) Ltd
Attorneys to VMR
ENS
Attorneys to Stibium
DLA Cliffe Dekker Hofmeyer
Corporate advisors to Stibium
Bravura Capital (Pty) Ltd (Australia)
Date: 21/05/2014 09:27:00 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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