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Disposal of assets
SENTULA MINING LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1992/001973/06)
Share code: SNU ISIN: ZAE000107223
(“Sentula” or “the Company”)
DISPOSAL OF ASSETS
1. INTRODUCTION
The board of directors of Sentula (“the Board”) is pleased to inform shareholders that Sentula’s wholly-
owned subsidiaries, Sentula Mining Services Mauritius Limited (“SMSM”), which is incorporated in the
Mauritius, and Senex S.A.R.L (“Senex”), which is incorporated in the Democratic Republic of Congo
(“DRC”) (collectively referred to hereinafter as “the Sellers”), have entered into a Sale of Assets
Agreement (“Sale Agreement”) dated 20 October 2014 (“Signature Date”) with Orezone Drilling
Mauritius Limited (“Orezone Drilling Mauritius”), a company registered and incorporated in Mauritius and
Orezone Drilling S.A.R.L (“Orezone Drilling DRC”), a drilling company registered and incorporated in the
DRC (collectively referred to hereinafter as “the Purchaser”), to dispose of certain idle Property, Plant
and Equipment (“PPE”) and associated Inventory (collectively referred to herein after as the “Assets”) held
by the Sellers and currently located in the DRC, as one indivisible transaction, for a purchase
consideration of US$2 400 000 (“Disposal”).
2. THE DISPOSAL
2.1 Rationale
Sentula’s subsidiaries are mainly engaged in providing opencast mining services, exploration
drilling services and crane hire services. With the exploration drilling sector having experienced a
significant decline over the past two years, Sentula currently has no contracted work in the DRC.
Accordingly, the Board has decided to dispose of the Assets, being the remainder of the Property,
Plant and Equipment located in the DRC.
Other Property, Plant and Equipment previously situated in the DRC have already been re-located
to operations in Mozambique, South Africa and Saudi Arabia. However, it will not be viable for
Sentula to re-locate the remaining Assets in the DRC to other operations due to the high cost of
demobilising the equipment across borders.
Proceeds from the Disposal will be utilised for the re-payment of debt and the funding of other
international operations.
2.2 Purchase consideration and effective date of the Disposal
The total purchase consideration of US$2 400 000 (“Purchase Price”) was determined based on
US$1 607 132 for the PPE and US$792 868 for the associated Inventory.
The Purchaser paid the Sellers a non-refundable deposit of US$480 000 on 4 August 2014. The
outstanding balance of US$1 920 000 is payable in nine monthly instalments of US$200 000 each,
the first of which will be made seven days after Signature Date, and a final instalment of
US$120 000. The outstanding balance will accrue interest at a rate of 2.5% per annum
compounded monthly, from Signature Date. Interest payments may be made at any time, but by no
later than the final instalment date (“Closing Date”).
Whilst risk in the Assets vests in the Purchaser on delivery of the Assets to the Purchaser, the
Assets will be held by the Sellers as security until the final payment is received when ownership will
pass to the Purchaser.
2.3 Condition precedent and other terms of the Disposal
The sole condition precedent to the Disposal is that any offers made by third parties to the
Purchaser for any specific part/s of the Assets prior to the Closing Date will be submitted to the
Sellers for written approval. Any offers to purchase with potential third parties will be subject to
approval thereof by the Sellers and the conclusion of the Disposal on the Closing Date.
In terms of the Sale Agreement, Senex has undertaken to provide the Purchaser with a confirmation
certificate from the DRC taxation authorities, confirming that all taxes in the DRC are up to date to
the end of December 2014. Until such time that the confirmation certificate is provided to the
Purchaser, in the event that the revenue authorities in the DRC seize the Assets as a result of
outstanding tax payments in Senex, the Sellers will have 60 days from receiving notification thereof
by the Purchaser, to secure the Assets back from the revenue authorities. Failing this, the non-
refundable deposit plus the instalments already paid by the Purchaser at the date that the Assets
are seized by the revenue authorities, will be refunded to the Sellers after deducting a reasonable
wear and tear amount for the use of the Assets.
In terms of the Sale Agreement, for a period of two years after the Signature Date, the Sellers will
not be able to perform any exploration drilling work in the DRC and the Purchaser will not be able to
perform any drilling work associated with blasting in the DRC.
Where the Purchaser becomes aware of a contract for both exploration drilling and drilling and
blasting work, the Purchaser shall notify the Sellers of the possibility of a combined tender.
2.4 The value of, and profits attributable to the Assets
At the end of the financial year ended 31 March 2014 (“2014 financial year”), the total net book
value of the PPE (numbering 52 items being disposed of) amounted to R12 623 234.
Plant and equipment with a net book value of R3 977 735 (numbering 5 items) was relocated to
other international operations before the end of the 2014 financial year.
At the end of the 2014 financial year, the value of the associated Inventory being disposed of
amounted to R7 513 203
The Assets being disposed of are currently idle and are not utilised in generating income. As
revenue and cost information per asset being disposed of cannot be accurately determined, it is not
possible to determine the gross profit and associated overhead expenses generated from the
Assets. Accordingly, shareholders are advised that the total turnover relating to operations in the
DRC during the financial year ended 31 March 2014 amounted to R98 628 569.
3. CATEGORISATION OF THE DISPOSAL
The Disposal constitutes a Category 2 transaction in terms of the Listings Requirements of the JSE
Limited.
Johannesburg
21 October 2014
Sponsor
Merchantec Capital
Date: 21/10/2014 12:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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