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Joint Firm Intention Announcement and Withdrawal of Cautionary
GOLIATH GOLD MINING LIMITED GOLD ONE AFRICA LIMITED
Incorporated in the Republic of South Africa Incorporated in the Republic of South Africa
(Registration number 1933/004523/06) (Registration number 1984/006179/06)
Share code: GGM ISIN: ZAE000154753
(“Goliath Gold” or “the Company”) (“Gold One Africa”)
JOINT ANNOUNCEMENT OF A FIRM INTENTION BY GOLD ONE AFRICA TO MAKE AN OFFER
TO ACQUIRE THE ISSUED SHARE CAPITAL OF GOLIATH GOLD THAT IT DOES NOT ALREADY
OWN AND WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
Further to the cautionary announcement released on SENS on 29 July 2015 and the subsequent
renewal thereof released on SENS on 9 September 2015, the board of directors of Gold One Africa
and the independent directors of the Goliath Gold board (“Goliath Gold Independent Board”) are
pleased to announce that Gold One Africa has made a firm intention offer ("Offer") to acquire all the
Goliath Gold ordinary shares that Gold One Africa does not already own, being a total of 41 247 658
ordinary shares (“Scheme Shares”) (“Proposed Transaction”), by way of a scheme of arrangement
(“Scheme”) in terms of section 114 of the Companies Act, 2008 (Act 71 of 2008), as amended, (the
"Companies Act"), to be proposed by the Goliath Gold Independent Board between Goliath Gold
and the holders of Goliath Gold Shares (“Goliath Gold Shareholders”). In this regard, Gold One
Africa and Goliath Gold have concluded a written transaction implementation agreement dated
21 September 2015 (“Implementation Agreement”) in relation to the Proposed Transaction.
The purpose of this joint firm intention announcement (“Firm Intention Announcement”) is to advise
Goliath Gold Shareholders of the terms and conditions of the Offer.
2. SALIENT TERMS OF THE OFFER
In terms of the Offer, Goliath Gold Shareholders can, if the Scheme is implemented, elect to receive
for each Scheme Share held by them on the Scheme consideration record date, either:
- R1.00 per Scheme Share on the date that the Scheme is implemented (“Scheme
Implementation Date”) (“Immediate Cash Payment”); or
- R1.60 per Scheme Share on the business day immediately after the expiry of a period of 18
months calculated with effect from and including the day after the Scheme Implementation Date
(“Closing Date”) (“Deferred Cash Payment”); or
- any combination of the Immediate Cash Payment and the Deferred Cash Payment, in such ratio
as may be elected (“Combination Cash Payment”),
(collectively the “Transaction Consideration”).
Goliath Gold Shareholders who do not make an election to receive either the Immediate Cash
Payment, the Deferred Cash Payment or the Combination Cash Payment timeously, will be deemed
to have elected to receive the Immediate Cash Payment for all of their Scheme Shares.
The rationale behind Goliath Gold Shareholders being afforded the option to receive, at their election,
either the Immediate Cash Payment, the Deferred Cash Payment, or the Combination Cash
Payment originates from the initial intention of Gold One Africa, which is an indirectly wholly-owned
subsidiary of Gold One International (Cayman Islands) (“Gold One International”), to make an offer
in terms of which the equivalent of the Deferred Cash Payment amount is converted into Gold One
International shares (“Conversion”) at a future point in time in the event of a potential listing of that
company on the Hong Kong Stock Exchange. However, given current market conditions abroad and
the complexities of such Conversion, this option was re-considered and the decision was taken to
make a straightforward deferred cash offer while maintaining the original timeframe and pricing
pertaining to the Conversion.
3. BACKGROUND AND RATIONALE FOR THE SCHEME
Goliath Gold, which is a South African mining exploration company listed on the JSE Limited (“JSE”),
was created by Gold One Africa via the 2012 reverse takeover of White Water Resources Limited
and the acquisition by the then White Water Resources Limited of the business of Gold One Africa
comprising the Sub Nigel new order mining right and the Spaarwater, Vlakfontein and West
Vlakfontein prospecting rights (“Megamine Assets”). At the time of the acquisition of the Megamine
Assets, the Wit Nigel prospecting right was already held by White Water Resources Limited.
Gold One Africa holds 72.0% of the issued share capital of Goliath Gold. The funding which has
enabled Goliath Gold and its subsidiaries to complete extensive exploration and geological modelling
of the East Rand Basin (“East Rand”) has been provided by the Gold One International group of
companies (“Gold One Group”).
The business of Goliath Gold is, through a management agreement, controlled and managed by
Gold One Africa which owns a mining operation and two prospecting rights adjacent to Goliath Gold’s
East Rand exploration area.
The finalisation of the transaction between Goliath Gold and the joint provisional liquidators of the
Pamodzi East Rand Group Companies in 2013, in terms of which Goliath Gold acquired certain
historical mining and geological data and was granted two additional prospecting rights, provided the
Company with a significant portfolio of prospecting rights across the East Rand. Accordingly, Goliath
Gold’s strategic focus has moved away from the deeper Megamine Assets to the exploration of low
capital, near-cash generative projects. This change has resulted in an increase of approximately 40%
in the Company’s East Rand resource estimate, as set out in Goliath Gold’s financial results for the
year ended 31 December 2014 which were announced on SENS on 31 March 2015.
The board of directors of Gold One Africa believes that an increased focus by management on the
aforementioned opportunities within the Gold One Group, outweighs the current value in maintaining
Goliath Gold’s listing.
While Goliath Gold’s market capitalisation as at 18 September 2015, being the last trading day prior
to signature of the Implementation Agreement, was approximately R221 million, the Company’s
outstanding loan balance to the Gold One Group amounted to approximately R125 million as at
31 December 2014 and R181 million as at 30 June 2015.
In addition, with Stellar Capital Partners Limited holding 21.89% of the issued share capital of Goliath
Gold, trading of the Company’s Shares on the JSE is very illiquid given that two Shareholders hold
approximately 94% of Goliath Gold’s issued share capital. Accordingly, should the Scheme be
implemented, Goliath Gold minority Shareholders will be provided with the opportunity to realise their
investments by exiting an illiquid share.
4. CONDITIONS PRECEDENT TO THE IMPLEMENTATION OF THE SCHEME
4.1. The Scheme will be subject to the fulfilment (or waiver, as the case may be), of the following
conditions precedent on or before 31 December 2015 (“Longstop Date”), or such later date
as Gold One Africa and Goliath Gold may agree to in writing:
4.1.1. the independent expert as referred to in section 114(2) of the Companies Act
(“Independent Expert”) appointed by Goliath Gold issuing a report dealing with the
matters set out in section 114(3) of the Companies Act and expressing an opinion
on whether the Offer is fair and reasonable;
4.1.2. the Goliath Gold Board having passed such resolutions as may be necessary in
terms of the regulations issued in terms of sections 120 and 223 of the Companies
Act (“Takeover Regulations”) to approve the Proposed Transaction;
4.1.3. the resolutions required to implement the Scheme, as contemplated in section 115(2)
of the Companies Act, having been approved by the requisite majority of Goliath
Gold Shareholders;
4.1.4. not more than 5%, being a total of 2 062 383 Scheme Shares, of the Goliath Gold
Shareholders voting at the meeting to be convened to approve the Scheme
(“Scheme Meeting”), exercising their rights of appraisal under section 164 of the
Companies Act;
4.1.5. should the implementation of the Proposed Transaction be subject to approval by a
court in terms of the provisions of section 115(2)(c) of the Companies Act, such
approval being obtained; and
4.1.6. the requisite unconditional written approvals having been obtained from, inter alia,
all governmental and regulatory bodies, including but not limited to:
4.1.6.1. approval by the JSE;
4.1.6.2. the issue by the Takeover Regulation Panel (“TRP”) of a compliance
certificate contemplated in section 121(b)(i) of the Companies Act;
4.1.6.3. approval by the South African Reserve Bank (“SARB”); and
4.1.6.4. approval by the National Development and Reform Commission, the
Ministry of Commerce, the State Administration of Foreign Exchange and
the State-owned Assets Supervision and Administration Commission of
the State Council of the People’s Republic of China, to the extent that any
such approval is required.
5. SHAREHOLDER UNDERTAKINGS
To date, irrevocable undertakings to vote in favour of the Scheme have been received from Stellar
Capital Partners Limited, a Goliath Gold Shareholder holding in aggregate 32 311 931 Goliath Gold
Shares, representing 78.34% of the voting power if all Scheme Shares are voted at the Scheme
Meeting or any adjournment thereof.
6. GUARANTEES AND CONFIRMATIONS TO THE TAKEOVER REGULATION PANEL
FirstRand Bank Limited, acting through its Rand Merchant Bank Division, and ENSafrica, situated at
1 North Wharf Square, Loop Street, Foreshore, Cape Town, being Gold One Africa’s legal advisors,
have respectively delivered an irrevocable, unconditional bank guarantee in the amount of
R51 699 089.60 (“Cash Guarantee”) and an irrevocable, unconditional confirmation that
R14 297 163.20 is being held in escrow (“Cash Confirmation”), to the TRP in compliance with
regulations 111(4) and 111(5) of the Takeover Regulations. The Cash Guarantee and the Cash
Confirmation comprise the maximum possible Transaction Consideration payable in terms of the
Scheme.
7. SHARE OPTIONS
The two executive directors of Goliath Gold hold 3 200 000 Goliath Gold share options (with a strike
price of R1.94 each) under the Goliath Gold Share Incentive Scheme (“Share Options”). These
executive directors, together with the company secretary of Goliath Gold (who holds 1 200 000 Share
Options) and management, employees and past employees of the Group (who hold 4 935 000 Share
Options) have elected to receive a settlement offer of R0.20 per Share Option for the cancellation of
all their Share Options upon finalisation of the Scheme. The total settlement value of the Share
Options in the amount of R1 867 000.00 is being held in escrow with ENSafrica Cape Town, being
the legal advisors to Gold One Africa.
8. TERMINATION OF THE GOLIATH GOLD LISTING
Following implementation of the Scheme, application will be made to the JSE to terminate the listing
of the Goliath Gold Shares on the JSE.
9. SHAREHOLDING IN GOLIATH GOLD AND ACTING AS PRINCIPAL
Gold One Africa, which, as previously stated, holds 72.0% of the Goliath Gold Shares, confirms that
it is the ultimate proposed purchaser of all the Goliath Gold Shares and that it is not acting as agent
or broker for, any other party.
10. RECOMMENDATION AND INDEPENDENT EXPERT OPINION
The Goliath Gold Independent Board has appointed BDO Corporate Finance Proprietary Limited as
the Independent Expert, as required in terms of section 114(2) of the Companies Act and the
Takeover Regulations, to issue a report dealing with the matters set out in section 114(3) of the
Companies Act and to express an opinion on whether the Offer is fair and reasonable.
The contents of the Independent Expert's advice and opinion and the final views of the Goliath Gold
Independent Board will be detailed in the circular to Goliath Gold Shareholders relating to the
Scheme (“Scheme Circular”).
11. DOCUMENTATION
Details of the Scheme and Proposed Transaction will be included in the Scheme Circular, which will
contain, inter alia, details of the Scheme, a notice of the Scheme Meeting, a form of proxy, and a
form of election, surrender and transfer. The Scheme Circular is expected to be distributed to Goliath
Gold Shareholders on or about 15 October 2015.
The salient dates pertaining to the Scheme will be released on SENS and published in the press
prior to the distribution of the Scheme Circular.
12. GOLIATH GOLD RESPONSIBILITY STATEMENT
The Goliath Gold Independent Board accepts responsibility for the information contained in this Firm
Intention Announcement to the extent that it relates to Goliath Gold. To the best of its knowledge and
belief, the information contained in this Firm Intention Announcement is true and nothing has been
omitted that is likely to affect the import of the information.
13. GOLD ONE AFRICA RESPONSIBILITY STATEMENT
The board of directors of Gold One Africa accepts responsibility for the information contained in this
Firm Intention Announcement to the extent that it relates to Gold One Africa. To the best of their
knowledge and belief, the information contained in this Firm Intention Announcement is true and
nothing has been omitted that is likely to affect the import of the information.
14. WITHDRAWAL OF CAUTIONARY
Following the release of this announcement, Shareholders are advised that caution is no longer
required when dealing in the Company’s securities.
Johannesburg
22 September 2015
Corporate Adviser and Transaction Sponsor to Goliath Gold
Merchantec Capital
Independent Expert
BDO Corporate Finance Proprietary Limited
Legal Adviser to Goliath Gold
ENSafrica
150 West Street, Sandton
Johannesburg, 2196
Date: 22/09/2015 07:05:00 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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