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Proposed Acquisition of the Business of Tegeta
OAKBAY RESOURCES AND ENERGY LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2009/021537/06
Share code: ORL ISIN: ZAE000196085
(“Oakbay Resources” or “the Company”)
PROPOSED ACQUISITION OF THE BUSINESS OF TEGETA
1. TEGETA ACQUISITION
1.1. Oakbay Resources is pleased to announce that, through its
74% owned subsidiary Shiva Uranium Proprietary Limited
(“Shiva”), it has entered into an asset exchange agreement
on 11 December 2015 (“the Agreement”) with Tegeta
Exploration and Resources Proprietary Limited (“Tegeta”)
whereby Shiva will acquire the business carried out by
Tegeta as at the Effective Date, consisting of the Business
Assets and Business Liabilities as detailed in paragraph 5.1
below (“Business”) in exchange for 100 million Shiva shares
(“Consideration Shares”) subject to the fulfilment of the
Suspensive Conditions (“the Acquisition”).
1.2. The Acquisition constitutes a related party transaction in
terms of the JSE Limited (“JSE”) Listings Requirements and
therefore requires Oakbay Resources shareholder approval by
way of an ordinary resolution.
1.3. The effective date of the Acquisition shall be the earlier
of three business days after the date upon which all of the
Suspensive Conditions as set out below are met or waived, or
29 February 2016 (“Effective Date”).
2. INFORMATION ON TEGETA
Tegeta is the registered holder of the new order mining rights
in respect of both the farms, Brakfontein and Brakfontein
Extension (“the Brakfontein Properties”), upon which the
operating open cast Brakfontein coal mine is situated. The
Brakfontein coal mine is located in the Delmas district of
Mpumalanga and currently produces between 100,000 tonnes and
200,000 tonnes of coal per month. Tegeta is also the holder of
an off-take agreement with Eskom.
According to the most recently available mineral resource
statements, the Brakfontein Properties have combined measured
resources of approximately 32 million tonnes of coal and an
estimated life of mine of approximately 13 to 14 years.
3. RATIONALE FOR THE ACQUISITION
Oakbay Resources has significant uranium and gold prospects in
the North West Province of South Africa. The Acquisition has
been proposed as part of the Company’s strategy to expand its
operational and investment portfolio to include other energy
related assets. Should the Acquisition be approved, it will
result in Shiva achieving strong operating cash flows in the
future, which will be of significance in the future
development and commissioning of the uranium prospects. The
Acquisition will also diversify the Company’s income and
investment streams, thereby mitigating the Company’s risk of
exposure to a single energy based commodity.
Shiva currently is the contract miner for Tegeta in respect of
Tegeta’s coal mining operations conducted at the Brakfontein
colliery.
4. PURCHASE CONSIDERATION
4.1. Oakbay Resources will acquire the Business in exchange for
the Consideration Shares.
4.2. In terms of the Agreement, the Consideration Shares will be
issued to Tegeta, constituting an interest of 19.6% of Shiva
ordinary shares subsequent to the conclusion of the
Acquisition, implying a deal value of approximately R2.1
billion, based on Shiva’s net asset value (“NAV”) of R20.61
per share.
5. SALIENT TERMS OF THE AGREEMENT
5.1. The Consists of the Business Assets and Business Liabilities
being:
- Business Assets include:
- Accounts receivable;
- Cash on hand;
- Inventory;
- Contracts, including an off-take agreement with
Eskom;
- Intangible assets;
- Fixed assets;
- Goodwill;
- Intellectual property;
- Consents, rights and permits issued to Tegeta in
terms of the Mineral and Petroleum Resources
Development Act, 2002 (“MPRDA”) to carry out
prospecting and/or mining activities;
- Any other assets reflected in the accounts of Tegeta
on the Effective Date; and
- All claims, deposits, prepayments, refunds, causes of
action, rights of recovery, rights of set-off and
rights of recoupment.
- Business Liabilities include;
- Accounts payable;
- Leave pay and bonus pay provisions and accrued
expenses in relation to employees;
- Liabilities arising in connection with any completed
contract;
- Liabilities arising in connection with any
uncompleted contracts; and
- Any other liability of Tegeta reflected in the
accounts of Tegeta.
5.2. Assets excluded from the Business Assets include amounts
owing on loan account to Tegeta from Tegeta shareholders,
the intellectual property rights associated with the name
and logo of Tegeta, and the assets acquired by Tegeta
pursuant to the sale of shares and claims agreement between
Tegeta, Glencore International AG and Optimum Coal Holdings
Proprietary Limited.
5.3. Liabilities excluded from the Business Liabilities include
any tax liability, amounts owing on loan account by Tegeta
to its shareholders, outstanding overdraft amounts to third
parties, and the liabilities acquired by Tegeta pursuant to
the sale of shares and claims agreement between Tegeta,
Glencore International AG and Optimum Coal Holdings
Proprietary Limited.
6. SUSPENSIVE CONDITIONS
6.1. The Agreement is subject to the fulfilment or waiver of the
following suspensive conditions normal to a transaction of
this nature by the Effective Date, which shall include, but
not be limited to:
6.1.1. the approval by Oakbay Resources shareholders of the
Acquisition, being a related party transaction in
terms of the JSE Listings Requirements;
6.1.2. Eskom providing its written consent to the cession
and assignment of the Tegeta off-take agreement to
Shiva;
6.1.3. The shareholders of Tegeta passing all such
resolutions as required in terms of section 112 of
the Companies Act, 2008 (Act 71 of 2008), as amended
(“Companies Act”) in order to implement the
Acquisition;
6.1.4. The Takeover Regulation Panel granting an exemption
to Tegeta in terms of section 119(6) of the Companies
Act;
6.1.5. receipt of all regulatory approvals and/or exemptions
required for the implementation of the Acquisition
including, inter alia, those required in terms of the
JSE Listings Requirements, the Companies Act and
consent of the minister under section 11 of the MPRDA
having been obtained, to the extent required.
7. WARRANTIES
The warranties are standard for a transaction of this nature.
8. FINANCIAL INFORMATION RELATING TO THE ACQUISITION
The value of the net assets of Tegeta are approximately R2.2
billion as at 31 August 2015. This includes the capitalised
costs incurred in bringing Tegeta into production.
The profits attributable to Tegeta are R34.2 million for the
six month period ended 31 August 2015. These profits relate to
the production during the initial ramp-up phase of the mine
situated on the Brakfontein Properties. This financial
information has been extracted without adjustment from the
interim results of Tegeta.
9. CATEGORISATION
The Acquisition constitutes a related party transaction in
terms of the JSE Listings Requirements on the basis that
Tegeta is an associate of Oakbay Investments Proprietary
Limited, based on its control over the board of Tegeta, and
therefore requires Oakbay Shareholder approval by way of an
ordinary resolution.
A circular, setting out the full details of the Acquisition,
will be distributed to Oakbay Resources shareholders within 60
days of the date of this announcement.
Johannesburg
11 December 2015
Transaction Adviser and Transaction Sponsor
PSG Capital
JSE Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 11/12/2015 05:47:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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