LABAT AFRICA LIMITED - Announcement relating to the acquisition of a 51% shareholding in Ormin, part withdrawal of cautionary announcement

Announcement relating to the acquisition of a 51% shareholding in Ormin, part withdrawal of cautionary announcement

LABAT AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1986/001616/06)
(“Labat” or “the Company”)
ISIN Code: ZAE 000018354 Share code: LAB


ANNOUNCEMENT RELATING TO THE ACQUISITION OF A 51% SHAREHOLDING IN ORMIN, PART WITHDRAWAL
OF CAUTIONARY ANNOUNCEMENT AND RENEWAL OF CAUTIONARY ANNOUNCEMENT


1.   Background
     Shareholders are advised that Labat has entered into an agreement dated 27 January 2017 with
     the shareholder of Ormin Coal Proprietary Limited (to be renamed Ormin Resources) “the Seller”, in
     terms of which Labat will acquire 51% of the issued share capital of Ormin for a total consideration
     of R16 000 000 (“the Acquisition”).

2.   Description of Ormin
     Ormin secures rights to above ground tailings of various minerals and currently supplies chrome
     product to identified markets. Ormin plans to expand the operations to other minerals during 2017.
     Ormin has obtained rights to an estimated 2 million tons of above ground minerals through rental
     and royalty agreements.

     Simultaneously, Ormin has secured markets for the products both locally and overseas.

     After an extensive (2 year) proof of concept and securing of resources, Ormin is now ready to
     commence operations on a full-time basis.

3.   Consideration (“Purchase Price”)
     The Purchase Price of R16 000 000 will be settled as follows:

     -     R5 500 000 will be settled through the issue of 18 333 333 new shares in Labat to the Seller at a
           price of 30 cents per share; and
     -     The balance of R10 500 000 shall be funded by a loan granted by the Seller to Labat, which
           loan will bear interest at the prime rate and will be payable in quarterly instalments at the
           equivalent of 80% of Ormin’s profit after tax, as independently determined on a quarterly
           basis, until the loan has been paid in full.

4.   Effective Date
     The effective date for the Acquisition is 1 February 2017, subject to the fulfillment of the suspensive
     conditions noted below.

5.   Rationale for the Acquisition
     Labat has identified the beneficiation of existing mined resources as a major opportunity and a
     mechanism for community upliftment, small business development and job creation at community
     level. Labat sees Ormin as an ideal partner for such a venture and has identified various other
     above ground opportunities to exploit together.
     Additionally, Labat is currently growing its existing Logistics business and sees major synergies
     between the two businesses due to the transport requirements of Ormin in order to transfer the
     finished product to markets either locally or to ports.

     Labat will be the dedicated Logistics contractor for all Ormin products.

6.   Suspensive conditions
     The Acquisition is subject to the fulfilment of the following suspensive conditions by 1 February 2017,
     which date can be extended by the parties:

     -     Labat advising the Seller in writing that it is satisfied with the outcome of the remainder of the
           required due diligence investigation;
     -     The Board providing a certified extract of the Board resolution approving the Acquisition;
     -     Any regulatory approvals to the extent required; and
     -     Any approval in connection with the admission to listing of the Labat shares on the JSE, issued
           as part payment of the Purchase Price.

7.   Classification of the transaction
     The Acquisition is classified as a Category 2 transaction in terms of the JSE Listings Requirements.
     Ormin and its associates are not related parties to Labat. Accordingly shareholder approval is not
     required.

8.   Financial Information
     The historical financial information has not been prepared in accordance with IFRS and Ormin was
     basically in the process of setting up operations, securing the rights and establishing markets for the
     product. Labat has requested management accounts effective 31 January 2017 and details of the
     net asset value and results of operations will be published in due course. The acquisition has been
     primarily based on the forward opportunity presented by Ormin based on the existing above-
     ground material secured by Ormin.

9.   Partial withdrawal and renewal of cautionary announcement
     Shareholders are referred to the cautionary announcement released on 16 January 2017 and are
     advised that, to the extent that it applied to the acquisition of Ormin, the cautionary
     announcement is withdrawn.

     However, Labat remains in various negotiations pertaining to, inter alia, new contracts and joint
     ventures and accordingly shareholders are advised to continue to exercise caution until a further
     announcement is made.

30 January 2017
Johannesburg

Sponsor
Arbor Capital Sponsors Proprietary Limited

Date: 30/01/2017 04:33:00 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.