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Operational Update and Opinion of the Independent Board
GOLIATH GOLD MINING LIMITED
Incorporated in the Republic of South Africa
(Registration number 1933/004523/06)
Share code: GGM ISIN: ZAE000154753
(“Goliath Gold” or “the Company”)
OPERATIONAL UPDATE AND OPINION OF THE INDEPENDENT BOARD
1. INTRODUCTION
In addition to referring Goliath Gold shareholders (“Shareholders”) to the announcements released on the
Stock Exchange News Service of the JSE Limited on 22 September 2015 and 15 October 2015, and to the
circular to Shareholders dated 15 October 2015 (“Circular”) pertaining to the proposed scheme of arrangement
(“Scheme”), the board of directors of Goliath Gold (“the Board”) wishes to provide Shareholders with an update
on certain events which have recently occurred in the ordinary course of the business of the Company
(“Operational Update”). This announcement uses the terms defined in the Circular unless otherwise stated.
2. OPERATIONAL UPDATE
2.1 Mining Permit
Earlier this year, application was made by the Company’s subsidiary, Newshelf 1186 Proprietary Limited
(“Newshelf”), to the Department of Mineral Resources (“DMR”) for a mining permit for gold over
4.96 hectares (“the mining area”) situated on the Remaining Extent of Portion 43 of the Farm
Modderfontein 76 I.R. (known as “West Pit 1”).
As set out in the Goliath Gold 2014 Integrated Annual Report, the competent person’s report in respect
of Goliath Gold’s mineral assets compiled by SRK Consulting (South Africa) Proprietary Limited, the
effective date of which is 30 June 2015 (“Competent Person’s Report”), and the executive summary
thereof included as Annexure 8 to the Circular (“Executive Summary”), the mining area falls within the
boundaries of Newshelf’s Cons Modder Prospecting Right and forms part of the Cons Modder Black
Reef Project (“Black Reef”).
The Competent Person’s Report and the Executive Summary thereof stated that the mining permit had
been applied for.
On 29 October 2015, the mining permit was issued and the requisite rehabilitation guarantee for an
amount of R3 725 000 was lodged with the DMR.
2.2 Toll Treatment Agreement
New Kleinfontein Gold Mine Proprietary Limited (“NKGM”), an indirectly owned subsidiary of Gold One
Africa Limited (which also holds 72.0% of the issued share capital of Goliath Gold) (“Gold One Africa”),
has agreed to toll treat approximately 45 000 tonnes of Black Reef ore at an average anticipated head
or feed grade of 8.1 g/t from West Pit 1 (“Newshelf Material”) at its gold metallurgical plant (“Plant”)
once Newshelf receives the mining permit.
In addition to costs related to the treatment of the Newshelf Material, Newshelf will be required to pay
NKGM for the low grade ore which will be used to flush the Plant during the treatment process.
It is anticipated that the gold ore produced by NKGM from the Newshelf Material will be delivered to
Rand Refinery Limited for refining and sale by the end of December 2015.
3. OPINION OF THE INDEPENDENT BOARD
3.1 Opinion as per Circular
As set out in Annexure 1 to the Circular, the Independent Expert, in determining the valuation range of
R1.72 to R3.24 per Scheme Share with a most likely value of R2.03 per Scheme Share (“Valuation as
at 9 October 2015”), performed a comparative valuation on Goliath Gold in accordance with the
SAMVAL Code.
As set out in paragraph 13.3 of the Circular, the Independent Board concurred with the Independent
Expert’s opinion, based upon information available up to 9 October 2015, that the Offer was neither fair
nor reasonable to Scheme Participants.
3.2 Impact of Operational Update
Shareholders are advised that the Independent Board has taken cognisance of the effect of the
Operational Update on the Valuation as at 9 October 2015 performed by the Independent Expert.
Accordingly, the Independent Board, together with the Independent Expert, has considered, inter alia:
- the timeline to achieve delivery of the gold ore produced by NKGM from the Newshelf Material for
refining and sale, which timeline is anticipated to be the end of December 2015, and the budgeted
cash revenue in respect thereof; and
- the expected outstanding loan balance of the Company to the Gold One Group at 31 December
2015, which is expected to be R119 164 792,
and consequently, both the Independent Expert and the Independent Board have concluded that the
aforementioned events have a material effect on the Valuation as at 9 October 2015 (where material
means, as defined in Regulation 81(n) of the Takeover Regulations, an amount equal to or greater than
10% of the value of any subject matter in relation to an offer).
The newly determined valuation range has been determined to be R2.13 to R3.66 per Scheme Share,
being a difference of R0.41 (23.8%) and R0.42 (13.0%) per Scheme Share, respectively, with a most
likely value of R2.44 per Scheme Share (“New Valuation”).
Accordingly, the opinions of both the Independent Expert and the Independent Board as set out in the
Circular remain unchanged in that the Scheme Consideration is still considered to be not fair and not
reasonable.
In addition, notwithstanding the New Valuation being a material change to the Valuation as at 9 October
2015, the Independent Board is still satisfied that the Scheme proceeds, given that its opinion has not
changed in principle.
The Independent Board accepts responsibility for the information contained in this announcement, which
information has no effect on the Scheme, is provided to Shareholders for information purposes only and will
be distributed to Shareholders in due course, together with an update to the Opinion of the Independent
Expert dated 9 October 2015 and included as Annexure 1 to the Circular, which update will be dated on or
about 4 November 2015 (“Updated Opinion of the Independent Expert”), in the same manner in which
they received the Circular. To the best of its knowledge and belief, the information contained in this
announcement is true and nothing has been omitted that is likely to affect the import of the information.
Johannesburg
4 November 2015
Corporate Adviser and Transaction Sponsor to Goliath Gold
Merchantec Capital
Independent Expert
BDO Corporate Finance Proprietary Limited
Competent Person
SRK Consulting (South Africa) Proprietary Limited
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