MTX - Metorex Limited - Re-Capitalisation and disposal of the Consolidated
MTX
MEMTX
MTX - Metorex Limited - Re-Capitalisation and disposal of the Consolidated
Murchison Operations ("CONS MURCH"), a division of Metorex
Metorex Limited
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
Share code: MTX
ISIN: ZAE000022745
Issuer code: MEMTX
("Metorex" or "the Group")
RE-CAPITALISATION AND DISPOSAL OF THE CONSOLIDATED MURCHISON OPERATIONS ("CONS
MURCH"), A DIVISION OF METOREX
Metorex, a focussed
base metals mining group, listed on the JSE Limited, is
pleased to announce that it has entered into a sale of business agreement ("the
Agreement") with To The Point Growth Specialists (Pty) Limited ("TTP"), subject
to certain suspensive conditions, in terms of which it will dispose of Cons
Murch to Cons Murch Mine (Pty) Limited ("Cons Murch Mine"), which is held as to
74% by TTP (indirectly) and 26% by the Cons Murch Black Economic Empowerment
Trust ("the BEE Trust"), subject to certain terms and conditions as set out
below ("the Transaction").
Terence Goodlace CEO said: "The re-capitalisation and socially responsible
disposal of Cons Murch represents the final step in Metorex`s strategy to re-
focus operationally as a base metals company. We are pleased to have concluded
a transaction with TTP which is led by Bernard Swanepoel, and that the existing
employees have an opportunity to participate in
the mine`s future through a BEE
Trust which will have a 26% shareholding in the operations."
1. COMMERCIAL RATIONALE AND KEY TERMS PERTAINING TO THE TRANSACTION
Metorex previously disclosed its intention to focus on the growth and
development of its copper/cobalt assets and to dispose of non-core assets.
This Transaction represents the final sale in the disposal process.
The disposal of Cons Murch has been challenging as a consequence of, inter
alia, the following factors:
- significant operating losses for an extended period of time; and
- recapitalisation and operational reorganisation required to become a -
sustainable mining operation.
Facing the above challenges, Metorex had two options with regard to Cons
Murch, namely:
- closing and rehabilitating the mine ("Closure Option"); or
- partially recapitalising the operation and disposing of it as a going
concern in an orderly fashion to a third party with appropriate
management skills, expertise and access to further capital to render
the Cons Murch operation sustainable ("Disposal Option").
Shareholders were informed that the Closure Option or Disposal Option
should not exceed a cost of US$13 million or R100 million.
The Closure Option included many inherent social and economic complexities.
Metorex sought to secure the ongoing employment of staff at Cons Murch and
wanted to provide a platform for the future development and sustainability
of the mining operations possible in the Disposal Option.
The Transaction presents an opportunity for
Metorex to implement the
Disposal Option in an orderly and socially responsible fashion, whilst
limiting the financial effects on Metorex. The Transaction will be
implemented in three phases in accordance with the Agreement being Part A,
Part B and Part C as follows:
1.1 Part A
Metorex will dispose of the Cons Murch business together with the
employees of Cons Murch to Cons Murch Mine for a purchase
consideration of R1. Metorex will retain the existing mining license
("Old Order Mining Right"), the existing new order prospecting right
("Prospecting Right") and the responsibility for the marketing and
sale of all gold and antimony produced by Cons Murch Mine. All mining
and processing activities will be conducted by Cons Murch Mine on a
contract mining basis until Part B of the Transaction is completed.
1.2 Part B
Following the conversion of the Old Order Mining Right into a new
order mining right ("Mining Right") and the granting of consent by the
Department of Mineral Resources ("DMR") in terms of S11 of the Mineral
and Petroleum Resources Development Act ("S11 Consent"), Metorex will
transfer to Cons Murch Mine (i) the Mining Right for a consideration
of R1 and (ii) the obligation to rehabilitate the mine and accordingly
Metorex will transfer R25 million from the Metorex rehabilitation fund
to the Cons Murch Mine rehabilitation fund.
In the event that the conversion of the Old Order Mining Right into
the Mining Right or S11 Consent is not obtained and Cons Murch Mine
does not wish to continue as a contract miner for
Metorex, Metorex has
the option but not the obligation to purchase the shares of Cons Murch
Mine for a consideration of R1.
1.3 Part C
Following granting of S11 Consent for the transfer thereof, Metorex
will transfer the Prospecting Right to Cons Murch Mine for a
consideration of R1.
In terms of the Agreement:
- Metorex undertakes to fund a further maximum amount of R15
million to the Metorex rehabilitation fund in respect of Cons
Murch;
- save for unrecorded liabilities owed by Metorex to bona fide
trade creditors that
arose prior to 1 May 2010 and for warranties
provided by Metorex in respect of its authority to carry on the
business which is the subject of the Transaction, its ability to
enter into and execute the Agreement and its title to the Old
Order Mining Right, the Mining Right and the Prospecting Right,
Metorex will not be exposed to any future claims in terms of the
Transaction, in an amount in excess of R5 million;
- Metorex will contribute an amount of R51 million, less any costs
incurred or to be incurred between the signature date and the
closing date of Part A of the Transaction, towards the
recapitalisation of Cons Murch; and
- the balance of the initial agreed recapitalisation of Cons Murch,
being an amount of R20 million, shall be provided by a
subsidiary of TTP.
2. TTP UNDERTAKINGS
TTP has undertaken to procure an equity investment of R20 million in
Cons Murch Mine ("TTP Equity Contribution") and has undertaken to
provide Cons Murch Mine with adequate financial support for a minimum
period of 12 months from the completion of Part A of the Transaction
("TTP Undertaking").
3. SUSPENSIVE CONDITIONS
3.1 Part A
The Transaction is subject to the fulfilment and/or waiver of a number
of conditions typical to a transaction of this nature including, inter
alia, the following suspensive conditions:
- TTP providing proof of its financial ability to make the TTP
Equity Contribution and provide the TTP Undertaking;
- Cons Murch Mine receiving the TTP Equity Contribution by 30
November 2010;
- Metorex transferring a maximum amount of R15 million to the
Metorex rehabilitation fund in respect of Cons Murch by 30
November 2010; and
- the Parties obtaining all regulatory approvals required for the
implementation of the Transaction by 15 December 2010, or such
later date as the Parties may agree in writing.
3.2 Part B
The transfer of the Mining Right is subject to, inter alia, the
fulfilment and/or waiver of the following suspensive conditions:
- the granting of the approval for the
conversion of the Old Order
Mining Right to the Mining Right by the DMR on or before 31
December 2013; and
- the DMR granting S11 Consent approving the transfer of the Mining
Right to Cons Murch Mine on or before 31 December 2013.
3.3 Part C
Part C of the Transaction remains subject to the fulfilment and/or
waiver of the following suspensive condition:
- the DMR granting S11 Consent to transfer the Prospecting Right to
Cons Murch Mine and registration at the Minerals and Petroleum
Titles Registration Office on or before 31 December 2013.
4. CATEGORISATION
The Transaction is not a
categorised transaction in terms of the Listings
Requirements of the JSE Limited and details thereof have been provided to
keep shareholders informed of Metorex`s ongoing activities.
Johannesburg
6 September 2010
Corporate Advisor: One Capital
Attorneys: Bowman Gilfillan Inc.
Sponsor: Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Financial Communications Adviser: College Hill
Date: 06/09/2010 11:00:01 Produced by the JSE SENS Department.
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