TIDMCZA
RNS Number : 5684B
Coal of Africa Limited
29 October 2009
Thursday 29 October 2009
THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION,
RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
AUSTRALIA, CANADA, OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO MAY
CONSTITUTE A VIOLATION OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION
Neither this announcement nor any part of it constitutes an offer to sell or
issue or the solicitation of an offer to buy, subscribe or acquire any new
Ordinary Shares in any jurisdiction in which any such offer or solicitation
would be unlawful and the information contained herein is not for publication or
distribution, directly or indirectly, in or into the United States, Australia,
Canada, Japan or any jurisdiction in which such publication or distribution
would be unlawful.
COAL OF AFRICA LIMITED
("CoAL" or the "Company")
CoAL continues its strategy of focusing on the acquisition, exploration and
development of thermal and metallurgical coal projects in South Africa. CoAL
announces today its proposed cash placing to raise up to approximately GBP59.6m
(the "Placing") and the proposed conditional acquisition of NuCoal Mining (Pty)
Limited ("NuCoal") for ZAR650m (the "Acquisition"). In addition, CoAL announces
its intention to seek admission to the Official List of the UK Listing Authority
and to trading on the Main Market of the London Stock Exchange
Highlights
The proposed placing by CoAL of new ordinary shares (the "Placing Shares") will
be to institutional investors to raise up to GBP59.6m (before expenses). Under
the Placing, up to 59,867,731 new ordinary shares are available to be placed
representing approximately 14.52% of CoAL's existing issued Ordinary
Shares. J.P. Morgan Cazenove Limited ("JPMC") is acting as Global Co-ordinator
and Sole Bookrunner, Evolution Securities Limited ("Evolution") is acting as
joint lead manager and Mirabaud Securities LLP ("Mirabaud") is acting as co-lead
manager (together, the "Managers").
The Company intends to use the net proceeds of the Placing to fund the
Acquisition, with the remainder being used for some or all of the following: to
increase logistics capacity (including the first instalment of capital required
to effect wagon acquisitions from Transnet Freight Rail), to accelerate capital
expenditure at the Vele and Makhado projects, to pursue other smaller,
opportunistic bolt on acquisitions of coal projects, and for general working
capital requirements. In the event that the Acquisition does not complete, CoAL
envisages using the proceeds to accelerate expansion of logistic facilities at
the Matola Terminal and Maputo port, for alternative acquisitions and for
general working capital.
CoAL also intends to move from the AIM Market ("AIM") and apply for a primary
listing and admission of its Ordinary Share capital to the Official List of the
UK Listing Authority and to trading on the Main Market of the London Stock
Exchange (the "LSE"). Work has commenced on the LSE listing process and, as part
of this, CoAL is currently considering changing its country of incorporation. It
is anticipated that a move to the Main Market of the LSE as a primary listing
will be concluded in H1 2010 and, upon admission to the Main Market, CoAL's
listing on AIM would be cancelled. This is based on the assumption that all
elements of the re-domiciliation and listing process can be satisfactorily
concluded in this period.
About NuCoal
NuCoal is a thermal coal producer with assets in South Africa in close proximity
to CoAL's Mooiplaats mine. NuCoal's Woestalleen Colliery, which produces 2.5Mtpa
of saleable coal for domestic and export markets, has off-take contracts in
place. NuCoal has two beneficiation plants, one fully operational mine as well
as one re-entering production in Q4 2009 and three planned
to commence production in 2010 (2) and 2013 (1).
The Acquisition, if completed, will transform CoAL into a multiple project
producer by adding five existing and future mining operations. The resultant
raising of CoAL's profile may facilitate negotiating leverage with suppliers,
service providers, customers and authorities as CoAL becomes a producer of
scale. Additionally, there is potential to realise synergies through blending
the NuCoal product with Mooiplaats' product and through transporting NuCoal's
product via CoAL's rail and port capacity. NuCoal also has a strong operational
management team in place and CoAL intends to retain key personnel.
Commenting on today's announcement, Simon Farrell, Managing Director of CoAL
said:
"Today's proposed placing and acquisition further underpin CoAL's track record
in building a high quality mid-tier thermal and coking coal business. The
Company already benefits from a sizeable resource base, carefully considered
logistics and a high quality and supportive investor base including its proposed
off-take partners. The proposed acquisition of NuCoal would, once completed,
transform CoAL into a multi-site producer, well placed to take advantage of the
current strength in, and attractive outlook for, global coal markets.
Recognising the growing size of the Company and its mining assets, its
predominantly London focussed institutional investor base and share trading
liquidity, a move to the Main Market of the LSE represents the logical next step
in CoAL's exciting development trajectory."
This summary should be read in conjunction with the full text of the following
announcement.
Analyst Presentation
Coal of Africa Ltd will be holding an analyst presentation today at 10.30am
prompt, at The Walbrook Club, 37a Walbrook, London, EC4N 8BS. If you would like
to attend, please contact Jos Simson on 0207 429 6603 or jos@conduitpr.com.
A teleconference facility will also be available to dial into the conference
call today at 10:30am (GMT).
Details to access the conference call are as follows:
The Dial-in number in the UK will be: 0800 358 2705
Elsewhere, the Dial-in number will be: 0044 (0) 20 8609 0205
The Conference ID in all cases will be: 252058#
A copy of the presentation is available on the company's website:
www.coalofafrica.com
Contacts
+-------------------------------+------------------------------------------+
| CoAL | Tel: +61 (0) 417 985 383 |
| Simon Farrell | Tel: +27 (0) 11 785 4518 |
| Blair Sergeant | |
+-------------------------------+------------------------------------------+
| J.P. Morgan Cazenove | Tel: +44 (0) 20 7588 2828 |
| Verne Grinstead | |
| Neil Passmore | |
+-------------------------------+------------------------------------------+
| Evolution Securities | Tel: +44 (0) 20 7071 4300 |
| Simon Edwards | |
| Chris Sim | |
+-------------------------------+------------------------------------------+
| Macquarie First South | Tel: +27 (0) 11 583 2000 |
| Advisers | |
| Melanie de Nysschen | |
+-------------------------------+------------------------------------------+
| Azure Capital | Tel: +61 (0) 8 6263 0888 |
| Geoff Ward | |
| Ryan Rockwood | |
+-------------------------------+------------------------------------------+
| Conduit PR | Tel: +44 (0) 20 7429 6603 |
| Jos Simson | |
| Leesa Peters | |
+-------------------------------+------------------------------------------+
Proposed Placing of approximately GBP59.6m.
Proposed acquisition of NuCoal for ZAR650m.
Intention to move to the Official List of the UK Listing Authority and to the
Main Market of the London Stock Exchange
1. Introduction
CoAL today announces its intention to raise up to approximately GBP59.6m (before
expenses based on yesterday's closing share price of 99.5 pence) by way of a
placing of the Placing Shares. Under the Placing, up to 59,867,731 new ordinary
shares are available to be placed, representing up to approximately 14.52% of
CoAL's existing issued share capital. The proposed issue of the Placing Shares
will be at a price established through an institutional bookbuilding process.
2. Background to and reasons for the Acquisition
The Company has developed a reputation for successfully developing assets within
budget through the railing and sale of first coal from the Mooiplaats project,
which was acquired in 2007. CoAL has an attractive portfolio of producing and
development stage coking and thermal coal assets, suitable for both domestic and
export markets. In parallel with the development of its mining operations and
core assets, the Company has remained cognisant of the importance of logistics,
securing considerable supporting rail and port capacity allocations to ensure
production can be exported when required.
Whilst focussing on its existing asset portfolio, the CoAL management team has
also continually assessed complementary acquisition opportunities. As part of
this process, NuCoal was identified as having assets close to CoAL's with a
similar logistical profile, both of which could improve significantly by
combination with CoAL. As part of the discussions with NuCoal management, CoAL
made available its rail and port logistical arrangements to NuCoal and an
exclusive option agreement for CoAL to acquire 100% of NuCoal was signed on 21
August 2009. Detailed due diligence is ongoing. An agreement for the acquisition
of NuCoal was signed on 29 October 2009. Further details of the acquisition are
set out below.
CoAL's Board of Directors believes the proposed acquisition of NuCoal will
strengthen the Company's position as a multiple project South African coal
producer and will further enhance the Company's significant growth profile,
delivering strong returns for shareholders in the medium to long term.
3. Information on NuCoal
NuCoal is a thermal coal producer with assets in South Africa in close proximity
to CoAL's Mooiplaats mine. NuCoal's Woestalleen Colliery, which in the year
ended 30 June 2009 produced 2.5Mt of saleable coal, produces saleable coal for
domestic and export markets, with some off-take contracts in place. NuCoal has
two beneficiation plants with a capacity, when fully operational, of 4.2Mtpa,
one fully operational mine as well as one re-entering production in Q4 2009 and
three entering production in 2010 (2) and 2013 (1). NuCoal's fully operational
mine is 49% owned by NuCoal although NuCoal has 100% effective economic control
through a life of mine management contract. NuCoal's current resource base
stands at 41.7Mt.
The Woestalleen Colliery and plant produces at an average free-on-rail ("FOR")
cost of approximately ZAR343/t, with 1.8Mt of saleable washed coal being
processed during the year ended 30 June 2009. The capacity of the plant doubled
in 2008 which allowed NuCoal to process some of the additional run-of-mine
("ROM") tonnes generated by the now fully operational and captive mine,
Zonnebloem, which came into production in August 2008. This, coupled with
production from Klipbank, which came online in September 2007, meant that
bought-in tonnes were nil in the year ended 30 June 2009. The increase in
capacity and hence saleable tonnes, coupled with increases in the revenue per
saleable tonne has seen revenue increase by 94% and 214% in year ended 30 June
2008 and year ended 30 June 2009 respectively.
Zonnebloem, which has a resource base of 19Mt and mining costs of approximately
ZAR130/t, will continue to be the major mine that provides ROM production to
Woestalleen with anticipated production in the current financial year of 3.3Mt.
Zonnebloem produced 2.5Mt in the year ended 30 June 2009 with a wash yield of
63%.
NuCoal also has three projects which are anticipated to come online
in Q4 2009 (1) and 2010 (2); namely Opgoedenhoop (opencast and underground),
with a resource base of 16Mt, Klipbank (opencast and underground), with a
resources base of 4Mt (Klipbank complex); Hartogshoop, with a resource base of
1.2Mt; and Klipfontein with 1Mt of resource.
It is proposed that the board of NuCoal will resign in their capacity as
directors on completion of the acquisition but key operational staff are
expected to stay on including Chief Operating Officer, Paul Erskine, who has
been responsible for much of NuCoal's development.
Additionally, as part of the Acquisition, CoAL intends to enter into a fixed
price hedging contract over all of NuCoal's non-contracted saleable coal in 2010
and over a proportion in 2011 and 2012 to underpin the acquisition cost.
Income statement of NuCoal¹,²
+--------------+-----------+-----------+-----------+
| Rands | Year | Year | Year |
| in | ended | ended | ended |
| 000s | 30 | 30 | 30 |
| | June | June | June |
| | 2007 | 2008 | 2009 |
| | Pro | Actual | Actual |
| | forma | | |
+--------------+-----------+-----------+-----------+
| Revenue | 158,178 | 306,078 | 961,422 |
+--------------+-----------+-----------+-----------+
| Cost | (120,637) | (165,890) | (385,202) |
| of | | | |
| sales | | | |
+--------------+-----------+-----------+-----------+
| Gross | 37,541 | 140,188 | 576,220 |
| profit | | | |
+--------------+-----------+-----------+-----------+
| Other | (6,638) | (5,932) | (5,658) |
| income | | | |
+--------------+-----------+-----------+-----------+
| Operating | (28,339) | (64,088) | (371,498) |
| expenses | | | |
+--------------+-----------+-----------+-----------+
| EBITDA | 2,564 | 70,168 | 199,064 |
+--------------+-----------+-----------+-----------+
| Depreciation | (10,704) | (21,686) | (41,183) |
+--------------+-----------+-----------+-----------+
| EBIT | (8,140) | 48,482 | 157,881 |
+--------------+-----------+-----------+-----------+
| Net | (2,668) | (13,815) | (20,013) |
| finance | | | |
| costs | | | |
+--------------+-----------+-----------+-----------+
| Profit | (10,808) | 34,667 | 137,868 |
| before | | | |
| tax | | | |
+--------------+-----------+-----------+-----------+
| Tax | 2,125 | 9,649 | (3,080) |
+--------------+-----------+-----------+-----------+
| Profit | (8,653) | 25,018 | 134,788 |
| after | | | |
| tax | | | |
+--------------+-----------+-----------+-----------+
| Key | | | |
| performance | | | |
| indicators | | | |
+--------------+-----------+-----------+-----------+
| Revenue | - | 93.5% | 214.1% |
| growth | | | |
+--------------+-----------+-----------+-----------+
| ROM | 1,078,581 | 1,538,990 | 3,507,607 |
| tonnes³ | | | |
+--------------+-----------+-----------+-----------+
| Sales | 895,111 | 1,297,932 | 2,502,787 |
| tonnes | | | |
+--------------+-----------+-----------+-----------+
| Revenue | 177 | 236 | 384 |
| (R/sales | | | |
| t) | | | |
+--------------+-----------+-----------+-----------+
| Mining | 69 | 64 | 77 |
| cost | | | |
| (R/ | | | |
| ROMt) | | | |
+--------------+-----------+-----------+-----------+
| Gross | 23.7% | 45.8% | 59.9% |
| profit | | | |
| (%) | | | |
+--------------+-----------+-----------+-----------+
| Operating | 17.9% | 20.9% | 38.6% |
| expense | | | |
| as % of | | | |
| revenue | | | |
+--------------+-----------+-----------+-----------+
| EBITDA | 1.6% | 22.9% | 20.7% |
| % | | | |
+--------------+-----------+-----------+-----------+
| EBIT % | (5.1)% | 15.8% | 16.4% |
+--------------+-----------+-----------+-----------+
1 Source: Unaudited NuCoal management information
2 These figures exclude
the results of Khanyisa Colliery, conditionally disposed of in July 2009
3
Includes ROM tonnes and bought in ROM tonnes
Balance sheet overview of NuCoal¹,²
+--------------+----------+-----------+-----------+
| Rands | Year | Year | Year |
| in | ended | ended | ended |
| 000s | 30 | 30 | 30 |
| | June | June | June |
| | 2007 | 2008 | 2009 |
| | Actual | Actual | Actual |
+--------------+----------+-----------+-----------+
| Property, | 14,949 | 73,215 | 94,652 |
| plant and | | | |
| equipment | | | |
+--------------+----------+-----------+-----------+
| Intangible | 25,624 | 41,093 | 51,876 |
| assets | | | |
+--------------+----------+-----------+-----------+
| Investments | 43,000 | 25,873 | 88,282 |
| in | | | |
| subsidiaries | | | |
+--------------+----------+-----------+-----------+
| Loans | 16,039 | 81,635 | 102,274 |
| and | | | |
| receivables | | | |
+--------------+----------+-----------+-----------+
| Deferred | 8,021 | - | - |
| tax | | | |
| asset | | | |
+--------------+----------+-----------+-----------+
| Total | 107,634 | 221,816 | 337,084 |
| fixed | | | |
| assets | | | |
+--------------+----------+-----------+-----------+
| | | | |
+--------------+----------+-----------+-----------+
| Inventories | 2,728 | 5,776 | 38,413 |
+--------------+----------+-----------+-----------+
| Trade | 10,362 | 33,313 | 60,896 |
| and | | | |
| other | | | |
| receivables | | | |
+--------------+----------+-----------+-----------+
| Trade | (16,036) | (39,614) | (103,230) |
| and | | | |
| other | | | |
| payables | | | |
+--------------+----------+-----------+-----------+
| Working | (2,946) | (525) | (3,921) |
| capital | | | |
+--------------+----------+-----------+-----------+
| | | | |
+--------------+----------+-----------+-----------+
| Provisions | (513) | (868) | (1,700) |
+--------------+----------+-----------+-----------+
| Trading | 104,175 | 220,423 | 331,463 |
| capital | | | |
| employed | | | |
+--------------+----------+-----------+-----------+
| | | | |
+--------------+----------+-----------+-----------+
| Debt | (91,617) | (184,010) | (239,724) |
| items | | | |
+--------------+----------+-----------+-----------+
| Cash | 4,995 | (1,863) | 54,863 |
| and | | | |
| cash | | | |
| equivalents | | | |
+--------------+----------+-----------+-----------+
| Net | 17,553 | 34,550 | 146,557 |
| assets | | | |
+--------------+----------+-----------+-----------+
| | | | |
+--------------+----------+-----------+-----------+
| Share | - | - | - |
| capital | | | |
+--------------+----------+-----------+-----------+
| Retained | 17,552 | 34,550 | 146,557 |
| income | | | |
+--------------+----------+-----------+-----------+
| Total | 17,552 | 34,550 | 146,557 |
| equity | | | |
+--------------+----------+-----------+-----------+
| | | | |
+--------------+----------+-----------+-----------+
| Key | | | |
| performance | | | |
| indicators | | | |
+--------------+----------+-----------+-----------+
| Inventory | 23 | 9 | 21 |
| days | | | |
| (based on | | | |
| CoS) | | | |
+--------------+----------+-----------+-----------+
| Debtors | 26 | 24 | 17 |
| days | | | |
| (based | | | |
| on | | | |
| revenue) | | | |
+--------------+----------+-----------+-----------+
| Creditors | (39) | (60) | (64) |
| days | | | |
| (based on | | | |
| CoS) | | | |
+--------------+----------+-----------+-----------+
| Net | 10 | (26) | (26) |
| working | | | |
| capital | | | |
| days | | | |
+--------------+----------+-----------+-----------+
1 Source: Unaudited NuCoal management information
2 These figures exclude
the results of Khanyisa Colliery, conditionally disposed of in July 2009
4. Principal terms of the Acquisition
CoAL has agreed to purchase NuCoal for ZAR650m, subject to the satisfaction of
suspensive conditions prior to 31 March 2010. These conditions include
conditions which are administrative in nature and the responsibility of the
current shareholders of NuCoal and relate to streamlining the legal and
ownership structure of NuCoal in order to affect the transfer of NuCoal to the
Company in an effective and efficient manner. Other conditions include some
which relate to the acquisition by NuCoal of certain mineral interests and the
resolution of certain issues arising in the due diligence exercise to the
satisfaction of CoAL. Certain regulatory approvals are also required to be
obtained as part of this process. NuCoal's shareholders and the relevant
regulatory authorities are currently progressing matters in order to satisfy
these conditions. In addition, the transaction remains subject to satisfactory
completion of CoAL's due diligence. CoAL's Board of Directors has engaged
external legal, accounting, technical and taxation advisors who are conducting
due diligence reviews in relation to NuCoal. Findings from these reviews will be
tabled to the Board, which will make a final resolution to proceed with the
acquisition of NuCoal upon (and assuming) satisfactory conclusions.
Satisfaction of the suspensive conditions is expected by 31 March 2010. Many of
the conditions should be fulfilled before this date. However, the consent
required from South Africa's Minister of Mineral Resources for the change in
ownership of NuCoal is anticipated to be the longest lead time suspensive
condition. Following this, the purchase consideration of ZAR650m less an escrow
amount of ZAR130m (being 20% of the purchase consideration) shall be payable by
CoAL to NuCoal's shareholders in cash. In order to provide CoAL with recourse
for any breach of certain key representations and warranties which NuCoal's
shareholders will provide to CoAL pursuant to the transaction, CoAL will
withhold the escrow amount over a period of one year, releasing the balance of
the purchase price to NuCoal's shareholders on the first anniversary of the
closing date should no claims be made.
Risk factors in relation to the Company and the NuCoal acquisition are set out
in Appendix B.
5. Information on the Placing
5.1 Use of Proceeds.
The net proceeds of the Placing will be used to fund the ZAR650m Acquisition
with the remainder being used for some or all of the following: to increase
logistics capacity (including the first instalment of capital required to effect
wagon acquisitions from Transnet Freight Rail), to accelerate capex at the Vele
and Makhado projects, to pursue other smaller, opportunistic bolt on
acquisitions of coal projects, and for general working capital requirements.
In the event that the Acquisition does not complete, CoAL envisages using those
proceeds earmarked for the Acquisition to accelerate expansion of logistic
facilities at the Matola Terminal and Maputo port, for alternative acquisitions
and for general working capital.
5.2 Details of the Placing Including Bookbuild and Settlement
It is proposed that the Placing will be undertaken by the placing of new
ordinary shares with institutional investors. Under the Placing, up to
59,867,731 new ordinary shares are available to be placed. The proposed issue of
the Placing Shares will take place at a set price which will be established
through an institutional bookbuilding process.
JPMC is acting as Global Co-ordinator and Sole Bookrunner, Evolution is acting
as joint lead manager and Mirabaud is acting as co-lead manager. The Placing
will take place in accordance with and subject to the terms and conditions set
out in Appendix A of this announcement.
Participation in the bookbuild will only be available to persons who are invited
to participate by the Managers. To enter a bid into the bookbuilding process,
institutional investors will be required to communicate their bid to JPMC,
Evolution or Mirabaud, specifying the number of Placing Shares which they wish
to subscribe for and any price limit to which their offer to participate is
subject. The Placing Price will ultimately be agreed by the Company and JPMC
following closure of the book. Institutions participating in the Placing will
receive the Placing Shares subject to the satisfaction of the conditions
contained in, and the non-termination of, the Placing Agreement. It is expected
that the books will close no later than 4:30p.m. (London time) on 29 October
2009 but may be closed earlier or later at the discretion of the Company and
JPMC. An announcement detailing the Placing Price and the proceeds to be
received from the Placing will be made as soon as practicable after the close of
the bookbuilding process.
When admitted, the Placing Shares will be credited as fully paid and will
rank pari passu in all respects with the existing Ordinary Shares, including
the right to receive all dividends and other distributions declared, made or
paid after the date of their issue. Application will be made for the Placing
Shares to be admitted to trading on AIM, ASX and JSE.
It is currently expected that settlement for the Placing Shares through CREST
as well as admission to trading on AIM will take place on 3 November 2009. It is
expected that settlement for the Placing Shares being settled through either
CHESS or Strate, and admission to trading on each of the ASX and the JSE, is
anticipated to place on 5 November 2009.
Full details of the terms and conditions of the Placing are set out in
Appendix A to this announcement. Placees participating in the Placing will be
deemed to have read and understood the full terms and conditions relating to the
Placing set out in this announcement (including the Appendices to this
announcement) and to be participating on the basis that they accept these terms
and conditions in full.
5.3 Placing Authority
CoAL has a placement capacity to issue up to 59,867,731 new shares representing
up to 14.52% of its existing issued share capital.
6. Announcement of intention to seek a primary listing on the Official List of
the UK Listing Authority
CoAL intends to move from AIM and apply for a primary listing and admission of
its Ordinary Share capital to the Official List of the UK Listing Authority and
to trading on the Main Market of the LSE. Work has commenced on the LSE listing
process and, as part of this, CoAL is currently considering changing its country
of incorporation. It is anticipated that a move to the Main Market of the LSE as
a primary listing will be concluded in H1 2010 and, upon admission to the Main
Market, CoAL's listing on AIM would be cancelled. This is based on the
assumption that all elements of the re-domiciliation and listing process can be
satisfactorily concluded in this period. The Company has appointed advisers in
this regard and will keep shareholders informed as to progress.
Resource Estimation:
Resource estimations relating to the Company have been compiled, according to
the JORC and SAMREC codes, by Mr John Sparrow (Member of the South African
Council of Natural Science Professions ("SACNASP") 400109/03), an independent
geological and technical consultant with 26 years experience in the Southern
African and Australian regions. Mr Sparrow has sufficient experience relevant to
the assessment of this style of mineralization to qualify as a Competent Person
as defined in the JORC Code and has compiled a number of Competent Person's
reports for various organisations for the JSE, ASX and Toronto Stock Exchange.
Mr Sparrow consents to the inclusion of the information in this announcement in
the form and context in which it appears. The JORC Code is the Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves and
SAMREC is the South African Code for the Reporting of Mineral Resources and
Mineral Reserves.
Information on NuCoal
The information on NuCoal including its resource estimates has been provided by
NuCoal management or is taken from publicly available sources and has not been
independently checked or legally verified.
To the fullest extend permitted by law, no representation or warranty, express
or implied is given by or on behalf of the Company as to the accuracy or
completeness of the information.
IMPORTANT NOTICE
THE INFORMATION IN THIS PRESS RELEASE IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA,
CANADA, JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
This announcement has been issued by and is the sole responsibility of the
Company. No representation or warranty, express or implied, is or will be made
as to, or in relation to, and no responsibility or liability is or will be
accepted by J.P. Morgan Cazenove Limited, Evolution Securities Limited or
Mirabaud Securities LLP or by any of their respective affiliates or agents as to
or in relation to, the accuracy or completeness of this announcement or any
other written or oral information made available to or publicly available to any
interested party or its advisers, and any liability therefore is expressly
disclaimed.
J.P. Morgan Cazenove is acting as Global Co-ordinator and Sole Bookrunner ,
Evolution Securities Limited is acting as joint lead manager and Mirabaud
Securities LLP is acting as co-lead manager in connection with the Placing. J.P.
Morgan Cazenove Limited, Evolution Securities Limited and Mirabaud Securities
LLP, which are authorised and regulated by the Financial Services Authority are
acting for the Company in connection with the Placing and no-one else and none
of J.P. Morgan Cazenove Limited, Evolution Securities Limited nor Mirabaud
Securities LLP will be responsible to anyone other than the Company for
providing the protections afforded to clients of J.P. Morgan Cazenove Limited,
Evolution Securities Limited and Mirabaud Securities LLP respectively nor for
providing advice in relation to the Placing or any other matter referred to
herein.
The distribution of this announcement and the Placing of the Placing Shares in
certain jurisdictions may be restricted by law. No action has been taken by the
Company, J.P. Morgan Cazenove, Evolution Securities Limited or Mirabaud
Securities LLP that would permit an offering of such shares or possession or
distribution of this announcement or any other offering or publicity material
relating to such shares in any jurisdiction where action for that purpose is
required. Persons into whose possession this announcement comes are required by
the Company, J.P. Morgan Cazenove Limited, Evolution Securities Limited and
Mirabaud Securities LLP to inform themselves about, and to observe, such
restrictions.
The information in this press release shall not constitute an offer to sell or
the solicitation of an offer to buy, nor shall there be any sale of, the
securities referred to herein in any jurisdiction in which such offer,
solicitation or sale would require preparation of further prospectuses or other
offer documentation, or be unlawful prior to registration, exemption from
registration or qualification under the securities laws of any such
jurisdiction.
No public offer of securities of the Company is being made in Australia, the
United Kingdom, the United States, the Republic of South Africa or elsewhere.
The information in this press release does not constitute or form a part of any
offer or solicitation to purchase or subscribe for securities in the United
States. The securities mentioned herein have not been, and will not be,
registered under the United States Securities Act of 1933 (the "Securities
Act"). The securities mentioned herein may not be offered or sold in the United
States except pursuant to an exemption from the registration requirements of the
Securities Act. There will be no public offer of securities in the United
States.
The information in this press release may not be forwarded or distributed to any
other person and may not be reproduced in any manner whatsoever. Any forwarding,
distribution, reproduction, or disclosure of this information in whole or in
part is unauthorised. Failure to comply with this directive may result in a
violation of the Securities Act or the applicable laws of other jurisdictions.
APPENDIX A
TERMS AND CONDITIONS OF THE PLACING
IMPORTANT INFORMATION FOR PLACEES ONLY REGARDING THE PLACING
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY IN OR INTO CANADA OR JAPAN OR ANY OTHER JURISDICTION IN OR INTO WHICH
SUCH RELEASE, PUBLICATION OR DISTRIBUTION IS UNLAWFUL.
MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION
PURPOSES ONLY AND ARE DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE
EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE
2(1)(E) OF THE PROSPECTUS DIRECTIVE (DIRECTIVE 2003/71/EC) ("QUALIFIED
INVESTORS"); (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO
(I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING
WITHIN ARTICLE 19(1) OF THE UNITED KINGDOM FINANCIAL SERVICES AND MARKETS ACT,
2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); OR (II) ARE PERSONS FALLING
WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS, ETC") OF THE ORDER; (C) IN AUSTRALIA, PERSONS TO WHOM AN OFFER OF
SECURITIES MAY BE MADE UNDER SECTION 708(8) OR 708(11) OF THE AUSTRALIAN
CORPORATIONS ACT; (D) IN SOUTH AFRICA, THOSE PERSONS ENVISAGED UNDER AN OFFER
DETAILED IN SECTION 144(b) OF THE SOUTH AFRICAN COMPANIES ACT NO 61 OF 1973; OR
(E) PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS
TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS APPENDIX AND THE TERMS
AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO
ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS
APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY
TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THIS
APPENDIX DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN THE COMPANY.
Persons who are invited to and who choose to participate in the Placing, by
making an oral or written offer to subscribe for Placing Shares (the "Placees"),
will be deemed to have read and understood this Announcement, including this
Appendix, in its entirety and to be making such offer on the terms and
conditions, and to be providing the representations, warranties,
acknowledgements, undertakings and agreements contained in this Appendix. In
particular, each such Placee represents, warrants and acknowledges that it is a
Relevant Person (as defined above) and undertakes that it will acquire, hold,
manage or dispose of any Placing Shares that are allocated to it for the
purposes of its business. In addition, Placees located in certain jurisdictions
will be required to execute investor letters in a form provided.
This Announcement does not constitute an offer, and may not be used in
connection with an offer, to sell or issue or the solicitation of an offer to
buy or subscribe for Placing Shares in any jurisdiction in which such offer or
solicitation is or may be unauthorised or unlawful. This Announcement and the
information contained herein is not for publication or distribution, directly or
indirectly, to persons in Canada or Japan or in any jurisdiction in which such
publication or distribution is unlawful. Persons into whose possession this
Announcement may come are required by the Company to inform themselves about and
to observe any restrictions of transfer of this Announcement. No public offer of
securities of the Company is being made in Australia, the United Kingdom, the
United States, the Republic of South Africa or elsewhere.
In particular, the Placing Shares referred to in this Announcement have not been
and will not be registered under the Securities Act or the laws of any state and
may not be offered, sold, pledged or otherwise transferred within the United
States except pursuant to an exemption from, or as part of a transaction not
subject to, the registration requirements of the Securities Act and applicable
state laws.
The relevant clearances have not been, and nor will they be, obtained from the
securities commission of any province or territory of Canada; no prospectus has
been lodged with or registered by the ASIC or the Japanese Ministry of Finance;
and the Placing Shares have not been, and nor will they be, registered under or
offered in compliance with the securities laws of any state, province or
territory of Canada or Japan. Accordingly, the Placing Shares may not (unless an
exemption under the relevant securities laws is applicable) be offered, sold,
resold or delivered, directly or indirectly, in or into Canada, Australia or
Japan or any other jurisdiction outside the United Kingdom.
The Placing Shares have not been approved or disapproved by the US Securities
and Exchange Commission, any State securities commission or other regulatory
authority in the United States, nor have any of the foregoing authorities passed
upon or endorsed the merits of the Placing or the accuracy or adequacy of this
Announcement. Any representation to the contrary is a criminal offence in the
United States.
Persons (including, without limitation, nominees and trustees) who have a
contractual or other legal obligation to forward a copy of this Appendix or the
announcement of which it forms part should seek appropriate advice before taking
any action.
Notice to Australian Residents
This announcement is not a prospectus for the purposes of the Australian
Corporations Act and may not contain all of the information that an Australian
investor may find in a prospectus prepared in accordance with the Australian
Corporations Act which may be required in order to make an informed investment
decision regarding, or about the rights attaching to, Placing Shares. As no
prospectus will be lodged with ASIC or otherwise prepared in accordance with the
Australian Corporations Act in respect of the Placing, the Placing Shares will
only be offered or issued to persons in Australia to whom an offer of shares for
issue may be made without a prospectus under Part 6D.2 of the Australian
Corporations Act or to persons outside Australia in accordance with the laws of
any other applicable jurisdiction. If you are located in Australia, you confirm
and warrant that you are a person to whom an offer of securities may be made
under section 708(8) or section 708(11) of the Australian Corporations Act such
that any offer or invitation to you does not require a prospectus or other form
of disclosure document under the Australian Corporations Act and you agree that
you will not offer to sell the Placing Shares to any person that is not a
sophisticated or professional investor under section 708(8) or section 708(11)
of the Australian Corporations Act until the day after a notice is lodged by the
Company with the ASX that complies with subsections 708A(5)(e) and (6) of the
Australian Corporations Act.
Notice to South African Residents
This document is not a prospectus and is not to be construed as an offer to the
public in terms of the South African Companies Act No 61 of 1973.
Notice to UK Residents
This Announcement is not a prospectus for the purposes of the Prospectus Rules
published by the UK Financial Services Authority ("FSA") and has not been
approved by, or filed with, the FSA. This Announcement contains no offer to the
public within the meaning of Section 102B of the United Kingdom Financial
Services and Markets Act, 2000, the United Kingdom Companies Act, 2006 or
otherwise.
NOTICE TO US RESIDENTS
THIS ANNOUNCEMENT MAY ONLY BE DISTRIBUTED (I) OUTSIDE THE UNITED STATES OR (II)
WITHIN THE UNITED STATES TO PERSONS WHO ARE ACCREDITED INVESTORS AND WHO ARE
ALSO QIBs. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS ANNOUNCEMENT IN
WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT
IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER
JURISDICTIONS.
THE PLACING SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES AND ARE BEING OFFERED SOLELY (1) OUTSIDE THE
UNITED STATES PURSUANT TO REGULATION S OR (II) WITHIN THE UNITED STATES TO
PERSONS WHO ARE ACCREDITED INVESTORS WHO ARE ALSO QIBs IN RELIANCE ON RULE 144A
OR ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES.
Placees of the Placing Shares who are located in the US will be required to make
certain acknowledgements, representations, warranties and agreements, contained
in an investor letter, which letter shall contain, among other things, an
agreement not to reoffer, resell, pledge or otherwise transfer the Placing
Shares except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and in compliance with any
State securities laws.
Passive Foreign Investment Company
No determination has been made as to whether or not the Company may be treated
as a "passive foreign investment company" ("PFIC") for U.S. federal income tax
purposes and there is a risk that the Company will be treated as such. The
Company will be treated as a PFIC if 75 percent or more of its gross income in a
taxable year, including its pro rata share of the gross income of any
corporation in which it is considered to own, directly or indirectly, 25 percent
or more of the shares by value, is passive income (as defined for U.S. federal
income tax purposes). Alternatively, the Company will be treated as a PFIC if at
least 50 percent of the value of its assets (within the meaning of the PFIC
rules) in a taxable year, averaged over the year, including its pro rata share
of the value of assets (within the meaning of the PFIC rules) of any corporation
in which it is considered to own 25 percent or more of the shares by value, are
held for the production of, or produce, passive income (as defined for U.S.
federal income tax purposes). If the Company is a PFIC, U.S. holders (as defined
below) of the Ordinary Shares may be subject to a number of detrimental U.S.
federal tax consequences, including but not limited to accelerated recognition
of income regardless of the timing of distributions, interest charges on
deferred income, recharacterisation of gain on the disposition of the Ordinary
Shares as ordinary income, the denial of any step-up in basis of the Ordinary
Shares upon the death of a U.S. holder, and the ineligibility of distributions
for taxation at the long-term capital gains rate as "qualified dividend income."
Specifically, if the Company were to be treated as a PFIC for any taxable year,
a U.S. holder would be required to allocate rateably over such U.S. holder's
holding period any "excess distributions" received (i.e., the portion of any
distributions received on the Ordinary Shares in a taxable year in excess of
125% of certain average historic annual distributions) and any gain realized on
the sale, exchange or other disposition of our Shares. The amount allocated to
the current taxable year would be subject to U.S. federal income tax as ordinary
income and the amount allocated to each of the other taxable years would be
subject to tax at the highest rate of tax in effect for the applicable class of
taxpayer for that year. An interest charge for the deemed deferral benefit would
be imposed with respect to the resulting tax attributable to each such other
taxable year.
For this purpose a "U.S. holder" is a beneficial owner of Ordinary Shares that
is a United States person within the meaning of Section 7701(a)(30) of the
Internal Revenue Code and which includes an individual citizen or resident (as
determined for U.S. federal income tax purposes), a corporation or other entity
organized under the laws of the United States or any of its political
subdivisions and classified as a corporation for U.S. federal income tax
purposes, an estate the income of which is subject to U.S. federal income
taxation regardless of its source, or a trust if a court within the United
States is able to exercise primary jurisdiction over the administration of the
trust and one or more U.S. persons have the authority to control all substantial
decisions of the trust. Persons who hold Ordinary Shares through one or more
partnerships, trusts, estates or other entities should consult with their own
tax advisers as to how the PFIC rules may apply to them.
The Company has not undertaken any analysis as to whether it is a PFIC for U.S.
federal income tax purposes. PFIC status is determined annually after the close
of the year in question. The Company makes no assurance that it is not currently
a PFIC, that it will not become a PFIC in the future, that if it becomes a PFIC
it will have timely knowledge or notify U.S. holders of such, or that it will
provide U.S. holders with information necessary for such holders to make filings
or elections in response to its PFIC status (which elections might mitigate
certain of the adverse U.S. federal income tax consequences described above).
The U.S. federal income tax provisions regarding PFICs are very complex and are
affected by various factors in addition to those described above. U.S. holders
of Ordinary Shares are strongly encouraged to consult with their own tax
advisors about the PFIC rules in connection with purchasing, holding, or
disposing of Ordinary Shares.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE
HAS BEEN FILED UNDER CHAPTER 421 B OF THE NEW HAMPSHIRE REVISED STATUTES ("RSA")
WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY
REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A
FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER
RSA 421 B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE
FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION
MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR
QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR
TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE
PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE
PROVISIONS OF THIS PARAGRAPH.
Details of the Placing Agreement and the Placing Shares
The Managers have entered into the Placing Agreement with the Company under
which the Managers have severally (and not jointly or jointly and severally), on
the terms and subject to the conditions set out therein, undertaken to use their
reasonable endeavours to procure subscribers for the Placing Shares at the
Placing Price.
The Placing Shares will, when issued, be credited as fully paid and will rank
pari passu in all respects with the existing issued Ordinary Shares including
the right to receive all dividends and other distributions declared made or paid
after the date of issue.
In this Appendix, unless the context otherwise requires, Placee means a Relevant
Person (including individuals, funds or others) on whose behalf a commitment to
subscribe for Placing Shares has been given.
Application for listing and admission to trading
Application will be made to the London Stock Exchange for admission to trading
of the Placing Shares to AIM. It is expected that Admission on AIM will become
effective and that dealings on AIM in the Placing Shares will commence at 8.00
a.m. (London time) on 3 November 2009.
Application will be made to the ASX for quotation of the Placing Shares on the
ASX as soon as reasonably practicable following the issue of the Placing Shares.
It is expected that dealings on the ASX in the Placing Shares will commence at
8.00 a.m. (Sydney time) on 5 November 2009.
Application will be made to the JSE for the Placing Shares to be listed and
admitted to trading on the Main Board of the JSE. It is expected that admission
will become effective and that dealings on the JSE in the Placing Shares will
commence at 9.00 a.m. (Johannesburg time) on 5 November 2009.
Bookbuild
The Managers will today commence an accelerated bookbuilding process in respect
to the Placing (the "Bookbuild") to determine demand for participation in the
Placing by Placees. This Appendix gives details of the terms and conditions of,
and the mechanics of participation in, the Placing. No commissions will be paid
to Placees or by Placees in respect of any Placing Shares.
The Managers and the Company shall be entitled to effect the Placing by such
alternative method to the Bookbuild as they may, in their sole discretion,
determine.
Participation in, and principal terms of, the Placing
1 JPMC is acting as sole Bookrunner and as an agent of the Company. Evolution is
acting as joint lead Manager and Mirabaud is acting as co-lead Manager, both as
agents of the Company.
2 Participation in the Placing will only be available to persons who may
lawfully be, and are, invited to participate by the Managers. The Managers and
their respective affiliates or their respective agents are entitled to enter
bids as principal in the Bookbuild.
3 The Bookbuild will establish a single price in pounds sterling. An Australian
Dollar and a South African Rand price will be determined from that pounds
sterling price at an exchange rate to be determined at the sole discretion of
the Bookrunner. When submitting bids, Placees will be entitled to choose whether
they wish to settle in pounds sterling or Australian Dollar or South African
Rand, in each case payable to the Managers by all Placees whose bids are
successful (the "Placing Price"). The Placing Price and the aggregate proceeds
to be raised through the Placing will be agreed between the Bookrunner and the
Company following completion of the Bookbuild. The Placing Price will be
announced on a Regulatory Information Service following the completion of the
Bookbuild (the "Pricing Announcement").
4 To bid in the Bookbuild, Placees should communicate their bid by telephone to
their usual sales contact at the Managers (the "Relevant Manager"). Each bid
should state the number of Placing Shares for which the prospective Placee
wishes to subscribe at either the pounds sterling, Australian Dollar or South
African Rand Placing Price, which is ultimately established by the Company and
the Bookrunner, or at prices in pounds sterling, Australian Dollars or South
African Rand up to a price limit in pounds sterling, Australian Dollars or South
African Rand specified in its bid. Bids may be scaled down by the Bookrunner on
the basis referred to in paragraph ?9 below.
5 The Bookbuild is expected to close no later than 4.30 p.m. (London time) on 29
October 2009 but may be closed earlier or later at the discretion of the
Bookrunner. The Managers may, in agreement with the Company, accept bids that
are received after the Bookbuild has closed. The Company reserves the right to
reduce or seek to increase the amount to be raised pursuant to the Placing, in
its absolute discretion.
6 Each Placee's allocation will be confirmed to the Placee orally by the
Relevant Manager following the close of the Placing, and a conditional contract
note will be dispatched as soon as possible thereafter. The Relevant Managers
oral confirmation to such Placee will constitute an irrevocable legally binding
commitment upon such person (who will at that point become a Placee) in favour
of the Relevant Manager and the Company, under which the Placee agrees to
acquire the number of Placing Shares allocated to it at the Placing Price on the
terms and conditions set out in this Appendix and in accordance with the
Company's constitution.
7 Each prospective Placees allocation and commitment will be evidenced by a
conditional contract note issued to such Placee by the Relevant Manager. The
terms of this Appendix will be deemed to be incorporated in that contract note.
8 The Pricing Announcement shall detail the number of Placing Shares to be
issued and the Placing Price in pounds sterling as well as the Australian dollar
and South African Rand price derived from that pounds sterling price at an
exchange rate to be determined at the sole discretion of the Bookrunner.
9 Subject to paragraphs ?4 and ?5 above, the Managers may choose to accept bids,
either in whole or in part, on the basis of allocations determined at their
discretion (in consultation with the Company) and may scale down any bids for
this purpose on such basis as it may determine. The Managers may also,
notwithstanding paragraphs ?4 and ?5 above, subject to the prior consent of the
Company (i) allocate Placing Shares after the time of any initial allocation to
any person submitting a bid after that time and (ii) allocate Placing Shares
after the Bookbuild has closed to any person submitting a bid after that time.
The Managers each reserve the right not to accept bids or to accept bids in part
rather than in whole.
10 A bid in the Bookbuild will be made on the terms and subject to the
conditions in this Announcement and will be legally binding on the Placee on
behalf of which it is made and except with the Bookrunners consent will not be
capable of variation or revocation after the time at which it is submitted. Each
Placee will also have an immediate, separate, irrevocable and binding
obligation, owed to the Relevant Manager, to pay it (or as it may direct) in
cleared funds an amount equal to the product of the Placing Price and the number
of Placing Shares such Placee has agreed to acquire. Each Placees obligations
under this paragraph will be owed to the Relevant Manager.
11 Except as required by law or regulation, no press release or other
announcement will be made by the Managers or the Company using the name of any
Placee (or its agent), in its capacity as Placee (or agent), other than with
such Placees prior written consent.
12 Irrespective of the time at which a Placees allocation pursuant to the
Placing is confirmed, settlement for all Placing Shares to be acquired pursuant
to the Placing will be required to be made at the relevant time, on the basis
explained below under "Registration and Settlement".
13 All obligations under the Bookbuild and Placing will be subject to fulfilment
of the conditions referred to below under "Conditions of the Placing" and to the
Placing not being terminated on the basis referred to below under "Right to
terminate under the Placing Agreement".
14 By participating in the Bookbuild, each Placee will agree that its rights and
obligations in respect of the Placing will terminate only in the circumstances
described below and will not be capable of rescission or termination by the
Placee.
15 To the fullest extent permissible by law, none of the Managers nor any of
their respective affiliates or agents shall have any liability to Placees (or to
any other person whether acting on behalf of a Placee or otherwise). In
particular, none of the Managers nor any of their respective affiliates or
agents shall have any liability (including to the extent permissible by law, any
fiduciary duties) in respect of the conduct of the Bookbuild process or of such
alternative method of effecting the Placing as the Managers and the Company may
agree.
16 Each prospective Placee who is purchasing the Placing Shares in the US will
be required to sign an investor letter to be provided by the Relevant Manager.
Conditions of the Placing
The obligations of the Managers under the Placing Agreement in respect of the
Placing Shares are conditional on, inter alia:
(a) AIM Admission occurring not later than 8.00 a.m. (London time) on 3 November
2009 or such other date as may be agreed between the Company and the Managers,
not being later than 6 November 2009;
(b) the Company having lodged with the ASX an Appendix 3B announcement
conditional only on the issue of the Placing Shares by the business day after
the date of this Announcement (or such other date as may be agreed between the
Company and the Managers not being later than 6 November 2009);
(c) the JSE having confirmed to the Company in writing before the date of AIM
Admission (or such other date as may be agreed between the Company and the
Managers) the agreement of the JSE that the Placing Shares will be eligible for
listing on the JSE on the date of Admission (or such other date as may be agreed
between the Company and the Managers, not being later than 6 November 2009);
(d) the agreement between the Bookrunner and the Company of the Placing Price
and the number of Placing Shares to be issued as established in the Bookbuild
process;
(e) in relation to the conditional share purchase agreement between the Company
and the NuCoal Vendors regarding the acquisition by the Company of the entire
issued share capital of NuCoal Mining (Pty) Limited and its subsidiaries there
having occurred no default or breach by the Company or any other party to the
agreement of its terms and it not having been terminated by any party by the
time immediately prior to Admission;
(f) the warranties contained in the Placing Agreement being true and accurate
and not misleading on and as of the date of the Placing Agreement and at AIM
Admission as though they had been given and made on such dates by reference to
the facts and circumstances then subsisting; and
(g) in the opinion of the Bookrunner, acting in good faith, there having been
since the date of the Placing Agreement no material adverse effect (as defined
in the Placing Agreement), whether or not foreseeable at the date of the Placing
Agreement.
If (i) any of the conditions contained in the Placing Agreement in relation to
the Placing Shares are not fulfilled or waived by the Bookrunner by the
respective time or date where specified (or such later time or date as the
Company and the Bookrunner may agree), (ii) any of such conditions becomes
incapable of being fulfilled or (iii) the Placing Agreement is terminated in the
circumstances specified below, the Placing in relation to the Placing Shares
will lapse and the Placee's rights and obligations hereunder in relation to the
Placing Shares shall cease and terminate at such time and each Placee agrees
that no claim can be made by the Placee against either the Company or any of the
Managers in respect thereof.
The Bookrunner may, in its absolute discretion and upon such terms as it thinks
fit, waive compliance by the Company with the whole or any part of any of the
Company's obligations in relation to the conditions in the Placing Agreement
save that certain conditions, including the condition relating to Admission
taking place, may not be waived. Any such extension or waiver will not affect
Placees' commitments as set out in this Announcement.
Neither the Bookrunner nor the Company shall have any liability to any Placee
(or to any other person whether acting on behalf of a Placee or otherwise) in
respect of any decision it may make as to whether or not to waive or to extend
the time and /or date for the satisfaction of any condition to the Placing nor
for any decision they may make as to the satisfaction of any condition or in
respect of the Placing generally and by participating in the Placing each Placee
agrees that any such decision is within the absolute discretion of the
Bookrunner and the Company.
Right to terminate under the Placing Agreement
The Bookrunner may, in its absolute discretion, at any time before Admission,
terminate the Placing Agreement by giving notice to the Company in certain
circumstances, including a breach of the warranties given to the Managers in the
Placing Agreement, the failure of the Company to comply with obligations which
are material in the Bookrunner's opinion or, the occurrence of a force majeure
event which in the opinion of the Bookrunner, is likely to prejudice the success
of the Placing. Following Admission to AIM, the Placing Agreement is not capable
of rescission or termination to the extent that it relates to the Placing or the
Placing Shares.
By participating in the Placing, the Placees agree that the exercise by the
Bookrunner of any right of termination or other discretion under the Placing
Agreement shall be within the absolute discretion of the Bookrunner and the
Company and that they need not make any reference to Placees and that they shall
have no liability to Placees whatsoever in connection with any such exercise.
No Prospectus
The Placing Shares are being offered to a limited number of specifically invited
persons only and will not be offered in such a way as to require a prospectus in
the United Kingdom, Australia, South Africa or in any other jurisdiction. No
offering document or prospectus has been or will be submitted to be approved by
the FSA, ASIC or registered in the South African Companies and Intellectual
Property Registration Office in relation to the Placing and Placees' commitments
will be made solely on the basis of the information contained in this
Announcement (including this Appendix and Appendix 2). Each Placee, by accepting
a participation in the Placing, agrees that the content of this Announcement is
exclusively the responsibility of the Company and confirms that it has neither
received nor relied on any other information, representation, warranty, or
statement made by or on behalf of the Company or the Managers or any other
person and none of the Managers nor the Company nor any other person will be
liable for any Placee's decision to participate in the Placing based on any
other information, representation, warranty or statement which the Placees may
have obtained or received and, if given or made, such information,
representation, warranty or statement must not be relied upon as having been
authorised by the Company, its officers or board of directors. Each Placee
acknowledges and agrees that it has relied on its own investigation of the
business, financial or other position of the Company in accepting a
participation in the Placing, including the merits and risks involved. The
Company is not making any undertaking or warranty to any Placee regarding the
legality of an investment in the Placing Shares by such Placee under any legal,
investment or similar laws or regulations. Each Placee should not consider any
information in this Announcement to be legal, tax or business advice. Each
Placee should consult its own attorney, tax advisor and business advisor for
legal, tax and business advice regarding an investment in the Placing Shares.
Nothing in this paragraph shall exclude the liability of any person for
fraudulent misrepresentation.
Registration and Settlement
Settlement of transactions in the Placing Shares following Admission on AIM, the
ASX and the JSE respectively, will take place:
* in respect of the Placing Shares to be held on the UK share register, on a
delivery versus payment basis in Depositary Interest form within CREST;
* in respect of Placing Shares to be held on the Australian share register, on a
delivery versus payment basis through CHESS; or
* in respect of Placing Shares to be held on the South African share register, on
a delivery versus payment basis in accordance with the rules of Strate with the
Bookrunner or its nominated affiliate or agent acting as broker under the rules
of Strate to manage settlement on behalf of the Company.
The Company reserves the right to require settlement for and delivery of the
Placing Shares (or a portion thereof) to any Placee in any form it requires if,
in the Bookrunner's opinion, delivery or settlement is not possible or
practicable within CREST, CHESS or Strate, as the case may be, or would not be
consistent with the regulatory requirements in the Placee's jurisdiction.
Following the close of the Bookbuild for the Placing, each Placee allocated
Placing Shares in the Placing will be sent a conditional contract note stating
the number of Placing Shares to be allocated to it at the Placing Price and
settlement instructions.
Each Placee agrees that it will do all things necessary to ensure that delivery
and payment is completed in accordance with the standing CREST, CHESS or Strate
rules and regulations and settlement instructions that it has in place with the
Managers.
The Company will deliver the Placing Shares:
* in Depositary Interest form to a CREST account operated by the Bookrunner as
agent for the Company and the Bookrunner will enter its delivery (DEL)
instruction into the CREST system. The input to CREST by a Placee of a matching
or acceptance instruction will then allow delivery of the relevant Placing
Shares to that Placee against payment;
* in CHESS holdings as the Bookrunner directs in respect of the Placing Shares
which are to be allotted in uncertificated form and, in each case, the Company
will ensure that the same are enabled for settlement as soon as practicable
after Admission and in any event prior to the relevant Record Date; or
* in Strate as the Bookrunner directs in respect of the Placing Shares which are
to be allotted in uncertificated form and, in each case, the Company will ensure
that the same are enabled for settlement as soon as practicable after Admission
and in any event prior to the relevant Record Date.
It is expected that settlement will be on 3 November 2009 in CREST on a T+3
basis, on 5 November 2009 in CHESS on a T+3 basis and on 5 November 2009 in
Strate on a T+5 basis in each case in accordance with the instructions set out
in the conditional contract note.
Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above at the rate of two
percentage points above London Interbank Offered Rate as determined by the
Bookrunner.
Each Placee is deemed to agree that, if it does not comply with these
obligations, the Bookrunner may sell any or all of the Placing Shares allocated
to that Placee on such Placee's behalf and retain from the proceeds, for the
Bookrunner's account and benefit, an amount equal to the aggregate amount owed
by the Placee plus any interest due thereof. The relevant Placee will, however,
remain liable for any shortfall below the aggregate amount owed by it and may be
required to bear any stamp duty or stamp duty reserve tax (together with any
interest or penalties) which may arise upon the sale of such Placing Shares on
such Placee's behalf.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the conditional contract note is copied and delivered
immediately to the relevant person within that organisation. Insofar as Placing
Shares are registered in a Placee's name or that of its nominee or in the name
of any person for whom a Placee is contracting as agent or that of a nominee for
such person, such Placing Shares should, subject as provided below, be so
registered free from any liability to UK stamp duty or stamp duty reserve tax.
Representations and Warranties
By participating in the Placing each Placee (and any person acting on such
Placee's behalf) makes the following representations, warranties,
acknowledgements, undertakings and agreements (as the case may be) to the
Company and to the Managers:
1 represents and warrants that it has read and understood this Announcement,
including the Appendices, in its entirety;
2 acknowledges that no offering document or prospectus has been prepared in
connection with the placing of the Placing Shares and represents and warrants
that it has not received a prospectus or other offering document in connection
therewith;
3 acknowledges that neither the Managers nor the Company nor any of their
affiliates or agents nor any person acting on behalf of any of them has
provided, and will not provide it, with any information or material regarding
the Placing Shares or the Company other than this Announcement; nor has it
requested any of the Managers, the Company, any of their affiliates or agents or
any person acting on behalf of any of them to provide it with any such
information or material;
4 acknowledges that the content of this Announcement is exclusively the
responsibility of the Company and that none of the Managers nor any person
acting on their respective behalf has or shall have any liability for any
information, representation or statement contained in this Announcement or any
information previously published by or on behalf of the Company and will not be
liable for any Placee's decision to participate in the Placing based on any
information, representation or statement contained in this Announcement,
prospectus or otherwise. Each Placee further represents, warrants and agrees
that the only information on which it is entitled to rely and on which such
Placee has relied in committing itself to acquire the Placing Shares is
contained in this Announcement and any information previously published by the
Company by notification to a Regulatory Information Service, such information
being all that it deems necessary to make an investment decision in respect of
the Placing Shares and that it has neither received nor relied on any other
information given or representations, warranties or statements made by any of
the Managers or the Company and neither the Managers nor the Company will be
liable for any Placee's decision to accept an invitation to participate in the
Placing based on any other information, representation, warranty or statement.
Each Placee further acknowledges and agrees that it has relied on its own
investigation of the business, financial or other position of the Company in
deciding to participate in the Placing;
5 acknowledges that the Ordinary Shares are listed, admitted to trading or
quoted (as the case may be) on the ASX, AIM and the JSE and the Company is
therefore required to publish certain business and financial information in
accordance with the rules of such exchanges (collectively, the "Exchange
Information"), which includes a description of the nature of the Companys
business and the Companys most recent financial statements, and similar
statements for preceding financial years, and that it is able to obtain or
access the Exchange Information without undue difficulty;
6 acknowledges that neither the Managers nor any person acting on their behalf
nor any of their affiliates or agents has or shall have any liability for the
Exchange Information, any publicly available or filed information or any
representation relating to the Company, provided that nothing in this paragraph
excludes the liability of any person for fraudulent misrepresentation made by
that person;
7 acknowledges that it is not, and at the time the Placing Shares are acquired
will not, be a resident of Canada or Japan, and that the Placing Shares have not
been and will not be registered under the securities legislation of Canada or
Japan and, subject to certain exceptions, may not be offered, sold, taken up,
renounced or delivered or transferred, directly or indirectly, within those
jurisdictions;
8 unless otherwise specifically agreed with the Managers, represents and
warrants that it is, or at the time the Placing Shares are acquired that it will
be, the beneficial owner of such Placing Shares, or that the beneficial owner of
such Placing Shares is not a resident of Canada or Japan;
9 acknowledges that the Placing Shares have not been and will not be registered
under the securities legislation of Canada or Japan and, subject to certain
exceptions, may not be offered, sold, taken up, renounced or delivered or
transferred, directly or indirectly, within those jurisdictions;
10 represents and warrants that the issue to it, or the person specified by it
for registration as holder, of Placing Shares will not give rise to a liability
under any of sections 67, 70, 93 or 96 of the Finance Act, 1986 (depositary
receipts and clearance services) and that the Placing Shares are not being
acquired in connection with arrangements to issue depositary receipts or to
transfer Placing Shares into a clearance system;
11 represents and warrants that it has complied with its obligations in
connection with money laundering and terrorist financing under the United
Kingdom Proceeds of Crime Act, 2002, the United Kingdom Terrorism Act, 2003 and
the United Kingdom Money Laundering Regulations, 2007 and the equivalent
Australian and South African legislation (the "Regulations") and, if making
payment on behalf of a third party, that satisfactory evidence has been obtained
and recorded by it to verify the identity of the third party as required by the
Regulations;
12 if a financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, represents and warrants that the Placing Shares purchased
by it in the Placing will not be acquired on a non-discretionary basis on behalf
of, nor will they be acquired with a view to their offer or resale to, persons
in a member state of the European Economic Area which has implemented the
Prospectus Directive other than Qualified Investors, or in circumstances in
which the prior consent of the Managers has been given to the offer or resale;
13 represents and warrants that it has not offered or sold and, prior to the
expiry of a period of six months from Admission, will not offer or sell any
Placing Shares to persons in the United Kingdom, except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their business or
otherwise in circumstances which have not resulted and which will not result in
an offer to the public in the United Kingdom within the meaning of section 85(1)
of the FSMA;
14 represents and warrants that it has not offered or sold and will not offer or
sell any Placing Shares to persons in the European Economic Area prior to
Admission except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their business or otherwise in circumstances which have not resulted
in and which will not result in an offer to the public in any member state of
the European Economic Area within the meaning of the Prospectus Directive;
15 represents and warrants that it has only communicated or caused to be
communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning of
section 21 of the FSMA) relating to the Placing Shares in circumstances in which
section 21(1) of the FSMA does not require approval of the communication by an
authorised person;
16 represents and warrants that it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to the Placing Shares in, from or otherwise involving, the United
Kingdom;
17 represents and warrants that if it resides in a member state of the European
Economic Area it is a Qualified Investor within the meaning of the Prospectus
Directive;
18 represents and warrants that it has complied and will comply with all
applicable provisions of the Australian Corporations Act (including relevant
insider trading provisions) and the ASX Listing Rules in relation to the Placing
Shares;
19 agrees that it must comply with all applicable provisions of the Australian
Foreign Investments and Takeovers Act, 1975 (Cth) in relation to the Placing
Shares;
20 represents and warrants that its participation in the Placing will not cause
its aggregate shareholding in the Company to be 20% or more of the issued share
capital of the Company;
21 represents and warrants that it is not a 'related party' of the Company as
that term is defined in section 228 of the Australian Corporations Act and/or
the ASX Listing Rules, (or if it is a 'related party' of the Company, that its
acquisition of Placing Shares would not require the Company to obtain the
approval of its shareholders under section 208(1)(a) of the Australian
Corporations Act);
22 represents and warrants that if it resides in the United Kingdom it is a
Qualified Investor within the meaning of the Prospectus Directive and a person
(a) who has professional experience in matters relating to investments and fall
within article 19(5) (investment professionals) of the Order, or (b) who falls
within article 49(2)(a) to (d) (high net worth companies, unincorporated
associations etc) of the Order;
23 represents and warrants that if it resides in Australia it is a person to
whom an offer of securities may be made under section 708(8) or section 708(11)
of the Australian Corporations Act and agrees that it will not offer to sell the
Placing Shares to any person that is not a sophisticated or professional
investor under section 708(8) or section 708(11) of the Australian Corporations
Act until the day after a notice is lodged by the Company with ASX that complies
with subsections 708A(5)(e) and (6) of the Australian Corporations Act;
24 represents and warrants that if it resides in the Republic of South Africa it
qualifies as an addressee described in section 144(b) of the South African
Companies Act No 61 of 1973;
25 represents and warrants that it and any person acting on its behalf is
entitled to acquire the Placing Shares under the laws of all relevant
jurisdictions and that it has all necessary capacity and has obtained all
necessary consents and authorities (including without limitation any and all
approvals that may be required for the purposes of the South African Exchange
Control Regulations, 1961) to enable it to commit to this participation in the
Placing and to perform its obligations in relation thereto (including, without
limitation, in the case of any person on whose behalf it is acting, all
necessary consents and authorities to agree to the terms set out or referred to
in this Announcement) and will honour such obligations, and it has had access to
such financial and other information concerning the Company and the Placing
shares as it deems necessary in connection with its decision to purchase the
Placing Shares;
26 where it is acquiring Placing Shares for one or more managed accounts,
represents and warrants that it is authorised in writing by each managed account
(a) to acquire the Placing Shares for each managed account; (b) to make on its
behalf the representations, warranties, acknowledgements, undertakings and
agreements in this Appendix and the announcement of which it forms part; and (c)
to receive on its behalf any investment letter relating to the Placing in the
form provided to you by any of the Managers;
27 undertakes that it (and any person acting on its behalf) will make payment
for the Placing Shares allocated to it in accordance with this Announcement on
the due time and date set out herein, failing which the relevant Placing Shares
may be placed with other placees or sold as the Bookrunner may in its sole
discretion determine and without liability to such Placee;
28 acknowledges that none of the Managers, nor any of their respective
affiliates, nor their respective agents nor any person acting on behalf of any
of them, is making any recommendations to it, advising it regarding the
suitability of any transactions it may enter into in connection with the Placees
and that participation in the Placing is on the basis that it is not and will
not be a client of any of the Managers and that none of the Managers have any
duties or responsibilities to it for providing the protections afforded to their
respective clients or customers or for providing advice in relation to the
Placing nor in respect of any representations, warranties, acknowledgements,
undertakings or indemnities contained in the Placing Agreement nor for the
exercise or performance of any of its rights and obligations thereunder
including any rights to waive or vary any conditions or exercise any termination
right;
29 undertakes that the person whom it specifies for registration as holder of
the Placing Shares will be (a) itself or (b) its nominee, as the case may be.
Neither the Managers nor the Company will be responsible for any liability to
stamp duty or stamp duty reserve tax resulting from a failure to observe this
requirement. Each Placee and any person acting on behalf of such Placee agrees
to participate in the Placing and it agrees to indemnify the Company and the
Managers in respect of the same on the basis that the Placing Shares will be
allotted to the CREST, CHESS or Strate stock account of the Bookrunner or its
affiliate or agent who will hold them as nominee on behalf of such Placee until
settlement in accordance with its standing settlement instructions;
30 acknowledges that any agreements entered into by it pursuant to these terms
and conditions shall be governed by and construed in accordance with the laws of
England and Wales and it submits (on behalf of itself and on behalf of any
person on whose behalf it is acting) to the exclusive jurisdiction of the
English courts as regards any claim, dispute or matter arising out of any such
contract, except that enforcement proceedings in respect of the obligation to
make payment for the Placing Shares (together with any interest chargeable
thereon) may be taken by the Company or the Managers in any jurisdiction in
which the relevant Placee is incorporated or in which any of its securities have
a quotation on a recognised stock exchange;
31 acknowledge that time shall be of the essence as regards obligations pursuant
to this Appendix to the Announcement;
32 agrees that the Company and the Managers and their respective affiliates and
agents and others will rely upon the truth and accuracy of the foregoing
representations, warranties, acknowledgements, undertakings and agreements which
are given to the Managers on their own behalf and on behalf of the Company and
are irrevocable, and with respect to any of the representations, warranties,
acknowledgements, undertakings and agreements deemed to have been made by a
purchaser of the Placing Shares as a fiduciary or agent for one or more investor
accounts, it has sole investment discretion with respect to each such account
and it has full power and authority to make the foregoing representations,
warranties, acknowledgements, undertakings and agreements on behalf of each such
account;
33 agrees to indemnify and hold the Company and the Managers and their
respective affiliates and agents harmless from any and all costs, claims,
liabilities and expenses (including legal fees and expenses) arising out of or
in connection with any breach of the representations, warranties,
acknowledgements, agreements and undertakings in this Appendix and further
agrees that the provisions of this Appendix shall survive after completion of
the Placing;
34 represents and warrants that it is an institution which (a) has such
knowledge and experience in financial and business matters and expertise in
assessing credit, market and all other relevant risks as to be capable of
evaluating, and has evaluated independently, the merits, risks and suitability
of its investment in the Placing Shares, and (b) it and any accounts for which
it is acting are each able to bear the economic risk of such investment, and are
each able to sustain a complete loss of any investment in the Placing Shares;
35 represents and warrants that it is either (a) outside the United States and
has not purchased the Placing Shares as a result of any directed selling efforts
within the meaning of Rule 902(c) of Regulation S or (b) an Accredited Investor
who is also a QIB who is purchasing the Placing Shares for its own account, or
for the account of one or more persons who are Accredited Investors and QIBs,
and is aware, and each beneficial owner of such Placing Shares has been advised,
that the sale of such Placing Shares to it is being made in reliance on Rule
144A or another exemption from the registration requirements of the Securities
Act for its own account or for the account of one or more other investors who
are Accredited Investors and who are also QIBs for which it is acting as a duly
authorised fiduciary or agent, in each case for investment, and not with a view
to, or for offer or sale in connection with, any distribution thereof within the
meaning of the Securities Act and has not purchased the Placing Shares as a
result of "general solicitation" or "general advertising" (within the meaning of
Rule 502(c) under the Securities Act), including advertisements, articles,
research reports, notices or other communications published in any newspaper,
magazine, on a website or in or on any similar media, or broadcast over radio or
television, or any seminar or meeting whose attendees have been invited by
general solicitation or general advertising;
36 understands and acknowledges that the Placing Shares are being offered in a
transaction not involving any public offering in the United States within the
meaning of the Securities Act and that the Placing Shares have not been and will
not be registered under the Securities Act or the securities laws of any State
in the United States. It agrees that the Placing Shares may not be reoffered,
sold, pledged or otherwise transferred, and that it will not directly or
indirectly reoffer, sell, pledge or otherwise transfer the Placing Shares,
except in an offshore transaction in accordance with Rule 903 or 904 of
Regulation S and that such offer, sale, pledge or transfer must, and will, be
made in accordance with any applicable securities laws of any State or other
jurisdiction of the United States;
37 understands that no representation has been, is being or will be made by the
Company as to the availability of an exemption from the registration for the
reoffer, resale, pledge or transfer of the Placing Shares in accordance the
Securities Act; and
38 understands that the Placing Shares are "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act and that, for so long as they
remain "restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, they may not be deposited into any unrestricted depositary
facility established or maintained by a depositary bank.
Placees should note that they will be liable for any stamp duty and all other
stamp, issue, securities, transfer, registration, documentary or other duties or
taxes (including any interest, fines or penalties relating thereto) payable
outside the UK by them or any other person on the subscription by them of any
Placing Shares or the agreement by them to acquire any Placing Shares.
Each Placee, and any person acting on behalf of the Placee, acknowledges that
none of the Managers owe any fiduciary or other duties to any Placee in respect
of any representations, warranties, undertakings, acknowledgements, agreements
or indemnities in the Placing Agreement.
Each Placee and any person acting on behalf of the Placee acknowledges and
agrees that the Managers or any of their respective affiliates or agents may, at
their absolute discretion, agree to become a Placee in respect of some or all of
the Placing Shares.
When a Placee or person acting on behalf of the Placee is dealing with the
Managers, any money held in an account with any of the Managers, on behalf of
the Placee and/or any person acting on behalf of the Placee will not be treated
as client money within the meaning of the rules and regulations of the FSA made
under the FSMA. The Placee acknowledges that the money will not be subject to
the protections conferred by the client money rules; as a consequence, this
money will not be segregated from the relevant Manager's money, as the case may
be, in accordance with the client money rules and will be used by the Managers
in the course of their own respective businesses and the Placee will rank only
as a general creditor of the Managers.
If the Company or any of the Managers their respective affiliates or agents
request any information about a Placee's agreement to acquire Placing Shares,
including, without limitation, any information required by the South African
Reserve Bank for the Placing Shares to be settlement in Strate and any evidence
supporting the representations and warranties given above, such Placee shall
(and it undertakes to) promptly disclose it to them.
All times and dates in this Announcement may be subject to amendment. The
Managers shall notify the Placees and any person acting on behalf of the Placees
of any changes.
APPENDIX B
RISK FACTORS
Prospective investors should be aware that an investment in the Company involves
a high degree of risk and should only be made by those with the necessary
expertise to appraise the investment. The following are considered by the
Company to be the risk factors which are specific to the Company and its
subsidiaries (together the "Group") and its industry and which are material to
taking investment decisions in the Ordinary Shares and should be read in
conjunction with the other information contained in this announcement. Such
factors are not intended to be presented in any assumed order of priority. The
list below does not purport to be an exhaustive list. Additional risks and
uncertainties not presently known to the Company, or which it currently
believes to be immaterial, may also have an adverse effect on the Group.
An investment in the Company is only suitable for financially sophisticated
investors who are capable of evaluating the merits and risks of such an
investment and who have sufficient resources to be able to bear any losses which
may arise therefrom (which may be equal to the whole amount invested). No
representation is or can be made as to the future performance of the Group and
there can be no assurance that the Company will achieve its objectives.
COMPANY SPECIFIC RISKS - EXPLORATION, DEVELOPMENT AND PRODUCTION
The Group's mining operations are subject to the normal risks of mining, and its
profits are subject to numerous factors beyond the Group's control. Certain of
these risk factors are set out below.
Mineral reserves and resources estimates
The estimating of mineral reserves and mineral resources is a subjective process
and the accuracy of reserve and resource estimates is a function of the quantity
and quality of available data and the assumptions used and judgments made in
interpreting engineering and geological information. There is significant
uncertainty in any reserve or resource estimate and the actual deposits
encountered and the economic viability of mining a deposit may differ materially
from the Group's estimates. The exploration of mineral rights is speculative in
nature and is frequently unsuccessful. The Group may be unable to successfully
discover and/or exploit reserves.
Estimated mineral reserves or mineral resources may have to be recalculated
based on changes in metals prices, further exploration or development activity
or actual production experience. In addition, by their very nature, resource
estimates are imprecise and depend to some extent on interpretations, which may
prove to be inaccurate. As further information becomes available through
additional fieldwork and analysis the estimates may change. This could result in
alterations to development and mining plans which may, in turn, adversely affect
the Group's operations. It could also have a material adverse effect on
estimates of the volume or grade of mineralization, estimated recovery rates or
other important factors that influence reserve or resource estimates. There can
be no assurance that any resources recovered can be brought into profitable
production. Market price fluctuations, increased production costs or reduced
recovery rates, or other factors may render the present estimated or inferred
resources of the Group uneconomical or unprofitable to develop at a particular
site or sites.
Exploration, project development and mining risks
Exploration for mineral resources involves many risks and hazards including
environmental hazards (including discharge of pollutants or hazardous
chemicals), industrial accidents, occupational and health hazards, unscheduled
plant shutdowns or other processing problems, technical failures, labour force
disruptions, the unavailability of materials and equipment or exploration,
production or supply infrastructure, unusual or unexpected rock formations, pit
slope failures, changes in the regulatory environment, weather conditions,
cave-ins, rock bursts, water conditions and stock losses. Such occurrences could
result in damage to, or destruction of, production facilities, personal injury
or death, environmental damage, delays in mining, increased production costs and
other monetary losses and possible legal liability to the owner or operator of
the mine. The Group may become subject to liability for pollution or other
hazards against which it has not insured or cannot insure, including those in
respect of past mining activities for which it was not responsible.
Ability to exploit successful discoveries
It is possible that the Group may not be able to exploit commercially viable
discoveries in which it holds an interest and few properties that are explored
are ultimately developed into producing mines.
Exploration may require external approvals or consents from relevant authorities
and the granting of these approvals and consents is beyond the Group's control.
The granting of such approvals and consents may be withheld for lengthy periods,
not given at all, or granted subject to the satisfaction of certain conditions
which the Group cannot or may consider impractical or uneconomic to seek to
meet. As a result of such delays, the Group may incur additional costs and
losses, reduced revenue or lose part or all of its equity in a licence.
If the relevant approvals and consents are granted, there can be no assurance
that any mineralisation discovered will result in proven and probable reserves
being attributed to the Company. If reserves are developed, it can take a number
of years from the initial phases of drilling until production is possible,
during which time the economic feasibility of production may change. Substantial
expenditures are required to establish the viability of coal reserves through
drilling and, in the cases of new properties, to construct mining and processing
facilities. As a result of these uncertainties, no assurance can be given that
the exploration programmes undertaken by the Company will result in any new
commercial mining operations being brought into operation.
Production estimates
The Group cannot give any assurance that it will achieve its production
estimates. The failure of the Group to achieve its production estimates could
have a material and adverse effect on any or all of its future cash flows,
results of operations and financial condition. These production estimates will
be dependent on, among other things, the accuracy of mineral reserve and
resource estimates, the accuracy of assumptions regarding ore grades and
recovery rates, ground conditions and physical characteristics of ores, such as
hardness and the presence or absence of particular metallurgical characteristics
and the accuracy of estimated rates and costs of mining and processing.
The Group's actual production may also vary from its estimates for a variety of
reasons, including, adverse operating conditions (such as unexpected geological
conditions, fire, weather, accidents), compliance with governmental
requirements, labour and safety issues, delays in installing or repairing plant
and equipment, inability to complete, or lack of success of, capital development
and exploration drilling.
Future capital requirements
Further funds will be required to develop the Group's projects, to take
advantage of opportunities for acquisitions, joint ventures or other business
opportunities and to meet any unanticipated liabilities or expenses which the
Group may incur. The Group may seek to raise further funds through equity or
debt financing, joint ventures, production sharing arrangements or other means.
Failure to obtain sufficient financing for the Group's activities and future
projects may result in delay or indefinite postponement of exploration,
development or production on the Group's properties or even loss of a property
interest (including any prospecting or mining right). There can be no assurance
that additional finance will be available when needed or, if available, the
terms of the financing might not be favourable to the Group and might involve
substantial dilution to shareholders.
Environmental regulation
The Group's operations are subject to existing and possible future environmental
and health and safety legislation, regulations and actions which could impose
significant costs and burdens on the Group (the extent of which cannot be
predicted) both in terms of compliance and potential penalties, liabilities and
remediation or decommissioning costs. Breach of any environmental obligations
could result in penalties and civil liabilities and/or suspension of operations,
any of which could adversely affect the Group.
Mining operations have inherent risks and liabilities associated with damage to
the environment and the disposal of waste products occurring as a result of
mineral exploration and production. Laws and regulations involving the
protection and remediation of the environment are constantly changing and are
generally becoming more restrictive. Approval is required for land clearing and
for ground disturbing activities. Delays in obtaining such approvals can result
in the delay to anticipated exploration programmes or mining activities.
Equipment and availability
The current and foreseeable levels of global exploration and development
activity are such that equipment utilisation rates are high, and the Group will
be in a competitive environment in relation to sourcing appropriate equipment.
If it is unable to source appropriate equipment economically or at all then this
would have a material adverse effect on the Company's financial or trading
position.
Volatility of prices for mineral and other commodities
The supply, demand and prices for commodities are volatile and are influenced by
factors beyond the Group's control. These factors include global demand and
supply, exchange rate, interest and inflation rates and political events. A
significant prolonged decline in commodity prices could impact the viability of
some of the Group's exploration activities.
Economic and political risks
Whilst the Group will make every effort to ensure it has robust commercial
agreements covering its activities, there is a risk that the Group's activities
are adversely impacted by economic and political factors such as the imposition
of additional taxes and charges, cancellation or suspension of licences,
expropriation, war, terrorism, insurrection and changes to laws governing
mineral exploration and operations. There is also the possibility that the terms
of any licence the Group holds (including any favourable tax provisions) may be
changed.
COMPANY SPECIFIC RISKS - RISKS RELATING TO THE BUSINESS
Government regulation
The Group's exploration activities, development projects and any future mining
operations are subject to laws and regulations in South Africa governing the
acquisition and retention of title to mineral rights, mine development, health
and worker safety, employment standards, waste disposal, protection of the
environment, and protection of endangered and protected species and other
matters. It is possible that future changes in applicable laws, regulations and
agreements, or changes in their enforcement, regulatory interpretation or
application could result in changes to legal or practical requirements or the
terms of existing permits, rights and agreements applicable to the Group or its
projects, which could have a material and adverse impact on the Group's current
exploration activities, planned development projects or future mining
operations, including by requiring the Group to cease, materially delay or
restrict exploration, development or mining operations.
Where required, obtaining necessary permits or rights to conduct exploration or
mining operations can be a complex and time consuming process and there can be
no assurance that any necessary permits or rights will be obtainable on
acceptable terms, in a timely manner, or at all. The costs and delays associated
with obtaining necessary permits or rights and complying with these permits or
rights and applicable laws and regulations could stop, delay or restrict the
Group from proceeding with exploration activities or with development or future
mining operations. Any failure to comply with applicable laws, regulations,
permits or rights, even if inadvertent, could result in the material
interruption or restriction of exploration activities, development or mining
operations, or fines, penalties or other liabilities.
The South African government has passed the Mineral and Petroleum Resources
Royalty Act (the "Royalty Act"). The Royalty Act aims to impose a royalty on
mining companies in favour of the National Revenue Fund on the transfer of
mineral resources. It will come into effect on 1 March 2010. Royalties imposed
differ between refined and unrefined mineral resources but in both instances are
based on a percentage of gross sales, derived from a pre-determined formula
measuring the ratio of earnings before interest and tax and the gross revenue
realised. Coal is generally unrefined and according to the legislation the
royalty to be imposed will be gross sales multiplied by a percentage determined
according to a formula which should not exceed 7 per cent. There is, however,
uncertainty regarding interpretation of the new legislation.
The ability of the Company, and its South African subsidiaries and their
operations, to transfer cash out of South Africa and to enter into agreements
which require or potentially require the transfer of cash out of South Africa
(for example through payment of the purchase price or in the event of a breach
of warranties given) is subject to South African exchange control regulations.
The South African Reserve Bank ("SARB"), and in particular its Exchange Control
Department ("ECD"), has been delegated the authority to administer the South
African exchange control system. The ECD has wide discretion that is exercised
in accordance with the exchange control regulations and the exchange control
rulings in line with the policy guidelines laid down by the South African
Minister of Finance. Certain banks have been appointed as authorised dealers in
terms of the exchange control regulations and these authorised dealers assist
the ECD in administering the exchange control system, their authority being
regulated by the exchange control rulings. All applications to the ECD must be
made though an authorised dealer. Any cash flows from South Africa are regulated
by exchange control regulations. There can be no assurance in the event that the
Company makes an application to the SARB for a transfer of funds out of South
Africa or enter into an agreement that such transfer will be approved, in which
case any restrictions placed on the Company in respect of any such transfer or
agreement may have a material adverse effect on the Group's business, operating
results and financial condition.
The South African Government has passed the Mineral and Petroleum Resources
Development Amendment Act, 2008 which has not yet commenced. Once it commences,
which date is presently unknown, this will require any change in the
shareholding of mining concessions and a change of control of those held
(directly or indirectly) by quoted companies (which were previously exempted) to
be submitted to the South African Minister of Mineral Resources for approval.
This may cause additional delay and complication in the completion of
transactions involving the Company's assets. Any such consent would be subject
to the Minister being satisfied regarding the Broad-Based Black Economic
Empowerment ("BBBEE") arrangements in place, as well as the new shareholder
being in a position to support the holder, if necessary, to ensure the holder
can still meet the requirements that were met when the right was issued and the
terms and conditions of the licence. These include financial and technical
capability.
Title
The acquisition and retention of title to mineral rights is a detailed and
time-consuming process. Title to, and the area of, mineral resource claims may
be disputed or challenged. Although the Group believes it has taken and is
taking reasonable measures to secure title to its projects, there is no
guarantee that title to its projects will be granted, that prospecting rights
will be converted into mining rights or that title will not be challenged or
impaired. Any successful challenges to the title of the Group's projects could
stop, materially delay or restrict the Group from proceeding with exploration
activities, any development, or future mining operations.
Certain of the Group's mining rights and prospecting rights may from time to
time have technical defects, errors or breaches, have not been registered with
the applicable authority or may have consents or approvals outstanding. These
include, for instance, outstanding consents ("Section 11 Consents") in terms of
section 11 of the Mineral and Petroleum Resources Development Act, 2002
("MPRDA") and/or outstanding registration of Section 11 Consents at the Mining
and Petroleum Titles Registration Office ("MPTRO") established in terms of the
Mining Titles Registration Act 1967, ("MTRA") and/or discrepancies in related
documentation, including in relation to the Mooiplaats, Vele and Makhado
projects. Whilst the Company believes that these are primarily administrative in
nature, and written notice must be given prior to cancellation or suspension of
the relevant rights, there can be no guarantee that the rights in question will
not be cancelled, suspended, revoked or otherwise impaired and any such
cancellation, suspension, revocation or impairment to the rights comprising the
Group's projects could stop, materially delay or restrict the Group from
proceeding with exploration activities, mining activities, any development, or
future mining operations.
Most of the Company's mineral rights have been acquired through acquisition of
the shares of existing holders or the mineral interests of existing holders. In
certain cases administrative matters remain outstanding which are required to
complete the record of the acquisition process, including in relation to the
Mooiplaats, Vele and Makhado projects. Whilst the Company believes these are
administrative in nature, there can be no guarantee that the process of
recording the acquisitions will be completed, nor is there a guarantee that as a
result of any such non-completion the Group's projects will not stop, be
materially delayed or that the Company will not be restricted from proceeding
with exploration activities, mining activities, any development, or future
mining operations.
BBBEE
The MPRDA introduced a broad based socio economic charter (the "Mining Charter")
which sets out a framework, targets and timetable for affecting the entry of
historically disadvantaged South Africans ("HDSA") into the mining industry in
South Africa (which is also known as the BBBEE legislation). The implementation
and administration of the Mining Charter is in its infancy and the long term
implications for mining companies, including the Company, are still unfolding.
The MPRDA gives the South African Minister of Mineral Resources a discretion
when considering a licence application regarding the BBBEE structure to be
implemented by an applicant. In general, the Mining Charter refers to targets of
15% of equity or attributable units of production vesting in HDSA hands within
five years from the commencement of the MPRDA (i.e. by 30 April 2009) and 26% of
equity or attributable units of production vesting in HDSA hands within ten
years from the commencement of the MPRDA (i.e. by 30 April 2014). Specific
commitments which a company has made regarding HDSA ownership are generally
recorded as a condition of the mineral rights granted by the South African
Minister of Mineral Resources. The Company has not yet met the 15% BBBEE
participation threshold. However, although formal agreements have not yet been
signed, the Company has finalised the terms of an in-principle transaction with
Firefly Investments 163 (Pty) Limited (a company wholly owned and controlled by
HDSAs) which is expected to be implemented if the Department of Mineral
Resources confirms that it will ensure compliance by the Company with the Mining
Charter. Implementation of the proposed transaction will depend on, among other
things, the approval of the Australian Foreign Investment Review Board.
Although the Company has a BBBEE strategy and intends to comply with the Mining
Charter or any requirement imposed by the South African Minister of Mineral
Resources going forward, no assurance can be given that it will be able to
achieve the objectives of the Mining Charter at all times, including the 15% or
26% (by 30 April 2014) ownership target. Furthermore, no assurance can be given
that the Company's ownership interests in its underlying assets will not change
materially, or that the extent and composition of its BBBEE partners will not
change from time to time. Non-compliance with any specific condition contained
in a mineral right regarding HDSA ownership may result in enforcement action and
could ultimately result in the withdrawal of the mineral right by the South
African Minister of Mineral Resources.
Land claims
Certain of the areas over which mineral rights have been granted to the Company
are the subject of land claims in terms of the South African Restitution of Land
Rights Act, 1994 by indigenous former inhabitants which if successful or if
settled could result in significant costs or burdens for the Company. Generally
a claim is made only to the surface rights attaching to the land and not to the
mineral rights as well, however the legal position on the question whether a
claim under the South African Restitution of Land Rights Act could include
mineral rights is not clear. South African case law decided before the MPRDA
took effect indicates that a claim under the South African Restitution of Land
Rights Act may include mineral rights. The substantial change to the South
African mining and mineral law regime brought about by the MPRDA may arguably
prevent a claim in respect of the mineral rights. If a land claim is settled in
favour of the claimants this should not stop mining or prospecting operations as
the mineral rights holder has statutory rights relating to accessing the land
but there may be a delay while access terms and conditions are negotiated with
any new land owner. The Company should receive fair value compensation from the
Government for any land or mineral rights which are given to claimants, although
the amount of such compensation will form part of any settlement negotiations
and may not match the values attributed by the Company thereto. Settlement of a
land claim over an area for which the company holds mining rights but no surface
rights may nevertheless require the Company to participate in the settlement and
to find and fund alternative land for the claimants the interests of securing
the mining areas.
Future transactions and financing
The Group plans to develop existing, and acquire new, interests through
acquisitions, joint ventures and other strategic alliances (including, for
example, the Rio Tinto joint venture and farm swap, the NuCoal acquisition and
the Vele acquisition - see below). However, there can be no assurance that any
such transactions can be concluded on acceptable terms or at all or that
conditions to which such transactions may be subject will be satisfied. Future
transactions may also require payments to be made and exploration expenditures
to be incurred. The only potential sources of funding currently available to the
Group are through the issue of additional equity and/or debt capital or through
bringing in a partner to fund the exploration and development costs on
investments it may acquire. There is no assurance that the Group will be
successful in raising sufficient funds or attracting a suitable partner to
enable it to meet its obligations under its agreements.
Rio Tinto farm swap and joint venture
The Company has entered into a farm swap (exchange of prospecting rights)
agreement (the "FS Agreement") with the Rio Tinto group relating to the
Company's Makhado project. The FS Agreement (and the application for a New Order
Mining Right) is conditional on, inter alia, approval being granted by the South
African Minister of Mineral Resources for the transfer and cession of relevant
prospecting rights and interests in such prospecting rights under section 11 of
the MPRDA, consents required in terms of the South African Competition Act, 1998
and South African exchange control regulations, execution of certain further
documentation and any outstanding board or shareholder approvals. There can be
no guarantee that such approval will be granted. If the FS Agreement does not
proceed to completion, this may impact the viability of the Company's Makhado
project. In addition, the Company has entered into a memorandum of understanding
in relation to a joint venture relating to the Company's Makhado project. There
can be no guarantee that such joint venture will proceed.
NuCoal acquisition
The Company has entered into a conditional agreement to acquire the entire
issued share capital of NuCoal (the "NuCoal Acquisition Agreement"). The NuCoal
Acquisition Agreement is conditional on, among other things, conditions which
are administrative in nature and which are the responsibility of the current
shareholders of NuCoal and relate to streamlining the legal and ownership
structure of NuCoal in order to effect the transfer of NuCoal to the Company in
an effective and efficient manner. Other conditions include some which relate to
the acquisition by NuCoal of certain mineral interests and the resolution of
certain issues arising in the due diligence exercise to the satisfaction of the
Company. Certain regulatory approvals are also required to be obtained by as
part of this process including SARB approval and approval being granted by the
South African Minister of Mineral Resources in terms of section 11 of the MPRDA.
A number of the conditions to the NuCoal Acquisition Agreement are outside of
the control of the Company and so there can be no guarantee that all of these
conditions will be satisfied and that the NuCoal Acquisition Agreement will
proceed to completion.
Vele acquisition
The Company owns 80% of Limpopo Coal Company (Pty) Limited ("Limpopo Coal") (the
company that owns the Vele coking coal project) and has entered into a binding
agreement to acquire the remaining 20% interest in Limpopo Coal held by Tranter
Holdings (Pty) Limited. This agreement (and the acquisition contemplated by it)
is conditional on, among other things, SARB approval and the granting of a New
Order Mining Right to Limpopo Coal. There can be no guarantee that SARB approval
will be obtained or that the New Order Mining Right will be granted.
Infrastructure - port allocation, rail access and power supply
The Company has secured long term port allocation for the export of coal through
the Maputo port terminal in Mozambique. Any future allocation to accommodate any
increased production will depend on a number of factors including, without
limitation, expansion of the port terminal. Although the owners of the Maputo
port terminal have announced potential future expansion, there can be no
guarantee that such expansion will take place. The Company is obliged to notify
to the Maputo port terminal the anticipated tonnage for the coming year and to
the extent that there is any delay in any of the Group's projects or production
is lower than expected the Company may be left with "take or pay" costs on the
excess notified capacity.
The Company has entered into an agreement with Transnet Freight Rail (a division
of the South African government owned rail and freight organisation) for the
transportation of coal by rail from the Company's operations in South Africa to
the Matola Terminal in Maputo, Mozambique. Any non performance by Transnet
Freight Rail of such agreement or dispute between the South African and
Mozambique governments in relation to the cross border rail link may materially
and adversely impact the Company's operations.
The Group depends on the reliable and continuous delivery of sufficient
quantities of power to its mines. South Africa has experienced and continues, to
a limited extent, to experience widespread and prolonged power outages, also
known as load shedding. The Group has power generators for use in the event of a
power outage. However, should a serious failure of basic infrastructure take
place or high occurrences of power outages across the country continue,
exploration, development and production at the Group's operations in South
Africa could be materially and adversely impacted.
Proposed move to the Main Market of the LSE
The Company has commenced work on its proposed move from AIM to the Main Market
of the LSE and, as part of this, may change its country of incorporation.
However, there can be no guarantee that this process will be completed within
the anticipated timeframe or at all. There can also be no assurance that any
proposal relating to such process will not have potential adverse tax,
regulatory or other consequences for certain shareholders or that, whether as a
result of any such adverse consequences or otherwise, any such proposal will
receive all necessary shareholder, regulatory or other approvals.
Major shareholders and conflicts of interest
The Company has a number of major shareholders. Whilst the Board has set up a
procedure to deal with potential conflicts of interest (whereby potentially
conflicted directors are required to abstain from relevant discussions and
votes), there can be no assurance that conflicts will not arise or that, if they
do, they can be successfully overcome. Further, the Company is party to certain
agreements which contain consent requirements regarding certain material
decisions such as issues of shares, changes in share capital structure or
material borrowings, acquisitions, disposals or changes in business. To the
extent such agreements remain outstanding, refusal of such consents might
materially impair or prevent the Company from pursuing its plans.
Insurance
The Company's insurance coverage may prove inadequate to satisfy potential
claims and losses. Further, the Group may become subject to liabilities that
cannot be insured against or against which it may elect not to be insured fully
or at all because of high premium costs.
Litigation
Legal proceedings may arise from time to time in the course of the Group's
business. The Company cannot preclude the possibility that litigation may be
brought against it or other companies in the Group.
The Company is subject to certain existing claims, including a claim regarding
an entitlement to be issued shares in the Company. Whilst the Company does not
believe these claims to be well founded or material, there can be no assurance
that such claims will not be successful or that, if successful, they will not
have an adverse impact upon the Company or other adverse effects that may not
have been anticipated.
Joint ventures
Members of the Group hold interests in joint ventures and may pursue further
joint venture opportunities in the future. Joint ventures may involve special
risks associated with the possibility that the joint venture partners may: (i)
have economic or business interests or targets that are inconsistent with those
of the Group; (ii) take action contrary to the Group's policies or objectives
with respect to their investments, for instance by veto of proposals in respect
of joint venture operations; (iii) be unable or unwilling to fulfil their
obligations under the joint venture or other agreements; or (iv) experience
financial or other difficulties. Any of the foregoing may have a material
adverse effect on the results of operations or financial condition of the Group.
In addition, the termination of certain of these joint venture agreements, if
not replaced on similar terms, could have a material adverse effect on the
results of operations or financial condition of the Group.
HIV/AIDS
HIV/AIDS is prevalent in Africa. Employees or contractors of the Group in South
Africa may have or could contract the potentially deadly virus. The prevalence
of HIV/AIDS could cause lost employee man-hours and loss of personnel who are
trained and experienced in mine exploration and extraction activities.
Currency risk
The Company reports its results in Australian Dollars, whilst the majority of
its costs are in South African Rand and revenues are in US Dollars. This may
result in additions to the Company's reported costs or reductions in the
Company's reported revenues.
Dependence on key personnel
There can be no assurance that the Group will be able to manage effectively the
expansion of its operations or that the Group's current personnel, systems,
procedures and controls will be adequate to support the Group's operations. Any
failure of management to manage effectively the Group's growth and development
could have a material adverse effect on the Group's business, financial
condition and results of operations.
The Group's business is dependent on retaining the services of a small number of
key personnel of the appropriate calibre as the business develops. The success
of the Group is, and will continue to be to a significant extent, dependent on
the expertise and experience of the directors and senior management. Whilst the
Group has entered into contractual arrangements with the aim of securing the
services of the existing management team, the retention of their services cannot
be guaranteed. Accordingly, the loss of key personnel could have an adverse
effect on the Group.
No geographical diversification
The Group's key projects are all located in South Africa. Any circumstance or
event which negatively impacts the ownership or development of mining projects
in South Africa could materially affect the financial performance of the Company
and more significantly than if it had a more diversified asset base.
Service providers and contractors
The Group is unable to predict the risk of: insolvency, non-performance of
contracts or other managerial failure by, or unionization of, any of the
customers or contractors or other suppliers or service providers (including,
without limitation, off-takers) of the Group in connection with its current or
future exploration, development, production or other activities. Any of the
foregoing may have a material adverse effect on the results of operations or the
financial condition of the Company. In addition, the termination of these
arrangements, if not replaced on similar terms, could have a material adverse
effect on the results of operations or the financial condition of the Company.
GENERAL RISKS
The activities of the Group are also subject to the usual commercial risks and
factors such as competition and economic conditions may generally affect the
Group's ability to generate income or achieve its objectives.
Trading and liquidity in the Ordinary Shares
An investment in the Ordinary Shares is highly speculative and subject to a high
degree of risk. The price of publicly quoted securities can be volatile and is
dependent upon a number of factors, some of which are general market or sector
specific and others that are specific to the Company. Only those who can bear
the risk of the loss of their entire investment should invest.
Notwithstanding the fact that an application will be made for the Ordinary
Shares to be traded on AIM and the JSE and quoted on the ASX, this should not be
taken as implying that there will be a "liquid" market in the Ordinary Shares
and an investment in the Ordinary Shares may be difficult to realise. In
addition, the price at which the Ordinary Shares will be traded and the price at
which investors may realise their investment will be influenced by a large
number of factors, some specific to the Group and its operations and some which
may affect quoted companies generally.
The market for shares in small to medium size public companies, such as the
Company, is less liquid than for larger public companies. The Group is aiming to
achieve capital growth and, therefore, Ordinary Shares may not be suitable as a
short-term investment; a prospective investor should not consider such purchase
unless he is certain he will not have to liquidate his investment for an
indefinite period of time. The share price may be subject to greater fluctuation
on small volumes of shares, and thus the Ordinary Shares may be difficult to
sell at a particular price. The value of the Ordinary Shares may go down as well
as up. The market price of the Ordinary Shares may not reflect the underlying
value of the Company's net assets. Investors may therefore realise less than
their original investment or sustain a total loss of their investment.
Force majeure
The Group's projects now or in the future may be adversely affected by risks
outside the control of the Group including labour unrest, civil disorder, war,
subversive activities or sabotage, fires, floods, explosions or other
catastrophes, epidemics or quarantine restrictions.
General economic conditions
Market conditions, particularly those affecting resource companies, may affect
the ultimate value of the Company's share price regardless of operating
performance. The Company could be affected by unforeseen events outside its
control, including, natural disasters, terrorist attacks and political unrest
and/or government legislation or policy. Market perception of resource companies
may change which could impact on the value of investors' holdings and impact on
the ability of the Company to raise further funds by an issue of further shares
in the Company. General economic conditions may affect exchange rates, interest
rates and inflation rates. Movements in these rates will have an impact on the
Company's cost of raising and maintaining debt financing.
Investment
The value of an investment in the Company could, for a number of reasons go up
or down. There is also the possibility that the market value of an investment in
the Company may not reflect the true underlying value of the Company.
Taxation
Any change in the Group's tax status or the tax applicable to holding Ordinary
Shares or in taxation legislation or its interpretation, could affect the value
of the investments held by the Group, affect the Company's ability to provide
returns to shareholders and/or alter the post-tax returns to shareholders.
Passive Foreign Investment Company
Please refer to Appendix A, "NOTICE TO US RESIDENTS", "Passive Foreign
Investment Company" for a detailed description regarding the risks of the
Company being treated as a "passive foreign investment company" ("PFIC") for
U.S. federal income tax purposes.
Forward looking statements
This announcement contains forward looking statements, including, without
limitation, statements containing the words "believe", "anticipated", "expected"
and similar expressions. Such forward looking statements involve unknown risk,
uncertainties and other factors which may cause the actual results, financial
condition, performance or achievement of the Group, or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward looking statements.
Give these uncertainties, prospective investors are cautioned not to place any
undue reliance on such forward looking statements. To the extent lawfully
permitted, the Company disclaims any obligations to update any such forward
looking statements in this document to reflect future events or developments.
DEFINITIONS
In addition to those terms otherwise defined in this document, the following
expressions have the following meaning unless the context otherwise requires:
+------------------------------+--------------------------------------------+
| Accredited Investor | accredited investors as defined in Rule |
| | 501(a) of Regulation D |
+------------------------------+--------------------------------------------+
| Admission | the admission by the London Stock Exchange |
| | of the Placing Shares to trading on AIM |
| | becoming effective in accordance with the |
| | AIM Rules |
+------------------------------+--------------------------------------------+
| AIM | the AIM market operated by the London |
| | Stock Exchange |
+------------------------------+--------------------------------------------+
| AIM Rules | the current rules published by the London |
| | Stock Exchange applicable to companies |
| | with a class of listed securities admitted |
| | to trading on AIM |
+------------------------------+--------------------------------------------+
| Announcement | this announcement (including the appendix |
| | to this announcement) |
+------------------------------+--------------------------------------------+
| ASIC | the Australian Securities & Investments |
| | Commission |
+------------------------------+--------------------------------------------+
| ASX | ASX Limited (ACN 008 624 691), a company |
| | registered under the Australian |
| | Corporations Act and, where the context |
| | permits, the Australian Securities |
| | Exchange operated by ASX Limited |
+------------------------------+--------------------------------------------+
| ASX Listing Rules | the Listing Rules of the ASX and any other |
| | rules of ASX which are applicable while |
| | the Company is admitted to the Official |
| | List of ASX |
+------------------------------+--------------------------------------------+
| Australian Corporations Act | the Corporations Act 2001 (Cth) of |
| | Australia and any Class Orders issued by |
| | ASIC |
+------------------------------+--------------------------------------------+
| A$ or Australian Dollars | the lawful currency of Australia |
+------------------------------+--------------------------------------------+
| Bookrunner | JPMC |
+------------------------------+--------------------------------------------+
| certificated or in | where a share or other security is not in |
| certificated form | uncertificated form |
+------------------------------+--------------------------------------------+
| CHESS | the Clearing House Electronic Subregister |
| | System |
+------------------------------+--------------------------------------------+
| CREST | the relevant system, as defined in the |
| | CREST Regulations (in respect of which |
| | Euroclear UK & Ireland Limited is the |
| | operator as defined in the CREST |
| | Regulations) |
+------------------------------+--------------------------------------------+
| Depositary Interests or DIs | independent securities constituted under |
| | English law and issued or to be issued by |
| | the Depositary in respect, and |
| | representing on a 1 for 1 basis, |
| | underlying Ordinary Shares which may be |
| | held or transferred through the CREST |
| | system |
+------------------------------+--------------------------------------------+
| Evolution | Evolution Securities Limited |
+------------------------------+--------------------------------------------+
| European Economic Area | the European Union, Iceland, Norway and |
| | Liechtenstein |
+------------------------------+--------------------------------------------+
| FSA | the Financial Services Authority |
+------------------------------+--------------------------------------------+
| FSMA | the Financial Services and Markets Act |
| | 2000 |
+------------------------------+--------------------------------------------+
| JPMC | J.P. Morgan Cazenove Limited |
+------------------------------+--------------------------------------------+
| JSE | JSE Limited, a public company incorporated |
| | with limited liability under the laws of |
| | the Republic of South Africa, with |
| | registration number 2005/022939/06 and |
| | licensed as an exchange under the South |
| | African Securities Services Act, No 36 of |
| | 2004, as amended, often referred to as the |
| | "Johannesburg Stock Exchange" |
+------------------------------+--------------------------------------------+
| London Stock Exchange or LSE | the London Stock Exchange plc |
+------------------------------+--------------------------------------------+
| Managers | JPMC, Evolution and Mirabaud; |
+------------------------------+--------------------------------------------+
| Mirabaud | Mirabaud Securities LLP |
+------------------------------+--------------------------------------------+
| NuCoal Vendors | means Troy Holdings & Investments Inc, |
| | Kusile Mining (Proprietary) Limited and |
| | Nucoal Holdings (Proprietary) Limited |
+------------------------------+--------------------------------------------+
| Ordinary Shares | ordinary shares in the share capital of |
| | the Company |
+------------------------------+--------------------------------------------+
| Placee | any person (including individuals, funds |
| | or otherwise) by whom or on whose behalf a |
| | commitment to acquire Placing Shares has |
| | been given |
+------------------------------+--------------------------------------------+
| Placing | the placing of the Placing Shares with |
| | Placees to be effected by the Managers on |
| | the terms and subject to the conditions |
| | set out in the Placing Agreement |
+------------------------------+--------------------------------------------+
| Placing Agreement | the placing and underwriting agreement |
| | dated 29 October 2009 among the Company |
| | and the Managers in respect of the Placing |
+------------------------------+--------------------------------------------+
| Placing Price | the price per Ordinary Share at which the |
| | Placing Shares are placed, such price |
| | being determined as part of the Bookbuild |
+------------------------------+--------------------------------------------+
| Placing Shares | up to 59,867,731 Ordinary Shares to be |
| | issued pursuant to the Placing |
+------------------------------+--------------------------------------------+
| pounds sterling, GBP or GBP | the lawful currency of the United Kingdom |
+------------------------------+--------------------------------------------+
| Prospectus Directive | the Directive of the European Parliament |
| | and of the Council of the European Union |
| | 2003/71/EC |
+------------------------------+--------------------------------------------+
| QIB | qualified institutional buyer, as defined |
| | in Rule 144A under the Securities Act |
+------------------------------+--------------------------------------------+
| Rand or South African Rand | the lawful currency of the Republic of |
| | South Africa |
+------------------------------+--------------------------------------------+
| Record Date | the Australian Record Date, the UK Record |
| | Date and/or the South African Record Date, |
| | as applicable |
+------------------------------+--------------------------------------------+
| Regulation D | Regulation D under the Securities Act |
+------------------------------+--------------------------------------------+
| Regulation S | Regulation S under the Securities Act |
+------------------------------+--------------------------------------------+
| Regulatory Information | one of the regulatory information services |
| Service | approved by the London Stock Exchange for |
| | the distribution to the public of AIM |
| | announcements and shall include the |
| | services through or ways in which |
| | announcements are released by the Company |
| | on or to the ASX or the JSE |
+------------------------------+--------------------------------------------+
| Rule 144A | Rule 144A under the Securities Act |
+------------------------------+--------------------------------------------+
| Securities Act | the US Securities Act of 1933, as amended |
+------------------------------+--------------------------------------------+
| Strate | Strate Limited, a company duly registered |
| | and incorporated in the Republic of South |
| | Africa under registration number |
| | 1998/02224/06, licensed as a central |
| | securities depository under the South |
| | African Securities Services Act, 2004 |
+------------------------------+--------------------------------------------+
| United Kingdom or UK | the United Kingdom of Great Britain and |
| | Northern Ireland |
+------------------------------+--------------------------------------------+
| United States or US | the United States of America, its |
| | territories and possessions, any state of |
| | the United States and the District of |
| | Columbia |
+------------------------------+--------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQUKVNRKARRURA
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