SIM
SIIF
SIM - Simmer & Jack Mines, Limited - General issue of shares for cash
Simmer & Jack Mines, Limited
(Incorporated in the Republic of South Africa)
(Registration number 1924/007778/06)
Share code: SIM ISIN Code: ZAE000006722
("Simmers" or "the Company")
GENERAL ISSUE OF SHARES FOR CASH
SIMMERS RAISES R110-MILLION TO COMPLETE THE INTEGRATION OF TAU LEKOA INTO
BUFFELSFONTEIN GOLD MINE AND FAST-TRACK DEVELOPMENT OF THE WELTEVREDEN PROJECT
Introduction
At the annual general meeting of the Company held on 19 September 2008, the
requisite majority of Simmers shareholders approved an ordinary resolution
authorising the directors to issue shares for cash in accordance with paragraph
5.52 of the JSE Limited ("JSE") Listings Requirements ("the general authority").
In accordance with the general authority the Company has successfully placed
49,336,905 ordinary shares ("the placed shares"), equating to 4.65% per cent of
the Company`s issued share capital, raising R110,514,667. The placed shares will
be listed on the JSE with effect from the commencement of business on or about
09 March 2009 and rank pari passu with the existing ordinary shares of the
Company. They were placed with approximately eleven local and international
institutional shareholders, all of whom qualify as "public" shareholders within
the meaning of paragraphs 4.25 and 4.26 of the JSE Listings Requirements.
Application of proceeds
On 18 February 2009, the Company announced that it had entered into an agreement
with AngloGold Ashanti Limited to acquire, as a going concern, the assets,
intellectual property and associated rights to the Tau Lekoa Mine including the
Weltevreden and Goedgenoeg properties ("Tau Lekoa") for a consideration of R600
million (the "Acquisition"). This Acquisition is viewed as transformational for
the Company`s gold business and establishes Simmers as a mid-tier gold producer.
The Acquisition will add approximately 130 000 ounces per annum to Simmer`s
current gold production profile as soon as the deal is closed, thereby providing
scale, diversifying production risk and providing operational synergies with the
existing Buffelsfontein Gold Mines Limited ("BGM") operations.
The Company will be applying the proceeds to fund the following new projects
associated with the Acquisition:
- Tau Lekoa / BGM business integration, specifically the integration of ore-
handling capability and logistics from Tau Lekoa to BGM, and integration of all
other mine systems: R45-million.
- Weltevreden Feasibility Study: R45-million.
- Goedgenoeg - Pre-feasibility Study: R10-million. This is aimed at optimising
the resources at the Goedgenoeg property by progressing the existing scoping
report to pre-feasibility level.
The Goedgenoeg and Weltevreden properties, located to the west and east of Tau
Lekoa, respectively, offer the possibility of further upside. Weltevreden was
initially developed by Gencor Limited as a mine with a surface decline during
the early 1990s at a capital cost of R229 million, but development was stopped
for economic reasons during 1992. There is potential to restart this operation
and exploit its large Ventersdorp Contact Reef Mineral Resource. The feasibility
study is aimed at supplementing Tau Lekoa production with early production from
Weltevreden through a phased approach.
In terms of the private placing, Simmers placed 49,336,905 ordinary shares at an
issue price of R2.24 per ordinary share, being a 5% discount to the 30-day
volume weighted average price of R2.36 per ordinary share as at 20 February
2009.
Gordon Miller, Simmers` chief executive officer, said: "The acquisition of Tau
Lekoa is a superb accretive opportunity. It underpins the significance of
Buffelsfontein Gold Mine and establishes Simmers as a mid-tier producer, with
the corresponding potential for a market re-rating. On closing, the acquisition
will not only provide an immediate boost to our production profile at average
cash costs of $500 per ounce, but it will also provide significant upside in
terms of the potential to fast-track production from the neighbouring shallow
ore body of Weltevreden, which has the potential to produce an additional 1.5
million ounces over a 12 year period."
Miller said that at current gold prices, the addition of Tau Lekoa would provide
sufficient free cash flow from operations for Simmers to meet its planned
organic growth needs at BGM and at its Mpumalanga operation, Transvaal Gold
Mining Estates Limited ("TGME").
These include the development of low-cost, low-risk surface mining projects at
TGME and the Buffelsfontein Mega Float Project which aims to optimise BGM`s
waste rock dumps.
In addition to the R110,514,667 raised through the placement of Simmers shares,
the Company is also set to receive approximately C$90,160,000 (R734,199,928)
from the sale of 19 600 000 common shares of its 53.93%-held subsidiary, First
Uranium Corporation ("FIU") through a bought deal financing agreement with a
syndicate of underwriters led by RBC Capital Markets (the "Offering"). As
previously disclosed, the net proceeds of the Offering will be applied by
Simmers towards a part of the purchase consideration of R600 million for the
acquisition of the Tau Lekoa Mine from AngloGold Ashanti. R150 million of the
purchase price consideration will be offset by a Simmers` portion of the free
cash flow generated by Tau Lekoa Mine during 2009.
The Offering is expected to close on 09 March 2009, whereupon Simmers will
continue to own 62 122 653 common shares in FIU, representing 40.99% of the 151
574 037 common shares issued and outstanding.
Simmers has also granted the underwriters a 15% overallotment option,
exercisable for a period of 30 days from the closing of the Offering, which if
exercised, would result in further funding of C$13, 524, 000 (R110,129,989)
towards the acquisition of Tau Lekoa.
Johannesburg
05 March 2009
Sponsor
Sasfin Capital (a division of Sasfin Bank Limited)
Legal advisor
Routledge Modise in association with Eversheds
Corporate advisor and joint book runner
Qinisele Resources (Pty) Ltd
Joint book runner
RBCCM
Date: 05/03/2009 08:20:02 Produced by the JSE SENS Department.
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