TIDMTHS
RNS Number : 8300E
Tharisa PLC
11 May 2017
Tharisa plc
(Incorporated in the Republic of Cyprus with limited
liability)
(Registration number HE223412)
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
('Tharisa')
Acquisition of mining fleet and transfer of employees from
existing mining contractor
Introduction
Further to the announcement on 4 April 2017 of Tharisa Minerals
Proprietary Limited's
(Tharisa Minerals) intention to transition to an owner mining
model, shareholders are advised that Tharisa Minerals has entered
into a binding term sheet with MCC Contracts Proprietary Limited
(MCC) on 10 May 2017 in terms of which Tharisa Minerals will
purchase, subject to the fulfilment of certain conditions
precedent, certain of MCC's existing equipment, strategic
components, site infrastructure and spare parts (Assets and
Equipment), and transfer the employees currently deployed at its
Tharisa Mine in South Africa (the Transaction).
Nature of the business carried on by MCC
MCC is currently the mining contractor at the Tharisa Mine and
provides opencast contract mining services, including drilling,
blasting, load hauling and rehabilitation. MCC's parent
company,
Extract Group Limited (Extract) has announced a strategic
decision to align its capital allocation with the current mining
environment and to review its business model.
Rationale for the Transaction
Tharisa Minerals, a profitable low cost producer of PGMs and
chrome, owns a large scale open pit operation in South Africa with
an open pit life of 18 years and a further 40 years of underground
mine extension. With the long life of the open pit, Tharisa
Minerals has been evaluating the benefits of transitioning from
contract mining to an owner mining model.
Tharisa Minerals has, in the normal course of managing its
mining operations, developed engineering and geological skills that
are integral to in-house mining. With the long life of the open
pit, Tharisa believes that the transition to an owner mining model
is a logical progression in its development with both cost and
operational benefits. By taking direct control of its mining
operations, Tharisa Minerals will be better placed to control the
reef grades, thereby delivering improved quality ore to the
processing plants and optimising the feed and recovery within the
plants. This will further cement Tharisa Minerals' low-cost high
margin position.
MCC's review of its business model has presented Tharisa
Minerals with the opportunity to purchase MCC's existing on-site
plant and equipment, as well as employ the employees currently in
service at the Tharisa Mine, thereby enabling Tharisa Minerals to
transition to an owner mining model with neither interruption nor
delay.
Particulars of the proposed Transaction
In terms of the binding term sheet, Tharisa Minerals will
purchase the Assets and Equipment from MCC for a purchase
consideration of ZAR303.3 million (US$22.3 million). The 153
'yellow fleet' machines being purchased include excavators, off
highway dump trucks, articulated dump trucks and support vehicles,
being substantially all of the equipment at the Tharisa Mine, as
well as 17 additional machines from another MCC site. In addition,
Tharisa will accept assignment in respect of leased equipment
comprising drill rigs, excavators and off highway dump trucks and
will continue to lease these 14 machines. The settlement amount for
the leased equipment as at 1 June 2017 is approximately ZAR100.2
million (US$7.3 million).
Approximately 900 on-site employees of MCC will be transferred
to Tharisa in terms of Section 197 of the South African Labour
Relations Act. Given the employees' existing roles on site, Tharisa
Minerals envisages a smooth integration of these employees into the
Tharisa Minerals workforce.
The purchase consideration for the Transaction will be settled
through a cash payment of
ZAR250.0 million (US$18.3 million) within 30 days of the
conditions precedent being fulfilled
or waived, the cession of the lease obligations of approximately
ZAR100.2 million (US$7.3 million), the deduction of certain
liabilities relating to the transfer of the employees such as the
leave pay provision and the deduction of future costs that have
been incorporated into the mining rate to date, such as future
equipment demobilisation. The balance owing will be paid in cash in
six equal monthly instalments.
The purchase consideration will be funded through a combination
of a new bridge finance facility, OEM supplier finance, traditional
banking facilities and available cash resources.
Tharisa Minerals is purchasing the mining fleet from its mining
contractor and, as such, the operating costs post implementation of
the Transaction are expected to be substantially the same as the
current amount being paid to MCC for the outsourced mining.
Accordingly there are no 'net profits' that can be attributed to
the net assets that are the subject of the Transaction in terms of
the requirements of the JSE Listings Requirements.
Conditions precedent to the Transaction
The Transaction is subject to the fulfilment or waiver, as the
case may be, of, inter alia, the following conditions precedent on
or before 30 September 2017:
-- all and any approvals required in terms of the South African
Competition Act No. 1998 from the Competition Authorities
-- irrevocable undertakings to vote in favour of the Transaction
from shareholders of Extract holding more than 50% of the voting
rights to be exercised in a general meeting of Extract
shareholders
-- all MCC shareholder approvals required to authorise and give effect to the Transaction
-- approval of the senior debt lenders of Tharisa Minerals
-- approval of the terms and conditions of the leases by Tharisa Minerals.
The effective date of the Transaction will be the date
immediately following the fulfilment or waiver, as applicable, of
the conditions precedent, or such later date as may be agreed
between the parties.
Categorisation
The acquisition of the MCC assets is categorised as a Category 2
Transaction in terms of Section 9.15 of the JSE Listings
Requirements and accordingly will not require Tharisa shareholder
approval.
Paphos, Cyprus
11 May 2017
JSE Sponsor
Investec Bank Limited
Investor Relations contact:
Tharisa plc
Sherilee Lakmidas
+27 11 996 3538
+27 79 276 2529
slakmidas@tharisa.com
Broker contacts:
Peel Hunt LLP (Joint Broker)
Matthew Armitt / Ross Allister
+44 207 7418 8900
BMO Capital Markets Limited (Joint Broker)
Jeffrey Couch/Neil Haycock/Thomas Rider
+44 020 7236 1010
Financial PR contacts:
Bobby Morse/Anna Michniewicz
+44(0) 20 7466 5000
tharisa@buchanan.uk.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQGRGDUXGBBGRB
(END) Dow Jones Newswires
May 11, 2017 03:30 ET (07:30 GMT)
Tharisa (LSE:THS)
Historical Stock Chart
From Mar 2024 to Apr 2024
Tharisa (LSE:THS)
Historical Stock Chart
From Apr 2023 to Apr 2024