RNS Number:1241H
Nikanor Plc
06 November 2007
6 November 2007
Not for release, publication or distribution in or into any jurisdiction where
to do so would constitute a violation of the relevant laws of any such
jurisdiction
Recommended Merger of Katanga and Nikanor to Create a Leading African Copper and
Cobalt Company
The Boards of Katanga Mining Limited and Nikanor PLC are pleased to announce
today that they have reached agreement on the terms of a recommended Merger of
the two companies. The Merger will create a company with a combined market
capitalisation of approximately US$3.3 billion and the potential to become by
2011 Africa's largest copper producer and the world's largest cobalt producer.
Summary
* The Merger will bring together the adjacent properties in the Democratic
Republic of Congo (DRC) owned by Katanga and Nikanor, which were previously part
of the same mine complex, to create a major single-site operation.
* Substantial high-grade resources of both copper and cobalt will create an
exceptional foundation for a large-scale, low-cost and long-life operation.
* Based on work completed to date, the Merged Company intends to develop a
unified mine complex with annual output approaching 400,000 tonnes of copper and
40,000 tonnes of cobalt by 2011. It is believed that the combined operations
will be the largest single-site project in the world producing both copper and
cobalt.
* The Merger is expected to deliver significant value enhancement for
shareholders of both companies resulting from capital savings, lower unit
operating costs and increased production.
* More cost effective operations are expected to increase revenue to the
DRC government. The coordination of the Merged Company's infrastructure spend
and corporate social responsibility activities will also be more effective in
producing positive change for the communities surrounding the operations.
* Officials in the DRC have been kept apprised of the potential Merger and
have expressed their support.
* The Merger will be implemented by way of an offer by Katanga for Nikanor
together with a Cash Return to Nikanor Shareholders of US$452 million.
* The Merged Company will be well-funded, with a pro forma cash balance of
approximately US$745 million as at 30 September 2007, after taking account of
the Cash Return.
* The Merged Company will follow Katanga and Nikanor's existing strategies
of financing their projects through a mixture of debt and equity. The level of
additional financing required will be determined as part of a combined business
plan, but it is expected that production from Katanga and a phased approach to
capital expenditure will result in a lower and delayed requirement for
additional financing than for Nikanor standalone.
* Katanga has received irrevocable undertakings to support the Merger and
accept the Offer from Glencore Finance, RP Capital Entities with interests in
Nikanor Shares, Oakey Invest Holdings Inc. and Pitchley Properties Limited
representing 78.4 per cent. of Nikanor Shares in issue.
* Nikanor has received irrevocable undertakings from Arthur Ditto, Tain
Holdings Limited, George Forrest and RP Capital Entities with interests in
Katanga Shares representing 48.1 per cent. of Katanga Shares in issue to support
the Merger and not to accept any competing proposal.
* In addition, Arthur Ditto and Tain Holdings Limited have undertaken to
vote in aggregate in respect of 6,843,000 Katanga Shares, representing 8.7 per
cent. of Katanga Shares in issue, in favour of the Merger at the Katanga
extraordinary general meeting.
* The Merged Company will be led by Arthur Ditto as President and CEO
supported by executives to be drawn from both companies. An integration
committee consisting of four members, two from Katanga and two from Nikanor,
will be set up to oversee the integration of the two businesses.
* The Merged Company, which will retain the name Katanga Mining Limited,
will make an application to obtain a primary listing on the Main Market of the
London Stock Exchange within 5 months of the Effective Date. The Merged Company
will therefore have primary listings on the TSX and the Main Market of the
London Stock Exchange.
Arthur Ditto, proposed President and CEO of the Merged Company, stated: "
Combining the assets of Katanga and Nikanor will create an industry leader in
both copper and cobalt. We believe it offers the opportunity for a dramatic
increase in value for shareholders of both companies and is a transaction where
the whole is definitely greater than the sum of the parts. Transacting the deal
now gives us the best opportunity to lower the overall capital spending and
deliver maximum benefit from a consolidated suite of operations. We will have a
much more efficient business model with greater benefits for all stakeholders
including employees, shareholders, and the DRC".
Jonathan Leslie, Executive Chairman of Nikanor, said: "Individually, Nikanor and
Katanga both present compelling copper and cobalt investment cases; combined,
they transform into an African champion with phenomenal resources and potential.
This merger is precisely the type of transaction we envisaged when we listed
the company more than year ago, creating a premier publicly traded copper and
cobalt company and generating significant operating and financial synergies. The
combined company will create value for shareholders and other stakeholders alike
and be even better placed to help play a positive role in the development of the
Katanga Province and as a long-term partner to Gecamines and ultimately to the
DRC".
Martin Kabwelulu, Minister of Mines of the DRC, said: "The DRC government would
like to highlight its support for the merger of Katanga and Nikanor. This
transaction highlights the quality of Katanga and Nikanor's deposits and
provides a natural platform between these two projects for the development of
these assets into a major copper and cobalt producer. The combination of
operational synergies between these two companies will result in increased
financial benefits for the DRC state and shareholders. The DRC has 10 per cent.
of the world's copper reserves and less than 1 per cent. of its production. This
transaction is a significant milestone in the transformation of the DRC's mining
sector towards production. The DRC government welcomes the merger as proof of
the confidence of the business community in the future of the DRC mining sector
".
Merger terms
The Merger will be effected by way of the Offer and Cash Return to Nikanor
Shareholders. Under the terms of the Merger Nikanor Shareholders will be
entitled to receive for each Nikanor Share:
0.613 New Katanga Shares, and
US$2.16 in cash by way of the Cash Return.
Following the Merger, Nikanor Shareholders will hold 60 per cent. and Katanga
Shareholders 40 per cent. of the Merged Company, calculated on a fully diluted
basis, excluding the recently announced convertible loan from Glencore Finance.
Based on the closing share prices of Katanga (on the TSX) and Nikanor (on AIM)
on 5 November 2007, the Merged Company would have a combined market
capitalisation of US$3.3 billion after the proposed Cash Return, calculated on
the fully diluted number of shares for both companies. The cash element of the
Merger will be paid by way of the Cash Return of US$452 million from Nikanor's
existing cash resources.
Katanga and Nikanor have entered into an Implementation Agreement in relation to
the Merger, which contains provisions regarding the implementation of the Merger
and certain assurances and confirmations between the parties.
This summary should be read in connection with the attached Announcement and
Appendices. Appendix I of this Announcement sets out the conditions and
principal further terms of the Offer. Appendix II of this Announcement contains
information on sources and bases used in this summary and the following
Announcement. Certain terms used in this summary are defined in Appendix IV of
this Announcement.
Media Conference Calls
Journalists will be invited to join a media conference call which will be held
at 2.30 p.m. UK (9.30 a.m. EST).
Analyst and Investor Conference Calls
Analysts and investors will be invited to join a conference call for analysts
and investors which will be held at 3.00 p.m. UK (10.00 a.m. EST).
Investor Contacts: Katanga
Arthur H. Ditto Steve Jones Anu Dhir
Chairman, President & CEO Senior Vice President & CFO VP, Corporate Development
Tel: +44 (0)20 7440 5800 Tel: +44 (0)20 7440 5800 Tel: +44 (0)20 7440 5800
Investor Contacts: Nikanor
Jonathan Leslie Peter Sydney-Smith Richard Boorman
Executive Chairman Finance Director Head of Investor Relations
Tel: +44 (0)20 7529 5800 Tel: +44 (0)20 7529 5800 Tel: +44 (0)20 7529 5800
CIBC World Markets plc, financial adviser to Katanga
Mick Oliver Jonathan Stephens
+44 (0)20 7234 6000 +44 (0)20 7234 6000
JPMorgan Cazenove, financial adviser and corporate broker to Nikanor
Ian Hannam Adam Brett Joe Seifert
+44 (0)20 7588 2828 +44 (0)20 7588 2828 +44 (0) 20 7588 2828
Media Contacts: Katanga
David Orford Simon Robinson Caroline Spivak
Manager, Communications Parkgreen Communications Fleishman-Hillard
Tel: +44 (0)20 7440 5828 Tel: +44 (0)20 7851 7480 Tel: +1 416 645 8185 Mobile: +1
416 371 9740
Mobile: +44 (0)7983 428920 Mobile: +44 (0)7887 985671
Media Contacts: Nikanor
Kate Delahunty George Cazenove
Citigate Dewe Rogerson Citigate Dewe Rogerson
Tel: +44 (0)207 282 2934 Tel: +44 (0)207 282 2870
Mobile: +44 (0)7775 560812 Mobile: +44 (0)7834 767054
About Katanga
Katanga Mining Limited operates a major copper-cobalt mine complex in the DRC on
behalf of the Kamoto Copper Company joint venture, in which it holds a 75 per
cent. interest. Copper production is expected to begin in December 2007 and the
site is expected to reach full production in 2011, when 150,000 tonnes of
refined copper and 8,000 tonnes of refined cobalt will be produced a year.
Katanga is listed on the TSX under the symbol KAT.
For further information on Katanga go to www.katangamining.com and
www.sedar.com.
About Nikanor
Nikanor PLC holds 75 per cent. of a joint venture at Kolwezi in the DRC. The
company's key mine is KOV, containing one of the world's largest high quality
copper and cobalt ore bodies. Nikanor is rehabilitating this well documented
brownfield site and intends to build a major state of the art copper and cobalt
refinery to produce 250,000 tonnes per year of LME A-grade copper cathode and
27,500 tonnes per year of cobalt products. Nikanor is admitted to AIM.
For further information on Nikanor go to www.nikanor.co.uk
CIBC World Markets plc, which is authorised and regulated in the United Kingdom
by the Financial Services Authority, is acting exclusively for Katanga and
no-one else in connection with the Offer and will not be responsible to anyone
other than Katanga for providing the protections afforded to clients of CIBC
World Markets plc or for providing advice in relation to the Offer or any other
matter referred to in this Announcement.
JPMorgan Cazenove Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for Nikanor
and no-one else in connection with the Offer and will not be responsible to
anyone other than Nikanor for providing the protections afforded to clients of
JPMorgan Cazenove Limited or for providing advice in relation to the Offer or
any other matter referred to in this Announcement.
The directors of Katanga accept responsibility for the information contained in
this Announcement other than the information relating to Nikanor. To the best
of the knowledge and belief of the directors of Katanga (who have taken all
reasonable care to ensure that such is the case), the information contained in
this Announcement for which they accept responsibility is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
The directors of Nikanor accept responsibility for the information contained in
this Announcement relating to Nikanor. To the best of the knowledge and belief
of the directors of Nikanor (who have taken all reasonable care to ensure that
such is the case), the information contained in this Announcement for which they
accept responsibility is in accordance with the facts and does not omit anything
likely to affect the import of such information.
Persons who are resident in the United Kingdom should note the following:
(a) The Offer will not be subject to the jurisdiction of the Panel
but will be conducted generally in accordance with the provisions of the Code
save for exceptions agreed between Nikanor and Katanga.
(b) The formal offer and the Offer Document will not constitute a
prospectus for the purposes of the Prospectus Rules published by the Financial
Services Authority of the United Kingdom (the "FSA"). Accordingly, the formal
offer and the Offer Document will not be reviewed or approved by the FSA or by
London Stock Exchange and it is not intended that any action will be taken by
Katanga or by CIBC World Markets plc that would permit a public offer of Katanga
Shares to be made in the United Kingdom which would require an approved
prospectus in accordance with FSMA and the Prospectus Rules.
(c) The Offer will be made to, and acceptance of Nikanor Shares will
be accepted from, only those shareholders in the United Kingdom who are (or who
are acting on behalf of), and who are able to establish to the satisfaction of
Katanga that they are (or are acting on behalf of): "qualified investors" within
the meaning of section 86(7) of FSMA, or (ii) persons to whom the Offer may
otherwise be made or directed without an approved prospectus having first been
made available to the public in the United Kingdom. UK shareholders receiving
the formal offer and the Offer Document should consult with their legal advisers
to determine whether they are eligible as "qualified investors" or are otherwise
able to receive and accept the Offer.
Unless otherwise determined by Katanga, the Offer will not be made, directly or
indirectly, in or into, or by the use of mails or by any means or
instrumentality (including, without limitation, by means of telephone,
facsimile, telex, internet or other forms of electronic communication) of
interstate or foreign commerce of, or any facility of a national state or other
securities exchange of, the United States, Canada, Australia or Japan or any
other Restricted Jurisdiction and the Offer will not be capable of acceptance by
any such use, instrumentality or facility or from within those jurisdictions.
Accordingly, copies of this Announcement and formal documentation relating to
the Offer are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, transmitted, distributed, sent or accessed in or into or
from the United States, Australia or Japan or any other Restricted Jurisdiction.
Persons receiving this Announcement (including without limitation custodians,
nominees and trustees) should observe these restrictions and must not mail or
otherwise forward, transmit, distribute or send it in or into or from the United
States, Australia or Japan or any other Restricted Jurisdiction. Doing so may
render invalid any purported acceptance of the Offer. The availability of the
Offer may be affected by the laws of the relevant jurisdictions in which they
are located or of which they are citizens. Such persons should inform
themselves of, and observe any, applicable legal or regulatory requirements of
their jurisdictions.
The New Katanga Shares have not been, and will not be, registered under the US
Securities Act 1933, as amended (the "Securities Act"), or under the securities
laws of any state, district, province or other jurisdiction of the United
States, Australia or Japan or any other Restricted Jurisdiction. Accordingly,
unless an exemption under relevant securities laws is applicable, the New
Katanga Shares are not being, and may not be, offered, sold, resold, delivered,
distributed or otherwise transferred, directly or indirectly, in or into the
United States, Australia or Japan or any other Restricted Jurisdiction, or
require registration thereof in, such jurisdiction, or to or for the account or
benefit of any US Person (as defined in Regulation S under the Securities Act)
or resident of Australia or Japan).
This Announcement has been prepared in accordance with English law and
information disclosed may not be the same as that which would have been prepared
in accordance with the laws of jurisdictions outside England.
This Announcement is not intended to, and does not, constitute or form any part
of an offer to sell or an invitation to purchase or subscribe for any securities
or the solicitation of an offer to buy or subscribe for any securities pursuant
to the Offer or otherwise. The Offer will be made solely on the basis of the
Offer Document and the Form of Acceptance accompanying the Offer Document, which
will contain the full terms and conditions of the Offer, including details of
how the Offer may be accepted. The Offer Document will be posted to those
shareholders able to receive it in due course. Those shareholders receiving the
Offer Document are strongly advised to read it in full, as it will contain
important information.
The contents of this document must not be construed as legal, business, tax or
investment advice. Each prospective recipient of New Katanga Shares should
consult his, her or its own legal adviser, financial adviser, tax adviser or
independent financial adviser for legal, financial, tax or investment advice.
The price and value of securities can go down as well as up. If you are in any
doubt as to the action you should take, you are recommended to seek your own
personal financial advice immediately from your stockbroker, bank manager,
solicitor, accountant, fund manger or other independent financial adviser
authorised under FSMA if you are in the United Kingdom, or, if you are not, from
another appropriately authorised independent financial adviser.
Cautionary and Forward-Looking Statements
This press release contains "forward-looking statements", within the meaning of
the United States Private Securities Litigation Reform Act of 1995 and similar
Canadian legislation, concerning the business, operations and financial
performance and condition of Katanga. Forward-looking statements include, but
are not limited to, statements with respect to anticipated developments in
Katanga's and the Merged Company's operations in future periods; planned
exploration activities; the adequacy of Katanga's and the Merged Company's
financial resources and other events or conditions that may occur in the future;
estimated production and synergies; the benefits of the development potential of
Katanga's and the Merged Company's properties; the future price of copper and
cobalt; information concerning the interpretation of drill results; the
estimation of mineral reserves and resources; the realization of mineral reserve
estimates; the timing and amount of estimated future production; costs of
production; capital expenditures; success of exploration activities; permitting
time lines and permitting, mining or processing issues; currency exchange rate
fluctuations; government regulation of mining operations; environmental risks;
unanticipated reclamation expenses; title disputes or claims; and limitations on
insurance coverage. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology such as "plans", "expects"
or "does not expect", "is expected", "budget", "scheduled", "estimates", "
forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or state that certain actions, events or
results "may", "could", "would", "might" or "will be taken", "occur" or "be
achieved". Forward looking statements are based on the opinions and estimates of
management as of the date such statements are made, and they are subject to
known and unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of Katanga and
the Merged Company to be materially different from those expressed or implied by
such forward-looking statements, including but not limited to risks related to:
unexpected events during construction, expansion and start-up; variations in ore
grade, tonnes mined; delay or failure to receive board or government approvals;
timing and availability of external financing on acceptable terms; risks related
to international operations; conclusions of economic evaluations; changes in
project parameters as plans continue to be refined; future prices of copper and
cobalt; possible variations in ore reserves, grade or recovery rates; failure of
plant, equipment or processes to operate as anticipated; political unrest and
insurrection; acts of terrorism; accidents, labour disputes and other risks of
the mining industry; delays in the completion of development or construction
activities, as well as those factors discussed in or referred to in the current
annual Management's Discussion and Analysis and current Annual Information Form
of Katanga filed with the securities regulatory authorities in Canada and
available at www.sedar.com. Although management of Katanga has attempted to
identify important factors that could cause actual results to differ materially
from those contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended. There can be
no assurance that such statements will prove to be accurate, as actual results
and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements. Neither Katanga nor Merged Company undertakes to
update any forward-looking statements that are incorporated by reference herein,
except in accordance with applicable securities laws. Comparative market
information is as of, or a date prior to, the date of this presentation.
Dealing disclosure requirements
The Nikanor Board has determined that Rule 8 disclosures should not be required
in connection with the Merger
6 November 2007
RECOMMENDED MERGER OF KATANGA AND NIKANOR
Introduction
The Boards of Katanga and Nikanor are pleased to announce that they have agreed
the terms of a recommended Merger of Katanga and Nikanor to be implemented by
way of an offer by Katanga for the entire issued and to be issued share capital
of Nikanor and a Cash Return. Further terms and conditions relating to the
Offer are contained in Appendix I of this Announcement and will be set out in
full in the Offer Document. Appendix II of this Announcement contains
information on sources and bases used in this summary and the following
Announcement. Terms used in this Announcement have the meaning given to them in
Appendix IV of this Announcement.
Significant potential synergies have been identified, including capital and
operating savings, operating efficiencies and increased production. The Merged
Company's objective will be to use a phased approach to the construction and
development of facilities with a combined output potential of 400,000 tonnes of
copper cathode and 40,000 tonnes of cobalt (as metal or salt). The DRC will
benefit from the creation of a strong regional champion with enhanced output and
higher royalties and tax payments. The coordination of the Merged Company's
infrastructure spend and corporate social responsibility activities will also be
more effective in producing positive change for the communities surrounding the
operations.
The Merger will bring together the adjacent properties owned by Katanga and
Nikanor and create a Merged Company with the potential by 2011 to become
Africa's largest copper producer and the world's largest cobalt producer.
Officials in the DRC have been kept apprised of the potential Merger and have
expressed their support.
The Merged Company, which will retain the name Katanga Mining Limited, will make
an application to obtain a primary listing on the Main Market of the London
Stock Exchange within 5 months of the Effective Date. The Merged Company will
therefore have primary listings on the TSX and the Main Market of the London
Stock Exchange.
Terms of the Merger
Under the terms of the Merger, Nikanor Shareholders will be entitled to receive
for each issued Nikanor Share:
0.613 Katanga Shares; and
US$2.16 in cash by way of the Cash Return.
A total of up to 128.1 million New Katanga Shares will be issued upon completion
of the Offer. Immediately following completion of the Offer, Nikanor's current
shareholders will own 60 per cent. and Katanga Shareholders will own
approximately 40 per cent. of the Merged Company calculated on a fully diluted
basis, excluding the recently announced convertible loan from Glencore Finance.
The cash entitlement of the Offer will be paid by way of a Cash Return of US$452
million, based on the fully diluted share capital of Nikanor, from Nikanor's
existing cash resources. Nikanor Shareholders may elect to receive their
proportion of the Cash Return in pounds sterling, at the exchange rate
prevailing at the date of payment.
It is intended that until the Effective Date, Nikanor will maintain its listing
on AIM, following which a de-listing would take effect no earlier than 20
business days after the Effective Date.
The Katanga Board and the Nikanor Board have unanimously approved the Merger and
are recommending it to their shareholders.
In addition to the receipt of sufficient acceptances under the Offer from
Nikanor Shareholders, the Offer will be subject, amongst other things, to the
approval of the transaction by Katanga Shareholders, the approval by Nikanor
Shareholders of the re-registration of Nikanor under the Companies Act so as to
facilitate certain steps in relation to the Cash Return and regulatory and other
approvals. The Merger is expected to be completed by the end of the first
quarter of 2008.
Katanga has received irrevocable undertakings to support the Merger and accept
the Offer from Glencore Finance, RP Capital Entities with interests in Nikanor
Shares, Oakey Invest Holdings Inc. and Pitchley Properties Limited representing
78.4 per cent. of Nikanor Shares to support the Offer, subject to certain
exceptions in relation to financing arrangements.
Nikanor has received irrevocable undertakings from Arthur Ditto, Tain Holdings
Limited, George Forrest, RP Capital Entities with interests in Katanga Shares
representing 48.1 per cent. of Katanga Shares to support the Merger and not to
accept any competing offer. In addition, Nikanor has received a similar
irrevocable undertaking from Glencore Finance with respect to the Katanga Shares
issuable upon conversion of the US$150 million convertible loan from Glencore
Finance which was completed on 5 November 2007. In addition, Arthur Ditto and
Tain Holdings Limited have undertaken to vote in favour of the Merger at the
Katanga extraordinary general meeting in aggregate in respect of 6,843,000
Katanga Shares, representing 8.7 per cent. of the Katanga Shares in issue.
Further details of these irrevocable undertakings are set out in Appendix III to
this Announcement.
Background and Reasons for the Merger
* The Merger reunites two adjacent assets that were previously part of the
same mine complex. By integrating the two projects, mining plans and capital
expenditure programmes can be optimized and production and operating
efficiencies achieved.
* Financial and operational synergies are anticipated over the life of the
project from pooling expertise, logistics, mining fleets and processing
facilities. Benefits include reduced capital expenditure requirements due to
shared infrastructure, higher copper and cobalt recoveries, production of a
higher grade copper cathode, increased cobalt production, reduced acid costs
resulting from a balance of oxide and sulphide ores and other cost savings.
* The Merged Company will have a significantly enhanced profile and the
ability to compete on a global scale. Based on the closing share prices of
Katanga (on the TSX) of C$11.75 and Nikanor (on AIM) of #5.885 on 5 November
2007, the Merged Company, would have a combined market capitalisation of US$3.3
billion after the proposed Cash Return calculated on the fully diluted basis
number of shares after the proposed Cash Return for both companies.
* The Merged Company will be well-funded, with a pro forma cash balance of
approximately US$745 million as at 30 September 2007, after taking account of
the Cash Return.
* The Merged Company will follow Katanga and Nikanor's existing strategies
of financing their projects through a mixture of debt and equity. The level of
additional financing required will be determined as part of a combined business
plan but it is expected that production from Katanga and a phased approach to
capital expenditure will result in a lower and delayed requirement for
additional financing than for Nikanor standalone.
* Management intends to use the phased expansion approach currently being
used by Katanga to bring its Kamoto complex into production on schedule and on
budget. This phased expansion is likely to delay achieving maximum capacity
relative to the combined standalone business plans but will allow a greater
portion of capital expenditure to be funded from internally produced cash flows
and reduced implementation risk.
* The existing program to rehabilitate the Kamoto joint venture to achieve
150,000 tonnes of refined copper and 8,000 tonnes of refined cobalt a year will
be continued more aggressively, while a mine plan for the combined assets is
being detailed and a new feasibility study completed.
Combined Reserves and Resources
Katanga's reserves and resources are reported to Canadian National Instrument
43-101 ("NI 43-101") requirements. Proven and probable reserves comprise 93
million tonnes of ore at 3.53% copper and 0.37% cobalt. Measured and indicated
resources (excluding reserves) comprise 69 million tonnes of ore at 3.47% copper
and 0.39% cobalt. Total contained copper excluding inferred resources is 5.7
million tonnes and total contained cobalt is 614,000 tonnes. (Source: June 2006
Feasibility Study and press release dated 22 February 2007).
Nikanor's reserves and resources are reported to SAMREC requirements. A revised
interim statement of Nikanor's assets, based on existing data and compliant with
NI 43-101, will be filed as part of Katanga's submission to its shareholders to
approve the Merger. Following completion of the Merger, a full feasibility study
will be commissioned on the combined project and, when complete, a new NI 43-101
reserves and resources statement will be issued.
Rick Dye, Senior Vice President, Technical Services of Katanga and a qualified
person under Canadian National Instrument 43-101, has supervised the reserve
calculations for Katanga and has reviewed and approved the use of the reserve
and resource statements in this press release.
Nikanor Irrevocable Undertakings
Irrevocable undertakings to accept the Offer, subject to certain exceptions in
relation to financing arrangements, have been received from certain major
Nikanor Shareholders, being Glencore Finance, RP Capital Entities with interests
in Nikanor Shares, Oakey Invest Holdings Inc. and Pitchley Properties Limited in
respect of in total 162,015,413 Nikanor Shares representing in aggregate
approximately 78.4 per cent. of Nikanor's issued share capital. These
irrevocable undertakings continue to be binding in the event of a higher offer
being made by a third party for Nikanor but cease to be binding if:
* there occurs a material adverse event in relation to Katanga which shall
only be deemed to have occurred if such event causes an interruption in
substantially all of production at any of Katanga's mines and such
interruption is reasonably likely to continue for a period of more than 45
days or a Katanga Negative Concession Review Event occurs;
* the Offer is withdrawn by Katanga unless a new revised Offer on equivalent
or superior terms is announced by Katanga or it is announced that it cannot
become unconditional; or
* the Offer or the new revised or replacement Offer has not become
unconditional by 15 March 2008.
Katanga Irrevocable Undertakings
Irrevocable undertakings to support the Offer and not to accept any competing
proposal, subject to certain exceptions in relation to financing arrangements,
have been received from certain major shareholders and members of the Katanga
Group, being Arthur Ditto, Tain Holdings Limited, George Forrest, RP Capital
Entities with interests in Katanga Shares in respect of in total 37,918,000
Katanga Shares representing in aggregate approximately 48.1 per cent of
Katanga's entire issued share capital. In addition, Nikanor has received a
similar irrevocable undertaking from Glencore Finance with respect to the
Katanga Shares issuable upon conversion of the US$150 million convertible loan
from Glencore Finance which was completed on 5 November 2007 These irrevocable
undertakings cease to be binding if:
* there occurs a material adverse event in relation to Nikanor which shall
only be deemed to have occurred if such event causes an interruption in
substantially all of production at any of Nikanor's mines and such
interruption is reasonably likely to continue for a period of more than 45
days or a Nikanor Negative Concession Review Event occurs;
* the Offer is withdrawn by Katanga in accordance with the terms of the
Implementation Agreement unless a new revised Offer on equivalent or
superior terms is announced by Katanga and Nikanor or it is announced that
it cannot become unconditional; or
* the Offer or the new revised or replacement Offer has not become
unconditional by 15 March 2008.
In addition, Arthur Ditto and Tain Holdings Limited have undertaken to vote in
favour of the Merger at the Katanga extraordinary general meeting in aggregate
in respect of 6,843,000 Katanga Shares, representing 8.7 per cent. of Katanga
Shares.
RP Capital Entities, by virtue of the size of their shareholding in both Katanga
and Nikanor, and George and Malta Forrest, by virtue of contractual arrangements
to be entered into between the Merged Company and Forrest group companies as
described below, will not be permitted to vote in favour of all resolutions to
be considered at the extraordinary general meeting of Katanga. However George
Forrest and RP Capital Entities with interests in Katanga Shares, who together
hold in aggregate 31,075,000 Katanga Shares, representing approximately 39.4 per
cent. of Katanga's existing issued share capital have agreed not to support any
competing proposals.
Board of Directors
The proposed board of the Merged Company is to be made up of 10 directors as
follows:
Con Fauconnier Independent Non Executive Director (Chairman)
Arthur Ditto President and Chief Executive Officer
Terry Robinson Independent Non Executive Director
Robert Wardell Independent Non Executive Director
George Forrest Non Executive Director (George Forrest nominee)
Malta Forrest Non Executive Director (George Forrest
nominee)
Raphael Berber Non Executive Director (Cosaf Limited / Pitchley
Properties Limited nominee)
Stephen Oke Non Executive Director (Oakey Invest Holdings
Inc. nominee)
Aristotelis Mistakidis Non Executive Director (Glencore Finance nominee)
It is proposed that an additional Independent Non Executive Director will be
identified and announced (upon approval from the Boards of both Katanga and
Nikanor) prior to the posting of the Offer Document. It is proposed that
Stephen Jones, the current Chief Financial Officer of Katanga will become the
Chief Financial Officer of the Merged Company and that Peter Sydney Smith, as a
member of the Integration Committee, will have responsibility for the London
listing.
Relationships with Major Shareholders
Nikanor and its major shareholders currently have in place relationship
agreements under which the major shareholders have the rights to appoint certain
of the directors to the Nikanor Board. As part of the terms of the approval of
the Offer by certain of the major shareholders of both companies of the Offer,
it has been agreed that the major shareholders will have certain appointment and
nomination rights in respect of directors following the Offer becoming
unconditional in all respects.
In particular, it is proposed that George Forrest shall have the right to
appoint 2 non-executive directors; Glencore Finance one non-executive director;
Cosaf Limited and Pitchley Properties Limited (taken together) one
non-executive director and Oakey Invest Holdings Inc. one non-executive
director.
After three years from the Effective Date, Art Ditto shall cease to be the
President and Chief Executive Officer unless re-appointed by Glencore. In
addition in the event that Arthur Ditto ceases to be the President and Chief
Executive Officer of the Merged Company, Glencore Finance shall have the right
to nominate (but not remove) the Chief Executive Officer and in the event that
Con Fauconnier ceases to be the Chairman, George Forrest has the right to
nominate (but not remove) the Chairman. Such nominations are subject to
confirmation by the nomination committee of the Board. George Forrest will also
be given the right to appoint the Non Executive Chairman of DCP and KCC. It is
intended that Simon Tuma-Waku will be the Vice Chairman of these entities.
None of the rights of the major shareholders set out above shall prejudice the
Merged Company's shareholders right to remove any of the major shareholders'
nominees in general meeting. Any director appointed to the board by the board
of the Merged Company will automatically come up for re-election at the
subsequent annual general meeting of the Merged Company.
The rights of the major shareholders as set out above to nominate and/or appoint
director(s) is subject to them and their associates holding certain minimum
interests in the Merged Company, being 5 per cent. in the case of each of George
Forrest and Glencore Finance and 10 per cent. in respect of each of RP Capital
Entities and Pitchley Properties Limited (taken together) and Oakey Invest
Holdings Inc.
It is intended that Relationship Agreements will be entered into between the
Merged Company and these shareholders to take effect on the Effective Date.
With effect from the Effective Date the existing relationship agreements between
Nikanor and its major shareholders will cease to have effect.
Glencore Finance, Ruwenzori Limited, Karisimbi Limited (which does not currently
hold any Nikanor Shares) and Cosaf Limited have entered into a co-operation and
voting agreement in relation to Nikanor. The agreement is intended, amongst
other things, to ensure that the parties exercise their respective rights as
shareholders in Nikanor in a co-ordinated manner. The agreement also includes
specific obligations (i) on each party to notify the other parties when it
purchases further Nikanor Shares; and (ii) on the parties (if required by
Glencore Finance) to vote the Nikanor Shares which they respectively hold (a) in
favour of the appointment of Glencore Finance's appointee as either the chief
financial officer and executive chairman or as the chief financial officer and
chief executive officer (as the case may be) of Nikanor (or against the removal
of such person from such office) and (b) in favour of the execution by Nikanor
of certain offtake agreements with Glencore. The agreement also includes
restrictions on the transfer of the Nikanor Shares which are held by the
respective parties and certain pre-emption rights in relation thereto. It is
intended that as from the Effective Date, this agreement will terminate and be
replaced by an agreement in relation to Katanga which will contain essentially
the same terms and conditions as applied with respect to Nikanor and otherwise
making it consistent with agreements as they apply to Glencore Finance as
described in this section and under "Transactions with Major Shareholders"
below. The agreement is governed by English law.
Transactions with Major Shareholders
In connection with the approval of the Offer the Merged Company has agreed to
enter into the arrangements with each of Glencore and George Forrest as set out
immediately below.
Glencore
Katanga and Nikanor have agreed that the Merged Company shall appoint Glencore
as the exclusive offtaker for the Merged Company and its subsidiaries from time
to time pursuant to which it will buy and take delivery of 100 per cent. of the
quantity of copper and cobalt produced by the mines currently owned and
subsequently acquired by Katanga, save for any existing offtake agreements of
the Katanga Group and existing offtake agreements in place at the time of any
newly acquired mines. The terms on which Glencore shall be appointed shall be
on the same terms, including the same commercial terms, as the offtake entered
into on 5 November 2007 between Katanga and Glencore save that it shall be
extended for the life of all Katanga's mines. However, in respect of Nikanor,
the existing offtake arrangements between Nikanor and Glencore shall continue
post the Effective Date. Following the Effective Date, Katanga will work with
Glencore on the terms of a unified contract for the offtake from the Merged
Company's operations.
George Forrest
KOL and Entreprise General Malta Forrest have entered into the T17 Open Pit
Mining Agreement and the Dima LOI (a letter from KOL to Entreprise General Malta
Forrest confirming KOL's intention to enter into a commercial contract with
Entreprise General Malta Forrest for the exploitation of open pits of the mining
complex "DIMA" on the basis of the T17 Open Pit Mining Agreement and the usual
standards for such type of contract) and these agreements shall continue
following the Effective Date. Notwithstanding the Dima LOI, the final pricing
for the Dima LOI is to be agreed with the management of the Merged Company and
approved by the board of the Merged Company.
In addition George Forrest will be granted the right to bid for any new contract
mining or construction contract for the Merged Company's KOV open cut
operations. If there is more than one bidder, then if the proposals are
equivalent then George Forrest's proposal will be preferred. In the event that
the sequence of mining is changed and KOV is to be mined ahead of the DIMA pits,
then the Dima LOI will be transferred across to KOV and, notwithstanding the
Dima LOI, the final prices and terms will be agreed between George Forrest and
the management of the Merged Company and approved by the board of the Merged
Company.
It is proposed that George Forrest and the management of the Merged Company will
agree upon the price and terms on which the existing Nikanor and/or DCP on site,
or ordered, equipment will be sold across to, and paid for by, George Forrest to
enable him to perform under his contracts with the Merged Company.
At any board meeting of the Merged Company to vote on these matters, neither of
the Directors appointed by George Forest shall vote on the proposed resolution.
KOL Call Option
In order to give the Merged Company the opportunity to acquire KOL, an entity
owned by George Forrest and Tain Holdings Limited (an entity connected with Art
Ditto) which is the operator of KCC's assets pursuant to the KOL Operating
Agreement, George Forrest and Tain Holdings Limited have entered into a call
option pursuant to which the Merged Company has an option to acquire KOL free
from all encumbrances. The purchase price payable if the option is exercised
will be determined by an independent investment bank agreed between the parties
as the fair market value to the KOL shareholders, as at the date of the
valuation, based on the Katanga stand alone model as at the date of this
Announcement.
The call option shall be exercisable once the purchase price is determined and
has been notified to the parties, subject to the approval of the board of the
Merged Company and to such regulatory and stock exchange approvals as may be
required. The call option shall terminate if not exercised within 3 months from
the date the purchase price is determined and notified to the parties.
If the call option is exercised by the Merged Company, the consideration may be
paid in cash or in Katanga Shares or a combination thereof at the election of
George Forrest and Tain Holdings Limited. The number of Katanga Shares to be
issued shall be calculated by reference to the volume weighted average price per
Katanga Share on the TSX for the 5 trading days prior to the exercise by Katanga
of the notice. No consideration will be paid to George Forrest or Tain Holdings
Limited for the grant of the call option.
At any board meeting of the Merged Company to determine whether to exercise the
option, neither Arthur Ditto nor any of the Directors appointed by George
Forrest shall vote on the proposed resolution.
Integration Committee
Katanga will set up an Integration Committee following this Announcement, to
continue until the listing on the London Stock Exchange is achieved, to oversee
the integration of Nikanor and Katanga into the Merged Company. The Integration
Committee shall consist of at least 4 members, being not less than 2 nominees of
Nikanor and not less than 2 nominees of Katanga. The initial members of the
Integration Committee shall be Peter Sydney-Smith, Rick Dye, Al Schoening, and
Jim Gorman. Peter Sydney-Smith shall be responsible for listing and integration
to hold office until the listing is completed. The Integration Committee will
be constituted within 2 weeks of the date of this Announcement and will meet in
the period prior to and after the Effective Date, but their proposals will only
be implemented following the Effective Date. Should the Nikanor appointees
resign, they will be replaced by Nikanor employees for the duration of the
committee.
Management and Employees
Katanga and Nikanor attach great importance to retaining the skills and
expertise of their management and employees. The boards of Katanga and Nikanor
believe that, although the combination of similar functions may lead to some
operating restructuring, the increased size and strength of the Merged Company
will offer attractive career prospects for its employees.
The existing employment rights of employees of both Katanga and Nikanor will be
fully safeguarded.
Recommendation of the Board of Nikanor
The Nikanor Directors, who have been so advised by JPMorgan Cazenove Limited,
consider the terms of the Offer to be fair and reasonable. In providing their
advice to the Nikanor Directors, JPMorgan Cazenove Limited has taken into
account the commercial assessments of the Nikanor Directors. Accordingly, the
Nikanor Directors intend unanimously to recommend that Nikanor Shareholders
accept the Offer, as they intend to do in respect of their own beneficial
holdings, which in aggregate amount to 253,350 Nikanor Shares, representing
approximately 0.1 per cent. of Nikanor's existing issued share capital.
Katanga Shareholder Approval and Recommendation of the Board of Katanga
The Offer is conditional on the approval of Katanga Shareholders at an
extraordinary general meeting of Katanga to be convened. The Katanga Board
intends unanimously to recommend that Katanga Shareholders vote in favour of the
Offer, and Arthur Ditto and Tain Holdings Limited have irrevocably undertaken to
do so in respect of in aggregate 6,843,000 Katanga Shares representing
approximately 8.7 per cent. of the issued share capital of Katanga, and not to
support any competing proposals.
Nikanor Shareholder Resolutions
The Offer is also conditional upon the passing at an extraordinary general
meeting of Nikanor of certain resolutions, each conditional upon the Offer being
unconditional in all other respects, including, in particular resolutions to (i)
re-register Nikanor as a company incorporated under the Companies Act; and (ii)
to adopt new memorandum and articles of association suitable for a company
governed by the Companies Act, each in order to allow the Nikanor Directors to
effect the Cash Return in accordance with section 50 of the Companies Act.
Conditions to the Offer
The Offer is subject to certain conditions, which are set out in full in
Appendix I of this Announcement.
Inducement Fee
Under the Implementation Agreement:
Nikanor has agreed to pay an inducement fee of #7.62 million (or if lower, 1 per
cent. of the Offer value to Nikanor Shareholders, excluding the Cash Return) to
Katanga, subject to any adjustment for VAT, if:
(a) a third party announces prior to the Offer lapsing that it may make an
offer for Nikanor, or another third party announces an offer within six months
of the announcement by the first party and one of such offers is declared
unconditional in all respects or completed;
(b) Nikanor Directors fail to recommend the Offer, or withdraw their
recommendation or otherwise fail to take the steps required to implement the
Offer, save in the event of a Katanga Negative Concession Review Event; or
(c) Nikanor enters into an agreement which would breach Rule 21(a), (b)(iv)
and (v) of the Code.
Katanga has agreed to pay an inducement fee of US$9.93 million (or if lower, 1
per cent. of the market value of Katanga at the time of this Announcement) to
Nikanor, subject to any adjustment for VAT, if:
(a) a third party announces prior to the Offer being withdrawn that it may
make an offer for Katanga or another third party announces an offer within six
months of the announcement by the first party, and one of such offers is
declared unconditional in all respects or is completed;
(b) Katanga withdraws or fails to make the Offer, save in the event of a
Nikanor Negative Concession Review Event occurring or any event giving rise to
an inducement fee payable to Katanga having occurred; or
(c) Katanga Directors fail to recommend the Offer, or withdraw their
recommendation that shareholders of Katanga approve the transaction or otherwise
fail to take the steps required to implement of the Offer, save in the event of
a Nikanor Negative Concession Review Event. No amount shall be payable if the
condition relating to the requirement for Katanga's shareholder approval is not
satisfied unless Katanga's directors withdraw their recommendation in respect of
such approvals.
Cash Return
The cash payment due to Nikanor Shareholders as part of the Merger is funded by
a distribution paid by Nikanor financed from Nikanor's existing cash resources.
It is intended that Nikanor Shareholders are to approve the re-registration of
Nikanor as a private "Manx" company under the Companies Act, such approval being
conditional on the Offer becoming unconditional and the re-registration effected
in all respects. Upon the Offer becoming unconditional, the Nikanor Board will
make a distribution to the then Nikanor Shareholders which, at the time of the
distribution will include Katanga. To the extent Katanga receives cash pursuant
to the distribution, it will pay the relevant proportion of the Cash Return to
those Nikanor Shareholders whose shares it has acquired pursuant to the Offer.
The Nikanor Shareholders of whose Nikanor Shares Katanga has not acquired as at
the date of the Cash Return will receive their proportional share of the Cash
Return directly from Nikanor. The Cash Return is only required to be paid once
Katanga has received the amount from Nikanor.
Nikanor has agreed pending the Offer becoming unconditional to retain an amount
of cash equal to the Cash Return in a separate account in immediately available
funds.
Nikanor and Katanga will work together in order to determine the most effective
way of giving effect to the Cash Return in a manner to ensure the amount
received by Katanga will be treated as a capital return. Further details will
be contained in the Offer Document.
Compulsory Acquisition / AIM Cancellation
On receipt of acceptances under the Offer in respect of 90 per cent. or more of
the Nikanor Shares, Katanga intends to apply the provisions of section 160 of
the Companies Act to acquire compulsorily any remaining Nikanor Shares. The
78.4 per cent. of Nikanor Shares under the irrevocable undertakings to support
the Merger will count towards this 90 per cent. threshold.
In addition, subject to the Offer becoming or being declared unconditional in
all respects, Katanga intends to procure that Nikanor applies to the London
Stock Exchange for the cancellation of the admission to AIM of the Nikanor
Shares. It is anticipated that such cancellation will take effect no earlier
than 20 business days after the Offer becomes or is declared unconditional in
all respects. Katanga also intends to re-register Nikanor as a "Manx" company
under the Companies Act.
Disclosure of Interest in Nikanor Shares
Neither Katanga, nor any Katanga Directors (i) has any interest in or right to
subscribe for any relevant Nikanor securities, nor (ii) has any short positions
in respect of relevant Nikanor securities (whether conditional or absolute and
whether in the money or otherwise), including any short position under a
derivative, any agreement to sell or any delivery obligation or right to require
another person to take delivery, (iii) has borrowed or lent any relevant Nikanor
securities (save for any borrowed shares which have been on-lent or sold), (iv)
has any securities convertible or exchangeable into, or any rights to subscribe
for or purchase, or holds any options to purchase any Nikanor Shares or holds
any derivative referenced to securities of Nikanor which remain outstanding nor
(v) has any arrangements of the kind referred to in Note 6 to Rule 8 of the Code
(including indemnity or option arrangements or agreements or understandings of
whatever nature relating to Nikanor Shares which may be an inducement to deal or
refrain from dealing).
Katanga and Nikanor Share Option Schemes
As a result of the Merger, options and awards under the Nikanor Share Plan 2006
will vest and become exercisable. The Offer will extend to any Nikanor Shares
issued and unconditionally allotted or issued whilst the Offer remains open for
acceptance, including any Nikanor Shares unconditionally allotted or issued upon
exercise of options or vesting of share awards granted under the Nikanor Share
Plan 2006. To the extent that such options are not exercised and share awards do
not vest, and if the Offer becomes or is declared unconditional in all respects,
Katanga will make appropriate proposals to option holders in due course. It is
the intention of the Merged Company to implement new share incentive
arrangements for all management and employees following completion of the
Merger.
Implementation Agreement
Katanga and Nikanor have today entered into an Implementation Agreement which
provides, amongst other things, for the implementation of the Merger and
contains assurances and confirmations between the parties, including provisions
as to the procedure to implement the Offer on and governing the conduct of the
business of Nikanor pending the Effective Date.
The Offer is not subject to the jurisdiction of the Panel. However, Katanga and
Nikanor have agreed in the Implementation Agreement the process for the Offer
under which Katanga and Nikanor have agreed to conduct the Offer as if the Code
applied to Nikanor, save for exceptions agreed between Katanga and Nikanor.
Nikanor has agreed that for the purpose of Articles 167 and 170 of Nikanor's
existing articles of association, the Offer is a "Permitted Acquisition" (as
defined therein).
The Implementation Agreement shall, save in respect of the inducement fee
provisions and any other accrued rights thereunder, terminate upon the earliest
to occur of:
(a) the Offer not being approved by Katanga Shareholders;
(b) any Condition becoming incapable of satisfaction or being invoked;
(c) the Offer lapsing or not being made; and
(d) 30 April 2008 if the Offer has not been declared unconditional as to
acceptances on or before that date.
Each of Katanga and Nikanor has given certain undertakings in relation to the
conduct of the Offer. In addition, Katanga has given Nikanor certain limited
warranties.
UK and Overseas Shareholders
The Offer will be made to, and acceptance of Nikanor Shares will be accepted
from, only those shareholders in the United Kingdom who are (or who are acting
on behalf of), and who are able to establish to the satisfaction of Katanga that
they are (or are acting on behalf of): "qualified investors" within the meaning
of section 86(7) of FSMA, or (ii) persons to whom the Offer may otherwise be
made or directed without an approved prospectus having first been made available
to the public in the United Kingdom. The availability of the Offer to Nikanor
Shareholders who are not resident in and citizens of the United Kingdom may be
affected by the laws of the relevant jurisdiction in which they are located or
of which they are citizens. Nikanor Shareholders who are not resident in or
citizens of the United Kingdom should inform themselves about, and observe, any
applicable legal or regulatory requirements of their jurisdictions. Further
details in relation to UK and overseas shareholders will be contained in the
Offer Document.
Notwithstanding the foregoing, Katanga retains the right to permit the Offer to
be accepted and any sale of securities pursuant to the Offer to be completed if,
in its sole discretion, it is satisfied that the transaction in question can be
undertaken in compliance with applicable law and regulation.
Issued Share Capital
As at close of business on 5 November 2007, Katanga confirms that it has
78,887,743 Katanga Shares in issue. The CUSIP reference for these securities is
G5221G109.
As at close of business on 5 November 2007, Nikanor confirms that it has
206,550,000 Nikanor Shares in issue. The ISIN reference for these securities is
GB00B182MG48.
Advisers
Katanga is being advised by CIBC World Markets plc and its legal advisers are
Cassels Brock & Blackwell LLP in Canada, Norton Rose LLP in the UK and Appleby
in Bermuda. Nikanor is being advised by JPMorgan Cazenove Limited and its legal
advisers are Linklaters LLP in the UK, Stikeman Elliott LLP in Canada and Cains
Advocates Limited in the Isle of Man.
General
The Offer Document will be posted to Nikanor Shareholders and made available,
for information only, to participants in the Nikanor Share Scheme, as soon as
practicable and in any event within 28 days of the date of this Announcement
unless agreed otherwise between Katanga and Nikanor.
Appendix I
Conditions and Further Terms of the Offer
The Offer is subject to the following conditions:
(a) valid acceptances of the Offer being received (and not, where
permitted, withdrawn) by no later than 1 p.m. (London time) on the first closing
date of the Offer (as set out in the Offer Document) (or such later time(s) and/
or date(s) as Katanga may decide) in respect of not less than 90 per cent. of
all of the Nikanor Shares and not less than 90 per cent. of the voting rights
carried by those Nikanor Shares (or in each case such lesser percentage as
Katanga may decide), provided that this condition shall not be satisfied unless
Katanga and/or its wholly-owned subsidiaries shall have acquired or agreed to
acquire, pursuant to the Offer or otherwise, Nikanor Shares carrying in
aggregate more than 50 per cent. of the voting rights normally exercisable at a
general meeting of Nikanor including for this purpose any such voting rights
attached to any Nikanor Shares unconditionally allotted or issued before the
Offer becomes or is declared unconditional as to acceptances, whether pursuant
to the exercise of any outstanding subscription rights or otherwise and for the
purposes of this condition:
(i) Nikanor Shares which have been unconditionally allotted but not
issued shall be deemed to carry the voting rights which they will carry upon
issue; and
(ii) valid acceptances shall be deemed to have been received in
respect of Nikanor Shares which have been acquired or contracted to be acquired
by Katanga by virtue of acceptances of the Offer;
(b) the passing at an extraordinary general meeting of Nikanor (or at any
adjournment thereof) of all such resolutions as may be reasonably necessary to
approve, implement or effect (as the case may be) the Offer, the acquisition by
Katanga of Nikanor pursuant thereto and the Cash Return in each case conditional
upon the Offer being unconditional in all other respects, including, in
particular:
(i) re-registering Nikanor as a company incorporated under the
Companies Act;
(ii) adopting new memorandum and articles of association suitable for
a company governed by the Companies Act (such articles not containing any
takeover provisions); and
(iii) implementing the Cash Return in accordance with section 50 of
the Companies Act;
(c) the New Katanga Shares will have been accepted for listing by the TSX,
no later than the first closing date of the Offer (as set out in the Offer
Document);
(d) Katanga obtaining shareholder approvals as may be required by
applicable securities laws and regulatory requirements (including the
requirements of the TSX) in respect of the completion of the Offer and any other
transactions as may be agreed between Katanga and Nikanor;
(e) a Katanga Negative Concession Review Event not having occurred;
(f) the granting of any necessary or desirable United Kingdom, Canadian,
Democratic Republic of Congo or Bermudan governmental, regulatory or exchange
control consents required to implement the Offer;
(g) no central bank, government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental or investigative body,
court, trade agency, professional association, institution, employee
representative body or any other such body or person whatsoever in any
jurisdiction (each a "Third Party" and all collectively "Third Parties") having
given written notice of a decision to take, institute or threaten any material
action, proceeding, suit, investigation, enquiry or reference, or having
required any action to be taken, or having enacted, made or proposed and there
not continuing to be outstanding any statute, regulation, decision or order
which would or might reasonably be expected to:
(i) make the Offer or its implementation or the acquisition or
proposed acquisition by Katanga of all or any Nikanor Shares, or the acquisition
or proposed acquisition of control of Nikanor, by any member of the Wider
Katanga Group, void, illegal or unenforceable under the laws of any relevant
jurisdiction, or otherwise, directly or indirectly, restrain, restrict,
prohibit, challenge, delay, hinder or otherwise materially interfere with the
same, or impose material additional adverse conditions or obligations with
respect thereto, or otherwise materially challenge or require material amendment
to the terms of the Offer or any such acquisition;
(ii) require, prevent or delay the divestiture, or alter the terms
envisaged for any proposed divestiture, by any member of the Wider Katanga Group
or by any member of the Wider Nikanor Group of all or any portion of their
respective businesses, assets or properties or impose any limitation on the
ability of any of them to conduct their respective businesses (or any part of
them) or to own or manage their respective assets or properties or any part of
them to an extent which is material in the context of the Wider Katanga Group
taken as a whole or the Wider Nikanor Group taken as a whole (as the case may
be);
(iii) impose any material limitation on, or result in a material delay
in, the ability of any member of the Wider Katanga Group, directly or
indirectly, to acquire or to hold or to exercise effectively all or any rights
of ownership in respect of shares, loans or other securities (or the equivalent)
in the Wider Nikanor Group or to exercise management control over any such
member to an extent which is material in the context of the Wider Katanga Group
taken as a whole;
(iv) otherwise adversely affect any or all of the businesses, assets,
liabilities, profits or prospects of any member of the Wider Katanga Group or
any member of the Wider Nikanor Group (including any action which would or might
adversely affect or prejudice any of the status, licences, authorisations,
exemptions or consents of any member of the Wider Katanga Group or of the Wider
Nikanor Group) to an extent which is material in the context of the Wider
Katanga Group taken as a whole or the Wider Nikanor Group taken as a whole (as
the case may be);
(v) save pursuant to the Offer or section 160 the Companies Act,
require any member of the Wider Katanga Group or the Wider Nikanor Group to
acquire, or offer to acquire, any shares or other securities (or the equivalent)
in, or any asset owned by, any member of the Wider Nikanor Group or the Wider
Katanga Group to an extent which, is material in the context of the Wider
Katanga Group taken as a whole, or as the case may be, the Wider Nikanor Group
taken as a whole;
(vi) require a divestiture by Katanga or any member of the Wider
Katanga Group of any shares or other securities (or the equivalent) in the Wider
Nikanor Group to an extent which is material in the context of the Wider Katanga
Group taken as a whole;
(vii) limit the ability of any member of the Wider Katanga Group or the
Wider Nikanor Group to co-ordinate or integrate its business, or any part of it,
with the business or any part of the business of any other member of the Wider
Katanga Group or of the Wider Nikanor Group, to an extent which is material in
the context of the Wider Katanga Group taken as a whole or the Wider Nikanor
Group taken as a whole (as the case may be); or
(viii) result in any member of the Wider Nikanor Group or the Wider
Katanga Group ceasing to be able to carry on business under any name which it
presently does so to an extent which is materially adverse in the context of the
Wider Nikanor Group taken as a whole,
and all applicable waiting and other time periods during which any such Third
Party could take, institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference under the laws of any relevant jurisdiction
or enact any such statute, regulation, order or decision or take any steps
having expired, lapsed or been terminated;
(h) all authorisations, orders, recognitions, grants, consents, licences,
confirmations, clearances, certificates, exemptions, permissions and approvals
("Authorisations") necessary or appropriate in any relevant jurisdiction for or
in respect of the Offer or the proposed acquisition of all or any Nikanor
Shares, or control of, Nikanor by any member of the Wider Katanga Group having
been obtained on terms and in a form reasonably satisfactory to Katanga from all
appropriate Third Parties or persons with whom any member of the Wider Nikanor
Group has entered into contractual arrangements where the absence of such
Authorisations would have a materially adverse effect on the Wider Katanga Group
taken as a whole or the Wider Nikanor Group taken as a whole, as the case may
be, and all such Authorisations, together with all Authorisations necessary or
appropriate to carry on the business of any member of the Wider Nikanor Group
where such business is material in the context of the Wider Nikanor Group taken
as a whole remaining in full force and effect at the time at which the Offer
becomes otherwise unconditional and there being no indication of any intention
to revoke, withdraw, suspend, restrict, withhold or modify or not to grant or
review any of the same;
(i) all necessary and material filings or applications having been made
in connection with the Offer, and all appropriate waiting periods (including
extensions thereof) in respect of the Offer or its implementation under any
applicable legislation or regulations in any relevant jurisdiction having
expired, lapsed or been terminated (as appropriate) and all necessary statutory
or regulatory obligations in any relevant jurisdiction having been complied with
in connection with the Offer or the acquisition by any member of the Wider
Katanga Group of any shares or other securities in, or control of, Nikanor;
(j) save as disclosed to Katanga by or on behalf of Nikanor or as
publicly announced to a Regulatory Information Service prior to 6 November 2007
there being no provision of any material agreement, authorisation, arrangement,
lease, licence, permit or other instrument to which any member of the Wider
Nikanor Group is a party or by or to which any such member or any of its assets
may be bound, entitled or subject, which in consequence of the Offer or the
proposed acquisition by Katanga or any member of the Wider Katanga Group of any
shares) in Nikanor or because of a change in the control or management of any
member of the Wider Nikanor Group, would or might reasonably be expected to
result, in a manner which could or might reasonably be expected to result (in
each case to an extent which is or would be material in the context of the Wider
Nikanor Group taken as a whole) in:
(i) any monies borrowed by or any other indebtedness (actual or
contingent) of, or grant available to, any member of the Wider Nikanor Group,
being or becoming repayable or being capable of being declared repayable
immediately or prior to their or its stated maturity date or repayment date or
the ability of any such member to borrow monies or incur any indebtedness being
withdrawn, prohibited or inhibited or becoming capable of being withdrawn,
prohibited or inhibited;
(ii) any such agreement, authorisation, arrangement, licence, permit
or other instrument or the rights, liabilities, obligations or interests of any
member of the Wider Nikanor Group thereunder being terminated or adversely
modified or affected or any onerous obligation or liability arising or any
adverse action being taken or arising thereunder;
(iii) any assets or interests of any member of the Wider Nikanor Group
being or falling to be disposed of or charged or any right arising under which
any such asset or interest could be required to be disposed of or charged
otherwise than, in any such case, in the ordinary course of business;
(iv) the creation or enforcement of any mortgage, charge or other
security interest over the whole or any material part of the business, property
or assets of any member of the Wider Nikanor Group, or any such mortgage, charge
or other security interest (whenever arising or having arisen) becoming
enforceable or being enforced;
(v) the rights, liabilities, obligations or interests of any member
of the Wider Nikanor Group in, or the business of any such member with, any
person, company, firm or body (or any agreements or arrangements relating to any
such interest or business) being terminated, or adversely modified or adversely
affected;
(vi) the value of any member of the Wider Nikanor Group or its
financial or trading position or profits or prospects being materially
prejudiced or materially and adversely affected;
(vii) any member of the Wider Nikanor Group ceasing to be able to carry
on business under any name under which it presently does so; or
(viii) the creation or assumption of any material liability, actual or
contingent, by any member of the Wider Nikanor Group other than in the ordinary
course of business,
and no event having occurred which, under any provision of any agreement,
authorisation, arrangement, lease, licence, permit or other instrument to which
any member of the Wider Nikanor Group is a party or by or to which any such
member or any of its assets are bound, entitled or subject, would be reasonably
likely to result in any of the events referred to in sub-paragraph (i) to (viii)
of this paragraph (j);
(k) save as disclosed to Katanga in writing by or on behalf of Nikanor or
as publicly announced to a Regulatory Information Service (prior to 6 November
2007), or as disclosed in the annual report and accounts for the year ended 31
December 2006, no member of the Wider Nikanor Group having, since 31 December
2006:
(i) (save as between Nikanor and wholly-owned subsidiaries of
Nikanor, or for Nikanor Shares issued pursuant to the exercise of options
granted under the Nikanor Share Plan 2006 prior to 6 November 2007,) issued or
agreed to issue or authorised or announced its intention to authorise the issue
of additional shares of any class or securities convertible into or exchangeable
for, shares of any class or rights, warrants or options to subscribe for, or
acquire, any such shares or convertible securities;
(ii) recommended, declared, paid or made or proposed to recommend,
declare, pay or make any bonus issue, dividend or other distribution whether
payable in cash or otherwise other than dividends (or other distributions
whether payable in cash or otherwise) lawfully paid or made by any wholly-owned
subsidiary of Nikanor to Nikanor or any of its wholly-owned subsidiaries;
(iii) other than pursuant to the Offer (and save for transactions
between Nikanor and its wholly-owned subsidiaries or other than in the ordinary
course of business) implemented, effected, authorised or proposed or announced
its intention to implement, effect, authorise or propose any merger, demerger,
reconstruction, amalgamation, scheme, commitment or acquisition or disposal of
assets or shares or loan capital (or the equivalent thereof) in any undertaking
or undertakings in any such case that is material in the context of the Wider
Nikanor Group taken as a whole;
(iv) (save for transactions between Nikanor and its wholly-owned
subsidiaries or other than in the ordinary course of business) disposed of, or
transferred, mortgaged or created any security interest over any asset or any
right, title or interest in any asset that is material in the context of the
Wider Nikanor Group taken as a whole or authorised, proposed or announced any
intention to do so;
(v) (save as between Nikanor and its wholly-owned subsidiaries) made
or authorised or announced an intention to make any material change in its loan
capital;
(vi) (save as between transactions between Nikanor and its
wholly-owned subsidiaries) issued, authorised, or announced an intention to
authorise, the issue of or made any change in or to the terms of any debentures
or become subject to any material contingent liability or incurred or increased
any material indebtedness other than in the ordinary course of business;
(vii) (save for transactions between members of the Wider Nikanor
Group) purchased, redeemed or repaid, or announced any intention to purchase,
redeem or repay, any of its own shares or other securities or reduced or made
any other change to or proposed the reduction or other change to any part of its
share capital;
(viii) entered into, implemented, effected, varied, authorised proposed
or announced its intention to enter into, any material reconstruction,
amalgamation, scheme, commitment or other transaction or arrangement which is of
long term or unusual or onerous nature in any case that is material in the
context of the Wider Nikanor Group taken as a whole and otherwise than in the
ordinary course of business;
(ix) entered into or materially varied or terminated or authorised,
proposed or announced its intention to enter into or vary any material contract,
arrangement, agreement, transaction or commitment (whether in respect of capital
expenditure or otherwise) which has a term in excess of 6 months, or which is
onerous or unusual in nature or magnitude or which is or is likely to be
materially restrictive on the business of any member of the Wider Nikanor Group
or which involves or is likely to involve an obligation of such a nature or
magnitude or which is other than in the ordinary course of business and in any
such case is material in the context of the Wider Nikanor Group taken as a
whole;
(x) entered into or varied to a material extent the terms of, or made
any offer (which remains open for acceptance) to enter into or vary the terms
of, any contract, service agreement or arrangement with any director or senior
executive of any member of the Wider Nikanor Group to an extent which is
material to the Wider Nikanor Group taken as a whole, save for salary increases,
bonuses or variations of terms in the ordinary course of business;
(xi) terminated or varied the terms of any agreement or arrangement
between any member of the Wider Nikanor Group and any other person in a manner
which would or might reasonably be expected to have a material adverse effect on
the financial position or prospects of the Wider Nikanor Group taken as a whole;
(xii) proposed, agreed to provide or modified the terms of any share
option scheme, incentive scheme or other benefit relating to the employment or
termination of employment of any person employed in the Wider Nikanor Group
which is material in the context of the Wider Nikanor Group taken as a whole;
(xiii) made or consented to any significant change to the terms of the
trust deeds and rules constituting the pension scheme(s) established for its
directors, employees or their dependants or to the benefits which accrue, or to
the pensions which are payable, thereunder, or to the basis on which
qualification for, or accrual or entitlement to, such benefits or pensions are
calculated or determined or to the basis upon which the liabilities (including
pensions) of such pension schemes are funded or made, or agreed or consented to,
any change to the trustees, including the appointment of a trust corporation, to
an extent in any such case which is material in the context of the Wider Nikanor
Group taken as a whole;
(xiv) been unable, or admitted in writing that it is unable, to pay its
debts or having stopped or suspended (or threatened to stop or suspend) payment
of its debts generally or ceased or threatened to cease to carry on all or a
substantial part of its business which is material in the context of the Wider
Nikanor Group taken as a whole;
(xv) (other than in respect of a member of the Wider Nikanor Group which
is dormant and was solvent at the relevant time) taken or proposed any corporate
action, or had any legal proceedings threatened or instituted against it for its
winding-up (voluntarily or otherwise), dissolution or reorganisation or for the
appointment of a receiver, administrative receiver, administrator, trustee or
similar officer of all or any material part of its assets or revenues or any
analogous or equivalent steps or proceedings in any relevant jurisdiction having
been taken or had any such person appointed;
(xvi) waived or compromised or settled any claim otherwise than in the
ordinary course of business which is material in the context of the Wider
Nikanor Group taken as a whole; or
(xvii) entered into any contract, agreement, commitment or arrangement or
passed any resolution or made any offer (which remains open for acceptance) with
respect to or announced any intention to, or to propose to, effect any of the
transactions, matters or events referred to in this condition (k);
(l) save as disclosed to Katanga in writing by or on behalf of Nikanor
or as publicly announced to a Regulatory Information Service prior to 6 November
2007 or as disclosed in the annual report and accounts for the year ended 31
December 2006, since 31 December 2006;
(i) no material adverse change or deterioration having occurred in
the business, assets, financial or trading position or profits or prospects or
operational performance of any member of the Wider Nikanor Group to an extent
which is material in the context of the Wider Nikanor Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other
legal proceedings or investigations having been threatened in writing,
announced, instituted or remaining outstanding by, against or in respect of any
member of the Wider Nikanor Group or to which any member of the Wider Nikanor
Group is or may become a party (whether as a claimant, defendant or otherwise)
and no enquiry or investigation by any Third Party against or in respect of any
member of the Wider Nikanor Group having been commenced, announced or threatened
in writing by or against or remaining outstanding in respect of any member of
the Wider Nikanor Group in each case which might reasonably be expected to have
a material adverse effect on the Wider Nikanor Group taken as a whole;
(iii) no contingent or other liability having arisen which would or
might reasonably be expected to adversely affect any member of the Wider Nikanor
Group to an extent which is material in the context of the Wider Nikanor Group
taken as a whole; and
(iv) no steps having been taken and no omissions having been made
which are likely to result in the withdrawal, cancellation, termination or
modification of any licence held by any member of the Wider Nikanor Group, which
is necessary or appropriate for the proper carrying on of its business and the
withdrawal, cancellation, termination or modification of which is likely to
materially and adversely affect the Wider Nikanor Group taken as a whole;
(m) save as disclosed to Katanga in writing by or on behalf of Nikanor, or
publicly announced to a Regulatory Information Service prior to 6 November 2007
or as disclosed in the annual report and accounts for the year ended 31 December
2006, Katanga not having discovered after 5 November 2007:
(i) that any financial, business or other information concerning
the Wider Nikanor Group publicly announced or disclosed at any time by or on
behalf of any member of the Wider Nikanor Group to the Wider Katanga Group, is
materially misleading, contains a material misrepresentation of any fact or
omits to state a fact necessary to make that information not materially
misleading and which in any case, is material in the context of the Wider
Nikanor Group taken as a whole;
(ii) that any present member of the Wider Nikanor Group or any
partnership, company or other entity in which any member of the Wider Nikanor
Group has a controlling interest and which is not a subsidiary undertaking of
Nikanor, is subject to any material liability, contingent or otherwise, which is
not disclosed in the annual report and accounts for Nikanor for the year ending
31 December 2006 and which is material in the context of the Wider Nikanor Group
taken as a whole;
(iii) any information which materially affects the import of any
information disclosed at any time by or on behalf of any member of the Wider
Nikanor Group (to an extent which is material in the context of the Wider
Nikanor Group taken as a whole);
(iv) that any member of the Wider Nikanor Group has not complied with
all applicable legislation, regulations or other requirements of any relevant
jurisdiction with regard to the use, treatment, storage, disposal, discharge,
spillage, leak or emission of any waste or hazardous substance or any substance
likely to impair the environment or harm human health, or otherwise relating to
environmental matters or that there has otherwise been a material emission,
discharge, disposal, spillage or leak of waste or hazardous substance or any
substance likely to impair the environment or harm human health (whether or not
the same constituted a non-compliance by any person with any such legislation or
regulations, and wherever the same may have taken place) on or from any land or
property of any description or other asset now or previously owned, occupied or
made use of by any member of the Wider Nikanor Group or in which any such member
may now or previously have had an interest which would, in any case, be likely
to give rise to any material liability (whether actual or contingent) on the
part of any member of the Wider Nikanor Group which is material in the context
of the Wider Nikanor Group taken as a whole;
(v) that there is or is likely to be any material liability (whether
actual or contingent) on the part of any member of the Wider Nikanor Group to
make good, repair, reinstate or clean up any property of any description or
other asset now or previously owned, occupied or made use of by any past or
present member of the Wider Nikanor Group, or in which any such member may now
or previously have had an interest, under any environmental legislation,
regulation, notice, circular or order of any Third Party which is material in
the context of the Wider Nikanor Group taken as a whole;
(vi) that circumstances exist (whether as a result of the making of
the Offer or otherwise) which would be likely to lead to any Third Party
instituting, (or whereby any member of the Wider Nikanor Group would be likely
to be required to institute), an environmental audit or take any steps which
would in any such case be likely to result in any actual or contingent liability
to improve or install new plant or equipment or to make good, repair, reinstate
or clean up any property of any description or other asset now or previously
owned, occupied or made use of by any member of the Wider Nikanor Group, or in
which any such member may now or previously have had an interest which is
material in the context of the Wider Nikanor Group taken as a whole;
(vii) that circumstances exist whereby a person or class of persons
would be likely to have any claim or claims in respect of any product or process
of manufacture or materials used therein now or previously manufactured, sold or
carried out by any member of the Wider Nikanor Group, which claim or claims
would be likely to be materially adverse in the context of the Wider Nikanor
Group taken as a whole.
For the purposes of these conditions the "Wider Nikanor Group" means Nikanor and
its subsidiaries, associated undertakings and any other undertaking in which
Nikanor and/or such undertakings (aggregating their interests) have a
significant interest and the "Wider Katanga Group" means Katanga and its
subsidiaries, associated undertakings and any other undertaking in which Katanga
and/or such undertakings (aggregating their interests) have a significant
interest and for these purposes "subsidiary undertaking", "associated
undertaking" and "undertaking" have the meanings given by the UK Companies Act,
and "significant interest" means a direct or indirect interest in more than
twenty per cent. of the equity share capital (as defined in the UK Companies
Act).
Katanga reserves the right to (if capable of waiver) waive, in whole or in part,
all or any of conditions: (b) to (m) inclusive, save that conditions (b), (c)
and (f) may only be waived by Katanga with the written consent of Nikanor.
Katanga and Nikanor have agreed that there shall be no restrictions on Katanga
exercising its discretion not to waive conditions (b), (c) and (f). Conditions
(b) to (m) must be satisfied as at, or (if capable of waiver) waived on or
before midnight (London time), on the twenty first day after the later of the
first closing date of the Offer (as set out in the Offer Document) and the date
on which condition (a) is fulfilled or waived (or in each case such later date
as Katanga and Nikanor may agree), otherwise the Offer will lapse.
Katanga shall be under no obligation to waive (if capable of waiver) or treat as
fulfilled any of conditions (b) to (m) inclusive by a date earlier than the
latest date specified above for the fulfilment thereof, notwithstanding that the
other conditions of the Offer may at such earlier date have been fulfilled and
that there are, at such earlier date, no circumstances indicating that any of
such conditions may be incapable of fulfilment.
The Offer will lapse if it is referred to the Competition Commission or the
European Commission initiates proceedings under Article 6(1)(c) of the Merger
Regulation, or following a referral under Article 9(1) of the Merger Regulation,
there is a subsequent reference to the Competition Commission, in each case
before 1 p.m. (London time) on the first closing date of the Offer (as set out
in the Offer Document) or the time and date on which the Offer becomes or is
declared unconditional as to acceptances, whichever is the later. In such
circumstances, the Offer will cease to be capable of further acceptance and
persons accepting the Offer and Katanga shall thereupon cease to be bound by
Form of Acceptance delivered on or before the date on which the Offer so lapses.
The availability of the Offer to persons in Restricted Jurisdictions may be
affected by the laws of the relevant jurisdictions. Persons who are resident in
a Restricted Jurisdiction should inform themselves about and observe any
applicable requirements.
The Offer will be governed by English law and will be subject to the
jurisdiction of the English courts. The Offer will not be subject to the
jurisdiction of the Panel but will be conducted generally in accordance with the
provisions of the Code save for exceptions agreed between Nikanor and Katanga
Appendix II
Sources and Bases
(a) The combined market capitalisation of the Merged Company is based upon
a fully diluted number of Katanga Shares of 94,584,985, the latest closing price
of Katanga Shares on TSX on 5 November 2007 of C$11.75 (converted into US$ as
set out in paragraph (h) below), the fully diluted number of Nikanor Shares of
208,893,529 and the latest closing price of Nikanor Shares on AIM on 5 November
2007 of #5.885 (converted into US$ as set out in paragraph (i) below), less the
Cash Return of US$452 million.
(b) The total amount of the Cash Return is based upon US$2.16 per Nikanor
Share and 208,893,529 Nikanor Shares (being the fully diluted share capital of
Nikanor).
(c) The market price of Katanga Shares is the closing middle market
quotation derived from the TSX.
(d) The market price of Nikanor Shares is the closing middle market
quotation derived from AIM.
(e) The calculation of 128.1 million New Katanga Shares to be issued is
based upon Nikanor's fully diluted share capital of 208,893,529 shares on 5
November 2007 multiplied by 0.613.
(f) Information relating to Katanga's reserves and resources are based
upon Katanga's June 2006 Feasibility Study and press release dated 22 February
2007 (available on www.sedar.com).
(g) The pro forma cash balance for the Merged Company as at 30 September
2007 is calculated using the unaudited management accounts for September 2007 of
Nikanor and Katanga.
(h) The US dollar : Canadian dollar exchange rate used in this Announcement
is 1.071 US$/C$.
(i) The US dollar : sterling exchange rate used in this Announcement is
2.090 US$/#.
Appendix III
Irrevocable Undertakings
The following holders of Nikanor Shares have given the following irrevocable
undertakings to accept the Offer:
Name Number of Nikanor Shares Percentage of issued share capital
of Nikanor
Glencore Finance (Bermuda) Limited 28, 679,417 13.88%
RP Explorer Master Fund 25,455,713 12.32%
Ruwenzori Limited 25,000,000 12.10%
Cosaf Limited 7,500,000 3.63%
Oakey Invest Holdings Inc. 47,370,283 22.93%
Pitchley Properties Limited 28,010,000 13.56%
162,015,413 78.4%
The following holders of Katanga Shares have given the following support
undertakings in relation to the offer:
Name Number of Katanga Shares Percentage of issued share capital
of Katanga
Arthur Ditto 1,318,000 1.67
Tain Holdings Limited 5,525,000 7.00
George Forrest 18,800,000 23.83
RP Capital Entities 12,275,000 15.56
Appendix IV
Definitions
"AIM" the AIM market of the London Stock Exchange
"Cash Return" the payment by Katanga of US$2.16 per Nikanor Share to Nikanor Shareholders
funded by way of distribution in a manner agreed to by Katanga and Nikanor to
Nikanor Shareholders in accordance with the Companies Act immediately following
the Effective Date, such that the payment shall be made to Katanga in respect of
the Nikanor Shares which have been assented to the Offer
"Companies Act" Isle of Man Companies Act 2006
"Code" the City Code on Takeovers and Mergers issued by the Panel
"Conditions" the conditions to the implementation of the Offer set out in Appendix I to this
Announcement and "Condition" meaning any one of them
"DCP" DRC Copper and Cobalt Project s.p.r.l, a company incorporated in the DRC
"Dima LOI" a letter dated 30 April 2007 from KOL to Entreprise General Malta Forrest
confirming KOL's intention to enter into a commercial contract with Entreprise
General Malta Forrest for the exploitation of open pits of the mining complex
"DIMA" (including the Dikuluwe, Mashamba West and Mashamba East pits) on the
basis of the T17 Open Pit Mining Agreement and the usual standards for such type
of contract
"DRC" Democratic Republic of Congo
"Effective Date" the date on which the Offer becomes unconditional in all respects
"Form of Acceptance" the form of acceptance and authority relating to the Offer which will accompany
the Offer Document, which may only be completed by holders of Nikanor Shares in
certificated form
"Glencore" Glencore International AG
"Glencore Finance" Glencore Finance (Bermuda) Limited
"Implementation Agreement" the agreement between Katanga and Nikanor dated 6 November 2007 in connection
with the implementation of the Offer
"Katanga" Katanga Mining Limited
"Katanga Board" the board of directors of Katanga
"Katanga Directors" the board of directors of Katanga and a "Katanga Director" being any one such
director
"Katanga Negative Concession the receipt by KCC or Katanga of an official notice issued by the government,
Review Event" relevant ministry or courts of the Democratic Republic of the Congo notifying
KCC or such entity of the intention to withdraw, revoke, or otherwise alter, or
the withdrawal, revocation or alteration of, any licence, lease or permit that,
if enacted, would prevent KCC from lawfully mining and exploiting any of the
Kamoto underground mine, the T17, Dikuluwe, Mashamba East and Mashamba West open
pits, the Kamoto concentrator or the Luilu metallurgical facility
"Katanga Shareholder" a holder of Katanga Shares
"Katanga Shares" common shares of US$0.01 each in the share capital of Katanga
"KCC" Kamoto Copper Company SARL, a company incorporated in DRC
"KOL" Kamoto Operating Limited, a company incorporated in DRC
"KOL Operating Agreement" the operating agreement between KOL and the Kamoto Copper Company dated 2
November 2005 in respect of the exploration, development, mining, processing and
related operations with respect to the Kamoto project properties
"KOV" the open pit mine situated near Kolwezi in the Katanga province of DRC,
consisting of the Kamoto East, Oliveira, Virgule and FNSR orebodies
"London Stock Exchange" London Stock Exchange plc or its successor
"Merged Company" the enlarged entity following the Merger
"Merger" the merger of Katanga and Nikanor on the terms and conditions set out in this
Announcement
"Merger Regulation" the EC Merger Regulation (Regulation 139/2004)
"New Katanga Shares" the new Katanga Shares to be issued as consideration for Nikanor Shares pursuant
to the Offer
"Nikanor" Nikanor PLC
"Nikanor Board" the board of directors of Nikanor
"Nikanor Directors" the board directors of Nikanor and a "Nikanor Director" meaning any one such
director
"Nikanor Negative Concession the receipt by DCP or Nikanor of an official notice issued by the government,
Review Event" relevant ministry or courts of the Democratic Republic of the Congo notifying
DCP or such entity of the intention to withdraw, revoke, or otherwise alter, or
the withdrawal, revocation or alteration of, any licence, lease or permit that,
if enacted, would prevent DCP from lawfully mining and exploiting any of the Kov
mine, the Tilwezembe mine, the Kolwezi concentrator and the new refinery/
processing plant
"Nikanor Shareholder" a holder of Nikanor Shares
"Nikanor Share Plan 2006" the Nikanor Group share option and award plans comprising the Nikanor plc Share
Plan 2006
"Nikanor Shares" ordinary shares of US$0.01 each in the capital of Nikanor
"Offer" the recommended offer by Katanga for the whole of the issued ordinary share
capital of Nikanor not already owned by Katanga on the terms and subject to the
conditions to be set out in the Offer Document including, where the context so
requires, any subsequent revision, variation, extension or renewal of such offer
"Offer Document" the document to be addressed to Nikanor Shareholders containing the Offer
"Panel" the Panel on Takeovers and Mergers
"Regulatory Information a service approved by the London Stock Exchange for the distribution to the
Service" public of AIM announcements and included within the list maintained on the
London Stock Exchange's website
"Relationship Agreements" the agreements to be entered into between Katanga and each of Glencore Finance,
RP Explorer Master Fund, Pitchley Properties Limited and their associates (taken
together) and Oakey Invest Holdings Inc. as the major shareholders of the Merged
Company
"Restricted Jurisdiction" any jurisdiction where local laws or regulations may result in a significant
risk of civil, regulatory or criminal exposure for Katanga or Nikanor if
information or documentation concerning the Offer is sent or made available to
Nikanor Shareholders in that jurisdiction
"RP Capital Entities" RP Explorer Master Fund, New Horizon Minerals Limited, Cosaf Limited and
Ruwenzori Limited or any of them as the context may require
"SAMREC" the South African Code for Reporting of Mineral Resources and Mineral Reserves
prepared by The South African Mineral Resource Committee under the auspices of
The South African Institute Of Mining And Metallurgy
"subsidiary" and "subsidiary a subsidiary (as defined by section 1159 and Schedule 6 UK Companies Act) or a
undertaking" subsidiary undertaking (as defined by section 1162 UK Companies Act)
"T17 Open Pit Mining Agreement" an agreement between KOL and Entreprise Generale Malta Forrest dated 11 April
2007
"TSX" the Toronto Stock Exchange
"UK Companies Act" United Kingdom Companies Act 2006
"United Kingdom" United Kingdom of Great Britain and Northern Ireland
"United States" or "U.S." the United States of America, its territories and possessions, any state of the
United States of America the District of Colombia, and all other areas subject
to its jurisdiction or any political subdivision thereof
"Wider Katanga Group" Katanga and its subsidiaries, associated undertakings and any other undertaking
in which Katanga and/or such undertakings (aggregating their interest) have a
significant interest
"Wider Nikanor Group" Nikanor and its subsidiaries, associated undertakings and any other undertaking
in which Nikanor and/or such undertakings (aggregating their interest) have a
significant interest
This information is provided by RNS
The company news service from the London Stock Exchange
END
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