GOLIATH GOLD MINING LTD
Incorporated in the Republic of South Africa
(Registration number 1933/004523/06) Share code: GGM ISIN: ZAE000154753
("Goliath Gold" or "the Company")
Incorporated in the Republic of South Africa
(Registration number 1984/006179/06)
("Gold One Africa")
Further to the cautionary announcement released on SENS on 29 July 2015 and the subsequent renewal thereof released on SENS on 9 September 2015, the board of directors of Gold One Africa and the independent directors of the Goliath Gold board ("Goliath Gold Independent Board") are pleased to announce that Gold One Africa has made a firm intention offer ("Offer") to acquire all the Goliath Gold ordinary shares that Gold One Africa does not already own, being a total of
41 247 658 ordinary shares ("Scheme Shares") ("Proposed Transaction"), by way of a scheme of
arrangement ("Scheme") in terms of section 114 of the Companies Act, 2008 (Act 71 of 2008), as amended, (the "Companies Act"), to be proposed by the Goliath Gold Independent Board between Goliath Gold and the holders of Goliath Gold Shares ("Goliath Gold Shareholders"). In this regard, Gold One Africa and Goliath Gold have concluded a written transaction implementation agreement dated 21 September 2015 ("Implementation Agreement") in relation to the Proposed Transaction.
The purpose of this joint firm intention announcement ("Firm Intention Announcement") is to
advise Goliath Gold Shareholders of the terms and conditions of the Offer.
In terms of the Offer, Goliath Gold Shareholders can, if the Scheme is implemented, elect to receive for each Scheme Share held by them on the Scheme consideration record date, either:
R1.00 per Scheme Share on the date that the Scheme is implemented ("Scheme
Implementation Date") ("Immediate Cash Payment"); or R1.60 per Scheme Share on the business day immediately after the expiry of a period of 18 months calculated with effect from and including the day after the Scheme Implementation Date
("Closing Date") ("Deferred Cash Payment"); or
any combination of the Immediate Cash Payment and the Deferred Cash Payment, in such ratio as may be elected ("Combination Cash Payment"),
(collectively the "Transaction Consideration").
Goliath Gold Shareholders who do not make an election to receive either the Immediate Cash Payment, the Deferred Cash Payment or the Combination Cash Payment timeously, will be deemed to have elected to receive the Immediate Cash Payment for all of their Scheme Shares.
The rationale behind Goliath Gold Shareholders being afforded the option to receive, at their election, either the Immediate Cash Payment, the Deferred Cash Payment, or the Combination Cash Payment originates from the initial intention of Gold One Africa, which is an indirectly wholly-
owned subsidiary of Gold One International (Cayman Islands) ("Gold One International"), to make an offer in terms of which the equivalent of the Deferred Cash Payment amount is converted into Gold One International shares ("Conversion") at a future point in time in the event of a potential listing of that company on the Hong Kong Stock Exchange. However, given current market conditions abroad and the complexities of such Conversion, this option was re-considered and the decision was taken to make a straightforward deferred cash offer while maintaining the original timeframe and pricing pertaining to the Conversion.
Goliath Gold, which is a South African mining exploration company listed on the JSE Limited
("JSE"), was created by Gold One Africa via the 2012 reverse takeover of White Water Resources Limited and the acquisition by the then White Water Resources Limited of the business of Gold One Africa comprising the Sub Nigel new order mining right and the Spaarwater, Vlakfontein and West Vlakfontein prospecting rights ("Megamine Assets"). At the time of the acquisition of the Megamine Assets, the Wit Nigel prospecting right was already held by White Water Resources Limited.
Gold One Africa holds 72.0% of the issued share capital of Goliath Gold. The funding which has enabled Goliath Gold and its subsidiaries to complete extensive exploration and geological modelling of the East Rand Basin ("East Rand") has been provided by the Gold One International group of companies ("Gold One Group").
The business of Goliath Gold is, through a management agreement, controlled and managed by Gold One Africa which owns a mining operation and two prospecting rights adjacent to Goliath Gold's East Rand exploration area.
The finalisation of the transaction between Goliath Gold and the joint provisional liquidators of the Pamodzi East Rand Group Companies in 2013, in terms of which Goliath Gold acquired certain historical mining and geological data and was granted two additional prospecting rights, provided the Company with a significant portfolio of prospecting rights across the East Rand. Accordingly, Goliath Gold's strategic focus has moved away from the deeper Megamine Assets to the exploration of low capital, near-cash generative projects. This change has resulted in an increase of approximately 40% in the Company's East Rand resource estimate, as set out in Goliath Gold's financial results for the year ended 31 December 2014 which were announced on SENS on 31
March 2015.
The board of directors of Gold One Africa believes that an increased focus by management on the aforementioned opportunities within the Gold One Group, outweighs the current value in maintaining Goliath Gold's listing.
While Goliath Gold's market capitalisation as at 18 September 2015, being the last trading day prior to signature of the Implementation Agreement, was approximately R221 million, the Company's outstanding loan balance to the Gold One Group amounted to approximately R125 million as at 31 December 2014 and R181 million as at 30 June 2015.
In addition, with Stellar Capital Partners Limited holding 21.89% of the issued share capital of Goliath Gold, trading of the Company's Shares on the JSE is very illiquid given that two Shareholders hold approximately 94% of Goliath Gold's issued share capital. Accordingly, should the Scheme be implemented, Goliath Gold minority Shareholders will be provided with the opportunity to realise their investments by exiting an illiquid share.
4.1. The Scheme will be subject to the fulfilment (or waiver, as the case may be), of the following conditions precedent on or before 31 December 2015 ("Longstop Date"), or such later date as Gold One Africa and Goliath Gold may agree to in writing:
4.1.1. the independent expert as referred to in section 114(2) of the Companies Act
("Independent Expert") appointed by Goliath Gold issuing a report dealing with the matters set out in section 114(3) of the Companies Act and expressing an opinion on whether the Offer is fair and reasonable;
4.1.2. the Goliath Gold Board having passed such resolutions as may be necessary in terms of the regulations issued in terms of sections 120 and 223 of the Companies Act ("Takeover Regulations") to approve the Proposed Transaction;
4.1.3. the resolutions required to implement the Scheme, as contemplated in section
115(2) of the Companies Act, having been approved by the requisite majority of
Goliath Gold Shareholders;
4.1.4. not more than 5%, being a total of 2 062 383 Scheme Shares, of the Goliath Gold
Shareholders voting at the meeting to be convened to approve the Scheme
("Scheme Meeting"), exercising their rights of appraisal under section 164 of the
Companies Act;
4.1.5. should the implementation of the Proposed Transaction be subject to approval by a court in terms of the provisions of section 115(2)(c) of the Companies Act, such approval being obtained; and
4.1.6. the requisite unconditional written approvals having been obtained from, inter alia, all governmental and regulatory bodies, including but not limited to:
4.1.6.1. approval by the JSE;
4.1.6.2. the issue by the Takeover Regulation Panel ("TRP") of a compliance certificate contemplated in section 121(b)(i) of the Companies Act;
4.1.6.3. approval by the South African Reserve Bank ("SARB"); and
4.1.6.4. approval by the National Development and Reform Commission, the Ministry of Commerce, the State Administration of Foreign Exchange and the State-owned Assets Supervision and Administration Commission of the State Council of the People's Republic of China, to the extent that any such approval is required.
To date, irrevocable undertakings to vote in favour of the Scheme have been received from Stellar Capital Partners Limited, a Goliath Gold Shareholder holding in aggregate 32 311 931 Goliath Gold Shares, representing 78.34% of the voting power if all Scheme Shares are voted at the Scheme Meeting or any adjournment thereof.
6. GUARANTEES AND CONFIRMATIONS TO THE TAKEOVER REGULATION PANEL
FirstRand Bank Limited, acting through its Rand Merchant Bank Division, and ENSafrica, situated at 1 North Wharf Square, Loop Street, Foreshore, Cape Town, being Gold One Africa's legal
advisors, have respectively delivered an irrevocable, unconditional bank guarantee in the amount of R51 699 089.60 ("Cash Guarantee") and an irrevocable, unconditional confirmation that R14 297 163.20 is being held in escrow ("Cash Confirmation"), to the TRP in compliance with regulations 111(4) and 111(5) of the Takeover Regulations. The Cash Guarantee and the Cash Confirmation comprise the maximum possible Transaction Consideration payable in terms of the Scheme.
The two executive directors of Goliath Gold hold 3 200 000 Goliath Gold share options (with a strike price of R1.94 each) under the Goliath Gold Share Incentive Scheme ("Share Options"). These executive directors, together with the company secretary of Goliath Gold (who holds
1 200 000 Share Options) and management, employees and past employees of the Group (who hold 4 935 000 Share Options) have elected to receive a settlement offer of R0.20 per Share Option for the cancellation of all their Share Options upon finalisation of the Scheme. The total settlement value of the Share Options in the amount of R1 867 000.00 is being held in escrow with ENSafrica Cape Town, being the legal advisors to Gold One Africa.
Following implementation of the Scheme, application will be made to the JSE to terminate the listing of the Goliath Gold Shares on the JSE.
9. SHAREHOLDING IN GOLIATH GOLD AND ACTING AS PRINCIPALGold One Africa, which, as previously stated, holds 72.0% of the Goliath Gold Shares, confirms that it is the ultimate proposed purchaser of all the Goliath Gold Shares and that it is not acting as agent or broker for, any other party.
10. RECOMMENDATION AND INDEPENDENT EXPERT OPINION
The Goliath Gold Independent Board has appointed BDO Corporate Finance Proprietary Limited as the Independent Expert, as required in terms of section 114(2) of the Companies Act and the Takeover Regulations, to issue a report dealing with the matters set out in section 114(3) of the Companies Act and to express an opinion on whether the Offer is fair and reasonable.
The contents of the Independent Expert's advice and opinion and the final views of the Goliath Gold Independent Board will be detailed in the circular to Goliath Gold Shareholders relating to the Scheme ("Scheme Circular").
Details of the Scheme and Proposed Transaction will be included in the Scheme Circular, which will contain, inter alia, details of the Scheme, a notice of the Scheme Meeting, a form of proxy, and a form of election, surrender and transfer. The Scheme Circular is expected to be distributed to Goliath Gold Shareholders on or about 15 October 2015.
The salient dates pertaining to the Scheme will be released on SENS and published in the press prior to the distribution of the Scheme Circular.
The Goliath Gold Independent Board accepts responsibility for the information contained in this Firm Intention Announcement to the extent that it relates to Goliath Gold. To the best of its knowledge and belief, the information contained in this Firm Intention Announcement is true and nothing has been omitted that is likely to affect the import of the information.
13. GOLD ONE AFRICA RESPONSIBILITY STATEMENTThe board of directors of Gold One Africa accepts responsibility for the information contained in this Firm Intention Announcement to the extent that it relates to Gold One Africa. To the best of their knowledge and belief, the information contained in this Firm Intention Announcement is true and nothing has been omitted that is likely to affect the import of the information.
14. WITHDRAWAL OF CAUTIONARY
Following the release of this announcement, Shareholders are advised that caution is no longer required when dealing in the Company's securities.
Johannesburg
22 September 2015
Merchantec Capital
Independent ExpertBDO Corporate Finance Proprietary Limited
Legal Adviser to Goliath Gold
ENSafrica
150 West Street, Sandton
Johannesburg, 2196
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