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Proposed unbundling of shares in Pioneer Coal Limited

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15 Dec 2008

SACOIL HOLDINGS LIMITED
(Formerly SA Mineral Resources Corporation Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
Share code: SCL     ISIN: ZAE000127460
("SACOIL" or "the company")                       

PROPOSED UNBUNDLING OF SHARES IN PIONEER COAL LIMITED ("PIONEER COAL")

CONDITIONAL ACQUISITION OF COAL EXPLORATION ASSETS BY PIONEER COAL

WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT  

Introduction
Further to the announcement dated 2 September 2008 which advised that the Directors of SacOil were, inter alia, considering proposals for the acquisition and unbundling to SacOil shareholders of coal exploration assets, the directors now advise that they have finalised proposals in terms of which:

  • Pioneer Coal, a newly formed company, will issue 313 291 612 ordinary shares to SacOil at a price   of R0.001 per share;
  • All the shares in Pioneer Coal held by SacOil will then be distributed to SacOil shareholders by way of an unbundling in terms of section 46 of the Income Tax Act, 1962 (Act 58 of 1962, as amended), on the basis of one Pioneer Coal share for each SacOil share held ("the unbundling");                     
  • Pioneer Coal will, immediately after the unbundling, acquire three mineral exploration companies which hold a number of mineral exploration rights on farms situated in Limpopo and Mpumalanga ("the coal exploration companies"); and
  • An application will be made for the listing of Pioneer Coal in the "Mining-Coal" sector of the JSE Limited ("the JSE")(Collectively, "the transactions").

Reasons for the transactions
On 26 March 2008 SacOil announced that it had reached agreement to invest in certain oil exploration rights in the Democratic Republic of the Congo ("the Oil Concessions"). Following this transaction ("the SacOil transaction"), the directors of SacOil have decided to focus the business of SacOil on that of the exploration and development of oil and gas resources.

The directors of SacOil decided that the coal exploration companies held strong potential for the shareholders of SacOil and accordingly decided to acquire the coalexploration companies for the benefit of SacOil shareholders via Pioneer Coal.

The unbundling will allow investors to attribute appropriate separate ratings to their holdings in SacOil and Pioneer Coal. It is expected that this will unlock any potential discount that may eventuate by retaining both companies under a single share structure. It will also enable the companies to develop separate management and funding structures that will be appropriate for the businesses they operate.

The unbundling
The unbundling will, subject to fulfilment of the suspensive conditions set out below, be affected in terms of section 46 of the Income Tax Act and section 90 of the Companies Act, by way of a reduction in SacOil`s share premium account. 

313 291 612 Pioneer Coal shares will be issued to SacOil shareholders prior to implementation of the SacOil transaction on the basis of one Pioneer Coal share for each SacOil share held. 

Acquisition of the coal exploration companies
Pioneer Coal has, in terms of agreements signed on Friday, 12 December 2008, agreed to acquire all the shares and loan accounts in Mudengu Resources Holdings (Proprietary) Limited, Bono Lithihi Investments Group (Proprietary) Limited and Solar Spectrum Trading 365 (Proprietary) Limited ("Solar") ("the acquisition").

The coal exploration companies have access to valid New Order Prospecting Rights ("new order rights") over, inter alia, some 35 farms totalling 48 160 hectares in the recognised Limpopo and Soutpansberg coalfields.

In addition, Pioneer Coal, through Solar, has applied for Prospecting Rights over 4 contiguous farms totalling 11 101 hectares in the Mpumalanga Coalfield. Pioneer Coal has mandated Venmyn Rand (Proprietary) Limited to complete a Competent Person`s report in terms of SAMREC Requirements.

The consideration for the acquisition is R102 780 309, to be settled by the issue to the vendors of 275,934,364 shares in Pioneer Coal at a price Of 30 cents per share, a cash payment of R2 000 000 to be paid on fulfilment Of the sus pensive conditions referred to below; and a deferred cash payment of R18 000 000, which cash payment will only be payable upon the proving by Pioneer Coal of reserves held by the coal exploration companies of not less than 67 million tonnes of proved coal reserves and 133 million tonnes of probable coal reserves.

The acquisition is subject to warranties normal for a transaction of this nature, including that the coal exploration companies have or alternatively will have valid title to the new order rights prior to the implementation of the acquisition.

The vendors of the coal exploration companies are, in the main, black persons including broadly based black organisations, led by Messrs Thaba Mufamadi and Ofhani Phaswana. Mr. Mufamadi has been appointed Chairman of Pioneer Coal.

It is intended that in conjunction with the unbundling and acquisition, Pioneer Coal will raise an appropriate amount of cash ("the capital raising").

Following the capital rising, it is expected that Pioneer Coal will continue to be majority black owned. 

Suspensive conditions
The transactions are subject to the fulfilment of the following principal.

Suspensive conditions:

  • SacOil shareholder approval;
  • Regulatory approvals, including those of the JSE and Exchange Control authorities;
  • The grant of a listing of Pioneer Coal by the JSE;
  • Consent by the Minister in terms of Section 11 of the Mineral and Petroleum Resource Development Act, 2002, to the extent required;
  • Completion of a Competent Person`s report on the coal exploration assets;
  • Completion by Pioneer Coal of a due diligence investigation into the coal exploration companies; and
  • Completion of the capital raising. 

Financial effects of the transactions
The table below sets out the unaudited pro forma financial effects of the transactions on a SacOil shareholder. The unaudited pro forma financial effects are presented for illustrative purposes only and because of their nature may not give a fair reflection of a SacOil shareholder`s financial position after the transactions. The directors of SacOil are responsible for the preparation of the unaudited pro forma financial effects.

The unaudited pro forma financial effects are based on the following Assumptions:

  1. The coal exploration companies have been acquired by Pioneer Coal;
  2. The mineral rights being acquired by Pioneer Coal through the acquisitions of the coal exploration companies have a value of R35.745 million as per the draft Competent Person`s Report prepared by Venmyn Rand (Pty) Ltd;
  3. The total number of shares that will be issued by Pioneer Coal in respect of the transactions will be 589 225 976, being 313 291 612 shares in respect of the unbundling and 275,934,364 shares in respect of the acquisition;
  4. The costs in relation to the transactions are estimated at R3 850 000; and
  5. The financial effects of the SacOil transaction have not been included in these financial effects because the unbundling will take place prior to the issue of shares under the SacOil transaction.

 

Before   (1)

After   the transactions (2)

% change

Loss per SacOil Share (cents)

 (5.68)

(5.68)

0.0

Headline loss per SacOil Share (cents)

(2.90)

(2.90)

0.0

Net asset value per SacOil Share (cents)

14.18

18.78

32.4

Tangible net asset Value per SacOil Share (cents)

14.18

14.18

0.0

Weighted average Number of shares in issue

 

 

167 592 528

167 592 528

Number of shares in issue

 

313 291 612

313 291 612

Notes:

  1. The “Before" financial information is based on SacOil`s published audited results for the twelve months ended 30 June 2008.
  2. The “After the transactions" net asset value and net tangible asset value per SacOil share are based on 1 Pioneer Coal share with a net asset value of 4.60 cents per Pioneer Coal share, which each SacOil shareholder will receive for every 1 SacOil share held and the net asset value and net tangible asset value per share of SacOil.

Withdrawal of cautionary announcement
In the light of the above and further to the cautionary announcements, the last of which was dated 4 December 2008, SacOil shareholders are advised that the cautionary announcement is withdrawn.

Midrand
15 December 2008

Sponsor
Sasfin Capital
A division of Sasfin Bank Limited

Date: 15/12/2008 17:20:20 Supplied by www.sharenet.co.za

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