07:00 London, 09:00 Helsinki, 30 September 2010 - Ruukki Group Plc, Stock
Exchange Release
RECOMMENDED CASH OFFER FOR CHROMEX MINING PLC
Chromex Shareholders and holders of Chromex Warrants should not make any
investment decision in relation to Chromex Shares or Chromex Warrants except on
the basis of the information in the Offer Document which is proposed to be
published by Synergy Africa in due course
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
ANY RESTRICTED JURISDICTION INCLUDING THE UNITED STATES, AUSTRALIA, CANADA OR
JAPAN
Embargoed until 7.00 a.m. UK time, 9.00 a.m. Finnish time on 30 September 2010
30 September 2010
RECOMMENDED CASH OFFER
by
Synergy Africa Limited
a company 51 per cent. owned by Ruukki Group Plc and 49 per cent. owned by
Kermas Limited
for
Chromex Mining Plc
Summary of the Offer
- The boards of Ruukki, Kermas and Chromex are today pleased to announce that
they have reached agreement on the terms of a recommended cash offer by Synergy
Africa to acquire the entire issued and to be issued share capital of Chromex.
- Synergy Africa is a newly incorporated company, 51 per cent. owned by Ruukki
and 49 per cent. owned by Kermas, which has been established for the purposes of
making the Offer.
- The Offer will be on the basis of 36.5 pence per Chromex Share.
- The Offer values the entire issued and to be issued share capital of Chromex
at approximately £37.0 million and represents:
- a premium of 82.5 per cent. to the Closing Price of 20 pence per Chromex Share
on 14 July (being the last Business Day prior to the commencement of the Offer
Period); and
- a premium of 83.4 per cent. to the average Closing Price during the 90 day
trading period up to and including 14 July 2010 (being the last Business Day
prior to the commencement of the Offer Period).
- Synergy Africa also intends to make an offer to acquire the Chromex Warrants
on the basis of 16.5 pence per Chromex Warrant in cash and will make appropriate
proposals to holders of Chromex Share Options as soon as practicable after the
Offer Document has been published.
- The Chromex Directors, who have been so advised by Panmure Gordon, consider
the terms of the Offer and the Warrant Offer to be fair and reasonable. In
providing advice to the Chromex Directors, Panmure Gordon has taken into account
the Chromex Directors' commercial assessments. The Chromex Directors intend to
recommend unanimously that Chromex Shareholders accept the Offer and that
holders of Chromex Warrants accept the Warrant Offer, as the Chromex Directors
and their connected parties have irrevocably undertaken to do so in respect of
their own beneficial holdings in Chromex comprising, in aggregate, 10,050,000
Chromex Shares, representing in aggregate approximately 11.3 per cent. of the
existing issued share capital of Chromex.
- In addition, Synergy Africa has received irrevocable undertakings to accept,
or procure the acceptance of, the Offer from certain other Chromex Shareholders
in respect of, in aggregate, 35,975,000 Chromex Shares, representing
approximately 40.4 per cent. of Chromex's existing issued share capital.
Accordingly, Synergy Africa has received irrevocable undertakings to accept, or
procure the acceptance of, the Offer in respect of, in aggregate, 46,025,000
Chromex Shares, representing approximately 51.7 per cent. of Chromex's existing
issued share capital. Langa Trust has given an irrevocable undertaking to
exercise its subscription rights under the Langa Trust Convertible Loan
Subscription Agreement and accept the Offer in respect of the resulting Chromex
Shares acquired by it, after the Offer has been declared or otherwise becomes
unconditional in all respects. Further details of the irrevocable undertakings
are set out in Appendix III to the Announcement including details of the
circumstances in which each of the irrevocable undertakings will lapse.
This summary should be read in conjunction with, and is subject to, the full
text of the following Announcement (including its appendices). Certain
information on Chromex, Ruukki, Kermas and Synergy Africa is set out in the
Announcement together with the conditions and certain terms of the Offer which
are set out in Appendix I. Appendix II contains the sources and bases of certain
information used in this summary and in the following Announcement. Appendix III
gives more detail on the irrevocable undertakings received by Synergy Africa.
Appendix IV contains definitions of certain terms used in this summary and the
following Announcement.
Further information on the Offer, Chromex, Ruukki, Kermas and Synergy Africa,
and the expected timetable of principal events will be set out in the Offer
Document which will be published as soon as practicable and, in any event,
except with the consent of the Panel, within 28 days of this Announcement.
Commenting on the Offer, Alwyn Smit, Chief Executive Officer of Ruukki, said:
“The acquisition of Chromex is a logical transaction as it achieves all three of
our strategic objectives; it completes the vertical integration of our South
African business, it increases our production capacity and it expands our market
share. By acquiring an accessible, sizeable resource base and a producing mine
at Stellite, we are consolidating our presence in one of the world's premier
chromite mining regions, adding immediate value to our existing operations and
laying the foundations for future growth.
Looking ahead to the medium term, Chromex provides a critical building block for
our processing growth plans, particularly the construction of two 70MW DC
furnaces, which will have a planned combined annual capacity of up to 280,000
tonnes, and we will be examining the opportunity for building these DC furnaces
at Stellite.”
Commenting on the Offer, Russell Lamming, Chief Executive of Chromex, said:
“Naturally we are delighted to have received this all cash offer for Chromex.
Chromex has developed into a cash generative chrome producer in southern Africa
with assets that now require further investment and returns on this investment
will take several years. In addition to the large premium to Chromex's recent
share price, the offer removes the uncertainties inherent in any further
investment by Chromex shareholders, who will be achieving a significant and
certain return on their investment immediately. I am very pleased to be able to
announce this offer and to recommend it to our shareholders.”
ENQUIRIES
Ruukki Group Plc / Synergy Africa Limited
Alwyn Smit Tel: +44 (0)20 7368 6763
Alex Buck, IR Tel: +44(0)7932 740 452
Investec Bank plc (financial advisers to Ruukki and Synergy Africa)
David Currie Tel: +44(0)20 7597 5970
Patrick Robb
Daniel Adams
Stephen Cooper
Pelham Bell Pottinger (PR advisers for Ruukki and Synergy Africa)
Charles Vivian Tel: +44 (0)20 7861 3126
James MacFarlane Tel: +44 (0)20 7861 3864
Chromex Mining plc
Russell Lamming Tel: +44 (0) 7810 870587
Brian Moritz Tel: +44 (0) 7976 994300
Panmure Gordon (UK) Limited (financial advisers to Chromex)
Dominic Morley Tel: +44 (0) 20 7459 3600
Callum Stewart
Grishma Patel
St Brides Media & Finance (PR advisers for Chromex)
Hugo de Salis Tel: +44 (0) 20 7236 1177
Felicity Edwards
A conference call for investors, analysts and media will be held at 10.00 UK
time today, 30 September 2010 and the presentation is available on the Ruukki
website at www.ruukkigroup.fi. To access the call, please dial-in at least 10
minutes beforehand and quote the reference: 720046#
UK Toll-Free 0800 376 4751
Finland Toll-Free 0800 115 351
South Africa Toll-Free 0800 983 092
International Toll +44 (0)20 7075 6551
A replay facility will be available for one week after the call, using the
reference: 275785#, please dial:
UK Toll-Free 0808 238 9699
International Toll +44 (0)20 3364 5943
The Offer Document and (in the case of Chromex Shares or Chromex Warrants held
in certificated form) the relevant Form of Acceptance will be posted to Chromex
Shareholders and holders of Chromex Warrants as soon as practicable and, in any
event, except with the consent of the Panel, within 28 days of this
Announcement, other than in relation to a Restricted Jurisdiction. A copy of the
Offer Document will also be made available on Chromex's and Ruukki's websites.
---
The Chromex Directors accept responsibility for the information contained in
this Announcement relating to the Chromex Group, themselves and their immediate
families and connected persons. The Synergy Africa Directors, the Ruukki
Directors and the Kermas Directors each accept responsibility for all of the
other information contained in this Announcement. To the best of the knowledge
and belief of the Synergy Africa Directors, the Ruukki Directors, the Kermas
Directors and the Chromex Directors (who have taken all reasonable care to
ensure that such is the case) the information contained in the following
Announcement for which they are respectively responsible is in accordance with
the facts and does not omit anything likely to affect the import of such
information.
Investec Bank plc, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Ruukki and Synergy
Africa and no one else in connection with the Offer and the Warrant Offer and
will not be responsible to anyone other than Ruukki and Synergy Africa for
providing the protections afforded to clients of Investec Bank plc or for
providing advice in connection with the Offer and the Warrant Offer.
Panmure Gordon (UK) Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for Chromex
and no one else in connection with the Offer and the Warrant Offer and will not
be responsible to anyone other than Chromex for providing the protections
afforded to clients of Panmure Gordon (UK) Limited or for providing advice in
relation to the Offer and the Warrant Offer.
The release, publication or distribution of the following Announcement in
jurisdictions other than the United Kingdom may be restricted by law and,
therefore, any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about, and observe, any
applicable requirements. The following Announcement has been prepared in
accordance with English law and the Code and information disclosed may not be
the same as that which would have been prepared in accordance with the laws of
jurisdictions outside England.
The following Announcement does not constitute an offer or an invitation to
purchase or subscribe for any securities or the solicitation of any vote or
approval in any jurisdiction pursuant to the Offer, the Warrant Offer or
otherwise. The Offer and the Warrant Offer will be made solely by means of the
Offer Document, an advertisement to be published in the London Gazette and the
Form of Acceptance (in respect of Chromex Shares in certificated form), which
will contain the full terms and conditions of the Offer and the Warrant Offer,
including details of how the Offer and the Warrant Offer may be accepted. Any
acceptance or other response to the Offer or the Warrant Offer should be made
only on the basis of the information in the Offer Document and the Form of
Acceptance (in the case of Chromex Shares in certificated form).
Unless otherwise determined by Synergy Africa and permitted by applicable law
and regulation, the Offer and the Warrant Offer will not be made, directly or
indirectly, in or into, or by the use of the mail or by any means or
instrumentality (including, without limitation, telephonically or
electronically) of interstate or foreign commerce, or any facility of a national
securities exchange, of a Restricted Jurisdiction (including the United States,
Canada, Australia or Japan) and the Offer and the Warrant Offer will not be
capable of acceptance by any such use, means, instrumentality or facility or
from within a Restricted Jurisdiction. Accordingly, copies of the following
Announcement are not being, and must not be, directly or indirectly, mailed or
otherwise forwarded, distributed or sent in or into or from a Restricted
Jurisdiction and persons receiving the following Announcement (including,
without limitation, custodians, nominees and trustees) must not mail or
otherwise forward, distribute or send it in or into or from a Restricted
Jurisdiction. Doing so may render invalid any purported acceptance of the Offer
or the Warrant Offer. The availability of the Offer and the Warrant Offer to
persons who are not resident in the United Kingdom may be affected by the laws
of the relevant jurisdictions. Persons who are not resident in the United
Kingdom should inform themselves about and observe any applicable requirements.
Under Rule 8.3(a) of the Code, any person who is “interested” in 1 per cent. or
more of any class of “relevant securities” of an offeree company or of any paper
offeror (being any offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash) must make an
“Opening Position Disclosure” following the commencement of the “offer period”
and, if later, following the announcement in which any paper offeror is first
identified. An “Opening Position Disclosure” must contain details of the
person's interests and short positions in, and rights to subscribe for, any
“relevant securities” of each of (i) the offeree company and (ii) any paper
offeror(s). An “Opening Position Disclosure” by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 pm (London time) on the 10th business
day following the commencement of the “offer period” and, if appropriate, by no
later than 3.30 pm (London time) on the 10th business day following the
announcement in which any paper offeror is first identified. Relevant persons
who “deal” in the” relevant securities” of the offeree company or of a paper
offeror prior to the deadline for making an “Opening Position Disclosure” must
instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Takeover Code, any person who is, or
becomes,”interested” in 1 per cent. or more of any class of “relevant
securities” of the offeree company or of any paper offeror must make a “Dealing
Disclosure” if the person “deals” in any relevant securities of the offeree
company or of any paper offeror. A “Dealing Disclosure” must contain details of
the “dealing“ concerned and of the person's interests and short positions in,
and rights to subscribe for, any “relevant securities” of each of (i) the
offeree company and (ii) any paper offeror, save to the extent that these
details have previously been disclosed under Rule 8. A “Dealing Disclosure” by a
person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London
time) on the business day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a paper offeror, they will be deemed to be a
single person for the purpose of Rule 8.3.
“Opening Position Disclosures” must also be made by the offeree company and by
any offeror and “Dealing Disclosures” must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see Rules
8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities “Opening Position Disclosures” and “Dealing Disclosures” must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to make
an “Opening Position Disclosure” or a “Dealing Disclosure”, you should contact
the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website.
Copies of this Announcement can be found at Ruukki's and Chromex's websites at
www.ruukkigroup.fi and www.chromexmining.co.uk respectively.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
ANY RESTRICTED JURISDICTION INCLUDING THE UNITED STATES, AUSTRALIA, CANADA OR
JAPAN
Embargoed until 7.00 a.m. UK time, 9.00 a.m. Finnish time on 30 September 2010
30 September 2010
RECOMMENDED CASH OFFER
by
Synergy Africa Limited
a company 51 per cent. owned by Ruukki Group Plc and 49 per cent. owned by
Kermas Limited
for
Chromex Mining Plc
1. Introduction
The boards of Ruukki, Kermas and Chromex are today pleased to announce the terms
of a recommended cash offer to be made by Synergy Africa, to acquire the entire
issued and to be issued ordinary share capital of Chromex.
2. The Offer
The Offer, which will be subject to the conditions and further terms set out in
Appendix I to this Announcement, in the Offer Document and (in respect of
Chromex Shares in certificated form only) in the Form of Acceptance, will be
made by Synergy Africa, on the following basis:
36.5 pence in cash for each Chromex Share
The Offer values the entire issued and to be issued share capital of Chromex at
approximately £37.0 million.
At 36.5 pence, the Offer represents:
- a premium of 82.5 per cent. to the Closing Price of 20 pence per Chromex Share
on 14 July (being the last Business Day prior to the commencement of the Offer
Period); and
- a premium of 83.4 per cent. to the average Closing Price during the 90 day
trading period up to and including the 14 July 2010 (being the last Business Day
prior to the commencement of the Offer Period).
The Offer will be conditional upon, inter alia:
- the Offer becoming unconditional as to acceptances;
- Ruukki Shareholders approving the Related Party Transaction;
- South African competition clearance; and
- written confirmation from the South African Department of Mineral Resources
that the acquisition resulting from the implementation of the Offer will not
require the approval of the Minister of Mineral Resources under section 11 of
the Minerals and Petroleum Resources development Act, No.28 of 2002 of South
Africa (the “MPRD Act”).
Details of the conditions and certain further terms of the Offer are set out
below and in Appendix I to this Announcement.
Synergy Africa also intends to make an offer to acquire the Chromex Warrants on
the basis of 16.5 pence in cash for each Chromex Warrant held. This represents
the difference between the 36.5 pence per Chromex Share payable under the Offer
and the subscription price of 20 pence payable on exercise of the Chromex
Warrants. The offer for the Chromex Warrants will be conditional only on the
Offer becoming or being declared unconditional in all respects.
The expected timetable of principal events will be set out in the Offer
Document, which will, together with the Form of Acceptance, except with the
consent of the Panel, be posted within 28 days of this Announcement.
3. Irrevocable undertakings
The Chromex Directors and their connected parties have entered into irrevocable
undertakings to accept, or procure the acceptance of, the Offer in respect of
their beneficial interests in Chromex Shares amounting, in aggregate, to
10,050,000 Chromex Shares, representing approximately 11.3 per cent. of the
existing issued ordinary share capital of Chromex.
Synergy Africa has also received undertakings from certain other Chromex
Shareholders to accept the Offer in respect of, in aggregate, 35,975,000 Chromex
Shares, representing approximately 40.4 per cent. of the existing issued share
capital of Chromex. Langa Trust has given an irrevocable undertaking to exercise
its subscription rights under the Langa Trust Convertible Loan Subscription
Agreement and accept the Offer in respect of the resulting Chromex Shares
acquired by it, after the Offer has been declared or otherwise becomes
unconditional in all respects.
These undertakings will lapse and be of no effect if, inter alia, the Offer does
not become or is not declared unconditional in all respects. All of these
undertakings remain binding, even in the event of a higher competing offer for
Chromex, unless the Offer lapses or is withdrawn.
Further details of these irrevocable undertakings are set out in Appendix III to
this Announcement.
4. Financing the Offer
Full acceptance of the Offer, assuming the exercise of all outstanding Chromex
Warrants, all options under the Chromex Share Options and the conversion of the
Langa Trust Convertible Loan (including accrued interest), will result in the
payment of approximately £37.0 million in cash. The cash consideration payable
by Synergy Africa under the terms of the Offer will be funded using the cash
resources of Ruukki and Kermas, a loan arrangement between Kermas and Ruukki
Holdings and the committed facilities of Synergy Africa made available to
Synergy Africa through shareholder loan arrangements between Synergy Africa and
Ruukki Holdings and Synergy Africa and Kermas.
Investec Bank plc (in its capacity as financial adviser to Synergy Africa)
confirms that it is satisfied that sufficient resources are available to Synergy
Africa to enable the satisfaction in full of the cash consideration payable as a
result of full acceptance of the Offer.
5. Information on Synergy Africa, Ruukki and Kermas
Synergy Africa is a newly incorporated joint venture company incorporated in
England, 51 per cent. owned by Ruukki Holdings and 49 per cent owned by Kermas,
which has been established for the purposes of making the Offer. Synergy Africa
has not traded to date. The directors of Synergy Africa are Alwyn Smit, Alistair
Ruiters and Dr. Danko Koncar.
Ruukki and Kermas entered into a relationship agreement on 30 June 2010. The
intention behind this agreement was, inter alia, to assist in the execution of
Ruukki's strategy to operate as a vertically integrated mine-to-metals producer.
In line with this relationship agreement, and to provide certainty of funding,
Ruukki, through its wholly-owned subsidiary Ruukki Holdings, and Kermas have
entered into the joint venture. Further details on the joint venture arrangement
between Ruukki and Kermas in relation to Synergy Africa and the existing
Relationship Agreement between Ruukki and Kermas will be set out in the Offer
Document.
Information on Ruukki
Ruukki Group Plc is a growing, mid-tier natural resources company with an
integrated mining and minerals processing business focused on the supply of
specialist products to the stainless steel and steel industries, which has
operations in South Africa, Turkey, Germany and Malta, and a wood processing and
house building business in Finland. The company is listed on Nasdaq OMX
Helsinki (ticker: RUG1V) and has a premium listing on the Main Market of the
London Stock Exchange (ticker: RKKI).
Mining and Minerals Businesses
In 2008, Ruukki diversified into the mining and minerals processing industry
with the acquisition of the specialised European mining and minerals processing
business from Kermas. Prior to this, the focus had been as a Finnish-based group
with interests in a variety of sectors, including house building and wood
processing.
The European mining and minerals processing business currently comprises a 98.74
per cent. holding in Turk Maadin Sirketi A.S. (“TMS”), a Turkish company; a 100
per cent. holding in the Maltese sales and marketing company, RCS Limited
(“RCS”); and a long-term ferrochrome toll manufacturing agreement with the
German company, Elektrowerk-Weisweiler GmbH (“EWW”).
In May 2009, Ruukki further expanded its mining and minerals processing
interests through the acquisition of an 84.9 per cent. holding in the South
African minerals processing company Mogale Alloys (Proprietary) Limited
(“Mogale”).
Ruukki's mining and mineral processing business produces a diverse range of
products including specialised low carbon and ultralow carbon ferrochrome,
charge chrome ferrochrome, silico manganese, chromium-iron-nickel alloy
(stainless steel alloy) and lumpy chrome ore. The end-products are distributed
internationally by Ruukki's marketing subsidiary, RCS, to customers operating in
the steel, stainless steel, automotive, aerospace and power plant industries
located in the USA, Brazil, China, India, Korea, Japan, Taiwan, Singapore,
Nigeria and South Africa, as well as a number of European countries.
On 1 September 2010, Ruukki announced two framework agreements with
Metallurgical Group Corporation (“MCC”) of China for the construction of two 70
MW DC furnaces, which have a planned combined annual capacity of up to 280,000
tonnes, and a 250 megawatt power plant in South Africa.
Wood processing and house building businesses
The Ruukki group's wood processing and house building businesses are divided
into three business areas; house building, sawmills and pallets. The operations
are located in Finland and the majority of end-products are sold within the
Finnish domestic market. During the fourth quarter of 2009 the Ruukki group
sold three of its sawmills. These operations are currently the subject of a
strategic review which is examining the best way to extract maximum value for
all Ruukki shareholders.
Information on Kermas
Kermas Limited is a private company incorporated in the British Virgin
Islands with registration number 504889, with interests in the minerals sector
and is a major shareholder of Ruukki with a 28.51 per cent. holding. Kermas is
owned 99 per cent. by Danica Zagmester, a cousin of Dr. Danko Koncar. Dr. Koncar
does not own any shares in Kermas and is an Executive Director of Ruukki.
History of Kermas
The Kermas group was one of the world's largest ferrochrome and chrome producing
groups prior to the sale of its interest in Samancor Chrome Limited (“Samancor
Chrome”). In addition to its mining and minerals processing activities, the
Kermas group has interests in other industries including real estate
investments.
In 2005, Kermas acquired a majority interest in Samancor Chrome, one of the
world's leading integrated ferrochrome producers and one of South Africa's
leading exporters of chemical-grade chromite, from Samancor Holdings
(Proprietary) Limited (“Samancor Holdings”), which was owned in a ratio of 60
per cent. to 40 per cent. by BHP Billiton and Anglo American Plc respectively.
Mogale, acquired by Ruukki in 2009, was at one stage part of Samancor Chrome.
The management of Palmiet Chrome led a black economic empowerment consortium to
acquire Palmiet Chrome, and renamed it Mogale Alloys at the same time as Kermas
acquired Samancor Chrome from Samancor Holdings.
Together with the BEE consortium, the Batho Barena Consortium, and its
international partners, Kermas successively transformed both the business and
the profitability of Samancor Chrome before disposing of its interest in
Samancor Chrome in November 2009. Dr. Danko Koncar, who has been a director of
Kermas since its incorporation, was the main architect of Samancor Chrome's
transformation during its time under Kermas's control. In connection with this
disposal, Dr. Danko Koncar resigned from the board of directors of Samancor
Chrome upon Kermas's disposal of its interest in Samancor Chrome and joined
Ruukki as Chief Executive Officer of the Group's minerals processing businesses.
He resigned this position in August 2010 when he was appointed Executive
Director responsible for new business and elected to the Ruukki board.
6. Information on Chromex
Chromex is a dedicated chrome production company established to acquire, control
and develop chromite mining and processing facilities. It currently has two key
mining assets located on the Bushveld Complex in South Africa, which between
them have a gross total chromite resource of approximately 41 million tonnes as
well as exploration claims in Zimbabwe.
The 271 hectare Stellite chrome project, located on the Western Limb of the
Bushveld complex in South Africa, has a New Order Mining Right which covers the
right to mine both chrome and Platinum Group Elements (“PGE”) and 31.9 million
tonnes of SAMREC compliant chrome resources comprising four seams, namely the
LG6, MG1, MG2 and MG4. All four seams outcrop on the property and it is
anticipated that around six million tonnes will be open cast. The open pit
operations at Stellite commenced production in July 2008.
Chromex has a New Order Mining Right over the Mecklenburg farm in the Limpopo
Province, South Africa, where it intends to mine chromite. Mecklenburg is
located on the Eastern Limb of the Bushveld Complex, well known for hosting much
of the world's known resources of platinum, but also a major source of chromite.
The LG-6 and LG-6A chromite reefs comprise approximately 9.1 million tonnes and
5.7 million tonnes of SAMREC compliant chrome resources and reserves
respectively (resources are inclusive of reserves).
During 2009, Chromex completed the construction of a processing facility at the
Stellite open cast chrome mine.
The commissioning of the first phase of the Stellite chrome beneficiation plant
was completed in August 2009 and by the beginning of November 2009 this facility
was able to operate at full design capacity, producing 42 per cent. and 44 per
cent. metallurgical grade chrome concentrates. All plant feed was sourced from
existing stockpiles at the Stellite mine. Due to ongoing demand, Chromex
recommenced mining operations at Stellite in January 2010.
Stellite currently produces approximately 20,000 run of mine (‘ROM') tonnes per
month, which is expected to increase to 40,000 ROM tonnes per month when the
dense media separation (‘DMS') circuit is installed at the beneficiation plant.
The DMS plant is due to be completed in the near future and is expected to
improve yields, margins and economic efficiencies. Importantly, in addition to
the capacity increase, Chromex will be in a position to market a sized lumpy
chrome product as well as the chemical and metallurgical grade concentrates.
In May 2010, Chromex acquired Waylox Mining (Private) Limited (“Waylox”), a
chrome company in Zimbabwe. Waylox has been operating in Zimbabwe since August
2008 after acquiring the Trixie and Prince of Wales claims located in the
prospective Darwendale area. The Darwendale area is located on the Great Dyke of
Zimbabwe which is host to significant chrome resources. The Trixie claims
contain economic grades of alluvial chrome resources. The current mineral
resources estimated on the 467ha Trixie project stands at approximately 1.9
million tonnes at an average modelled grade of 13.8 per cent chromite.
Development of Chromex's Mecklenburg project has been deferred pending
settlement of the legal dispute with Samancor Chrome over the Mining Rights.
Mecklenburg will be an underground mine, producing high grade ore from the LG6
and LG6A reefs, which outcrop at surface. Access to the mine will be via an
outcrop portal and access decline on the lower slopes of Serafa Hill, with
on-reef development and a hybrid trackless/conventional stope mining method. The
Mecklenburg mine design will be completed once the legal dispute has been
resolved.
During the year ended 30 September 2009, the Chromex's Group Income Statement
showed a loss before tax of £151,000 (2008 - loss before tax £1,406,000) and a
profit after tax of £195,000 (2008 - loss after tax £1,406,000). These results
reflect the fact that much of the year was taken up with the construction of the
Stellite processing plant, while producing sufficient chrome to provide positive
cash flow, and retaining valuable chrome resources in the ground pending an
upturn in prices.
The loss before and after tax for the six months ended 31 March 2010 was
£399,000 (2009 - profit before tax £81,000; profit after tax £47,000). This was
a period of reduced volumes and lower than expected recoveries as well as low
Rand based chrome prices.
The following tables provide financial information on Chromex which has been
extracted without adjustment from Chromex's financial statements.
Unaudited consolidated income statement
for the six months ended 31 March 2010
--------------------------------------------------------------------------------
| | 6 Months | 6 Months | Year ended |
| | ended 31 | ended 31 | 30 September |
| | March 2010 | March 2009 | 2009 |
--------------------------------------------------------------------------------
| | £'000 | £'000 | £'000 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Revenue | 964 | 1,613 | 2,016 |
--------------------------------------------------------------------------------
| Cost of sales | (683) | (1,068) | (1,204) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross (loss)/profit | 281 | 545 | 812 |
--------------------------------------------------------------------------------
| Administrative expenses | (668) | (500) | (993) |
--------------------------------------------------------------------------------
| Cost of bankable | - | (27) | (8) |
| feasibility study | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating (loss)/profit | (387) | 18 | (189) |
| before finance costs | | | |
--------------------------------------------------------------------------------
| Finance income | 7 | 63 | 38 |
--------------------------------------------------------------------------------
| Finance expense | (19) | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| (Loss)/profit before tax | (399) | 81 | (151) |
--------------------------------------------------------------------------------
| Taxation | - | (34) | 346 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| (Loss)/profit for the | (399) | 47 | 195 |
| period | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| (Loss)/profit per share | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Basic | (0.47)p | 0.06p | 0.23p |
--------------------------------------------------------------------------------
| Diluted | (0.47)p | 0.05p | 0.23p |
--------------------------------------------------------------------------------
Unaudited consolidated balance sheet
as at 31 March 2010
--------------------------------------------------------------------------------
| | 6 Months | 6 Months | Year ended |
| | Ended 31 | Ended 31 | 30 September |
| | March 2010 | March 2009 | 2009 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | £'000 | £'000 | £'000 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | |
--------------------------------------------------------------------------------
| Property, plant and | 10,438 | 6,824 | 9,699 |
| equipment | | | |
--------------------------------------------------------------------------------
| Deferred tax | 569 | 79 | 525 |
--------------------------------------------------------------------------------
| Intangible assets | - | 886 | - |
--------------------------------------------------------------------------------
| | 11,007 | 7,789 | 10,224 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | |
--------------------------------------------------------------------------------
| Inventories | 1,111 | 134 | 766 |
--------------------------------------------------------------------------------
| Trade and other receivables | 76 | 407 | 611 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | 1,406 | 2,270 | 1,182 |
--------------------------------------------------------------------------------
| Other debtors | 163 | - | - |
--------------------------------------------------------------------------------
| | 2,756 | 2,811 | 2,559 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 13,763 | 10,600 | 12,783 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity and liabilities | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity attributable to | | | |
| equity holders of the | | | |
| Company | | | |
--------------------------------------------------------------------------------
| Share capital | 850 | 850 | 850 |
--------------------------------------------------------------------------------
| Share premium | 9,120 | 9,120 | 9,120 |
--------------------------------------------------------------------------------
| Accumulated losses | (1,369) | (1,118) | (970) |
--------------------------------------------------------------------------------
| Exchange reserves | 1,747 | 423 | 1,180 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity | 10,348 | 9,275 | 10,180 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | |
--------------------------------------------------------------------------------
| Provisions | 383 | 399 | 353 |
--------------------------------------------------------------------------------
| Loans and borrowings | 2,320 | 734 | 1,724 |
--------------------------------------------------------------------------------
| | 2,703 | 1,133 | 2,077 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | |
--------------------------------------------------------------------------------
| Trade and other payables | 712 | 192 | 526 |
--------------------------------------------------------------------------------
| | 712 | 192 | 526 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity and liabilities | 13,763 | 10,600 | 12,783 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Chromex Mining plc |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group income statement |
--------------------------------------------------------------------------------
| for the year ended 30 September 2009 |
--------------------------------------------------------------------------------
| | 2009 | 2008 |
--------------------------------------------------------------------------------
| | £'000 | £'000 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Revenue | 2,016 | 440 |
--------------------------------------------------------------------------------
| Cost of sales | (1,204) | (204) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Gross Profit | 812 | 236 |
--------------------------------------------------------------------------------
| Administrative expenses | (993) | (956) |
--------------------------------------------------------------------------------
| Cost of bankable feasibility study | (8) | (46) |
--------------------------------------------------------------------------------
| Share Based Payments | - | (790) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Operating loss before finance costs | (189) | (1,556) |
--------------------------------------------------------------------------------
| Finance income | 38 | 151 |
--------------------------------------------------------------------------------
| Finance expense | - | (1) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Loss before tax | (151) | (1,406) |
--------------------------------------------------------------------------------
| Taxation | 346 | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/(loss) for the year | 195 | (1,406) |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Profit/ (loss) per share | | |
--------------------------------------------------------------------------------
| Basic and diluted | 0.23p | (1.94)p |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Chromex Mining plc |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Group and Company balance sheets |
--------------------------------------------------------------------------------
| as at 30 September 2009 |
--------------------------------------------------------------------------------
| | Group | Company |
--------------------------------------------------------------------------------
| | 2009 | 2008 | 2009 | 2008 |
--------------------------------------------------------------------------------
| | £'000 | £'000 | £'000 | £'000 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Assets | | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Property, plant and | 9,699 | 5,480 | 540 | 23 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Deferred tax | 525 | 106 | - | - |
--------------------------------------------------------------------------------
| Intangible assets | - | 886 | - | 519 |
--------------------------------------------------------------------------------
| Investments | - | - | 1,872 | 1,872 |
--------------------------------------------------------------------------------
| | 10,224 | 6,472 | 2,412 | 2,414 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | 766 | 123 | - | - |
--------------------------------------------------------------------------------
| Loans to subsidiary | - | - | 6,113 | 4,845 |
| companies | | | | |
--------------------------------------------------------------------------------
| Trade and other | 611 | 590 | 101 | 88 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Cash and cash | 1,182 | 2,566 | 898 | 2,271 |
| equivalents | | | | |
--------------------------------------------------------------------------------
| | 2,559 | 3,279 | 7,112 | 7,204 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total assets | 12,783 | 9,751 | 9,524 | 9,618 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Equity and liabilities | | | | |
--------------------------------------------------------------------------------
| Equity attributable to | | | | |
| equity holders of the | | | | |
| Company | | | | |
--------------------------------------------------------------------------------
| Share capital | 850 | 847 | 850 | 847 |
--------------------------------------------------------------------------------
| Share premium | 9,120 | 9,071 | 9,120 | 9,071 |
--------------------------------------------------------------------------------
| Accumulated losses | (970) | (1,165) | (493) | (361) |
--------------------------------------------------------------------------------
| Exchange reserves | 1,180 | 29 | - | - |
--------------------------------------------------------------------------------
| Total equity | 10,180 | 8,782 | 9,477 | 9,557 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Provisions | 353 | 286 | - | - |
--------------------------------------------------------------------------------
| Loans | 1,724 | 1 | - | - |
--------------------------------------------------------------------------------
| | 2,077 | 287 | - | - |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Trade and other | 526 | 682 | 47 | 61 |
| payables | | | | |
--------------------------------------------------------------------------------
| | 526 | 682 | 47 | 61 |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Total equity and | 12,783 | 9,751 | 9,524 | 9,618 |
| liabilities | | | | |
--------------------------------------------------------------------------------
7. Background to and reasons for the Offer
Ruukki's current operation in South Africa, Mogale, consists of processing
facilities only. Mogale does not have any security of chrome ore supply as ore
is procured from various sources on short term contracts.
Chromex's Stellite mine, located in one of the world's premier chromite mining
regions and, is in operation with all the necessary infrastructure in place. In
addition, Chromex has a total of 41 million tonnes of chrome resources, with new
order mining rights making it an attractive and logical acquisition target.
Stellite is located approximately 80 kilometres from Mogale.
Ruukki expects that the Offer will enable Ruukki to achieve its stated strategy
of increasing production capacity, expanding market share and vertically
integrating its whole business through:
a) vertical integration of the South African operations as Mogale, which will
secure its own, long term ore supply, thereby completing the business model of
mining, processing, sales and marketing;
b) expansion of Ruukki's production volumes as Chromex's Stellite mine is
currently in operation. In addition to the expected increase from 20,000 ROM
tonnes per month to 40,000 ROM tonnes per month when the DMS circuit is
installed, Ruukki believes there is an opportunity to further increase Chromex's
forecast monthly production rate over the short to medium term if the
underground development plans for Stellite and Mecklenburg are successfully
implemented;
c) supporting the planned increase in the production capacity of Ruukki's South
African operations through the additional, potential increase in the production
volume from Chromex's Stellite mine;
d) potential to increase Ruukki's processing capacity as there is the
opportunity for two DC furnaces to be built at the Stellite mine. Ruukki has
entered into a framework agreement with MCC of China for the construction of two
such DC furnaces. Ruukki has significant technological skill and experience in
successfully operating DC furnaces. Until such time as these furnaces are built,
any excess ore supply from Stellite will be exported to customers in China or
India;
e) consolidating Ruukki's presence in one of the world's premier chromite mining
regions and geographically diversifying into Zimbabwe with the Waylox project;
f) enabling synergies in the areas of operational expertise, human resources,
cost savings and efficiencies. Ruukki anticipates retaining most of Chromex's
operational team. It is expected that following completion, Ruukki will bring
in-house the sales and marketing operations which Chromex currently outsources;
and
g) diversifying Ruukki's product range with the production of chemical,
metallurgical, refractory and foundry grade concentrates and PGE by-products, as
well as excess ore supply available for export in the short to medium term.
Chromex's operations will benefit from Ruukki's management expertise and
knowledge in mining, minerals processing and sales and marketing expertise.
Ruukki and Kermas have entered into a joint venture and formed Synergy Africa in
order to facilitate the acquisition and subsequent holding of Chromex.
8. Background to and reasons for recommending the Offer
Since its admission to AIM in 2006, Chromex has developed an attractive base of
chrome-producing assets in southern Africa, most recently with its acquisition
of Waylox. Despite the recent turmoil in the industry and the wider global
economy, Chromex has had significant success in developing its business.
Chromex's strategy has resulted in the growth of Chromex to a stage where it is
appropriate to consider future steps for realising shareholder value. Although
the Chromex Directors believe that Chromex would have a strong future as an
independent business, they consider that the Offer represents an opportunity for
Chromex Shareholders to realise the value of their investment in Chromex at an
attractive premium to its prevailing market value as set out in paragraph 2
above. The Chromex Directors also believe that the Offer fully values the
Company's assets, operations and future prospects and represents an excellent
opportunity for Chromex Shareholders to realise a compelling value in cash for
their Chromex Shares, particularly given the future capital expenditure that
will be required to develop the business and the ongoing pressure on margin
caused by the strength of the South African Rand. Accordingly, the Chromex
Directors are unanimously recommending that Chromex Shareholders accept the
Offer and that holders of Chromex Warrants accept the Warrant Offer.
9. Related Party Transaction
Synergy Africa has been established as a joint venture company held 51 per cent.
by Ruukki and 49 per cent. by Kermas. Kermas holds 28.51 per cent of Ruukki's
issued shares. Accordingly, under the Listing Rules, the arrangements between
Kermas and Ruukki relating to the establishment and financing of Synergy Africa
(including the loan between Kermas and Ruukki Holdings) and the acquisition and
holding of Chromex Shares constitutes a Related Party Transaction requiring the
approval of Ruukki Shareholders (other than Kermas). A separate circular will be
made available to Ruukki Shareholders seeking their approval for the Related
Party Transaction by way of an ordinary resolution to be proposed at an
extraordinary general meeting (“EGM”). Ruukki is a Finnish public limited
liability company and, as such, the EGM will be convened and held in accordance
with Finnish laws. No approval is required from the shareholders of Kermas. The
Offer is conditional on the approval of the Related Party Transaction by Ruukki
Shareholders (other than Kermas).
Atkey Limited, Aida Djakov, Hino Resources Co. Ltd and Markku Kankaala have each
given an irrevocable undertaking to vote in favour of the Related Party
Transaction at the EGM in respect of, in aggregate, 86,645,653 Ruukki ordinary
shares, representing approximately 51.4 per cent. of Ruukki's voting rights at
the EGM.
10. Directors, management and employees of Chromex
Each of the Chromex Directors has agreed the terms on which they will resign
from the Chromex Board and the termination of their employment, conditional
upon, and with effect from the date the Offer becomes or is declared
unconditional in all respects. Graham Stacey will continue to work in Chromex's
southern African subsidiary.
Synergy Africa intends that once the Offer becomes unconditional in all
respects, the accrued employment rights, including pension rights, of all
management and employees of Chromex will be fully safeguarded.
Synergy Africa intends to continue the business of Chromex in broadly its
current form. There are currently no intentions regarding any major changes to
the business of Chromex, nor the disposal of Chromex or a material part of the
business of Chromex over the next 12 months. Ruukki expects to implement
Chromex's plans to increase production at Stellite from 20,000 tonnes per month
to around 40,000 tonnes per month and submit a mine plan for the development of
an underground mine. Ruukki also anticipates retaining most of Chromex's
operational team. Further details of Ruukki's plans for Chromex can be found
under paragraph 7 above.
11. Chromex Share Options and the Langa Trust Convertible Loan
The Offer will extend to any Chromex Shares which are issued or unconditionally
allotted and fully paid (or credited as fully paid) before the date on which the
Offer closes (or, subject to the Code, by such earlier date as Synergy Africa
may decide), including Chromex Shares issued pursuant to the exercise of Chromex
Share Options, Chromex Warrants, the subscription rights under the Langa Trust
Convertible Loan or otherwise.
Synergy Africa will make appropriate proposals to holders of Chromex Share
Options as soon as practicable after the Offer Document has been published. The
proposals will enable holders of Chromex Share Options to exercise their options
and subsequently accept the Offer in respect of the Chromex Shares acquired by
them on exercise. Alternatively holders of Chromex Share Options will be
entitled to elect to receive a cash payment equal to the gain that would
otherwise have been made on exercise of the relevant Chromex Share Option(s) and
receipt of 36.5 pence per Chromex Share under the Offer and adjusted for any
applicable tax deductions. This alternative proposal will be conditional on the
Offer becoming unconditional in all respects.
Under the terms of the Langa Trust Convertible Loan Subscription Agreement,
Langa Trust is entitled to subscribe for Chromex Shares in respect of the
outstanding principal and accrued interest under the Langa Trust Convertible
Loan at a strike price of 22 pence per Chromex Share, converted at the
prevailing ZAR/£ exchange rate with such subscription price being discharged by
ceding Langa Trust's repayment right under the Langa Trust Convertible Loan.
Langa Trust has given an irrevocable undertaking to exercise its subscription
rights under the Langa Trust Convertible Loan Subscription Agreement and accept
the Offer in respect of the resulting Chromex Shares acquired by it, after the
Offer has been declared or otherwise becomes unconditional in all respects. On
the basis of the five day average ZAR/£ exchange rate on the date immediately
preceding the date of this Announcement, the number of Chromex Shares which
would be issued to Langa Trust were it to have subscribed on the date
immediately preceding the date of this Announcement would be 9,049,239. The
exact number of Chromex Shares to which Langa Trust will become entitled will
depend on the timing of the subscription and the ZAR/£ exchange rate at the time
of the subscription.
Langa Trust is connected to Spruce Management, which is interested in 32,675,000
Chromex Shares, representing 36.7 per cent. of the current issued share capital
of Chromex.
12. Inducement fee and exclusivity agreement
As an inducement to Synergy Africa to make the Offer, Chromex has agreed to pay
Synergy Africa a cash fee of £370,277 (inclusive of value added tax, except to
the extent that such VAT is recoverable by Chromex), being one per cent. of the
value of the Offer, or such other amount as the Panel may agree, in certain
circumstances including if: (i) another offer for Chromex is received from a
third party which becomes or is declared wholly unconditional; (ii) the terms of
the recommendation of the Offer from the Chromex Directors are withdrawn,
adversely modified or qualified; or (iii) Chromex makes a direct or indirect
disposal of a material asset.
In addition, Chromex has undertaken not to solicit, initiate, encourage or enter
into any discussions, negotiations, agreements or understandings with any third
parties relating to a proposed sale or other disposal of Chromex Shares or any
material assets of Chromex (a "Competing Proposal"). Chromex will notify Ruukki
as soon as reasonably practicable in the event it is approached by a third party
in connection with a Competing Proposal subject to the statutory and fiduciary
duties and duties of confidentiality of the Chromex Directors and will notify
Ruukki immediately if any information is provided to a third party in connection
with a Competing Proposal.
The inducement fee and exclusivity agreement also contains a mutual undertaking
from Synergy Africa and Chromex to use reasonable endeavours to obtain the
written confirmation from the South African Department of Mineral Resources
referred to in condition (d) set out in Appendix I.
13. Recommendation
The Chromex Directors, who have been so advised by Panmure Gordon, consider the
terms of the Offer and the Warrant Offer to be fair and reasonable. In providing
advice to the Chromex Directors, Panmure Gordon has taken into account the
commercial assessments of the Chromex Directors. Accordingly, the Chromex
Directors unanimously intend to recommend that Chromex Shareholders accept the
Offer, and that holders of Chromex Warrants accept the Warrant Offer, as they
have irrevocably undertaken to do in respect of their beneficial holdings, and
those of their connected parties, amounting to, in aggregate, 10,050,000 Chromex
Shares, representing approximately 11.3 per cent. of the existing issued share
capital of Chromex.
14. Disclosure of interests in Chromex
Synergy Africa confirms that it is on the date of this Announcement making an
Opening Position Disclosure, setting out the details required to be disclosed by
it under Rule 8.1(a) of the Takeover Code. Save in respect of the irrevocable
undertakings referred to in paragraph 3 above, as at the close of business on 29
September 2010 (being the last Business Day prior to the date of this
Announcement) neither Synergy Africa, nor any directors of Synergy Africa, nor,
so far as Synergy Africa is aware, any person acting in concert with Synergy
Africa has: (i) any interest in or right to subscribe for any relevant
securities of Chromex, nor (ii) any short positions in respect of relevant
Chromex 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 purchase
or take delivery, nor (iii) borrowed or lent any relevant Chromex securities.
15. Further details of the Offer
The Chromex Shares will be acquired under the Offer fully paid and free from all
liens, equities, charges, encumbrances and other interests and together with all
rights attaching to them on or after the date of this Announcement, including
the right to receive all dividends and other distributions (if any) declared,
made or paid thereafter.
The Offer will extend to all Chromex Shares unconditionally allotted or issued
and fully paid on the date of the Offer (excluding any Chromex Shares already
owned by Synergy Africa and treasury shares except to the extent these cease to
be held as treasury shares before such date as Synergy Africa may determine) and
any Chromex Shares which are unconditionally allotted or issued and fully paid
(including pursuant to the exercise of Chromex Share Options, Chromex Warrants
or the subscription rights under the Langa Trust Convertible Loan) before the
date on which the Offer closes or such earlier date as Synergy Africa may,
subject to the Code, decide not being earlier than the date on which the Offer
becomes unconditional as to acceptances.
16. Overseas Shareholders
Unless otherwise determined by Synergy Africa and permitted by applicable law
and regulation, the Offer and the Warrant Offer will not be made, directly or
indirectly, in or into, or by the use of the mail or by any means or
instrumentality (including, without limitation, telephonically or
electronically) of interstate or foreign commerce, or any facility of a national
securities exchange, of a Restricted Jurisdiction (including the United States,
Canada, Australia or Japan) and the Offer and the Warrant Offer will not be
capable of acceptance by any such use, means, instrumentality or facility or
from within a Restricted Jurisdiction. Accordingly, copies of this Announcement
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in or into or from a Restricted Jurisdiction and
persons receiving this Announcement (including, without limitation, custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send it
in or into or from a Restricted Jurisdiction. Doing so may render invalid any
purported acceptance of the Offer or the Warrant Offer. The availability of the
Offer and the Warrant Offer to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Persons who
are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements. If you are in any doubt about your
position, you should consult your legal adviser in the relevant territory
without delay.
17. Compulsory acquisition, cancellation of admission of Chromex Shares to
trading on AIM and re-registration
If Synergy Africa receives acceptances under the Offer in respect of, and/or
otherwise acquires, 90 per cent. or more of the Chromex Shares to which the
Offer relates and the Offer becomes or is declared unconditional in all
respects, Synergy Africa intends to exercise its rights under sections 974 to
991 (inclusive) of the Act to acquire compulsorily any remaining Chromex Shares
following the Offer becoming or being declared unconditional in all respects.
When the Offer becomes or is declared unconditional in all respects, and subject
thereto, Synergy Africa intends to procure the making of an application by
Chromex for cancellation of the admission to trading of Chromex Shares on AIM. A
notice period of not less than 20 Business Days prior to the cancellation of
listing and trading will take effect after the Offer becomes or is declared
unconditional in all respects.
The cancellation of Chromex's admission to AIM will significantly reduce the
liquidity and marketability of any Chromex Shares not assented to the Offer and
their value may be affected in consequence.
18. General
The Offer Document and (in the case of Chromex Shares or Chromex Warrants held
in certificated form) the relevant Form of Acceptance will be posted to Chromex
Shareholders and holders of Chromex Warrants as soon as practicable and in any
event within 28 days of this Announcement, except with the consent of the Panel.
The bases and sources of certain financial information contained in this
Announcement are set out in Appendix II of this Announcement; further details of
the irrevocable undertakings received by Synergy Africa are set out in Appendix
III; and definitions of certain expressions used in this Announcement are
contained in Appendix IV of this Announcement.
ENQUIRIES
Ruukki Group Plc / Synergy Africa Limited
Alwyn Smit Tel: +44 (0)20 7368 6763
Alex Buck, IR Tel: +44(0)7932 740 452
Investec Bank plc (financial advisers to Ruukki and Synergy Africa)
David Currie Tel: +44(0)20 7597 5970
Patrick Robb
Daniel Adams
Stephen Cooper
Pelham Bell Pottinger (PR advisers to Ruukki and Synergy Africa)
Charles Vivian Tel: +44 (0)20 7861 3126
James MacFarlane Tel: +44 (0)20 7861 3864
Chromex Mining plc
Russell Lamming Tel: +44 (0) 7810 870587
Brian Moritz Tel: +44 (0) 7976 994300
Panmure Gordon (UK) Limited (financial advisers to Chromex)
Dominic Morley Tel: +44 (0)20 7459 3600
Callum Stewart
Grishma Patel
St Brides Media & Finance (PR advisers to Chromex)
Hugo de Salis Tel: +44 (0)20 7236 1177
Felicity Edwards
A conference call for investors, analysts and media will be held at 10.00 UK
time today, 30 September 2010 and presentation is available on the Ruukki
website at www.ruukkigroup.fi. To access the call, please dial-in at least 10
minutes beforehand and quote the reference: 720046#
UK Toll-Free 0800 376 4751
Finland Toll-Free 0800 115 351
South Africa Toll-Free 0800 983 092
International Toll +44 (0)20 7075 6551
A replay facility will be available for one week after the call, using the
reference: 275785#, please dial:
UK Toll-Free 0808 238 9699
International Toll +44 (0)20 3364 5943
The Offer Document and (in the case of Chromex Shares held in certificated form)
the Form of Acceptance will be posted to Chromex Shareholders and holders of
Chromex Warrants as soon as practicable and, in any event, except with the
consent of the Panel, within 28 days of this Announcement, other than in
relation to a Restricted Jurisdiction.
The Chromex Directors accept responsibility for the information contained in
this Announcement relating to the Chromex Group, themselves and their immediate
families and connected persons. The Synergy Africa Directors, the Ruukki
Directors and the Kermas Directors each accept responsibility for all of the
other information contained in this Announcement. To the best of the knowledge
and belief of the Synergy Africa Directors, the Ruukki Directors, the Kermas
Directors and the Chromex Directors (who have taken all reasonable care to
ensure that such is the case) the information contained in this Announcement for
which they are respectively responsible is in accordance with the facts and does
not omit anything likely to affect the import of such information.
Investec Bank plc, which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting exclusively for Ruukki and Synergy
Africa and no one else in connection with the Offer and the Warrant Offer and
will not be responsible to anyone other than Ruukki and Synergy Africa for
providing the protections afforded to clients of Investec Bank plc or for
providing advice in connection with the Offer and the Warrant Offer.
Panmure Gordon (UK) Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for Chromex
and no one else in connection with the Offer and the Warrant Offer and will not
be responsible to anyone other than Chromex for providing the protections
afforded to clients of Panmure Gordon (UK) Limited or for providing advice in
relation to the Offer and the Warrant Offer.
The release, publication or distribution of this Announcement in jurisdictions
other than the United Kingdom may be restricted by law and, therefore, any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom should inform themselves about, and observe, any applicable
requirements. This Announcement has been prepared in accordance with English law
and the Code 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 does not constitute an offer or an invitation to purchase or
subscribe for any securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the Offer, the Warrant Offer or otherwise. The Offer
and the Warrant Offer will be made solely by means of the Offer Document, an
advertisement to be published in the London Gazette and the Form of Acceptance
(in respect of Chromex Shares in certificated form), which will contain the full
terms and conditions of the Offer and the Warrant Offer, including details of
how the Offer and the Warrant Offer may be accepted. Any acceptance or other
response to the Offer or the Warrant Offer should be made only on the basis of
the information in the Offer Document and the Form of Acceptance (in the case of
Chromex Shares in certificated form).
Unless otherwise determined by Synergy Africa and permitted by applicable law
and regulation, the Offer and the Warrant Offer will not be made, directly or
indirectly, in or into, or by the use of the mail or by any means or
instrumentality (including, without limitation, telephonically or
electronically) of interstate or foreign commerce, or any facility of a national
securities exchange, of a Restricted Jurisdiction (including the United States,
Canada, Australia or Japan) and the Offer and the Warrant Offer will not be
capable of acceptance by any such use, means, instrumentality or facility or
from within a Restricted Jurisdiction. Accordingly, copies of this Announcement
are not being, and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in or into or from a Restricted Jurisdiction and
persons receiving this Announcement (including, without limitation, custodians,
nominees and trustees) must not mail or otherwise forward, distribute or send it
in or into or from a Restricted Jurisdiction. Doing so may render invalid any
purported acceptance of the Offer and the Warrant Offer. The availability of the
Offer and the Warrant Offer to persons who are not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Persons who
are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements.
Under Rule 8.3(a) of the Code, any person who is “interested” in 1 per cent. or
more of any class of “relevant securities” of an offeree company or of any paper
offeror (being any offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash) must make an
“Opening Position Disclosure” following the commencement of the “offer period”
and, if later, following the announcement in which any paper offeror is first
identified. An “Opening Position Disclosure” must contain details of the
person's interests and short positions in, and rights to subscribe for, any”
relevant securities” of each of (i) the offeree company and (ii) any paper
offeror(s). An “Opening Position Disclosure” by a person to whom Rule 8.3(a)
applies must be made by no later than 3.30 pm (London time) on the 10th business
day following the commencement of the ”offer period” and, if appropriate, by no
later than 3.30 pm (London time) on the 10th business day following the
announcement in which any paper offeror is first identified. Relevant persons
who “deal” in the “relevant securities” of the offeree company or of a paper
offeror prior to the deadline for making an “Opening Position Disclosure” must
instead make a “Dealing Disclosure”.
Under Rule 8.3(b) of the Code, any person who is, or becomes, “interested” in 1
per cent. or more of any class of “relevant securities” of the offeree company
or of any paper offeror must make a “Dealing Disclosure” if the person “deals”
in any relevant securities of the offeree company or of any paper offeror. A
“Dealing Disclosure” must contain details of the dealing concerned and of the
person's interests and short positions in, and rights to subscribe for, any
“relevant securities” of each of (i) the offeree company and (ii) any paper
offeror, save to the extent that these details have previously been disclosed
under Rule 8. A “Dealing Disclosure” by a person to whom Rule 8.3(b) applies
must be made by no later than 3.30 pm (London time) on the business day
following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a paper offeror, they will be deemed to be a
single person for the purpose of Rule 8.3.
“Opening Position Disclosures” must also be made by the offeree company and by
any offeror and “Dealing Disclosures” must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see Rules
8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities “Opening Position Disclosures” and “Dealing Disclosures” must be made
can be found in the Disclosure Table on the Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to make
an ”Opening Position Disclosure” or a “Dealing Disclosure”, you should contact
the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website.
Copies of this Announcement can be found at Ruukki's and Chromex's websites at
www.ruukkigroup.fi and www.chromexmining.co.uk respectively.
APPENDIX I
CONDITIONS AND CERTAIN FURTHER TERMS OF THE OFFER AND THE WARRANT OFFER
The Offer and the Warrant Offer, which will be made by Synergy Africa, will
comply with the Code. The Offer and any dispute or claim arising out of, or in
connection with, it (whether contractual or non-contractual in nature) will be
governed by, and construed in accordance with, English law and be subject to the
jurisdiction of the courts of England. The Offer and the Warrant Offer will be
made on the terms and conditions set out in the Offer Document.
1. CONDITIONS OF THE OFFER
The Offer will be subject to the following conditions:
(a) valid acceptances being received (and not, where permitted, withdrawn) by
3.00 p.m. on the first closing date of the Offer (or such later time(s) and/or
date(s) as Synergy Africa may, subject to the rules of the Code, decide) in
respect of not less than 90 per cent. (or such lesser percentage as Synergy
Africa may decide) in nominal value of the Chromex Shares to which the Offer
relates, provided that this condition will not be satisfied unless Synergy
Africa shall have acquired or agreed to acquire, whether pursuant to the Offer
or otherwise, Chromex Shares carrying, in aggregate, more than 50 per cent. of
the voting rights then exercisable at a general meeting of Chromex, including
for this purpose to the extent (if any) required by the Panel, any such voting
rights attaching to any Chromex Shares that may be unconditionally allotted or
issued before the Offer becomes or is declared unconditional as to acceptances
whether pursuant to the exercise of any outstanding conversion or subscription
rights or otherwise, and for this purpose:
(i) the expression "Chromex Shares to which the Offer relates" shall be
construed in accordance with sections 974-991 of the Act;
(ii) the expression "shares that may be unconditionally allotted or issued"
shall include any Treasury Shares which are unconditionally transferred or sold
by Chromex; and
(iii) shares which have been unconditionally allotted but not issued shall be
deemed to carry the voting rights which they will carry on being entered into
the register of members of Chromex;
(b) the passing at an extraordinary general meeting of Ruukki of a resolution to
approve the Related Party Transaction to be entered into between Ruukki and
Kermas in connection with the establishment and funding of Synergy Africa and
the acquisition and holding of Chromex shares as required by chapter 11 of the
Listing Rules;
(c) the requisite approval of the acquisition resulting from the implementation
of the Offer by the relevant South African competition authority under chapter 3
of the Competition Act, No. 89 of 1998;
(d) written confirmation being obtained from the South African Department of
Mineral Resources that the acquisition resulting from implementation of the
Offer will not require the approval of the Minister of Mineral Resources under
section 11 of the Minerals and Petroleum Resources Development Act, No. 28 of
2002 of South Africa (the “MPRD Act”) or, if an amendment to the MPRD Act comes
into effect with the result that such approval is required before implementation
of the Offer, under the MPRD Act as so amended;
(e) no government or governmental, quasi‑governmental, supranational, statutory,
administrative or regulatory body, authority, court, trade agency, association,
institution, environmental body or any other person or body in any jurisdiction
(each a "Relevant Authority") having decided to take, instituted, implemented or
threatened any action, proceedings, suit, investigation, enquiry or reference,
or made, proposed or enacted any statute, regulation, order or decision or taken
any other steps and there not continuing to be outstanding any statute,
regulation, order or decision, which would or might:
(i) make the Offer or the acquisition of any Chromex Shares, or control of
Chromex by Synergy Africa void, illegal or unenforceable or otherwise materially
restrict, restrain, prohibit, delay or interfere with the implementation
thereof, or impose material additional conditions or obligations with respect
thereto, or require material amendment thereof or otherwise challenge or
interfere therewith;
(ii) require or prevent the divestiture by Chromex or any of its subsidiaries or
subsidiary undertakings or any associated undertaking or any company of which 20
per cent. or more of the voting capital is held by the Chromex Group or any
partnership, joint venture, firm or company in which any member of the Chromex
Group may be interested (the "wider Chromex Group") or by Synergy Africa or any
of its subsidiaries or subsidiary undertakings or any associated undertaking or
any company of which 20 per cent. or more of the voting capital is held by the
Synergy Africa Group or any partnership, joint venture, firm or company in which
any member of the Synergy Africa Group may be interested (the "wider Synergy
Africa Group") of all or a material portion of their respective businesses,
assets or property or impose any material limitation on the ability of any of
them to conduct their respective businesses or own any of their material assets
or property;
(iii) impose any limitation on or result in a delay in the ability of any member
of the wider Chromex Group or the wider Synergy Africa Group to acquire or to
hold or to exercise effectively any rights of ownership of shares or loans or
securities convertible into shares in any member of the wider Chromex Group or
of the wider Synergy Africa Group held or owned by it or to exercise management
control over any member of the wider Chromex Group or of the wider Synergy
Africa Group to an extent which is material in the context of the Chromex Group
taken as a whole or, as the case may be, the Synergy Africa Group taken as a
whole; or
(iv) otherwise materially and adversely affect the assets, business, profits or
prospects of any member of the wider Synergy Africa Group or of any member of
the wider Chromex Group;
and all applicable waiting and other time periods during which any such Relevant
Authority could decide to take, institute, implement or threaten any such
action, proceeding, suit, investigation, enquiry or reference having expired,
lapsed or been terminated;
(f) all necessary notifications and filings having been made, all applicable
waiting periods (including any extensions thereof) under any applicable
legislation or regulations of any jurisdiction having expired, lapsed or been
terminated, in each case in respect of the Offer and the acquisition of any
Chromex Shares, or of control of Chromex, by Synergy Africa, and all
authorisations, orders, recognitions, grants, consents, licences, confirmations,
clearances, permissions and approvals ("Authorisations") necessary or
appropriate in any jurisdiction for, or in respect of, the Offer and the
proposed acquisition of any Chromex Shares, or of control of Chromex, by Synergy
Africa and to carry on the business of any member of the wider Synergy Africa
Group or of the wider Chromex Group having been obtained, in terms and in a form
satisfactory to Synergy Africa, from all appropriate Relevant Authorities and
from any persons or bodies with whom any member of the wider Synergy Africa
Group or the wider Chromex Group has entered into contractual arrangements and
all such Authorisations remaining in full force and effect at the time at which
the Offer becomes unconditional in all respects and Synergy Africa having no
knowledge of an intention or proposal to revoke, suspend or modify or not to
renew any of the same and all necessary statutory or regulatory obligations in
any jurisdiction having been complied with;
(g) except as publicly announced by Chromex prior to the date hereof (by the
delivery of an announcement to a Regulatory Information Service) or as otherwise
fairly disclosed prior to this Announcement in writing to any member of the
Synergy Africa Group by or on behalf of Chromex in the course of negotiations or
otherwise as a result of the Offer, there being no provision of any arrangement,
agreement, licence, permit or other instrument to which any member of the wider
Chromex Group is a party or by or to which any such member or any of their
assets is or may be bound, entitled or be subject to and which, in consequence
of the Offer or the acquisition or proposed acquisition of any Chromex Shares,
or control of Chromex, by Synergy Africa or otherwise, would or might, to an
extent which is material in the context of the Chromex Group taken as a whole,
result in:
(i) any monies borrowed by, or other indebtedness actual or contingent of, any
such member of the wider Chromex Group being or becoming repayable or being
capable of being declared immediately or prior to its or their stated maturity
or the ability of any such member to borrow monies or incur any indebtedness
being inhibited or becoming capable of being withdrawn;
(ii) the creation or enforcement of any mortgage, charge or other security
interest over the whole or any part of the business, property or assets of any
such member or any such security (whenever arising or having arisen) being
enforced or becoming enforceable;
(iii) any such arrangement, agreement, licence or instrument being terminated or
adversely modified or any action being taken of an adverse nature or any
obligation or liability arising thereunder;
(iv) any assets of any such member being disposed of or charged, or right
arising under which any such asset could be required to be disposed of or
charged, other than in the ordinary course of business;
(v) the interest or business of any such member of the wider Chromex Group in or
with any firm or body or person, or any agreements or arrangements relating to
such interest or business, being terminated or adversely modified or affected;
(vi) any such member ceasing to be able to carry on business under any name
under which it presently does so;
(vii) the creation of liabilities (actual or contingent) by any such member; or
(viii) the financial or trading position of any such member being prejudiced or
adversely affected,
(h) except as publicly disclosed in Chromex's annual report documents for this
year ended 30 September 2009 or in the interim report for the six months to 31
March 2010 or as otherwise publicly announced by Chromex prior to the date
hereof (by the delivery of an announcement to a Regulatory Information Service)
or as otherwise fairly disclosed prior to this Announcement in writing to any
member of the Synergy Africa Group by or on behalf of Chromex in the course of
negotiations or otherwise as a result of the Offer, no member of the wider
Chromex Group having, since 30 September 2009:
(i) issued, agreed to issue or proposed the issue of additional shares or
securities of any class, or securities convertible into, or exchangeable for or
rights, warrants or options to subscribe for or acquire, any such shares,
securities or convertible securities (save as between Chromex and wholly‑owned
subsidiaries of Chromex and save for options granted, and for any Chromex Shares
allotted upon exercise of Chromex Warrants or options granted under the Chromex
Share Options before the date hereof), or redeemed, purchased or reduced any
part of its share capital;
(ii) sold or transferred or agreed to sell or transfer any Treasury Shares;
(iii) recommended, declared, paid or made or proposed to recommend, declare, pay
or make any bonus, dividend or other distribution other than to Chromex or a
wholly-owned subsidiary of Chromex;
(iv) agreed, authorised, proposed or announced its intention to propose any
merger or demerger or acquisition or disposal of assets or shares which are
material in the context of the Chromex Group taken as a whole (other than in the
ordinary course of trading) or to any material change in its share or loan
capital;
(v) issued, authorised or proposed the issue of any debentures or incurred any
indebtedness or contingent liability which is material in the context of the
Chromex Group taken as a whole;
(vi) acquired or disposed of or transferred, mortgaged or encumbered any asset
or any right, title or interest in any asset (other than in the ordinary course
of trading) in a manner which is material in the context of the Chromex Group
taken as a whole;
(vii) entered into or varied or announced its intention to enter into or vary
any contract, arrangement or commitment (whether in respect of capital
expenditure or otherwise) which is of a long‑term or unusual nature or involves
or could involve an obligation of a nature or magnitude, and in either case
which is material in the context of the Chromex Group taken as a whole;
(viii) entered into or proposed or announced its intention to enter into any
reconstruction, amalgamation, transaction or arrangement (otherwise than in the
ordinary course of business) which is material in the context of the Chromex
Group taken as a whole;
(ix) taken any action nor having had any steps taken or legal proceedings
started or threatened against it for its winding‑up or dissolution or for it to
enter into any arrangement or composition for the benefit of its creditors, or
for the appointment of a receiver, administrator, trustee or similar officer if
it or any of its assets (or any analogous proceedings or appointment in any
overseas jurisdiction);
(x) 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 carrying on all or a
substantial part of its business;
(xi) entered into or materially varied or made any offer to enter into or
materially vary the terms of any service agreement or arrangement with any of
the Chromex Directors;
(xii) waived, compromised or settled any claim which is material in the context
of the wider Chromex Group; or
(xiii) entered into or made an offer (which remains open for acceptance) to
enter into any agreement, arrangement or commitment or passed any resolution
with respect to any of the transactions or events referred to in this paragraph
(g);
(i) since 30 September 2009, except as publicly disclosed in Chromex's annual
report and accounts for the year ended 30 September 2009 or in the interim
report for the six months to 31 March 2010 or as otherwise publicly announced by
Chromex prior to the date hereof (by the delivery of an announcement to a
Regulatory Information Service) or as otherwise fairly disclosed prior to this
Announcement in writing to any member of the Synergy Africa Group by or on
behalf of Chromex in the course of negotiations or otherwise as a result of the
Offer, or as disclosed in this Announcement;
(i) there having been no adverse change in the business, assets, financial or
trading position or profits or prospects of any member of the wider Chromex
Group which in any such case is material in the context of the Chromex Group
taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or other legal
proceedings having been instituted, announced or threatened by or against or
remaining outstanding against any member of the wider Chromex Group and no
enquiry or investigation by or complaint or reference to any Relevant Authority
against or in respect of any member of the wider Chromex Group having been
threatened, announced or instituted or remaining outstanding which in any such
case could have a material affect on that member of the Chromex Group; and
(iii) no contingent or other liability having arisen or been incurred which
might reasonably be expected to adversely affect any member of the Chromex Group
in a manner which is material in the context of the wider Chromex Group;
(j) Synergy Africa not having discovered that, save as disclosed in Chromex's
annual report and accounts for the year ended 30 September 2009 or in the
interim report for the six months to 31 March 2010 or as otherwise publicly
announced by Chromex prior to the date hereof (by the delivery of an
announcement to a Regulatory Information Service):
(i) the financial, business or other information concerning the wider Chromex
Group which has been disclosed at any time by or on behalf of any member of the
wider Chromex Group whether publicly (by the delivery of an announcement to a
Regulatory Information Service) or to the Synergy Africa Group or its
professional advisers, either contains a material misrepresentation of fact or
omits to state a fact necessary to make the information contained therein not
materially misleading; or
(ii) any member of the wider Chromex Group is subject to any liability,
contingent or otherwise, which is not disclosed in the annual report and
accounts of Chromex for the financial year ended 30 September 2009 or in the
interim report for the six months to 31 March 2010 and which is material in the
context of the Chromex Group taken as a whole;
(iii) any past or present member of the wider Chromex Group has not complied
with all applicable legislation or regulations of any jurisdiction or any notice
or requirement of any Relevant Authority with regard to the 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 which
non-compliance would be likely to give rise to any liability which is material
in the context of the Chromex Group as a whole (whether actual or contingent) on
the part of any member of the wider Chromex Group;
(iv) there has been a disposal, spillage, emission, discharge or leak of waste
or hazardous substance or any substance likely to impair the environment or harm
human health on, or from, any land or other asset now or previously owned,
occupied or made use of by any past or present member of the wider Chromex
Group, or which any such member may now or previously have had an interest,
would be likely to give rise to any liability which is material in the context
of the Chromex Group as a whole (whether actual or contingent) on the part of
any member of the wider Chromex Group;
(v) there is or is likely to be any obligation or liability (whether actual or
contingent) to make good, repair, reinstate or clean up any property now or
previously owned, occupied or made use of by any past or present member of the
wider Chromex Group or in which any such member may now or previously have had
an interest under any environmental legislation or regulation or notice,
circular or order of any Relevant Authority in any jurisdiction; or
(vi) 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 past or present member of the wider Chromex Group which claim or claims
would be likely to materially affect adversely any member of the wider Chromex
Group.
Synergy Africa reserves the right to amend condition (a) or waive, in whole or
in part, all or any of conditions (d) to (j) inclusive. Synergy Africa also
reserves the right, subject to the consent of the Panel, to extend the time
allowed under the Code for satisfaction of condition (a) (as may be amended)
until such time as conditions (b) to (i) have been satisfied, fulfilled or, to
the extent permitted, waived. If Synergy Africa is required by the Panel to
make an offer for Chromex Shares under the provisions of Rule 9 of the Code,
Synergy Africa may make such alterations to the above conditions, including
condition (a) above, as are necessary to comply with the provisions of that
Rule.
The Offer will lapse unless the conditions set out above (other than condition
(a) to the Offer) are fulfilled or (if capable of waiver) waived or, where
appropriate, have been determined by Synergy Africa in its reasonable opinion to
be or to remain satisfied by no later than 21 days after the later of the first
closing date of the Offer or the date on which the Offer becomes or is declared
unconditional as to acceptances, or such later date as the Synergy Africa may,
with the consent of the Panel, decide. Synergy Africa shall be under no
obligation to waive or treat as satisfied any of conditions (d) to (j)
inclusive by a date earlier than the latest date specified above for the
satisfaction thereof notwithstanding that the other conditions of the Offer may
at such earlier date have been waived or fulfilled or satisfied and that there
are at such earlier date no circumstances indicating that any of such conditions
may not be capable of fulfilment or satisfaction.
The Offer will lapse if it is referred to the Competition Commission before 3.00
p.m. on the first closing date of the Offer or the date on which the Offer
becomes or is declared unconditional as to acceptances, whichever is the later.
If the Offer so lapses the Offer will cease to be capable of further acceptance
and accepting Chromex Shareholders and Synergy Africa will cease to be bound by
acceptances received before the time when the Offer lapses.
2. FURTHER TERMS OF THE OFFER
(a) The Offer will extend to all Chromex Shares unconditionally allotted or
issued on the date on which the Offer is made, and any further Chromex Shares
unconditionally allotted or issued, and any Treasury Shares unconditionally sold
or transferred by Chromex, in each case, while the Offer remains open for
acceptance (or such earlier date or dates as Synergy Africa may decide).
(b) The Chromex Shares are to be acquired by Synergy Africa fully paid and free
from all liens, charges and encumbrances, rights of pre‑emption and any other
third party rights of any nature whatsoever and together with all rights
attaching thereto, including the right to all dividends or other distributions
declared, paid or made after the date hereof.
3. CONDITIONS OF THE WARRANT OFFER
The Warrant Offer will be subject to the Offer becoming or being declared
unconditional in all respects.
APPENDIX II
BASES AND SOURCES
1. Historic share prices are sourced from the AIM Appendix to the Daily Official
List and represent closing middle market prices for Chromex's Shares on the
relevant dates.
2. The value of the entire issued and to be issued share capital of Chromex is
based upon the sum of:
(i) 88,981,755 Chromex Shares in issue, as announced on 24 September 2010
(representing the entire issued share capital of Chromex);
(ii) 7,625,000 Chromex Share Options with exercise prices of less than 36.5
pence per Chromex Share;
(iii) 2,854,665 Chromex Warrants; and
(iv) 9,049,239 New Chromex Shares to be issued on conversion of the Langa Trust
Convertible Loan. Whilst this is based on the five day average ZAR/£ exchange
rate on the date immediately preceding the date of this Announcement, the exact
number of Chromex Shares to which Langa Trust will become entitled will depend
on the timing of the subscription and the ZAR/£ exchange rate at that time.
3. Unless otherwise stated, the financial information relating to Chromex
contained in this Announcement is extracted from the audited published
consolidated accounts of Chromex for the year ended 30 September 2009 and the
unaudited published consolidated accounts of Chromex for the six months ended 31
March 2010.
APPENDIX III
DETAILS OF IRREVOCABLE UNDERTAKINGS
Irrevocable undertakings to accept or procure the acceptance of the Offer have
been received in relation to the following Chromex Shares:
--------------------------------------------------------------------------------
| Name | Number of Chromex | Percentage of Chromex's |
| | Shares | existing issued shares |
| | | capital |
--------------------------------------------------------------------------------
| Spruce Management | 32,675,000 | 36.7 |
| Limited | | |
--------------------------------------------------------------------------------
| Shia and Phax Trusts | 3,300,000 | 3.7 |
--------------------------------------------------------------------------------
| James Everett Burgess | 5,000,000 | 5.6 |
--------------------------------------------------------------------------------
| Brian Michael Moritz | 4,050,000 | 4.6 |
--------------------------------------------------------------------------------
| Sonia Barbara Moritz | 1,000,000 | 1.1 |
--------------------------------------------------------------------------------
The irrevocable undertakings entered into by the Chromex Directors also extend
to Chromex Shares which they may acquire on exercise of their rights under the
Chromex Share Options. Chromex Directors hold options over, in aggregate,
5,975,000 Chromex Shares under the Chromex Share Options. The number of Chromex
Shares which each individual Chromex Director is entitled to acquire under these
option arrangements is 3,300,000 in respect of Russell Lamming, 600,000 in
respect of Brian Moritz and 2,075,000 in respect of Graham Stacey.
Under the terms of the Langa Trust Convertible Loan Subscription Agreement,
Langa Trust is entitled to subscribe for Chromex Shares in respect of the
outstanding principal and accrued interest under the Langa Trust Convertible
Loan at a strike price of 22 pence per Chromex Share, converted at the
prevailing ZAR/£ exchange rate with such subscription price being discharged by
ceding Langa Trust's repayment right under the Langa Trust Convertible Loan.
Langa Trust has given an irrevocable undertaking to exercise its subscription
rights under the Langa Trust Convertible Loan Subscription Agreement and accept
the Offer in respect of the resulting Chromex Shares acquired by it, after the
Offer has been declared or otherwise becomes unconditional in all respects. On
the basis of the five day average ZAR/£ exchange rate on the date immediately
preceding the date of this Announcement, the number of Chromex Shares which
would be issued to Langa Trust were it to have subscribed on the date
immediately preceding the date of this Announcement would be 9,049,239. The
exact number of Chromex Shares to which Langa Trust will become entitled will
depend on the timing of the subscription and the ZAR/£ exchange rate at that
time.
The Langa Trust, Shia Trust and Phax Trust are connected to Spruce Management,
which is interested in 32,675,000 Chromex Shares, representing 36.7 per cent. of
the current issued share capital of Chromex.
These irrevocable undertakings will lapse only if the Offer Document is not
despatched to Chromex Shareholders on or before the date that is 28 days after
the date of this Announcement or such later date as may be agreed by the Panel
or if the Offer lapses or is withdrawn provided that the reason for such lapse
or withdrawal is not because Synergy Africa has elected to implement the Offer
by way of a scheme of arrangement.
APPENDIX IV
DEFINITIONS
Save where otherwise stated, for the purpose of this Announcement,
"subsidiary'', "subsidiary undertaking'', "associated undertaking'' and
"undertaking'' shall be construed in accordance with the Act.
In this Announcement, the singular includes the plural and vice versa, unless
the context otherwise requires. All references to time in this Announcement are
to London time.
The following definitions apply throughout this document unless the context
requires otherwise:
--------------------------------------------------------------------------------
| "the Act" | the Companies Act 2006 |
--------------------------------------------------------------------------------
| “AIM” | the AIM Market of London Stock Exchange plc |
--------------------------------------------------------------------------------
| “Announcement” | this announcement |
--------------------------------------------------------------------------------
| "Australia" | the Commonwealth of Australia, its states, |
| | territories and possessions |
--------------------------------------------------------------------------------
| “Business Day” | a day other than a Saturday or Sunday or |
| | public holiday in England on which banks are |
| | open for business in the City of London |
--------------------------------------------------------------------------------
| "Chromex" | Chromex Mining plc |
--------------------------------------------------------------------------------
| "Chromex Directors" | the directors of Chromex as at the date of |
| | this Announcement |
--------------------------------------------------------------------------------
| "Chromex Group" | Chromex and its subsidiaries and subsidiary |
| | undertakings |
--------------------------------------------------------------------------------
| "Chromex Shareholders" | holders of Chromex Shares |
--------------------------------------------------------------------------------
| "Chromex Shares" | the existing unconditionally allotted or |
| | issued and fully paid ordinary shares of 1p |
| | each in the capital of Chromex and any |
| | further such shares which are unconditionally |
| | allotted or issued and fully paid, and any |
| | Treasury Shares unconditionally sold or |
| | transferred by Chromex, in each case, before |
| | the date on which the Offer closes (or such |
| | earlier date(s) as Synergy Africa may, |
| | subject to the Code, determine), including |
| | any such shares so unconditionally allotted |
| | or issued pursuant to the exercise of Chromex |
| | Warrants or Chromex Share Options or pursuant |
| | to the Langa Trust Convertible Loan |
| | Subscription Agreement |
--------------------------------------------------------------------------------
| "Chromex Share Options" | the options to acquire Chromex Shares held by |
| | various current and former officers and |
| | employees of the Chromex Group which give the |
| | right to subscribe for, in aggregate, |
| | 5,575,000 Chromex Shares at 25 pence per |
| | share and 2,050,000 Chromex Shares at 30 |
| | pence per share |
--------------------------------------------------------------------------------
| "Chromex Warrants" | the 2,854,665 warrants in issue giving the |
| | right to subscribe for one Chromex Share for |
| | each warrant held at a subscription price of |
| | 20 pence per share |
--------------------------------------------------------------------------------
| "Canada" | Canada, its provinces and territories and all |
| | areas subject to its jurisdiction and any |
| | political sub-division thereof |
--------------------------------------------------------------------------------
| “certificated form” | a share or security that is not in |
| | uncertificated form |
--------------------------------------------------------------------------------
| “Closing Price” | means the middle market closing price of one |
| | Chromex Share on the relevant day as derived |
| | from the AIM appendix of the Daily Official |
| | List |
--------------------------------------------------------------------------------
| "Code" | the City Code on Takeovers and Mergers |
--------------------------------------------------------------------------------
| “CREST” | the relevant system, as defined in the CREST |
| | Regulations in respect of which Euroclear is |
| | the operator in accordance with the which |
| | securities may be held in and transferred in |
| | uncertificated form |
--------------------------------------------------------------------------------
| “CREST Regulations” | the Uncertificated Securities Regulations |
| | 2001 (S1 2001 No. 3755) |
--------------------------------------------------------------------------------
| “Daily Official List” | the Daily Official List of the London Stock |
| | Exchange |
--------------------------------------------------------------------------------
| “Euroclear” | Euroclear UK & Ireland Limited |
--------------------------------------------------------------------------------
| “Form of Acceptance” | the form of acceptance relating to the Offer |
| | and the Warrant Offer as the case may be |
| | accompanying the Offer Document which may |
| | only be completed by holders of Chromex |
| | Shares or Chromex Warrants in certificated |
| | form |
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| "Kermas" | Kermas Limited, a company incorporated in the |
| | British Virgin Islands with registered number |
| | 504889 |
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| "Kermas Directors" | the Directors of Kermas as at the date of |
| | this Announcement |
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| “Langa Trust” | the Trustees for the time being of the Langa |
| | Trust (Master's Reference No: IT 9967/05) |
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| "Langa Trust Convertible | the outstanding principal and accrued |
| Loan" | interest under a loan facility agreement |
| | dated 19 December 2008, being ZAR 22,038,318 |
| | as at the date of this Announcement |
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| "Langa Trust Convertible | the subscription agreement dated 19 December |
| Loan Subscription Agreement" | 2008 pursuant to which Langa Trust is |
| | entitled to subscribe for Chromex Shares in |
| | respect of the Langa Trust Convertible Loan |
| | at a conversion price of 22 pence per Chromex |
| | Share converted at the prevailing ZAR/£ |
| | exchange rate |
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| “London Stock Exchange” | London Stock Exchange plc |
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| "Listing Rules" | the listing rules issued by the UK Listing |
| | Authority pursuant to Part VI of the |
| | Financial Services and Markets Act 2000 |
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| “Mogale” | Mogale Alloys (Proprietary) Limited, a |
| | company incorporated in South Africa with |
| | registration number 2002/015207/07 and |
| | involved in the Ruukki's minerals business |
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| "Offer" | the recommended cash offer to be made by |
| | Synergy Africa pursuant to the Code to |
| | acquire all of the Chromex Shares on the |
| | terms and subject to the conditions to be set |
| | out in the Offer Document and the form of |
| | acceptance relating thereto, and including, |
| | where the context so requires, any subsequent |
| | revision, variation, extension or renewal of |
| | such offer |
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| "Offer Document" | the document to be sent to Chromex |
| | Shareholders by Synergy Africa containing the |
| | terms and conditions of the Offer and the |
| | Warrant Offer |
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| "Offer Period" | the period commencing on (and including) 15 |
| | July 2010 until whichever of the following |
| | times and dates shall be the latest of: |
| | (i) 1.00pm (London time) on the first closing |
| | date of the Offer; or |
| | (ii) the earlier of: |
| | (a) the time and date at the Offer lapses; or |
| | (b) the time and date at which the Offer |
| | becomes unconditional as the acceptances. |
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| "Panel" | the Panel on Takeovers and Mergers |
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| "Panmure Gordon" | Panmure Gordon (UK) Limited |
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| "Regulatory Information | a Regulatory Information Service that is |
| Service" | approved by the Financial Services Authority |
| | and is on the list maintained by the |
| | Financial Services Authority in LR App 3 to |
| | the Listing Rules |
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| "Related Party Transaction" | the arrangements agreed by Kermas and Ruukki |
| | relating to (i) the establishment of Synergy |
| | Africa as a joint venture (ii) the financing |
| | of Synergy Africa (including the loan between |
| | Kermas and Ruukki) and (iii) the acquisition |
| | and holding of Chromex Shares |
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| “Relationship Agreement” | the Relationship deed dated 30 June 2010 |
| | between Dr Danko Koncar, Kermas, Ruukki and |
| | Kermas' majority shareholder (who is Dr Danko |
| | Koncar's cousin) |
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| "Restricted Jurisdiction" | Australia, Canada, Japan and the United |
| | States or any other jurisdiction where local |
| | laws or regulations may result in a |
| | significant risk of civil, regulatory or |
| | criminal exposure if information is sent or |
| | made available to Chromex Shareholders in |
| | that jurisdiction |
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| "Ruukki" | Ruukki Group Plc, a public limited company |
| | incorporated in Finland with business |
| | identity code 0618181-8 and trade register |
| | number 360.572 |
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| "Ruukki Directors" | the Directors of Ruukki as at the date of |
| “Ruukki Holdings” | this Announcement |
| | Ruukki Holdings Limited, a company |
| | incorporated in Malta with registration |
| | number C45836 and a wholly owned subsidiary |
| | of Ruukki |
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| "Ruukki Shareholders" | the holders of ordinary shares of no par |
| “SAMREC” | value each in the capital of Ruukki |
| | the South African code for reporting of |
| | mineral resources and mineral reserves |
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| "£" or "Sterling" | pounds sterling, the lawful currency for the |
| | time being of the UK and references to |
| | "pence" and "p" shall be construed |
| | accordingly |
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| "subsidiary" and "subsidiary | have the meanings given to them in the Act |
| undertaking" | |
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| "Synergy Africa" | Synergy Africa Limited, a private limited |
| | company incorporated in England and Wales |
| | with registered number 7382978 |
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| “Synergy Africa Directors” | Alwyn Smit, Alistair Ruiters and Dr Danko |
| | Koncar |
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| "Synergy Africa Group" | Ruukki and Kermas and their respective |
| | subsidiaries and subsidiary undertakings |
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| "Treasury Shares" | shares held as treasury shares as defined in |
| | section 724(5) of the Act |
| | |
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| "UK" or "United Kingdom" | the United Kingdom of Great Britain and |
| | Northern Ireland |
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| "UK Listing Authority" | the Financial Services Authority as the |
| | competent authority under Part VI of the |
| | Financial Services and Markets Act 2000 |
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| “uncertificated form” | recorded on the relevant register of the |
| | share or security concerned as being held in |
| | uncertificated form in CREST and title to |
| | which by virtue of the CREST Regulations may |
| | be transferred by means of CREST |
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| "United States" | the United States of America, its territories |
| | and possessions, any state of the United |
| | States of America, the District of Columbia, |
| | and all other areas subject to its |
| | jurisdiction |
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| “Warrant Offer” | the recommended cash offer to be made by |
| | Synergy Africa pursuant to the Code to |
| | acquire all of the Chromex Warrants on the |
| | terms and subject to the conditions to be set |
| | out in the Offer Document and the form of |
| | acceptance relating thereto, and including, |
| | where the context so requires, any subsequent |
| | revision, variation, extension or renewal of |
| | such offer |
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| “ZAR” or “Rand” | South Africa Rand, the lawful currency of the |
| | Republic of South Africa |
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