RNS
Acquisition of Veremo in conjunction with Kermas Group
6 August 2007
Petmin (JSE: PET, AIM: PTMN) announces that, further to its most recent cautionary announcement of 19 September 2007, it has agreed to a joint acquisition, together with Framework Investments Limited (‘’Framework”), a 100% owned subsidiary of Kermas Limited (collectively, the “Kermas Group”), of Veremo Holdings Limited (“Veremo”) and the prospecting rights to a substantial polymetallic ore body, suitable for the production of high quality pig iron, in the eastern Bushveld three hours from Johannesburg.
The highlights of the transaction include:
- In a two-phase transaction, Petmin will acquire a 25% stake in Veremo, with the Kermas Group owning the remaining 75%
- Veremo will purchase the remaining 30% of Veremo Minerals (Pty) Limited, owners of the prospecting rights at the project
- Petmin will fund its share of the acquisition by the issue of 15,073,602 new Petmin shares
- Kermas Group will subscribe for 2,000,000 new Petmin shares at R3.00 per share
- The financing, development and commissioning of a mine on the deposit and the construction of a pig iron processing plant in the eastern Bushveld at Stoffberg, 3 hours from Johannesburg, will be funded by the Kermas Group up to an annual production level of 700,000 tons of pig iron
- The ore body contains, on average, approximately 60.83 % Iron Oxide (wt%) and 14.39% Titanium Dioxide (wt%) and is suitable for the production of high quality pig iron
- Preliminary estimates of the tonnage contained within the project area indicate 150 million tons of magnetite ore in situ and 800 million tons of additional material that still requires testing
- The Kermas Group has warranted that Petmin will receive a cash dividend of R65,000,000 for each of the first three years of production from Veremo (expected to commence during 2012) or 25% of its profit after tax which ever is the greater
- Preliminary calculations indicate that the project is financially robust, on the basis of pig iron sales alone. The titanium slag may contribute additional revenue but has not been taken into account in any of the abovementioned estimates
- Petmin, currently the largest producer of anthracite and silica in South-Africa, will be granted an irrevocable first right of refusal to supply all anthracite – currently estimated to be in excess of 200,000 tons per annum – and all silica that may be required by the Veremo Project for a period of 5 years from first production on terms at least as favorable as those which Veremo is able to obtain from other suppliers
Bradley Doig, COO of Petmin, said:
“This transaction represents a further step in our development as a multi commodity minerals business, focusing on investments which are either at or near the cash producing stage. We are particularly pleased to partner the Kermas Group, who have international experience and a proven ability to manage large projects. The Veremo Project provides an excellent opportunity to develop an important South African asset with significant guaranteed returns to Petmin.”
The document that follows comprises the full details of the transaction, as announced in accordance with JSE regulations.
