Acquisition
Published: 21/11/2005, 07:02
Weatherly International PLC 21 November 2005 Press release 21 November 2005 Weatherly International plc ("Weatherly or the "Company") Proposed acquisition of Puku Minerals Limited Proposed waiver of Rule 9 of the City Code Placing of 29,312,500 Ordinary Shares at 8 pence per share Admission to trading on AIM Notice of Extraordinary General Meeting Weatherly International plc is pleased to announce today that it has conditionally agreed to acquire the entire issued share capital of Puku Minerals Limited, a company which holds certain exploration and development rights to a copper mining project in Zambia. Puku will be acquired for a consideration of £3.25 million, to be satisfied by the issue of approximately 40.6 million Consideration Shares at an issue price of 8 pence per share. Additionally, Weatherly proposes to raise approximately £2.3 million by issuing approximately 29.3 million Placing Shares at an issue price of 8 pence per share. The market capitalisation of the Enlarged Group, post-Acquisition and post-Placing, at the issue price will be approximately £11.5 million. Puku owns two prospecting licences covering a decommissioned copper mine and tailings dam situated in Luanshya, in the Zambian Copperbelt (the copper producing region of Northern Zambia). The Luanshya Copper Project (an area defined by these prospecting licences) is considered by the Executive Directors to be one of the larger copper resources in Zambia with up to 1.4 million tonnes of copper contained in resource categories. The Executive Directors estimate that the Luanshya Copper Project could be capable of producing up to 60,000 tonnes of copper annually using modern, proven mining and processing techniques. The timing and cost of re-opening the mine is currently being assessed and will be subject to a bankable feasibility study to be commissioned following the Acquisition. Chief Executive Rod Webster said: "Using some of the funds now available, we intend to progress Luanshya to the development stage, including commissioning a bankable feasibility study. We believe Luanshya may contain up to 1.4 million tonnes of copper, and is capable of producing up to 60,000 tonnes a year using modern mining technology not generally available when it was last worked." Pursuant to the AIM Rules, the Acquisition will constitute a reverse takeover and, as the Executive Directors hold a controlling interest in Puku, it will also constitute a related party transaction. Following Admission, certain Shareholders who are deemed to be acting in concert by the Panel, will have an aggregate holding of 63,972,580 ordinary shares representing approximately 44.6 per cent. of the Enlarged Share Capital of the Company. As the Concert Party will be interested in more than 30 per cent. of the Enlarged Share Capital, in normal circumstances a general offer to existing Shareholders would be required under Rule 9 of the City Code to acquire all the Shares not held by the Concert Party. However, the Panel has agreed to waive the requirement for such a general offer to be made subject to the approval of the holders of existing Ordinary Shares being obtained. Accordingly, Shareholders' consent will be sought at the Extraordinary General Meeting to approve the reverse takeover and the waiver of the requirement for a general offer to be made. The Non-Executive Directors consider that the Proposals and the Waiver are fair and reasonable and in the best interests of the Company and its Shareholders as a whole. Accordingly, the Non-Executive Directors unanimously recommend that the Shareholders vote in favour of the EGM Resolutions to be proposed at the Extraordinary General Meeting to be held on 14 December 2005. It is expected that dealings on AIM will commence on or around 15 December 2005. This summary should be read in conjunction with the full text of the announcement. For further information please contact: Weatherly International plc Rod Webster, Chief Executive +44 (0) 20 7332 2204 Peter Redmond, Non-Executive Director Libertas Capital Brad Cheng / Aamir Quraishi +44 (0) 20 7569 9650 First City Financial Allan Piper +44 (0) 20 7436 7486 +44 (0) 7736 064 982 Weatherly International plc Proposed acquisition of Puku Minerals Limited Proposed waiver of Rule 9 of the City Code Placing of 29,312,500 Ordinary Shares at 8 pence per share Admission to trading on AIM Notice of Extraordinary General Meeting Introduction Weatherly International plc is pleased to announce today that it has conditionally agreed to acquire the entire issued share capital of Puku Minerals Limited, a company which holds certain exploration and development rights to a copper mining project in Zambia. Puku will be acquired for a consideration of £3.25 million, to be satisfied by the issue of approximately 40.6 million Consideration Shares in the Company at an issue price of 8 pence per share. Additionally, Weatherly proposes to raise approximately £2.3 million by issuing approximately 29.3 million Placing Shares at an issue price of 8 pence per share. Pursuant to the AIM Rules, the Acquisition will constitute a reverse takeover and, as the Executive Directors hold a controlling interest in Puku, it will also constitute a related party transaction. Following Admission, certain Shareholders who are deemed to be acting in concert by the Panel, will have an aggregate holding of 63,972,580 Ordinary Shares representing 44.6 per cent. of the Enlarged Share Capital of the Company. As the Concert Party will be interested in more than 30 per cent. of the Enlarged Share Capital, in normal circumstances a general offer to Existing Shareholders would be required under Rule 9 of the City Code to acquire all the Shares not held by the Concert Party. However, the Panel has agreed to waive the requirement for such a general offer to be made subject to the approval of the holders of existing Ordinary Shares being obtained. Accordingly, Shareholders' consent will be sought at the Extraordinary General Meeting to approve the reverse takeover and the waiver of the requirement for a general offer to be made. Information on Puku Puku Minerals Limited is a privately owned company incorporated in Zambia which acquired two tenements comprising prospecting licences PLLS 239 and PLLS 240 in April 2005. These licences cover the historic Luanshya underground copper mine and tailings dams situated in the Zambian Copperbelt and offer the right to explore and develop the Luanshya tenements (comprising PLLS 239 and PLLS 240). These licences were granted for a period of two years, which commenced on 4 April 2005, and can either be renewed or converted into mining licences at the option of the licence holder dependent upon the licence holder satisfying standard exploration obligations during the two year period. The performance of these obligations has already commenced. In June 2005, Puku also acquired prospecting licence PLLS 252, which covers an exploration area adjacent to the areas covered by PLLS 239 and PLLS 240. The Executive Directors, prior to their appointments as directors of Weatherly, had been investigating the opportunity to acquire the Luanshya tenements since November 2003. The vendors of Puku comprise Dr. Martinick, Mr. Webster and ASX-listed Ezenet Limited. The Executive Directors are also directors of, and, through direct and indirect shareholdings, controlling shareholders in, Puku. Luanshya Copper Project The Luanshya Copper Project comprises some nine kilometres of historical underground workings which, between 1927 and 2001, have produced in total approximately 4.8 million tonnes of copper. Based on historic resource statements and annual reports, it is estimated that up to a further 1.4 million tonnes of copper in resource categories remains in situ. Most of the copper is contained in extensions to the existing underground workings, although a significant amount of copper also remains in the various surface dumps and tailings dams. It is the belief of the Executive Directors that Luanshya has significant inherent value and will serve as a solid foundation towards building a world-class mining operation. The Executive Directors further believe that with new flexible workforce arrangements and the implementation of modern, proven mining and processing techniques, the Luanshya Copper Project could be established as a profitable, "long-life'' operation. The Company's immediate focus will be to complete the acquisition of Puku and progress the Luanshya Copper Project to the development stage, including the completion of a bankable feasibility study, with the aim of bringing the Luanshya Copper Project into production within the next three years. The Executive Directors have made preliminary investigations in respect of the development of the Luanshya tenements. They believe that a number of profitable development options exist, each requiring increasing amounts of capital relative to the proposed scale and output. The Executive Directors believe that following completion of the bankable feasibility study, the most attractive options will be capable of producing up to 60,000 tonnes per annum (and up to a total of approximately 0.9 million tonnes) of copper, either as concentrate or finished metal. In the short term, the Company is also evaluating a number of strategic acquisition opportunities which are complementary to the Luanshya Copper Project and which the Executive Directors believe will further enhance the value of the Company. Information on Weatherly Weatherly is a former financial services group that experienced financial difficulties and was subsequently rescued by means of a CVA approved on 23 January 2004. Following a refinancing, which raised £250,000 (before expenses) and which was arranged by the Non-Executive Directors, the Ordinary Shares were readmitted to trading on AIM in January 2004 as an investing company. In July 2005, there was a further cash injection of £723,500 (before expenses) and a change in strategy with the appointments of Dr. Martinick and Mr. Webster as executive directors following the acquisition of WM Exploration Limited in exchange for new Ordinary Shares. Dr. Martinick and Mr. Webster participated in this placing and, through their interests in the shares in WM Exploration Limited, also acquired (or became interested in) Ordinary Shares pursuant to the acquisition of that company by Weatherly. In August 2005, the Company announced a further placing of 23.5 million Ordinary Shares which raised approximately £1.41 million (before expenses) for the Company. Dr. Martinick participated in this placing. The new strategy entailed seeking opportunities for acquisition or investment in the natural resources sector, mainly in Africa. Following the Acquisition, the Enlarged Group's main activity will be that of exploration and development of mining and mineral projects. On Admission, cash resources of the Company are expected to be £3.8 million. The Board Dr. Wolf Martinick, Chairman, aged 60 Dr. Martinick is an environmental scientist with extensive experience in the mineral resource industry. Dr. Martinick has been involved with mineral exploration and mining projects around the world, especially in Australasia, southern, central and northern Africa, China, India and parts of the former Soviet Union. Dr. Martinick is a non-executive director of Sun Resources NL, an oil and gas exploration company listed on the ASX, and the executive chairman and substantial shareholder of Ezenet Limited, a digital movie supply and distribution company, also listed on the ASX. He was a founding director of Basin Minerals Limited, another ASX listed mineral exploration company that discovered a world-class mineral project in Victoria, Australia, and then participated in negotiations that led to a recommended takeover of Basin by Iluka Resources Limited in 2003. He is also a founding director and non-executive chairman of MBS Environment Pty Ltd, an environmental and social consultancy company to the mining industry in Australasia. He has been associated with the exploration and mining industry for over 35 years. He has particular experience in environmental, water, land access and indigenous people issues and has (in his role as non executive chairman of MBS Environment Pty Ltd) conducted due diligence on mining projects around the world on behalf of international financial institutions and resource industry companies for a variety of transactions including listings on international stock exchanges, mergers and debt financing. He has in recent years been active in identifying and investigating mineral projects and prospects in central and other parts of Africa. Mr. Rod Webster, Chief Executive Officer, aged 55 Mr. Webster is a graduate mining engineer from the University of Sydney. He has over 30 years' of experience in the resources industry, including more than 10 years' in managing director or chief executive officer positions. Between August 2001 and February 2005 Mr. Webster was a senior executive at First Quantum Minerals Ltd ("FQM''), a Toronto Stock Exchange and AIM listed company, developing and operating copper mines in Zambia, the Democratic Republic of Congo and Mauritania. Most recently, he was in charge of the FQM's Mauritanian activities, but prior to this he was the chief executive officer responsible for the development of the Kansanshi mine in Zambia, probably the world's most significant new copper mine to come on stream in recent times. During 2001, he was also a non-executive director of another major Zambian copper producer, Mopani Copper Mines Ltd, in which FQM had a major interest. Prior to his involvement with FQM, he was a founding director and the chief executive officer of an Australian base metals producer, Western Metals Ltd between 1994 and 2000. During his stewardship, the company grew to be Australia's third largest base metals producer, with annual production exceeding 260,000 tonnes of zinc, 100,000 tonnes of lead and 35,000 tonnes of copper. To achieve this growth, the company raised approximately US$600 million for the development of six new mines and a private port. In his earlier years as a mining engineer, he held senior management positions with the global resource companies, Homestake Gold of Australia Ltd (between 1988 and 1993) and BHP Minerals Ltd (between 1980 and 1988). He is a Fellow of both the Australian Institute of Mining and Metallurgy and the Australian Institute of Company Directors. At various stages he has been a member of the Executive Committees of both the Australian Minerals Council and the International Zinc Association, and a non-executive director of numerous companies. Mr. Peter Redmond, Non-Executive Director, aged 56 Mr. Redmond has some 20 years' experience in corporate finance and venture capital. After leaving Durlacher Limited in 2003, he joined Merchant House Group plc and became its Chairman in May 2004. He has been active in reconstructing a number of AIM companies as investing companies in recent years and is currently a director of a number of companies including Bella Media plc, BWA Group plc, Fortfield Investments plc, Future Internet Technologies plc, Petsmore plc and Synigence Plc, all of which are traded on AIM. Mr. Richard Armstrong, Non-Executive Director, aged 57 Mr. Armstrong has many years' experience as an investment analyst and as a corporate stockbroker. He is currently an associate of Fiske plc where he has specialised in raising funds for smaller quoted companies. He is a director of a number of companies including BWA Group plc, Fortfield Investments plc and Future Internet Technologies plc, all of which are traded on AIM. Prior to Admission, Mr. Armstrong has agreed to resign as a director of the Company. Mr. Armstrong will not be receiving any compensation for loss of office other than payments due under his letter of appointment. The Company intends to appoint a further Non-Executive Director following Admission. Terms of the Acquisition Subject to the satisfaction of the Conditions, Weatherly will acquire the entire issued share capital of Puku for a consideration of £3.25 million to be satisfied by the issue by the Company of the Consideration Shares. In accordance with the provisions of the Acquisition Agreement, the Company has the right to nominate that the shares in Puku to which it becomes entitled at completion of the Acquisition (representing all of the issued share capital of Puku) shall be issued to and held by any of the wholly owned subsidiaries of the Company. On issue, the Consideration Shares will rank pari passu in all respects with the Existing Ordinary Shares. Objectives and Strategy The Company is seeking to develop significant, profitable and "long-life'' mining operations in Africa and the acquisition of Puku will, the Executive Directors believe, serve as the foundation to achieve this. The Acquisition will provide Weatherly with exploration and development rights to a significant copper deposit which contains up to 1.4 million tonnes of copper in resource categories. As a result, the Executive Directors believe that the Company will gain a significant foothold in the Zambian Copperbelt, and more generally, entry into the natural resource sector in Africa. In addition to the Luanshya Copper Project, Weatherly is investigating a number of other opportunities in Southern Africa. Extraordinary General Meeting A notice convening an extraordinary general meeting of the Company which is to be held at the offices of Watson, Farley & Williams LLP, 15 Appold Street, London, EC2A 2HB at 10:00 a.m. on 14 December 2005, will be set out in the Admission Document. The following EGM Resolutions will be proposed: (1) to approve the Acquisition as a reverse takeover for the purposes of Rule 14 of the AIM Rules; (2) to approve the Waiver; (3) to approve the Acquisition as a substantial property transaction with the Directors for the purposes of section 320 of the Companies Act 1985 (the "Act"); (4) to authorise the Directors pursuant to section 80 of the Act to allot relevant securities including, amongst others, the Placing Shares and the Consideration Shares; and (5) to authorise the Directors to allot relevant securities for cash as if the statutory pre-emption rights set out in section 89 of the Act did not apply to such allotment. EGM Resolutions (1), (2), (3) and (4) will be proposed as Ordinary Resolutions and EGM Resolution (5) shall be proposed as a Special Resolution. EGM Resolution (2) will, as required by the Panel, be decided on a poll of Independent Shareholders. It is expected that dealings on AIM will commence on or around 15 December 2005. General The Admission Document, which contains details of the Proposals, will be sent to Shareholders as soon as is practicable and will be available at the offices of Watson, Farley & Williams LLP, 15 Appold Street, London, EC2A 2HB. Libertas Capital Corporate Finance Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Weatherly and no one else in connection with the Proposals and the matters described herein and will not be responsible to anyone other than Weatherly for providing the protections afforded to its customers or for giving advice in relation to the proposals or any other matter referred to herein. This announcement does not constitute, or form part of, any offer for, or any solicitation of any offer for, securities. Definitions "Acquisition" the proposed acquisition of the entire issued share capital of Puku pursuant to the Acquisition Agreement "Acquisition Agreement" the conditional agreement dated the date of the Admission Document between the Vendors and the Company relating to the Acquisition "Admission" the re-admission of the Existing Ordinary Shares to trading on AIM and the admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules "AIM" the market of that name operated by the London Stock Exchange "AIM Rules" the rules for AIM companies as published by the London Stock Exchange "ASX" Australian Stock Exchange Limited "Board" the board of directors of the Company, namely Dr. Wolf-Gerhard Martinick, Roderick John Webster, Peter Redmond and Richard James Armstrong, including a duly constituted committee of such directors "City Code" the City Code on Takeovers and Mergers "Conditions" the conditions to the Acquisition and the Placing being (i) the EGM Resolutions (other than resolution 5) being passed at the Extraordinary General Meeting, (ii) the Company not terminating the Acquisition Agreement prior to completion because of circumstances arising which have or would cause a material adverse effect on Puku or its business and (iii) Admission "Company or "Weatherly" Weatherly International plc "Concert Party" the Vendors "Consideration Shares" the 40,625,000 new Ordinary Shares to be allotted and issued to the Vendors pursuant to the Acquisition Agreement "Directors" the directors of the Company, namely Dr. Wolf-Gerhard Martinick, Roderick John Webster, Peter Redmond and Richard James Armstrong "EGM Resolutions" the resolutions set out in the notice of Extraordinary General Meeting attached to the Admission Document "Enlarged Group" the Company and its subsidiary undertakings as at the date of Admission "Enlarged Share Capital" the Ordinary Shares in issue immediately following Admission (excluding any Ordinary Shares that may be issued pursuant to the exercise of any Warrants prior to Admission) "Executive Directors" Dr. Wolf-Gerhard Martinick and Roderick John Webster "Existing Ordinary Shares" the 73,502,093 Ordinary Shares in issue at the date of this document "Extraordinary General the extraordinary general meeting of the Company to be held at Meeting" 10:00 a.m. on 14 December 2005 "Libertas Capital" Libertas Capital Corporate Finance Limited and/or Libertas Capital Securities Limited, as the context requires "Independent Shareholders" the holders of Existing Ordinary Shares, excluding the Concert Party "Non-Executive Directors" Peter Redmond and Richard James Armstrong "Ordinary Shares" ordinary shares of 0.5 pence each in the capital of the Company "Panel" the Panel on Takeovers and Mergers "Placing" the conditional placing by the Company of the Placing Shares pursuant to the Placing Letters "Placing Price" 8 pence per Placing Share "Placing Shares" the 29,312,500 new Ordinary Shares which are the subject of the Placing "Proposals" the Acquisition, the Placing and the Admission "Puku" Puku Minerals Limited "Shareholders" the holders of Ordinary Shares of the Company "Vendors" Dr. Wolf-Gerhard Martinick, Roderick John Webster and Ezenet Limited "Waiver" the waiver by the Panel of the obligation of the Concert Party to make a general offer under Rule 9 of the City Code "Warrants" 1,416,691 warrants each of which entitles the holder to subscribe for one Ordinary Share at a price of 3 pence per share, 2,496,979 warrants each of which entitles the holder to subscribe for one Ordinary Share at a price of 5 pence per share, and 2,996,991 warrants each of which entitles the holder to subscribe for one Ordinary Share at a price of 12 pence per share This information is provided by RNS The company news service from the London Stock Exchange