Bushveld Minerals Limited Circular Publication Greenhills Resources Demerger (4771S)

TIDMBMN

RNS Number : 4771S

Bushveld Minerals Limited

02 October 2017

Bushveld Minerals Ltd

("Bushveld" or the "Company")

Publication of Circular to Approve the Demerger of Greenhills Resources Limited and

Proposed Subdivision of each Ordinary Share

Bushveld Minerals Limited (AIM: BMN), a diversified mineral development company with a portfolio of vanadium, tin, coal, titanium and iron ore assets in Southern Africa, confirms that it intends to effect a demerger of its wholly owned subsidiary, Greenhills Resources, and its subsidiaries (the "Demerger").

If approved by shareholders, the Demerger will result in Bushveld shareholders continuing to hold the same number of ordinary shares in the Company as held by them on the Demerger Record Date, and also holding an equal number of AfriTin ordinary shares ("AfriTin Shares") to be issued by Afritin Mining Limited ("AfriTin"), which will become the holding company of the Greenhills Group.

The Demerger is conditional on shareholder approval and the admission of the AfriTin Shares to trading on AIM, a market operated by the London Stock Exchange, and it is currently anticipated that admission will occur and dealings in AfriTin Shares will commence during November 2017.

As stated above, shareholder approval is required for the Demerger and accordingly a circular is being posted to all shareholders (the "Circular") today to convene a General Meeting to be held at 18-20 Le Pollet, St Peter Port, Guernsey GY1 1WH on 20 October 2017 at 10 a.m.

The letter from the Chairman is extracted from the Circular and set out below as part of this announcement. Shareholders should read the whole of the Circular and not only rely on the information provided in this announcement. The Circular gives shareholders further information about the background to and reasons for the proposed Demerger, including why the Board believes the proposal is in the best interest of the Company and its shareholders. A copy of the circular is available on the Company's website www.bushveldminerals.com.

All terms used in this announcement are the same as set out in the Circular, unless otherwise specified.

Fortune Mojapelo, CEO of Bushveld Minerals Limited, commented: "The proposed de-merger is an important step in the execution of our stated strategy for the Company's tin platform, Greenhills Resources Limited. Having built a critical mass of in-situ tin resources in South Africa and Namibia, with a near term production profile initially focused on the flagship Namibian Uis Tin Project, the time is opportune for Bushveld to launch a new stand-alone AIM listed dedicated tin platform, which will be called AfriTin Mining Limited. AfriTin, led by Anthony Viljoen, who has played a central role in the origination and development of the Company's tin portfolio, will be supported by a sound and experienced management team and a high calibre board of directors. AfriTin gives our shareholders direct interest in an AIM listed platform that is well poised to grow into a significant producer of tin initially and systemic growth as a consolidator of African tin assets over the longer term. Bushveld will retain a significant shareholding in and continue to support AfriTin as it embarks on this new journey as an African tin champion."

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulations (EU) No. 596/2014.

Enquiries:

Bushveld Minerals Limited

Fortune Mojapelo [phone]

[e-mail]

SP Angel Corporate Finance (Nominated Adviser and Joint broker)

Ewan Leggatt / Richard Morrison [phone]

Beaufort Securities (Joint broker)

Jon Bellis [phone]

Blytheweigh (Public Relations)

Tim Blythe / Camila Horsfall [phone]

Gabriella von llle [phone]

EXTRACTED FROM THE CIRCULAR

Letter FROM THE CHAIRMAN TO SHAREHOLDERS

Dear Shareholder

Proposed sub-division of each Ordinary Share and approval of the demerger of Greenhills Resources Limited

1. INTRODUCTION

The Board announced today that the Company intends to effect a demerger of its wholly owned subsidiary, Greenhills Resources, and its subsidiaries. Further details of the Demerger are set out in paragraph 6 of this Part 1.

If approved by Shareholders, the Demerger will result in Shareholders continuing to hold the same number of Ordinary Shares in the Company as held by them on the Demerger Record Date, and also holding an equal number of AfriTin Shares to be issued by AfriTin, which will become the holding company of the Greenhills Group.

Shareholders attention is however drawn to the proposed transactions resulting in the issue of further AfriTin Shares described in paragraph 4 of this Part I and should note that as a result of these proposed transactions the proportion of the share capital of AfriTin which will be held by them immediately following Admission will be less than the proportion of the share capital of Bushveld Minerals which will be held by them on the Demerger Record Date. The exact percentage of the total issued share capital in AfriTin held by Bushveld Shareholders will only be determined once the Placing has been completed.

The Demerger will be conditional upon Admission.

Shareholder approval is required for the Demerger and accordingly a General Meeting is being convened at 18-20 Le Pollet, St Peter Port, Guernsey GY1 1WH at 10:00 a.m. on 20 October 2017. The Notice of General Meeting is set out at the end of this Circular.

Shareholders should read the whole of this Circular and not just rely on the summarised information set out in this letter. The purpose of this Circular is to give you further information about the background, to and reasons for, the proposed Demerger, including why the Board believes the Demerger to be in the best interests of the Company and of Shareholders as a whole.

2. BACKGROUND TO AND REASONS FOR THE DEMERGER

Bushveld Minerals is a diversified AIM listed mineral development company with a portfolio of vanadium, tin, coal, titanium and iron ore assets in Southern Africa and Madagascar. One of its stated objectives has been to progress the tin assets to a level where they could be placed into a stand-alone tin company by accumulating a critical mass of in-situ deposits with a near-term production profile.

The principal tin assets of the Bushveld Group are the Mokopane Tin Project and the Zaaiplaat Tin Tailings Project, located in South Africa, and its recently acquired interest in the Uis Tin Project in Namibia.

The Directors believe that the tin assets now represent an attractive stand-alone platform with a strong and dedicated management team in place to deliver long-term shareholder value. The Directors also believe that these assets represent a significant value opportunity that is not being fully exploited within Bushveld Minerals.

By separating them from the rest of the Bushveld Group, the Directors believe they will be able to fully realise that value. The de-merged entity will also be able to raise further funds to ensure the tin assets are brought into production as quickly as possible and will, conditional on Admission to AIM, acquire the remaining 50.5% of Dawnmin which indirectly owns 85% of the Uis Tin Project.

The proposed Demerger also ensures the Company's primary vanadium platform, together with its coal and power platform, receive increased and dedicated management time and the financial resources to continue to grow and achieve their strategic objectives.

Further details of the Demerger process are set out in paragraphs 4 and 6 of this Part 1.

3. ONGOING STRATEGIES POST DEMERGER

Bushveld

Following the Demerger, Bushveld will continue to operate a commodity-focused platform with a view to building independent businesses in the natural resources sector. In respect of the Bushveld Mineral's vanadium assets, the Company's vision is to build the largest, lowest-cost vertically integrated vanadium company that:

* has the largest high-grade primary vanadium resource base and the largest primary vanadium production in the world;

* can target the lowest cost position on the vanadium production cost curve, leveraging high insitu V2O5 grades, open-cast mining, as well as access to low-cost brownfield processing infrastructure; and

* can develop downstream operations beyond production of end-use vanadium products to include development and deployment of vanadium applications in industries such as the energy storage market, where the Company intends to manufacture vanadium electrolyte and to build large-scale vanadium based vanadium redox flow batteries.

In respect of the coal assets, the Company is seeking to secure a power purchase agreement for a 60MW thermal coal power project as well as tying up partnerships with financial and EPC partners ahead of a potential spin-off of Lemur Resources Limited ("Lemur").

Following Admission, Anthony Viljoen will be the Chief Executive Officer of AfriTin and will cease to be an executive director of Bushveld Minerals. In view of Anthony's extensive experience in Madagascar and in relation to Lemur in particular, he will continue as a non-executive director of Bushveld Minerals and as Chairman of Lemur. The Board has appointed Prince Nyati as the project head of Lemur and he will take up the day-to-day responsibility of developing the Lemur project.

AfriTin

The strategy of AfriTin, following Admission, is to become a primary producer of tin concentrate and metal and through in-house development of the tin projects (described below) as well as consolidation, with an initial focus on Africa.

4. AFRITIN MINING LIMITED

Background

AfriTin was formed in 2017 to acquire the tin assets of Bushveld Minerals held by the Greenhills Group, namely the Mokopane Tin Project and Zaaiplaat Tin Tailings Project, located in South Africa, and the recently acquired interest in the Uis Tin Project in Namibia.

Summary of the Tin Projects

The Mokopane Tin Project is a brownfields tin project containing 18,447 tonnes of tin with an average grade of 0.12% tin (Sn) on two adjacent deposits. It is situated on the Northern Limb of the Bushveld Complex and consists of one prospecting right (2205 PR), covering six farms with an area of approximately 13,422 ha. Within the licence area, numerous targets for open-castable disseminated tin resources have been identified, and Greenhills has explored and drilled two of the targets, Groenfontein and Zaaiplaats, upon which a scoping study was based and the results released in September 2014.

The scoping study incorporated a simple process design based on closed circuit multi-stage gravity separation, followed by small-scale flotation and electrostatic separation, and smelting to produce a high-purity metal. The base case scenario is of a 691,000 tpa ROM operation producing 700 tpa of 99.5% tin metal from 1,380 tpa of 51.4% Sn concentrate. The required capital expenditure is low at US$16.7 million and the economics of this project are positive showing a pre-tax NPV of US$18.0 million and post-tax NPV of US$10.0 million, as well as a pre-tax IRR of 49.8% and posttax IRR of 34.6%.

The Uis Tin Project

The Uis Tin Project is one of the largest undeveloped opencast hard rock tin deposits in the world and has a history of significant tin mining with an estimated 70.3Mt non-JORC resource at 0.14% Sn for a total potential resource of over 90,000 tonnes of contained tin.

The Uis Tin Project is located in the Erongo Region of Namibia and comprises three mining licenses, ML 134, ML 129 (B1 and C1) and ML 133. Historic work confirmed a significant tin resource on all three licenses, the most significant of which is the ML 134 resource estimated at 70.3Mt at 0.14% Sn for a total potential resource of over 90,000 tonnes of contained tin.

Due diligence has confirmed large well developed pegmatite ore body with 0.3% Sn commonly found in greisenised zones, estimated to host approximately 20,000 tonnes of tin. Greenhills intends to confirm a JORC compliant resource and advance feasibility studies, while simultaneously refurbishing an old existing plant for a 10tph pilot scale production of tin concentrate. Following due diligence work recently completed, Greenhills has identified high grade zones that it recommends form the basis for early production with pilot scale production, at the existing plant which is currently being refurbished by Erongo.

Summary of the Demerger

AfriTin and Bushveld Minerals entered into the Demerger Agreement on 2 October 2017. In order to effect the Demerger, it is proposed that Bushveld Minerals will dispose of 85% of the issued share capital of Greenhills Resources to AfriTin for a consideration equal to the Deemed Value, conditional only on the passing of the Resolution and Admission. The consideration will be satisfied through the issue to each Shareholder of one AfriTin Share for each Ordinary Share held by them on the Demerger Record Date.

In order to compensate the Company for the capitalisation of outstanding intercompany loans made to the Greenhills Group, Bushveld Minerals will retain 15% of the Greenhills Shares, which on Admission will be exchanged for such number of AfriTin Shares as is equal to 15% of the aggregate of such AfriTin Shares and the Demerger Shares. Further details of the Demerger Agreement are set out in Part 2.

Other issues of AfriTin Shares on Admission

Conditional on Admission, it is expected that AfriTin will also issue AfriTin Shares as set out in the following paragraphs.

Proposed acquisition of a further interest in the Uis Tin Project

As at the date of this Circular, Greenhills Resources owns its interest in the Uis Tin Project through a 49.5% interest in Dawnmin, with the remaining 50.5% (the "Naminco Interest") being held by Naminco, or one of its wholly owned subsidiaries. It is expected that AfriTin will acquire the Naminco Interest (and will direct the shares comprising the Naminco Interest be transferred to Greenhills Resources) the consideration for which will be satisfied by the issue to Naminco of new AfriTin Shares at the Placing Price, provided that such number of new AfriTin Shares do not represent more than 29.9% of the Enlarged Issued Share Capital. The Dawnmin Acquisition will be conditional upon Admission.

The number of new AfriTin Shares to be issued pursuant to the Dawnmin Acquisition will depend upon the final agreement of the consideration for the Naminco Interest and the Placing Price. If Naminco's resulting interest in Afrtin is 20% or more of the Enlarged Share Capital (which it is expected to be), Naminco will enter into a relationship agreement with AfriTin and AfriTin's nominated adviser whereby it agrees that all transactions and relationships between it and AfriTin will be conducted on terms which allow AfriTin and the Greenhills Group to carry on their business dependently, and all such transactions and relationships will be at arm's length and on a normal commercial basis.

Loan Notes

It is expected that the Loan Notes will be converted automatically upon Admission into AfriTin Shares at the Conversion Price. The Company holds GBP720,000 of the Loan Notes, which monies are being utilised by AfriTin to fund the costs of Admission and the associated transactions. The remaining GBP280,000 of the Loan Notes are held by certain private investors, which monies will be used by AfriTin for working capital purposes. The number of new AfriTin Shares to be issued pursuant to the conversion of the Loan Notes will depend upon the Placing Price.

Acquisition of the Bushveld Retained Interest

Conditional upon Admission, AfriTin will acquire the Bushveld Retained Interest in consideration of the issue to the Company of such number of new AfriTin Shares as is equal to 15% of the aggregate of such AfriTin Shares and the Demerger Shares.

If the Company's interest in AfriTin is 20% or more of the Enlarged Share Capital (which it is expected to be as a result of the issue of new AfriTin Shares either received in exchange of the Bushveld Retained Interest and arising on conversion of the Loan Notes, each as described above), the Company will enter into a relationship agreement with AfriTin and the AfriTin's nominated adviser whereby it agrees that all transactions and relationships between it and AfriTin will be conducted on terms which allow AfriTin and the Greenhills Group to carry on their business independently, and all such transactions and relationships will be at arm's length and on a normal commercial basis.

The Placing

A placing of new AfriTin Shares at the Placing Price. The number of new AfriTin Shares to be issued pursuant to the Placing will be dependent upon the amount raised and the Placing Price.

Issue of new AfriTin Shares to directors, employees and consultants

It is proposed that on Admission new AfriTin Shares will be issued to directors, employees and consultants of AfriTin at the Placing Price where such employees and consultants elect to receive such shares in part satisfaction of their respective salaries and/or fees.

Accordingly, Bushveld Shareholders should be aware that, as a result of the proposed Placing and any other proposed transactions referred to above pursuant to which AfriTin Shares are to be issued prior to or upon Admission, the proportion of the share capital of AfriTin which will be held by them immediately following Admission will be less than the proportion of the share capital of Bushveld Minerals which will be held by them on the Demerger Record Date. The exact percentage of the total issued share capital in AfriTin held by Bushveld Shareholders will only be determined once the Placing has been completed.

Directors

At Admission, the board of directors of AfriTin will comprise one executive director (being Mr Viljoen, described below) and three non-executive directors.

The Chief Executive Officer of AfriTin will be Anthony Viljoen, a brief biography of whom is set out below:

Anthony Viljoen, aged 40 - Chief Executive Officer

Anthony is a mining entrepreneur and founding shareholder of VM Investment company, a principal investment company within the African mining sector. Anthony has been involved in the development of numerous exploration and mining projects across Africa over a wide range of commodities and geographies. He was instrumental in the development and listing of Lemur Resources, a Coal project in Madagascar, on the Australian Stock Exchange and raising AUS$25 million on IPO and sat as the Chief Executive Officer of that company. Anthony is also a founding and current executive director of Bushveld Minerals and has completed a number of acquisitions in the tin and vanadium markets in Africa for Bushveld Minerals. He has a deep knowledge of the African mining and is familiar with London markets. Anthony holds a Post-Graduate degree in finance and began his career in investment banking in London.

Details of the other board members will be included in the Admission Document to be published shortly prior to Admission.

Pursuant to the Demerger Agreement, Bushveld Minerals will, for a period of two years following Admission and provided that during that period it beneficially owns or is interested in 20% or more of the total issued share capital of AfriTin, be entitled to appoint one non-executive director to the board of AfriTin or to appoint a non-director representative to attend and speak at meetings of the AfriTin board.

Articles

The Directors consider that, in all material respects, the AfriTin Articles provide Shareholders with the same rights, and contain the same obligations, in respect of AfriTin as the Bushveld Articles provide or contain in respect of the Company. A summary of the AfriTin Articles is set out in Part 2 of this document. To request a copy of the AfriTin Articles, Shareholders may contact the Company Secretary, Oak Secretaries Limited at [e-mail].

Further details of AfriTin are set out in Part 2.

5. THE GREENHILLS GROUP

Greenhills has (or will on Admission have, assuming completion of the Dawnmin Acquisition) the following wholly owned direct subsidiaries:

* Dawnmin;

* Mokopane Tin Company (Pty) Limited, a company registered in South Africa with company number 2010/018622/07; and

* Pamish Investments No.71 (Pty) Ltd, a company incorporated in South Africa with company number 2011/005217/07;

Dawnmin has an 85% interest in Guinea Fowl Investments Twenty Seven (Pty) Limited a company incorporated in Namibia with company number 2014/0098, through which it holds the Uis Tin Project.

Mokopane Tin Company (Pty) Limited has the following interests,:

* a 74% interest in Renetype (Pty) Limited, a company incorporated in South Africa with company number 2009/011128/07), through which it holds the Mokopane Tin Project; and

* a 50% interest in Jaxson 641 (Pty) Limited, a company incorporated in South Africa with company number 2016/492636/07.

Pamish Investments No.71 (Pty) Ltd has a 74% interest in Zaaiplaats Mining (Pty) Ltd, a company incorporated in South Africa with company number 1908/002990/06. Zaaiplaats Mining (Pty) Ltd holds the Zaaiplaat Tin Tailings Project.

A structure diagram showing Greenhills Resources and its subsidiaries immediately following Admission is set out in the Circular.

As at 28 February 2017, the Greenhills group had net assets of GBP18,895,632 and reported sales of GBP nil and an operating loss of GBP239,255 in the year ending 28 February 2017.

Full details of the assets and liabilities, financial position, profits and losses and prospects of AfriTin and the rights attaching to the AfriTin Shares will be set out in an Admission Document.

6. DETAILS OF THE DEMERGER

The Demerger will comprise the following steps: Bushveld Minerals and AfriTin have entered into the Demerger Agreement, pursuant to which Bushveld Minerals has agreed to transfer 85% of the entire issued share capital of Greenhills Resources to AfriTin at the Deemed Value, conditional, inter alia, upon the Resolution being passed and Admission;

Subject to the passing of the Resolution at the General Meeting and conditional inter alia upon Admission, the share capital of Bushveld Minerals will be amended so that each Ordinary Share will be sub-divided into one Ordinary Share and one Redeemable Share;

The Redeemable Shares will provide the holders of such shares with the following rights and obligations:

* the holders of the Redeemable Shares, as a class, shall have the right to receive any distribution (whether directly or indirectly) of the Company's interest in Greenhills Resources (save for the Bushveld Retained Interest), to the exclusion of any other class of shares, but shall otherwise not be entitled to receive any dividends or distributions;

* the Redeemable Shares will not provide the holder of such shares with a right to receive notice of, attend or vote at general meetings of the Company, save to the extent that the Companies Law or the Bushveld Articles requires the holders of the Redeemable Shares to approve a variation of the rights attaching to the Redeemable Shares;

* the Company will be entitled to redeem all (but not some) of the Redeemable Shares at any time for an aggregate redemption price equal to the Deemed Value, which shall be satisfied

by the Company effecting the transfer of 85% of the Greenhills Shares to AfriTin and procuring the issue by AfriTin of the Demerger Shares to the holders of the Redeemable Shares in accordance with the Demerger Agreement.

Prior to Admission, the Directors will determine the amount of the Company's share capital which is to be allocated to the Redeemable Shares upon the sub-division described above. The Directors may determine the appropriate allocation in their entire discretion, provided that the amount of share capital so allocated to the Redeemable Shares is at least equal to the Deemed Value.

Upon Admission, the following will occur:

* the sub-division of the Company's share capital into Ordinary Shares and Redeemable Shares (as described iabove) will become effective;

* 85% of the issued share capital of Greenhills Resources will be transferred by the Company to AfriTin at the Deemed Value;

* AfriTin will issue the Demerger Shares to the Bushveld Shareholders; and

* the Company will redeem the Redeemable Shares, at an aggregate redemption price equal to the Deemed Value, which will be deemed to have been satisfied by the Company effecting the transfer of 85% of the Greenhills Shares to AfriTin and procuring the issue by AfriTin of the Demerger Shares to the holders of the Redeemable Shares in accordance with the Demerger Agreement.

Immediately following the Demerger and Admission, each Shareholder will hold, for each Ordinary Share held by them on the Demerger Record Date, one Ordinary Share and one AfriTin Share. The redemption of the Redeemable Shares will result in a reduction of the share capital of Bushveld Minerals of an amount at least equal to the Deemed Value, and a related indirect distribution of 85% of Greenhills Resources to the Bushveld Shareholders.

The Demerger will also constitute a reduction of capital by Bushveld Minerals and an indirect distribution to Bushveld Shareholders of 85% of their indirect interest in Greenhills Resources.

7. SETTLEMENT

Redeemable Shares

The Redeemable Shares issued in connection with the Demerger will be issued in certificated form but the Company will not issue any share certificates in respect of such shares. No contract notes relating to the issue or the subsequent redemption of the Redeemable Shares will be issued.

Demerger Shares

The Demerger Shares will be issued to Shareholders in the following manner:

* Shareholders who hold their Ordinary Shares in uncertificated form (that is, in CREST) will receive their AfriTin Shares in uncertificated form and the issue of such shares will be credited to their respective CREST accounts.

* Shareholders who hold their Ordinary Shares in certificated form (that is, not in CREST) will receive their AfriTin Shares in certificated form. Share certificates in respect of such shares will be despatched to the last registered address appearing on the register of members of the Company. All such certificates will be sent by normal post and at the respective Shareholder's risk.

8. GENERAL MEETING

The Demerger is being conducted in accordance with the requirements of the Companies Law. In order to comply with these requirements, the Company is convening a General Meeting for 10:00 a.m. on 20 October 2017 to consider and, if thought fit, pass the Resolution to grant the Company the authority to undertake the Demerger and to sub-divide the Company's share capital.

The Resolution, if passed, will have the following effect:

* to approve the disposal of 85% of the Greenhills Shares to AfriTin pursuant to the Demerger Agreement, conditional upon Admission;

* to approve the disposal of the Bushveld Retained Interest to AfriTin in exchange for the issue to the Company of such number of new AfriTin Shares as is equal to 15% of the aggregate of such AfriTin Shares and the Demerger Shares, conditional upon Admission;

* to approve the sub-division of each Ordinary Share into one Ordinary Share and one Redeemable Share;

* to define the rights and obligations attaching to the Redeemable Shares; and

* to authorise the Directors to determine the amount of the Company's share capital to be allocated to the Redeemable Shares, provided that the amount of share capital so allocated is at least equal to the Deemed Value.

The Resolution must be passed either (i) on a show of hands by at least 75 per cent. of those Shareholders present in person or by proxy and voting or (ii) on a poll by those Shareholders (present in person or by proxy and voting) holding 75 per cent. or more of the Ordinary Shares voted, in each case, at the General Meeting. The Demerger will not proceed unless the Resolution is duly passed.

Pursuant to Regulation 41 of the CREST Regulations, the Company specifies that only those members registered on the Company's register of members at the Record Date (or, if the General Meeting is adjourned, at 10:00 a.m. on the day two days prior to the adjourned meeting) shall be entitled to attend and vote at the General Meeting.

9. CONDITIONS

The proposed Demerger is conditional upon the satisfaction or waiver of the following (the "Conditions"):

* the approval of Shareholders at the General Meeting, by the passing of the Resolution;

* the Directors being satisfied on reasonable grounds that the Company will, immediately after the proposed Demerger, satisfy the solvency test under the Companies Law;

* Admission becoming effective;

* the grant of any consents, authorisations or similar clearances which are required by any government, regulatory body or authority for completion of the Demerger, or which are in the reasonable opinion of the Company and AfriTin necessary or desirable for completion of the Demerger;

* no person having commenced, or threatened to commence, any proceedings or investigation for the purposes of prohibiting or otherwise challenging or interfering with the Demerger, and no person having enacted or proposed any legislation which would prohibit, materially restrict or materially delay the implementation of the Demerger or the operations of the businesses of the Company or AfriTin; and

* the consent of holders of Warrants, where such consent is required pursuant to the instrument creating the Warrants held by them (but not otherwise).

Section 303 the Companies Law provides that the board of directors of a company may authorise a distribution to be made by a company if it is satisfied on reasonable grounds that such company will immediately after the distribution satisfy the solvency test and any other requirement in its memorandum and articles.

It is expected that, subject to the approval of Shareholders at the General Meeting and the Directors being satisfied on reasonable grounds that the Company will satisfy the solvency test, the proposed Demerger will occur no later than 30 November 2017.

If the Resolution is not approved by Shareholders, or if Admission does not occur by 2 April 2018, the Demerger Agreement will terminate and the Demerger will not occur.

There can be no guarantee that Admission will occur or that the other conditions set out above will be satisfied, in which case, the Demerger will not take place, and no Demerger Shares shall be issued.

10. TAXATION

A summary of the taxation consequences of the Demerger for UK and Guernsey resident Shareholders is set out in paragraph 7 of Part 2 of this Circular. It should be noted that this refers to the current system of taxation. Shareholders are advised to consult their own professional advisers regarding their own tax position.

11. EXISTING WARRANTS

As at the date of this document there are in issue 30,064,320 outstanding warrants to subscribe for Ordinary Shares. Pursuant to the anti-dilution provisions in the deeds under which most of the Warrants are constituted, the auditors of the Company are required, on inter alia, a reduction of capital of the Company, to issue a certificate setting out adjustments required to the number of Ordinary Shares which may be subscribed for and/or the subscription price, such that the holders of such Warrants are not prejudiced and/or diluted by the reduction.

Pursuant to the anti-dilution provisions contained in the deeds under which a small number of the Warrants are constituted, the Demerger will oblige the Company to treat the holder of such Warrants, upon their exercise, as if it had exercised its Warrants immediately prior to the Demerger, such that it was a holder of the Ordinary Shares resulting from the exercise on the Demerger Record Date.

Accordingly the holder of such Warrants will be entitled on exercise to be issued with new AfriTin Shares following the Demerger.

Pursuant to the anti-dilution provisions contained in the deeds under which approximately 1 million of the Warrants are constituted, the Demerger will oblige the Company to procure that AfriTin issues to the holders of such Warrants, substitute warrants in AfriTin entitling them to subscribe for such number of AfriTin Shares as they would have been entitled to be issued in Ordinary Shares in the event that as at the Demerger Record Date they had exercised their Warrants in full immediately before the Demerger Record Date.

Holders of Warrants will be contacted separately.

12. ACTION TO BE TAKEN

Shareholders will find enclosed with this Circular a Form of Proxy for use at the General Meeting. Whether or not Shareholders intend to be present at the meeting, Shareholders are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon in the envelope provided so that it arrives at Capita Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and in any event so as to be received by post or by hand (during normal business hours only) not later than 10:00 a.m. on 18 October 2017.

Completion and return of the Form of Proxy will not prevent Shareholders from attending and voting at the meeting should they so wish.

CREST members who wish to appoint a proxy or proxies through the CREST electronic appointment service may do so for the General Meeting by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed (a) voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order to be valid the appropriate CREST Proxy Instruction must be transmitted so as to be received by the Company's agent by no later than 10.00 a.m. on 18 October 2017.

13. FURTHER INFORMATION

Your attention is drawn to the additional information set out in Part 2 of this Circular.

14. RECOMMENDATION

The Directors consider that the proposal to be considered at the General Meeting is in the best interests of Shareholders as a whole and unanimously recommend that you vote in favour of the Resolution as they intend to do in respect of their own beneficial holdings of 13,366,667 Ordinary Shares, representing 1.66 per cent. of the existing issued ordinary share capital of the Company. If you are in any doubt as to any aspect of the proposals referred to in this document or as to the action you should take in respect of them, you should seek your own advice from your stockbroker, bank manager, solicitor, accountant or other professional adviser duly authorised under the FSMA if you are in the United Kingdom, or another appropriately authorised independent adviser if you are in a territory outside the United Kingdom.

Yours sincerely

Ian Watson

Non-Executive Chairman

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCMTBFTMBTMBJR

(END) Dow Jones Newswires

October 02, 2017 12:25 ET (16:25 GMT)