Restructure of BEE arrangement and issue of equity

 

TIDMSNRP 
 
RNS Number : 0299W 
Strategic Natural Resources PLC 
11 November 2010 
 

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                                            11 November 2010 
 
                        Strategic Natural Resources PLC 
                            ("SNR" or the "Company") 
 
    Restructure of black economic empowerment partnership and issue of equity 
 
Strategic Natural Resources plc (AIM:SNRP)  is pleased to announce restructuring 
and consolidation of the black economic empowerment ("BEE") shareholding in its 
74 per cent. owned subsidiary, Elitheni Coal (Pty) Ltd ("Elitheni") as follows: 
Highlights 
 
·      new major BEE partner in Elitheni 
·      simultaneous subscription for 10,000,000 new ordinary shares of 1 pence 
in SNR by the new BEE partner 
·     approximately GBP2.67m raised by the SNR group immediately in cash with a 
further GBP0.64m receivable by it under a loan agreement 
 
Background 
 
In accordance with South African mining law, as part of the grant of the 
Company's mining and prospecting rights, SNR is obliged to facilitate the 
participation of historically disadvantaged persons by 2014 in Elitheni. In 
order to comply with this, in July 2008 the Company's wholly owned subsidiary, 
Acharnian Mining Limited ("Acharnian"), transferred shares equating to 26 per 
cent. of the issued share capital of Elitheni to Vuwa Investments (Pty) Limited 
("Vuwa") (21 per cent.) and Mr. Christopher Mazizandile Msutu ("Mr Msutu") (5 
per cent.). 
 
Vuwa paid for 4 per cent. of the shares in Elitheni at the time of the transfer 
in June 2008 and the balance was loaned to Vuwa by Acharnian. In addition, 
Acharnian also loaned Mr Msutu the purchase price for the Elitheni shares issued 
to him. 
 
In order to restructure and consolidate the BEE shareholding in Elitheni, 
Acharnian entered into a conditional share purchase agreement (the "Share 
Purchase Agreement") on 9 November 2010 with Rapitrade 644 (Pty) Ltd 
("Rapitrade") replacing these original loans. Rapitrade is controlled by Mr 
Phumelele Stone Sizani ("Mr Sizani"). 
 
New BEE partner 
 
Under the terms of the Share Purchase Agreement, Acharnian will re-sell the 
remaining 22 per cent. formerly held by Mr Msutu and Vuwa  to Rapitrade for the 
sum of ZAR 22,000,000 (approximately GBP2,001,000) (the "Sale Price"). Both Vuwa 
and Mr Msutu have confirmed in writing to Acharnian their agreement to this 
consolidation and restructuring of Elitheni's BEE shareholding. This Sale Price 
will be satisfied by the payment by Rapitrade to Acharnian of  ZAR 15,000,000 
(approximately GBP1,370,000) in cash and a simultaneous loan of ZAR 7,000,000 
(approximately GBP637,000) by Acharnian to Rapitrade. This loan will bear 
interest at a rate equal to the three month LIBOR plus 1.5 per cent. to be 
rolled up with the principal.  Upon Elitheni declaring a dividend, Rapitrade 
will apply 50 per cent. of the sums payable towards discharging the then 
outstanding loan. 
 
Rapitrade in turn, has an agreement with Mr Msutu for him to share in 
Rapitrade's equity. Mr Msutu will continue fulfilling the role of Elitheni's 
Director of stakeholder management. 
 
The Share Purchase Agreement is conditional, inter alia, on a shareholders' 
agreement being concluded in respect of Elitheni as well as all necessary 
regulatory and other approvals being obtained within 40 business days of the 
date of the Sale and Purchase Agreement. 
 
Following completion of the restructure and consolidation, Acharnian will own 74 
per cent. of Elitheni and Rapitrade and Vuwa will each own 22 per cent. and 4 
per cent. respectively. 
 
Appoint to the board of Elitheni 
 
In accordance with the terms of the new BEE agreement Rapitrade have the right 
to appoint a director to the board of Elitheni and it is their intention to 
appoint Mr Sizani, who is currently a Member of Parliament in the South African 
Government. 
 
Mr Sizani qualified from the University of East Anglia in the UK with an MA 
after he had been imprisoned with Mr Nelson Mandela on Robben Island from 1976 
to 1981. He was a former Eastern Cape Education Minister and subsequently 
Chairperson of the African National Congress in the Eastern Cape. 
 
It is the intention of the SNR board to appoint Mr Sizani as a director of SNR 
over the coming weeks, subject to compliance with the AIM Rules for Companies. 
 
Share subscription 
 
As part of the terms of Rapitrade's involvement as a BEE partner in Elitheni, 
Rapitrade has agreed to purchase 10,000,000 new ordinary shares of 1 pence each 
in SNR at subscription price of 13p per share (the "Rapitrade Shares"). The 
Rapitrade Shares will be issued 10 days after the date upon which the Share 
Purchase Agreement becomes unconditional and, when issued, will rank pari passu 
in all respects with the existing issued share capital of the Company. The 
aggregate funds raised as a result of Rapitrade's subscription, namely 
GBP1,300,000, will be used to continue the execution of SNR's business plan. 
 
An application will be made for the Rapitrade Shares to be admitted to trading 
on AIM following the date of their issue and further announcements will be made 
in this regard.  When issued the Rapitrade Shares will represent 9.61 per cent. 
of the enlarged share capital of SNR. The total enlarged issued share capital of 
SNR following the admission of the Rapitrade Shares will be 104,103,333 ordinary 
shares of 1 pence each in the capital of the Company. The above figure may be 
used by shareholders at the appropriate time as the denominator for the 
calculations by which they will determine if they are required to notify their 
interest in, or a change to their interest in, the share capital of the Company 
under the Disclosure and Transparency Rules. 
SNR's CEO David Nel said: "We are excited and honoured to move forward in 
partnership with Mr Stone Sizani. Finalising and consolidating our paid-up 
Elitheni BEE shareholding is a significant achievement which will enable us to 
expedite the objectives we have set out to achieve in the development of 
Elitheni. We are also pleased to have achieved the 26 per cent. BEE shareholding 
level required by the Department of Mineral Resources well ahead of the 2014 
deadline". 
 
                                      ends 
 
For further information, please contact: 
 
Strategic Natural Resources plc 
David Nel, Chief Executive Officer 
[phone] 
Jeremy Metcalfe, Communications Director 
[phone] 
 
Nominated Adviser and Joint Broker - Allenby Capital Limited 
Nick Naylor / Alex Price / James Reeve 
[phone] 
 
Joint Broker - SP Angel Corporate Finance Limited 
Emin Eyi / Tercel Moore 
[phone] 
 
Financial PR/IR - Blythe Weigh Communications 
[phone] 
Ana Ribeiro / Tim Blythe / Matthew Neal 
 
For further information about Strategic Natural Resources plc please visit 
www.snrplc.co.uk. 
 
About Black Economic Empowerment 
 
Black Economic Empowerment is a programme launched by the South African 
government with the aim of redressing the inequalities of Apartheid by giving 
previously disadvantaged groups economic opportunities previously not available 
to them. It includes measures such as Employment Equity, skills development, 
ownership, management, Socioeconomic development and preferential procurement. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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