summary CirCular to Keaton shareholders

Transcription

This Summary Circular is important and requires your immediate attention
The definitions and interpretations commencing on page 5 of this Summary Circular apply, mutatis mutandis, throughout this Summary
Circular including this cover page.
If you are in any doubt as to what action you should take arising from this Summary Circular, please consult your CSDP, broker, banker,
attorney, accountant or other professional advisor immediately.
If you have disposed of all of your Keaton Shares, please forward this Summary Circular to the purchaser of such Keaton Shares or to
the broker, CSDP, banker, attorney, or other agent through whom the disposal was effected.
Action required
Keaton Shareholders are referred to page 3 of this Summary Circular, which sets out the action required by them.
(Incorporated in the Republic of South Africa)
(Registration number. 2006/011090/06)
Share code: KEH ISIN: ZAE000117420
summary Circular to Keaton Shareholders
regarding:
• the proposed acquisition of the entire issued share capital of Xceed by way of the Scheme in
accordance with Part 5.1 of the Australian Corporations Act; and
• the Specific Issue of 32 647 838 New Keaton Shares for cash to Plusbay, a material shareholder
of Keaton and a Related Party in terms of the Listings Requirements;
and incorporating:
• a notice convening a General Meeting of Keaton Shareholders; and
• a form of proxy (blue) for use by Certificated and own-name Dematerialised Keaton
Shareholders in respect of the General Meeting of Keaton Shareholders.
THIS SUMMARY CIRCULAR IS ONLY A SUMMARY OF THE INFORMATION IN THE CIRCULAR
AND DOES NOT CONTAIN FULL OR COMPLETE DETAILS. THE CIRCULAR CAN BE ACCESSED ON
KEATON’S WEBSITE: WWW.KEATONENERGY.CO.ZA FROM FRIDAY, 20 DECEMBER 2013.
Joint Financial Advisors
Legal Advisor in Australia
Legal Advisor in South Africa
Investment Bank and Sponsor
Independent Reporting
Accountants to Keaton
Independent Reporting
Accountants in relation to Xceed
Independent Expert
Joint Competent Persons
Tax and Exchange Control
Advisors to Keaton
Date of issue: 20 December 2013
CORPORATE INFORMATION AND ADVISORS
The definitions commencing on page 5 of this Summary Circular apply, mutatis mutandis, to this corporate information
and advisors section:
Company secretary and Registered Office
Transfer Secretaries
Michelle Louise Taylor
Ground Floor, Eland House
The Braes
3 Eaton Avenue
Bryanston
2191
(Postnet Suite 464, Private Bag X51, Bryanston, 2021)
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647/07)
Ground Floor
70 Marshall Street
Johannesburg
2001
(PO Box 61051, Marshalltown, 2107)
Joint Financial Advisor
Joint Financial Advisor
Qinisele Resources Proprietary Limited
13th Floor, The Forum at Sandton Square
2 Maude Street
Sandton
2196
(PO Box 2345, Northriding, 2162)
Ceres Capital International Limited
(Registration number 2444114)
1st Floor
24/25 New Bond Street
Mayfair
London
W1S 2RR
Independent Reporting Accountants to Keaton
Independent Reporting Accountants in relation to Xceed
KPMG Incorporated
KPMG Forum
1226 Francis Baard Street
Hatfield
Pretoria
0083
(PO Box 11265, Hatfield, 0028)
Moore Stephens FFRS Incorporated
No. 6 Lakeside Place
Kleinfontein Lake
Benoni
1501
(PO Box 663, Benoni, 1500)
Independent Expert
Legal Advisor in South Africa
BDO Corporate Finance
22 Wellington Road
Parktown
2193
(Private Bag X60500, Houghton, 2041)
Norton Rose Fulbright
Incorporated as Deneys Reitz Inc.
15 Alice Lane
Sandton
2196
(PO Box 784903, Sandton, 2196)
Legal Advisor in Australia
Investment Bank and Sponsor
Ashurst Australia
Level 32, Exchange Plaza
2 The Esplanade
Perth
Western Australia
6001
(GPO Box 9938, Perth, WA, 6848)
Nedbank Capital, a division of Nedbank Limited
135 Rivonia Road
Sandown
2196
(PO Box 1144, Johannesburg, 2000)
Joint Competent Person
Joint Competent Person
Venmyn Deloitte Proprietary Limited
Deloitte Place, The Woodlands
20 Woodlands Drive
Woodmead
Sandton
2191
(Private Bag X6, Gallo Manor, 2052)
Gemecs Proprietary Limited
Visiomed Office Park
Unit 16, Building 5
269 Beyers Naude Drive
Blackheath Ext. 1
2195
(PO Box 652252, Benmore, 2010)
Registered address of Xceed
Tax and Exchange Control Advisors to Keaton
Level 9
105 St George’s Terrace
Perth
Western Australia
6000
(GPO Box 2575, Perth, WA, 6001)
Webber Wentzel
10 Fricker Road, Illovo Boulevard
Johannesburg
2196
Keaton
Xceed
Date of incorporation: 10 April 2006
Place of incorporation: Johannesburg
Date of incorporation: 9 June 1986
Place of incorporation: Western Australia
1
TABLE OF CONTENTS
The definitions and interpretations commencing on page 5 of this Summary Circular apply, mutatis mutandis, to the
following table of contents:
Page
CORPORATE INFORMATION AND ADVISORS Inside front cover
ACTION REQUIRED BY KEATON SHAREHOLDERS
3
SALIENT DATES AND TIMES
4
DEFINITIONS AND INTERPRETATIONS
5
SUMMARY CIRCULAR TO KEATON SHAREHOLDERS
1. Introduction
2. The Transaction
3. The Specific Issue
4. The Off-take
5. Conditions Precedent
6. Pro Forma Financial Information and effects
7. Further information relating to Xceed
8. Statement as to working capital
9. Application for listing
10. Opinion and recommendations
11. Consents
12. General Meeting
ANNEXURE 1
VENMYN DELOITTE COVERING LETTER
Notice of General Meeting of Keaton Shareholders
Form of proxy (blue)
2
13
14
16
17
17
20
21
22
22
22
22
23
24
29
Attached
ACTION REQUIRED BY KEATON SHAREHOLDERS
The definitions and interpretations commencing on page 5 of this Summary Circular apply, mutatis mutandis, to this
action required by Keaton Shareholders section.
Please take careful note of the following provisions regarding the actions required by Keaton Shareholders:
• This Summary Circular contains information relating to the Transaction and the Specific Issue. You should read this
Summary Circular carefully and decide how you wish to vote on the Resolutions to be proposed at the General Meeting.
• The General Meeting, convened in terms of the notice incorporated in this Summary Circular, will be held at the
Vermillion Room, Wanderers Building, The Campus, 57 Sloane Street, Bryanston on Thursday, 23 January 2014,
commencing at 10:00.
• If you are in any doubt as to what action to take, please consult your broker, CSDP, banker, attorney, accountant, or
other professional advisor immediately.
1.
If you have disposed of all of your Keaton Shares
You should forward this Summary Circular to the purchaser of such Keaton Shares or to the broker, CSDP, banker,
attorney, or other agent through whom the disposal was effected.
2.
If you hold Certificated Keaton Shares
You are entitled to attend in person, or be represented by proxy, at the General Meeting.
If you are unable to attend the General Meeting, but wish to be represented thereat, you must complete and return
the attached form of proxy (blue), in accordance with the instructions contained therein, to be received by the
Transfer Secretaries by no later than 10:00 on Tuesday, 21 January 2014.
3.
If you hold Dematerialised Keaton Shares
3.1
Own-name registration
You are entitled to attend in person, or be represented by proxy, at the General Meeting.
If you are unable to attend the General Meeting, but wish to be represented thereat, you must complete and
return the attached form of proxy (blue), in accordance with the instructions contained therein, to be received
by the Transfer Secretaries by no later than 10:00 on Tuesday, 21 January 2014.
Other than own-name registration
Your CSDP or broker should contact you to ascertain how you wish to cast your vote at the General Meeting,
and thereafter cast your vote in accordance with your instructions. You should communicate such instructions
to your CSDP or broker timeously, as your CSDP or broker has to communicate these instructions to the
Transfer Secretaries by no later than 10:00 on Tuesday, 21 January 2014.
If your CSDP or broker does not contact you, you are advised to contact your CSDP or broker and furnish
them with your voting instructions. If your CSDP or broker does not obtain instructions from you, they will be
obliged to act in terms of your mandate furnished to them.
You are entitled to attend in person, or be represented by proxy, at the General Meeting. If you wish to attend
or be represented at the General Meeting, you must obtain the necessary letter of representation from your
CSDP or broker to enable you to attend or to be represented at the General Meeting. You must not complete
the attached form of proxy (blue).
Keaton does not accept responsibility and will not be held liable for any failure on the part of the CSDP
of a Dematerialised Keaton Shareholder to notify such Keaton Shareholder of the General Meeting or any
business to be conducted at the General Meeting.
3
SALIENT DATES AND TIMES
The definitions and interpretations commencing on page 5 of this Summary Circular apply, mutatis mutandis, to this
salient dates and times section:
Summary Circular and notice of General Meeting posted to Keaton Shareholders on
Friday, 20 December 2013
Last day to trade in order to be eligible to vote at the General Meeting
Friday, 10 January 2014
Record date for voting at the General Meeting
Forms of proxy for the General Meeting to be received by 10:00 on
Tuesday, 21 January 2014
General Meeting to be held at 10:00 on
Thursday, 23 January 2014
Release of results of the General Meeting on SENS on
Thursday, 23 January 2014
Publication of results of the General Meeting in the press on
Xceed Scheme Meeting to be held at 11:00 on1
Monday, 3 February 2014
Listing of the New Keaton Shares expected on
Friday, 7 February 2014
Xceed Scheme Implementation Date1
Wednesday, 19 February 2014
Notes:
1. Australian dates and times, all other dates and times are South African dates and times.
2. The above dates and times are subject to amendment. Any such amendment will be released on SENS and, if required by the Listings Requirements,
published in the South African press.
3. This Summary Circular and the Circular are available in English only and will be available on the Company’s website: www.keatonenergy.co.za
from Friday, 20 December 2013.
4
DEFINITIONS AND INTERPRETATIONS
In this Summary Circular, unless otherwise stated or the context otherwise indicates, the words in the first column below
shall have the meaning stated opposite them in the second column, reference to the singular shall include the plural and
vice versa, words denoting one gender shall include the other genders, and an expression denoting natural persons shall
include juristic persons and associations of persons. Unless otherwise specified all referenced legislation, governmental
bodies and regulators refer to South African legislation, governmental bodies and regulators:
“Agreed Coal Price”
the agreed base price (subject to any adjustment pursuant to the Off-take
Agreement) in respect of the Agreed Tonnage per metric ton of Coal FOB
one safe port/one safe berth at RBCT, as set out below in respect of each
calendar year (or part thereof) until the expiry of the Delivery Period:
– for 2015: US$ 60.50 per metric ton basis 5 650 Kcal/Kg NAR;
– for 2016: US$ 61.50 per metric ton basis 5 650 Kcal/Kg NAR;
“Agreed Prepayment Amount”
US$4 000 000, the agreed prepayment amount payable by Gunvor SA to
Keaton as part of the Off-take and as contemplated in the Off-take
Agreement;
“Agreed Tonnage”
600 000 metric tonnes (the total tonnage of coal required to be delivered by
Keaton to Gunvor SA pursuant to the Off-take Agreement);
“Ashurst” or “Legal Advisor in Australia”
Ashurst Australia, a general partnership constituted under the laws of the
Australian Capital Territory and part of the Ashurst group (and the legal
advisor to Keaton in Australia);
“ASIC”
Australian Securities and Investments Commission;
“ASX”
Australian Securities Exchange Limited (Australian Business Number:
83 000 943 377), a public company incorporated and registered in Australia,
licensed as an exchange under the Australian Corporations Act;
“Australia”
Commonwealth of Australia;
“Australian cent”
Australian cent, being one-hundredth of an Australian Dollar;
“Australian Corporations Act”
the Corporations Act 2001 (Cth), as amended;
“Australian Dollar” or “AU$”
Australian dollar, the official currency of Australia;
“Bankfontein”
the Bankfontein project situated on the farm Bankfontein 215 IS in the
Mpumalanga Province of South Africa;
“BDO” or “Independent Expert”
BDO Corporate Finance Proprietary Limited (registration number
1983/002903/07), a private company incorporated and registered in South
Africa and the independent expert to Keaton;
“BEE”
Broad-Based Black Economic Empowerment in South Africa pursuant to the
provisions of the South African Broad-Based Black Economic Empowerment
Act, 2003, and the Codes of Good Practice on Black Economic Empowerment
published under such Act, any sector specific empowerment initiative or
the MPRDA;
“Board of Directors”, or
“Board” or “Directors”
the board of directors of Keaton whose names are reflected on page 13 of
this Summary Circular;
5
“Braakfontein”
the Braakfontein project, located 10km east-southeast of the town of
Newcastle in the KwaZulu-Natal Province of South Africa;
“Business Day”
business day as defined in the Scheme Implementation Deed;
“Capex”
capital expenditure;
“Category 1 Transaction”
a transaction categorised as a category one transaction in terms of
Section 9 of the Listings Requirements;
“Ceres Capital” or “Joint Financial Advisor”
Ceres Capital International Limited (registration number 2444114), a private
company incorporated and registered in the United Kingdom and joint
financial advisor to Keaton;
“Certificated Keaton Shareholders”
Keaton Shareholder(s) who hold Certificated Keaton Shares;
“Certificated Keaton Shares”
Keaton Shares, represented by a share certificate or other document(s) of
title, which are not dematerialised;
“Circular”
the full circular, dated 20 December 2013, including all annexures, the notice
of General Meeting and the form of proxy (blue) attached thereto;
“Competition Act”
the Competition Act, No. 89 of 1998, as amended;
“Competition Authorities”
the applicable competition authorities in terms of the Competition Act;
“Computershare” or “Transfer Secretaries”
Computershare Investor Services Proprietary Limited (registration number
Africa and the transfer secretaries to Keaton;
“Conditions Precedent”
the conditions precedent as summarised in paragraph 5 of this Summary
Circular, and set out in full in clause 3 of the Scheme Implementation Deed
(as amended in the Scheme Amendment Deed) and clause 2 of the
Subscription Agreement;
“Court”
the Federal Court of Australia;
“Competent Persons’ Report” or “CPR”
independent competent persons’ reports compiled in accordance with the
Listings Requirements, dated 16 July 2013;
“CSDP”
a central securities depository participant, appointed by individual Keaton
Shareholder(s) for the purpose of, and in regard to, Dematerialisation in
terms of the Financial Markets Act;
“Delivery Period”
a period of 22 months commencing on 1 January 2015 to 31 October 2016;
“Dematerialised”
the process whereby physical share certificates are replaced with electronic
records evidencing ownership of shares for the purpose of the Strate system,
being “uncertificated securities” as defined in the Companies Act;
“Dematerialised Keaton Shares”
Keaton Shares that have been Dematerialised through a CSDP or broker and
are held on a sub-register of shareholders administered by CSDPs in
electronic form;
“Dematerialised Keaton Shareholders”
Keaton Shareholder(s) who have replaced paper share certificates or other
documents of title with electronic records for purposes of Strate;
“DMR”
the South African Department of Mineral Resources (formerly the
Department of Minerals and Energy);
“DTI”
the South African Department of Trade and Industry;
6
“DWA”
the South African Department of Water Affairs;
“EBITDA”
earnings before interest, taxes, depreciation and amortisation;
“Effective Date”
the date on which the Scheme becomes effective;
“EIA”
environmental impact assessment, prepared in accordance with the National
Environmental Management Act, No. 107 of 1998, as amended;
“Eskom”
Eskom Holdings SOC Limited (registration number 2002/015527/06), a
State-owned enterprise incorporated and registered in South Africa;
“Exxaro”
Exxaro Resources Limited (registration number 2000/011076/06), a public
company incorporated and registered in South Africa and listed on the JSE;
“Financial Markets Act”
the Financial Markets Act, No. 19 of 2012, as amended;
“FOB”
free on board as defined in INCOTERMS 2012;
“Focus Coal Investments”
Focus Coal Investments Proprietary Limited (Australian Companies Number:
140 005 670), a proprietary company incorporated and registered in
Australia and a wholly-owned subsidiary of Xceed;
“Founding Shareholders”
Dan Lucas Sikhosana, Anna Percy Sikhosana and Mbabazini Esther Dhladhla;
“Gemecs” or “Joint Competent Person”
Gemecs Proprietary Limited (registration number 79/04409/07), a private
company incorporated and registered in South Africa and the provider of the
SAMREC-compliant CPRs;
“General Meeting”
the general meeting of Keaton Shareholders to be held at the Vermillion
Room, Wanderers Building, The Campus, 57 Sloane Street, Bryanston on
Thursday, 23 January 2014 at 10:00 to consider and, if deemed appropriate,
pass the Resolutions;
“Government”
the Government of South Africa;
“GST”
Goods and Services Tax as levied from time to time in terms of A New Tax
System (Goods and Services Tax) Act of 1999 of Australia;
“GTIS”
gross tonnes in-situ;
“Gunvor”
Gunvor Group Ltd (registration number 279934), a private company
incorporated and registered in Cyprus;
“Gunvor SA”
Gunvor SA (registration number CH-660.2.734.005-4), a company
incorporated in Switzerland and a wholly-owned subsidiary of Gunvor;
“IFRS”
International Financial Reporting Standards;
“Issue Price”
the price at which Keaton will issue the New Keaton Shares to Plusbay in
terms of the Specific Issue, being R1.7782 per Keaton Share, which represents
a 10% discount to the 30-day VWAP of Keaton Shares for the period ended
22 August 2013;
“Investec Bank Limited”
Investec Bank Limited (registration number 1969/004763/06), a public
company incorporated and registered in South Africa;
“Investec Funding”
the debt funding of approximately R130 000 000 provided by Investec Bank
Limited to Keaton;
“JIBAR”
Johannesburg interbank agreed rate;
7
“Joint Competent Persons”
Venmyn Deloitte and Gemecs;
“Joint Financial Advisors”
Qinisele Resources and Ceres Capital;
“JORC”
Joint Ore Reserves Committee;
“JORC Code”
Australasian Code for the Reporting of Exploration Results, Mineral Resources
and Ore Reserves, 2012 Edition;
“JSE”
JSE Limited (registration number 2005/022939/06), a public company
incorporated and registered in South Africa and licensed as an exchange
under the Financial Markets Act;
“JSE Issue Approval”
approval by the JSE of the listing of the New Keaton Shares in terms of the
Specific Issue;
“Keaton” or “Company”
Keaton Energy Holdings Limited (registration 2006/011090/06), a public
company incorporated and registered in South Africa whose Shares are
listed on the JSE;
“Keaton Shareholder(s)”
Certificated and Dematerialised Keaton Shareholders;
“Keaton Share(s)” or “Share(s)”
ordinary shares in the Company, listed on the JSE;
“km”
kilometre;
“KPMG” or “Independent Reporting
Accountants to Keaton”
KPMG Incorporated (registration number 1999/012876/07), a private
company incorporated and registered in South Africa and the independent
reporting accountants to Keaton in relation to the Pro Forma Financial
Information;
“Last Practicable Date”
the last practicable date prior to the finalisation of the Summary Circular
and the Circular, being, Monday, 9 December 2013;
“LOM”
life of mine;
“Listings Requirements”
the Listings Requirements of the JSE;
“Mining Area”
the area in respect of which the Mining Right has been granted, which area
is more fully described in the Mining Right;
“Mining Charter”
Broad-Based Socio Economic Empowerment Charter for the South African
Mining Industry (together with the Charter Scorecard), published in terms of
the provisions of section 100(2)(a) of the MPRDA;
“Mining Right”
means the mining right granted to Xceed in terms of section 23(5) of the
MPRDA, entitling Xceed to mine and search for coal in, on and under the
Mining Area and registered at the MPTRO;
“Minister”
the Minister of Mineral Resources;
“Moabsvelden”
the Moabsvelden project, situated on portion 8 of the farm Moabsvelden
248 IR, in the Mpumalanga Province of South Africa;
“Moore Stephens” or “Independent
Reporting Accountants in relation
to Xceed”
Moore Stephens FFRS Incorporated (registration number 2006/018138/21),
a private company incorporated and registered in South Africa and the
independent reporting accountants to Keaton in relation to Xceed;
“MPRDA”
Mineral and Petroleum Resources Development Act, 28 of 2002, as amended;
“MPTRO”
Mining and Petroleum Titles Registration Office;
8
“Mt”
million tonnes;
“Mtpa”
million tonnes per annum;
“Nedbank”
Nedbank Limited (registration number 1951/000009/06), a public company
incorporated and registered in South Africa;
“Nedbank Capital” or “Investment Bank
and Sponsor”
Nedbank Capital, a division of Nedbank;
“Neosho”
Neosho Trading 86 Proprietary Limited (registration number
Africa and a 74% owned subsidiary of Xceed;
“New Keaton Shares”
32 647 838 Keaton Shares to be issued to Plusbay pursuant to the Specific
Issue;
“Norton Rose Fulbright” or
“Legal Advisor in South Africa”
Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc.
registration number 1984/003385/21), a private company incorporated and
registered in South Africa and the legal advisor to Keaton in South Africa;
“Off-take”
the off-take arrangement between Keaton and Gunvor SA in terms of the
Off-take Agreement;
“Off-take Agreement”
the agreement governing the Off-take entered into between Keaton and
Gunvor SA on 14 November 2013;
“Plusbay”
Plusbay Limited (registration number 274836), a private company
incorporated and registered in Cyprus and a wholly-owned subsidiary of
Gunvor;
“Pro Forma Financial Effects”
the pro forma financial effects of Keaton relating to the Transaction and
Specific Issue;
“Purchase Consideration”
the cash consideration to which each Xceed Shareholder becomes entitled
under the Scheme, being AU$0.14 for every Xceed Share held by that Xceed
Shareholder as at the Scheme Record Date. As at the Last Practicable Date,
the purchase consideration was expected to be AU$19 670 060.90 (nineteen
million six hundred and seventy thousand and sixty Australian Dollars and
ninety Australian cents), assuming 140 500 435 fully paid Xceed Shares as
at the Scheme Record Date;
“Qinisele Resources” or
“Joint Financial Advisor”
Qinisele Resources Proprietary Limited (registration 1997/022049/07),
a private company incorporated and registered in South Africa and joint
financial advisor to Keaton;
“RBCT”
Richards Bay Coal Terminal;
“Related Party”
a related party as defined in the Listings Requirements;
“Registered Office”
Keaton’s registered office, Ground Floor, Eland House, The Braes, 3 Eaton
Avenue, Bryanston, 2191;
“Resolution(s)”
the ordinary resolutions to be passed by the requisite majority of Keaton
Shareholders at the General Meeting to authorise and approve the Specific
Issue and the Transaction, as more fully set out in the notice of General
Meeting attached to this Summary Circular;
“ROM”
run of mine;
9
“Roodepoort”
the Roodepoort project, situated on the farms Roodepoort 40 IS and
Diepspruit 41 IS, in the Mpumalanga Province of South Africa;
“RSM Bird Cameron” or
“Xceed Independent Expert”
RSM Bird Cameron Proprietary Limited, a private company incorporated and
registered in Australia and the independent expert to Xceed;
“SAMREC”
South African Code for the Reporting of Exploration Results, Mineral
Resources and Mineral Reserves, 2007 Edition;
“SAMVAL”
South African Code for the Reporting of Mineral Asset valuation as amended
in July 2009;
“SARB”
South African Reserve Bank;
“Scheme”
the scheme of arrangement in accordance with Part 5.1 of the Australian
Corporations Act between Xceed and Xceed’s Shareholders;
“Scheme Amendment Deed”
the scheme amendment deed entered into between Keaton and Xceed on
20 November 2013 in order to make certain amendments to the Scheme
Implementation Deed;
“Scheme Booklet”
the information memorandum in respect of the Scheme to be approved by
the Court and dispatched to Xceed Shareholders, and includes the Scheme,
an explanatory statement as that term is defined in section 412 of the
Australian Corporations Act, the Xceed Independent Expert’s report, a notice
of meeting and proxy form in relation to the Xceed Scheme Meeting and
any other document agreed between Keaton and Xceed;
“Scheme Implementation Deed”
the scheme implementation deed entered into between Keaton and Xceed
on 23 August 2013, as amended by the Scheme Amendment Deed;
“Scheme Record Date”
5:00 pm on the day which is five Business Days after the Effective Date, or
any other date (after the Effective Date) agreed by Keaton and Xceed to be
the record date to determine entitlements to receive the Purchase
Consideration under the Scheme;
“Scheme Implementation Date”
the third Business Day following the Scheme Record Date (or such other
date agreed between Keaton and Xceed);
“Second Court Date”
the first day on which the Court hears the application for an order under
section 411(4)(b) of the Australian Corporations Act approving the Scheme
or, if the application is adjourned or subject to appeal for any reason, the
first day on which the adjourned or appealed application is heard;
“SENS”
the Securities Exchange News Service of the JSE;
“South Africa”
the Republic of South Africa;
“South African Companies Act” or
“Companies Act”
the Companies Act, 2008 (Act 71 of 2008), as amended and substituted
from time to time;
“South Africa Rand”, “Rand” or “R”
South African Rand, the official currency of South Africa;
“Specific Issue”
the specific issue of the New Keaton Shares at the Issue Price to Plusbay;
“Standard Bank”
The Standard Bank of South Africa Limited (registration number
1962/000738/06), a public company incorporated and registered in South
Africa;
10
“Strate”
Strate Limited (registration number 1998/022242/06), a public company
incorporated and registered in South Africa and which provides the electronic
settlement system for transactions that take place on the JSE and offmarket trades;
“Subscription Agreement”
the agreement governing the Specific Issue entered into between Keaton
and Plusbay on 13 November 2013;
“Subscription Date”
the first Business Day after the Effective Date, or such later date as Plusbay
and Keaton may agree to in writing;
“Summary Circular”
this summary circular, dated 20 December 2013, including all annexures, the
notice of General Meeting and the form of proxy (blue) attached hereto;
“Takeover Regulations”
the Companies Regulations, 2011, in terms of the Companies Act;
“Thebe Investment Corporation”
Thebe Investment Corporation Proprietary Limited (registration number
Africa;
“Thebe Mining”
Thebe Mining Resources Proprietary Limited (registration number
Africa and a subsidiary of Thebe Investment Corporation;
“Transaction”
the proposed acquisition by Keaton of the entire issued share capital of
Xceed by way of the Scheme, being a Category 1 Transaction in terms of the
Listings Requirements;
“Transfer Date”
the date of registration of transfer of the Xceed Shares into the name of
Keaton;
“TRP”
Takeover Regulation Panel, a regulatory body established in terms of
section 196 of the Companies Act;
“US$”
United States Dollar, the official currency of the United States of America;
“Vaalkrantz”
the Vaalkrantz Anthracite Colliery, located 14km east of the town of Vryheid,
in the KwaZulu-Natal Province of South Africa;
“Vanggatfontein”
the Vanggatfontein Colliery, located 14km south east of the town of Delmas,
in the Mpumalanga Province of South Africa;
“VAT”
Value-Added Tax as levied from time to time in terms of the Value-Added
Tax Act, 89 of 1991;
“Venmyn Deloitte” or
“Joint Competent Person”
Venmyn Deloitte Proprietary Limited (registration number 1988/004918/07),
a private company incorporated and registered in South Africa and the
provider of the SAMVAL-compliant CPRs;
“Venmyn Deloitte Covering Letter”
the covering letter prepared by Venmyn Deloitte in relation to the Competent
Persons’ Reports and the Venmyn Deloitte Report, which is included as
Annexure 1 to this Summary Circular;
“Venmyn Deloitte Letter”
the letter prepared by Venmyn Deloitte in relation to the Off-take, which is
included as Annexure 11 to the Circular;
“Venmyn Deloitte Report”
the report, dated 27 September 2013, prepared by Venmyn Deloitte, which
is included as Annexure 6 to the Circular;
“Voting Intention Statement”
the voting intention statement provided by the Xceed Supporting
Shareholders in respect of their intention to vote all Xceed Shares, directly
or indirectly, held by them in favour of the Scheme;
11
“30-day VWAP”
thirty-trading day volume weighted average price;
“Xceed”
Xceed Resources Limited (registration number ABN: 79 009 181 006), a
public company incorporated and registered in Australia and listed on
the ASX;
“Xceed Budget”
the latest budget in respect of Xceed’s operations and Capex, as provided by
Xceed on or before the date of the Scheme Booklet, for a period of eight
months beginning 1 July 2013;
“Xceed Directors”
the Xceed board of directors as at the Scheme Implementation Date;
“Xceed Share(s)”
each fully paid ordinary share in Xceed;
“Xceed Shareholder(s)”
each person entered in the register as a holder of Xceed Shares;
“Xceed Scheme Meeting”
the meeting of Xceed Shareholders to be convened as ordered by the Court
under section 411(1) of the Australian Corporations Act, to consider the
Scheme;
“Xceed Supporting Shareholders”
the Xceed Shareholders who have provided a Voting Intention Statement
authorising Keaton and Xceed to announce their intention to vote all Xceed
Shares, directly or indirectly, held by them in favour of the Scheme as further
set out in paragraph 2.6 of this Summary Circular; and
“Xstrata”
Xstrata Coal South Africa Proprietary Limited (registration number
Africa.
12
Directors
D Salter (Non-executive Chairman) #
M Glad (Chief Executive Officer)
J Rossouw (Chief Financial Officer)
L Mtumtum ‡ (Lead independent non-executive director)
Paul Sadler ‡
G Kemp ‡
A Sedibe #
P Pouroulis #
D Jonker #
# Non-Executive
‡ Independent, non-executive
summary CIRCULAR TO KEATON SHAREHOLDERS
THIS SUMMARY CIRCULAR IS ONLY A SUMMARY OF THE INFORMATION IN THE CIRCULAR AND DOES
NOT CONTAIN FULL OR COMPLETE DETAILS. THE CIRCULAR CAN BE ACCESSED ON KEATON’S WEBSITE:
WWW.KEATONENERGY.CO.ZA FROM FRIDAY, 20 DECEMBER 2013.
The Summary Circular and the Circular should be read in their entirety for a complete understanding of the Transaction
and the Specific Issue. This Summary Circular is issued in compliance with the Listings Requirements for the purposes of
furnishing Keaton Shareholders with information relating to the Transaction and the Specific Issue, and convening the
General Meeting for the purpose of considering, and if deemed appropriate, passing the requisite Resolutions.
1.
Introduction
Keaton announced on 26 August 2013 that it had entered into the Scheme Implementation Deed with Xceed, in
terms of which Keaton and Xceed agreed that Keaton would pay AU$0.14 per Xceed Share in consideration for the
transfer of the entire issued share capital of Xceed to Keaton by way of the Scheme in accordance with part 5.1 of
the Australian Corporations Act. The expected maximum Purchase Consideration of AU$19 670 060.90 categorises
the Transaction as a Category 1 Transaction for Keaton in terms of the Listings Requirements and, accordingly,
requires Keaton Shareholder approval. If implemented successfully, Xceed will become a wholly-owned subsidiary of
Keaton and will be removed from the Official List of the ASX.
Keaton Shareholders were advised in an announcement released on SENS on 20 November 2013 that Keaton had
made certain amendments to the funding arrangements relating to the Transaction and had entered into the Scheme
Amendment Deed.
In order to partly fund the Purchase Consideration, Keaton entered into the Subscription Agreement with Plusbay in
terms of which Keaton will issue 32 647 838 New Keaton Shares to Plusbay, at a price of R1.7782 per Keaton Share,
being a 10% discount to the 30-day VWAP of Keaton Shares on the JSE for the period ended 22 August 2013.
The balance of the Purchase Consideration will be funded by way of the Investec Funding and by Keaton from its
available cash resources.
In terms of the Listings Requirements, Plusbay is classified as a material shareholder of Keaton, and hence a Related
Party to Keaton. Consequently, the Specific Issue required Keaton’s Board to obtain a fairness opinion from an
Independent Expert. The opinion letter of the Independent Expert is included as Annexure 5 to the Circular. In
addition, 75% approval by Keaton Shareholders (excluding Gunvor, Plusbay and their associates) is required to approve
the Resolution authorising the Specific Issue.
13
2.
The Transaction
2.1
Overview of Xceed
Xceed is an Australian-based public company engaged in the exploration and development of coal projects
in South Africa. The company is listed on the ASX and had a market capitalisation of approximately
AU$18 265 060 as at the Last Practicable Date. Xceed’s primary focus is on the acquisition and development of
coal projects located within South Africa’s premier coal fields, which are supported by established infrastructure
and are readily able to reach their intended markets.
Xceed currently holds an interest in and is developing three coal projects situated in the Mpumalanga Province
of South Africa, namely:
• Moabsvelden – opencast thermal coal project located 3km from Keaton’s Vanggatfontein colliery near
Delmas;
• Roodepoort – shallow thermal coal project located 3km from Exxaro’s New Clydesdale colliery near
Emalahleni; and
• Bankfontein – underground thermal coal project located 5km from Tselentis colliery (formerly owned by
Xstrata) near Breyten.
The mineral resources and mineral reserves relating to the abovementioned projects are set out below,
estimated in accordance with the JORC Code. The Venmyn Deloitte Report and the Competent Persons’
Reports in relation to Xceed are included as Annexure 6 and Annexure 7, respectively, to the Circular.
Xceed Mineral Resources Statement as at July 2013
Project
Moabsvelden1
Roodepoort2
Bankfontein3
Totals
Xceed interest
in the project
(%)
74
15
15
Measured
Resources
– GTIS
(Mt)
Indicated
Resources
– GTIS
(Mt)
Inferred
Resources
– GTIS
(Mt)
Total
Resources
– GTIS
(Mt)
63.00
9.86
–
2.35
13.59
6.05
–
5.85
13.71
65.35
29.30
19.76
72.86
21.99
19.56
114.41
Xceed Mineral Reserves Statement as at July 2013
Project
Moabsvelden1
Totals
Xceed interest
in the project
(%)
74
Proved
reserves
(Mt)
Probable
reserves
(Mt)
Total
reserves
(Mt)
30.71
13.16
43.87
30.71
13.16
43.87
Source:
1. CPR for Moabsvelden, Project Number GMXP11034 July 2013, prepared by Gemecs.
2. CPR for Roodepoort, Project Number GMXP12025 July 2013, prepared by Gemecs.
3. CPR for Bankfontein, Project Number GMXP12025 July 2013, prepared by Gemecs.
2.2
Rationale
The Transaction forms part of Keaton’s strategy to grow to a 5Mtpa plus producer of diversified coal products,
including thermal power station coal and metallurgical coal of varying quality. Xceed’s projects fit naturally
within Keaton’s existing portfolio of operating mines and development projects.
Moabsvelden, Xceed’s flagship project, located in close proximity to Keaton’s Vanggatfontein colliery, will create
significant operational synergies and Keaton will use its experience in opencast mining and coal processing to
develop and operate the project. At the end of May 2013, Xceed received written notification from the DMR
regarding the intention of the DMR to issue the Moabsvelden Mining Right, which was subsequently issued
and notarially executed on 16 October 2013. Xceed has also signed a mandate and credit approved project
finance term sheet with Standard Bank for the development of the Moabsvelden colliery. A key advantage of
Moabsvelden is that the entire resource will be entirely open castable, with a low stripping ratio and a LOM in
excess of 15 years.
14
2.3
Purchase Consideration
Pursuant to the Scheme, Keaton will acquire the entire issued share capital of Xceed, being 140 500 435
fully paid Xceed Shares as at the Last Practicable Date, for the Purchase Consideration, being a cash offer of
AU$0.14 per share held by Xceed Shareholders as at the Scheme Record Date. Based on 140 500 435 Xceed
Shares, the entire issued share capital of Xceed, the maximum Purchase Consideration therefore equates to
AU$19 670 060.90.
The Purchase Consideration represents a premium of:
• 27.0% to the closing price of Xceed Shares on the ASX on 23 August 2013, being the last trading day prior
to the announcement of the Scheme;
• 35.0% to the 30-day VWAP of Xceed Shares on the ASX for the period ended 23 August 2013; and
• 66.0% to the 30-day VWAP to 19 June 2013, being the last trading day prior to the announcement by
Xceed that it was in discussions about a potential corporate transaction.
2.4
Scheme process
Xceed Shareholders will be provided with the Scheme Booklet which will explain the Scheme and the Scheme
process, including a report prepared by the Xceed Independent Expert appointed to advise Xceed Shareholders
on whether or not the Scheme is in their best interests.
The Xceed Scheme Meeting is scheduled to be held on Monday, 3 February 2014, at which meeting a motion
to approve the Scheme will be put forward to Xceed Shareholders. In order to pass the resolution concerning
the Scheme, the resolution must be approved by both of the following:
• unless the Court orders otherwise, more than 50% of Xceed Shareholders entitled to vote who are present
and voting at the Xceed Scheme Meeting (either in person, or by proxy or representative); and
• holders of at least 75% of the total number of votes cast on the Scheme resolution by members entitled
to vote who are present and voting at the Xceed Scheme Meeting (either in person, or by proxy or
representative). This vote is determined on a poll, that is one vote per Xceed Share.
If the Conditions Precedent are satisfied or waived and the Scheme is successfully approved by Xceed
Shareholders, and subsequently approved by the Court, the Scheme will be implemented on the Scheme
Implementation Date.
On implementation, Keaton will deposit an amount equal to the Purchase Consideration in cleared funds in
an escrow account controlled by a reputable escrow agent acceptable to Xceed (acting reasonably), which
funds will only be released upon instruction by Keaton to the escrow agent that the Court has made orders
under section 411(4)(b) of the Australian Corporations Act approving the Scheme, for the purpose of Xceed
paying or procuring payment of the Purchase Consideration to each participating Xceed Shareholder. On
implementation, the Xceed Shares will be transferred to Keaton.
2.5
Xceed Board’s recommendation
Subject to there being no competing superior proposal emerging which is capable of acceptance and the Xceed
Independent Expert concluding and continuing to conclude that the Scheme is in the best interests of Xceed
Shareholders, Xceed’s directors each:
• consider the Scheme to be in the best interests of Xceed Shareholders and recommend to Xceed Shareholders
that the Scheme be approved by voting in favour of the Scheme at the Xceed Scheme Meeting; and
• intend to vote the Xceed Shares they hold (directly or indirectly) in favour of the Scheme.
15
2.6
Xceed Shareholder support
The following are the Xceed Supporting Shareholders who together hold approximately 57.38% of Xceed’s
issued share capital:
Number
of Xceed
Shares
Percentage
interest
in Xceed
Daleglen Holdings Pty Ltd
Maberley Holdings Pty Ltd
SF Belben (ATF Belben Family Trust)
Dow Super Pty Ltd
SG Growth Equities Pty Ltd
SF and PJ Belben (ATF Belben Super Fund)
Dhow Nominees Pty Ltd
Cenotaph Nominees Pty Ltd
Ettenan Nominees Pty Ltd
27 500 000
25 000 000
11 416 666
11 250 000
2 640 672
1 182 685
1 166 667
366 667
96 259
19.5
17.79
8.13
8.01
1.88
0.84
0.83
0.26
0.07
Total
80 619 616
57.38
Shareholder name
The Xceed Supporting Shareholders have provided a Voting Intention Statement authorising Keaton and Xceed
to announce their intention to vote all Xceed Shares, directly or indirectly, held by them in favour of the
Scheme at the Xceed Scheme Meeting, subject to the Xceed Independent Expert concluding and continuing
to conclude that the Scheme is in the best interests of Xceed Shareholders and in the absence of a superior
proposal that is capable of acceptance. The Xceed Supporting Shareholders have agreed not to change,
withdraw or modify their Voting Intention Statement, or indicate an intention to do so, except where this
arises from the disposal of any Xceed Shares to a person that, prior to any such disposal, has provided the same
Voting Intention Statement.
3.
The Specific Issue
3.1
Introduction
In order to partly fund the Transaction, Keaton entered into the Subscription Agreement with Plusbay in terms
of which, and subject to the fulfilment of the Conditions Precedent set out in paragraph 5.2 below, including
Keaton Shareholder approval, Keaton will issue 32 647 838 New Keaton Shares to Plusbay at the Issue Price,
being R1.7782 per Keaton Share (R58 054 385.53 in aggregate). The Issue Price represents a 10% discount to
the 30-day VWAP of Keaton Shares on the JSE for the period ended 22 August 2013.
The Specific Issue will increase Plusbay’s shareholding in Keaton from 23.92% to 34.99%.
3.2
Board representation
Following the Subscription Date, for so long as Plusbay holds 20% or more of Keaton Shares in issue, Plusbay
will be entitled to designate two nominees for election or appointment to the Board of Directors of Keaton,
from time to time, who meet the individual qualification requirements for directors under South African law.
Plusbay will consult with Keaton with respect to the appropriateness of any individual to act in such role to
ensure that such individual meets the individual qualification requirements for directors under applicable laws.
3.3
No mandatory offer
Provided that Plusbay (together with any of its concert parties) holds a shareholding of 25% or more
Keaton undertakes to Plusbay that until 30 June 2016, Keaton shall not purchase or repurchase or cancel any
Keaton Shares, or undertake any other corporate action, and will procure that none of its subsidiaries purchases
any Keaton Shares, or distributes or transfers or causes to be delivered any Keaton Shares to Keaton, where
the effect of any such actions is to cause Plusbay (or any person acting in concert with it) to have to make a
mandatory offer pursuant to section 123 of the Companies Act and/or the Takeover Regulations thereunder.
Thereafter, provided that Plusbay (together with any of its concert parties) holds a shareholding of 25% or
more, Keaton undertakes to Plusbay that, should Keaton or any of its subsidiaries undertake any purchase
or repurchase or cancelation of any Keaton Shares or any other corporate action which, in any continuous
12-month period, results in a reduction of Keaton’s issued share capital of 2% or more (or any lesser percentage
which has the effect of causing Plusbay (or any person acting in concert with it) to have to make a mandatory
offer pursuant to section 123 of the Companies Act and/or the Takeover Regulations thereof):
16
• Keaton will, using its best endeavours, give Plusbay not less than three months’ written notice prior to any
such corporate action being undertaken by it or its subsidiaries; provided that, where despite Keaton’s best
endeavours such minimum three-month period of notice is not achieved, then Keaton shall give Plusbay as
long a period of notice as is possible, using its best endeavours; and
• Keaton will co-operate with, and reasonably assist, Plusbay in obtaining any relevant regulatory or
Shareholder waivers or consents that would result in a mandatory offer not being triggered by any action
which would otherwise be perceived as such corporate action.
3.4
Related Party and fairness opinion
In terms of the Listings Requirements, Plusbay is classified as a material shareholder of Keaton, and hence a
Related Party to Keaton. Consequently, the Specific Issue required Keaton’s Board to obtain a fairness opinion
from an Independent Expert in terms of the Listings Requirements.
BDO was appointed by the Board as the Independent Expert and has provided a fairness opinion to the Board
that the terms and conditions of the Specific Issue and the Transaction, based on quantitative considerations,
are fair to the Keaton Shareholders. The text of the letter from BDO is included as Annexure 5 to the Circular.
3.5
Keaton Shareholder approval
The Resolution relating to the Specific Issue requires the approval of at least 75% of Keaton Shareholders
present and voting, or represented by proxy, at the General Meeting (excluding Gunvor, Plusbay and their
associates).
4.
The Off-take
Subject to the implementation of the Transaction, Keaton has entered into the Off-take Agreement with Gunvor
SA in terms of which Keaton will deliver the Agreed Tonnage of export quality coal for the Agreed Coal Price to
Gunvor SA over the Delivery Period.
The Agreed Tonnage is to be delivered from Moabsvelden once it commences production. Moabsvelden is currently
owned by Neosho, a subsidiary of Xceed.
As part of the Off-take, Gunvor SA will pay the Agreed Prepayment Amount of US$4 000 000 to Keaton on the
Prepayment Date. The balance of the consideration in terms of the Off-take Agreement is payable to Keaton over
the Delivery Period.
In terms of the Off-take Agreement Gunvor SA will have first right of refusal over any export quality coal produced
at Moabsvelden in excess of the Agreed Tonnage during the Delivery Period and for a period of three years after
conclusion of the Delivery Period.
Should Gunvor SA realise a final quality adjusted FOB sales price to a third party for any of the Agreed Tonnage
delivered to it under the Off-take Agreement of more than US$10/Mt over and above the Agreed Coal Price (plus the
Agreed Prepayment Amount) for that delivery year, then 30% of the amount in excess of the US$10/Mt will be paid
to Keaton as a cash payment by way of a share in the profits.
The Directors of Keaton are of the opinion that the Off-take Agreement has been concluded on normal commercial
terms. Venmyn Deloitte has considered the terms of the Off-take Agreement and is of the opinion that it has been
concluded on normal commercial terms. The text of the letter from Venmyn Deloitte is included as Annexure 11 to
the Circular.
5.
Conditions Precedent
5.1
The Scheme
The Scheme is subject to the fulfilment of a number of Conditions Precedent, which must be satisfied or
waived by the Party entitled to waive such Condition Precedent in terms of the Scheme Implementation Deed
and as summarised below. Unless otherwise indicated, a reference to time below is time in Perth, Western
Australia. The Conditions Precedent to the Scheme are as follows:
• from the date of the Scheme Implementation Deed until the Xceed Scheme Meeting, no Xceed Director
changes or withdraws their recommendation to Xceed Shareholders to vote in favour of the Scheme and
all resolutions incidental to the Scheme (if any);
17
• the Xceed Independent Expert issues an independent expert’s report before the date on which the Scheme
Booklet is provided for registration with ASIC under section 412 of the Australian Corporations Act and
concludes that the Scheme is in the best interests of Xceed Shareholders and, upon consideration of all the
relevant information from time to time, the Xceed Independent Expert does not change that conclusion
prior to 5:00 pm on the day before the Second Court Date;
• before 5:00 pm on the fifth Business Day prior to the date of the Xceed Scheme Meeting, the approval
of the Transaction, by more than 50%, and the Specific Issue, by at least 75%, of Keaton Shareholders
(excluding Gunvor, Plusbay and their associates in relation to the Specific Issue) present and voting either
in person or by proxy at the General Meeting to be convened to approve the Transaction and the Specific
Issue;
• before the Second Court Date, the Court makes orders convening the Scheme Meeting under section 411(1)
of the Australian Corporations Act;
• before 8:00 am on the Second Court Date, Xceed Shareholders approve the Scheme at the Xceed Scheme
Meeting, by the following majorities:
• unless the Court orders otherwise, a majority in number (more than 50%) of the Xceed Shareholders
present and voting on the resolution to approve the Scheme at the Xceed Scheme Meeting; and
• at least 75% of the total number of votes cast on the resolution to approve the Scheme by Xceed
Shareholders present and voting at the Xceed Scheme Meeting to be convened pursuant to an order of
the Court or at any adjournment thereof. This vote is determined on a poll, that is one vote per Xceed
Share;
• the Court makes orders under section 411(4)(b) of the Australian Corporations Act approving the Scheme
(with or without modification, such modification being acceptable to both Keaton and Xceed) and
consequently:
• JSE Issue Approval thereby automatically becomes unconditional and the arrangements under the
Subscription Agreement thereby automatically become unconditional; and
• the proceeds from the Specific Issue are thereby unconditionally available to Keaton for payment by
Keaton as part of the Purchase Consideration in accordance with the Scheme Implementation Deed, the
Scheme and “deed poll” (as defined in the Scheme Implementation Deed);
• an office copy of the Court Order approving the Scheme is lodged with ASIC under section 411(10) of the
Australian Corporations Act;
• before 5:00 pm on the Business Day immediately prior to the Xceed Scheme Meeting, the approvals for
the Transaction and Specific Issue are obtained (if and to the extent necessary) from certain regulatory
authorities, limited to the Competition Authorities, the SARB, the TRP, the JSE and the DMR, and such
approvals not being withdrawn prior to 8:00 am on the Second Court Date, save for the JSE Issue Approval
which, at 5.00 pm on the Business Day immediately prior to the Xceed Scheme Meeting and at 8.00 am on
the Second Court Date, will be conditional only on the Court making orders under section 411(4)(b) of the
Australian Corporations Act approving the Scheme;
• no temporary restraining order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing the Scheme from being
implemented is in effect at 8:00 am on the Second Court Date;
• before 8:00 am on the Second Court Date, all “third party consents” (as defined in the Scheme
Implementation Deed) are granted or obtained in respect of the implementation of the Scheme and those
consents are not withdrawn, cancelled or revoked;
• as at 8:00 am on the Second Court Date, no “material agreement” (as defined in the Scheme Implementation
Deed) is amended in a material respect or terminated;
• from the date of the Scheme Implementation Deed until 8:00 am on the Second Court Date, no “material
adverse event” (as defined in the Scheme Implementation Deed) occurs, or becomes known to Keaton;
• from the date of the Scheme Implementation Deed until 8:00 am on the date of the Xceed Scheme
Meeting, the closing spot AU$/R exchange rate as at 4:00 pm (UK time) does not fall, for a period of more
than three consecutive Business Days to a level where AU$1.00 converts to over R10.00;
• from the date of the Scheme Implementation Deed until 8:00 am on the Second Court Date, no “target
prescribed event” (as defined in the Scheme Implementation Deed) occurs;
• from the date of the Scheme Implementation Deed until 8:00 am on the Second Court Date, there are
no “target material transactions” (as defined in the Scheme Implementation Deed) by Xceed or any of its
subsidiaries without the prior written consent of Keaton, where such consent must not be unreasonably
withheld or delayed;
18
• each representation and warranty given or made by Xceed in the Scheme Implementation Deed is true and
correct as at the date of the Scheme Implementation Deed, 8:00 am on the Second Court Date and any
other date at which the representation or warranty is expressed to be given;
• the Voting Intention Statements by the Xceed Supporting Shareholders referred to in paragraph 2.6 above
are not withdrawn prior to the Xceed Scheme Meeting;
• from the date of the Scheme Implementation Deed until 8:00 am on the Second Court Date, Xceed does
not deviate from the “target budget” (as defined in the Scheme Implementation Deed) beyond the limits
specified in the Scheme Implementation Deed without the prior written approval of Keaton;
• subject to obtaining the applicable Keaton Shareholder approvals and regulatory approvals:
• sufficient funds as necessary to pay the Purchase Consideration, save for the proceeds of the Specific
Issue, are unconditionally available to Keaton for payment by Keaton in accordance with the Scheme
Implementation Deed, the Scheme and “deed poll” (as defined in the Scheme Implementation Deed) at
5.00 pm on the Business Day immediately prior to the Xceed Scheme Meeting, and such funds remain
so available to Keaton at 8.00 am on the Second Court Date;
• at 5.00 pm on the Business Day immediately prior to the Xceed Scheme Meeting and at 8.00 am on the
Second Court Date, the only outstanding condition to be satisfied before the proceeds of the Specific
Issue are made unconditionally available to Keaton for the purpose of paying part of the Purchase
Consideration in accordance with the Scheme Implementation Deed, the Scheme and the “deed poll”
(as defined in the Scheme Implementation Deed) is the Court making orders under section 411(4)(b) of
the Australian Corporations Act approving the Scheme; and
• by 5.00 pm on the Business Day immediately prior to the Xceed Scheme Meeting, all proceeds of
the Specific Issue will be deposited by Gunvor or its affiliates, and will remain at 8.00 am on the
Second Court Date, in an escrow account controlled by a reputable escrow agent acceptable to Xceed
(acting reasonably), which funds will only be released upon instruction by Keaton to the escrow agent
that the Court has made orders under section 411(4)(b) of the Australian Corporations Act approving
the Scheme;
• and Keaton agrees to promptly provide to Xceed, upon written request, such evidence as Xceed reasonably
requires to verify the occurrence of those events; and
• each representation and warranty given or made by Keaton in the Scheme Implementation Deed is true
and correct as at the date of the Scheme Implementation Deed, 8:00 am on the Second Court Date and
any other date at which the representation or warranty is expressed to be given.
5.2
The Specific Issue
The Specific Issue is subject to the fulfilment of the following Conditions Precedent by no later than
29 January 2014, or such later date as is agreed in writing by Keaton and Plusbay:
• the approvals of the SARB (or their authorised agents), for Keaton and Plusbay to perform their respective
obligations, and exercise their rights, in terms of the Subscription Agreement, are granted unconditionally
or, if any such approvals are granted conditionally, on conditions acceptable to Plusbay in its sole discretion;
• the approval, insofar as it may be necessary in law and/or required by the JSE and/or any stock exchange on
which Keaton Shares trade to enable the terms and conditions of the Subscription Agreement to be carried
into effect, each case in a form and substance reasonably acceptable to Plusbay;
• the approval pursuant to the Companies Act (to the extent applicable), the Listings Requirements to
the extent required, the memorandum of incorporation of Keaton, by the requisite majority of Keaton
Shareholders in general meeting for the entry into and implementation by Keaton of the Subscription
Agreement and such approvals being or becoming unconditional, each case in a form and substance
reasonably acceptable to Plusbay;
• the Board of Directors of Keaton will have passed resolutions authorising the entering into and
implementation by Keaton of the Subscription Agreement, in a form and substance reasonably satisfactory
to Plusbay, and Plusbay is provided with a copy of the resolution (or extracts from the minutes of the
relevant meeting of the Keaton Board), certified to be a true and complete copy or extract (as applicable)
by a Director or the company secretary of Keaton;
• the board of directors of Plusbay will have passed resolutions authorising and/or ratifying the entering into
and implementation by Plusbay of the Subscription Agreement;
• the JSE Issue Approval being granted for the admission to listing of the New Keaton Shares to be issued
pursuant to the Specific Issue (which consent may be given subject to conditions relating only to the
implementation of the Subscription Agreement and other customary conditions of an administrative
19
nature, and may provide for the admission to listing of the New Keaton Shares to occur on or prior to
commencement of trading on the first Business Day after the Subscription Date) and Plusbay is provided
with a copy of such consent;
• the requisite approvals, if any, required from any authority pursuant to the MPRDA, or any mining or
prospecting rights granted to Keaton or Xceed, or their respective subsidiaries, for the Specific Issue are
granted unconditionally or, if any such approvals are granted conditionally, on conditions acceptable to
Plusbay in its sole discretion;
• the Keaton escrow agreement (as defined in the Subscription Agreement) is entered into between the
relevant parties thereto, in a form and substance acceptable to Plusbay and Keaton; and
• the requisite approval pursuant to section 121 of the Companies Act having been obtained, or requisite
exemption therefrom being granted (or existing general exemption for comparable transactions being
confirmed to apply), by the TRP.
6.
Pro Forma Financial Information and effects
Based on Keaton’s reviewed results for the six months ended 30 September 2013, the Pro Forma Financial Effects
of the Specific Issue and the Transaction on Keaton’s earnings per share (“EPS”), headline earnings per share
(“HEPS”), net asset value per share (“NAV”) and net tangible asset value per share (“NTAV”) are set out below. The
Pro Forma Financial Effects are prepared for illustrative purposes only, and because of their nature, may not give a fair
presentation of Keaton’s financial position, changes in equity, results of operations and cash flows or the effect and
impact of the Specific Issue and the Transaction. The Pro Forma Financial Effects has been prepared in accordance with
the accounting policies of Keaton used in the preparation of the audited results for the year ended 31 March 2013.
The Pro Forma Financial Effects is the responsibility of Keaton’s Directors. KPMG’s reasonable assurance report on the
Pro Forma Financial Effects is set out in Annexure 2 to the Circular.
Before the
After the
Specific Issue Specific Issue
and the
and the
Transaction(1) Transaction(2)
EPS (cents)(3)
HEPS (cents)(3)
NAV (cents)(4)
NTAV (cents)(4)
Total Shares in issue(5)
Shares and weighted Shares in issue net of treasury Shares(5)
19.4
19.4
382
166
191 663 141
191 663 141
22.6
6.4
398
75
224 310 979
224 310 979
Change
(%)
16.5%
(67.0%)
4.2%
(54.8%)
17.0%
17.0%
Notes:
1. Based on Keaton’s reviewed results for the period ended 30 September 2013.
2. Based on the assumption that Keaton acquires the entire issued share capital of Xceed, and as a result Xceed is accounted for as a subsidiary
of Keaton. In calculating the Pro Forma Financial Information and effects, it was assumed that the Specific Issue and the Transaction were
implemented on 1 April 2013 for statement of comprehensive income purposes and on 30 September 2013 for statement of financial
position purposes. Xceed’s statement of comprehensive income for the six months ended 30 June 2013 was converted to Rands from
Australian Dollars, using the average exchange rate for the period 1 April 2013 to 30 September 2013 of R9.25 to the AU$, with their
audited statement of financial position as at 30 June 2013 converted to Rands from Australian Dollars, using the spot exchange rate as at
30 September 2013 of R9.37. The statement of comprehensive income and statement of financial position were adjusted to reflect the
difference in accounting polices between Keaton and Xceed (refer to Annexure 3, note 31).
3. The EPS and HEPS were adjusted for:
(a) the inclusion of the consolidated earnings of Xceed for the six months ended 30 June 2013, as well as the adjustments made to reflect
the difference in accounting polices between Keaton and Xceed;
(b) estimated transaction costs of R10 053 756 incurred by Keaton;
(c) provisionally assessed gain on the business combination amounting to R36 315 675 based on the provisional assessments of fair value;
(d) assumed interest paid on the Investec Funding of R5 813 117; and
(e) assumed amortisation charge of R105 211 relating to the Investec debt raising fees capitalised.
4. The NAV per share and NTAV per share were adjusted for:
(a) the inclusion of the consolidated assets and liabilities of Xceed at 30 June 2013 as well as the adjustments made to reflect the difference
in accounting polices between Keaton and Xceed;
(b) elimination of the subsidiary company share capital of R407 332 640;
(c) issue of 32 647 838 New Keaton Shares with no par value to Plusbay at R1.7782 per share for a cash consideration of R58 054 386;
(d) estimated transaction cost of R5 026 099 incurred by Keaton that have been capitalised;
(e) elimination of the subsidiary company share-based payment reserve of R402 910;
20
5.
6.
7.
8.
7.
(f) accounting for R4 302 985 share-based payment reserve;
(g) elimination of the subsidiary company other reserves of R1 517 940;
(h) retained earnings adjusted for:
– elimination of subsidiary company accumulated loss of R188 629 344;
– transaction costs of R10 053 756 incurred by Keaton;
– gain on business combination relating to the acquisition of Xceed of R36 315 675 based on the provisional assessments of fair
values;
(i) Investec Funding of R126 254 085 received for the acquisition of Xceed. Debt raising fees of R1 893 811 were capitalised to the Investec
Funding. R28 267 233 was reclassified from long-term borrowings to short-term borrowings;
(j) cash and cash equivalents have been adjusted for:
– issue of New Keaton Shares to Plusbay for cash of R58 054 386;
– Investec Funding of R126 254 085 received for the acquisition of Xceed;
– payment of Investec debt raising fees of R1 893 811;
– total transaction costs paid of R15 079 855; and
– payment of the Purchase Consideration of R184 308 471.
Shares in issue and the weighted average number of Shares in issue were adjusted for the issue of 32 647 838 New Keaton Shares.
All of the above adjustments with the exception of transaction costs are expected to have a continuing effect on Keaton.
There are no post-balance sheet events, which require adjustments to the Pro Forma Financial Information.
For detailed disclosure on the Pro Forma financial information, refer to Annexure 1 of the Circular.
further Information relating to Xceed
7.1
Prospects
Xceed is an Australian-based public company engaged in the exploration and development of coal projects
located within the premier coal fields of South Africa.
Xceed’s principal activities have been directed towards the development of Moabsvelden, a thermal coal
project situated in the Witbank coalfield. Moabsvelden is expected to have a 15-year LOM and will produce
both export and domestic quality thermal coal.
Additionally, Xceed has a 15% interest, with a right to increase this to 70%, in each of the Roodepoort and
Bankfontein projects as follows:
• Focus Coal Investments has the right to acquire an additional 19% by undertaking sufficient drilling to
establish a SAMREC compliant resource, with a proviso that not less than R1.5 million is spent on exploration
of each project. Focus Coal Investments will have a right to purchase a further 17% in each project by
making a cash payment per ROM tonne (as included in the Mining Works Programme) times 17% times
R4.00/tonne. On commencement of mining Focus Coal Investments will have a right to purchase a further
19% in the relevant project through making a final cash payment per ROM tonne (as included in the Mining
Works Programme) times 19% times R6.00/tonne.
Roodepoort, which is located in the Witbank coalfield is a low grade thermal coal project aimed primarily for
the production of thermal coal for the domestic market. Bankfontein, which is located in the Ermelo coalfield,
is an export quality coal project aimed at producing coal for the export markets.
During November 2012, Xceed entered into agreements with Thebe Mining, whereby Thebe Mining will become
a 30% owner in Moabsvelden by investing R65 million into Neosho, which owns Moabsvelden. A condition of
Thebe Mining’s investment into Neosho was that Neosho would buy back the 26% equity interest currently
held in Neosho by the Founding Shareholders. Following the completion of the Thebe Mining investment,
ownership of Moabsvelden will be held 30% by Thebe Mining and 70% by Xceed. A sunset date for the
proposed investment by Thebe Mining of 30 June 2014 exists under the agreements entered into between
Xceed and Thebe Mining.
Thebe Mining’s investment funds of R65 million have been deposited into an escrow account and will be
released to Neosho once the conditions precedent of the Thebe Mining investment have been satisfied.
In March 2013, Xceed received and accepted a credit approved offer of project development finance for
Moabsvelden from Standard Bank totalling R220 million inclusive of capitalised interest and cost overrun
facilities.
To date Xceed has received two of the three key regulatory permits required for Moabsvelden, being the Mining
Right and environmental approval. An application for an integrated water use licence has been submitted and
is being processed by the DWA.
21
Xceed received notice of appeals lodged by two related parties with the Mpumalanga Provincial Government
against the environmental approval received by Xceed for the development of Moabsvelden.
Xceed does not believe that the grounds for appeal have merit and, through its legal counsel, will oppose
the appeals.
7.2
Historical financial information
The audited consolidated historical financial information of Xceed for the financial year ended 30 June 2013,
and independently reviewed consolidated historical financial information for the years ended 30 June 2012 and
30 June 2011 is set out in Annexure 3 to the Circular. The Xceed Directors and Keaton Directors are responsible
for the accuracy of the relevant financial information extracted from the year-end statements of Xceed. The
Independent Reporting Accountant in relation to Xceed’s report on the historical financial information of
Xceed is set out in Annexure 4 to the Circular.
8. Statement as to working capital
The Board of Directors is of the opinion that the working capital available to Keaton and its subsidiaries is adequate
for its requirements for a period of at least 12 months from the date of issue of this Summary Circular.
The Board of Directors is of the opinion that:
• Keaton and its subsidiaries will be able, in the ordinary course of business, to pay their debts for a period of
12 months from the date of the issue of this Summary Circular;
• the assets of Keaton and its subsidiaries will be in excess of their liabilities for a period of 12 months after the date
of the issue of this Summary Circular;
• the share capital and reserves of Keaton and its subsidiaries will be adequate for ordinary business purposes for a
period of 12 months after the date of the issue of this Summary Circular; and
• the working capital of Keaton and its subsidiaries will be adequate for ordinary business purposes for a period of
12 months after date of the issue of this Summary Circular.
9.
Application for listing
Keaton has applied for the listing of the New Keaton Shares to be issued to Plusbay. The JSE will approve the listing of
up to 32 647 838 New Keaton Shares in aggregate, subject to the passing of the necessary Resolutions at the General
Meeting and approval of the Scheme by Xceed Shareholders and the Court. The date of the listing of the New Keaton
Shares will be confirmed and announced once all the Conditions Precedent have been fulfilled.
10. Opinion and recommendations
The Independent Expert has considered the terms and conditions of the Specific Issue and the Transaction and, based
on and subject to the conditions set out in their opinion letter, is of the opinion that the terms and conditions of the
Specific Issue and the Transaction, based on quantitative considerations, are fair to Keaton Shareholders.
The Board has considered the terms and conditions of the Transaction and the Specific Issue and recommends that
Keaton Shareholders vote in favour of the Resolutions to be proposed at the General Meeting. The Directors intend
to vote, in respect of any Keaton Shares held by them, in favour of the requisite Resolutions.
The Board has considered the terms of the Off-take Agreement and is of the opinion that the Off-take is being
concluded on normal commercial terms.
Due to his employment with Gunvor, Dirk Jonker, a Director of Keaton, was excluded from the deliberations and the
recommendation of the Specific Issue. He was also excluded from the Board opinion regarding the Off-take.
11. Consents
Each of Qinisele Resources, Ceres Capital, Norton Rose Fulbright, Webber Wentzel, Ashurst, Nedbank Capital, BDO,
KPMG, Moore Stephens, Gemecs, Venmyn Deloitte and Computershare have consented in writing to act in the
capacities stated, to their names being stated in this Summary Circular, and had not withdrawn such consent prior to
the publication of this Summary Circular.
22
12. General Meeting
12.1 Notice of General Meeting
A notice convening the General Meeting is attached to the Summary Circular. The General Meeting will be
held at the Vermillion Room, Wanderers Building, The Campus, 57 Sloane Street, Bryanston on Thursday, 23
January 2014 commencing at 10:00.
12.2 Dematerialised Keaton Shareholders, other than own-name Dematerialised Keaton Shareholders
If you have not been contacted by your CSDP or broker, it is advisable for you to contact your CSDP or broker
and furnish them with your instructions. If your CSDP or broker does not obtain instructions from you, they
will be obligated to act in terms of your mandate furnished to them. Such holders of Dematerialised Keaton
Shares, other than own-name Dematerialised Keaton Shareholders, must not complete the attached form of
proxy (blue), unless you advise your CSDP or broker in the manner and cut-off time stipulated by your CSDP
or broker, that you wish to attend the General Meeting or send a proxy. If you wish to attend the General
Meeting, you must request your CSDP or broker to issue the necessary letter of representation to you, to
enable you to attend or be represented at the General Meeting.
12.3 Own-name Dematerialised Keaton Shareholders and Certificated Keaton Shareholders
If your Keaton Shares have been Dematerialised but are recorded in the register of Keaton in your own name
or if your Keaton Shares have not been Dematerialised you can attend and vote at the General Meeting. If
you are unable to attend the General Meeting and wish to be represented thereat, you must complete the
attached form of proxy (blue) in accordance with the instructions therein and lodge it with or post it to the
Transfer Secretaries, to be received by no later than 10:00 on Tuesday, 21 January 2014 (or 24 hours before
the adjourned General Meeting which date, if necessary, will be released on SENS and published in the South
African press). A form of proxy for use by own name Dematerialised Keaton Shareholders and Certificated
Keaton Shareholders only, at the General Meeting is included with the Summary Circular. Instructions for its
completion and lodging with the Transfer Secretaries are contained on the form.
12.4 Keaton Shareholder approval
The Specific Issue and the Transaction are subject to the approval of Keaton Shareholders present or represented
by proxy at the General Meeting and entitled to vote, as set out in the notice of General Meeting.
12.5 Voting rights
All issued Keaton Shares rank pari passu with each other.
At the General Meeting, every Keaton Shareholder present or represented by proxy shall have one vote on a
show of hands, and on a poll, one vote for every Keaton Share held.
This Summary Circular was issued in accordance with the Listings Requirements.
Mandi Glad
20 December 2013
Registered Office
Transfer Secretaries
The Braes
3 Eaton Avenue
Bryanston, 2191
(Postnet Suite 464, Private Bag X51, Bryanston, 2021)
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg, 2001
23
Annexure 1
ANNEXURE 1: VENMYN DELOITTE COVERING LETTER
27 September 2013
The Directors
Keaton Energy Holdings Limited
Ground Floor, Eland House, The Braes
3 Eaton Rd, Bryanston,
Republic of South Africa
MOABSVELDEN, BANKFONTEIN AND ROODEPOORT PROJECTS SUBMISSION TO THE JSE
Dear Sirs
This letter serves to summarise the results of three Competent Persons Reports (CPRs) prepared by Gemecs (Pty) Ltd for
Xceed Resources Ltd (Xceed) on the Moabsvelden, Bankfontein and Roodepoort Projects and the Independent Mineral
Asset Valuation Report prepared by Venmyn Deloitte (Pty) Ltd (Venmyn Deloitte) for RSM Bird Cameron (RSM) on the
same assets.
The combination of these three CPRs and a single valuation report will ensure that the requirements of the JSE Listing
Requirements Section 12, the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral
Reserves (SAMREC Code) and the South African Code for the Reporting of Mineral Asset Valuation (SAMVAL Code) are
met for the proposed acquisition of Xceed by Keaton Energy Holdings Limited (Keaton Energy). Venmyn Deloitte
understands that Xceed and Keaton intend to enter into a transaction (the transaction) whereby Keaton will acquire all of the
issued shares of Xceed, resulting in Xceed becoming a subsidiary of Keaton. The full CPRs and the Mineral Asset Valuation
Report are available for scrutiny on the Keaton Energy website.
Legal Tenure of Assets
PROJECT
24
FARMS
Moabsvelden
Portion 8 of
Farm
Moabsvelden
248 IR
Bankfontein
Portions 1, 10
and 13 of Farm
Bankfontein 215
IS
Roodepoort
Portions 6, 11,
12 and 17 of
Farm
Roodepoort 40
IS and Portion 6
of Farm
Diepspruit 41 IS
TYPE OF
RIGHT
Mining Right
Prospecting
Right
Prospecting
Right
FARM
SIZE
(Ha)
HOLDING
COMPANY
250.00
Neosho
Trading 86
(Pty) Limited
913.12
Hampfuna
Mining and
Exploration
(Pty) Limited
1,120.25
Hampfuna
Mining and
Exploration
(Pty) Limited
XCEED
STAKE
74%
15%
15%
DATE OF
GRANTING
19-Apr-13
25-Aug-09
25-Aug-09
EXPIRY
DATE
COMMENTS
Unknown The Mining
Right has
not
yet
been
executed.
The Mining Right
was granted on 19th
April 2013 but has
not
yet
been
executed.
24-Aug-12
Application
for
renewal
of
the
Prospecting Right
was submitted to
the DMR on 31st
May 2012
24-Aug-13
Application
for
renewal
of
the
Prospecting Right
was submitted to
the DMR on 30th
July 2013
Gemecs was commissioned by Xceed to produce independent CPRs on the coal resources of the Moabsvelden,
Bankfontein and Roodepoort Projects. The CPRs were prepared in partial fulfilment of the requirements of the SAMREC
Code and JSE Listing Requirements Section 12, as they exclude mineral asset valuations of the respective projects. All the
requirements of the SAMREC Code Table 1 and the JSE Section 12 have been complied with, excluding those associated
with the valuation report prepared by Venmyn Deloitte.
Moabsvelden
The Moabsvelden Mining Right covers Portion 8 of Farm Moabsvelden 248 IR, situated approximately 13km east of the town
of Delmas in the Mpumalanga Province of South Africa. It is a development project located in the Witbank Coalfield and
covers an area of 250ha.
Moabsvelden Mining Right is held by Neosho Trading 86 (Pty) Limited (Neosho). Neosho is 74% owned by Focus Coal
Investments (Pty) Ltd (Focus Coal), a wholly owned subsidiary of Xceed. The remaining 26% is owned by Focus Coal#
Black Economic Empowerment (BEE) partners consisting of Mr Dan Lucas Sikhosana, Mrs Anna Percy Sikhosana and Mrs
Mbabazini Esther Dhladhla (collectively the Founding Shareholders).
Prospecting for coal on Moabsvelden Portion 8 started in 2010 and was carried out on behalf of Focus Coal. Ten boreholes
were drilled. In 2011 Xceed drilled another twenty-nine boreholes in an effort to increase the geological confidence over the
property.
A mining right in terms of Section 23(1) of the Mineral and Petroleum Resources Development Act, 2002 (Act 28 of 2002)
(MPRDA) was granted to Neosho in April 2013. However, in terms of Section 23(5) of Act 28 of 2002, the mining right only
became effective on the date on which the Environmental Management Progamme (EMP) for Moabsvelden was approved,
th
10 September 2013.
Coal resources were modelled ", estimated and reported for the Moabsvelden Project.
Gross in situ coal resources and carbonaceous in-seam partings were reported for the Mid and Bottom Seams. Minimum
seam thickness cut offs of 0.50m were applied (no thickness cut offs were applied for the in-seam partings). Gross in situ
coal resources were reported for the Mid and Bottom Seams, excluding the three major in-seam partings identified in the
Bottom Seam. Quality cut offs of ash values less than 50% and dry ash free volatiles of more than 27% were applied.
The coal resource estimate for the project was completed in July 2013 by Gemecs using the guidelines of the JORC and
SAMREC Codes. The total estimate was based upon results from a total of 36 diamond drill holes. The Moabsvelden coal
resource statement is presented in the table below:Moabsvelden Gross in situ Coal Resources (Gemecs, July 2013)
RESOURCES
CLASSIFICATION
Measured
Indicated
TOTAL / AVE RESOURCE
GTIS
(Mt)
63.00
2.35
65.35
RD
1.67
1.65
1.67
ASH
(%)
36.30
34.70
36.24
IM
(%)
RAW QUALITIES (AIR DRY)
CV
VM
TS
(MJ/kg)
(%)
(%)
3.90
3.90
3.90
17.40
18.40
17.44
20.30
20.10
20.29
0.81
0.72
0.81
TPS
(%)
0.04
0.02
0.04
DAFV
(%)
33.90
30.50
33.78
A Feasibility Study was completed on Moabsvelden by Belton Projects and Exploration (Pty) Ltd (Belton) in April 2012 which
concluded that the Project was economically viable and ready for financing and construction at that time. Belton declared a
Mineable tonnes in situ reserve of 43Mt based upon a mining grid scheduling model with 350m by 45m mining blocks.
Bankfontein
The Bankfontein Project is located in the Ermelo Coalfield, in the Breyten District of the Mpumalanga Province approximately
250km east of Johannesburg and north of the town of Breyten. The Project comprises Portions 1, 10, and 13 of the farm
Bankfontein 215 IS and covers an area of 913.12ha. It is an advanced exploration project.
Bankfontein is 100% owned by Hampfuna Mining and Exploration (Pty) Limited (Hampfuna), in which Focus Coal has
earned a 15% shareholding through the funding of exploration to date.
Historical data and data from newly drilled boreholes were used to construct a physical and raw analysis geological model
"!
estimated only for Seams A-Lower, B-Lower, C-Lower and the D seam.
Coal resources for Bankfontein have been classified in the Indicated and Inferred categories as defined under SAMREC.
The combined Indicated and Inferred coal resource is 19.76Mt at an average calorific value of 22.40MJ/kg. The coal
resource Statement for Bankfontein is shown in the table to follow:-
2
25
Bankfontein Mineral Resource Statement (Gemecs, July 2013)
SEAM
NAME
RESOURCES
CLASSIFICATION
AVER.
SEAM
THICKNESS
(m)
COAL
AREA
(ha)
SBL
SCL
SD
0.00
2.15
Indicated
99.60
0.95
13.80
0.55
TOTAL / AVE INDICATED
113.40
1.22
63.20
0.64
0.00
1.87
Inferred
218.50
0.82
224.10
0.82
TOTAL / AVE INFERRED
505.80
1.04
SAL
SBL
SCL
SD
GTIS
RD
AS
CV
(%)
(MJ/kg)
(%)
1.63
1.53
1.51
1.56
1.49
1.63
1.64
1.66
1.60
31.80
23.70
21.00
25.50
15.90
31.40
33.67
33.40
28.59
20.60
23.70
25.10
23.13
26.80
20.67
19.27
20.13
21.72
22.40
3.10
2.90
2.70
2.90
3.50
3.13
2.87
2.97
3.12
(Mt)
4.59
1.35
0.12
6.05
0.60
7.04
2.86
3.21
13.71
19.76
IM
VM
TS
DAFV
(%)
(%)
(%)
2.40
24.80
24.20
17.13
28.00
22.43
20.37
20.00
22.70
0.53
0.82
1.07
0.81
0.53
0.22
0.56
0.88
0.55
32.80
33.80
31.60
32.73
34.70
34.23
32.10
31.70
33.18
Roodepoort
The Roodepoort Project is located 7km north of the town of Kriel in the Mpumalanga Province of South Africa and consists
of Portions 6, 11, 12 and 17 of the farm Roodepoort 40 IS and Portion 6 of the farm Diepspruit 41 IS. It covers an area of
1,120.25ha. It is an advanced exploration project.
Roodepoort is owned by Hampfuna, in which Focus Coal has a 15% shareholding.
Twenty-three boreholes were drilled during the latter part of 2011 and the beginning of 2012. The borehole information was
used to create a geological model . Drilling was limited to portions 6 and 12 of
Roodepoort and portion 6 of Diepspruit.
All resources were limited by farm boundaries and a minimum seam thickness of 0.5m. The project hosts an estimated coal
resource of 29Mt at an estimated calorific value of 14.85MJ/kg. The No.4, 2 and 1 seams were intersected, but the seams
with current economic potential are the 2 Upper, 2 Lower and 1 seams. The SAMREC coal resource estimation was carried
out by Gemecs in July 2013 and is shown in the table below:Roodepoort Gross In Situ Coal Resource Statement (Gemecs, July 2013)
ROODEPOORT 40 IS GTIS RESOURCE TONNAGES, JULY 2013
SEAM
NAME
S2U
S2L
S1A
S1
S2U
S2L
S1A
S1
S2U
S2L
S1A
S1
RESOURCES
CLASSIFICATION
Measured
TOTAL / AVE MEASURED
Indicated
TOTAL / AVE INDICATED
Inferred
COAL
AREA
(ha)
AVER. SEAM
THICKNESS
(m)
117.56
89.33
16.17
67.70
2.49
1.43
0.86
1.04
1.46
2.71
1.46
0.67
0.88
1.43
1.76
1.11
0.74
0.69
1.08
176.73
143.87
3.26
99.50
82.77
108.97
14.30
67.10
TOTAL / AVE INFERRED
GTIS
RD
(Mt)
6.22
2.38
0.21
1.05
9.86
8.46
3.78
0.03
1.32
13.59
2.73
2.24
0.17
0.72
5.86
29.31
1.77
1.79
1.51
1.49
1.74
1.85
1.72
1.52
1.59
1.79
1.91
1.87
1.58
1.55
1.84
AS
CV
IM
VM
TS
(%)
(MJ/kg)
(%)
(%)
(%)
44.85
46.50
24.80
22.70
42.46
49.70
40.35
25.90
27.25
44.87
52.80
49.10
27.40
25.90
47.34
14.65
14.20
24.10
24.00
15.74
12.70
16.35
23.60
22.40
14.68
11.80
13.50
23.30
22.80
14.13
14.93
2.45
2.30
2.00
2.70
2.43
2.45
2.40
1.90
2.55
2.44
2.60
2.40
1.60
2.90
2.53
17.35
17.45
29.20
23.00
18.23
16.90
19.25
28.30
21.25
18.00
16.40
17.30
29.50
22.90
17.92
0.65
0.35
0.80
1.50
0.67
0.65
0.60
0.70
0.75
0.65
0.90
0.70
1.10
0.90
0.83
Mineral Asset Valuation
Venmyn Deloitte, a subsidiary of Deloitte Consulting (Pty) Limited, was commissioned by to prepare an Independent Mineral
Asset Valuation Report on the mineral assets of Xceed. In preparing this valuation, Venmyn Deloitte has complied with the
requirements of the SAMVAL Code.
rd
The effective date of this assessment is 23 August 2013.
3
26
The strict definition of an asset is taken from the International Financial Reporting Standards (IFRS) which sta$an
asset is a resource controlled by an entity as a result of past events and from which future economic benefits are expected
to flow% #arially
executed, the definition of an asset is not met and therefore, the value is deemed to be zero.
!!"&# conducted a mineral asset valuation according to the stipulations
of the SAMVAL Code on the basis of available exploration and processing data using methods appropriate for the
development status of each of the projects. To this end, appropriate valuation methods were used and each mineral asset
was examined on its merits and demerits.
Since the individual projects are at different stages of production and development, different valuation approaches were
adopted. The three main valuation approaches, as stipulated in the code, include the Cost Approach, the Market /
Comparative Approach and the Income / DCF Approach. The valuation approaches incorporate the respective Coal
Resource and Coal Reserve categories on the following basis:
stage of development;
level of geological confidence in the interpretation of the geology and mineralisation;
the depth of the defined Coal Resources and Coal Reserves relative to surface i.e. whether the undeveloped
Coal Resources are likely to be mined early, or later in the production plan, and at what relative cost;
the availability of existing mining infrastructure and mineral production within the project area, i.e. whether
the undeveloped Coal Resources and Coal Reserves are likely to be mined as an extension of a pre-existing
operation; and
relative difficulty or ease of mining conditions largely due to complex geological structures, and whether or
not they are conducive to mechanised mining.
&"!" Development Classification of Mineral Assets
PROJECT
Moabsvelden
Roodepoort
Bankfontein
TYPE
Development Projects
Advanced Exploration
Advanced Exploration
"! "&Valuation Approaches and Methodologies Applied for Mineral Assets
MINERAL ASSET
Moabsvelden
Roodepoort
Bankfontein
* - Primary method of valuation
COST
VALUATION METHOD
MARKET
No
Yes
Yes
Yes
Yes
Yes
DCF
Yes*
No
No
Venmyn ! & !
and the results, which are presented in detail in the Mineral Asset Valuation Report, are summarised in the table below:rd
Xceed Mineral Asset Valuation Summary, 23 August 2013
MINERAL ASSET
XCEED
STAKE
VALUATION METHOD
(XCEED ATTRIBUTABLE) (ZARm)
COST
MARKET
DCF
XCEED ATTRIBUTABLE VALUE RANGE
(ZARm)
LOWER
UPPER
PREFERRED
536.23
536.23
285.80
536.23
9.93
2.70
17.15
3.72
2.88
4.55
TOTAL
291.38
557.94
549.87
* - The DCF value has been selected as the Preferred Value for Moabsvelden as we are of the opinion that the DCF method gives a fair
reflection of the intrinsic value of this mineral asset.
Moabsvelden*
Roodepoort
Bankfontein
74%
15%
15%
-
2.70
2.88
285.80
17.15
4.55
Venmyn Deloitte concludes that the Fair Value of the mineral assets attributable to Xceed is ZAR549.87m with a lower value
of ZAR291.38m and an upper value of ZAR557.94m.
4
27
Venmyn Deloitte carried out sensitivity analyses on the Moabsvelden Project cashflow model and results showed that the
project is most sensitive to the coal price. The valuation ranges attributable to the Moabsvelden Project are presented
graphically below and these ranges are based on various combinations of discount rates, exchange rate and metal prices.
hlighted
boxes represent the value ranges within which RSM can form their opinion with regards the values of Moabsvelden that they
will use in their IER.
!"#$%&'()'*+,--./$0-#$('+1#(0'+2#*3'%+
Valuation Range
+
+
Preferred Value
Lower Range
Upper Range
Xceed Attributable Project NPV (ZARm)
800
700
600
500
400
300
200
100
0
12.75%
13.75%
14.75%
15.75%
16.75%
Discount Rate (Real)
+
+
Yours faithfully
A.N.CLAY
M.Sc. (Geol.), M.Sc. (Min. Eng.), Dip. Bus. M.
FAusIMM, MSAIMM, FGSSA, MAIMA, MSPE
Pr. Sci. Nat.
COMPETENT PERSON AND COMPETENT VALUATOR
5
28
Notice of General Meeting of Keaton Shareholders
Unless the contrary appears from the context, the definitions commencing on page 5 of this Summary Circular of which
this notice of General Meeting forms part apply, mutatis mutandis, to this notice of General Meeting.
Notice is hereby given that a General Meeting of Keaton Shareholders will be held at the Vermillion Room, Wanderers
Building, The Campus, 57 Sloane Street, Bryanston on Thursday, 23 January 2014, commencing at 10:00 for the purpose
of considering and, if deemed fit, passing with or without modification, the following Resolutions:
ORDINARY RESOLUTION NUMBER 1
Approval of the Specific Issue
“RESOLVED that, in terms of the Listings Requirements and subject to the adoption of Ordinary Resolution Number 2,
Plusbay, a material Shareholder of the Company and hence a Related Party to Keaton, shall subscribe for and be issued
32 647 838 New Keaton Shares at the Issue Price as set out in paragraph 3.1 of the Circular and on the terms contained
in the Subscription Agreement.”
NOTE TO ORDINARY RESOLUTION NUMBER 1
In terms of the Listings Requirements, this Ordinary Resolution Number 1 must be supported by at least 75% of the voting
rights exercised on this Ordinary Resolution Number 1 for it to be approved.
Gunvor, Plusbay and their associates will not be entitled to vote on this Ordinary Resolution Number 1.
EXPLANATORY NOTE TO ORDINARY RESOLUTION NUMBER 1
The adoption of this Ordinary Resolution Number 1 will authorise the Company to issue 32 647 838 New Keaton Shares
to Plusbay at the Issue Price.
Approval of the Transaction
“RESOLVED that, in terms of the Listings Requirements and subject to adoption of Ordinary Resolution Number 1, the
Company will acquire the entire issued share capital of Xceed by way of the Scheme, in accordance with Part 5.1 of
the Australian Corporations Act, as set out in paragraph 2 of the Circular and on the terms contained in the Scheme
Implementation Deed. The Transaction constitutes a Category 1 Transaction in terms of the Listings Requirements.”
In terms of the Listings Requirements, this Ordinary Resolution Number 2 must be supported by more than 50% of the
voting rights exercised on this Ordinary Resolution Number 2 for it to be approved.
The adoption of this Ordinary Resolution Number 2 will authorise the Company to acquire the entire issued share capital
of Xceed by way of the Scheme.
29
Directors’ authority to sign and do all such things and take such further steps
“RESOLVED that, subject to the passing of the aforementioned Resolutions, any Director of the Company be and is hereby
authorised to take all steps necessary, to effect Ordinary Resolutions Numbers 1 and 2 (and any such amendments as may
be authorised) and to do all things necessary, perform all acts necessary and sign all documents necessary to implement
Ordinary Resolutions Numbers 1 and 2 and, insofar as any actions have been taken by any person in relation to the above,
those actions are ratified.”
In terms of the Listings Requirements and the Companies Act, this Ordinary Resolution Number 3 must be supported by
more than 50% of the voting rights exercised on this Ordinary Resolution Number 3 for it to be approved.
The adoption of this Ordinary Resolution Number 3 will authorise the Directors to sign and do all such things and to
sign all documents including Company forms and take all such actions as they consider necessary to give effect to and
implement the aforementioned Ordinary Resolutions Numbers 1 and 2 and will ratify any actions taken to date.
Voting and proxies
A Keaton Shareholder entitled to attend and vote at the General Meeting is entitled to appoint one or more proxies
to attend, speak, and vote in his/her stead. A proxy need not be a member of the Company. For the convenience of
Certificated Keaton Shareholders or Dematerialised Keaton Shareholders with own-name registration, a form of proxy
(blue) is attached hereto. Duly completed forms of proxy must be lodged with the Transfer Secretaries, Computershare
Investor Services Proprietary Limited, at the address below by no later than 10:00 on Tuesday, 21 January 2014.
Dematerialised Keaton Shareholders without own-name registration must advise their CSDP or broker of their voting
instructions should they be unable to attend the General Meeting but wish to be represented thereat. Dematerialised
Keaton Shareholders without own-name registration should contact their CSDP or broker with regard to the cut-off time
for their voting instructions. If, however, such members wish to attend the General Meeting in person, then they will
need to request their CSDP or broker to provide them with the necessary letter of representation in terms of the custody
agreement entered into between the Dematerialised Keaton Shareholders and their CSDP or broker.
Hand deliveries to:
Ground Floor
70 Marshall Street
Johannesburg, 2001
Postal deliveries to:
PO Box 61051
Marshalltown
2107
The record date for the purpose of determining which Keaton Shareholders are entitled to participate in and vote at the
General Meeting shall be Friday, 17 January 2014.
Forms of proxy are to be received by no later than 10:00 on Tuesday, 21 January 2014 (or 24 hours before any adjourned
General Meeting which date, if necessary, will be released on SENS).
By order of the Board
M Glad
20 December 2013
Johannesburg
Registered Office
The Braes, 3 Eaton Avenue
Bryanston, 2191
(PO Box 652836, Benmore, 2010)
30
PRINTED BY INCE (PTY) LTD
REF. W2CF16953
Form of proxy
The definitions commencing on page 5 of the Summary Circular to which this form of proxy is attached apply, mutatis
mutandis, to this form of proxy.
This form of proxy is for the use by Certificated Keaton Shareholders or Dematerialised Keaton Shareholders with ownname registration (“own-name Dematerialised Keaton Shareholders”) only. Dematerialised Keaton Shareholders without
own-name registration are requested to refer to the “Action required by Keaton Shareholders” provided on page 3 of the
Summary Circular to which this form of proxy is attached, for a full understanding of the action required by them.
For use by Certificated Keaton Shareholders and own-name Dematerialised Keaton Shareholders only, at the General
Meeting of the Company to be held at the Vermillion Room, Wanderers Building, The Campus, 57 Sloane Street, Bryanston
on Thursday, 23 January 2014, commencing at 10:00, or at any adjournment thereof.
Any Keaton Shareholder entitled to vote at the General Meeting may appoint a proxy or proxies to attend, speak and vote
in his/her stead. A proxy need not be a Shareholder of the Company.
I/We (full names)
of (address)
being the holder(s) of
Keaton Shares
do hereby appoint (see note 2):
1.
of
or failing him/her,
2.
of
or failing him/her,
3. the Chairperson of the General Meeting,
as my/our proxy to act for me/us and on my/our behalf at the General Meeting which will be held for the purpose of
considering and, if deemed fit, passing, with or without modification, the Resolutions to be proposed at the General
Meeting and at any adjournment thereof; and to vote for and/or against such Resolutions and/or abstain from voting in
respect of the Keaton Shares registered in my/our name(s), in accordance with the following instructions (see note 2):
Number of Keaton Shares
For
Against
Abstain
Ordinary Resolution Number 1 – Approval of the Specific Issue
Ordinary Resolution Number 2 – Approval of the Transaction
Ordinary Resolution Number 3 – Directors’ authority to sign and do all
such things and take such further steps
*Note: Please indicate with an “x” or the number of Keaton Shares in the spaces above how you wish your votes to be cast. If no indication is given,
the proxy will vote or abstain in his/her discretion.
Signed at
on
Signature/s
Name in BLOCK LETTERS (full name if signing in a representative capacity)
Assisted by (where applicable)
Please read the notes on the reverse hereof.
2013/2014
Notes:
This form of proxy must only be used by Certificated Keaton Shareholders or own-name Dematerialised Keaton Shareholders.
1. A Keaton Shareholder entitled to attend and vote may insert the name of a proxy or the names of two alternative proxies of the Shareholder’s
choice in the space provided, with or without deleting “the Chairperson of the General Meeting”. A proxy need not be a Shareholder of the
Company. The person whose name stands first on this form of proxy and who is present at the General Meeting will be entitled to act as proxy to
the exclusion of those whose names follow.
2. A Keaton Shareholder is entitled to one vote on a show of hands, and on a poll, a Keaton Shareholder is entitled to one vote for each Keaton Share
held. A Keaton Shareholder’s instructions to the proxy must be indicated by inserting the relevant number of votes exercisable by the Keaton
Shareholder in the appropriate box. Failure to comply with this will be deemed to authorise the proxy to vote or to abstain from voting at the
General Meeting as he/she deems fit in respect of all the Keaton Shareholder’s votes.
3. A vote given in terms of an instrument of proxy shall be valid in relation to the General Meeting, notwithstanding the death of the person granting
it, or the revocation of the proxy, or the transfer of the Keaton Shares in respect of which the vote is given, unless an intimation of such death,
revocation or transfer is received by the Transfer Secretaries, not less than 24 hours before the commencement of the General Meeting.
4. If a Keaton Shareholder does not indicate on this form of proxy that his/her proxy is to vote in favour of or against any Resolution or to abstain
from voting, or gives contradictory instructions, or should any further resolution(s) or any amendment(s) which may properly be put before the
General Meeting be proposed, the proxy shall be entitled to vote as he/she thinks fit.
5. The Chairperson of the General Meeting may reject or accept any form of proxy which is completed and/or received, other than in compliance
with these notes.
6. The completion and lodging of this form of proxy will not preclude the relevant Keaton Shareholder from attending the General Meeting and
speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such Keaton Shareholder wish to do so.
7. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form
of proxy, unless previously recorded by the Company or unless this requirement is waived by the Chairperson of the General Meeting.
8. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, as applicable, unless the relevant documents
establishing his/her capacity are produced or have been registered by the Company.
9. Where there are joint holders of Keaton Shares:
• any one holder may sign this form of proxy;
• the vote(s) of the senior Keaton Shareholder (for that purpose seniority will be determined by the order in which the names of Keaton
Shareholders appear in the Company’s register of Keaton Shareholders) who tenders a vote (whether in person or by proxy) will be accepted to
the exclusion of the vote(s) of the other joint Keaton Shareholder(s).
10. Forms of proxy should be lodged with or mailed to the Transfer Secretaries, Computershare Investor Services Proprietary Limited:
Hand deliveries to:
Postal deliveries to:
Ground Floor
PO Box 61051
70 Marshall Street
Marshalltown
Johannesburg, 2001
2107
to be received by no later than 10:00 on Tuesday, 21 January 2014 (or 24 hours before any adjourned General Meeting which date, if necessary,
will be released on SENS and published in the South African press).
11. Any alteration or correction made to this form of proxy, other than the deletion of alternatives, must be initialled by the signatory/ies.

summary CirCular to Keaton shareholders

Transcription

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