15th Apr 2008 17:08
Aquarius Platinum Ld15 April 2008 Tuesday 15th April 2008 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO OR IN THE UNITED STATES,CANADA, OR JAPAN. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF AN OFFER OF SECURITIES INTHE UNITED STATES OR ANY OTHER JURISDICTION. Aquarius announces repurchase of Implats' stakes and associated equity capital and debt raising Aquarius Platinum Limited (ASX, LSE & JSE: "Aquarius or AQP") is pleased toannounce that it has entered into agreements with Impala Platinum HoldingsLimited ("Implats") to repurchase all the shares Implats currently holds inAquarius and that its subsidiary Aquarius Platinum (South Africa) (Pty) Ltd ("AQPSA") will repurchase all the shares Implats' holds in AQPSA. The combinedconsideration for these repurchases is $790 million. The Directors of Aquarius believe that the terms of the transactions are highlyattractive to shareholders: • the share repurchase removes the only corporate shareholding inAquarius and will result in the company having a 100% free float; • it leaves Aquarius strategically positioned as a strong, independentplatinum player, with full control of its cashflows post completion of theapproved Savannah Consortium share exchange; and • the transaction is expected to be earnings accretive in the first fullyear post completion. Background Implats approached Aquarius late last year with a proposal to exit itsshareholdings in both AQP and AQPSA as a result of a portfolio review. Implatshas made an exceptional return on its investments in the Aquarius group.Implats' decision to exit is mutually beneficial and leaves Aquariusstrategically positioned as a strong, independent platinum player, with fullcontrol of its cashflows (pending the completion of the approved SavannahConsortium ("SavCon") share exchange). A simultaneous disposal of Implats'stakes was viewed as desirable by both parties and this is achieved by thesetransactions. Aquarius' Black Economic Empowerment ("BEE") credentials remainintact and SavCon are fully supportive of the transactions. SavCon is pursuing the final phase of the BEE transaction approved byshareholders in Special General Meeting on 11 October 2004 which will result inSavCon's constituent members receiving shares in Aquarius in exchange forSavCon's shareholding in AQPSA. The number of new Aquarius shares to whichSavCon will be entitled upon the disposal of its revised equity interest of32.5% in AQPSA to AQP remains 65,042,856 On completion of the final phase of theBEE transaction Aquarius will own 100% of AQPSA. Key Terms of the Agreements Aquarius will repurchase the 21,425,898 common shares (approximately 8.4% ofAquarius' issued share capital) currently held by Implats for £6.71 ($13.34) pershare, representing a total consideration of £143.8 million ($285 million). Theprice was determined using the 30-day volume weighted average price ("VWAP") pershare of £7.46 on the London Stock Exchange to 19 March 2008 (the day theprincipals agreed the pricing of a potential transaction) less an agreeddiscount. The closing share price on the London Stock Exchange on 14 April, thelast trading day prior to this announcement, was £8.10. The repurchased shareswill be cancelled. AQPSA will also repurchase Implats' 20% stake in AQPSA for a total considerationof $504.9 million; comprising a cash payment of $459.0 million to Implats and aSecondary Tax on Companies ("STC") charge of $45.9 million, as required underSouth African tax legislation. The STC payment will be incurred by AQPSA andwill be treated as a once-off charge against its 2008 earnings. Following thetransaction Aquarius' shareholding in AQPSA will increase from 54% to 67.5% andSavCon, AQPSA's BEE Partner will increase it's shareholding from 26% to32.5%.The acquisition price agreed for Implats' AQPSA stake took into accountthe parties respective views of value, future cashflows, and dividend potentialfor the Implats minority stake in an unlisted company, with appropriatediscounts applied for both liquidity issues and pre-emption rights. Both repurchase transactions are inter-conditional and neither will beindependently implemented. Rationale Commenting on the transaction, CEO of Aquarius, Stuart Murray said: "I am pleased that we have been able to add further value to our business byagreeing the two repurchase transactions with Implats. Both parties haveachieved a most satisfactory outcome. The Directors of Aquarius believe that the terms of the transactions are highlyattractive to shareholders, representing an appropriate valuation of the assetswhile at the same time providing Implats with a cost effective cash exit fromits minority interests in the respective companies. Given the pricing and funding mechanism of the repurchases, I believe thetransactions will enhance the company's value and are expected to be neutral forearnings for the 2008 financial year (save for the once-off STC tax chargeincurred by AQPSA and transaction costs associated herewith) and earningsaccretive for the 2009 financial year and thereafter, subject to prevailingmetal prices and exchange rates. The transactions will simplify our corporatestructure; a theme requested by shareholders, in a financially sound manner andsecures Aquarius a 100 percent free-float. Furthermore, on completion of theSavCon share exchange, Aquarius will have full control over its South Africansubsidiaries. I believe that the repurchases are in the very best interest of shareholders." Financing the transactions Aquarius intends to raise up to $400,000,000 through an accelerated bookbuildplacing to institutional investors immediately following this announcement tofinance the buy-back of Implats' shareholding in Aquarius and to assist AQPSAwith the financing of its buyback. The sole book runner is RMB Morgan Stanleywith co-leads Euroz Securities Limited and Investec Bank (UK) Limited. Theremainder of the consideration for the AQPSA buyback will be funded through acombination of available cash resources (approximately $250 million) and debtprovided to AQPSA by Rand Merchant Bank. Taking into account existing cash and borrowings, it is not anticipated that theGroup will have more than $275 million of debt funding outstanding subsequent tothe transaction at a time of continued strong operational cashflows. AQPSA'sfinancial obligations in respect of its rehabilitation obligations are notaffected by this transaction and the cash backed guarantee remains in place. On completion of the book build, Aquarius will issue an Appendix 3B to the ASXdetailing the number of common shares placed and pricing thereof. Noshareholder approvals are required for completion of this transaction as thenumber of shares to be issued following the capital raising will be below 15% ofthe present issued capital of the Company. Conditions Precedent The implementation of the buy-back agreements is conditional upon: • Aquarius raising the requisite funding to finance the respectivetransactions; and • Aquarius, AQPSA and Implats obtaining the relevant South Africanregulatory approvals (as necessary) for the implementation of the transactions. It is envisaged that the completion of these transactions will be achieved by 25April 2008. Operating and Trading Update Aquarius customarily prepares quarterly operating and trading reports which arereleased by the end of the month following the close of the operating quarter.As shareholders are aware, the Company will publish its third quarter productionand financial results on Thursday 24 April 2008. As the repurchase agreementsand associated financing are being announced before consolidated accounts areavailable, AQP is providing investors a detailed operating and trading update.Consolidated Profit & Loss, Balance Sheet and Cashflow Statement for the quarterended March 2008 will be published as planned in the third quarter results on 24April 2008. Highlights • Attributable production for the third quarter of approximately 111,5244E PGM ounces (first 9 months: 389,337 ounces) • Record 4E PGM basket prices achieved in the first two months of thequarter for the group of $2,473 per PGM ounce. Underlying PGM prices haveremained strong in both March and April. • An estimated net profit for the third quarter of between $70 and $75million; actual net profit for the first two months of the quarter was $56.6million on revenues of $153 million. Production Overview The quarter ended March 2008 was an operationally challenging but unusuallyprofitable one for the Company. Our management teams in both South Africa and Zimbabwe had to cope withsignificant electrical power shortages. Both countries experienced a number ofnew challenges, with reductions in power supply that ultimately impactedproduction at all of our mines. By the quarter end the power situation inZimbabwe had stabilised and a new power supply contract with HCB is inpreparation. The third quarter is traditionally the lowest production quarter in the miningcalendar of Aquarius, as the number of days 'lost' to public holidays (Christmasand New Year) is the highest of each operating quarter. Additionally, atMarikana, production at the open-pit was closed for 5 days by unusually highlevels of rainfall in February and March. As previously announced, AQPSA tookover the mining operations at Everest at the end of January. The Company hasbeen able to transition to owner-operator at its Everest mine faster and moreseamlessly than was expected, with output at revised targeted levels at the endof March. At AQPSA a number of previously reported labour related issues also impactedmining performance, most notably at Everest and Marikana. In Zimbabwe the political situation in the run up to the 29 March elections wascalm. The economic environment, however, remains challenging, impacting boththe price and availability of goods. The mine initiative to assist withprovisioning of basics has been instrumental in keeping the workforce motivatedand productive. Estimated Production and Working Cost Statistics are set out below Q3 2008 AQPSA ASACS MIMOSA Kroondal Marikana Everest CTRP Mimosa (100%) (100%) (100%) (100%) (100%)Tons milled (kt) 1,581.4 425.7 428.7 63.4 399Head grade (g/t) 2.56 2.78 2.99 4.59 3.60Recovery (%) 76.9 63.4 75.5 24.8 75.74E ozs in concentrate 100,020 24,223 31,107 2,309 34,281Cash cost (R/4E oz) 4,131 9,289 4,324 2,818 $362Cash cost (R/6E oz) 3,386 7,664 3,524 1,909 NA Aquarius Attributable Production Total Q3 2008 YTD4E oz in concentrate 111,524 389,337 Production Outlook Total production in the third quarter was approximately 15,000 to 20,000 PGM(4E) ounces below target for the reasons articulated above. It is anticipatedthat the fourth quarter should see an improvement in production at alloperations. At Kroondal more output is expected from the K5 Shaft; at Marikanathe new labour relationship brokered by AQPSA between the underground contractorand the workforce is due for implementation in April 2008; progress at Everestremains very encouraging and levels of 80 to 85% of ultimate production ratesshould be achieved in the fourth quarter, and; at Mimosa the short-termcommissioning problems should be resolved and with a large stockpile ahead ofthe plant the benefits of the Wedza Phase 5 expansion should start tomaterialise. Subject to the final regulatory approvals for the Platinum Miletransaction, some additional production from that operation will be added togroup output. Based on the production levels achieved to date, full year production isenvisaged to be in the range 520,000 to 530,000 PGM ounces, a level comparableto the last financial year's production. Profitability The Company has not in the past given profit guidance as several factors thataffect profits are beyond the control of the Company. It is however,appropriate to draw shareholders' attention to the very strong run up in theprices of platinum and rhodium in recent months. Aquarius benefited from the exceptional commodity pricing environment and ahigher proportion of rhodium in its production mix to achieve record 4E basketprices in the third quarter. As reported the net profit for the Company for the half year to December 2007was $106.6 million. Net profit for the first two months of the third quarter(January and February 2008) amounted to $56.6 million on revenues of $153million, demonstrating the benefit of the current high price environment. Basedon the production and cost data provided above, management estimates that thequarterly Net Profit for Q3 will be approximately $70 to $75 million. For further information please contact: In Australia:Willi BoehmAquarius Platinum Corporate Services+61 (0)8 9367 5211 In United Kingdom and South Africa:Nick BiasAquarius Platinum+ 44 (0)7887 920 530 RMB Morgan Stanley, Sole Book RunnerChris MeyerCEO+27 11 282 8286 Morgan StanleyPeter BacchusManaging Director+44 (0)207 425 4669 Alastair CochranManaging Director+44 (0)207 677 5039 This announcement has been issued by the Company and is the sole responsibilityof the Company. RMB Morgan Stanley, Morgan Stanley and Rand Merchant Bank are acting exclusivelyfor the Company and no one else in connection with the placing. RMB MorganStanley, Morgan Stanley and Rand Merchant Bank will not be responsible to anyoneother than the Company for providing the protections afforded to theirrespective clients nor for providing advice in relation to the placing or anyother matter referred to in this announcement. This announcement is for information purposes only and does not constitute anoffer or an invitation to acquire or dispose of any securities or investmentadvice in any jurisdiction. This announcement is not for publication or distribution or release in theUnited States of America (including its territories and possessions, any stateof the United States and the District of Columbia). This announcement does notconstitute or form part of an offer to sell or issue or solicitation of an offerto purchase or subscribe for securities in the United States, Australia, Canada,Japan or any other jurisdiction and should not be relied upon in connection withany decision to acquire the placing shares or any other Aquarius securities. Thesecurities referred to herein have not been and will not be registered under theUnited States Securities Act of 1933, as amended (the "Securities Act"), and maynot be offered, sold or transferred within the United States, except pursuant toan exemption from, or in a transaction not subject to, the registrationrequirements of the Securities Act. No public offering of the placing shares isbeing made or will be made in the United States. This announcement does not and is not intended to constitute an offer to thepublic in South Africa in terms of Chapter VI of the South African CompaniesAct, 1973 (as amended). This announcement includes "forward-looking statements". All statements otherthan statements of historical fact included in this announcement, including,without limitation, those regarding Aquarius's financial position, businessstrategy, plans and objectives of management for future operations, areforward-looking statements. Such forward-looking statements involve known andunknown risks, uncertainties and other factors which may cause the actualresults, performance or achievements of Aquarius, or industry results, to bematerially different from any future results, performance or achievementsexpressed or implied by such forward-looking statements. Such forward-lookingstatements are based on numerous assumptions regarding Aquarius's present andfuture business strategies and the environments in which Aquarius will operatein the future and such assumptions may or may not prove to be correct. There area number of factors which could cause actual results, performance of Aquarius,or industry results to differ materially from those expressed or implied inforward looking statements. These forward-looking statements speak only as ofthe date of this announcement. Aquarius expressly disclaims any obligation(except as required by the rules of the UK Listing Authority and the LondonStock Exchange or the rules of the ASX Limited or the JSE Limited) orundertaking to disseminate any updates or revisions to any forward-lookingstatement contained herein to reflect any change in Aquarius's expectations withregard thereto or any change in events, conditions or circumstances on which anysuch statement is based. Neither this announcement nor any copy of it may be taken, transmitted ordistributed, directly or indirectly in or into the United States, Canada orJapan. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AQP.L