15th Sep 2009 07:00
15th September 2009
Weatherly International Plc ("Weatherly" "WTI", or the "Company")
Share Subscription by East China Mineral Exploration and Development
Weatherly is very pleased to announce that it has signed a Letter of Intent ("LOI") whereby a wholly owned subsidiary of East China Mineral Exploration and Development Bureau ("ECE") will subscribe for 446,851,840 new shares in the Company at a price of 3.6 pence per share for total proceeds of £16,087 million. Assuming the transaction is completed as set out in the LOI, ECE would own 50.1% of the enlarged issued share capital of the Company.
The essential terms of the LOI are as follows;
1/ The proceeds of the subscription will be utilised firstly, in redeeming US$3 million plus accrued interest of approximately US$1 million, of the outstanding convertible loan notes in the capital of WTI; and secondly, in providing working capital for the Company's mining operations, smelter and development projects in Namibia and Burkina Faso. The proceeds may also be used to redeem the remaining $9 million and associated interest of the outstanding convertible loan notes as and when they fall due.
2/ Subsequent to the completion of the subscription, WTI and ECE agree that WTI may acquire the entire issued share capital of Namibia Non- Ferrous East China Minerals Exploration and Development Pty Ltd, ("ECEN") a wholly owned subsidiary of ECE for an independently valued and agreed consideration, payable in additional WTI shares. ECEN is the owner of certain exploration and prospecting licenses in the Republic of Namibia.
3/ Subject to the approval of the relevant Chinese laws and governmental authorities, ECE agrees that WTI may also acquire from ECE additional mining resource projects located in China and elsewhere for an independently valued and agreed consideration, payable in additional WTI shares.
4/ Concurrent with any such acquisition of ECEN or additional projects, WTI would place additional new shares, on a best efforts basis, such that ECE's equity holding in WTI is maintained at 50.1%.
5/ ECE will nominate new directors to the Company's Board of Directors. The existing 4 directors of the Company will remain on the Board. The Directors nominated by ECE shall occupy the majority seats on the Board.
6/ ECE will be responsible for all exploration work carried out by the Weatherly group
7/ Completion of the transaction contemplated in the LOI is subject to the following conditions;
- Completion of due diligence of WTI to the sole satisfaction of ECE
- Approval of the Boards of Directors of WTI and ECE
- Admission of the enlarged ordinary share capital of WTI to trading on the AIM Market of the London Stock Exchange
- Approval by Weatherly shareholders at a General Meeting to be convened to approve the proposed transaction
- A "whitewash" from the independent shareholders of the Company to alleviate any obligation on ECE to make a mandatory offer under Rule 9 of the Takeover Code
- Approval by the relevant authorities in the Government of the People's Republic of China
- Any other governmental, stock exchange and regulatory approvals as may be required for a transaction of this nature
The LOI anticipates that the entire transaction will be completed on or before January 31, 2010.
Rod Webster, CEO of Weatherly said; "On behalf of the board of directors, I am delighted to recommend this transaction to the shareholders of Weatherly International. ECE has recognised the value inherent in Weatherly's asset base and management team and are prepared to invest heavily to obtain a controlling position in the Company. The benefits of the transaction to Weatherly shareholders are considerable and include;
- The creation of a strategic relationship with an important Chinese metals group that brings potential for significant growth for the Company
- An immediate injection of substantial working capital, and repayment of the first US$3 million and associated interest of the outstanding Convertible Loan Notes.
- A greatly improved balance sheet and increased shareholder value
- The acceleration of development of the Tschudi open pit copper project
- Adequate funding to underpin the current expansion of the smelter to meet all contractual obligations to both current and future concentrate suppliers
- The ability to reopen the Otjihase and Matchless mines, currently on care and maintenance, to take advantage of increased copper prices
- The acquisition of additional Namibian exploration concessions and potentially of other resource projects in China and elsewhere
- Access to ECE's exploration capability and mining expertise with the potential to effect cost reductions and improved efficiencies at WTI operations, and importantly,
- A further strengthening of our relations with the Namibian government, at the highest levels.
I believe that the proposed relationship with ECE will enable Weatherly to put a close to what has been a very difficult period for the Company. We can now look forward to the growth of our significant asset base, and to the new opportunities that we are confident will arise as a result of ECE's exciting plans for the development of the Company."
For further information contact:
|
Rod Webster, Chief Executive Officer, Weatherly International Plc |
+44 (0) 20 7868 2232 |
|
Richard Greenfield, Ambrian Partners Limited |
+44 (0) 20 7634 4700 |
Related Shares:
Weatherly International Plc