21 May - 4 min read

Acquisition Of The Gravenhage Manganese Mining Right

Acquisition Of The Gravenhage Manganese Mining Right

AFRIMAT LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2006/022534/06)
Share code: AFT
ISIN: ZAE000086302
(“Afrimat” or “the Company” or “the Group”)

ACQUISITION OF THE GRAVENHAGE MANGANESE MINING RIGHT

1.   INTRODUCTION

     Shareholders are advised that on 20 May 2021, the Company entered into an agreement
     (“Agreement”) with Aquila Steel (S Africa) Proprietary Limited and Rakana Consolidated
     Mines Proprietary Limited (“the Sellers”), in terms of which the Company will purchase
     100% of the Gravenhage manganese mining right and associated assets (“Assets”) from
     the Sellers (“Acquisition”).

2.   DESCRIPTION OF THE ASSETS

     Gravenhage is a long-life near-development manganese resource situated approximately
     50 km’s north of Hotazel and approximately 120 km’s from Afrimat’s existing Demaneng
     mine. It is one of the last independently owned, undeveloped manganese deposits in
     South Africa. It is situated in the northern region of the globally important Kalahari
     Manganese Field. A definitive feasibility study was finalised confirming the technical and
     economic feasibility of the Gravenhage manganese project based on an initial open cut
     operation with the potential for subsequent underground mining. The resource and its
     significant potential has been well defined by continued exploration drilling.

3.   RATIONALE FOR THE ACQUISITION

     This expansion into manganese is a continuation of Afrimat’s bulk commodities growth
     and diversification strategy. Gravenhage’s proximity to Afrimat’s existing iron ore
     operations in the Northern Cape provides operational and logistical synergies. The
     successful development of Gravenhage will increase Afrimat’s scale in the ferrous-metal
     value chain and its exposure to foreign currency denominated earnings.

     This investment deepens Afrimat’s commitment to supporting the South African economy
     through enabling job creation, skills development, social upliftment in surrounding
     communities, as well as stimulating healthy growth of the local economy in the Northern
     Cape.

4.   PURCHASE CONSIDERATION

     The purchase consideration is payable by Afrimat to the Sellers in cash following fulfilment
     or waiver of the Conditions Precedent (as defined below), which date may be extended
     by the parties in writing. The purchase consideration of USD45,0 million and ZAR15,0
     million (“Purchase Consideration”), respectively, is structured and will be paid as set out
     below:
         •   A first tranche payment in ZAR equivalent to USD30,0 million plus a contribution
             amount of ZAR15,0 million relating to the purchase of the property payable on the
             10th business day following fulfilment or waiver of the Conditions Precedent.

         •   A second tranche payment in ZAR equivalent to USD15,0 million at the earlier of:

                o   the entry into one or more transactions with a third party (other than a
                    related party) which will result in Afrimat (or the Afrimat nominee) holding
                    (directly or indirectly) less than 50% interest in the mining right; and

                o   12 months after the date on which manganese ore or iron ore (excluding
                    any discard material pertaining to such ore) recovered from the mining
                    area is first delivered to the product stockpile containing such types of ore,
                    a facility for processing or any location outside of the mining area.


5.   CONDITIONS PRECEDENT

     The Acquisition is subject to the fulfilment of the following outstanding conditions
     precedent (“Conditions Precedent”):

     -   Approval in terms of section 11 of the Mineral and Petroleum Resources
         Development Act No. 28 of 2002;

     -   Competition Commission approval;

     -   Grant of Water Use License application; and

     -   Approval of the Chinese State-owned Assets Supervision and Administration
         Commission of the State Council for the sale of the Assets and the assumption of the
         assumed liabilities as contemplated in the Agreement having been obtained by Aquila
         Steel (S Africa) Proprietary Limited.

     The Conditions Precedent must be fulfilled by no later than 17h00, 15 calendar months
     after the signature date, being 20 August 2022.

6.   EFFECTIVE DATE OF THE ACQUISITION

     The Effective Date of the Acquisition is the 10th business day following the date on which
     the Conditions Precedent are fulfilled.

7.   FINANCIAL INFORMATION

     The Assets are currently in the pre-development phase and Afrimat considers the
     Purchase Consideration to be a fair representation of the pre-development fair value of
     the Assets. In addition, no profits can be attributable to the Assets given its pre-
     development state.

     Afrimat has satisfied itself with the quality of the financial information disclosed.

8.   WARRANTIES AND OTHER SIGNIFICANT TERMS OF THE AGREEMENT

     The Agreement contains representations and warranties by the Seller in favour of the
     Company which are standard for a transaction of this nature.

9.   CLASSIFICATION OF THE ACQUISITION

     The Acquisition constitutes a category 2 transaction in terms of the JSE Limited Listings
     Requirements.

10. OTHER

     The Company confirms, for purposes of paragraph 9.16 of the JSE Limited Listings
     Requirements that nothing in the constitutional documents of Gravenhage will, in any way,
     frustrate or relieve the Company from compliance with the JSE Limited Listings
     Requirements.


Cape Town
21 May 2021

Sponsor
PSG Capital

Date: 21-05-2021 07:05:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.
Information on this Website is provided for general information purposes only and is not a substitute for professional advice. ASX Information (including company announcements and prices) is delayed by at least 20 minutes. JSE Information (including company announcements and prices) is delayed by at least 15 minutes. Reliance on the information you access on or from this Website is solely at your own risk. We make no representation or warranty in relation to the future performance of the companies that appear on this Website. Investment in securities involves risk and you should obtain independent professional legal, financial, investment or company advice before acting on any of the information you access on this Website. Using, browsing or otherwise accessing this Website is subject to our Terms and Conditions and our Privacy Policy.

© 2021 Listcorp. ABN 60 166 140 307

Never miss news from Afrimat Limited (JSE:AFT) when you join Listcorp.