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W G WEARNE LIMITED - Disposal of Muldersdrift quarry business, property and mining right, withdrawal of cautionary announcement

Release Date: 05/12/2019 14:00
Code(s): WEA     PDF:  
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Disposal of Muldersdrift quarry business, property and mining right, withdrawal of cautionary announcement

W G WEARNE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005983/06)
(Share Code: WEA ISIN Code: ZAE000078002)
(“Wearne” or “the Company” or “the Group’’)

DISPOSAL OF MULDERSDRIFT QUARRY BUSINESS, PROPERTY AND MINING RIGHT
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1.   INTRODUCTION

     Shareholders are referred to the various cautionary announcements, the last being 5
     June 2019. Shareholders are advised of the following:

     1.1   Wearne Aggregates (Pty) Limited (“Wearne Aggregates”) has, on 3 December
           2019 (“Signature date”), entered into an agreement (“Sale of Business
           Agreement”) with Drift Supersand (Pty) Ltd (“Drift Supersand”) to dispose of the
           Muldersdrift Business to Drift Supersand, subject to certain conditions precedent
           referred to below (“Business disposal”) with effect from the date when all
           suspensive conditions are fulfilled (“Effective date”). As a condition to the
           Business disposal, Wearne entered into an agreement with Drift Supersand
           (“Lease Agreement”) to lease the Property for a three year period from the
           Effective Date (“Property Lease”);

     1.2   On the Signature Date, Wearne entered into an agreement (“Sale of Property
           Agreement”) with Drift Supersand Mining (Pty) Ltd (“Drift Mining”) to dispose of
           the property. The property is defined as Portions Re/226,227,266,267,285,286
           and 287 of the Farm Rietfontein 189-IQ; and Portions 57,58,171,182 and 185 of
           the Farm Rietfontein 180-IQ (“the Property”), subject to certain conditions
           precedent referred to below (“Property disposal”); and

     1.3   On the Signature Date, Wearne Aggregates entered into an agreement (“Sale of
           Mining Right Agreement”) with Drift Supersand to dispose of a Mining Right to
           Drift Supersand. The mining right was granted by the Minister under Sections 22
           and 23 of the MPRDA in favour of Wearne Aggregates in respect of portion 185
           (on the remaining extent of portion 28) and portion 57 of the farm Rietvlei 180 IQ
           and portions 227, 267, 285, 286 and 287 of the farm Rietfontein 189 IQ, District
           of Krugersdorp (“the Mining Right”), subject to certain conditions precedent
           referred to below (“Mining Right disposal”).

     (collectively known as the “The Transactions”).

2.   NATURE OF THE BUSINESS OF MULDERSDRIFT QUARRY

     The Muldersdrift Quarry is a granite quarry located in Muldersdrift near Krugersdorp
     that produces normal aggregates for the road and normal building industry. The
     Muldersdrift Quarry also produces building and river sand.


3.   RATIONALE FOR THE TRANSACTIONS
      As previously announced, Wearne has developed and is implementing a restructure
      plan to sell off non-core assets to improve its liquidity and solvency. The Muldersdrift
      Quarry has been identified as a non-core asset.
4.   SALIENT TERMS AND CONDITIONS OF THE BUSINESS DISPOSAL

     4.1 Wearne Aggregates disposed of the Muldersdrift Business to Drift Supersand
         which includes plant and equipment, stock and specifically excludes certain assets
         as defined in the Sale of Business Agreement for an amount of R9 million.
     4.2 Wearne Aggregates appointed Drift Supersand as its exclusive contractor to mine
         on behalf of Wearne Aggregates in terms of section 101 of the Mineral and
         Petroleum Resources Development Act, No. 28 of 2002 (“MPRDA”), from the
         Effective date to the earliest of the Mining Right transfer date or the third
         anniversary of the Effective date.
     4.3 The purchase price is payable on the Effective date.
     4.4 The Business disposal is subject to inter alia, the Sale of Property Agreement, the
         Lease Agreement and the Sale of Mining Rights Agreement are concluded and
         Wearne Aggregates advertises the Business disposal in terms of section 34 of the
         Insolvency Act, No. 24 of 1936 (“Insolvency Act”).
     4.5 The Business disposal is subject to warranties that are customary in nature.


5.   SALIENT TERMS AND CONDITIONS OF THE PROPERTY DISPOSAL

     5.1 Wearne disposed of the Property and certain leases to Supersand Mining for an
         amount of R32.5 million (“Property disposal purchase price”).
     5.2 The Property disposal purchase price is payable in cash on the date of transfer of
         the Property.
     5.3 The Property disposal is subject to, inter alia the following suspensive conditions:
           5.3.1 the Sale of Business Agreement, the Lease Agreement and the Sale of
                 Mining Rights Agreement are concluded;
           5.3.2 board approval of directors of Wearne and Drift Mining has been obtained;
           5.3.3 the Debt Restructuring Agreement entered into between Consolidated
                 Infrastructure Group Limited (“CIG”) and its bankers and lenders for the
                 rescheduling or restructuring of the debt of CIG and its subsidiaries and
                 approval of the Property disposal by such bankers and lenders , as defined
                 in the Sale of Property Agreement has been concluded;
           5.3.4 all regulatory approvals (including JSE Listings Requirements) have been
                 obtained;
           5.3.5 section 11 application has been lodged with the Department of Minerals
                 and Resources (“DMR”) in accordance with the MPRDA; and
           5.3.6 Wearne advertises the Property disposal in terms of section 34 of the
                 Insolvency Act.
     5.4 On or before the first anniversary of the date of transfer, Drift Mining shall purchase
         Portion 181 of the Farm Rietfontein 180-IQ for R500 000.

     5.5 The Property disposal is subject to warranties that are customary in nature.
      6. SALIENT TERMS AND CONDITIONS OF THE MINIG RIGHT DISPOSAL

       6.1 Wearne disposed of the Mining Right to Drift Supersand for an amount of R8 million
           (“Mining Right disposal purchase price”).
       6.2 The Mining Right disposal purchase price is payable in cash on the date the all
           suspensive conditions below are fulfilled.
       6.3 The Mining Right disposal is subject to the following suspensive conditions:
            6.3.1 the Sale Property Agreement becomes unconditional and the Property is
                  transferred in terms thereof; and
            6.3.2 Section 11 consent is granted by the Minister.
       6.4 Drift Supersand undertakes to do all such things as required to, by no later than the
           date that the Mining Right is registered in Drift Supersand’s name, to release
           Wearne from the rehabilitation obligation relating to the Mining Right.

       6.5 The Mining Right disposal is subject to warranties that are customary in nature.

7.      USE OF PROCEEDS
       The proceeds from the Transactions will be used for repayment of debt and to improve
       the liquidity position of the Group.

8.      FINANCIAL INFORMATION FOR THE TRANSACTIONS

       The net value of the assets attributable to the Transactions was approximately R83.5
       million as at the 31 August 2019. The loss attributable to the net assets that are the
       subject of the Transactions, was R1, 4 million for the six months to 31 August 2019.

9.     CATEGORISATION OF THE TRANSACTIONS

       The JSE has determined that the Transactions are a category 2 transaction.

10.    WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

       Shareholders are referred to the cautionary announcement dated 5 June 2019 and are
       advised that as a result of this announcement, caution is no longer required to be
       exercised by shareholders when dealing in their securities.




Randfontein
5 December 2019


Designated adviser
Exchange Sponsors

Date: 05-12-2019 02:00:00
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