The Mission Group Regulatory News (TMG)

1 Nov 2007 07:01

Thistle Mining Inc.01 November 2007 Thistle announces signing of binding agreements with Pamodzi Gold Limited forits interests in the President Steyn Gold Mine Toronto, November 1, 2007: Thistle Mining Inc. ("Thistle") or the "Company")(AIM: TMG) and Pamodzi Gold Limited ("Pamodzi") (JSE: PZG) announced today thatthey entered into a Sale of Shares and Claims Agreement ("SSCA") for the sale toPamodzi of Thistle's direct and indirect interests in President Steyn Gold Mines(Free State) (Pty) Ltd ("PSGM") on October 29, 2007 (the "Sale Transaction"). Pamodzi is a South African gold mining company that is controlled by PamodziResources (Pty) Limited, a South African black owned resources company ("PamodziResources"). Pamodzi owns established mining operations in both the western andeastern parts of the Witwatersrand. In the west, Pamodzi owns the Middelvleimine, an open cast operation currently in ramp-up stage. In the east, theinterest consists of a group of operating mines namely Grootvlei, Cons Modderand Nigel. Pamodzi has also signed agreements with Harmony Gold Limited toacquire their Orkney mines. The stated objective of Pamodzi is to be a 1,000,000oz per annum producer in the short to medium term. The acquisition of PSGM willsecure for Pamodzi a foothold in the Free State goldfields of South Africa andcontribute towards the realization of its stated objective. Pamodzi is in a goodposition to secure the capital needed to develop PSGM's Golden Triangle projectand explore its Eldorado reefs thus securing a sound future for the employees ofPSGM. Under the terms of the SSCA, the consideration payable by Pamodzi to Thistle forall of its direct and indirect interests in PSGM (on its behalf and on behalf ofall other holders of such interests) will be ZAR240 million (Two Hundred andForty Million South African Rands) (approximately US$ 36.9 million (Thirty SixMillion Nine Hundred Thousand United States Dollars)) at an exchange rate of ZAR6.50 to the US$ (the "Purchase Consideration"). The Purchase Consideration whichwill be allocated as to ZAR10 million (Ten Million South African Rands) inrespect of the entire issued share capital of PSGM and the remainder to allclaims on loan account held against PSGM and all of its subsidiaries by Thistleand all of its other subsidiaries. The Purchase Consideration has been reduced by ZAR 10 million from the figureannounced in the press release dated October 5, 2007 to fund the payment ofcertain claims identified after that date. The Purchase Consideration is to be satisfied through the payment of (i) ZAR 100million (One Hundred Million South African Rands) in cash (conditional on aplacement of shares of Pamodzi failing which Pamodzi will allot and issuePamodzi shares to Thistle at a 10% discount to the volume weighted averagetraded price over the 30 trading days prior to December 1, 2007); and (ii) aparticipating loan of ZAR 140 million (One Hundred and Forty Million SouthAfrican Rands) (the "Participating Loan") in respect of a Participating LoanAgreement entered into between Thistle, Clidet No 776 (Pty) Ltd ("Clidet"), awholly owned subsidiary of Pamodzi Resources, and Pamodzi Resources. Should thecash portion of the Purchase Consideration be settled by the allotment and issueof Pamodzi shares it is the Company's current intention to retain these sharessubject to the financial circumstances of the Company. In terms of the Subscription Agreement, Clidet will acquire a specified numberof ordinary shares in Pamodzi (the "Pamodzi Gold Shares") for an aggregateamount of ZAR 140 million (One Hundred and Forty Million South African Rands) atsubscription price of ZAR14.73 per share. In terms of the Participating Loan Agreement, on or after May 31, 2009 (or inlimited circumstances, prior thereto), Thistle will be entitled to repayment ofthe Participating Loan including interest calculated at 12% per annum togetherwith 80% of any increase in the value of the Pamodzi Gold Shares (in totalreferred to as the "Settlement Amount") which will be settled by way of atransfer of Pamodzi Gold Shares to Thistle or out of the proceeds of sale of thePamodzi Gold Shares. However, in circumstances where the Settlement Amount isgreater than the Pamodzi Gold Shares, the payment is limited to the value of thePamodzi Gold Shares. As security for the performance by Thistle of its, and certain of itssubsidiaries', obligations under the SSCA, including in respect of thewarranties provided by it, Thistle has entered into a cession agreement underwhich it has ceded and assigned to Pamodzi, by way of a security cession, all ofThistle's rights and interests under the Participating Loan Agreement.Similarly, as security for the performance by Clidet of its obligations underthe Participating Loan Agreement and the other transaction agreements (asapplicable), Clidet has entered into a pledge agreement under which it has cededand pledged to Thistle, by way of a security pledge, all of its rights, titleand interest in and to the Pamodzi Gold Shares. The Purchase Consideration will be adjusted upwards or downwards (as the casemay be) by the difference between the net working capital of PSGM as at June 30,2007 and as at December 1, 2007 (the "Effective Date"). In addition, thePurchase Consideration will be adjusted downwards by one half of the aggregateloans advanced to PSGM by Casten Holdings Limited and/or MC Resources Limited(who are major creditors and shareholders of Thistle each owning 35% of theoutstanding shares of Thistle) and all the interest and fees related theretofrom September 26, 2007 to the Effective Date. An adjustment downwards willreduce the cash and Participating Loan portion of the Purchase Considerationequally. Should there be an increase in the Purchase Consideration, then onlythe cash consideration will be increased. At this stage an adjustment downwardsof between ZAR 40 million and ZAR 50 million is expected. Completion of the Sale Transaction is conditional on various matters, includingcompetition and any applicable regulatory and South African exchange controlapprovals and receipt of shareholder approval by the shareholders of each ofThistle and Pamodzi. In addition for the Sale Transaction to be completed,production at PSGM must exceed 340 kg of gold in November 2007. Notwithstandingthe closing date of the Sale Transaction, the sale will be deemed to have takenplace on the Effective Date and ownership of and risk in, and benefit attachingto, the entire issued share capital of PSGM will, against payment of the fullPurchase Consideration (together with any accrued interest thereon, if any), bedeemed to have passed to Pamodzi on the Effective Date. In the event that Pamodzi withdraws from the Sale Transaction, it has agreed topay a break fee of ZAR5 million (Five Million South African Rands) to Thistle,subject to certain limited conditions. On October 30, 2007 Mindserv (Pty) Ltd ("Mindserv"), a wholly owned subsidiaryof Thistle owning 85% of the issued share capital of PSGM, Iningi Investments167 (Pty) Ltd ("Iningi"), owning the remaining 15% of PSGM and PSGM agreed tothe sale of Iningi's interest in PSGM to Mindserv for ZAR 2 million (Two MillionSouth African Rands). The purchase consideration is payable by Mindserv toIningi in full by no later than the fifth business day after receipt of the cashportion of the Purchase Consideration under the SSCA. This agreement isconditional on closing of the Sale Transaction under the SSCA. A meeting of the Company's shareholders to consider the proposed sale isexpected to be held in Toronto in early December 2007. In connection with themeeting, the Company will be preparing and sending to its shareholders a noticeof meeting and circular containing additional details concerning the SaleTransaction in mid November 2007. A further announcement in respect of thecircular will be made by the Company in due course. The Sale Transaction willrequire approval by a two thirds majority of the votes cast by Thistleshareholders at the meeting. Pamodzi has received assurances from MC ResourcesLimited and Casten Holdings Limited, each owning 35% of the outstanding sharesof Thistle, of their intention to vote for the Sale Transaction. Pamodzi's shareholder meeting to approve the Sale Transaction is expected to beheld early in December 2007 in Johannesburg, South Africa. The Sale Transactionwill require approval by a simple majority of the votes cast by Pamodzishareholders at the meeting. Thistle has received assurances from PamodziResources and Middelvlei Gold Investments (Pty) Ltd, together owning 50.1% ofthe outstanding shares of Pamodzi, of its intention to vote for the SaleTransaction. Assuming the shareholders of Pamodzi and Thistle approve the Sale Transactionand all other conditions to the completion are satisfied or waived, Thistleexpects that the Sale Transaction will be completed by December 14, 2007 ("Completion Date"). Under the terms of the SSCA, the conditions precedent must becompleted by February 1, 2008 ("Long Stop Date"), or else the agreement willnever become of any force or effect and the status quo ante will be restored asnear as may be possible unless the Long Stop Date is extended by mutualagreement. The Company's Board of Directors is considering using the proceeds of the SaleTransaction primarily to meet the Company's outstanding debt obligations andwill be considering the future direction of the Company and discussing this withthe Company's creditors. PSGM owns and operates the President Steyn Gold Mine which includes five shaftsand a processing facility in the Free State province of South Africa. Totalounces sold by PSGM in the first six months of 2007 amounted to 59,999 ozcompared to 71,389 oz sold in the corresponding period in 2006. For further information, contact: Anton Kakavelakis, Group Financial Controller + 27 57 391 9026 or email toinfo@disselgroup.comGerry Beaney, Maureen Tai or Troy MacDonald Grant Thornton Corporate Finance at+44 (0) 207 383 5100 Forward Looking Information: This press release may contain or refer toforward-looking information based on current expectations. Forward-lookingstatements are subject to significant risks and uncertainties, and other factorsthat could cause actual results to differ materially from expected results.These forward-looking statements are made as of the date hereof and the Companyassumes no responsibility to update or revise them to reflect new events orcircumstances. This information is provided by RNS The company news service from the London Stock Exchange