REG - Galileo Resources - Glenover Assets Sale and Option to sell shares
09/12/2021 07:00
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RNS Number : 0426V Galileo Resources PLC 09 December 2021
For immediate release
9 December 2021
Galileo Resources Plc
("Galileo" or "the Company")
Glenover Assets Sale and
Option to sell shares in Glenover
Galileo Resources plc ("Galileo "or the "Company") is pleased to provide
details regarding;
a. Asset sale agreements entered into between Glenover Phosphate
Proprietary Limited ("Glenover") in which Galileo has a 29% direct and 4.99%
indirect investment held via Galagen Proprietary Limited who are the BEE
partner in Glenover, and JSE Limited listed Afrimat Limited (JSE : AFT)
("Afrimat") on 8 December 2021 (the "Asset Sale Agreement"). The Asset Sale
Agreements relate to the sale for ZAR 250M (approx. GBP11.64M) of certain
deposits of phosphate rock located at the Glenover Mine ("Inventory Deposits")
("Glenover Unconditional Asset Sale") and mining rights to mine the
Vermiculite Deposit at the Glenover Mine ("Vermiculite Mining Rights")
("Glenover Conditional Asset Sale").
b. A conditional sale of shares agreement between Afrimat, Glenover and
the shareholders of Glenover under which Glenover has the option (the "Afrimat
Option") to acquire the sale of shares in and shareholders loans made to
Glenover for ZAR300M ( approx. GBP14M ) (the "Sale of Shares Agreement") which
is expected to complete by 15 June 2023 if the option is exercised.
The agreements hereinafter being referred to as the ("Glenover Agreements").
Colin Bird Chairman & CEO said:
"Galileo originally invested in Glenover in 2012 and this agreement is
testament to the hard work of the Glenover management, our local shareholder
Ferminore Proprietary Limited, and BEE partner Galagen. The Acquirer
Afrimat, is a well respected South African mining group, who have carried out
extensive critical testwork and due diligence, before proposing this
acquisition. We wish them well with this. The succesfull completion of this
transaction is a good example of how local South African groups can
successfully work with an experienced international partner creating value for
all parties and an asset that can be taken on for further development by an
established South African mining group. I would also like to thank the Galileo
shareholders for their patience and support."
As further detailed below on completion of the;
a. Asset Sale Agreement the value to Glenover will be ZAR250 million
(approx.. GBP11.64M) which after taxes, costs and working capital requirements
it intends to distribute to to the Glenover shareholders; and
b. Sale of Shares Agreement the value to the Glenover shareholder will be
a further ZAR300M (approx. GBP14M).
Galileo has a 29% direct shareholding in Glenover and a 4.99% indirect
shareholding held via Galagen Proprietary Limited who are the BEE partner in
Glenover.
Highlights of Glenover Unconditional Asset Sale
Consideration payable i) ZAR 215.1M for the ("Inventory Deposits") the ("Inventory Consideration").
to Glenover
Payment of Unconditional Asset Sale Consideration Inventory Consideration to be paid by Afrimat in cash to Glenover within 15
business days of the signature date of the Asset Sale Agreement.
Effective Date The effective date is the signature date of Asset Sale Agreement.
Distribution of Unconditional Asset Sale Consideration to Glenover Glenover intends to make a cash distribution to its shareholders from the
shareholders Inventory Consideration and the IP Consideration having made provision for
South African Income Tax @ 28%, transaction costs and bonuses and having
retained sufficient funds for 12 months working capital requirements at the
time of the distribution to meet South African companies law solvency
requirements ("Provisions Prior to Paying Dividend") . The final amount and
timing of this distribution has not been finalised but is expected, subject to
advice, to be around ZAR145M (approx. GBP6.8M) before 28 February 2022 of
which Galileo's 29% share would be approximately ZAR42M (approx. GBP1.97M).
Any proceeds received in respect of Galileo indirect 4.99% interest are
subject to agreement with Galagen Proprietary Limited and will be notified at
the time, as applicable.
Highlights of Glenover Conditional Vermiculite Mining Right Sale
Consideration payable ZAR 34.9M to acquire the Vermiculite Mining Right (the "Vermiculite
Consideration").
to Glenover
Settlement of Vermiculite Consideration The Vermiculite Consideration is at Glenover's election to be settled in cash
or Afrimat shares based on the 30 days' volume weighted average price
("VWAP") at which Afrimat shares traded on the JSE Limited on the relevant
Effective Date. The Afrimat shares issued to settle the Vermiculite
Consideration will not be subject to any sale restrictions.
Sale of Assets Outstanding Conditions a) by no later than 15 June 2022, the mining right to mine certain
minerals on the property known as Farm Glenover 371 L.Q. (the "Mining Right")
has been granted to Glenover; and
b) by no later than 15 June 2022, the Water Use License Application
("WULA") has been granted and a period of 30 days have lapsed since the date
of grant of the WULA without any appeal having been lodged against the grant
thereof.
"Sale of Assets Outstanding Conditions"
Effective Date The effective date of the sale of the Vermiculite Mining Right shall be the
first day of the month following the month in which the last of the Sale of
Assets Outstanding Conditions has been fulfilled, which is anticipated as
being 1 July 2022.
Distribution of Vermiculite Consideration to Glenover shareholders Glenover intends to make a distribution in specie of Afrimat shares to its
shareholders from the Vermiculite Consideration having made provision for
South African Income Tax @ 22.4%, transaction costs and bonuses and having
retained sufficient funds for 12 months working capital requirements at the
time of the distribution to meet South African companies law solvency
requirements. The final amount and timing of this distribution has not been
finalised but is expected, subject to advice, to be around ZAR35M (approx..
GBP1.6M) of which Galileo's 29% share would be approximately ZAR10M (approx.
GBP470K). Any proceeds received in respect of Galileo indirect 4.99% interest
are subject to agreement with Galagen Proprietary Limited and will be notified
at the time, as applicable.
Highlights of Share Sale Agreement
Consideration payable to Glenover shareholders ZAR300M (approx. GBP 14M) to acquire from the Glenover shareholders all the
shares of and sale claims to Glenover (the "Glenover Shares") (the "Sale
Shares Consideration"). Galileo Resources SA (Pty) Ltd, the Company's wholly
owned South African subsidiary, share of the Sale Shares Consideration is
ZAR102M (approx. GBP4.78M).
Settlement of Consideration payable to Glenover shareholders a) 50% of the Sale Shares Consideration shall, at the election of Afrimat, be
split between Afrimat shares based on the Afrimat 30 day VWAP at which the
Afrimat shares traded on the JSE Limited on the relevant Effective Date and
cash (Afrimat has to make this election on the relevant Effective Date); and
b) 50% of the Sale Shares Consideration shall, at the election of the Sellers,
be split between Afrimat shares 30 day VWAP at which the Afrimat shares
traded on the JSE Limited on the relevant Effective Date and cash (the Sellers
have to make this election on the relevant Effective Date).
Any Afrimat shares issued to settle the Sale Shares Consideration will not be
subject to any sale restrictions.
Afrimat Option Period Afrimat has at its sole discretion until 15 June 2022 or, if an extension has
been granted by 10 November 2022, to exercise their option to acquire the
Glenover Shares.
Conditions Precedent a) by no later than 15 June 2022 the issue of a mining licence to Glenover
(the "Mining Right");
b) by no later than 15 June 2022 the Water Use License Application ("WULA")
has been granted and a period of 30 days have lapsed since the date of grant
of the WULA without any appeal having been lodged against the grant thereof;
c) by no later than 28 February 2023 the approval in terms of the Competition
Act No. 89 of 1998, if required, has been granted, either unconditionally or
subject to conditions which have been approved in writing by Afrimat;
d) by no later than 31 May 2023 the consent of the Minister of the Department
of Mineral Resources and Energy for the application in terms of Section 11 of
the Mineral and Petroleum Resources Development Act No. 28 of 2002, has been
granted, either unconditionally or on terms and conditions which are
reasonably acceptable to Afrimat;
e) by no later than 15 June 2022 the shareholders of the Company (to the
extent required by the AIM Rules) have approved the Share Sale Agreement;
f) Afrimat has at its sole discretion have exercised the Afrimat Option to
acquire or not to acquire 100% of the issued share capital of Glenover,
exercisable at the sole discretion of Afrimat by 15 June 2022 or, if an
extension has been granted by 10 November 2022; and
g) by no later than 15 June 2022, the approval of the amended Glenover's
memorandum of incorporation by Glenover, Afrimat and the Shareholders is
obtained to be filed with the CIPC;
(the "Sale of Shares Outstanding Conditions").
Effective Date The effective date of the Sale of the Glenover Shares shall be the first day
of the month following the month in which the last of the Sale of Shares
Outstanding Conditions is fulfilled or waived, which is anticipated as being 1
July 2023.
Additional Information on Afrimat: Afrimat is a leading black empowered Group
with its main business and core competence in open pit mining. It is listed on
the 'Construction and Materials' sector of the JSE Main Board since 2006. The
group supplies a broad range of products ranging from Construction Materials
(aggregates, bricks, blocks, pavers and readymix concrete), Industrial
Minerals (lime and lime products) and Bulk Commodities (iron ore and
anthracite). Afrimat Afrimat's announcement in relation to the Asset Sale
Agreement and the Option Agreement can be found at their website
https://www.afrimat.co.za/ (https://www.afrimat.co.za/)
Further information on Assets the subject of the Share Sale Agreement: The
Company has a 29% direct shareholding in Glenover and an indirect investment
of 4.99% in Glenover held through its shareholding in Galagen. The investment
in Glenover is treated in the Company's accounts as a minority investment in a
joint venture as such the Company recognises in its statement of Comprehensive
Incone the net result of Glenover which was a loss of GBP9,088 in its accounts
for the year ended 31 March 2021 (the "2021 Accounts"). The carrying value of
the Company's investment in Glenover in the 2021 Accounts is GBP1,979,640 and
its loan to Glenover is GBP335,390. Accordingly, Galileo anticipates that
should the all parts of the disposal proceed as antificpated, it will record a
profit on disposal in its accounts for the relevant reporting period, which
will be determined at that time.
Use of funds: The Company intends to use the dividends received from Glenover,
and if Afrimat exercise their option under the Share Sale Agreement, the sale
proceeds from the sale of its Glenover shares, less any associated tax
liabilities as working capital of the Company to support expenditure on the
Company's existing projects, ongoing corporate costs and / or for further
acquisitions in the mining sector.
Intention regarding Afrimat shares: The Company intends to hold any Afrimat
shares it receives by way of dividend from Glenover arising from the
Vermicilite Consideration and / or the sale of Glenover Shares as a current
asset investment.
Decision on settlement of share of Sale of Shares Consideration: The Company
will based on market conditions at the time of completion of the Share Sale
Agreement make a decision as to whether to receive a portion of 50% of the
Sale of Shares Consideration in Afrimat Shares or cash.
Transaction Incentive Award: Further to the approval granted at the
Company's AGM on 25 October 2021 the Company intends to make awards in
relation to the Glenover Agreements transaction (the "Transaction") based on
criteria determined by the remuneration committee. The maximum transaction
award payable in relation to the Transaction will be 2% of the Transaction
value and be allocated amongst the eligible participants by the remuneration
committee. Awards may be paid in cash and/or Company shares and if in
Company shares based on the 30-day VWAP following the date the Company
announces the Transaction.
You can also follow Galileo on Twitter: @GalileoResource
For further information, please contact: Galileo Resources PLC
Colin Bird, Chairman Tel +44 (0) 20 7581 4477
Beaumont Cornish Limited - Nomad Tel +44 (0) 20 7628 3396
Roland Cornish/James Biddle
Novum Securities Limited - Joint Broker +44 (0) 20 7399 9400
Colin Rowbury /Jon Belliss
Shard Capital Partners LLP - Joint Broker Tel +44 (0) 20 7186 9952
Damon Heath
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").
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