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» Sallies is actively looking for a new acquisition - Izak Marais, CEO
» Flack bids mining farewell
» Sallies looks beyond fluorspar
» A bright 2007 for battered Sallies

> JSE:SALLIES LIMITED:
28c 0%
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Sallies to launch R75m rights offer
David McKay
Posted: Tue, 20 Mar 2007

[miningmx.com] -- FLUORSPAR producer, Sallies, plans to recapitalise its business in a R75m rights offer the proceeds of which would be used to buy a new mining fleet and swell the company's bank balance, a market source said.

Izak Marais, CEO of Sallies, is postponing the company's planned March 22 interim results presentation in Johannesburg until after the rights issue is complete. He declined to comment on the potential rights offer. However, it's thought an announcement is due before the end of the week.

According to market sources, Sallies will issue shares at 60c/share in a one-in-four offer. This represents a massive discount on the 109c/share at which the company is currently trading. Sallies traded 4.4% lower on the JSE today: "The delay in the presentation is probably creating a bit of uncertainty in the stock," a market source said.

The rights offer is 100% underwritten and about 46% of shareholders are thought to have agreed to the plan. Sallies tapped shareholders for R65m in June last year in order to complete the acquisition of the Buffalo Fluorspar.

Marais said at the company's year-end results presentation last year that Sallies' prospects had brightened following the completion of major transactions, including an empowerment deal, and the removal of an onerous contract to supply US company, Honeywell, with fluorspar at far below market prices.

However, it's thought the following interim period has been another poor one operationally for Sallies. It's for this reason, the company requires new plant in order to improve operations and help remove bottlenecks.

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Sallies is a small company but has repeatedly hit the headlines most recently when its chairman and mining veteran, Peter Flack, quit the company in January. At the time, Flack said he resigned from the board because shareholders would not support the issue of new shares. Flack said the new shares would have been used to grant options to him and his partners at FRM, the turnaround team that resurrected Sallies’ fortunes.

“We haven’t really been paid anything other than the relatively small directors fees,” Flack said at the time. There will be a request to have the options issued, but if they are not, Flack said consideration would be given to suing the company.