Village progressing in acquisition of Lesego

I-Net Bridge | Thu, 11 Mar 2010 10:58

[miningmx.com] -- Village Main Reef Gold Mining on Thursday said it has concluded binding agreements with additional shareholders in Lesego Platinum that together own 76.6% of the project's inferred resource for a total purchase consideration of R506.8m.

The company late January unveiled its plan to acquire a controlling interest in Lesego Platinum and the Phosiri Platinum Project and at the time said it expected the acquisition to cost R411.5m.

At the time the company said it had concluded a binding agreement to acquire a controlling interest in Lesego and certain affiliated entities that together control the Phosiri project.

It said the purchase consideration would be settled through the issue of more than R205.7m ordinary shares in Village at a share price of 200c per share.

Now the company has advised that it has concluded further binding agreements with certain additional shareholders in Lesego and certain affiliated entities in the project.

The binding agreements represent an added attributable inferred resource of 3.8 million ounces of platinum group metals (3PGMs plus gold) for an additional purchase consideration of R95.35m to be settled through the issue of an additional almost 47.7 million ordinary shares in Village at a share price of 200 South African cents per share.

In terms of the proposed transaction, Village will acquire the direct and indirect interests in Lesego of the shareholders of Lesego, Umbono Capital Partners, Minex Projects, Sun Platinum Holdings and Jay and Jayendra, which collectively own 72% of Lesego.

In addition, Village will acquire the entire share capital of Nebavest 69 that owns an effective 55% interest in the Eerste Regt prospecting right from Sekoko Resources, the Ncholo Trust, Thulo Mogotsi, Cream Magenta 42, Nasidima Investment Holdings and Umbono.

Post implementation of the proposed transaction, Village will directly hold 72% of Lesego, with the balance being held by the Industrial Development Corporation (IDC), and a 55% of Sweet Sensation, which holds the Eerste Regt prospecting right.

With Lesego's 45% holding in Sweet Sensation, the company will effectively hold 87.4% of the Eerste Regt Prospecting Right.

Village said the proposed transaction would give it operational control of a potentially world class platinum asset at an attractive valuation relative to its platinum peers.

It would also increase Village's attributable inferred resource to 21.3 million ounces of platinum group metals (3PGMs plus gold). That would enable the company to leverage the benefits of R142m existing capital already raised by Lesego from the IDC to provide for the full funding requirements of the project to the bankable feasibility study stage.

Situated about 300km north east of Johannesburg between the Anooraq's Bokoni mine and the Lonmin Limpopo mine, the project has been developed by Lesego since 2005.

In February 2010, Lesego commenced work on the bankable feasibility study for the project, which is expected to be completed in three years, probably by the end of 2012.