2 September 2011
GENERAL INDUSTRIES PLC
("General Industries" or the "Company")
Posting of AIM Admission Document to Shareholders
Proposed Reverse Acquisition
General Industries Plc is pleased to announce that the Company's Admission Document regarding its proposed admission to AIM has been posted to Company Shareholders today. Accordingly trading in the Company's Ordinary Shares on PLUS Stock Exchange will resume trading with effect from 8.00am on 5 September 2011.
As announced on 8 March, 10 March and 19 May 2011, the Board made the decision
to apply for admission of the Company's shares to trading on AIM ('the
Admission') and withdraw from PLUS further to signing a conditional Share
Purchase Agreement to acquire the entire issued share capital of Skiptons
Global Investments Limited (BVI) ('Skiptons') ('the Acquisition') (together
'the Transaction'). The Acquisition and Admission are subject to approval from
Shareholders at a General Meeting to be held at the offices of the Company, 56
Station Road, Egham, TW20 9LF at 11.00am on Monday 26 September 2011 and
admission to AIM proposed for 28 September 2011. A copy of the Admission
Document will also be available on the Company's website,
www.generalindustries.com (and from Admission www.galileoresources.com).
Beaumont Cornish Limited is acting as the Company's Nominated Advisor and
Broker for the AIM Admission.
Beaumont Cornish Limited is the Company's PLUS Corporate Advisor and will act as Nominated Advisor and Broker on Admission to AIM.
All enquiries: Company J R Wollenberg Chairman 01784 437444
PLUS Corporate Adviser
Beaumont Cornish Limited 0207 628 3396
Roland Cornish
James Biddle
Details of the Transaction as extracted from the Admission Document are set out below:
'Proposed acquisition of Skiptons Global Investment Limited (BVI) ("Skiptons")
Proposed name change to Galileo Resources Plc
Proposed Admission of the Enlarged Share Capital to trading on AIM
Proposed waiver of the requirements of Rule 9 of the Takeover Code on Takeovers
and Mergers
Notice of General Meeting
INTRODUCTION
Following the announcements on 8 March 2011, 10 March 2011 and 19 May 2011 that the Company was investigating investment opportunities in RSA, providing details of a loan made to Brightwater and providing details of the agreement in principle reached to acquire 100 per cent of the issued share capital in Skiptons and the consequent suspension of trading in the Company's shares on PLUS, the Board announced today that the Company has now entered into the Acquisition Agreement to acquire the entire issued share capital of Skiptons (referred to in this Document as the "Acquisition") and its intention to change its name to Galileo Resources Plc. In addition, the Company intends to apply for the Enlarged Share Capital of the Company to be admitted to trading on AIM and for the listing to be cancelled on PLUS. The Acquisition constitutes a Reverse Takeover under the PLUS Rules because the Acquisition will give rise to a fundamental change to the business, board composition and voting control of General Industries. The Acquisition therefore requires the approval of Shareholders. The Acquisition is conditional, inter alia, upon Shareholder approval and the completion of the Subscription to raise £3,300,000 in cash (funds for which are being conditionally held by the Company pending completion and Admission) which, when combined with General Industries' existing cash resources, will give the Enlarged Group the resources to fund the cost of Admission, provide general working capital, fund the costs of acquiring historic engineering on Glenover along with the costs of metallurgical test work, exploration and collection and analysis of pre-feasibility data in order to define to scale the extent of an initial rare earth resource on the Stockpiles along with some exploratory drilling of the pyroxenite/carbonite plug to identify REE resource potential as well as initial exploration of the in situ resources at the area covered by Glenover's mining licence (as detailed in Phase 1 in the CPR). Accordingly, a General Meeting (a "GM") of the Company is being convened for 26 September 2011 at which resolutions will be proposed, inter alia, to approve the Acquisition, the Rule 9 Waiver and to change the Company's name to Galileo Resources Plc. BUSINESS OF SKIPTONS Skiptons was incorporated on 14 August 2008 to hold mineral rights in RSA and, in particular, to invest in the Joint Venture Projects through its wholly-owned South African subsidiary company, Utafutaji Trading. On 18 August 2011, Utafutaji Trading entered into the Glenover Shareholders Agreement and the Glenover BEE Memorandum. On 17 May 2011, Utafutaji Trading acquired 49 per cent of the issued share capital of Brightwater, which holds the right (subject to necessary regulatory consent) to acquire a mining licence relating to the Qokolweni Quarry from the current holder, Cannosia (which is itself a minority shareholder in Brightwater) Skiptons currently undertakes no trade save as a result of Utafutaji Trading's equity investments in the Joint Venture Projects. As at 31 March 2011, it had Total Assets of £1,204,820 and Net Liabilities of £6,575 and it is wholly owned by Colin Bird, the proposed Chairman of the Enlarged Group. REEs are a set of 17 chemical elements in the periodic table, specifically the fifteen lanthanides plus scandium and yttrium. Scandium and yttrium are considered REEs as they occur in the same ore deposits as the lanthanides and exhibit similar chemical properties. REEs are used extensively in a wide variety of applications to make technologies lighter, stronger, more efficient, and easier to use. Currently, the dominant end uses for REEs are for magnets; as additive in steel manufacture; auto catalysts; and petroleum refining catalysts. Other major end uses for REEs include use in phosphors in colour televisions, LEDs, LCDs, and flat panel displays on cell phones, portable DVDs, and laptops; medical devices; polishing materials; industrial glasses; defence applications such as jet fighter engines, missile guidance systems, satellite and communication systems.
China produces over 97 per cent of the world's rare earth supply, mostly in Inner Mongolia, although it only has 37 per cent (or 36 Mt equivalent) of proven reserves.
In 2010, world demand for REEs was estimated at 134 thousand tonnes (kt) per year, with global production around 124 kt annually. The difference was covered by historical inventories. By 2012, world demand is expected to rise to 190 kt annually although no new mine output is expected in the short term. Most new mining projects will take 10 years to reach full production. In the long-run, however, the USGS expects that global reserves and undiscovered resources are large enough to meet demand. COMPETENT PERSON'S REPORT
The Competent Person's Report, has been prepared by Snowden and is set out in the Document. Extracts are set out below:
Description of the assets
Glenover Project
The Glenover Project new order prospecting rights granted and held in the name of Glenover Phosphate (Pty) Ltd, are detailed below.
Glenover prospecting rights
Farm Name Farm
Number Area (ha) Minerals Expiry Date Protocol
Number
Glenover 371 LQ 2683 All Minerals 30 October 2012 28/2007
including
diamonds
Ouhoek 345 LQ 2446 All Minerals 31 October 2012 28/2007
including
diamonds
Houndslow 372 LQ 2703 All Minerals 31 October 2012 28/2007
including
diamonds
Elfrida 378 LQ 2019 All Minerals 31 October 2012 28/2007
including
diamonds
Eldorado 370 LQ 3098 All Minerals 31 October 2012 28/2007
including
diamonds
Rosevalley 369 LQ 2853 All Minerals 31 October 2012 28/2007
including
diamonds
Qokolweni quarry
The Qokolweni dolerite quarry is located on Farm 313 in the hilly Qokolweni district, 18 km south east of Mthatha in the Eastern Cape province of South Africa. The quarry site (coordinates 31°45'08"S; 28°47'13.4"E) is easily accessible from a tarred road that links Mthatha with the coastal region and the surrounding areas of Mthatha.
A new order mining right is held over the property, held in the name of Cannosia Trading 62 cc as detailed below.
Qokolweni quarry mining right
Farm Name Farm Area (ha) Minerals Expiry Date Protocol Number
Number
Farm 313 313 41.4 Stone,aggregate, 28 July 2025 28/2007
gravel
Geological Settings
Glenover project
The Glenover carbonatite is a complex circular, carbonatite/pyroxenite plug intruded into sedimentary shale and arenite rocks of the Waterberg Group and prominently visible as a major circular feature on satellite images of the area. Thickness estimates for the Waterberg Group range from 2,700 metres (m) to more than 7,000 m.
The deposit comprises a central iron rich breccia (subsequently mined out), surrounded by a pyroxenite plug, into which carbonatite has intruded as a series of dykes and cone sheets.
The main historical source of geological information concerning the Glenover Carbonatite is Handbook 6 of the Geological Survey of South Africa, 'The Carbonatites of South Africa and South West Africa', published in 1967 and authored by WJ Verwoerd.
Verwoerd hypothesised that the deposit was created by two geological events that resulted in the formation of a primary and a secondary phosphate deposit. Exploitation has historically focussed on the phosphate content of the deposit and the potential of the surrounding rocks. However limited exploration has been undertaken to determine the potential of other metals and minerals, inter alia REE's (Begley, 1987). Qokolweni quarry The Qokolweni dolerite quarry in the Eastern Cape Province is underlain primarily by sandstones and mudstones of the Beaufort Group of the Karoo Sequence. These Beaufort group rocks can be highly weathered and often covered by thick overburden. Where the mudstone and sandstone are interlayered, they are more resistant to weathering and as a result there is a very thin soil covering in these areas. The quarry targets an outcropping dolerite/norite sill on the top of a hill. The quarry, more accurately known as a borrow pit, was previously mined to supply road aggregate and a box cut exposes the sill to a depth of 30 m. The mining right covers a 14 ha area and an estimated 40 per cent of the dolerite in the mining right is fully exposed. The overburden soil is limited to a few scattered areas and is up to 1 m thick. Early Jurassic age igneous intrusions are abundant in the area and are generally referred to loosely as dolerite but the actual rock type varies. They occur in the form of dykes and sills and are composed primarily of plagioclase feldspar and pyroxene. These rocks are highly durable and thus are often seen capping the sandstone and mudstone hills of the Eastern Cape area.
Resource Estimations
Glenover Mineral Resource Statement
Snowden is not aware of any previous Mineral Resource estimates for the REE content of the deposit or the stockpiles.
Following the resurvey and sampling exercises undertaken in 2011, Snowden has
reviewed the data and considers that a Mineral Resource classified at the
Inferred level, in terms of the guidelines of the SAMREC Code (2009), can be
justified for those stockpiles sampled. The Mineral Resources contained within
the Glenover stockpiles, as at 10 June 2011, are presented below.
Mineral Resources contained within the Glenover stockpiles as
at 10 June 2011
Stockpile Classification TREO* Tonnage Contained Tonnage Contained
(Mt) TREO (kt)
(%) (Mt) TREO (kt)
Grass Grass
Net Net
(44.24%) (44,24%)
Stockpile 1 Inferred 2.60 0.80 21 0.35 9
Stockpile 4 Inferred 1.98 0.46 9 0.20 4
Stockpile 5 Inferred 1.51 0.39 6 0.17 3
------ -------- ------- -------- --------
Total 2.17 1.64 36 0.73 16
---- ------- ---- -------- -----
Note:
Total rare earth oxides (TREO) values are based on the assay results received from the sampling exercise and have been discounted.
The Operator is Glenover.
Qokolweni quarry Mineral Resource Statement
A Mineral Resource estimate was undertaken for the quarry by KSE Geological Consultants. Mineral Resources have been estimated by taking a 30 m thick sample of dolerite within the pit areas. Two pits are planned for the quarry. Pit 1 surrounds the existing pit and has been calculated to contain 4.3 million tonnes (Mt) of good quality aggregate. Pit 2 is planned for the southern portion of the mining right. This pit is estimated to contain a total of 5.8 Mt of good quality aggregate and may have the potential to be exploited to depths greater than 30 m below surface.
Snowden classifies these Mineral Resources at the Inferred level of confidence as per the guidelines and definitions of the SAMREC Code below.
Mineral Resource estimate for the Quarry Project as at
July 2011
Bulk Density Tonnage Tonnage Operator
(g/cm3) (Mt) (Mt)
Pit Gross Net (49%)
Pit 1 2.94 4.3 4.3 Brightwater
Pit 2 2.94 5.8 5.8 Brightwater
Total 2.94 10.1 10.1 Brightwater
Valuation approaches
The SAMVAL Code requires that a Competent Valuator must apply at least two valuation approaches in determining a Valuation. The three generally accepted Valuation Approaches are:
* Cash Flow Approach: The Cash Flow Approach relies on the 'value-in-use' principle and requires determination of the present value of future cash flows over the useful life of the mineral asset. This valuation technique is not used in the valuation of early stage exploration projects or projects whereby limited market information is available. * Market Approach: The market approach relies on the principle of 'willing buyer, willing seller' and requires that the amount obtainable from the sale of the mineral asset is determined as if in an arm's-length transaction. The Comparable Market Value Approach or Market Approach followed applies a dollar value per in-situ resource ounce determined by analysis of the transactional value of recently traded similar mineral properties. This valuation technique has been applied in the valuation of the Glenover Project.
* Cost Approach:
The Cost Approach relies on historical and/or future amounts spent on the mineral asset. This approach is usually applied to early exploration assets and has been used in the valuation of the Glenover Project. Derivatives of the Cost Approach include the Replacement Value method (not used) and the Geoscientific (Kilburn) Rating method (used in this Valuation).
Valuation of the Mineral assets
The Mineral Asset Valuation was based on the Market and Cost approaches.
It must be noted that the exploration programmes, assumptions and industry circumstances as a whole may change significantly over time. Should these change materially, the Valuation may be significantly different. The Competent Valuator is under no obligation to advise of any change in circumstances after the effective date of this Valuation or to review, revise or update the Valuation or opinion.
Skiptons, through a 100 per cent owned South African registered subsidiary is required to comply with Black Economic Empowerment (BEE) legislation, consideration of which has been made in the valuation.
Snowden is of the opinion that the Comparable Market Value method is, considering the current state of the REE market, a more suitable approach than the Kilburn method.
Utafutaji holds two call options on Glenover. Snowden has valued these financial options by means of the Black Scholes methodology. The combined value of these options is GBP1.7 million (M).
The Concluding Opinion of Value has been outlined below.
The Concluding Opinion of Value of the Glenover Project's total Mineral Assets
Unit Minimum Maximum Preferred
value value ValueCost Approach (Kilburn method) GBP M 1.4 33.8 8.1
Market Approach GBP M 6.6 24.1 16.5
Concluding Value GBP M 6.6 24.1 16.5
Utafutaji Share (44.24%) GBP M 2.9 10.7 7.3
Option Value GBP M 1.7 1.7 1.7
Overall Utafutaji Share of GBP M 4.6 12.4 9.0
Glenover
Notes:
1. Exchange rate of ZAR11.09:4 GBP1 used
2. Concluding Opinion of Value is based on the Market Approach.
The overall value of Utafutaji's shareholding and options in Glenover is valued at the sum of its proportion of the Mineral Asset Value and the Financial Option Value. The overall value is therefore between GBP4.6 million and GBP12.4 million. Snowden's preferred value being GBP 9.0 million.
Snowden has not received any information relating to possible environmental liabilities associated with ownership of the Glenover Project or the Quarry. Snowden is consequently unable to comment on how any such possible environmental liabilities would impact on the Valuation.
The Report Date is 1 September 2011. The Valuation Date is 20 June 2011. No material changes have occurred between the Report Date and the Valuation Date.
Conclusion
Snowden has reviewed the information provided relating to the Glenover Project and Qokolweni dolerite quarry and is of the opinion that both assets have potential for further development and exploitation.
In Snowden's opinion, the assayed stockpiled material at Glenover contains a significant Inferred Resource of REEs, with additional un-assayed stockpiles and underground material representing additional potential resources. A logical process for Project development has been presented by Glenover which, in Snowden's opinion, has real potential to add value should the outcome of planned exploration and process definition stages prove positive.
Potential Quarry development is contingent on the completion of a detailed market analysis and the securing of medium term off-take agreements.
SUMMARY OF THE JOINT VENTURE ARRANGEMENTS Brightwater Joint Venture
Utafutaji Trading has acquired a 49 per cent equity interest in Brightwater. Brightwater's other principal shareholder, Cannosia, is the holder of a mininglicence relating to the Qokolweni Quarry and has entered into an agreement to transfer (subject only to the consent of the Department of Mineral Resources in RSA, which has been applied for) this licence to Brightwater. Brightwater already complies with BEE Requirements since certain of its existing shareholders are qualifying persons for these purposes.
The Brightwater Shareholders Agreement was entered into between Brightwater and each of its shareholders, including Utafutaji Trading and Cannosia, on 24 August 2011.
For further details of the Brightwater Shareholders Agreement please see Part IV of the Document.
Glenover Joint Venture The Glenover Shareholders Agreement was entered into between Glenover, Utafutaji Trading and FMO and relates principally to the management and operation of, and the rights of Utafutaji Trading to acquire additional shares in, Glenover, which holds a prospecting licence relating to mineral resources on land in the Limpopo region of RSA. The Glenover Shareholders Agreement provides Utafutaji Trading with the right to acquire up to a 51 per cent equity stake (such percentage being subject to dilution to 44.24 per cent as a result of implementation of the Glenover BEE Memorandum) in Glenover upon provision of up to $7 million funds to Glenover in support of its operations (and a proportionately lesser stake if less then $7 million is provided) over the next 30 months. The Glenover Shareholders Agreement also provides options for Utafutaji Trading to increase its equity interest in Glenover further, up to a maximum of 73.73 per cent (taking into account implementation of the Glenover BEE Memorandum) by acquiring further shares from FMO at prices set out in that agreement.
REASONS FOR THE ACQUISITION AND THE DIRECTORS' COMMERCIAL ASSESSMENT
The Existing Directors believe that the Acquisition as detailed in this Document presents an opportunity to increase shareholder value.
The acquisition of Skiptons allows the Company to participate in two natural resource projects in South Africa: the Qokolweni Quarry as operated by Brightwater and the rare earths exploration project, owned by Glenover. Brightwater is entitled to acquire from one of its principal shareholders, Cannosia (subject to the consent of RSA's Department of Mineral Resources) mining rights to stone aggregates at the Quarry and, subject to obtaining the necessary off take agreements, intends to establish quarrying activities to supply local infrastructure projects. The project should provide cash flow and assist in the Enlarged Group's other exploration activities. The Glenover REE project consists of potential near term production from historic stockpiles and then exploration on the in-situ rock surrounding these stockpiles. Snowden's have valued Utafutaji Trading's share in the Glenover project (assuming the initial subscription of $7 million is invested such that Utafutaji acquires, taking into account implementation of the Glenover BEE Memorandum, an effective equity interest in Glenover of 44.24 per cent) at £9.0 million which is a valuation only taking into account the Inferred Resource in the stockpiles. The opportunity for the Company to participate in additional drilling on the in-situ rock allows the opportunity to extract greater value from the Glenover project. This valuation does not take into account any additional equity interest in Glenover which Utafutaji may acquire pursuant to the options granted to it by FMO under the terms of the Glenover Shareholders Agreement, which could enable Utafutaji to increase its effective equity interest in Glenover to 73.73 per cent.
The Market for REE is expected to remain important to the world's needs as set out in detail in the Competent Persons Report.
In addition, the Acquisition allows the Company to benefit from the considerable experience of Skiptons' management team and the new board members. This team has a proven track record of delivering shareholder value on previous natural resource projects in Africa and the Board is delighted to have secured the services of these individuals. On completion of the Acquisition the Group also intends to explore additional identified opportunities to invest in a number of companies which hold, or are applying for, mining licences in prospective manganese and iron ore projects in RSA. EXPLORATION STRATEGY Glenover
As part of the JV agreement between Skiptons and Glenover, Skiptons is committed to funding a work programme for the purpose of Project development.
The programme has been planned in three Phases. Phase 1 will comprise initial Conceptual and detailed exploration and development activities. Should the project prove prospective upon completion of Phase 1 detailed resource estimation, mining and flowsheet options analysis, selection and development and Definitive Feasibility Study (DFS) will be performed in Phase 2. The DFS will form the basis for Phase 3, project implementation.
Qokolweni quarry
As part of a JV agreement between Brightwater and owners of the Quarry mining right, Brightwater states its intention to fund a work programme for the exploitation of the mining rights to an amount of ZAR3 million. The budgeted work programme comprises a capital element of ZAR1,383,728, allocated to site establishment, and operating capital of allocated to overhead of ZAR254,324 per month.
A five-year business plan has been produced by Brightwater, which indicates that positive cash flows can be achieved at a production and sales rate of 800,000 m3 (cubic metres) per annum, using contract mining, and assuming a price range of product averaging ZAR150 per tonne.
Snowden believes that further studies would need to be undertaken, particularly regarding local competitors, marketing, transport and ex-mine prices, in order for the business case to prove its feasibility. Currently, less than 17 per cent of proposed Quarry production would meet existing demand from municipal and provincial/government tenders.'
PROPOSED NAME CHANGE
Following completion of the Acquisition, the name of the Company will, subject to relevant shareholder approvals, be changed to Galileo Resources Plc.
SUMMARY OF ACQUISITION AGREEMENT
Pursuant to the Acquisition Agreement, the Company has agreed, conditional, inter alia, on Shareholder approval at the GM and Admission to AIM, to purchase the entire issued share capital of Skiptons in consideration of the issue to the Vendor of the Consideration Shares which, based on the Subscription Price of 23 pence per Ordinary Share, values Skiptons at £10.166 million. The consideration for the Acquisition is the issue to the Vendor of 44.2 million new Ordinary Shares representing 62.52 per cent of the Enlarged Issued Share Capital. The Consideration Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions hereafter declared, paid or made on the Ordinary Shares.
THE SUBSCRIPTION LETTERS AND USE OF PROCEEDS
The Subscription Letters
The Company has entered into conditional Subscription Agreements with a number of existing and new shareholders in respect of 14,500,000 New Ordinary Shares to be issued at 23p per share to raise approximately £3.3 million. The Subscription Agreements are conditional, inter alia, on (a) the passing of the Resolutions, (b) the Acquisition Agreement having been completed in all respects; and (c) the London Stock Exchange having agreed to admit all of the Enlarged Share Capital to trading on AIM. As part of the Subscription the Directors have participated in the Subscription as follows: Richard Wollenberg and his family have participated in the subscription by way of subscribing for 1,250,000 Ordinary Shares; Anthony Shakesby has participated in the subscription by way of subscribing for 50,000 Ordinary Shares; Derek Joseph has participated in the subscription by way of subscribing for 200,000 Ordinary Shares and Ian Reynolds has participated in the subscription by way of subscribing for 500,000 Ordinary Shares. Furthermore the Company intends to settle outstanding and currently unpaid fees due to Richard Wollenberg amounting to £69,000 by issuing him with 300,000 new ordinary 5p shares at the equivalent of 23p per share (the "Reimbursement Shares").
Use of Proceeds
The Company intends to use the proceeds of the Subscription along with the Company's existing cash resources, amounting to a total of approximately £3.5 million to fund the costs of Admission, complete Phase 1 in connection with Glenover (as set out above and for which approximately £537,500 has already been provided to Glenover by the Company) and fund the maintenance of the Qokolweni Quarry and associated licences and permits whereby bringing the quarry to a stage where off-take agreements can be signed. Should Brightwater enter into any off-take agreements the Company estimates that it will require an additional amount of approximately £500,000 which would have to be raised as new equity or debt by the Company.
DIRECTORS, MANAGEMENT AND EMPLOYEES
The Directors
Following completion of the Proposals, Colin Bird will become Executive Chairman of the Company, Andrew Sarosi will become Technical Director (Qokolweni Quarry), Anthony Shakesby will remain as Finance Director and Chris Molefe and J Richard Wollenberg will become Non-Executive Directors. Ian Reynolds and Derek Joseph will resign as directors at that time. Their biographies are as follows:
Colin Bird, Chairman and Chief Executive Officer (aged 67)
Colin Bird has a Diploma in Mining Engineering, is a Fellow of the Institute of Materials, Minerals and Mining and is a certified mine manager both in the UK and in the United States of America. The formative part of his career was spent with the National Coal Board in the UK and thereafter he moved to the Zambia Consolidated Copper Mines and then to South Africa to work in a management position with Anglo American Coal. On his return to the UK he was Technical and Operations Director of Costain Mining Limited, which involved responsibility for gold mining operations in Argentina, Venezuela and Spain. In addition to his coal mining activities he has been involved in the management of mining nickel, copper, gold and other diverse mineral operations. He has founded and floated several public companies in the resource sector and served on resource company boards in the UK, Canada and South Africa. Notably he was on the board of Kiwara Plc which was successfully sold to First Quantim Plc in February 2010. In addition, he currently serves as Chairman of Jubilee Platinum, an AIM listed platinum exploration company with operations in South Africa. Andrew Francis Sarosi, Technical Director (Responsible for Qokolweni Quarry) (aged 71) B.Sc. Metallurgy, M.Sc. (Eng.) University of the Witwatersrand, MIMMM Andrew Sarosi is a mineral processing engineer and consultant with 40 years experience in mineral processing research and development, process and plant design, management of pilot to full scale operations and troubleshooting in gold, silver, tungsten, tin, copper, and zinc and diamond ore processing in Saudi Arabia, Ethiopia, South Africa, Botswana and the United Kingdom. Andrew is currently executive director of Jubilee and is on the board of other resource and exploration companies in South Africa - including the Tjate Platinum Mine project - Madagascar, Canada and Australia. Between 1978 and 1985 Andrew was the senior metallurgist for the Amax Hemerdon Tungsten-Tin project in the UK. In 1986 and 1995 he was mill superintendent at Mahd Ad' Dahab Gold Silver Copper Zinc Mine in Saudi Arabia including research and process design of the zinc flotation extension to the mine. From 1990 to 1992 he consulted for Mackay and Schnellmann Limited as adviser to the Ethiopian Mineral Resources Development Corporations's Lega Dembi Mine Project on its pilot plant operation and process flowsheet design, From 1996 he embarked on a career as an independent consultant and in August 2002 was appointed Technical Manager of Jubilee Platinum Plc and subsequently appointed to the main board in January 2006.
Anthony (Tony) Shakesby, Finance Director (aged 55)
Mr. Shakesby is a graduate chartered accountant, who qualified with Price Waterhouse in 1981. After training in Leeds, he spent time in the Sydney office before returning to the London office where he was responsible for a number of large quoted clients and undertook a wide range of corporate finance work. In 1989, he joined a quoted property and leisure company as a corporate planner, before moving as Finance Director to a quoted company in the health food business. In January 1997 he assisted Mr. Wollenberg in the reverse takeover of BDA Holdings Plc by Edge Properties Plc and further in 1998, 2000 and 2006, under the General Industries Plc name, he assisted Mr. Wollenberg in the reverse takeover and subsequent listing of HACAS Group Plc, The Celltalk Group Plc and Immupharma Plc respectively. As a self employed business consultant, Mr. Shakesby has acted as head of finance to a number of public and private companies in a variety of sectors, including support services, aviation, distribution and property. He is currently the Finance Director of Quest Aviation Services Ltd, an aviation holding company with trading subsidiaries in the UK and Germany.
J Richard Wollenberg, Non-Executive Director (aged 63)
Richard Wollenberg, was, between 1981 and 1996, an investment consultant with Brown Shipley Stockbroking Limited and has over the past 25 years, been actively involved in a number of corporate acquisitions, mergers and capital re-organisations of public and private companies. Mr. Wollenberg is currently Chairman and Chief Executive Officer of The Cardiff Property Public Limited Company, a quoted property investment and development company. In 2006, as Chairman, he floated the Company on PLUS. He was also a Non-Executive Director of Kiwara Plc alongside Colin Bird.
Christopher (Chris) Molefe - Non-Executive Director (aged 62)
B.Com (Unin); Post graduate diploma (University of Cape Town).
Mr. Molefe was formerly the Chief Executive of Royal Bafokeng Resources (Pty) Limited and is presently the Non-Executive Chairman of Merafe Resources Limited a publicly listed company on the JSE Securities Exchange, and a non-executive Director of Capital Oil (Pty) Ltd and Jubilee Platinum. Mr. Molefe has held several positions in corporate banking and industry for the previous 20 years. He commenced his career as Group Human Resource Manger at Union Carbide Africa Corporation. His subsequent positions include being the Manager of Corporate Affairs at Mobil Oil Southern Africa (Pty) Limited; an Executive Director at Black Management Forum; a Financial Analyst at Chase Manhattan Bank; the Marketing Manager at African Bank Limited; an Executive Manager at Transnet (Propnet) (Pty) Limited; and an Executive Director at Dipapatso Media (Pty).
Key Management
Alex Andersson - Main Project Glenover (aged 37) B.Sc Met Eng; MBA
Alex has 18 years experience in the minerals processing industry. After spending 2 years working in the minerals and automotive industries in South Africa, he joined Fer-Min-Ore in 1996 as a project engineer in its projects division. He took over general management of the division in 1999 and at the same time was admitted to he Fer-Min-Ore board. In 2001 he was admitted to the board of British Rema, UK, where he served until 2004. In 2003 he moved to France to complete his MBA at INSEAD where after he returned to FMO and took over the position of group CEO in 2009. He is currently chairman of the following FMO subsidiaries: The Combustion Group, Talis Platinum, FMO Process Plant and FMO Mineral Services. Utafutaji has engaged Alex Andersson as a senior management official or a fee of ZAR2,000 per month.
TAKEOVER CODE ON TAKEOVERS AND MERGERS
The Acquisition gives rise to certain considerations under the Takeover Code.
The Takeover Code is issued and administered by the Panel. The Takeover Code
applies to all takeovers and merger transactions, however effected, where the
offeree company is, inter alia, a public company with its registered office in
the UK and whose place of central management and control is in the UK. General
Industries Plc is such a company and its Shareholders are entitled to the
protections afforded by the Takeover Code.
Under Rule 9 of the Takeover Code (Rule 9) when any person acquires, whether by
a series of transactions over a period of time or not, an interest in shares
which (taken together with shares in which persons acting in concert with him
are interested) carry 30 per cent or more of the voting rights of a company; or
(b) any person, together with persons acting in concert with him, is interested
in shares which in the aggregate carry not less than 30 per cent of the voting
rights of a company but does not hold shares carrying more than 50 per cent of
such voting rights and such person, or any person acting in concert with him,
acquires an interest in any other shares which increases the percentage of
shares carrying voting rights in which he is interested, then such person shall
extend offers, on the basis set out in Rules 9.3, 9.4 and 9.5, to the holders
of any class of security whether voting or non-voting and also to the holders
of any other class of transferable securities carrying voting rights.
An offer under Rule 9 must be in cash and at the highest price paid within the
preceding twelve months for any shares in the company by the person required to
make the offer or any person acting in concert with him.
The Panel has deemed the members of the Concert Party to be acting in concert
for the purpose of the Takeover Code on account of them having worked together
in the past and continuing to do so and by virtue of them tending to act in
concert.
On completion of the Proposals (and including the Acquisition, Subscription,
the issue of Reimbursement Shares and grant of Options), the Concert Party,
will hold and/or be entitled to acquire all of the Consideration Shares, being
44,200,000 Ordinary Shares in aggregate, representing approximately 62.52 per
cent of the Enlarged Ordinary Share Capital along with options to subscribe for
950,000 Ordinary Shares, representing a maximum potential holding representing
approximately 63.01 per cent of the Fully Enlarged Ordinary Share Capital. The
interest of the Concert Party in the Company following completion of the
Proposals is as follows:
Number of Percentage of Fully
Ordinary
Shares assuming Enlarged Share
full Capital
Number of Percentage exercise of the assuming full
of exercise of
Ordinary Shares Enlarged Options by the the Options by the
Share
on Admission Capital Concert Party Concert Party
Colin Bird 44,200,000 62.52% 44,700,000 62.39%
Christopher - - 200,000 0.28%
Molefe
Andrew Sarosi - - 250,000 0.35%
Total 44,200,000 62.52% 45,150,000 63.01%
Further information on the members of the Concert Party is set out above.
Accordingly, the issue of Ordinary Shares to the Concert Party on completion of the Proposals would normally give rise to an obligation on the Concert Party to make a Rule 9 offer to Shareholders immediately before the Proposals are implemented. The Panel has agreed, however, to waive this obligation on the Concert Party to make a general offer to all Shareholders that would otherwise arise as a result of the Proposals subject to the passing on a poll by Shareholders of Resolution 3 set out in the Notice of General Meeting. Following completion of the Proposals, the members of the Concert Party will, in aggregate, be interested in shares carrying more than 50 per cent or more of the Company's voting share capital and as a result, the Concert Party will be able to acquire interests in further shares without incurring any further obligation under Rule 9 to make a general offer. The members of the Concert Party have not had any interest in securities of the Company in the 12 months preceding the date of this Document. The Rule 9 Waiver will be invalid if the Concert Party acquires an interest in securities of the Company in the period between the date of this Document and the GM. Accordingly, the members of the Concert Party have undertaken to the Company that they will not acquire an interest in securities in the Company during such period. The Existing Directors have irrevocably committed to General Industries and Skiptons to vote in favour of the Resolutions to be proposed at the GM set out in the Notice of GM contained at the end of this Document, with the exception of Richard Wollenberg who will be excluded from voting on Resolutions 3 and 4. The Directors have an aggregate holding of 3,350,000 Ordinary Shares representing approximately 31.3 per cent of the Existing Ordinary Shares.
PROPOSED SHARE OPTIONS
The Company intends to grant share options as follows, subject to approval by the shareholders of the Company:
Unapproved Share Options (Proposed)
The following Unapproved Share Options are to be exercisable at £0.23 per share
and are to be exercisable for a period of 5 years from the date of Admission.
Name Number of Options
Colin Bird 500,000
Alex Andersson 250,000
Andrew Sarosi 250,000
Chris Molefe 200,000
Richard Wollenberg 2,500,000
Beaumont Cornish 100,000
Total 4,050,000
In addition, the Company intends to grant further unapproved options to certain
employees of the Enlarged Group in respect of up to 2,000,000 Ordinary Shares
at an exercise price of £0.23 per share.
ADOPTION OF NEW ARTICLES
Under the Act, various provisions which formerly appeared in the Company's memorandum of association were deemed to be incorporated into its Articles and Resolution 6 in the Notice of GM is intended to delete those provisions from its Articles by the adoption of the New Articles. The New Articles incorporate amendments to reflect, amongst other things, the provisions of the Act and changes to market practice and include technical changes in relation to the holding of, and the voting at, general meetings, electronic communications, conflicts of interest, the holding of uncertificated securities and the provision of indemnities by the Company and will also have the effect that the Company will no longer have an authorised share capital.
DIVIDEND POLICY
In the short to medium term, the Directors do not believe that the Company will be in a position to declare a dividend but will consider the payment of dividends as and when the amount of distributable reserves and profitability of the Company allows. The declaration and payment of any future dividends by the Company and the quantum thereof will be dependent upon the Enlarged Group's results, financial position, cash requirements, future prospects, profits available for distribution and other factors deemed by the Continuing Directors to be relevant at the time.
UNAUDITED PRO FORMA STATEMENT OF NET ASSETS OF THE ENLARGED GROUP
Set out in Appendix 2 is an unaudited pro forma statement of net assets for the Enlarged Group showing the effects of the Acquisition and Subscription on the Group. GENERAL MEETING A GM is being convened at the offices of the Company, 56 Station Road, Egham, TW20 9LF on 26 September 2011 at 11 a.m at which the following resolutions will be proposed, of which Resolutions 1 to 4 inclusive will be proposed as ordinary resolutions and Resolutions 5 to 7 will be proposed as special resolutions of the Company:
* Resolution 1: (which will be proposed as an ordinary resolution) to approve
the Acquisition, subject to the remaining Resolutions being passed;
* Resolution 2: to authorise the Directors to issue and allot the
Consideration Shares, the Subscription Shares, the Reimbursement Shares and
the Option Shares and in addition up to a further 50,000,000 Ordinary
Shares;
* Resolution 3: (which will be taken on a poll) to approve the waiver of any
obligation which might otherwise arise under Rule 9 of the Takeover Code
for the Concert Party to make an general offer for the Company as a result
of the Acquisition;
* Resolution 4: to approve the issue of 2,500,000 Option Shares to Richard
Wollenberg, an Existing Director of the Company;
* Resolution 5: to disapply statutory pre-emption rights in respect of the
issue and allotment of the Subscription Shares, the Reimbursement Shares
and the Option Shares and in addition up to a further 50,000,000 Ordinary
Shares; * Resolution 6: to change the Company's name to Galileo Resources Plc; * Resolution 7: to adopt the New Articles.
LOCK INS
The Proposed Directors and the Concert Party (the "Lock-In Parties") have undertaken to Beaumont Cornish and the Company not to dispose of any interest in Ordinary Shares for a period of one year from the date of Admission.
In addition, the Lock In Parties have undertaken to Beaumont Cornish and the
Company not to dispose of any interest in Ordinary Shares for a period of one
year from the anniversary of Admission without the prior written consent of
Beaumont Cornish at its absolute discretion and through Beaumont Cornish as
long as it shall remain the Company's Nominated Adviser ("the Orderly Market
Undertaking").
The total number of shares subject to the lock-ins are 49,550,040 representing 70.08 per cent of the Enlarged Share Capital immediately after Admission.
RECOMMENDATION
The Existing Directors believe that: the Resolutions, as described in paragraph 23 of Part II of the Document, are each in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend Shareholders to vote in favour of each of the Resolutions, as they intend to do so in respect of their own beneficial holdings in respect of 3,350,040 Ordinary Shares representing 31.3 per cent of the Existing Ordinary Share Capital, with the exception of Richard Wollenberg who will not be voting on Resolutions 3 and 4 due to his interests in these resolution. The Existing Directors who have been so advised by Beaumont Cornish, consider that the Proposals are fair and reasonable and in the best interests of the Shareholders and the Company as a whole. In providing its advice, Beaumont Cornish has taken into account the Existing Directors' commercial assessments (as summarised above) and the valuation of Skiptons' net interest of the Glenover Stockpiles (as set out in the Competent Person's Report).
Appendix 1
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Latest time for receipt of Forms of Proxy for the24 September 2011
General Meeting
General Meeting 26 September 2011
Completion of the Acquisition 26 September 2011Cancellation of admission to PLUS 5pm on 27 September
2011
Admission effective and commencement of dealings on AIM 8.00am on 28 September
2011
CREST accounts credited 28 October 2011Despatch of definitive share certificates 14 October 2011
Note: All references to times in this timetable are to
London times and each of the times and dates may be
subject to change.
Number of Ordinary Shares in issue immediately 70,700,040following the Admission
Number of Options in issue following Admission 4,050,000
Expected market capitalisation on Admission £16.26 million
International Security Identification Number ("ISIN") GB00B115T142
PLUS symbol prior to Admission GEIO
AIM symbol immediately following Admission GLR
Website on Admission: www.gallileoresources.com
Conversion rates used in the Document (unless otherwise indicated) are set out as follows:
£:US$ £:ZAR 1:1.6 1:11.5 Appendix 2
Unaudited Pro Forma Statement of Net Assets
The following unaudited pro forma statement of net assets of the Enlarged Group
following the Acquisition and the Subscription has been prepared for
illustrative purposes only to provide information about the impact of the
Acquisition and the Subscription on the Enlarged Group and because of its
nature may not give a true reflection of the financial position of the Enlarged
Group. It has been prepared on the basis that the Acquisition and Subscription
were undertaken as at 31 March 2011 on the basis set out in the notes:
The Company As Skiptons Adjustments Pro Forma
at 31 March As at 31 March Subscription net assets
2011 Proceeds and of
2011 (note 2) Acquisition the Enlarged
£ £ Group
(note 1) £
£
Non-current assets
Goodwill - - 9,644,739(3) 9,644,739
Other intangible 1,212,121(6) 1,212,121
assets
Investments 361,757 - 436,471(4) 798,228
361,757 11,293,331 11,655,088
Current Assets
Debtors 5,837 - - 5,837
Cash and cash 831,434 2,598,529(5) 3,429,963
equivalents
837,271 2,598,529 3,435,800
Non-current - (6,575) - (6,575)
liabilities
Current liabilities (5,297) - (1,212,121)(6) (1,217,418)
Net assets/ 1,193,731 (6,575) 12,679,739 13,866,895
(liabilities)
Notes
1. The net assets of the Company at 31 March 2011 have been extracted from the
financial information set out in Part VII of this document.
2. The net assets of Skiptons at 31 March 2011 have been extracted from the
financial information set out in Part VIII of this document.
3. Goodwill, being the excess of the fair value of consideration on the
acquisition of Skiptons over the fair value of the net liabilities
acquired, has been calculated as follows:
Fair value of consideration (44,200,000 shares at 23p per share) £10,166,000
Less:
Net assets of Skiptons at 31 March 2011 £(6,575) Equity in investment in Utafutaji Trading 112 (Pty) Limited* £527,836
£521,261
£9,644,739
* After 31 March 2011, Skiptons acquired the entire issued share capital of Utafutaji Trading 112 (Pty) Limited, which subscribed to shares in Glenover Phosphate (Pty) Limited of $870,929. Upon consolidation and assuming an exchange rate of $1.65/£1, this would result in an investment of £527,836 within the consolidated balance sheet of Skiptons.
4. After 31 March 2011, investments within Utafutaji Trading 112 (Pty) Limited
total £527,836, as calculated in note 3 above. As part of this, the
convertible loan of £91,365 made by the Company to Glenover Phosphate (Pty)
Limited is replaced by an intercompany balance. Therefore the net movement
in investments totals £436,471.
5. Net Subscription proceeds of £3,035,000 is assumed to be £3,335,000 gross
Subscription proceeds (14,500,000 new Subscription Shares being issued at a
Subscription Price of 23p per share) less admission costs of £300,000
(including VAT).
In addition, after 31 March 2011, the Company issued loans totalling £436,471 to Utafutaji Trading 112 (Pty) Limited to enable it to acquire shares in Glenover Phosphate (Pty) Limited.
Therefore the net movement in cash totals £2,598,529.
6. After 31 March 2011, Utafutaji Trading 112 (Pty) Limited entered into a
shareholders agreement with Glenover Phosphate (Pty) Limited, and committed
to pay Fer-Min-Ore (Pty) Limited $2 million for historical engineering
work. Assuming an exchange rate of $1.65/£1, this is likely to create an
asset and liability in the consolidated balance sheet of Skiptons of £
1,212,121.
Appendix 3
Additional Information
Responsibility Statements under the Takeover Code
The Company and the Directors whose names appear on page 18 of the Document accept responsibility for the information contained in this Document save for the information on the Concert Party (for which each member of the Concert Party is responsible). To the best of the knowledge and belief of the Directors (who have taken reasonable care to ensure that such is the case) the information contained in the Document for which they are responsible (as above) is in accordance with the facts and there are no other facts the omission of which is likely to affect the import of such information. Each member of the Concert Party along with the director of Skiptons accept responsibility for the information contained in the Document relating to the Concert Party or otherwise expressly referable to the Concert Party. To the best of the knowledge and belief of the Concert Party and the director of Skiptons (who have taken reasonable care to ensure that such is the case) the information contained in the Document for which they are responsible (as above) is in accordance with the facts and there are no other facts the omission of which is likely to affect the import of such information.
Significant Shareholders
As at the date of the Following Admission
Admission Document
Percentage Number of Percentage
Shareholder Number of of Issued Ordinary of Issued
Ordinary Share Shares Share
Shares Capital Capital (%)
(%)
Richard Wollenberg 1,550,000* 13.25 2,800,000** 3.96
Derek Joseph 500,020 4.27 700,020 0.99
Ian Reynolds 1,250,020 10.68 1,750,020 2.48
Julian C C Ashby 500,000 4.27 700,000 1.00
Brook Hall Ltd A/c JSS 400,000 3.42 400,000 0.57
Brook Hall Ltd A/c JS 418,000 3.57 418,000 0.59
Geiger Counter Limited - - 2,200,000 3.11
The Cardiff Property Plc* 900,000 7.69 900,000 1.27
**
Cheviot Capital 699,000 5.97 949,000 1.34
(Nominees) LimitedFerlim Nominees Limited A 670,000 5.73 670,000 0.95 /c POOLED
Rock (Nominees) Limited A 520,000 4.44 1,000,000 1.41
/c 0230233
Investec Wealth and 970,000 8.29 1,330,000 1.88
Investment Ltd
Colin Bird - - 44,200,000 62.52
* Includes 250,000 ordinary shares held by Richard Wollenberg's close relatives
** Includes 500,000 ordinary shares held by Richard Wollenberg's close relatives
*** J Richard Wollenberg and his family are 41.96% shareholders in The Cardiff Property Plc
Appendix 4 DEFINITIONS
In this announcement and the Document, where the context permits, the expressions set out below shall bear the following meanings:
"Acquisition" the proposed acquisition of the whole of the
issued share capital of Skiptons
"Acquisition Agreement" the conditional agreement dated 1 September 2011
between (1) the Vendor and (2) General Industries,
a summary of the principal terms of which is set
out in the Document
"Acquisition Shares" the shares of Skiptons to be acquired by General
Industries pursuant to the Acquisition Agreement
"Accountants' Reports" the reports on the financial information relating
to General Industries and Skiptons prepared by
Saffery Champness, the Company's Reporting
Accountants, as set out in Parts VII to XI of the
Document
"Act" the Companies Act 2006
"Admission" admission of the New Ordinary Shares and the
Existing Ordinary Shares to trading on AIM
becoming effective in accordance with the AIM
Rules
"AIM" AIM, a market operated by London Stock Exchange
"AIM Rules" Together the AIM Rules for Companies, AIM Rules
for Nominated Advisers and AIM Disciplinary
Procedures and Appeals Handbook and the AIM Note
for Mining, Oil and Gas Companies
"AIM Rules for Companies" the rules of the London Stock Exchange governing
admission to, and operation of, Companies on AIM
"AIM Rules for Nominated the rules of London Stock Exchange governing
Advisers" admission to, and operation of, Nominated Advisers
on AIM
"Beaumont Cornish" Beaumont Cornish Limited, the Company's Nominated
Adviser and Broker, authorised and regulated by
the Financial Services Authority
"BEE Requirements" means the social upliftment requirements set out
in the Mineral and Petroleum Resources Development
Act 2002 (RSA), which requires, amongst other
things, that 15% of the equity rights in any
entity which holds mineral rights in RSA must be
held by qualifying persons (historically
disadvantaged persons) and 26% thereof be held by
such persons by March 2015
"Board' the existing board of directors of the Company,
whose names are set out on page 18 of the Document
"Brightwater" Brightwater Trade & Invest 55 Proprietary Limited
a company incorporated under the laws of RSA,
registration number 2010/012065/07
"Brightwater Shareholders' the shareholders agreement dated 26 August 2011
Agreement" between Cannosia, Utafutaji Trading, the
individual shareholders of Brightwater (who hold
shares in Brightwater pursuant to BEE
Requirements) and Brightwater and the Memorandum
of Incorporation of Brightwater, details of which
are set out in Part IV of the Document
"Cannosia" Cannosia Trading 62 CC, a close corporation
incorporated under the laws of the RSA under
registration number 2008/043188/23
"Combined Code" the Combined Code on Corporate Governance
"Company' or "General General Industries Plc, a company incorporated in
Industries" or "GI" England and Wales under registered number 05679987
"Competent Person" or Snowden Mining Industry Consultants, South Africa
"Snowden" an independent firm providing specialist mining
industry consultancy services, whose details are
set out in Part V of the Document
"Concert Party" Colin Bird, Chris Molefe and Andrew Sarosi, being
those parties deemed to be acting in concert under
the Takeover Code
"Consideration Shares" the 44,200,000 new Ordinary Shares to be issued to
the Vendor on completion of the Acquisition
"CREST' the computerised settlement system used to
facilitate the transfer of title to shares in
uncertificated form operated by Euroclear UK &
Ireland Limited
"CREST Regulations" The Uncertificated Securities Regulations 2001 (SI
2001/3755)
"Current Articles" The articles of association of the Company in
force at the date of the Document
"Directors" the Existing Directors and the Proposed Directors
"Document' the admission document
"Engagement Letter"' The engagement letter dated 6 April 2011 and made
between the Company and Beaumont Cornish further
details which are set out in paragraph 10.1 of the
Document
"Enlarged Group" the Company, Skiptons and its subsidiaries on
Admission following the Acquisition
"Enlarged Ordinary Share the issued share capital of the Company upon
Capital" Admission consisting of the Existing Ordinary
Shares and the New Ordinary Shares
"Existing Directors" John Richard Wollenberg- Chairman
Derek Joseph- Director
Ian Reynolds- Director
Anthony Shakesby- Director
"Existing Ordinary Shares" the 11,700,040 Ordinary Shares in issue on the
Record Date
"Existing Shareholders" the shareholders in the Company as at the date of
the Document
"FMO" Fer-Min-Ore Proprietary Limited incorporated in
RSA with registered number 1999/004905/07
"Financial Services and the Financial Services and Markets Act 2000
Markets Act" or "FSMA"
"Form of Proxy" the form of proxy for use by Shareholders in
connection with the GM
"FSA" the Financial Services Authority
"Fully Enlarged Ordinary the Enlarged Ordinary Share Capital plus the
Share Capital" 950,000 options issued to the Concert Party
"General Meeting" the general meeting of the Company to be held at
or "GM" 56 Station Road, Egham, Surrey TW20 9LF at 11am on
26 September 2011
"Glenover Shareholders' the shareholders agreement dated 18 August 2011
Agreement" between FMO, Utafutaji Trading and Glenover and
the Memorandum of Incorporation of Glenover
details of which are set out in Part IV of the
Document
"Glenover" Glenover Phosphate Proprietary Limited
incorporated in RSA with registered number 1963/
000788/07
"Glenover BEE Memorandum the memorandum between Glenover, FMO, Utafutaji
Trading and various individuals dated 17 August
2011 relating to the proposed issue of shares in
Glenover such that Glenover satisfies its BEE
Requirements, details of which are set out in Part
IV of the Document
Introduction Agreement the agreement dated 1 September 2011 and made
between the Company, Beaumont Cornish, the
Existing Directors and the Proposed Directors,
further details which are set out in paragraph
10.9 of Part XIII of the Document
"Joint Venture Projects" means the use of the rights granted by the
Licences to mine the Qokolweni Quarry through
Brightwater and to conduct mineral exploration of
certain land in the Limpopo region of RSA through
Glenover
"Licences" the mining licence granted to Cannosia in respect
of the Qokolweni Quarry (which that company has
agreed to transfer (subject to regulatory consent)
to Brightwater and the prospecting licence granted
to Glenover relating to land in the Limpopo region
of RSA
"Locked-in Parties" The Proposed Directors and the Vendor
"London Stock Exchange" London Stock Exchange plc
"Member Account ID" the identification code or number attached to any
member account in CREST
"New Articles" the new articles of association of the Company
proposed to be adopted by the Company pursuant to
Resolution 6 set out in the Notice of General
Meeting set out at the end of the Document
"New Ordinary Shares" the Consideration Shares, the Reimbursement Shares
and the Subscription Shares
"Nominated Adviser the agreement dated 1 September 2011 and made
Agreement" between the
Company, Beaumont Cornish and the Directors
further details which are set out in paragraph
10.11 of Part XIII of the Document
"Official List" the official list of the UK Listing Authority
"Option Shares" the 4,050,000 unissued Ordinary Shares in respect
of which options (as described in paragraph 16 of
Part II of the Document) are to be granted to the
Proposed Directors and Beaumont Cornish on
Admission
"Ordinary Share Capital" the 11,700,040 Ordinary Shares in issue as at the
date of the Document
"Ordinary Shares" Ordinary Shares of 5p each in the capital of the
Company
"Panel" the Panel on Takeovers and Mergers
"Participant ID" the identification code or membership number used
in CREST to identify a particular CREST member or
other CREST participant
"PLUS" PLUS Stock Exchange, as operated by PLUS Stock
Exchange plc
"Proposals" the Acquisition, the Resolutions, the Whitewash
and Name Change
"Proposed Directors" Colin Bird -Chairman and Chief Executive Officer
Andrew Sarosi - Technical Director (Main Project
Qokolweni Quarry)
Anthony Shakesby- Finance Director
Chris Molefe - Non-Executive Director
John Richard Wollenberg- Non-Executive Director
"Qokolweni Quarry" the Qokolweni Quarry in respect of which
Brightwater is entitled to the mining rights as
described in Parts IV and V of the Document
"Qualifying Shareholders" Shareholders on the register of members of the
Company at the Record Date
"RSA" Republic of South Africa
"REE" Rare Earth Elements or Rare Earth Metals
"Reimbursement Shares" 300,000 Ordinary Shares to be issued to John
Richard Wollenberg credited as fully paid at the
Subscription Price in full satisfaction of his
accrued and unpaid director's fees as at 31 August
2011
"Resolutions" the resolutions set out in the Notice of General
Meeting set out at the end of the Document
"Saffery Champness" Saffery Champness, the Reporting Accountants
"Sapila International" Sapila International, a Mauritius registered
company with the registered number 57554 C2/GBL
"Shareholders" holders of Ordinary Shares
"Skiptons" Skiptons Global Investment Limited (BVI) a company
incorporated in The British Virgin Islands with
registration number 1499111
"Snowden" Snowden Mining Industry Consultants (Pty) Ltd
"Subscription" the subscription of the Subscription Shares at the
Subscription Price, details of which are set out
in paragraph 13 of Part II the Document
"Subscription Price" means 23p per Ordinary Share
"Subscription Shares" 14,500,000 new Ordinary Shares to be issued to
subscribers pursuant to the Subscription
"Takeover Code" The City Code on Takeovers and Mergers
"UK" or "United Kingdom" United Kingdom of Great Britain and Northern
Ireland
"United States" or "US" the United States of America, its territories and
possessions and any state of the United States and
the District of Columbia
"US Holders" Shareholders who are US Persons
"US Persons" US persons as defined in Regulation 5 under the US
Securities Act
"US Securities Act" the US Securities Act of 1933, as amended
"Utafutaji Trading" Utafutaji Trading 112 Proprietary Limited (a
company registered in RSA with registration number
2010/022865/07), a wholly-owned subsidiary of
Skiptons
"Vendor" Colin Bird, the owner of the entire issued share
capital of Skiptons and one of the Proposed
Directors.
"Waiver" or "Whitewash" the consent of the Panel to waive any obligations
on the Vendor to make a mandatory offer to
Shareholders for the Ordinary Shares not owned by
the Vendor upon completion of the Proposals, which
would otherwise arise under Rule 9 of the City
Code as a result of the acquisition of Ordinary
Shares by the Vendor in connection with the
Proposals.
TECHNICAL GLOSSARY
GLOSSARY OF TECHNICAL TERMS, ABBREVIATIONS
AND UNITS (T10)
Glossary
Alkaline Igneous rock that has a high proportion of sodium and
potassium.
alteration A change in mineralogical composition of a rock commonly
brought about by reactions with hydrothermal solutions or
by pressure changes.
Ankerite A calcium, iron, magnesium, manganese carbonate mineral (Ca
(Fe, Mg, Mn)(CO3)2)
anomalous A departure from the expected norm. In mineral exploration
this term is generally applied to either geochemical or
geophysical values higher or lower than the norm.
Apatite A calcium-phosphate mineral, with formula Ca5(PO4)3.
Arenite A sedimentary clastic rock with a grain size of 0.0625 mm
to and 2 mm and contains less than 15% matrix material
Archean The oldest rocks of the Earth's crust - older than 2,400
million years.
Arcuate Having the shape of a bow or curve.
Basement Crust of the earth underlying younger sedimentary deposits.
basket price gross revenue per recovered rare earth element (in
kilogram's)
Beforsite Ankerite rich carbonatites
Biotite A common phyllosilicate mineral from the mica group (K
(Mg,Fe)3AlSi3O10(F,OH)2)
Breccia A rock composed of broken fragments of minerals or rock
cemented together by a fine-grained material (matrix)chemical symbols La - Lanthanum
Nd - Neodymium
Pr - Praseodymium
Carbonatite Intrusive or extrusive igneous rocks defined by a
mineralogical composition consisting of greater than 50 %
carbonate minerals
Clastic Rocks that are composed of fragments, or clasts, of
pre-existing rock
Competent Person / A person with requisite knowledge and relevant experience
CP in a particular type of commodity and mining work that
meets minimum requirements for internationally recognized
procedures and standards.
Competent Persons A report produced by a CP, typically submitted as part of
Report the listing documents.Competent Valuator A Competent Valuator is a person who possesses the
necessary qualifications, ability and sufficient relevant
experience in valuing mineral assets.
concentrate Product obtained after metallurgical processing.concentrate grade Mass of economic minerals by mass of final concentrate.
Conglomerate A rock consisting of individual clasts within a
finer-grained matrix that have become cemented together.
Conglomerates are sedimentary rocks consisting of rounded
fragments and are thus differentiated from breccias, which
consist of angular clasts
contact The surface between two different rock types.
(geological)
cut-off / cut-off The lowest grade of ore that can be exploited economically
grade from an ore body.
diamond (core) Method of obtaining rock core by drilling with a diamond
drilling impregnated bit.
Diopside A monoclinic pyroxene mineral with composition (MgCaSi2O6)
Dolerite A mafic, holocrystalline, subvolcanic rock equivalent to
volcanic basalt or plutonic gabbro
dip Inclination of a geological feature to the horizontal.
dolerite A medium grained basic intrusive rock composed mostly of
pyroxenes and sodium-calcium feldspar.
downthrow See Throws.
dyke A body of intruding igneous rock that cross cuts the host
strata at a high angle.
fault A fracture in rocks along which rocks on one side have been
moved relative to the rocks on the other.
feldspar/ Alumino-silicate minerals that vary between white and
feldspathic pinkish colours and form the bulk of granite rocks.
felsic Light coloured rock containing an abundance of any of the
following; feldspars, felspathoids and silica.
folding A term applied to the bending of strata or a planar feature
about an axis.
gabbro Coarse grained igneous rock containing any of the following
minerals: feldspar (typically calcic plagioclase), pyroxene
and/or olivine. Gabbro is sometimes referred to as a
norite, depending on the type of pyroxene present.geological losses Any part of known or unknown geological features (e.g.
faults and dykes) which disturb mining operations and will
not be mined.
graben A depressed block of land bordered by parallel faults.
granite A medium to coarse-grained felsic intrusive rock, which
contains 10% - 50% quartz.
greenfield Area where no mining activity has previously taken place.
Hematite The mineral form of iron(III) oxide (Fe2O3)
igneous rocks Rocks formed by the solidification from a molten or
partially molten state.
in-situ The original, natural state of the orebody before mining or
processing of the ore takes place.
Indicated Resource An 'Indicated Mineral Resource' is that part of a Mineral
Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated
with a reasonable level of confidence. It is based on
information from exploration, sampling and testing of
material gathered from locations such as outcrops,
trenches, pits, workings and drill holes. The locations are
too widely or inappropriately spaced to confirm geological
or grade continuity but are spaced closely enough for
continuity to be assumed.
Inferred Resource An 'Inferred Resource' is that part of a Mineral Resource
for which tonnage, grade and mineral content can be
estimated with a low level of confidence. It is inferred
from geological evidence and sampling and assumed but not
verified geological and/or grade continuity. It is based on
information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and
drill holes that may be limited or of uncertain quality and
reliability.
intrusion / A body of igneous rock that invades older rocks.
intrusives
Karst topography A geologic formation shaped by the dissolution of a layer
or layers of soluble bedrock, usually carbonate rock
Listing AIM Listing Requirements
Requirements
lithology A term pertaining to the general characteristics of rocks.
It generally relates to descriptions based on hand-sized
specimens and outcrops rather than microscopic or chemical
features.
Lutite: A sedimentary clastic rock with clay or silt grain size
less than 1/16 mmmafic (composition) Igneous rocks composed dominantly of iron and magnesium
minerals.
magma Naturally occurring molten rock, generated within the Earth
and capable of intrusion and extrusion.
magnetite An oxide mineral that is strongly magnetic, with chemical
formula Fe3O4.
Matrix: The finer grained mass of material in which larger grains
or clasts are embedded
Measured Resource A 'Measured Mineral Resource' is that part of a Mineral
Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated
with a high level of confidence. It is based on detailed
and reliable information from exploration, sampling and
testing of material from locations such as outcrops,
trenches, pits, workings and drill holes. The locations are
spaced closely enough to confirm geological and grade
continuity.
melanorite An igneous rock (i.e. a norite) that has 60% to 90% dark
minerals.metamorphism The process by which changes are brought about in earth's (metamorphic rocks) crust by the agencies of heat, pressure and chemically
active fluids.
metasediment Metamorphosed sedimentary rock.
Mineral Resource A concentration or occurrence of material of economic
interest in or on the earth's crust in such form, quality
and quantity that there are reasonable and realistic
prospects for eventual economic extraction. The location,
quantity, grade, continuity and other geological
characteristics of a Mineral Resource are known, or
estimated from specific geological evidence, sampling and
knowledge interpreted from an appropriately constrained and
portrayed geological model. Mineral Resources are
subdivided, and must be so reported, in order of increasing
confidence in respect of geoscientific evidence, into
Inferred, Indicated and Measured categories.
Mineral Reserve A 'Mineral Reserve' is the economically mineable material
derived from a Measured and/or Indicated Mineral Resource.
It includes diluting materials and allows for losses that
are expected to occur when the material is mined.
Appropriate assessments to a minimum of a Pre-Feasibility
Study for a project, or a Life of Forecast Plan for an
operation, must have been carried out, including
consideration of, and modification by, realistically
assumed mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors.
modifying factor Factors, including mining, metallurgical, economic,
marketing, legal, environmental, social and governmental
considerations that affect quantification of mineral
reserve.
motherhole An original drill hole from which other deflections may be
drilled.
olivine A mineral silicate composed of magnesium, iron, manganese
and minor amounts of nickel, with chemical formula Mg2SiO4.
outcrop Exposure of rock, reef or mineralisation on surface.
pegmatoid/ An igneous rock that has the coarse-grained texture of a
pegmatoidal pegmatite but that lacks graphic intergrowths or typically
granitic composition.
plagioclase A series of triclinic feldspars with composition in the
range NaAlSi3O8 to CaAl2Si2O8. Feldspars are framework
alumina-silicates of sodium, potassium and calcium, and are
the most abundant mineral group in the Earth's crust.
Precambrian An era of the geological time scale, aged older than
approximately 570 million years.
Probable Reserve Defined by the SAMREC Code as the economically minable
material derived from a Measured or Indicated Mineral
Resource or both. It is estimated with a lower level of
confidence than a Proved Mineral Reserve. It includes
diluting and contaminating material and allows for losses
that are expected to occur when the material is mined.
Appropriate assessments to a minimum of a Pre-Feasibility
Study for a project or a Life of Mine Plan for an operation
must have been carried out, including consideration of and
modification by, realistically assumed mining,
metallurgical, economic, marketing, legal, environmental,
social and governmental factors. Such modifying factors
must be disclosed.
Proved Reserve Defined by the SAMREC Code as the economically mineable
material derived from a Measured Mineral Resource. It is
estimated with a level of confidence. It includes diluting
and contaminating materials and allows for losses that are
expected to occur when the material is mined. Appropriate
assessments to a minimum of a Pre-Feasibility Study for a
project or a Life of Mine Plan for an operation must have
been carried out including considerations of, and
modification by, realistically assumed mining,
metallurgical, economic marketing, legal, environmental,
social and governmental factors. Such modifying factors
must be disclosed.
pulp(s) Pulverised or ground ore in solution or suspension in
water.
pycnometer A vessel of a precise volume used to measure the density of
liquids or solids.
pyroxenite A dark coloured igneous rock composed almost entirely of
the mineral pyroxene.
quartz Mineral species composed of crystalline silica.
quartzite A metamorphosed sandstone, composed almost entirely of
crystalline silica.
remote sensing The recording of images of parts of the Earth's surface
using electromagnetic radiation, normally from an aircraft
or satellite at sufficient height for a broad area to be
covered. Includes passive aerial photography and imagery
using multispectral scanners and thematic mappers, as well
as active techniques, such as radar, which shows the
topographic texture of terrain in the presence of cloud
cover, etc.
sedimentary rock Rocks formed by deposition of particles carried by air,
water or ice.
sulphides Minerals consisting of a chemical combination of sulphur
with a metal.
syenite An igneous rock that principally consists of alkali
feldspars usually with more than one mafic mineral.
tailings That portion of the ore that is low in value and is
rejected during the concentrating stage.
take-off A type of link, whereby a supply pipe is connected to a
main water supply pipe.
throws Vertical displacement on a geological structure (e.g. dykes
and faults). A downthrow occurs when, as one advances, the
reef horizon has moved down relative to your initial
position. The converse is true for an upthrow.
waste rock Barren rock or mineralized material that is too low in
grade to be economically processed.
water balance In hydrology, a water balance equation can be used to
describe the flow of water in and out of a system. A system
or model can be one of several hydrological domains, such
as a column of soil or a drainage basin.
weathering The breakdown of rocks and minerals caused by the action of
atmospheric elements such as water and air.
Abbreviations
2009B, 2011F 2009 Budget, 2011 Forecast
BEE Black Economic Empowerment
CP Competent Person
CPR Competent Persons Report
DMR Department of Mineral Resources
DTM digital terrain model
DVD Digital Video Disc
DWA Department Water Affairs
EIA environmental impact assessment
EMP environmental management programme
EOH End of hole
FW Footwall
GBP British pound sterling
GPS Global Positioning System
HDSA Historically Disadvantaged South African
hectare Ha
HREE Heavy rare earth elements
JV Joint Venture
LCD Liquid crystal display
LED Light emitting diode
LREE Light rare earth elements
M Million
mamsl metres above mean sea level
Mgmnt Management
Mining Charter Broad Based Socio-Economic Empowerment Charter for the
South African Mining Industry
MPRDA Minerals and Petroleum Resources Development Act, Act
No. 28 of 2002
MSAIMM Member of South African Institute of Mining and
Metallurgy
N/A Not available
NEMA National Environmental Management Act, Act No. 107 of
1998
OK Ordinary Kriging
PR Prospecting Right
Ptn Portion
QA/QC Quality Assurance-Quality Control
QC Quality Control
QQ Quantile-Quantile
REEs Rare earth elements
REOs Rare earth oxides
R24 Regional road No.24
ROM Run of Mine
RSA Republic of South Africa
SAIMM South African Institute of Mining and Metallurgy
SAMREC Code South African Code for the Reporting of Exploration
Results, Mineral Resources and Mineral Reserves, 2007
Edition, as amended in July 2009
SAMVAL Code South African Code for the Reporting of Mineral Asset
valuation, as amended in July 2009
SABLE Standardised Approach to Borehole Logging for
Exploration
SANAS South African National Accreditation System
SARS South African Revenue Services
SLP social and labour plan
SV# SAMVAL Code naming convention/ referencing
TREOs Total rare earth oxides
T# SAMREC Code naming convention/ referencing
US$ United States Dollar
ZAR South African Rand
ZAR1 M One million South African Rand
UNITS
° Degree
°C degrees Celsius
% Percent
cm Centimetre
g/cm3 grammes per cubic centimetre
g/t grammes per tonne
km Kilometre
km2 square kilometre
kt kilotonnes
ktpm kilotonnes per month
mamsl metres above mean sea level
M million
m metre
m2 square metres
m3 cubic metres
m3/month cubic metres per month
m3/s cubic metres per second
mm millimetre
Moz million ounces
Mt million tonnes
Mtpa million tonnes per annum
oz ounce
pa per annum
ppm parts per million
t tonnes
tpm tonnes per month
US$ United States Dollar
ZAR or R South African Rand
