TIDMLMI
RNS Number : 9488E
Lonmin PLC
09 November 2015
NOT FOR RELEASE, PUBLICATION, FORWARDING OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR WITHIN THE
UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICES
PART OF THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A
PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL
CONSTITUTE AN OFFERING OF ANY SECURITIES. ANY DECISION TO PURCHASE,
SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY
PROVISIONAL ALLOTMENT LETTER, NIL PAID RIGHTS, FULLY PAID RIGHTS,
LETTERS OF ALLOCATION AND/OR NEW SHARES MUST BE MADE ONLY ON THE
BASIS OF THE INFORMATION CONTAINED IN AND INCORPORATED BY REFERENCE
INTO THE PROSPECTUS ONCE PUBLISHED.
9 November 2015
Lonmin Plc
US$407 million Rights Issue
The Board of Lonmin Plc ("Lonmin", "the Company" and, together
with its subsidiaries, "the Group") today announces an underwritten
Rights Issue to raise gross proceeds of approximately US$407
million.
HIGHLIGHTS
-- 46 for 1 underwritten Rights Issue of 26,997,717,400 New
Shares at 1.00 pence per New Share (or, in the case of
Qualifying South African Shareholders, ZAR 0.214 per New Share)
to raise net proceeds of approximately US$369
million (after payment of fees and expenses relating to the
Rights Issue and the Amended Facilities Agreements).
-- The Public Investment Corporation, which holds approximately
seven per cent. of the issued share capital of
Lonmin, has irrevocably committed to take up its entitlement in
full in the Rights Issue and has sub-underwritten a
material portion of the Rights Issue in excess of its
entitlement.
-- The net proceeds of the Rights Issue will be used to fund the
implementation of the Business Plan, thereby
improving the Group's ability to withstand potential adverse
movements in external factors, specifically a
continuation of the weak PGM pricing environment, and
repositioning the Group on the South African PGM
industry cost curve; and for general corporate purposes,
including as additional working capital, strengthening the
balance sheet and allowing the Group to meet its obligations and
commitments as they fall due and reducing the
Group's borrowings.
-- Upon the Underwriting Agreement with respect to the Rights
Issue becoming wholly unconditional and certain
customary conditions being met, the Amended Facilities
Agreements which the Company has entered into with its
existing lending syndicate will come into effect providing:
(i) an extension of maturity of the Existing US Dollar Facility
from May 2016 to May 2020 (assuming
Lonmin exercises its option to extend the term up until this
date) and a reduction in the amount of
the Amended US Dollar Facilities to US$225 million (as compared
to US$360 million for the Existing
US Dollar Facility); and
(ii) an extension of maturity of the Existing Rand Facilities
from June 2016 to May 2020 (assuming
Lonmin exercises its option to extend the term up until this
date).
Brian Beamish, Chairman of Lonmin, said: "In order to be able to
deal effectively with the effects of a continuation of current low
PGM prices, the Board and management have developed the Business
Plan with the aim to achieve positive cash flow after capital
expenditure. The Rights Issue is expected to raise approximately
US$407 million in gross proceeds and is designed to strengthen the
Group's balance sheet and allow the implementation of the Business
Plan, whilst preserving the long-term value of the Group. The Board
remains confident in the potential of the Group, with its
high-quality asset base and long-term mining rights, and in the
medium to long term fundamentals of the PGM industry and is focused
on preserving and enhancing value for all Shareholders."
DETAILS OF THE RIGHTS ISSUE
The Rights Issue, which is conditional on, amongst other things,
Shareholder approval, will result in the issue of 26,997,717,400
New Shares (representing 97.87 per cent. of the enlarged issued
share capital of Lonmin) at a price of 1.00 pence per New Share, in
respect of Qualifying Shareholders (other than Qualifying South
African Shareholders) or, in the case of Qualifying South African
Shareholders, ZAR 0.214 per New Share, payable in full on
acceptance. The Rights Issue will be on the basis of:
46 New Shares for every 1 Existing Share
The New Shares will, when issued and fully paid, be ordinary
shares ranking pari passu in all respects with the Existing Shares,
including the right to receive all future dividends and other
distributions declared, made, paid or declared after the date of
their issue. The only difference will be that while the Existing
Shares have a nominal value of US$1.00 per Share, the New Shares
will have a nominal value of US$0.000001 per share.
The UK Issue Price of 1.00 pence per New Share, which is payable
in full by Qualifying Shareholders (other than Qualifying South
African Shareholders) on acceptance by no later than 11.00 a.m.
(London time) on 10 December 2015, represents, in effect:
-- a 93.85 per cent. discount to the closing price of an Existing Share; and
-- a 24.50 per cent. discount to the theoretical ex-Rights price of an Existing Share,
in each case based on the closing middle-market price of 16.25
pence on the London Stock Exchange on 6 November 2015, the last
business day prior to the publication of the Prospectus.
The SA Issue Price of ZAR0.214 per New Share represents:
-- a 94.28 per cent. discount to the closing price of an Existing Share; and
-- a 25.96 per cent. discount to the theoretical ex-Rights price of an Existing Share,
in each case based on the closing price of ZAR3.74 on the JSE on
6 November 2015, the last business day prior to the publication of
the Prospectus.
The Rights Issue is being underwritten by HSBC, J.P. Morgan
Cazenove and Standard Bank, save in respect of New Shares which the
Directors have irrevocably undertaken to take up.
The Board has received financial advice from Greenhill in
relation to the Rights Issue.
This summary should be read in conjunction with the full text of
this announcement. Further, this summary contains extracts from the
Prospectus, which extracts are qualified and/or contextualised by,
and should be read with, the Prospectus. Defined terms shall have
the same meaning as given in the Prospectus, unless the context
requires otherwise.
CONTACTS
+44 20 7201
Lonmin 6007 /
Tanya Chikanza (Head
of Investor Relations) +27 11 218 8300
---------------------------- ----------------
Greenhill
(UK Sponsor and Financial +44 20 7198
Adviser) 7400
David Wyles
Gareth Davies
---------------------------- ----------------
HSBC
(Joint Bookrunner and +44 20 7991
Corporate Broker) 8888
Nick Donald
Peter Glover
---------------------------- ----------------
J.P. Morgan Cazenove
(Joint Bookrunner and +44 20 7742
Corporate Broker) 4000
Michael Wentworth-Stanley
Alexander Large
---------------------------- ----------------
J.P. Morgan Equities
Limited
(SA Transaction Sponsor) +27 11 507 0300
Jako Van Der Walt
---------------------------- ----------------
Standard Bank
(Joint Bookrunner) +27 11 344 5914
Eric Von Glehn
Chris Godman
---------------------------- ----------------
Cardew Group
Anthony Cardew / James +44 20 7930
Clark 0777
Sue Vey +27 72 644 9777
---------------------------- ----------------
---------------------------- ----------------
---------------------------- ----------------
SHAREHOLDER ENQUIRIES
UK Shareholders: Contact the UK Shareholder Helpline on 0371 384
2232 (from inside the United Kingdom) or +44 (0)121 415 0919 (from
outside the United Kingdom). This Shareholder Helpline is available
from 8.30 a.m. to 5.30 p.m. (London time) Monday to Friday (except
bank holidays).
South African Shareholders: contact the South African
Shareholder Helpline on 0861 LINKSA (0861 546572) (from inside
South Africa) or +27 861 LINKSA (+27 861 546572) (from outside
South Africa). This Shareholder Helpline is available from 8.00
a.m. to 5.00 p.m. (Johannesburg time) Monday to Friday (except
public holidays).
Please note that for legal reasons, the UK Shareholder Helpline
and the South African Shareholder Helpline are only able to provide
information contained in this announcement or the prospectus
relating to the Rights Issue and information relating to Lonmin's
register of members and are unable to give advice on the merits of
the Rights Issue, or provide legal, financial, tax or investment
advice.
IMPORTANT NOTICES
This announcement, and the information referred to in it, is an
advertisement and not a prospectus and any decision to purchase,
otherwise acquire, subscribe for, sell or otherwise dispose of any
Provisional Allotment Letter, Form of Instruction, Nil Paid Rights,
Fully Paid Rights, Letters of Allocation and/or New Shares
(together, the "Securities") should only be made on the basis of
information contained in or incorporated by reference into the
Prospectus. This announcement cannot be relied upon for any
investment contract or decision.
This announcement is not intended to and does not constitute or
form part of any offer or invitation to purchase or subscribe for,
or any solicitation to purchase or subscribe for, Securities or to
take up any entitlements to Nil Paid Rights in any
jurisdiction.
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
The information contained in this announcement is not for
release, publication or distribution to persons in the United
States of America or any Excluded Territory and should not be
distributed, forwarded to or transmitted in or into any
jurisdiction where to do so might constitute a violation of the
securities laws or regulations of such jurisdiction. There will be
no public offer of the Securities in the United States of America
or any Excluded Territory. The distribution of this announcement
and/or the Prospectus and/or the Securities into jurisdictions
other than the United Kingdom may be restricted by law, and,
therefore, persons into whose possession this announcement and/or
the information contained herein and/or the Prospectus and/or the
Provisional Allotment Letter and/or the Form of Instruction comes
should inform themselves about and observe any such restrictions.
Any failure to comply with any such restrictions may constitute a
violation of the securities laws of such jurisdiction.
The Securities have not been and will not be registered under
the U.S. Securities Act of 1933, as amended (the "U.S. Securities
Act"), or under any securities laws of any state or other
jurisdiction of the United States and may not be offered, sold,
pledged, taken up, exercised, resold, renounced, transferred or
delivered, directly or indirectly, within the United States except
pursuant to an applicable exemption from, or in a transaction not
subject to, the registration requirements of the U.S. Securities
Act and in compliance with any applicable securities laws of any
state or other jurisdiction of the United States. The Securities
have not been approved or disapproved by the United States
Securities Exchange Commission, any state securities commission in
the United States or any other U.S. regulatory authority, nor have
any of the foregoing authorities passed upon or endorsed the merits
of the Rights Issue or the accuracy or adequacy of the Prospectus.
Any representation to the contrary is a criminal offence in the
United States.
Accordingly, subject to certain exceptions, the Rights Issue is
not being made in the United States of America and neither this
announcement, the Prospectus, the Letters of Allocation nor the
Provisional Allotment Letters constitute or will constitute an
offer, or an invitation to apply for, or an offer or an invitation
to subscribe for or acquire any Securities in the United States.
Subject to certain limited exceptions, Provisional Allotment
Letters have not been, and will not be, sent to, and Nil Paid
Rights have not been, and will not be, credited to the CREST
account of, any Qualifying Shareholder with a registered address in
or that is located in the United States of America.
This communication is for distribution only to, and directed
only at, persons in member states of the European Economic Area who
are "qualified investors" within the meaning of Article 2(1)(e) of
the Prospectus Directive (as amended by Directive 2010/73/EU)
("Qualified Investors"). For the purposes of this provision, the
expression "Prospectus Directive" means Directive 2003/71/EC and
includes any relevant implementing measure in each member state of
the European Economic Area which has implemented the Prospectus
Directive. In addition, in the United Kingdom, this communication
is for distribution only to, and is directed only at, Qualified
Investors who (i) have professional experience in matters relating
to investments who fall within the definition of "investment
professionals" in Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005, as amended (the
"Order"), or (ii) are persons falling within Article 49(2)(a) to
(d) of the Order, or (iii) are persons to whom it may otherwise
lawfully be communicated (all such persons together being referred
to as "relevant persons"). Any investment or investment activity to
which this communication relates is available only to and will only
be engaged in with such persons. This communication must not be
acted on or relied on (i) in the United Kingdom, by persons who are
not relevant persons, and (ii) in any member state of the European
Economic Area (including the United Kingdom), by persons who are
not Qualified Investors.
Each of J.P. Morgan Securities plc (which conducts its UK
investment banking activities as J.P. Morgan Cazenove) ("JPMS") and
HSBC Bank plc ("HSBC") is authorised in the United Kingdom by the
Prudential Regulation Authority (the "PRA") and regulated in the
United Kingdom by the PRA and the Financial Conduct Authority (the
"FCA"). The Standard Bank of South Africa Limited ("Standard Bank")
conducts its European investment banking activities through its
affiliates which are authorised and regulated in the United Kingdom
by the FCA. Greenhill & Co. International LLP ("Greenhill") is
authorised and regulated in the United Kingdom by the FCA.
Each of Greenhill, J.P. Morgan Equities South Africa (Pty) Ltd,
JPMS, HSBC and Standard Bank (together, the "Banks") is acting
solely for Lonmin and no one else in connection with the Rights
Issue and will not regard any other person (whether or not a
recipient of this announcement) as a client in relation to the
Rights Issue and will not be responsible to anyone other than
Lonmin for providing the protections afforded to their respective
clients nor for giving advice in connection with the Rights Issue
or any other transaction, arrangement or matter referred to in this
announcement.
Apart from the responsibilities and liabilities, if any, which
may be imposed on the Banks by the Financial Services and Markets
Act 2000 (as amended) or the regulatory regime established
thereunder or otherwise under law, none of the Banks accept any
responsibility or liability whatsoever for the contents of this
announcement, and no representation or warranty, express or
implied, is made by any of the Banks in relation to the contents of
this announcement (or whether any information has been omitted from
this announcement), including its accuracy, completeness or
verification or regarding the legality of any investment in the
Securities or any other information relating to the Company,
whether written, oral or in a visual or electronic form, and
howsoever transmitted or made available or for any loss howsoever
arising from any use of this announcement or its contents or
otherwise arising in connection herewith, by any person under the
laws applicable to such person or for any other statement made or
purported to be made by it, or on its behalf, in connection with
the Company, the Securities and the Rights Issue, and nothing in
this announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or the
future. To the fullest extent permissible each Bank accordingly
disclaims all and any responsibility or liability whether arising
in tort, contract or otherwise (save as referred to above) which it
might otherwise have in respect of this announcement.
The information contained in this announcement is for background
purposes only and does not purport to be full or complete. No
reliance may be placed for any purpose on the information contained
in this announcement or its accuracy or completeness. The
information in this announcement is subject to change. Nothing in
this announcement should be interpreted as a term or condition of
the Rights Issue.
A copy of the Prospectus containing details of the Rights Issue
when published will be available from the registered office of the
Company and on the Company's website at www.lonmin.com provided
that the Prospectus will not, subject to certain exceptions, be
available (whether through the website or otherwise) to
Shareholders in the United States or any Excluded Territories.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this announcement.
This announcement does not constitute a recommendation
concerning any investor's options with respect to the Rights Issue.
The price and value of securities can go down as well as up. Past
performance is not a guide to future performance. The contents of
this announcement are not to be construed as legal, business,
financial or tax advice. Each Shareholder or prospective investor
should consult his, her or its own legal adviser, business adviser,
financial adviser or tax adviser for legal, financial, business or
tax advice.
No person has been authorised to give any information or to make
any representations other than those contained in this announcement
and, if given or made, such information or representations must not
be relied on as having been authorised by the Company, any of the
Banks or any other person. Subject to the Listing Rules, the
Prospectus Rules and the Disclosure and Transparency Rules, the
issue of this announcement shall not, in any circumstances, create
any implication that there has been no change in the affairs of the
Group since the date of this announcement or that the information
in it is correct as at any subsequent date.
This announcement has been prepared for the purposes of
complying with applicable law and regulation in the United Kingdom
and the information disclosed may not be the same as that which
would have been disclosed if this announcement had been prepared in
accordance with the laws and regulations of any jurisdiction
outside of the United Kingdom.
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
In connection with the Rights Issue, HSBC, JPMS and Standard
Bank (together, the "Joint Bookrunners") and any of their
affiliates, may take up a portion of the Nil Paid Rights, Fully
Paid Rights, Letters of Allocation or New Shares in the Rights
Issue as a principal position and in that capacity may retain,
purchase, sell, offer to sell for their own accounts such Nil Paid
Rights, Fully Paid Rights, Letters of Allocation or New Shares and
other securities of the Company or related investments in
connection with the Rights Issue or otherwise. Accordingly,
references in the Prospectus, once published, to the Securities
being issued, offered, subscribed, acquired, placed or otherwise
dealt in should be read as including any issue or offer to, or
subscription, acquisition, placing or dealing by, the Joint
Bookrunners and any of their affiliates acting as investors for
their own accounts. The Joint Bookrunners do not intend to disclose
the extent of any such investment or transactions otherwise than in
accordance with any legal or regulatory obligations to do so.
This announcement, and the information referred to in it,
includes forward-looking statements. All statements other than
statements of historical fact included in this announcement and the
information referred to in it, including without limitation those
regarding Lonmin's plans, objectives and expected performance, are
forward-looking statements. Lonmin has based these forward-looking
statements on its current expectations and projections about future
events, including numerous assumptions regarding its present and
future business strategies, operations, and the environment in
which it will operate in the future. Forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "may", "will", "could", "would", "expect",
"intend", "estimate", "anticipate", "believe", "plan", "aim" or
"continue", or, in each case, their negative, or other variations
or comparable terminology. Such forward-looking statements involve
known and unknown risks, uncertainties, assumptions and other
factors related to Lonmin, including, among other factors: (1)
material adverse changes in economic conditions generally or in
relevant markets or industries in particular; (2) fluctuations in
demand and pricing in the mineral resource industry and
fluctuations in exchange rates; (3) future regulatory and
legislative actions and conditions affecting Lonmin's operating
areas; (4) obtaining and retaining skilled workers and key
executives; and (5) acts of war and terrorism. By their nature,
forward-looking statements involve risks, uncertainties and
assumptions and many relate to factors which are beyond Lonmin's
control, such as future market conditions and the behaviour of
other market participants. Actual results may differ materially
from those expressed in forward-looking statements. Given these
risks, uncertainties, and assumptions, you are cautioned not to put
undue reliance on any forward-looking statements. In addition, the
inclusion of such forward-looking statements should under no
circumstances be regarded as a representation by Lonmin that Lonmin
will achieve any results set out in such statements or that the
underlying assumptions used will in fact be the case. Other than as
required by applicable law or the applicable rules of any exchange
on which Lonmin's securities may be listed, Lonmin has no intention
or obligation to update or revise any forward-looking statements
included in this announcement after the publication of this
announcement.
NOT FOR RELEASE, PUBLICATION, FORWARDING OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR WITHIN THE
UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD BE UNLAWFUL. THIS ANNOUNCEMENT IS AN
ADVERTISEMENT AND NOT A PROSPECTUS. PLEASE SEE THE IMPORTANT
NOTICES ABOVE.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND DOES NOT CONSTITUTE A
PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT. NOTHING HEREIN SHALL
CONSTITUTE AN OFFERING OF ANY SECURITIES. ANY DECISION TO PURCHASE,
SUBSCRIBE FOR, OTHERWISE ACQUIRE, SELL OR OTHERWISE DISPOSE OF ANY
NIL PAID RIGHTS, FULLY PAID RIGHTS, LETTERS OF ALLOCATION AND/OR
NEW SHARES MUST BE MADE ONLY ON THE BASIS OF THE INFORMATION
CONTAINED IN AND INCORPORATED BY REFERENCE INTO THE PROSPECTUS ONCE
PUBLISHED.
9 November 2015
LONMIN PLC
46 FOR 1 RIGHTS ISSUE OF 26,997,717,400 NEW SHARES AT 1.00 PENCE
OR ZAR 0.214 PER NEW SHARE
INTRODUCTION
On 21 October 2015, Lonmin announced that it proposed to
undertake a Rights Issue to raise approximately US$407 million in
gross proceeds. Today, the Group has entered into conditional
Amended Facilities Agreements with its existing lenders, which the
Directors believe, together with the Rights Issue and the Group's
Business Plan, will put the Group in a stronger financial position
and enable it to deal with the low PGM pricing environment, whilst
at the same time preserving the long-term value of the Group.
The Rights Issue, which is conditional on, amongst other things,
Shareholder approval, will be made to all Qualifying Shareholders
on the terms set out in the Prospectus, expected to be published
today, and will be on the basis of 46 New Shares at 1.00 pence per
New Share or, in the case of Qualifying South African Shareholders,
ZAR 0.214 per New Share, for every 1 Existing Share held on the
relevant Record Date by Qualifying Shareholders. The Rights Issue
will involve the issue of 26,997,717,400 New Shares, representing
approximately 4,600 per cent. of the Company's share capital in
issue as at the date of this announcement.
The UK Issue Price of 1.00 pence per New Share represents a
24.50 per cent. discount to the theoretical ex-Rights price based
on the closing middle market price of 16.25 pence per Share, and a
93.85 per cent. discount to the closing middle market price, in
each case on 6 November 2015, the last business day prior to the
date of the Prospectus. The SA Issue Price of ZAR 0.214 per New
Share represents a 25.96 per cent. discount to the theoretical
ex-Rights price based on the closing price of ZAR 3.74 per Share,
and a 94.28 per cent. discount to the closing price, in each case
on 6 November 2015, the last business day prior to the date of the
Prospectus.
The Rights Issue is being underwritten (save in respect of those
New Shares which the Directors have irrevocably undertaken to take
up) by HSBC, J.P. Morgan Cazenove and Standard Bank.
The Public Investment Corporation, which holds approximately
seven per cent. of the issued share capital of Lonmin, has
irrevocably committed to take up its entitlement in full in the
Rights Issue and has sub-underwritten a material portion of the
Rights Issue in excess of its entitlement.
The purpose of this announcement is to explain to you the
background to and reasons for the Rights Issue and to explain why
the Directors consider that the Rights Issue is in the best
interests of the Company and Shareholders as a whole and why the
Directors recommend that Shareholders vote in favour of the
Resolutions to be proposed at the General Meeting on 19 November
2015 at 9:30am (London time) to facilitate the Rights Issue. This
announcement contains extracts from the Prospectus, which extracts
are qualified and/or contextualized by, and should be read with,
the Prospectus.
BACKGROUND TO AND REASONS FOR THE RIGHTS ISSUE
1. Introduction
The Group is the third largest primary producer of platinum in
the world, with mines located in the Bushveld Igneous Complex in
South Africa, which according to the SFA Report contains
approximately 70 per cent. of the world's known platinum resources
and is projected to account for over half of the global primary
supply of PGMs in 2015. The Group operates a vertically integrated
business model with an established infrastructure. The Directors
believe that the average depth of the Group's current mining
activities is shallower than that of the Group's principal
competitors in South Africa and that there is a cost advantage in
mining at shallower depths from decreased underground air-cooling
requirements and transit times, lower electricity consumption and
lower capital costs. The Group's mineral resources provide a source
of supply that is expected to last for decades at its current and
anticipated future rates of mining.
The Group's business model remains to create long-term value for
Shareholders through the discovery, extraction, refining and
marketing of PGMs through the economic cycle.
The Directors are confident in the potential of the Group, with
its high-quality asset base and long-term mining rights, and in the
medium to long-term fundamentals of the PGM industry. The Group is
highly geared to the PGM pricing environment and to the Rand/US
dollar exchange rate. In addition to the operational and cost
containment achievements of the Group over the last twelve months,
the Directors have determined that the Group needs to take further
decisive measures to improve its ability to operate in the current
PGM pricing environment and to enable the Group to benefit from any
recovery in PGM prices in the medium to long term.
2. Recent events
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
The 2014 Strike Action reduced the Group's sales of metal below
levels previously expected, such that significant fixed costs could
not be recovered as production effectively stopped for
approximately five months. The impact of the 2014 Strike Action was
exacerbated by weakness in the PGM pricing environment, which
further deteriorated during the year ended 30 September 2015. As a
result, the Group has experienced operating losses in each of the
last two financial years, which has resulted in a deterioration in
the Group's net debt position. The Group had operating losses of
US$2,018 million (including a special impairment charge of US$1,811
million related to the Group's Marikana, Akanani and Limpopo assets
largely driven by a decline in long-term PGM price assumptions and
changes in assumptions regarding production levels and other
factors under the Business Plan) and US$255 million for the years
ended 30 September 2015 and 2014, respectively, and had net debt
(defined as current and non-current interest bearing loans and
borrowings less cash and cash equivalents) of US$185 million and
US$29 million as at 30 September 2015 and 2014, respectively.
Moreover, as at 30 September 2015, the Group had total
contractual obligations and commercial commitments due within one
year of US$567 million, which comprised primarily US$360 million
due in May 2016 under the Group's Existing US Dollar Facility and
US$143 million due in June 2016 under the Group's Existing Rand
Facilities. In addition, in the course of negotiations regarding
the Amended Facilities Agreements and in consideration for the
Group's existing lenders agreeing to suspend the testing of the
tangible net worth covenants under the Existing Facilities, on 26
October 2015 the Group agreed not to transfer cash held by the
Company to its operating subsidiaries until 20 November 2015 (which
is expected to be the effective date of the Amended Facilities
Agreements, provided that all of the Resolutions are passed by
Shareholders and the Rights Issue proceeds).
3. Response to changing circumstances
In order to address these risks and to improve the Group's
ability to operate in a low PGM pricing environment and position
the Group to benefit from any recovery in PGM prices in the medium
to long term:
-- the Group has adopted the Business Plan, which the Directors
believe provides an appropriate basis for the
Group to continue to focus on its objective of reducing costs
and improving cash flows;
-- companies in the Group have entered into the Amended
Facilities Agreements with the Group's existing
lenders, so as to extend the maturity of the Existing US Dollar
Facility and Existing Rand Facilities to May 2020
(in each case, assuming Lonmin exercises its option to extend
the term up until this date); and
-- Lonmin is undertaking the Rights Issue.
The Directors believe that the receipt of proceeds from the
Rights Issue, when taken together with the implementation of the
Business Plan and the Amended Facilities Agreements, will
strengthen the Group's financial position.
The Amended Facilities Agreements were signed on 9 November
2015, but remain conditional on the Underwriting Agreement becoming
wholly unconditional and satisfaction of customary conditions
precedent (including payment of fees and expenses and delivery of
certificates and other documents). The Amended Facilities
Agreements provide for (i) an extension of maturity of the Existing
US Dollar Facility from May 2016 to May 2020 (assuming Lonmin
exercises its option to extend the term up until this date) and a
reduction in the amount of the Amended US Dollar Facilities to
US$225 million (as compared to US$360 million for the Existing US
Dollar Facility); and (ii) an extension of maturity of the Existing
Rand Facilities from June 2016 to May 2020 (assuming Lonmin
exercises its option to extend the term up until this date).
4. The Business Plan
The Directors believe that the low PGM pricing environment,
which has weakened further in 2015, may continue to prevail in the
short to medium term. The Directors have reviewed the Group's
business and capital structure and developed a comprehensive
response incorporating necessary protective measures, whilst
maintaining the Group's ability to increase production in the
future, with the aim of safeguarding the long-term interests of
Shareholders, employees and other key stakeholders.
The Directors have undertaken a detailed assessment of the
Group's cost structure, shaft profitability and capital
requirements in order to establish an appropriate structure for the
Group to operate in the continuing low PGM pricing environment.
This comprehensive exercise has focused on factors that are within
the Group's control, whilst seeking to preserve the integrity of
the Group's operations. Overall, the Business Plan focuses on:
-- reducing fixed cost expenses by reducing the size of the
Group's workforce and reducing overhead costs and
support service structures;
-- removing high-cost PGM production ounces which no longer meet
their marginal cost of production and,
importantly, eliminating associated fixed and variable
costs;
-- reducing capital expenditure to the minimum required to
sustain the efficient running of the Group's
operations whilst satisfying regulatory and safety standards and
limiting the number of development projects
for the continuing shafts;
-- maintaining operational and strategic flexibility through
sufficient immediately available ore reserves;
-- creating, preserving and enhancing long-term equity value by
retaining long-term expansion opportunities; and
-- continuing to improve relationships with key stakeholders.
In response to the low PGM pricing environment, the Directors
have accelerated the implementation of the Group's published
strategy of ultimately operating only its large, long-life and
low-cost shafts. As described below, the Business Plan aims to
maintain broadly flat unit costs per PGM ounce in nominal terms for
the next three financial years (as compared to the year ended 30
September 2015).
SRK Consulting (UK) Ltd was commissioned by Lonmin to undertake,
inter alia, an independent technical review of the Business Plan.
In its report, SRK Consulting (UK) Ltd provides assurances to the
Board of Directors of the Company that the ore reserves and the
technical-economic assumptions underlying the Business Plan
(including forecasts of production, operating expenditure and
capital expenditure), as provided by the Company and reviewed (and,
where appropriate, modified) by SRK Consulting (UK) Ltd, are
reasonable, given the information currently available.
4.1 Reducing fixed cost expenses
4.1.1 Reducing the size of the Group's workforce
As a result of reduced profitability, the Group has announced a
retrenchment programme and has embarked on a section 189
consultation process with relevant stakeholders. As at 6 November
2015, approximately 2,120 employees (leaving through the voluntary
separation programme that was launched in May 2015) and 1,016
contractors had left the Group, which should result in a large
reduction of overhead costs. In total, approximately 6,000
employees, including contractors, are expected to leave the Group
by 30 September 2016 and the Directors expect additional employees
and contractors to leave the Group by 30 September 2017 in
connection with the planned closure and placement on care and
maintenance of shafts. The Group charged special costs of US$59
million for the year ended 30 September 2015 related to the one-off
retrenchment and associated restructuring costs that the Group
expects to incur in connection with these departures.
The Group employed approximately 38,000 people, including
contractors, as at 30 September 2014 and through the South African
Chamber of Mines is a signatory to the Mining Leadership
Declaration Agreement to limit job losses. It is the Directors'
objective to protect the majority of those jobs over the long term
by ensuring that the Group can deal with the sustained low pricing
PGM environment.
The Group continues to work closely with key stakeholders,
particularly its unions and the South African government, in
connection with the planned workforce reductions. The relationship
charter established between the Group and AMCU during 2014 has been
a useful reference point in the section 189 consultation process.
In the interests of ensuring timely consultations, the Group has
undertaken two consultation processes within the section 189
legislative framework in parallel-one with AMCU, the Group's
majority union, and one with the other unions and non-unionised
employees. Both processes are being facilitated by the South
African Commission for Conciliation, Mediation and Arbitration. The
consultation period was extended by mutual agreement of all
relevant stakeholders to enable full exploration of all
alternatives to forced retrenchments. The formal consultation
process with AMCU ended on 22 October 2015, and the Group is now in
the process of finalising the voluntary separations and
redeployment. In the event that there is an insufficient number of
voluntary separations and redeployment, forced retrenchment may
occur, and any forced retrenchment is expected to be phased over a
period of time. The Group continues to work closely with all key
stakeholders during this process.
4.1.2 Reducing overhead costs and support service structures
The Group is reducing overhead costs and support service
structures at least in line with the reduction in the size of the
Group's operations. The closure and placement on care and
maintenance of the shafts outlined below will result in the removal
of associated overhead costs, including the decommissioning of a
concentrator.
In addition, the Directors expect to implement the following
measures as part of the fixed cost expenses reduction element of
the Business Plan:
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
-- the waiver of cash annual bonuses to management level
employees for the year ended 30 September 2015,
resulting in a cost reduction of ZAR120 million for the year
ended 30 September 2015. In addition, no salary
increases have been granted for the year ending 30 September
2016. Moreover, the Group is in the process of
revising its bonus and incentive schemes for the year ending 30
September 2016 with the aim of ensuring that
cash payments under such schemes are self-funding in the current
low PGM pricing environment through
productivity and efficiency improvements;
-- the reduction of marketing and promotional expenses, as well
as discretionary spending on training. In
addition, the Group is in discussions with Platinum Guild
International and World Platinum Investment Council
to reduce the marketing costs the Group incurs by up to 30 per
cent.; and
-- the amalgamation, in the pursuit of operational and
administrative efficiencies, of EPL and WPL into a single
operating entity. The elimination of royalty payments by EPL to
the Bapo Community from December 2014 has
enabled this simplification to be achievable.
4.2 Removing high-cost production
Following a shaft-by-shaft analysis, the Directors have decided
to reduce high-cost PGM production ounces to improve the Group's
profitability and cash flows. Specifically, the Directors have
decided to take the following actions.
-- Planned orderly closure and placement on care and maintenance
of the Hossy shaft: There has been significant improvement over the
last twelve months at the Hossy shaft in productivity and in the
relationship with employees. However, the Hossy shaft remains the
Group's highest cost Generation 2 Shaft and the Directors have
concluded that in the prevailing low PGM pricing environment the
shaft has no prospect of self-funding its direct mining and
processing costs and direct capital expenditure. The Directors plan
to implement the closure and placement on care and maintenance of
the Hossy shaft in an orderly manner over the next two financial
years, allowing the Group to continue to use the immediately
available ore reserves that have been built up at the shaft during
its turnaround, whilst limiting capital expenditure to essential
levels.
-- Planned orderly closure and placement on care and maintenance
of the Newman shaft: Whilst the Newman shaft has remained
profitable despite the low PGM pricing environment, the shaft is
nearing the end of its life and the capital expenditure required to
extend its life ranks below other projects in the Group's capital
allocation programme. The Directors plan to implement the closure
and placement on care and maintenance of the Newman shaft in an
orderly manner over the next financial year, allowing the Group to
continue to use immediately available ore reserves at the shaft,
whilst limiting capital expenditure to essential levels.
-- Closure and placement on care and maintenance of the 1B
shaft: Overall, the 4B/1B combined shaft has remained profitable
despite the weak PGM pricing environment. However, the 1B part of
the shaft has produced high-cost ounces and the Directors expect
that its closure and placement on care and maintenance will result
in improved performance metrics as direct and associated costs are
removed.
-- On-going assessment of certain Generation 1 Shafts: As part
of the response to prolonged weakness in PGM prices, the Group
previously announced plans to put on care and maintenance two of
its Generation 1 Shafts, namely, the E1 and W1 shafts, which are
managed by contractors. These shafts were operating only at
break-even levels and not generating significant cash.
Subsequently, the Group engaged with the contractor managing these
shafts and the contractor has proposed a plan that the Directors
believe will be cash generative. In light of this development, the
Group is renegotiating the ore purchase agreement with the
contractor to include more favourable terms which, if concluded and
subject to a favourable outcome of the Section 189 Consultation
Process, the Directors believe will allow mining at these shafts to
continue for the year ending 30 September 2016. The Directors plan
to reassess the viability of continuing to mine these shafts at the
end of the year ending 30 September 2016.
-- K4 shaft to remain on care and maintenance: The Directors
have concluded that the K4 shaft should remain on care and
maintenance and that all related capital expenditure in respect of
that shaft should be suspended. The Directors believe that K4
continues to be one of the Group's best projects in South Africa
and plan to reopen the shaft when market conditions improve.
The Directors expect the implementation of the Business Plan to
result in a reduction of approximately 100,000 platinum ounces in
the Group's normalised annual production over the next two
financial years as high-cost production at certain shafts is wound
down, with a concomitant reduction in staffing and overhead levels.
The Directors expect that the sales profile for the Group will be
approximately 700,000 platinum ounces for the year ending 30
September 2016 and approximately 650,000 platinum ounces for each
of the years ending 30 September 2017 and 2018.
The Directors believe that the Group has already started to
benefit from the implementation of the Business Plan initiatives.
The Directors believe that the implementation of the Business Plan,
including the reduction in the size of the Group's workforce and in
overhead costs and support service structures detailed above, will
result in a cost reduction of approximately ZAR0.7 billion in real
terms in the year ending 30 September 2016 (as compared to the
annual cost base for the year ended 30 September 2015) and a
further cost reduction of approximately ZAR1.6 billion in real
terms in the year ending 30 September 2017 (as compared to the
forecast annual cost base for the year ending 30 September 2016),
thereby potentially improving the Group's cost per PGM ounce
produced in comparison with some competitors. The Group's unit cost
per PGM ounce produced was ZAR10,339 per PGM ounce for the year
ended 30 September 2015 and the Group aims to keep its unit costs
in nominal terms broadly flat for the years ending 30 September
2016, 2017 and 2018. Based on current information, the SFA Report
forecasts that for 2015 the Group's position on the South Africa
PGM industry cost curve (net total cash costs per 3PGE + Au ounce)
should improve to the second quartile. The Directors believe that
such an improvement in the effectiveness of the Group's operations
will help improve the Group's ability to operate in a low PGM
pricing environment and will position the Group to benefit from any
recovery in PGM prices in the medium to long term.
4.3 Reducing capital expenditure
A comprehensive assessment of capital projects has been
undertaken by the Group's management. Planned capital expenditure
for the next two financial years has been limited to:
-- capital expenditure sufficient to keep the Group's existing
assets in operation and to comply with legislative, environmental
and social responsibility requirements,
-- ore reserve development capital expenditure sufficient to
ensure that immediately available ore reserves continue
to be available to support planned production; and
-- expansion capital expenditure for a limited number of development projects.
Capital portfolio optimisation tools have been used with the aim
of ensuring that capital expenditure is invested only in the most
valuable ore reserve development and expansion projects that are
available to the Group. Although certain ore reserve development
and expansion projects have been deferred, thereby reducing the
discounted value of certain of the Group's shafts and their
associated projected revenue streams, the Directors believe that
this is a necessary measure in order to improve the Group's cash
flows and liquidity in the short term.
Pursuant to the Business Plan, the Group expects to limit its
total capital expenditure to approximately US$132 million and
US$110 million for the years ending 30 September 2016 and 2017,
respectively. Based on current information, the Group anticipates
that its capital expenditure for the year ending 30 September 2018
will increase to approximately US$188 million, as the Group's
investments in stay-in-business and ore reserve development capital
expenditure are expected to increase.
A large portion of the planned ore reserve development capital
expenditure is for the development of the Middelkraal resource that
the Group plans to extract via its existing, profitable Rowland
shaft, as well as the further deepening of the existing, profitable
K3 shaft. The Directors believe that a continued investment in
these projects will enable the hoisting capacity of these shafts to
be fully used for an extended period and to maintain their low unit
costs.
The Group's planned capital expenditure also includes expansion
capital expenditure for the Group's bulk tailings treatment ("BTT")
project which was deferred earlier in the year ended 30 September
2015. The BTT project entails the re-mining of a tailings dam to
extract chrome and contained PGMs. The BTT project is expected to
be mined by a contractor over a seven-year period with the first
tonnes expected in the latter half of the year ending 30 September
2017. The chrome is expected to be recovered in a new chrome spiral
plant and the contained PGMs are expected to be recovered in the
Group's Number One Furnace. The Group is in the process of securing
third-party funding for the conversion of the concentrator and the
establishment of the slurry pipeline that will be required.
Approximately US$29 million and US$14 million are included for the
BTT project in the total planned capital expenditure for the years
ending 30 September 2016 and 2017, respectively.
4.4 Maintaining operational and strategic flexibility through
sufficient immediately available ore reserves
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
The Directors intend to maintain a clear strategic focus on the
Group's mineral resources and mining and processing infrastructure
at Marikana, which has seen considerable investment in recent
years, with US$388 million of capital expenditure incurred in
aggregate in the years ended 30 September 2015, 2014 and 2013 for
the Group's total operations. The expenditure of recent years has
resulted in an improvement in the rate of ore reserve development
and, as at 30 September 2015, the Group had immediately available
ore reserves equating to approximately 22 months of mining under
normal operating and market conditions, which the Directors believe
provides the Group with operational and strategic flexibility. The
Group plans to reduce the rate of development for the years ending
30 September 2016 and 2017 as part of its cost saving initiatives
under the Business Plan.
4.5 Retaining long-term expansion opportunities
In the longer term, the Directors believe that the Group has a
number of attractive brownfield expansion opportunities that can be
developed when the PGM pricing environment improves, including the
K4 project and the Pandora E3 and E4 deepening projects. As at 30
September 2015, these projects had in aggregate 30.5 million ounces
of mineral resources of platinum, palladium, rhodium and gold,
including 18.7 million ounces of platinum resources.
4.6 Continuing to improve relationships with key stakeholders
The Group plans to continue to focus on improving relationships,
and promoting the alignment of interests, with its key
stakeholders. The Directors believe that the Group has been
successful in improving its relationship with its employees, the
unions that represent its employees and the communities in
localities where the Group operates. A major component of the
Group's approach is to continue to engage with all key stakeholders
on a regular basis and to proactively participate in industry-led
initiatives. The Directors believe that the successful completion
of the three BEE transactions announced on 26 November 2014 and 4
December 2014, which resulted in an increase in the shareholding of
the Group's employees, local communities and the Bapo Community in
WPL and EPL and the issue of shares in the Company to the Bapo
Community, has also contributed to better alignment of interests
with key stakeholders.
5. Historical background and the Group's achievements under difficult circumstances
5.1 The 2012 rights issue and renewal plan
In 2012, following the tragic Events at Marikana, Lonmin
developed a renewal plan aimed at extracting the Group's long-life,
high-quality resources and raised total proceeds of US$767 million
(after costs and loss on settlement of forward exchange contracts)
through a rights issue. The 2012 rights issue was expected
(alongside amendments to the Group's debt facilities, which were
entered into at the same time) to stabilise the Group's financial
position by reducing its level of indebtedness and increasing its
balance sheet strength. The renewal plan set out a strategy of
modest capital expenditure in the short term, followed by large
capital investment to materially increase the Group's production
capacity in the medium to long term, when a sustained improvement
in PGM demand and pricing was expected to occur. In particular,
Lonmin expected to increase the Group's capital expenditure to
develop a number of its main, large shafts (namely K4, Hossy and
Saffy) and to undertake certain processing projects. From the net
proceeds of the 2012 rights issue, the Group repaid the outstanding
balance of its committed facilities during the year ended 30
September 2013 and the remaining balance of the net proceeds was
used to fund working capital and capital expenditure. Following the
Events at Marikana, the Group successfully ramped up production and
maintained operational momentum through to December 2013. The Group
generated EBITDA of US$304 million for the year ended 30 September
2013, as the Group established strong immediately available ore
reserves and excellent operational performance.
5.2 The 2014 Strike Action and sustained weakness in PGM prices
Beginning in January 2014, the Group experienced a five-month
strike action by members of AMCU, which also affected the two other
largest PGM producers in South Africa. The 2014 Strike Action
disrupted the Group's production from January to June 2014,
resulting in the Group losing an estimated 391,000 equivalent
saleable platinum ounces, and had a severe impact on the Group's
results of operations for the year ended 30 September 2014, with
the Group incurring special costs of US$307 million. On 24 June
2014, a wage agreement effective until 30 June 2016 was reached for
a return to work. A relationship charter was also established with
AMCU including a commitment from AMCU that there would be no
further industrial action in respect of the issues covered by and
ancillary to the wage agreement.
The impact of the 2014 Strike Action has been exacerbated by
sustained weakness in the PGM pricing environment.
5.3 Achievements under difficult circumstances
Despite these difficult circumstances, the Directors believe
that the Group has made a number of notable achievements in recent
periods by managing variables that are within the Group's
control.
-- Successful post-2014 Strike Action ramp-up: In anticipation
of the end of the 2014 Strike Action in June 2014, management
planned and applied a disciplined approach to the safe and
successful ramp-up in production. The Group achieved a successful
ramp-up to normal production within two months of the end of the
strike, which the Directors believe was faster than the Group's
principal competitors in South Africa, due to a combination of
early planning, good working relationships and the Group's strong
immediately available ore reserves. In particular, the Group
prioritised re-starting the most cash generative shafts first.
-- Operational and cash preservation achievements: The Directors
believe that the Group has had a number of notable operational
achievements, including the following.
o The Group aspires to operate to the safest standards and
achieved a South African industry record of a
period of 18 months without a fatality from November 2013 to
April 2015. The Group subsequently
experienced a setback between May and October 2015 as four
employees died as a result of injuries
sustained in separate incidents with no common cause or factor.
The Group continues to focus on safety
training and improving safety performance.
o The Group has focused its resources into developing its larger
Generation 2 Shafts, particularly at the Saffy
shaft. Additional stoping crews were deployed to Saffy from
depleting shafts and its immediately available
ore reserves have been increased. The shaft has reached steady
state, as planned, by 30 September 2015,
with consequently improved efficiency and reduced unit costs for
the shaft and the Group.
o The Group produced 759,695 platinum ounces for the year ended
30 September 2015, its highest
production in eight years, against market guidance of 750,000
platinum ounces. The Group also achieved
sales of 751,560 platinum ounces for the year ended 30 September
2015, above market guidance of 730,000
platinum ounces.
o The underlying unit cost per PGM ounce at ZAR10,339 per PGM
ounce for the year ended 30 September
2015 was achieved, well within the original market guidance of
ZAR10,800 per PGM ounce, as a result of the
robust cost containment measures undertaken by the management
team. Based on current information,
the SFA Report forecasts that for 2015 the Group's position on
the South Africa PGM industry cost curve (net
total cash costs per 3PGE + Au ounce) should improve to the
second quartile, having shifted from the third
quartile since 2013.
o The Group has effectively contained its capital expenditure in
a liquidity constrained environment and
successfully reduced its capital expenditure for the year ended
30 September 2015 to US$136 million (as
compared to its initial guidance of US$250 million).
o The Group has maintained healthy immediately available ore
reserves. As at 30 September 2015, the Group
had immediately available ore reserves equating to approximately
22 months of mining under normal
operating and market conditions.
o The Group has maintained the resilience of its processing
plants and its concentrators continue to achieve
levels of PGM recoveries which are amongst the best in the
Group's history and, the Directors believe, the
South African PGM industry. The Directors believe that the Group
has also benefited from the flexibility its
smelter capacity provides.
o The Group announced in 2014 that it aimed to achieve ZAR2
billion of value benefits over the three years
ending 30 September 2017, of which approximately ZAR526 million
of net value benefits have already been
achieved in the year ended 30 September 2015. The Directors
believe that this demonstrates the focused
cost management actions that have been undertaken by the Group.
The Group continues to look at ways of
enhancing efficiencies and productivity. Despite a challenging
labour landscape, the Group's retrenchment
programme has remained on schedule and as at 6 November 2015
approximately 2,120 employees (leaving
through the voluntary separation programme that was launched in
May 2015) and 1,016 contractors had left
the Group.
-- Empowerment achieved: On 26 November 2014 and 4 December
2014, the Group announced that it had
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
successfully completed three BEE transactions, thus achieving
the target of 26 per cent. HDSA ownership in line with the
requirements of the Mining Charter. These empowerment transactions
are aligned with the Group's commitment and values to support the
improvement and development of the communities where the Group
operates, as well as to align the interests of employees and host
communities with those of Shareholders. In connection with the Bapo
Transaction, the Bapo Community was granted the opportunity to
participate in ZAR200 million of the Group's procurement and
business value-chain activities. Separately the Group has engaged
in a range of activities and initiatives with its employees and
local communities, which are aimed at improving the lives of its
employees, their families and communities. The Directors believe
that the Group has been successful at maintaining on-going
engagement with community leaders to ensure alignment on safety and
sustainability issues that affect all stakeholders.
-- Employee relationships: The Group has focused on drawing on
lessons learned from the 2014 Strike Action to engage and rebuild
relationships with employees and unions, thereby reducing the risk
of prolonged and reoccurring industrial action. Management has
increased its efforts to engage directly with employees as it
strives to reclaim its role as the primary source of communication.
Initiatives such as cultural surveys are being rolled out in an
attempt to promote better alignment. The Group's employees hold a
3.8 per cent. equity interest in EPL and WPL, the Group's principal
operating companies in South Africa, through an employee profit
share scheme, which the Directors believe aligns more closely the
interests of employees and Shareholders.
The Group has initiated a relationship building programme with
its unions. The Group and its majority union,
AMCU, have together established a relationship charter which
outlines the nature of the relationship that the
parties aim to build. The Directors believe that this has
significantly improved the sharing of information, aided
understanding and improved the interaction between the Group and
its unions. The Group also participates in
industry-wide initiatives and is part of the mining leadership
declaration agreement which aims to minimise
section 54 production disruptions.
-- Work with government and communities: The rebuilding and
protection of the Group's relationships with key stakeholders is
important and has received significant attention from the
management team. Whilst this is an on-going process, there have
been some worthwhile achievements-for example, the Group donated 50
hectares of its property to the South African government for the
building of accommodation for local community members and employees
and has made significant progress including the building of infill
apartments.
5.4 Fulfilling the Group's social licence to operate
Alongside the Group's legal and regulatory obligations, the
Directors believe that it is necessary to earn its social licence
to operate from the people and communities which host its
operations. The Group has therefore over the years, engaged with
and invested in its local communities. The Group's New Order Mining
Rights include detailed obligations set out in social and labour
plans agreed with the DMR. The Group is also required to achieve a
compliance level of at least 26 per cent. of ownership by HDSAs
under the Mining Charter and to comply with certain obligatory
targets under the Mining Charter.
For over 20 years, the Group paid royalties into a trust fund on
behalf of the Bapo Community. The royalty stream was subsequently
converted into equity ownership as part of the three BEE
transactions which were announced on 26 November 2014 and 4
December 2014. In connection with the Bapo Transactions, the Bapo
Community was also granted the opportunity to participate in ZAR200
million of the Group's procurement and business value-chain
activities. The Bapo Community therefore forms an important part of
the Group's HDSA ownership profile which is an important aspect of
maintaining the Group's mining licences and building sustainable
relationships with the communities that host its operations.
Lonmin believes in developing leadership in the communities in
which it operates. For example, the Group has invested in local
schools, in the belief that education has the power to transform
lives and that the money earned by those who attend the schools
will ultimately flow through to the benefit of other community
members. The Group also has an active bursary programme supporting
students at university and is proud that approximately 50 per cent.
of the students it supports and sponsors have been drawn from the
local community.
6. Market dynamics
6.1 Strong long-term PGM fundamentals
PGMs have a wide range of industrial and technological
applications as a result of their physical and chemical properties
and the Directors believe that the well-established performance of
PGMs across numerous technical applications poses a significant
technological challenge to substitution.
The largest application for PGMs is in the manufacture of
catalytic converters in which one or more of platinum, palladium
and rhodium are coated onto a substrate housed in the exhaust
system of internal combustion engines and act as catalysts to
reduce emitted levels of carbon monoxide, hydrocarbons and oxides
of nitrogen to within legislated levels. Over 85 per cent. of all
new on-road vehicles sold globally each year are fitted with
catalysts containing PGMs, according to the SFA Report. Gross
autocatalyst demand for platinum is expected to increase over the
long term, driven primarily by the roll-out and further tightening
of emissions standards in emerging markets and increases in the
sales of diesel cars in India and in light commercial vehicles and
heavy-duty diesel vehicles outside Western Europe, the United
States, India and Japan, according to the SFA Report. Assuming
fallout from the recent Volkswagen diesel scandal is contained and
steady economic growth continues, Western Europe, with its high
diesel share and stringent emissions standards, is expected to
continue to be the main contributor to autocatalyst demand,
according to the SFA Report.
The jewellery industry comprises another significant source of
demand for PGMs, principally platinum. China is the world's largest
platinum jewellery market, as well as home to much of the global
jewellery manufacturing capacity and, therefore, demand for PGMs is
affected by economic, social and political conditions and other
factors affecting levels of consumer spending in China. The SFA
Report forecasts that India should become the world's second
largest platinum jewellery market by later this decade. Overall,
global platinum jewellery consumption is expected to remain
relatively steady over the coming years, cushioned by the
resilience of the long-established markets of Japan, the United
States and Europe, according to the SFA Report.
Significant demand for PGMs also comes from a variety of
industrial applications, including their use in the magnetic layers
of hard-disk drives, in the manufacture of speciality glass such as
flat screen televisions and in catalytic processes in the
petroleum, agrochemical and chemical industries. Demand for
industrial uses of PGMs has been, and is likely to continue to be,
reliant to a large degree on general macroeconomic conditions.
Industrial demand is expected to increase over the long term as a
result of demographic trends along with rising per capita wealth
and urbanisation in emerging markets, according to the SFA
Report.
Overall, the SFA Report forecasts a long-term PGM supply deficit
driven primarily by expected PGM mineral reserve depletion
affecting primary supply from South Africa and expected demand
growth due primarily to the roll-out and further tightening of
emissions standards in emerging markets and increases in the sales
of diesel cars in India and in light commercial vehicles and
heavy-duty diesel vehicles outside Western Europe, the United
States, India and Japan.
In light of the above, the Directors continue to believe in the
medium to long-term fundamentals for platinum and other PGMs and
expect prices to improve in the medium to long term. The Directors
believe that the Business Plan will enable the Group to become a
more efficient business that can better sustain continued weakness
in PGM prices and will better position the Group to benefit from
any recovery in PGM prices in the medium to long term.
6.2 The Group's operational exposure to PGM pricing and foreign exchange movements
The Group's policy is not to hedge commodity price exposure on
PGMs, excluding gold, and therefore any change in prices has a
direct effect on the Group's results of operations. The following
table sets forth the effects on the Group's operating profit of a
10 per cent. movement in the average metal prices achieved by the
Group in the year ended 30 September 2015 for platinum (US$1,095
per ounce), palladium (US$718 per ounce) and rhodium (US$998 per
ounce).
Year ended 30 September 2015
---------------------------------
Platinum Palladium Rhodium
---------- ---------- ---------
Impact on operating
profit of 10
per cent. movement
in average price +/- US$82 +/- US$25 +/- US$9
achieved................ million million million
These sensitivities are estimated calculations based on costs
incurred and volumes sold in the period and assume all other
variables, including foreign exchange rates, remain constant.
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
In addition, the Group's trading results are sensitive to
fluctuations in foreign exchange rates, specifically between the US
dollar and the Rand. The majority of the Group's revenues are
derived from sales denominated in US dollars, whilst the majority
of the Group's operating costs, capital expenditure and taxes are
paid in Rand. Therefore, a strengthening of the Rand against the US
dollar has an adverse effect on profits and margins. A 10 per cent.
movement in the Rand to US dollar average exchange rate in the year
ended 30 September 2015, which was ZAR12.01 to US$1.00, would have
impacted the Group's underlying operating profit by (+/-) US$111
million for the year ended 30 September 2015. These sensitivities
are estimated calculations based on prices achieved, costs incurred
and volumes sold in the period and assume all other variables
remain constant.
7. Amended Facilities Agreements
Companies in the Group entered into the Amended Facilities
Agreements with the Group's existing lenders on 9 November 2015.
The Amended Facilities Agreements provide for (i) an extension of
maturity of the Existing US Dollar Facility from May 2016 to May
2020 (assuming Lonmin exercises its option to extend the term up
until this date) and a reduction in the amount of the Amended US
Dollar Facilities to US$225 million (as compared to US$360 million
for the Existing US Dollar Facility); and (ii) an extension of
maturity of the Existing Rand Facilities from June 2016 to May 2020
(assuming Lonmin exercises its option to extend the term up until
this date). The Amended Facilities Agreements remain conditional on
the Underwriting Agreement becoming wholly unconditional and
satisfaction of customary conditions precedent (including payment
of fees and expenses and delivery of certificates and other
documents).
Under the terms of the Existing Facilities, the Group would have
been required to certify to the Group's existing lenders whether it
was in compliance with the financial covenants under the Existing
Facilities once the Group's financial statements for the year ended
30 September 2015 were available. The Group and its existing
lenders were concerned that the Group would be in breach of certain
of these financial covenants, the effect of which would be an event
of default under the Existing Facilities. Accordingly, in the
course of negotiations regarding the Amended Facilities Agreements,
the Group's existing lenders agreed on 26 October 2015 to suspend
testing of the tangible net worth covenants under the Existing
Facilities, subject to certain conditions, until the Amended
Facilities Agreements become effective. On 26 October 2015, the
Group also agreed to reduce the total size of the Existing US
Dollar Facility to US$360 million (from US$400 million) and not to
transfer cash held by the Company to its operating subsidiaries (it
being acknowledged by the lenders that the Company could approach
them for consent to transfer cash to allow the funding of its
operating subsidiaries if necessary). The restriction on the
transfer of cash from the Company to its operating subsidiaries
will terminate on 20 November 2015 (which is expected to be the
effective date of the Amended Facilities Agreements, provided that
all of the Resolutions are passed by Shareholders and the Rights
Issue proceeds).
8. Use of proceeds
The Rights Issue is expected to raise approximately US$407
million (in gross proceeds). The Rights Issue and Amended
Facilities, taken together, are expected to strengthen the Group's
financial position and to result in immediate and long-term
benefits to the Group, and in particular are expected to:
-- enable the Group to execute and deliver on the Business Plan,
thereby improving the Group's ability to withstand
potential adverse movements in external factors, specifically a
continuation of the weak PGM pricing
environment, and repositioning the Group on the South African
PGM industry cost curve; and
-- strengthen the balance sheet, allow the Group to meet its
obligations and commitments as they fall due and
reduce the Group's borrowings.
The net proceeds of the Rights Issue will be used:
-- to fund the implementation of the Business Plan, including inter alia:
o planned capital expenditure of approximately US$132 million
for the year ending 30 September 2016; and
o one-off retrenchment and associated restructuring costs of
approximately US$59 million related to the
expected reduction in the size of the Group's workforce by
approximately 6,000 employees, including
contractors; and
-- for general corporate purposes, including as additional
working capital for the Group's business.
In addition, a portion of the gross proceeds of the Rights Issue
will be used for fees and expenses relating to the Rights Issue
(approximately US$26 million) and the Amended Facilities Agreements
(approximately US$12 million).
9. Details of the Capital Reorganisation
At the General Meeting, Shareholders will be asked to approve a
two-stage Capital Reorganisation comprising the Sub-division and
the subsequent Consolidation.
9.1 Overview of, and reasons for, the Capital Reorganisation
9.1.1 Sub-division
Given that the Shares have traded at a discount to their nominal
value of US$1.00 for a significant period of time, the Issue Price
of 1.00 pence is at a discount to the current nominal value.
Section 580 of the Companies Act prohibits the allotment of shares
at a discount to their nominal value. In order to appropriately
reduce the nominal value of the Shares in order to undertake the
Rights Issue and the Bapo BEE Placing, Shareholders will be asked
at the General Meeting to approve the Sub-division of each of the
Company's Existing Shares into:
-- one Intermediate Ordinary Share of US$0.000001 nominal value
(being a price that is considered appropriate to
facilitate the pricing of the Rights Issue and the Bapo BEE
Placing as described below
-- one 2015 Deferred Share of US$0.999999 nominal value.
The 2015 Deferred Shares are being issued solely to facilitate
the reduction in the nominal value of the Shares to
US$0.000001.
If approved, it is expected that the Sub-division will be
implemented after the General Meeting and prior to Admission and
South African Admission.
The Existing Shares, the Intermediate Ordinary Shares and the
New Shares to be issued pursuant to the Rights Issue will have the
same rights and be subject to the same restrictions and ranking on
the same basis, save that the Existing Shares have a nominal value
of US$1.00 whereas the Intermediate Ordinary Shares and the New
Shares will have the lower nominal value of US$0.000001.
It is intended that, subject to the Resolutions being passed at
the General Meeting, the Intermediate Ordinary Shares will be
admitted to the Official List of the FCA and to trading on the main
market of the London Stock Exchange and to listing and trading on
the Main Board of the JSE.
The 2015 Deferred Shares which will be created on the
Sub-division becoming effective will have no voting or dividend
rights and will not carry any entitlement to receive notice of any
general meeting of the Company or to attend, speak or vote at any
general meeting of the Company. The 2015 Deferred Shares will only
be entitled to a payment on a return of capital or winding up of
the Company after payment of the capital paid up on any or all
Shares or Sterling Deferred Shares and the further distribution of
US$500 billion. The 2015 Deferred Shares will not be listed on the
Official List or admitted to trading on the London Stock Exchange,
the JSE or any other investment exchange. As such, the 2015
Deferred Shares will be effectively valueless as they will carry
very limited rights.
Under the terms of the 2015 Deferred Shares, the Company will
have the ability to:
-- buy back the 2015 Deferred Shares for aggregate consideration of US$0.01; and/ or
-- transfer all of the 2015 Deferred Shares to the secretary of
the Company for nil consideration,
in each case without obtaining the sanction of the holder or
holders of the 2015 Deferred Shares.
The Company will make a decision as soon as reasonably
practicable following completion of the Rights Issue as to whether
the 2015 Deferred Shares will be bought back or transferred to the
Secretary of the Company. The Company will notify the holders of
the 2015 Deferred Shares of such decision.
The Rights Issue is conditional upon, amongst other things,
completion of the Sub-division.
9.1.2 Consolidation
A very large number of New Shares will need to be issued under
the Rights Issue. As a result, it is expected that the number of
Shares in issue following the implementation of the Rights Issue
will mean that a small movement in the Company's share price could
result in large percentage movements and considerable
volatility.
In order to address this, Shareholders will be asked at the
General Meeting to approve the Consolidation of the Shares in issue
at the Consolidation Record Date. The Consolidation will reduce the
number of Shares in issue on the Consolidation Record Date on the
basis of a ratio of existing Shares to post-Consolidation Shares
(the "Consolidation Ratio"), determined with a view to ensuring
that the Consolidation results in a share price more appropriate
for the Company and more attractive to a greater number of
investors. The Directors have determined that the Consolidation
Ratio will be 100:1.
If approved, it is expected that the Consolidation will be
implemented after the allotment of New Shares pursuant to the
Rights Issue.
Do not exercise your Rights and purchase your entitlement of New
Shares if you hold fewer than 3 Existing Shares. Notwithstanding
the Sub-division, holdings of less than 3 Existing Shares will fall
below the ratio needed to receive one Consolidated Ordinary Share
(the Consolidation Ratio) and will therefore be sold, with the
proceeds of such sale being paid to the relevant Shareholder.
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
9.2 The effect of the Reorganisation on Lonmin's capital
structure, the listing of the Shares and the Group's net assets
Subject to the effects of the treatment of the fractions
following the Consolidation and the issue of New Shares pursuant to
the Rights Issue, the proportion of Lonmin's issued share capital
held by each Shareholder immediately following the Sub-division and
the subsequent Consolidation will remain unchanged. The
Sub-division will change only the nominal value of Shares. The
Consolidation will change only the nominal value of Shares and the
total number of Shares in issue (subject to the treatment of
fractions arising from the Consolidation, as discussed below). In
addition, each Intermediate Ordinary Share and each Consolidated
Ordinary Share will carry the same rights as set out in the
Articles of Association that apply to the Existing Shares
(including in relation to voting, dividends and rights on a return
of capital), save as to the nominal value.
The number of ordinary shares of Lonmin listed on the Official
List and admitted to trading on the London Stock Exchange's main
market for listed securities and on the Main Board of the JSE will
change as a result of the Consolidation. However, the Capital
Reorganisation will not affect the Group's or Lonmin's net assets.
A request will be made to the FCA, the London Stock Exchange and
the JSE Ltd to reflect, on the Official List and the JSE's Main
Board, respectively, the Sub-division and, subsequently, the
Consolidation.
The last day of trading on the London Stock Exchange and on the
JSE in the Existing Shares is expected to be 19 November 2015. The
Sub-division is expected to become effective on 20 November 2015
and the Consolidation is expected to become effective on 18
December 2015.
The Intermediate Ordinary Shares will continue to trade on the
London Stock Exchange and the JSE with the existing ISIN and SEDOL.
Following the Consolidation, the Consolidated Ordinary Shares will
be admitted to trading on the London Stock Exchange and the JSE on
18 December 2015 with ISIN: GB00BYSRJ698 and SEDOL: BYSRJ69.
9.3 Treatment of fractional entitlements under the
Consolidation
Where the Consolidation Ratio results in any Shareholder being
entitled to a fraction of a Consolidated Ordinary Share, that
Shareholder's shareholding would still be consolidated, and this
will result in them no longer being a member of Lonmin in relation
to that holding. Arrangements will be put in place for any such
fractional entitlements arising from the Consolidation to be
aggregated and sold in the market on behalf of the relevant
Shareholders. It is expected that proceeds of fractional
entitlements will be distributed to Shareholders by 31 December
2015. As a result of the Consolidation, Shareholders with a small
shareholding in Lonmin may no longer hold Shares in Lonmin as a
result of the Rights Issue.
For purely illustrative purposes, an example of the effect of
the Consolidation is set out below:
Intermediate Consolidated Fractional Entitlement(1)
Ordinary Shares Ordinary Shares
1 0 0.01
99 0 0.99
150 1 0.50
1,000 10 0.00
46,521 465 0.21
100,000 1,000 0.00
_______________
(1) The fractional entitlement represents the fraction of a
Share which will be sold on behalf of a relevant Shareholder at the
time of the Consolidation.
Although Shareholders would hold fewer ordinary shares than
before, their shareholding as a proportion of the total number of
ordinary shares in issue and therefore their ownership in Lonmin,
will be the same before and after the Consolidation, subject to
adjustments to reflect fractional entitlements arising from the
Consolidation and the Rights Issue.
9.4 Share certificates
If the Resolutions are passed, the Company does not propose to
issue new share certificates to existing Shareholders following the
Sub-division. The existing share certificates which have been
issued to Shareholders in respect of their holdings of Existing
Shares will remain valid in respect of the Intermediate Ordinary
Shares following completion of the Sub-division. Existing share
certificates will cease to be valid with effect from the close of
business on 17 December 2015 and new share certificates
representing Consolidated Ordinary Shares are expected to be
despatched to Shareholders on the UK Register who hold shares in
certificated form by 31 December 2015 and to Shareholders on the SA
Register holding in uncertificated form by 29 December 2015. On
receipt of such new share certificates, all ordinary share
certificates previously issued can be destroyed. If a Shareholder
does not receive a new share certificate and believes they are
entitled to one, they can contact Lonmin's UK Registrar or SA
Registrar. Share certificates representing 2015 Deferred Shares
will not be issued.
Although Shareholders holding Shares in certificated form will
not receive share certificates in respect of their Intermediate
Ordinary Shares, they will receive a Provisional Allotment Letter
or a Letter of Allocation as applicable, and will, subject to the
terms and conditions set out in more detail in Section 2 of Part II
"Information in Relation to the Rights Issue" of this Prospectus,
be entitled to participate in the Rights Issue.
Shareholders who hold their entitlement to Existing Shares in
uncertificated form through CREST are expected to have their CREST
accounts adjusted to reflect the Sub-division and their entitlement
to Consolidated Ordinary Shares on 18 December 2015, but will not
have their CREST accounts adjusted to reflect their entitlement to
2015 Deferred Shares.
Shareholders on the SA Register whose Shares are held in
uncertificated form are expected to have their CSDP/broker accounts
adjusted to reflect their entitlement to Consolidated Ordinary
Shares on 28 December 2015, but will not have their CSDP/broker
accounts adjusted to reflect their entitlement to 2015 Deferred
Shares.
9.5 American Depositary Receipts
Further information on any implications of the Capital
Reorganisation for ADR Holders will be provided to them by the
Depositary in separate communications.
10. Current Trading and Prospects
The Group's published platinum sales target for the year ended
30 September 2015 was approximately 730,000 ounces. Platinum sales
for the year ended 30 September 2015, at 751,560 ounces, exceeded
the Group's target by approximately 3.0 per cent. This was an
increase of 309,876 from the 441,684 ounces sold for the year ended
30 September 2014. The lower sales volume in the prior year was
largely attributable to the disruptions in production caused by the
2014 Strike Action. When compared to the year ended 30 September
2013, platinum sales for the year ended 30 September 2015 increased
by 8.0 per cent. The Directors expect the implementation of the
Business Plan to result in a reduction of approximately 100,000
platinum ounces in the Group's normalised annual production over
the next two financial years as high-cost production at certain
shafts is wound down, with a concomitant reduction in staffing and
overhead levels. The Directors expect that the sales profile for
the Group will be approximately 700,000 platinum ounces for the
year ending 30 September 2016 and approximately 650,000 platinum
ounces for each of the years ending 30 September 2017 and 2018.
The Group effectively contained its capital expenditure in a
liquidity constrained environment and successfully reduced its
capital expenditure for the year ended 30 September 2015 to US$136
million (as compared to its initial guidance of US$250 million).
Pursuant to the Business Plan, the Group expects to limit its total
capital expenditure to approximately US$132 million and US$110
million for the years ending 30 September 2016 and 2017,
respectively. Stay-in-business, ore reserve development and
expansion capital expenditure are expected to account for
approximately 45-55 per cent., 25-35 per cent. and 15-20 per cent.,
respectively, of total capital expenditure for each of the years
ending 30 September 2016 and 2017. Based on current information,
the Group anticipates that its capital expenditure for the year
ending 30 September 2018 will increase to approximately US$188
million, as the Group's investments in stay-in-business and ore
reserve development capital expenditure are expected to
increase.
The Group achieved underlying unit cost per PGM ounce at
ZAR10,339 per PGM ounce for the year ended 30 September 2015, well
within the original market guidance of ZAR10,800 per PGM ounce, as
a result of the robust cost containment measures undertaken by the
management team. Based on current information, the SFA Report
forecasts that for 2015 the Group's position on the South Africa
PGM industry cost curve (net total cash costs per 3PGE + Au ounce)
should improve to the second quartile, having shifted from the
third quartile since 2013. Pursuant to the Business Plan, the Group
aims to keep its unit costs in nominal terms broadly flat for the
years ending 30 September 2016, 2017 and 2018.
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
PGM prices were under downward pressure in the year ended 30
September 2015, with the Group's average PGM basket price,
excluding base metal revenue, for the year ended 30 September 2015
declining by 16.2 per cent. to US$849 per ounce from US$1,013 per
ounce for the year ended 30 September 2014 and the average price of
platinum for the year ended 30 September 2015 declining by 22.0 per
cent. to US$1,095 per ounce from US$1,403 per ounce for the year
ended 30 September 2014. However, the price weakness in US dollar
terms was largely offset by the weakening of the Rand against the
US dollar, resulting in the Group's overall Rand PGM basket price,
excluding base metal revenue, declining by 4.2 per cent. from the
prior year. The SFA Report forecasts a long-term PGM supply deficit
driven primarily by expected PGM mineral reserve depletion
affecting primary supply from South Africa and expected demand
growth due primarily to the roll-out and further tightening of
emissions standards in emerging markets and increases in diesel
cars in India and in light commercial vehicles and heavy-duty
diesel vehicles outside Western Europe, the United States, India
and Japan. In light of the above, the Directors continue to believe
in the medium to long-term fundamentals for platinum and other PGMs
and expect prices to improve in the medium to long term.
As at 31 October 2015, the Group's net debt was US$284 million
(unaudited), an increase of US$99 million compared to the Group's
net debt of US$185 million as at 30 September 2015. The increase in
the Group's net debt since 30 September 2015 reflected a reduction
in cash and cash equivalents due primarily to a decrease in revenue
during October 2015 largely as a result of:
-- a seasonal decrease in production and sales volumes caused by
production stoppages during the annual stock take conducted in
October to verify inventory quantities at year end; and
-- the subdued PGM pricing environment which continued to prevail in October 2015.
11. Bapo BEE Placing
Under the Mining Charter, Group companies in South Africa are
required to ensure economic participation in their assets by groups
representing HDSAs through the BEE process.
Retention of the prospecting and mining rights held by certain
subsidiary undertakings of Lonmin in South Africa is conditional on
the achievement of various targets in connection with BEE. Relevant
Group companies were required to be at least 26 per cent.
"empowered" (meaning ownership by HDSAs) by 31 December 2014. On 14
August 2014, Lonmin published a circular seeking shareholder
approval for a series of transactions for BEE purposes, increasing
the shareholding of the Group's employees, local communities and
the Bapo Community in WPL and EPL and issuing shares in Lonmin to
the Bapo Community. Completion of these transactions was announced
on 26 November 2014 and 4 December 2014, on the basis of which the
Directors believe that the HDSA target ownership of at least 26 per
cent. required under the Mining Charter has been achieved.
The Bapo Community has indicated that it does not have the
financial resources to participate in the Rights Issue. The issue
of New Shares pursuant to the Rights Issue will dilute the
ownership of Existing Shares for all existing Shareholders who do
not take up their Rights. Maintaining HDSA equity ownership in
Lonmin is one of the factors on which Lonmin and its subsidiaries
are assessed by the South African Department of Mineral Resources
when considering the Group's ongoing compliance with the Mining
Charter, as measured by the Mining Charter Scorecard. Given the
Bapo Community will not be able to take up its Rights, the dilutive
effect of the Rights Issue on the Bapo Community's proportional
interest in Lonmin will reduce the relevant Group companies'
empowerment status below the requisite HDSA ownership level of 26
per cent., which could result in Lonmin not being in compliance
with the requirements of the Mining Charter and other BEE
regulations unless mitigating measures were taken to preserve
Lonmin's empowerment status.
In view of the above, the Directors explored all viable options
available to preserve Lonmin's empowerment status in Lonmin's
current circumstances, including issuing further equity to HDSAs
(including the Bapo Community) in relevant Group companies other
than Lonmin. In Lonmin's current circumstances, the Directors have
concluded that it is in the best interests of Shareholders to issue
sufficient new Shares to the Bapo Community in order to maintain
its proportional interest in Lonmin on a post-Rights Issue basis at
a price per Share that the Bapo Community is able to pay. The Bapo
Community has confirmed to the Company that it is unable to pay
more than the par value of US$0.000001 per share, which is less
than that payable under the Rights Issue and, as at the Latest
Practicable Date, represented a discount in excess of 99.99 per
cent. to the market price of the Shares. The Directors consider
that, given a failure to maintain compliance with the requirements
of the Mining Charter and other BEE regulations could result in a
potential loss of the Group's prospecting and mining rights, the
issue of sufficient Shares to the Bapo Community at this issue
price in order to maintain Lonmin's empowerment status is in the
best interests of all Shareholders.
It is proposed that the Bapo BEE Shares be issued in a separate
placing to the Rights Issue and the Bapo Community has agreed that
it will not take up or trade its Rights. The effect of the Bapo BEE
Placing will be to maintain the Bapo Community's current minority
current holding of less than three per cent. of the Shares
following issue of the New Shares pursuant to the Rights Issue. The
Bapo BEE Shares will be issued in addition to the offer of New
Shares under the Rights Issue and will therefore have a minor
dilutive effect on the other Shareholders in Lonmin. The Bapo
Community has agreed to accept a ten-year lock-in period with
regard to the Bapo BEE Shares acquired by it under the Bapo BEE
Placing.
Applications will be made to the FCA and the London Stock
Exchange for admission of the Bapo BEE Shares to the premium
segment of the Official List and trading on the main market of the
London Stock Exchange and to the JSE Ltd for admission to listing
and trading on the Main Board of the JSE. It is currently expected
that the Bapo BEE Placing Admission will become effective following
completion of the Rights Issue.
The Bapo BEE Placing is conditional on Shareholder approval and
the approval of all of the other Resolutions. The Board is seeking
Shareholders' approval for the Bapo BEE Placing pursuant to
Resolutions 3 and 5.
SUMMARY OF THE PRINCIPAL TERMS OF THE RIGHTS ISSUE
The Rights Issue is intended to raise net proceeds of
approximately US$369 million. The Rights Issue is being
underwritten (save in respect of those New Shares which the
Directors have irrevocably undertaken to take up) by HSBC, J.P.
Morgan Cazenove and Standard Bank. In the UK, Greenhill is acting
as sponsor in relation to the Rights Issue and, in South Africa,
J.P. Morgan Equities South Africa (Pty) Ltd is acting as
transaction sponsor in relation to the Rights Issue.
Subject to the fulfilment of, amongst others, the conditions
described below, the New Shares will be offered for subscription to
Qualifying Shareholders (other than Qualifying South African
Shareholders) by way of Rights Issue at 1.00 pence per New Share,
or, in the case of Qualifying South African Shareholders, ZAR0.214
per New Share, payable in full on acceptance. The Rights Issue will
be on the basis of:
46 New Shares for every 1 Existing Share
held by and registered in the names of Qualifying Shareholders
(other than, subject to certain exceptions, Qualifying Shareholders
resident or with registered addresses in the United States or any
of the Excluded Territories) on the relevant Record Date and so in
proportion to any other number of Existing Shares each Qualifying
Shareholder then holds and otherwise on the terms and conditions
set out in the Prospectus and, in the case of Qualifying Non-CREST
Shareholders or Qualifying South African Shareholders holding
Shares in certificated form (other than, subject to certain
exceptions, such Shareholders resident or with registered addresses
in the United States or any of the Excluded Territories), the
Provisional Allotment Letters or Forms of Instruction
respectively.
Entitlements to New Shares will be rounded down to the nearest
whole number and fractional entitlements will not be allotted to
Shareholders but will be aggregated and issued into the market for
the benefit of the Company. Holdings of Existing Shares in
certificated and uncertificated form will be treated as separate
holdings for the purpose of calculating entitlements under the
Rights Issue.
Applications will be made for the New Shares to be admitted to
listing on the premium segment of the Official List and to trading
on the London Stock Exchange's main market for listed securities.
It is expected that Admission will become effective and dealings
will commence (nil paid) in the New Shares at 8:00 a.m. (London
time) on 20 November 2015 and in the New Shares (fully paid) will
commence at 8:00 a.m. (London time) on 11 December 2015.
Application will be made to the JSE Ltd for the Letters of
Allocation and the New Shares to be admitted to listing and trading
on the Main Board of the JSE. It is expected that South African
Admission will become effective and that dealings on the JSE in the
Letters of Allocation will commence at 9:00 a.m. (Johannesburg
time) on 20 November 2015 and in the New Shares (fully paid) will
commence at 9:00 a.m. (Johannesburg time) on 4 December 2015.
Any changes to the timetable of the Rights Issue will be
announced by the Company in accordance with applicable rules in the
United Kingdom and South Africa.
The Rights Issue is conditional upon:
(a) the passing of all of the Resolutions by the Shareholders at the General Meeting;
(b) completion of the Sub-division;
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
(c) Admission being effective no later than 8:00 a.m. (London
time) on 20 November 2015 or such later time and/or
date as the Company, the Sponsor and the Joint Bookrunners may
agree but provided that the Acceptance Date is
no later than 10 January 2016;
(d) approval by the JSE Ltd of the listing and trading of the
Letters of Allocation on the JSE's Main Board by not later
than Admission; and
(e) the Underwriting Agreement otherwise becoming unconditional
in all respects and not having been terminated in
accordance with its terms prior to Admission and South African
Admission.
The New Shares will, when issued and fully paid, rank pari passu
in all respects with the Existing Shares, including the right to
receive all future dividends and other distributions declared, made
or paid after the date of their issue.
The Rights Issue will result in the issue of 26,997,717,400 New
Shares, which will form approximately 97.87 per cent. of the Shares
in issue immediately following the Rights Issue.
DIVIDEND POLICY
Whilst the Company's payment of dividends has been suspended,
the Directors are conscious of the priority to return cash to
Shareholders at the earliest convenience. The Directors continue to
have confidence in the demand for PGMs in the medium to long term.
The Directors believe that the successful implementation of the
Business Plan, together with an increase in PGM prices in the
medium to long term, would lead to stronger earnings and cash
flows, which may permit the resumption of dividend payments in the
future.
DIRECTORS' INTENTION
Each Director who holds Shares has undertaken to take up in full
his or her Rights to subscribe for New Shares under the Rights
Issue in respect of his or her beneficial holding, which together
amount to 198,586 Shares, representing approximately 0.03 per cent.
of the issued ordinary share capital of the Company as at the date
of this document.
IMPORTANCE OF THE AMENDED FACILITIES AGREEMENT AND RIGHTS
ISSUE
The 2014 Strike Action reduced the Group's sales of metal below
levels previously expected, such that significant fixed costs could
not be recovered as production effectively stopped for
approximately five months. The impact of the 2014 Strike Action was
exacerbated by weakness in the PGM pricing environment, which
further deteriorated during the year ended 30 September 2015. As a
result, the Group has experienced operating losses in each of the
last two financial years, which has resulted in a deterioration in
the Group's net debt position. The Group had operating losses of
US$2,018 million (including a special impairment charge of US$1,811
million related to the Group's Marikana, Akanani and Limpopo assets
largely driven by a decline in long-term PGM price assumptions and
changes in assumptions regarding production levels and other
factors under the Business Plan) and US$255 million for the years
ended 30 September 2015 and 2014, respectively, and had net debt
(defined as current and non-current interest bearing loans and
borrowings less cash and cash equivalents) of US$185 million and
US$29 million as at 30 September 2015 and 2014, respectively.
Moreover, as at 30 September 2015, the Group had total contractual
obligations and commercial commitments due within one year of
US$567 million, which comprised primarily US$360 million due in May
2016 under the Group's Existing US Dollar Facility and US$143
million due in June 2016 under the Group's Existing Rand
Facilities. In addition, in the course of negotiations regarding
the Amended Facilities Agreements and in consideration for the
Group's existing lenders agreeing to suspend the testing of the
tangible net worth covenants under the Existing US Dollar Facility,
on 26 October 2015 the Group agreed not to transfer cash held by
the Company to its operating subsidiaries until 20 November 2015
(which is expected to be the effective date of the Amended
Facilities Agreements, provided that all of the Resolutions are
passed by Shareholders and the Rights Issue proceeds).
The Directors believe that the Group's operating cash position
is such that, unless the Resolutions are passed, the Rights Issue
is completed and the Amended Facilities Agreements come into effect
and thus the restriction on the transfer of cash from the Company
to its operating subsidiaries is removed, the Group is unlikely to
have sufficient funds to meet its obligations and commitments as
they fall due. In particular, if the Amended Facilities Agreements
do not come into effect and thus the restriction on the transfer of
cash from the Company to its operating subsidiaries is not removed,
the Group may face a cash shortfall at the operating subsidiary
level by December 2015 and as a result the Group may be unable to
continue as a going concern at that time. In addition, if the
Rights Issue is not completed and the Amended Facilities Agreements
do not come into effect, the Group may be unable to repay or
refinance its Existing US Dollar Facility due in May 2016 or its
Existing Rand Facilities due in June 2016 and as a result the Group
may be unable to continue as a going concern at that time.
Moreover, if the Amended US Dollar Facilities do not come into
effect by 20 November 2015, the suspension of the testing of the
tangible net worth covenants will no longer be applicable and,
given the substantial special impairment charges recognised by the
Group as at 30 September 2015, the Group would then be in breach of
the tangible net worth covenants, which would constitute an event
of default under the Existing Facilities. In those circumstances,
the Group's existing lenders could accelerate the Group's
indebtedness under the Existing Facilities and, as a result, the
Group may be unable to continue as a going concern from 20 November
2015.
CONCLUSION
In order to address the current risks, to improve the Group's
ability to operate in a low PGM pricing environment and position
the Group to benefit from any recovery in PGM prices in the medium
to long term:
-- the Group has adopted the Business Plan, which the Directors
believe provides an appropriate basis for the Group to continue to
focus on its objective of reducing costs and improving cash
flows;
-- companies in the Group have entered into the Amended
Facilities Agreements with the Group's existing lenders, so as to
extend the maturity of the Existing US Dollar Facility and Existing
Rand Facilities to May 2020 (in each case, assuming Lonmin
exercises its option to extend the term up until this date);
and
-- Lonmin is undertaking the Rights Issue.
The Directors believe that the receipt of proceeds from the
Rights Issue, when taken together with the implementation of the
Business Plan and the Amended Facilities Agreements, will
strengthen the Group's financial position.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS IN THE UNITED KINGDOM
Each of the times and dates in the table below is indicative
only and may be subject to change.(3,4,5)
Publication of circular 2 November 2015
------------------------------------------------------------------------------ --------------------------------------
Publication of prospectus 9 November 2015
------------------------------------------------------------------------------ --------------------------------------
Latest time and date for receipt of Forms of Proxy 9:30am on 17 November 2015
------------------------------------------------------------------------------ --------------------------------------
Restrictions on transfers between UK Register and SA Register begin Close of business on 17 November 2015
------------------------------------------------------------------------------ --------------------------------------
Record date for entitlement under the Rights Issue for Qualifying CREST
Shareholders and Qualifying
Non-CREST Shareholders Close of business on 17 November 2015
------------------------------------------------------------------------------ --------------------------------------
General Meeting 9:30 a.m. on 19 November 2015
------------------------------------------------------------------------------ --------------------------------------
Record date for the Sub-division 6:00 p.m. on 19 November 2015
------------------------------------------------------------------------------ --------------------------------------
Despatch of Provisional Allotment Letters (to Qualifying Non-CREST
Shareholders only)(1) 19 November 2015
------------------------------------------------------------------------------ --------------------------------------
Start of subscription period 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Effective time of the Sub-division. 8:00 a.m. on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Existing Shares marked "ex" by the London Stock Exchange 8:00 a.m. on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Admission/Dealings in New Shares, nil paid, commence on the London Stock
Exchange 8:00 a.m. on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
Nil Paid Rights credited to stock accounts in CREST (Qualifying CREST
Shareholders only)(1) 8:00 a.m. on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Nil Paid Rights and Fully Paid Rights enabled in CREST 8:00 a.m. on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Recommended latest time and date for requesting withdrawal of Nil Paid Rights
and Fully Paid
Rights from CREST (i.e. if your Nil Paid Rights and Fully Paid Rights are in
CREST and you
wish to convert them to certificated form) 4:30 p.m. on 4 December 2015
------------------------------------------------------------------------------ --------------------------------------
Latest time for depositing renounced Provisional Allotment Letters, nil or
fully paid, into
CREST or for dematerialising Nil Paid Rights or Fully Paid Rights into a
CREST stock account
(i.e. if your Nil Paid Rights and Fully Paid Rights are represented by a
Provisional Allotment
Letter and you wish to convert them to uncertificated form) 3:00 p.m. on 7 December 2015
------------------------------------------------------------------------------ --------------------------------------
Latest time and date for splitting Provisional Allotment Letters, nil or
fully paid 3:00 p.m. on 8 December 2015
------------------------------------------------------------------------------ --------------------------------------
Latest time and date for acceptance, payment in full and registration or
renunciation of Provisional
Allotment Letters 11:00 a.m. on 10 December 2015
------------------------------------------------------------------------------ --------------------------------------
Results of the Rights Issue announced(2) 7:00 a.m. on 11 December 2015
------------------------------------------------------------------------------ --------------------------------------
Dealings in New Shares, fully paid, commence on the London Stock Exchange 8:00 a.m. on 11 December 2015
------------------------------------------------------------------------------ --------------------------------------
New Shares credited to CREST stock accounts 8:00 a.m. on 11 December 2015
------------------------------------------------------------------------------ --------------------------------------
Record date for the Consolidation 6:00 p.m. on 17 December 2015
------------------------------------------------------------------------------ --------------------------------------
Effective time of the Consolidation 8:00 a.m. on 18 December 2015
------------------------------------------------------------------------------ --------------------------------------
Consolidated Ordinary Shares credited to CREST accounts 8:00 a.m. on 18 December 2015
------------------------------------------------------------------------------ --------------------------------------
Restriction on transfers between UK Register and SA Register ends Close of business on 28 December 2015
------------------------------------------------------------------------------ --------------------------------------
Expected despatch of definitive share certificates for the Consolidated
Ordinary Shares in
certificated form By no later than 31 December 2015
------------------------------------------------------------------------------ --------------------------------------
____________________
(1) The Rights Issue is subject to certain restrictions relating
to Shareholders with registered addresses in the United States or
the Excluded Territories, details of which are set out in Section 2
of Part II "Information in relation to the Rights Issue" of the
prospectus.
(2) The results of the Rights Issue will be announced by way of
a simultaneous RIS and SENS announcement at 7:00 a.m. (London time)
on 11 December 2015.
(3) The times and dates set out in the expected timetable of
principal events above and mentioned throughout the Prospectus may
be adjusted by Lonmin in consultation with the Underwriters, in
which event details of the new times and dates will be notified to
the UK Listing Authority, the London Stock Exchange and, where
appropriate, Qualifying Shareholders by way of a simultaneous RIS
and SENS announcement.
(4) References to times in this timetable are to London time.
(5) If you have any queries on the procedure for acceptance and
payment, you should contact the UK Shareholder Helpline on 0371 384
2232 (from inside the United Kingdom) or +44 (0)121 415 0919 (from
outside the United Kingdom). This Shareholder Helpline is available
from 8:30 a.m. to 5:30 p.m. (London time) Monday to Friday (except
bank holidays). Calls to the UK Shareholder Helpline from outside
the United Kingdom will be charged at the applicable rates. Please
note that for legal reasons, the UK Shareholder Helpline is only
able to provide information contained in the Prospectus and
information relating to Lonmin's register of members and is unable
to give advice on the merits of the Rights Issue, or provide legal,
financial, tax or investment advice.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS IN SOUTH AFRICA
Each of the times and dates in the table below is indicative
only and may be subject to change.(4,5,6,7,8)
Publication of circular 2 November 2015
------------------------------------------------------------------------------ --------------------------------------
Publication of prospectus 9 November 2015
------------------------------------------------------------------------------ --------------------------------------
Latest time and date of receipt of Forms of Proxy 11:30 a.m. on 17 November 2015
------------------------------------------------------------------------------ --------------------------------------
Restrictions on transfers between UK Register and SA Register begin Close of business on 17 November 2015
------------------------------------------------------------------------------ --------------------------------------
General Meeting 11:30 a.m. on 19 November 2015
------------------------------------------------------------------------------ --------------------------------------
Last day to trade for the Sub-division 5:00 p.m. on 19 November 2015
------------------------------------------------------------------------------ --------------------------------------
Last day to trade Existing Shares on the JSE to qualify to participate in the
Rights Issue
(cum Rights) 19 November 2015
------------------------------------------------------------------------------ --------------------------------------
Effective time of the Sub-division 9:00 a.m. on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Existing Shares marked "ex" by the JSE 9:00 a.m. on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Listing of and trading in Letters of Allocation on the JSE begins 9:00 a.m. on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Despatch of Forms of Instruction to Qualifying South African Shareholders who
hold their Shares
in certificated form(1) Close of business on 20 November 2015
------------------------------------------------------------------------------ --------------------------------------
Record date for entitlements under the Rights Issue for Qualifying South
African Shareholders 26 November 2015
------------------------------------------------------------------------------ --------------------------------------
Record date for the Sub-division 5:00 p.m. on 26 November 2015
------------------------------------------------------------------------------ --------------------------------------
In respect of Qualifying South African Shareholders who hold their Shares in
certificated
form, end of period during which the SA Registrar will not dematerialise
Existing Shares Close of business on 26 November 2015
------------------------------------------------------------------------------ --------------------------------------
Qualifying South African Shareholders who hold their Shares in uncertificated
form will have
their accounts at their CSDP or broker automatically credited with their
Letters of Allocation
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
(Rights Issue opens)(1) 9:00 a.m. on 27 November 2015
------------------------------------------------------------------------------ --------------------------------------
Qualifying South African Shareholders who hold their Shares in certificated
form will have
their Letters of Allocation credited to an account held with the SA Registrar
(Rights Issue
opens)(1) 9:00 a.m. on 27 November 2015
------------------------------------------------------------------------------ --------------------------------------
In respect of Qualifying South African Shareholders who hold their Shares in
certificated
form wishing to sell all or part of their Letters of Allocation, latest time
and date for
submission of Form of Instruction to SA Registrar 9:00 a.m. on 3 December 2015
------------------------------------------------------------------------------ --------------------------------------
Last day to trade Letters of Allocation on the JSE to settle trades by the
closing date of
the Rights Issue in order to participate in the Rights Issue 3 December 2015
------------------------------------------------------------------------------ --------------------------------------
Listing and trading of New Shares on the JSE and dealings in New Shares on a
deferred settlement
basis commence 9:00 a.m. on 4 December 2015
------------------------------------------------------------------------------ --------------------------------------
In respect of Qualifying South African Shareholders who hold their Shares in
certificated
form and who wish to exercise all or part of their Nil Paid Rights, latest
time and date for
submission of completed Form of Instruction (with payment in full) to the SA
Registrar 12:00pm on 10 December 2015
------------------------------------------------------------------------------ --------------------------------------
Rights Issue closes 12:00pm on 10 December 2015
------------------------------------------------------------------------------ --------------------------------------
CSDP/broker accounts credited with New Shares and debited with payments due
in respect of
New Shares in uncertificated form(2) 9:00 a.m. on 11 December 2015
------------------------------------------------------------------------------ --------------------------------------
Results of Rights Issue announced(3) 9:00 a.m. on 11 December 2015
------------------------------------------------------------------------------ --------------------------------------
Results of Rights Issue announced in the press 9:00 a.m. on 11 December 2015
------------------------------------------------------------------------------ --------------------------------------
Last day to trade for the Consolidation 5:00 p.m. on 17 December 2015
------------------------------------------------------------------------------ --------------------------------------
Effective time of the Consolidation 9:00 a.m. on 18 December 2015
------------------------------------------------------------------------------ --------------------------------------
Record Date for the Consolidation 5:00 p.m. on 24 December 2015
------------------------------------------------------------------------------ --------------------------------------
Consolidated Ordinary Shares credited to CSDP or broker accounts 9:00 a.m. on 28 December 2015
------------------------------------------------------------------------------ --------------------------------------
Restrictions on transfers between UK Register and SA Register ends Close of business on 28 December 2015
------------------------------------------------------------------------------ --------------------------------------
Expected despatch of definitive share certificates for the Consolidated
Ordinary Shares By 29 December 2015
------------------------------------------------------------------------------ --------------------------------------
____________________
(1) The Rights Issue is subject to certain restrictions relating
to Shareholders with registered addresses in the United States or
the Excluded Territories, details of which are set out in Section 2
of Part II "Information in relation to the Rights Issue" of the
Prospectus.
(2) CSDPs effect delivery in respect of Qualifying South African
Shareholders who hold their shares in uncertificated form on a
delivery versus payment method.
(3) The results of the Rights Issue will be announced by way of
a simultaneous RIS and SENS announcement at 9:00 a.m. (Johannesburg
time) on 11 December 2015.
(4) The times and dates set out in the expected timetable of
principal events above and mentioned throughout the Prospectus may
be adjusted by Lonmin in consultation with the Underwriters, in
which event details of the new times and dates will be notified to
JSE Ltd and, where appropriate, Qualifying South African
Shareholders and announced by way of a simultaneous RIS and SENS
announcement.
(5) References to times in this timetable are to Johannesburg times.
(6) Qualifying South African Shareholders who hold their Shares
in uncertificated form are required to inform their CSDP or broker
of their instructions in terms of the Rights Issue in the manner
and time stipulated in the agreement governing the relationship
between the shareholder and their CSDP or broker.
(7) Qualifying South African Shareholders who hold their
Existing Shares in uncertificated form will have their accounts at
their CSDP or broker automatically credited with their Letters of
Allocation and Qualifying South African Shareholders who hold their
Existing Shares in certificated form will have their Letters of
Allocation credited to an account with the SA Registrar and will be
sent a Form of Instruction.
(8) South African Shareholders may not rematerialize or
dematerialise their Existing Shares from 19 November 2015 until 26
November 2015 both days inclusive
(9) If you have any queries on the procedure for acceptance and
payment, you should contact the South African Shareholder Helpline
on 0861 LINKSA (0861 546572) (from inside South Africa) or +27 861
LINKSA (+27 861 546572) (from outside South Africa). This
Shareholder Helpline is available from 8:00 a.m. to 5:00 p.m.
(Johannesburg time) Monday to Friday (except public holidays).
Please note that for legal reasons, the South African Shareholder
Helpline is only able to provide information contained in the
Prospectus and information relating to Lonmin's register of members
and is unable to give advice on the merits of the Rights Issue, or
provide legal, financial, tax or investment advice.
ISIN CODES
The ISIN code for the Intermediate Ordinary Shares will be the
same as that of the Existing Shares, being GB0031192486. Following
the Consolidation, the ISIN code for the Consolidated Ordinary
Shares will be GB00BYSRJ698. The ISIN code for the Nil Paid Rights
is GB00BYSRJD64 and for the Fully Paid Rights is GB00BYSRJF88.
DEFINITIONS
The following definitions shall apply throughout this
announcement unless the context requires otherwise:
"2014 Strike the five-month strike action
Action" started in January 2014 by
members of AMCU, which also
affected the two other largest
PGM producers in South Africa;
"2015 Deferred the deferred shares of US$0.999999
Shares" each in the share capital of
Lonmin resulting from the Sub-division;
"Admission" admission of the New Shares
to the premium segment of the
Official List and to trading,
nil paid, on the London Stock
Exchange's main market for
listed securities;
"ADRs" American Depositary Receipts
evidencing American depositary
shares issued by the Depositary
pursuant to the Deposit Agreement;
"Akanani" Akanani Mining (Proprietary)
Limited, an exploration and
evaluation asset located on
the Northern Limb of the Bushveld
Igneous Complex in which Lonmin
holds a 74% equity interest;
"AMCU" the Association of Mineworkers
and Construction Union; the
trade union representing the
largest number of the Group's
employees;
"Amended Facilities" the Amended US Dollar Facilities
and Amended Rand Facilities;
"Amended Facilities the Amended US Dollar Facilities
Agreements" Agreement and the Amended Rand
Facilities Agreement;
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
"Amended Rand the Existing Rand Facilities
Facilities" as proposed to be amended pursuant
to the Amended Rand Facilities
Agreement
"Amended US Dollar the Existing US Dollar Facility
Facilities" as proposed to be amended pursuant
to the Amended US Dollar Facilities
Agreement;
"Articles of the articles of association
Association" of the Company;
or "Articles"
"Bapo BEE Placing" the issue of the Bapo BEE Shares
pursuant to the transaction;
"Bapo BEE Placing admission of the Bapo BEE Shares
Admission" to the premium segment of the
Official List and to trading
on the London Stock Exchange's
main market for listed securities
and to the Main Board of the
stock exchange operated by
JSE Ltd;
"Bapo BEE Shares" up to 617,581,491 Shares to
be issued pursuant to the Bapo
BEE Placing;
"Bapo Community" the Bapo ba Mogale Traditional
Community, an association of
persons forming an indigenous
tribe under a Kgosi or traditional
leader and constituting a universitas
personarum in law, with locus
standi to sue and to be sued,
and a traditional community
in terms of the Traditional
Leadership and Governance Framework
Act 41 if 2003;
"Bapo Transaction" one of three BEE transactions
announced on 26 November 2014
and 4 December 2014 between
the Group and the Bapo Community,
in which the Bapo Community
swapped its rights to a statutory
royalty on profits together
with its shares in Bapo ba
Mogale Mining Company (Pty)
Limited (which held the Bapo
Community's 7.5 per cent. participation
interest in the Pandora JV)
for shares in Lonmin and a
deferred royalty payment over
a period of five years;
"BEE" broad-based black economic
empowerment, or black economic
empowerment, which arises as
a result of the following South
African legislation: the Employment
Equity Act No. 55 of 1998;
the Skills Development Act
No. 97 of 1998; the Preferential
Procurement Policy Framework
Act No. 5 of 2000; the BEE
Act; the Broad-Based Black
Economic Empowerment Amendment
Act, No. 46 of 2013; the MPRDA
and the Mining Charter;
"BEE Act" the Broad-Based Black Economic
Empowerment Act No.53 of 2003;
"Board" or "Directors" the Company's directors;
"business day" a day (excluding Saturday,
Sunday and public holidays)
on which banks generally are
open for business in the City
of London for the transaction
of normal banking business
and on which banks generally
are open for business in South
Africa for the transaction
of normal banking business;
"Business Plan" a new business plan developed
by the Group as a comprehensive
response to prolonged weakness
in PGM prices following a review
of the Group's business and
capital structure, which aims
to reduce fixed cost expenses,
remove high-cost PGM production
ounces and reduce capital expenditure
to the minimum required for
the safe and efficient running
of the Group's operations,
whilst preserving the ability
of the Group to increase its
production as and when PGM
prices improve;
"Capital Reorganisation" the Sub-division and the Consolidation
"CCSS" the CREST Courier and Sorting
Service established by Euroclear
UK & Ireland to facilitate,
inter alia, the deposit and
withdrawal of securities;
"certificated in relation to a share or other
form" security, a share or other
security which is not in uncertificated
form (that is, not in CREST
or Strate);
"Companies Act" the Companies Act 2006;
"Company" or Lonmin Plc, a company registered
"Lonmin" or "Issuer" in England and Wales with registered
number 103002 and registered
as an external company in South
Africa under registration number
1969/000015/10;
"Consolidated the ordinary shares of US$0.000001
Ordinary Shares" each in the share capital of
Lonmin resulting from the Consolidation;
"Consolidation" the proposed consolidation of
100 Intermediate Ordinary Shares,
New Shares and Bapo BEE Shares
into one Consolidated Ordinary
Share;
"Consolidation the ratio of 100:1 existing Shares
Ratio" to post-Consolidation Shares
to be used in the Consolidation
to reduce the number of Shares
in issue and the ratio referred
to in Resolution 1 of the Notice
of the General Meeting;
"Consolidation (i) in the UK, 6:00 p.m. (London
Record Date" time) on 17 December 2015 and
(ii) in South Africa, 5:00 p.m.
(Johannesburg time) on 24 December
2015 and the ratio referred to
in Resolution 1 of the Notice
of the General Meeting;
"CREST" the computerised system for
the paperless settlement of
sales and purchases of securities
and the holding of uncertificated
securities operated by Euroclear
UK & Ireland in accordance
with the CREST Regulations;
"CSDP" a "participant", as defined
in the Financial Markets Act,
being a person authorised by
a licenced central securities
depository to perform custody
and administration services
or settlement services or both
in terms of the central depository
rules;
"Deposit Agreement" The amended and restated deposit
agreement dated 25 February
2002 between the Company, the
Bank of New York Mellon and
ADR Holders;
"Depositary" the Bank of New York Mellon,
as depositary under the Deposit
Agreement;
"Directors" the Company's directors;
"EBITDA" Operating profit before depreciation,
amortisation and impairment
of goodwill, intangibles and
property, plant and equipment;
"EPL" Eastern Platinum (RF) (Proprietary)
Limited, a private company
duly incorporated in accordance
with the laws of South Africa
under registration number 1987/070294/06,
whose name appears in the records
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
of the CIPC as Eastern Platinum
Limited, a subsidiary of the
Group in which Lonmin has a
76.4 per cent. interest;
"EU" the European Union;
"Events at Marikana" the illegal strike at the Company's
Marikana operations in August
and September 2012;
"Excluded Territories" the Commonwealth of Australia,
its territories and possessions,
Canada, and Japan and "Excluded
Territory" means any one of
them;
"Existing Facilities" the Existing US Dollar Facility
and Existing Rand Facilities;
"Existing Rand the Company's three bilateral
Facilities" bank debt facilities of ZAR660
million each made available
pursuant to the Existing Rand
Facilities Agreements;
"Existing Shares" the Shares in issue as at the
Record Date;
"Existing US the US$360 million revolving
Dollar Facility" credit facility made available
pursuant to the Existing US
Dollar Facility Agreement;
"FCA" the Financial Conduct Authority
acting in its capacity as the
competent authority for listing
in the UK for the purposes
of Part VI of FSMA;
"Form of Instruction" the forms of instruction to
be posted to Qualifying South
African Shareholders who hold
their Existing Shares in certificated
form, in respect of their Letters
of Allocation and reflecting
the entitlement of that Qualifying
Shareholder to Nil Paid Rights;
"Fully Paid Rights" rights to acquire the New Shares
fully paid;
"General Meeting" the general meeting of Lonmin
to be held in connection with
the Rights Issue at The Lincoln
Centre, 18 Lincoln's Inn Fields,
London WC2A 3ED, United Kingdom
on 19 November at 9:30 a.m.
(London time), notice of which
was sent to Shareholders as
part of an explanatory circular
on 2 November 2015 (or any
adjournment thereof);
"Generation 1 E1, E2, E3, W1 and Newman shafts;
Shafts"
"Generation 2 K3, Rowland, Saffy, 4B/IB and
Shafts" Hossy shafts;
"Generation 3 K4 shaft;
Shaft"
"Greenhill" Greenhill & Co. International
LLP;
"Group" or "Lonmin Lonmin and its subsidiary undertakings
Group" (as defined in the Companies
Act);
"HDSAs" historically disadvantaged
South Africans, as defined
in the Mining Charter. It refers
to South African citizens who
were disadvantaged by unfair
discrimination before the implementation
of the Constitution of the
Republic of South Africa in
1993;
"HSBC" HSBC Bank plc;
"Intermediate the ordinary shares of US$0.000001
Ordinary Shares" each in the capital of Lonmin
resulting from the Sub-division;
"ISIN" International Security Identification
Number;
"Issue Price" the UK Issue Price or the SA
Issue Price, as appropriate;
"J.P. Morgan J.P Morgan Securities plc (which
Cazenove" conducts its United Kingdom
investment banking activities
as J.P Morgan Cazenove);
"Joint Bookrunners" J.P. Morgan Cazenove, HSBC
and Standard Bank;
"JSE" the stock exchange operated
by JSE Ltd;
"JSE Ltd" JSE Limited, a company incorporated
in accordance with the laws
of South Africa and licensed
to operate a securities exchange
in terms of the Financial Markets
Act;
"Latest Practicable 6 November 2015, being the
Date" latest practicable date for
the inclusion of information
in the Prospectus prior to
the finalisation of the Prospectus;
"Letter of Allocation" a renounceable letter of allocation
issued by the Company in electronic
form conferring Nil Paid Rights
on a Qualifying South African
Shareholder;
"Limpopo" Limpopo platinum mine;
"London Stock London Stock Exchange plc;
Exchange"
"Marikana" Marikana platinum mine;
"Mining Charter" the Amendment of the Broad-Based
Socio Economic Empowerment
Charter for the South African
Mining and Minerals Industry
published in September 2010
in terms of Section 100(2)
of the MPRDA, including any
amendment, supplement, replacement
or successor thereto, and any
legislation or regulation of
a similar or related nature
adopted in South Africa;
"Mining Charter the scorecard incorporated
Scorecard" in the Mining Charter, published
pursuant to section 100(2)(a)
of the MPRDA;
"net debt" current and non-current interest
bearing loans and borrowings
less cash and cash equivalents;
"New Order Mining the Old Order Mining Rights,
Rights" once they have been converted
to mining rights in terms of
the MPRDA or mining rights
issued under the MPRDA;
"New Shares" the new Shares of US$0.000001
each to be issued pursuant
to the Rights Issue;
"Nil Paid Rights" in the case of Qualifying Shareholders
(other than Qualifying South
African Shareholders), New
Shares in nil paid form provisionally
allotted to such Qualifying
Shareholders pursuant to the
Rights Issue and, in the case
of Qualifying South African
Shareholders, the right to
subscribe for New Shares at
the SA Issue Price, as represented
by Letters of Allocation automatically
credited to their CSDP or broker
accounts or, in the case of
Qualifying South African Shareholders
who hold their Shares in certificated
form, the account of the SA
Registrar for the benefit of
such Shareholder;
"Non-CREST Shareholders" Shareholders whose Shares are
on the UK Register and are
held in certificated form;
"Official List" the Official List of the FCA;
"Pandora" Pandora platinum mine;
"Prospectus Directive" Directive of the European Parliament
and of the Council 2003/71/EC
as amended by Directive 2010/73/EU
and includes any relevant implementing
measures in each Member State
of the European Economic Area
that has implemented Directive
2003/71/EC and its amending
Directive 2010/73/EU;
"Provisional the renounceable provisional
Allotment Letters" allotment letters relating
to the Rights Issue, expected
to be despatched to Qualifying
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
Non-CREST Shareholders (other
than, subject to certain exceptions,
Qualifying Non-CREST Shareholders
with registered addresses in
the United States or any of
the Excluded Territories) as
described in Part II "Information
in Relation to the Rights Issue";
"Public Investment Public Investment Corporation,
Corporation" a South African state-owned
or "PIC (ZA)" corporation established in
terms of the Public Investment
Corporation Act No. 23 of 2004;
"Qualifying CREST Shareholders whose Shares are
Shareholder" on the UK Register as at the
UK Record Date and which are
held in uncertificated form
and held through CREST;
"Qualifying Non-CREST Shareholders whose Shares are
Shareholder" on the UK Register as at the
UK Record Date and which are
in certificated form;
"Qualifying Shareholder" a Qualifying Non-CREST Shareholder,
Qualifying CREST Shareholder
and/or Qualifying South African
Shareholder, as the case may
be (which, for the avoidance
of doubt, does not include
ADR Holders);
"Qualifying South Shareholders on the SA Register
African Shareholders" as at the SA Record Date;
"Rand" or "ZAR" the currency of South Africa;
"Record Date" the UK Record Date and/or the
SA Record Date, as the context
so requires;
"Register" the UK Register and/or the
SA Register, as the context
so requires;
"Registrars" the UK Registrar and/or the
SA Registrar, as the context
so requires;
"Resolutions" the resolutions to be proposed
at the General Meeting as set
out in the Notice of the General
Meeting;
"Rights" the Nil Paid Rights and/or
the Fully Paid Rights (as the
context may require);
"Rights Issue" the 46 for 1 rights issue announced
by the Company on 9 November
2015
"SA Issue Price" the price at which New Shares
will be issued to Qualifying
South African Shareholders
pursuant to the Rights Issue,
being ZAR0.214;
"SA Register" the branch of the register
of members of the Company maintained
in South Africa;
"SA Registrar" Link Market Services South
Africa (Proprietary) Limited
of 13th Floor, Rennie House,
19 Ameshoff Street, Braamfontein,
Johannesburg 2000, South Africa;
"SA Transaction J.P. Morgan Equitieis South
Sponsor" Africa (Pty) Ltd
"SEDOL" Stock Exchange Daily Official
List, used in the United Kingdom
and Ireland for clearing purposes;
"SENS" the Securities Exchange News
Service of the JSE Ltd;
"SFA Report" a report entitled "The PGM
Market Outlook Report", being
an independent report commissioned
by Lonmin and published in
October 2015 by SFA (Oxford)
Ltd;
"Shareholder means the relevant helpline
Helpline" telephone number
"Shareholders" the holders of any Shares from
time to time and "Shareholder"
means any one of them;
"Shares" (i) prior to the implementation
of the Sub-division, the ordinary
shares of US$1.00 each in the
capital of Lonmin;
(ii) between the implementation
of the Sub-division and the
implementation of the Consolidation,
the ordinary shares of US$0.000001
each in the capital of Lonmin;
and,
(iii) following the implementation
of the Consolidation, the ordinary
shares of US$0.0001 each in
the capital of Lonmin,
which, in each case, for the
avoidance of doubt, do not
include ADRs.
"South Africa" the Republic of South Africa;
"South African the admission of Letters of
Admission" Allocation and the New Shares
to listing and trading on the
JSE's Main Board;
"Sponsor" Greenhill;
"Standard Bank" The Standard Bank of South
Africa Limited;
"sterling" or the lawful currency of the
"GBP" or "GBP", United Kingdom
or "pence" or
"p"
"Sub-division" the proposed sub-division of
the Shares into Intermediate
Ordinary Shares of US$0.000001
nominal value each and 2015
Deferred Shares of US$0.999999
nominal value each;
"UK Issue Price" the price at which New Shares
will be issued to Qualifying
Shareholders (other than Qualifying
South African Shareholders)
pursuant to the Rights Issue,
being 1.00 pence;
"UK Listing Authority" the UK Listing Authority, being
or "UKLA" the FCA acting as the competent
authority for the purposes
of Part VI of FSMA;
"UK Register" the register of members of
the Company maintained in the
United Kingdom;
"UK Registrar" Equiniti Limited of Aspect
House, Spencer Road, Lancing,
BN99 6DA, United Kingdom;
"uncertificated in respect of a Qualifying
form" Shareholder other than a Qualifying
South African Shareholder,
describes the form of a share
held by such person in CREST;
and in respect of a Qualifying
South African Shareholder describes
the form of a share held by
such person not evidenced by
a certificate or written instrument,
incorporated into Strate and
entered and recorded in the
Company's South African sub-register
in electronic form in terms
of the Financial Markets Act;
"Underwriters" the Joint Bookrunners;
"Underwriting the underwriting agreement
Agreement" dated 9 November 2015 entered
into between the Company, the
Underwriters, the Sponsor and
the SA Transaction Sponsor
relating to the Rights Issue;
"United Kingdom" the United Kingdom of Great
or "UK" Britain and Northern Ireland;
"United States" the United States of America,
or "US" its territories and possessions,
any state of the United States
of America and the District
of Columbia;
"US dollar(s)" United States dollars and cents,
or "dollar(s)" the currency of the United
or "USD" or "US$" States;
or "$" or "US
cents"
"US Securities the United States Securities
Act" Act of 1933;
"Volkswagen" Volkswagen AG, Audi AG and
Volkswagen Group of America,
Inc;
"Website" www.lonmin.com, the Group's
website; and
"WPL" Western Platinum (RF) (Proprietary)
Limited, a private company
(MORE TO FOLLOW) Dow Jones Newswires
November 09, 2015 02:10 ET (07:10 GMT)
Lonmin (LSE:102S)
Historical Stock Chart
From Apr 2024 to May 2024
Lonmin (LSE:102S)
Historical Stock Chart
From May 2023 to May 2024