Corporate Transactions And Dividend Policy

Goldplat plc / Ticker: GDP / Index: AIM / Sector: Mining & Exploration

20 July 2021

Goldplat plc ('Goldplat' or 'the Company')

Corporate Transactions and dividend policy

Goldplat plc, the AIM listed gold producer, with international gold recovery operations located in South Africa and Ghana, is pleased to announce that it is increasing the Group's interest in Goldplat Recovery (Pty) Limited ("GRL"), its principal operating subsidiary, from 74% to 90.63% through the buy-back by GRL of GRL shares from its minority shareholders ("the Transaction").

GRL has two minority shareholders, Amabubesi Property Holdings Proprietary Limited ("Amabubesi") and Dartingo Trading 161 Proprietary Limited ("Dartingo"), who respectively hold an 11% and a 15% interest in GRL. Following a notification received from the two minority shareholders indicating their intention to dispose of their shareholdings, GRL has agreed to repurchase all of the Dartingo shareholding and 7.33% of the shares held by Amabubesi for ZAR 89.3 million (approximately £4.5 million). Amabubesi and Dartingo are companies connected with Goldplat's Non-Executive Director, Mr Sango Ntsaluba. Subsequent to the Transaction, GRL will issue to Aurelian Capital Proprietary Limited ("Aurelian"), a company associated with Mr Ntsaluba, shares amounting to 4.90% of GRL, at the same valuation as the share repurchase, for ZAR 16 million (approximately £807,000) as described further below. As a result of the Transaction, Goldplat will own 90.63% of GRL and Mr Ntsaluba will own, directly and indirectly, 9.37% of GRL.

The consideration for the repurchased shares of ZAR 89.3 million (approximately £4.5 million) will be settled in two instalments, with 50% settled when the first payment is received from the funding arrangement with Nedbank as described below and the remainder not later than 180 days thereafter. Separately GRL has agreed with the minority shareholders to bring forward the settlement date of the second instalment as far as is practical for GRL. The net cost to GRL of the Transaction will be ZAR 73.4 million (approximately £3.7 million), and Goldplat's share of the net cost of the Transaction to GRL will be 90.63%, effectively resulting in its additional 16.63% interest in GRL costing Goldplat ZAR 66.52 million (approximately £3.35 million).

The Transaction values GRL at ZAR 400 million (approximately £20.2 million). For the year ended 30 June 2020, GRL made a post-tax profit of ZAR 90.3 million (approximately £4.55 million) and had net assets of ZAR 227 million (approximately £11.7 million).

Funding Arrangements

The Transaction will be financed in part through a South African Rand denominated bank facility of ZAR 60 million (approximately £3.02 million) provided by Nedbank, of which 50% will be drawn within the next 30 days and the remainder 180 days later. The remainder of the consideration will be settled through a set-off against the existing Amabubesi vendor loan of ZAR 12.6 million (approximately £635,000) outstanding to the Group with the balance being paid in cash.

The principal on the bank facility will be repayable monthly over 36 months. The interest payable on the facility will be the South African Prime Rate plus 1.75%.

As a condition of the facility from Nedbank, the Group's facility with Scipion, currently standing at £33,000, will be settled in full and its securities over GRL will be cancelled.

Further to above, GRL will grant security over its debtors as well as have a negative pledge over its moveable and any immovable property and a general notarial bond over all movable assets of GRL will be registered. The Group will further enter into a limited suretyship for ZAR 60 million (approximately £3.02 million), in favour of Nedbank.

Related Party Transactions with Mr Sango Ntsaluba

Conditional on the share repurchase from Amabubesi and Dartingo occurring, GRL has agreed to issue 4.90% shares in GRL (after the share repurchase) to Aurelian, a company controlled by Mr Sango Ntsaluba, in order to maintain a BEE partner in GRL and to reduce the cost to the Group of the share repurchase transaction. The issue of the shares is subject to regulatory approvals and the waiver of pre-emptive rights by the remaining minority shareholders of GRL. Aurelian will settle the ZAR 16 million (approximately £807,000) consideration as follows:

  • ZAR 5 million (approximately £252,000) will be settled in cash in 35 days;
  • A further ZAR 5 million (approximately £252,000) will be settled in cash in 180 days; and
  • A vendor loan has been granted for a further ZAR 6 million (approximately £302,000), which will be repayable from distributions to be declared by GRL in respect of 1.84% of the shares in GRL held by Aurelian.

After the completion of above transactions and cancellation of the repurchased shares, the Group will hold 90.63% of GRL (an increase of 16.63%), Amabubesi will hold 4.47% and Aurelian 4.90%.

By virtue of their size and because Mr Ntsaluba is both a director of Goldplat and a major shareholder of Amabubesi and Dartingo, both the share repurchases by GRL of 22.33% of shares held by Amabubesi and Dartingo and the subsequent issue by GRL of shares to Aurelian constitute related party transactions under Rule 13 of the AIM Rules for Companies. The independent directors, being the Goldplat board members with the exception of Mr Ntsaluba, consider, having consulted with the Company's Nominated Adviser, Grant Thornton UK LLP, that the terms of the transactions are fair and reasonable insofar as Goldplat's shareholders are concerned.

With the share repurchase by GRL of the shares, the Group:

  • increases its shareholding in the historically most profitable subsidiary in the Group and therefore the Group's share of dividends paid from GRL;
  • increases its share by 16.63% in the intercompany loan of £4.5 million (approximately ZAR 89,3 million) receivable by GRL from the Group and the 1% interest receivable on the loan, which is payable over the next 4 years; and
  • ensures that the minority shareholding is not taken up by a party unknown to the Group.

Compliance with BEE regulations

These transactions result in a reduction in the Black Economic Empowerment ("BEE") ownership of GRL. However, none of GRL's current licenses to operate are impacted by these changes. The reduction in the BEE ownership will impact on GRL's ability to renew its mining right in South Africa when it comes up for renewal in May 2023. GRL however does not plan to renew this mining right as it does not have an identified minerals deposit and can continue its current operations under the Refining License which only expires on 1 November 2040. Nonetheless, the Group and GRL remain cognisant of South African government policy to advance economic transformation and enhance the economic participation of black people in South Africa and will continue to look at means to do so through ownership, management representation, development of employee skills, local enterprise development and participation in local socio-economic development.

Dividend Policy

With the disposal of Kilimapesa, as announced on 26 April 2021, the Group has no further material calls on its cashflows to invest into gold mining. The Group intends to continue to invest into and develop its recovery operations, both by way of sustaining existing operations as well as expanding these when appropriate opportunities are identified. Subject to this, after the completion of above Transaction, it is the Group's intention to distribute to shareholders cash surplus to its expected operational and development requirements and additionally, the Group intends to pay as dividend any royalties received from Kilimapesa Gold on the royalty agreement signed (whose conditions precedent were met or waived on 23 April 2021), with Mayflower Gold Investments Limited and Kilimapesa Gold.

Any distribution declarations will be applicable on net earnings after 30 June 2021 and will be subject to, inter alia:

  • Any banking or other funding requirements by which the Group is bound from time to time;
  • The operating and investment needs of the Group;
  • The anticipated future growth and earnings of the Company;
  • Provisions of the Company's Articles of Association;
  • Emerging trends in Dividend pay-outs in the industry; and
  • Any relevant applicable laws.

Werner Klingenberg, CEO of Goldplat commented: "I am pleased to announce the share repurchase agreement with the minority shareholders in South Africa and the share sale to Aurelian. I believe this will provide Goldplat shareholders with the best value for use of the cash generated in the Group. The transactions place the Group in a position to start sharing the results of its operations with shareholders through declaration of dividends from future cashflows".

"I would like to thank Amabubesi and Dartingo for their contribution and support as minority shareholders and am delighted with the ongoing involvement in Goldplat and GRL of Mr Ntsaluba".

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