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Pala Investments (SRX)

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Friday 18 November, 2011

Pala Investments

Offer Update

Offer Update

Pala Investments

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN.

Pala Closes Successful Offer for Sierra Rutile Limited

LONDON, ENGLAND – 18 November 2011: Pala Investments Holdings Limited ("Pala"), through its wholly-owned subsidiary, Pala Minerals Limited ("PML"), is pleased to announce that its successful cash offer for Sierra Rutile Limited (AIM:SRX) ("Sierra Rutile") closed today. Following the close of the Offer, Pala’s interest in Sierra Rutile is 54.75 per cent. of Sierra Rutile's issued share capital.

Pala’s Commitment to Sierra Rutile

The Offer is indicative of Pala’s commitment to its long-term partnership with Sierra Rutile. Pala remains focused on supporting Sierra Rutile in its efforts to maximize value for all shareholders.

Since the time of Pala’s initial acquisition of an approximately 30% interest in Sierra Rutile in September 2010, and the accompanying substantial strengthening of the independent board of directors, Sierra Rutile has focused on unlocking the value of its world-class asset, including the following key achievements:

  • implementing significant operational improvements;
  • augmenting the company’s talented management team with the additional skills required to execute the its expansion plans; and
  • exiting from legacy sales contracts, enabling the company to benefit from further forecast rutile price increases.

Going forward, Pala will continue to support Sierra Rutile’s pursuit of its strategic growth plans, including:

  • further increasing performance and optimisation of the existing assets;
  • increasing natural rutile production by 90% within two years through the implementation of the dry mining and Mogbwemo tails projects; and
  • completing a detailed feasibility study into the construction of a new large dredge that is expected to increase production to more than 200,000 tonnes of rutile per annum.

Pala believes that Sierra Rutile’s current board of directors and management is well positioned to drive the company forward in executing these strategic growth plans and looks forward to working together with them.

Background to the Offer

On 7 September 2011 Pala, acting through PML, made a cash offer to acquire all the shares of Sierra Rutile not already owned by Pala, at a price of 25 pence per Sierra Rutile Share which was increased to 30 pence per Sierra Rutile Share on 3 October 2011 (the "Offer").

On 4 November 2011, Pala announced that the Offer was unconditional in all respects. Pala also announced that in accordance with Rule 31.4 of the Code, the Offer would continue to remain open for acceptances until 1.00 p.m. (London time) today, 18 November 2011.

Pala is pleased to announce that the Offer was closed at 1.00 p.m. today.

Levels of Acceptances

As at 1.00 p.m. (London time) today, being the closing date of the Offer, valid acceptances of the Offer have been received in respect of 25,721,082 Sierra Rutile Shares, representing 5.05 per cent. of Sierra Rutile's issued share capital.

At that time, Pala held or had agreed to acquire by private treaty or market purchases 253,071,882 Sierra Rutile Shares, representing 49.69 per cent. of Sierra Rutile's issued share capital. This figure is comprised of 192,273,344 Sierra Rutile Shares, representing 37.76 per cent. of Sierra Rutile's issued share capital, which Pala held on the date of the Original Offer Announcement and 60,798,538 Sierra Rutile Shares, representing 11.94 per cent. of Sierra Rutile's issued share capital, acquired or agreed to be acquired by Pala during the course of the Offer period either through private treaty or market purchases. This also includes 75,000 Sierra Rutile Shares, representing 0.01 per cent. of Sierra Rutile's issued share capital relating to market purchases undertaken by Pala which have not yet settled.

In aggregate, therefore, the total number of Sierra Rutile Shares which Pala has acquired or agreed to acquire and for which PML has received acceptances is 278,792,964 Sierra Rutile Shares, representing 54.75 per cent. of Sierra Rutile's issued share capital.

This announcement should be read in conjunction with the full text of the announcements of 7 September 2011 and 3 October 2011 (including their respective Appendices) and 11 October 2011, 25 October 2011, 28 October 2011 and 4 November 2011. The Acceptance Condition and the further terms of the Offer are set out in Appendix I to the Original Offer Announcement (as modified by paragraph 4 of the Improved Offer Announcement). Unless the context otherwise requires, definitions used in the Original Offer Announcement and Improved Offer Announcement also apply to this announcement.

Unless otherwise stated, the closing prices for Sierra Rutile Shares referred to in this announcement are closing middle market quotations sourced from Bloomberg.

For enquiries:

Colin Murray
Pala Investments AG
+41 41 560 9070

About Pala

Pala Investments Holdings Limited is a multi-strategy investment company dedicated to investing in, and creating value across, the mining sector in both developed and emerging markets. Pala's exclusive investment advisor, Pala Investments AG, has extensive experience within the mining sector. Pala seeks to assist companies in which it has long-term shareholdings by providing strategic advice and innovative financing solutions. For more information, visit www.pala.com.

Publication of this announcement

A copy of this announcement will be available at www.pala.com by no later than 12.00 p.m. (London time) on the business day after the date of this announcement. You can obtain a hard copy of this announcement or any information incorporated by reference by contacting Computershare Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH. You will not receive a hard copy of this announcement or any information incorporated by reference unless you so request. You may also inform Computershare that you wish all future documents, announcements and information in relation to the Improved Offer be sent to you in hard copy.