Board Response to Indicative Non-Binding Proposals
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.
29 April 2015
Ormonde Mining plc
("Ormonde" or "the Company")
Response to Indicative Non-Binding Proposals from Almonty Industries Inc ("Almonty")
The Board of Ormonde ("Board") provides the following response to indicative non-binding proposals from Almonty to acquire the entire issued share capital of the Company (the "Proposals").
An initial proposal from Almonty (the "March Proposal") was received by Ormonde on the night of 10 March, 2015, at which time Almonty also unilaterally announced that it had made a proposal, noting in its announcement that "There is no certainty that any transaction will be progressed or, in particular, that a formal offer to shareholders will be made, or as to the terms on which a formal offer may be made if forthcoming."
The March Proposal, which is stated inter alia, to be subject to due diligence and to the unanimous recommendation of the Ormonde Board, comprised an indicative non-binding proposal of 4.25p for each Ormonde share, to be satisfied in new Almonty shares, save that Ormonde shareholders could elect for a maximum of 50% of the offer consideration in cash (subject to funding for the cash component being secured by Almonty - Almonty indicated in the March Proposal they would likely require a bridging facility to make the cash payment).
On 23 April, 2015 (subsequent to the announcement by Ormonde on 13 April, 2015 that it expected to shortly be in a position to finalise agreements in relation to the proposed project financing of the Barruecopardo Project with Oaktree Capital Management L.P.) a second indicative non-binding proposal was received from Almonty (the "April Proposal"). The April Proposal, which is stated inter alia, to be subject to due diligence and to the unanimous recommendation of the Board, comprises an indicative non-binding all cash proposal of 4.00p for each Ormonde share, with a share alternative also proposed. It is indicated that a 24 month bridging facility would be used to fund the cash portion, but no evidence has as yet been advanced by Almonty that such a facility is in place and/or available.
Since the receipt of the March Proposal, your Board has sought to obtain clarity on those specific key issues which it, together with its advisers, considered necessary to enable it to determine the credibility of any take-over proposal from Almonty and of its ability to subsequently fund the Barruecopardo mine development, an issue not addressed in either of Almonty's two proposals (although relevant to any share alternative proposed by Almonty), nor in its responses to specific questions posed by Ormonde subsequent to the March Proposal.
Ormonde also engaged two international mine consultancy groups (CSA Global Pty Ltd of Perth, Australia1 and Micon International Ltd of Toronto, Canada2) to examine and prepare a report on the publicly available information on Almonty.
Following its own examination of the publicly available information on Almonty, and of the reports received from the independent consultants, the Board has a number of concerns in respect of the reported reserves, projected mine life, negative net cashflows from operations, and existing debt profile of Almonty and its operations. The Board notes that, in the opinion of the authors of both independent reports, no technical or economic justification has been provided for the inclusion by Almonty of the tailings from its Los Santos Mine within the Los Santos Mineral Reserve Estimate, and that, therefore, these tailings should be removed from the Reserve Estimate. The removal of the tailings from Reserves would result in the remaining mine life at Los Santos falling from the 8 years reported by Almonty to a little over 2 years. Micon also considered Almonty's other mine, Wolfram Camp, and noted that it has reported reserves for less than one year's operations. Given the above, the Board has concerns over the ability of Almonty to provide funds on the "certain funds" basis required under the Irish Takeover Rules for an offer for Ormonde as well as servicing its own reported debt of CAD$26.9 million, as at 31 December 2014.
The Board has also noted that another tungsten developer, Woulfe Mining Corporation, recently announced that its board had unanimously determined to terminate an agreed merger (subject to due diligence) with Almonty shortly after the commencement of reciprocal due diligence between the parties.
In the absence of additional specific assurances from Almonty and following our consideration of the public documentation, the reports referred to above and other available information, the Board would not be in a position to recommend any proposal which included a component of Almonty's sharesand further, due to the Board's concerns indicated above, it is not confident that Almonty is capable of executing its proposal to acquire the Company for cash, even were it to make a proposal at a level which was capable of recommendation.
Accordingly, following careful consideration of the April Proposal, including the 4.00p cash offer price, which is considered by the Board to substantially undervalue the Company and the Barruecopardo asset,the non-binding nature of the proposal, the continued lack of satisfactory evidence thus far provided of Almonty's ability to fund the cash component and the Board's continuing concerns with respect to the ability of Almonty to complete any such proposal, the Board of Ormonde does not believe that it is in the best interests of the Company to deviate from its decision to pursue and, with shareholder consent, complete the Oaktree project financing. The Oaktree project financing is the subject of a further announcement today to the effect that the Company has entered into binding agreements and is publishing a circular convening an extraordinary general meeting at which a resolution to approve the Oaktree project financing will be proposed and recommended by the Board.
The Board notes that Almonty approached the Company in 2013 and was then, after an offer period of more than 5 months, required by the Irish Takeover Panel to make an offer or announce that it did not intend to make an offer within a specified deadline, with no offer ultimately forthcoming. The Board now believes that the current Almonty proposals could pose considerable risk, exposing the Company and its shareholders to a situation where it has neither the prospect of project financing being completed, nor the option of a definitive and satisfactory cash offer.
Your Board continues to work towards creating value for Ormonde shareholders. Any fully funded offer, presenting appropriate value and capable of implementation in a reasonable time frame, forthcoming from any party, will of course be considered by the Company.
Notwithstanding this, the Board believes that delivering project financing for the development of a mine at Barruecopardo in the short to medium term currently represents the best opportunity to maximise the value of Ormonde's interest in Barruecopardo, in the interests of the Company and its shareholders as a whole and recommends that shareholders vote in favour of the Oaktree project financing at the forthcoming extraordinary general meeting.
1. CSA Global Pty Ltd is a geological, mining and management company with 30 years' experience in the mining industry. CSA Global provides multi-disciplinary services to resource industry clients worldwide from offices in Australia, Indonesia, Singapore, South Africa, Russia, United Kingdom and Canada.
2. Micon International Limited is an independent firm of mineral industry consultants, headquartered in Toronto, Canada, and with offices in Vancouver, Canada, and Norwich and Cornwall, United Kingdom. Micon's practice is worldwide and covers all of the base and precious metals, the energy minerals (coal and uranium) and a wide variety of industrial minerals.
Sources and bases of information:
The relevant sources of information are set out below in the order in which the relevant information appears in this announcement. Where any such information is repeated, the underlying bases and sources are not.
(1) Information in relation to the Almonty March Proposal is taken from correspondence received from Almonty and, to the extent relevant, discussions with Almonty's advisers.
(2) Information in relation to the Almonty April Proposal is taken from correspondence received from Almonty.
(3) Publicly disclosed information in relation to Almonty has been extracted from announcements and other documentation issued by Almonty and available on www.sedar.com. These include in particular the financial reports and accounts of Almonty in respect of each of the years ended 31 September, 2012, 2013 and 2014.
(4) Information in relation to the previously proposed transaction between Almonty and Woulfe Mining Corporation has been sourced from an announcement issued by Woulfe Mining Corporation dated 17 February, 2015 and available on its website, www.woulfemining.com.
(5) Information in relation to the previous approach made by Almonty has been sourced from an announcement issued by Ormonde dated 9 August, 2013, an announcement issued by the Irish Takeover Panel dated 18 December, 2013 and subsequent announcements issued by Almonty and Ormonde dated 31 January, 2014.
(6) Information relating to the outcome of diligence on Almonty conducted by two external consultants engaged by Ormonde has been sourced from the respective reports. In accordance with the requirements of the Irish Takeover Rules, these reports will be display documents in the event of Almonty making a formal offer under the Irish Takeover Rules and Ormonde issuing a response under the Irish Takeover Rules to that offer.
The Directors of Ormonde accept responsibility for the information contained in this announcement, save that the only responsibility accepted by the Directors of Ormonde in respect of the information in this announcement relating to Almonty, the Almonty Industries Group, the board of directors of Almonty and the persons connected with them, which has been compiled from published sources, has been to ensure that such information has been correctly and fairly reproduced or presented (and no steps have been taken by the Directors of Ormonde to verify this information). To the best of the knowledge and belief of the Directors of Ormonde (having taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.
Any holder of 1% or more of any class of relevant securities of Ormonde or of Almonty may have disclosure obligations under Rule 8.3 of the Irish Takeover Panel Act, 1997, Takeover Rules 2013.
No statement in this announcement is intended to be an asset valuation or a profit forecast and profits and earnings per share will not necessarily be changed.
Davy and Davy Corporate Finance each of which are regulated in Ireland by the Central Bank of Ireland, are acting for Ormonde and no one else in relation to the matters referred to herein. In connection with such matters, Davy and Davy Corporate Finance, its affiliates and their respective directors, officers, employees and agents will not regard any other person as their client, nor will they be responsible to anyone other than Ormonde for providing the protections afforded to their clients or for providing advice in connection with the matters described in this announcement or any matter referred to herein.
Publication on Website
A copy of this announcement will be available, subject to certain restrictions relating to persons resident in restricted jurisdictions, at www.ormondemining.com by no later than 12 noon (Dublin time) on 30 April 2015. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
Enquiries to:
Ormonde Mining plc
Kerr Anderson, Managing Director Tel: +353 (0)1 8253570
Capital M Consultants
Simon Rothschild Mob: +44 (0)7703 167065
Murray Consultants
Mark Brennock Tel: +353 (0)1 4980300 Mob: +353 (0)87 2335923
Davy (Nomad / ESM Adviser)
Eugenée Mulhern / Roland French Tel: +353 (0)1 6796363
SP Angel Corporate Finance LLP(Joint Broker)
Ewan Leggat / Katy Birkin Tel: +44 (0)20 3 470 0470
About Ormonde
Ormonde Mining Plc is admitted to trading on the AIM market in London and the ESM market in Dublin. Ormonde is a mineral development and exploration company focused on Spain (Ticker: ORM).
Ormonde is developing a low cost mining operation at its Barruecopardo tungsten project to become a major, secure European supply of tungsten. Following the completion of a Definitive Feasibility Study in 2012, and the Environmental and Mining Permit being received during 2014, Ormonde is now in the process of completing a financing package for the Project which would enable its development during 2015, with production commencing in the second half of 2016. Ormonde also has a number of other exploration projects including tungsten, gold and copper.
ENDS
This information is provided by RNS
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