THUNGELA RESOURCES
LIMITED
(Incorporated in the Republic of
South Africa)
(Registration number:
2021/303811/06)
JSE Share code: TGA
LSE Share code: TGA
ISIN: ZAE000296554
('Thungela' or the 'Company' and,
together with its affiliates, the 'Group')
ACQUISITION OF THE REMAINING SHAREHOLDING INTERESTS IN THE
ENSHAM BUSINESS
1. Introduction
Shareholders are referred to the
announcements released by the Company on 3 February 2023 and
29 August 2023 relating to the acquisition by the Group
of an 85% joint venture interest in the Ensham coal mine and
related assets ("Ensham
Business"), effected through its wholly owned subsidiary,
Thungela Resources Australia Pty Ltd ("Thungela Australia")
("Original
Transaction").
Thungela Australia acquired the
Group's interest in the Ensham Business via an investment holding
company, Sungela Holdings Pty Ltd ("Sungela Holdings"), together with
co-investors Audley Energy Limited ("Audley") and Mayfair Corporations Group
Pty Ltd ("Mayfair") (Audley
and Mayfair, the "Co-Investors"), with the initial
shareholdings being 75% held by Thungela Australia and 12.5% held
by each of the Co-Investors. A portion of the Co-Investors'
investment was funded through loans from Thungela International Pty
Ltd ("Thungela International") in an aggregate capital sum of
AUD66,828,836, carrying interest at an interest rate of the
Australian 3-month bank bill swap rate +10%, capped at 15%
("Mezzanine Loans").
As part of the acquisition, a
long-term incentive plan ("LTIP") was put in place pursuant to
which the Co-Investors' shareholdings in Sungela Holdings could
increase by a further 5% (fully diluted) on certain business
milestones being achieved. To date, 2.5% of the 5% have vested,
with the remaining milestone yet to be fulfilled relating to the
award of a mining license and related environmental approvals for
Zone 1 (as defined in paragraph 2 below) occurring on or before 31
December 2025.
Shareholders are also referred to
the announcement by the Company on 28 February 2025 relating to
Thungela Australia's acquisition of Bowen Investment (Australia)
Pty Ltd 15% interest in the Ensham Business.
2. The Transaction
Thungela Australia has today entered
into sale and purchase agreements with each of the Co-Investors to
acquire their respective interests in Sungela Holdings, including
the unvested LTIP interests ("Transaction"). Each sale and purchase
agreement is separate, but is subject to a right in favor of
Thungela Australia to cross-cancel both agreements should either
sale fail to occur or be cancelled for reasons other than
Thungela's breach.
In each sale and purchase agreement,
the purchase consideration payable in terms of the Transaction
comprises:
a) an upfront amount
equal to the balance of the Mezzanine Loans of AUD81,940,313.39 at
28 February 2025, (settled by Thungela Australia directly to
Thungela International) plus a cash amount of USD862,500. The cash
amount is payable in USD to Audley and in AUD to Mayfair, as
determined by the ruling USD/AUD exchange rate 5 business days
prior to closing; and
b) an additional
(deferred) conditional consideration ("Additional
Consideration") of up to
USD7,766,875 ("Additional Consideration
Cap").
The consideration payable will be
reduced to take account of any dividends paid to the
Co-investors' from Sungela
Holdings prior to closing, with the first 10% of the dividend
applied to reduce the Additional Consideration Cap and the
remainder in reduction of the upfront consideration.
The Additional Consideration will be
payable if, and then as from the date on which, the Ensham Business
receives a mining license and related environmental approvals
required for the Ensham Life of Mine Extension Project to extend
the life of the existing underground operations of the Ensham
Business to 2037 ("Zone
1"). If the Additional Consideration becomes payable, it
will be paid over a 6-year period (or until the Additional
Consideration Cap has been reached). No further payments will be
made after the 6-year period, whether or not the total payments
have reached the Additional Consideration Cap.
Payments of the Additional
Consideration to the Co-Investors will be made bi-annually,
following the release of the Company's interim and final annual
financial statements, in amounts determined with reference to the
tonnes of coal sold by the Ensham Business, in proportion to
Sungela's interest in the Ensham Business, being 85% of the sold
production during the preceding 6-month period, multiplied by an
amount per tonne determined with reference to the average index
price for coal over that period ("Additional Consideration Rate"). The
Additional Consideration Rate applicable to each of Audley and
Mayfair ranges from zero, at average coal prices below USD115 per
tonne, to USD1.275, at average coal prices at or above USD170 per
tonne during the preceding 6 months.
The acquisition of Bowen Investment
(Australia) Proprietary Limited's remaining 15% interest announced
on 28 February 2025, together with the Transaction, once fully
implemented, will result in Thungela owning and controlling 100% of
the Ensham Business.
3. Rationale for the
Transaction
From inception of the Original
Transaction, Thungela has always emphasised the importance of its
geographic diversification strategy into Australia, which continues
to enhance the Group's production profile and earnings. We remain
pleased with the operational performance of the Ensham Business as
we continue to utilise our technical and marketing capabilities to
create further value for the Group. In line with our strategic
priorities, the Ensham Business continues to enable Thungela to
sell coal into new markets such as Japan and Malaysia, diversifying
our customer base and providing exposure to the Newcastle Benchmark
coal price.
4. Conditions precedent
The Transaction is subject to the
fulfilment or waiver (as applicable) of the following conditions
precedent contained in the sale and purchase agreements by
31 August 2025:
a) Foreign Investment
Review Board approval
The Treasurer of the Commonwealth of
Australia having exercised its powers in terms of the Foreign
Acquisitions and Takeovers Act 1975 and has not objected to the
Transaction.
b) South African Reserve
Bank approval
To the extent required, Thungela (or
other applicant member of the Group) having obtained all the
necessary consents or permissions for the Transaction from the
South African Reserve Bank.
5. Financial Information
The Transaction involves the
investment by Thungela Australia into Sungela Holdings, and
repayment of the Mezzanine Loans. As such, the Transaction has no
incremental net asset value ("NAV"), however will increase the
attributable NAV and attributable net profit after tax
("NPAT").
The Ensham Business had a NAV of
AUD395 million (100% basis) as at 30 June 2024, being the date
of the last reviewed interim financial statements. The NPAT
attributable to these net assets was AUD27 million (on a 100%
basis), based on the last reviewed interim financial statements as
at 30 June 2024 for Thungela Resources prepared in terms of
International Financial Reporting Standards.
6. Other
The intention is to fund the total
purchase consideration payable for the Transaction from the Group's
existing net cash resources. The Company expects to continue to
have sufficient liquidity headroom to provide the necessary support
to continue to fund the completion of existing committed
projects.
7. Categorisation of the
Transaction
The Transaction is categorized as a
Category 2 transaction in terms of section 9 of the JSE Listings
Requirements. An exchange rate of ZAR18.31:USD was utilised in
respect of the Transaction, being the spot rate of exchange at
close of business on 13 March 2025, the first business day prior to
the signature of the sale and purchase agreements by
Thungela.
Johannesburg
14 March 2025
Disclaimer
The information contained within
this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU)
No. 596/2014 as amended by the Market Abuse (Amendment) (EU Exit)
Regulations 2019. Upon the publication of this announcement via the
regulatory information service, this inside information is now
considered to be in the public domain.
Investor Relations
Hugo Nunes
Email: hugo.nunes@thungela.com
Shreshini Singh
Email: shreshini.singh@thungela.com
Media
Hulisani Rasivhaga
Email: hulisani.rasivhaga@thungela.com
South African Attorneys
Webber Wentzel
UK
Financial Adviser and Corporate Broker
Panmure Liberum Limited
Sponsor
Rand Merchant Bank
(A division of FirstRand Bank
Limited)
