So from the Last Ann. released on the 14th of January (under Duress from the ASX).
The Company explored alternative mine planning and scheduling options however the evaluation of these options was incomplete and inconclusive at the time the Company tendered the return of the Mbila shares.
What condition(s) precedent have not been fulfilled by the vendors of the Mbila Project (“Vendors”) pursuant to the acquisition agreement entered into by the Company with the Vendors (“Acquisition Agreement”) of the Mbila Project? The Vendors failed to timeously fulfil a condition precedent contained in the Acquisition Agreement. The relevant clauses read as follows: “3.1 The provisions of this Agreement...are subject to the fulfilment of the following conditions precedent: ... 3.1.2 that the Sellers, Mandlakazi Trust, Subco (now ZYL Mining SA (Pty) Ltd) and Micawber (now York SA (Pty) Ltd) (being the shareholders of Mbila as at the Signature Date) adopt the necessary changes to the memorandum of incorporation of Mbila to reflect the introduction of Mbila Holdco into the transaction and sign all documents necessary to lodge same with the Companies and Intellectual Property Commission.” “3.3 If the conditions precedent are not fulfilled by 15 May 2012, this Agreement shall be null and void ab initio...and no Party shall have any claim against any other Party of any nature...” The Company and the subscribers contend that as a consequence of this condition precedent not having been fulfilled, the Acquisition Agreement has lapsed and has become null and void ab initio. The Company and the subscribers communicated the aforegoing to the Vendors on 27 December 2012 and a response is awaited.
8.2 If it was aware of the non-fulfillment of the condition(s) precedent prior to the release of the Further Update please advise why the Company did not make an announcement at an earlier time or request a trading halt at an earlier time? Please comment specifically on the application of listing rule 3.1. The Company did make an announcement at an earlier time in the Mbila Update on 31 December 2012, to the effect that it did not consider itself bound by the agreement. This arose as a consequence of the determination of the non-fulfilment of the condition precedent.
We wish to draw your attention to the definition of “aware” in chapter 19 of the listing rules which states that: “an entity becomes aware of information if a director or executive officer (in the case of a trust, director or executive officer of the responsible entity or management company) has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as a director or executive officer of that entity” Further, we wish to draw your attention to listing rule 3.1 which requires an entity to give ASX immediately any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s securities. The exceptions to this requirement are set out in listing rule 3.1A.
ASX Limited (“ASX”) refers to the following announcements to the market with respect to the Company’s interest in the Mbila anthracite mining project in South Africa (“Mbila Project”): ? The Company’s announcement of 5 November 2012 titled “Mbila Bankable Feasibility Study Interim Update” and released to the market at 10:13 am (EST) in which it was stated inter alia that: o “Detailed technical studies undertaken by RSV Enco as part of the BFS have highlighted a lower than expected conversion from Resources to Reserves within the Badger Study Area (the implication being that reduced Reserves leads to a shorter mine life) while simultaneously confirming a larger Resource base within the area known as the Mbila Project Area.” o “A technical mining workshop will be conducted this week to examine detailed mine scheduling and its impact on Reserves contained within the Badger Study Area”. “The outcomes of the technical mining workshop to be held this week will be evaluated and will determine what, if any, additional technical studies, drilling or feasibility work is required. The implications in terms of costs and time will be determined from this evaluation. The Company will re-engage with the vendors on these findings and discuss with them what options can be considered going forward”. “It is expected that the time frame of the Mbila Project will be pushed out, and although disappointing, should not detract from the fact that the underlying project and its potential remains intact.”
“Interim BFS Update”) ? The Company’s announcement of 31 December 2012 titled “Mbila Update” and released to the market at 8:30 am (EST) in which it was stated inter alia that: “The Company and the subscribers under the agreement in terms of which they were to acquire shares in Mbila Resources (Pty) Ltd have informed the vendors of the Mbila project that they do not consider themselves bound by the agreement and that consequently no further payments in terms of the agreement are to be made” (“Mbila Update”) ? The Company’s announcement of 4 January 2013 titled “Company Update” and released to the market at 10:23 am (EST) in which it was stated inter alia that: “On 5 November 2012 the Company announced that it had been unable to duplicate the Resources to the Proven Reserves conversion detailed in the Badger Study. A technical mining workshop was subsequently conducted and it confirmed the Company?s concern as disclosed in the announcement of 5 November 2012. The Company has not yet received a competent person?s report on the final reserves.” ”Furthermore it has recently come to light that a condition precedent to the Mbila agreement (as amended) was not timeously fulfilled by the vendors. The Company and the subscribers under the Mbila agreement have informed the vendors of the Mbila Project that as a consequence of the non-fulfilment of a condition precedent, the agreement has lapsed and that all monies paid to date must accordingly be refunded.
Return of monies? Litigation update? Any other guesses? I guess we'll find out soon enough.
Holding off from buying into Atrum Coal, in case these is a TURN AROUND from this point of the ZYL ABYSS!!!!!
Pandelis
HWK Price at posting:
1.7¢ Sentiment: None Disclosure: Not Held
