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Small Related Party Transaction
TRUSTCO GROUP HOLDINGS LIMITED
Incorporated in the Republic of Namibia
(Registration number 2003/058)
Registered as an external company in South Africa
(External registration number 2009/002634/10)
JSE share code: TTO
NSX share code: TUC
OTCQX share code: TSCHY
ISIN Number: NA000A0RF067
("Trustco" or "Company")
SMALL RELATED PARTY TRANSACTION
1. INTRODUCTION
1.1 Shareholders are referred to the announcement released on SENS on 20 March
2020 ("Initial Announcement"), where Shareholders were advised that Trustco
Business Developments (Pty) Ltd ("TBD"), a wholly owned subsidiary of Trustco,
and investment vehicle for its mining investments and Riskowitz Value Fund LLP
("RVF") ("the Parties") entered into a sale of share and option agreement
("Agreement") on 20 March 2020 ("Signature Date") in terms of which:
1.2 RVF will acquire 52 shares ("Sale Shares") amounting to 1.3% of the issued share
capital of Trustco Resources (Pty) Ltd ("Trustco Resources"), a wholly owned
subsidiary of TBD; and
1.3 RVF will be granted an option ("Option") to acquire up to a further 148 shares
("Option Shares") amounting to 3.7% of the issued share capital of Trustco
Resources.
1.4 Shareholders are further referred to the announcement released on SENS on 17
September 2020 regarding an addendum ("Addendum") to the Agreement entered
into by the Parties on 16 September 2020, with such Addendum amending the
Option period from a six-month period to a twelve-month period.
2. BACKGROUND
2.1 The Company requested a ruling from the JSE considering the Option period that
had subsequently lapsed with the result that the Option was incapable of being
exercised. Therefore, only the disposal of the 1.3% Sale Shares of Trustco
Resources, needed to be taken into consideration for purposes of a Fairness
Opinion (The disposal of the Sale Shares forming the Transaction).
2.2 At the time of entering into the transaction RVF and his associates were material
shareholders of Trustco and thus considered to be a related party to Trustco in terms
of paragraph 10.1(b) (i) of the Listings Requirements of the JSE Limited ("JSE
Listings Requirements").
2.3 As only the Sale Shares were required to be considered in terms of a fairness
opinion, the Transaction was classified as a small, related party transaction in terms
of section 10.7 of the JSE Listings Requirements. As such, the board of Trustco was
required to obtain a fairness opinion from an independent expert acceptable to the
JSE, prepared in accordance with Schedule 5 of the JSE Listings Requirements.
Such opinion must confirm that the terms of the Transaction are fair to Trustco
shareholders prior to Trustco implementing the Transaction.
2.4 Shareholders are advised that following the ruling from the JSE, the Transaction
was no longer categorised as a category 2 transaction as previously stated on the
Initial Announcements, but categorised as a small related party transaction and
therefore a circular was no longer required.
3. DESCRIPTION OF BUSINESS
3.1. Description of the business conducted by Trustco Resources
3.1.1 Trustco Resources is the holding company for the Namibian, Mauritius and Sierra
Leone mining operations in the mining investments. The mining investments were
established to pursue opportunities within the natural resources sector in general,
however since its inception, Trustco Resources' focus has been on the diamond
industry.
3.1.2 Trustco Resources is Trustco's investment entity that houses the mining portfolio.
The most significant investment in the mining portfolio is Meya Mining, a world-class
diamond deposit in Sierra Leone which holds a 25-year mining licence. Meya Mining
recently released findings from a diamond resource estimate, by Z Star Mineral
Resource Consultants, Qualified Persons as defined by the SAMREC reporting
code. The report estimated in-situ value of USD 763 million for the Meya River
kimberlite domain, which represents less than 5% of the total combined strike
lengths of the kimberlite domains within Meya Mining's licensed area. The mine is
expected to reach commercial production during the 2024 financial year.
4. RATIONALE
TBD is entering into the Transaction as it will allow for an injection of capital into
Trustco Resources which capital will be used for the purposes set out in paragraph
6 below.
5. TRANSACTION STRUCTURE
The effective date ("Effective Date") of the Transaction shall be the later of 20
March 2020 or payment of the Purchase Consideration.
The completion date ("Completion Date") of the Transaction shall be 17 July 2024.
6. APPLICATION OF THE PURCHASE CONSIDERATION
The Purchase Consideration shall be used by TBD to inject capital into Trustco
Resources to:
6.1 enable upgrades of the mine infrastructure, plant and equipment in Namibia as well
as Sierra Leone;
6.2 accelerate development of its mining operations and transition into commercial
production; and
6.3 Unlock further equity and debt opportunities.
7. PURCHASE PRICE AND CONDITIONS PRECEDENT
7.1 RVF will acquire the Sale Shares for a purchase consideration of USD 4 550 000
(NAD79,261,000) ("Purchase Consideration").
7.2 The Transaction is subject thereto that,
7.2.1 the Parties obtain all regulatory approvals in principle required for the execution of
the transaction by all parties; and
7.2.2 the Parties obtain approval from their respective boards and in so far as it may be
required, also from their respective shareholders.
7.3 The transaction would not constitute a change in control of the Company or in
Trustco Resources.
7.4 In addition to the salient terms set out above, the Agreement contains warranties
which are standard for a transaction of this nature.
7.5 The suspensive conditions have been met and the Completion Date will be
considered the 17 July 2024.
8. FINANCIAL INFORMATION
8,1 As per the Initial Announcement, the book value of the net assets that were the
subject of the Transaction at 30 September 2019 was NAD 967 million. The loss
after tax attributable to the net assets that were the subject of the Transaction for
the 6 months ended 30 September 2019 was NAD 73 million after taking in
consideration the restatement of loan waiver.
8.2 The above financial information was extracted from the interim results of Trustco
Resources for the six months ended 30 September 2019 which were prepared in
terms of International Financial Reporting Standards.
9. RELATED PARTIES TRANSACTION AND FAIRNESS OPINION
9.1 As a result of the Transaction being classified as a small related party transaction,
in terms of 10.7 it required a fairness opinion ("Fairness Opinion") from an
independent professional expert acceptable to the JSE ("Independent Expert"),
confirming that the terms of the Transaction are fair as far as shareholders of Trustco
are concerned.
9.2 Paragraph 10.7(b) has been complied with and the Independent Expert, has
declared the Transaction to be fair and the Fairness Opinion will lie for inspection at
the Company's registered office for a period of 28 days from the date of
announcement.
10. EXCHANGE RATE
All amounts were converted at the NAD/USD exchange rate of N$17.42 at the close
of business on 19 March 2020.
Windhoek, Namibia,
17 July 2024
Komada Holdings (Pty) Ltd
Company Secretary and Investor Relations Services to Trustco Group Holdings
Limited
JSE Sponsor
Vunani Sponsors
NSX Sponsor
Simonis Storm Securities Proprietary Limited – Windhoek
OTCQX Sponsor
J.P Galda & Co – New York
Date: 17-07-2024 05:36:00
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