REG - MC Mining Limited - Response to 4th Supplementary Bidder's Statement

MC MiningAnnouncement

03/04/2024 11:00

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RNS Number : 1599J  MC Mining Limited  03 April 2024

ANNOUNCEMENT
 
                3 April 2024

 

INDEPENDENT BOARD COMMITTEE'S RESPONSE TO GOLDWAY'S FOURTH SUPPLEMENTARY
BIDDER'S STATEMENT

 

The independent board committee (IBC) of MC Mining Limited (MCM or the Target)
refers to the A$0.16 off-market takeover offer by Goldway Capital Investment
Limited (Goldway) for all of the shares in MCM not currently owned by
associates of Goldway (Offer).

 

As stated in the Target's Statement dated 4 March 2024 (Target's Statement)
and confirmed in the Supplementary Target's Statements that the IBC
unanimously recommends that shareholders DO NOT ACCEPT the Goldway Offer,
having reviewed the Independent Expert's Report (IER), prepared by BDO
Corporate Finance (WA) Pty Ltd (BDO), concluding that the Offer is neither
fair nor reasonable to Shareholders. The IBC continues to hold this view.

 

MCM has received a copy of Goldway's Fourth Supplementary Bidder's Statement
dated 28 March 2024 (Fourth Supplementary Bidder's Statement). Goldway has
continued to criticise the IBC's response and to dismiss the findings of the
Independent Expert 1  in an effort to justify its A$0.16 price which
significantly undervalues MCM 2 . BDO assessed the value of an MCM Share prior
to the Offer between A$0.214 and A$0.356, with a preferred value of A$0.285
per MCM Share (on a controlling interest basis). The IBC wishes to respond to
the statements made by Goldway in its Fourth Supplementary Bidder's Statement:

 

1.           IBC Response and view of the Independent Expert

Goldway has sought to ''call into question the view adopted by the IBC
Response, as well as that of the Independent Expert and SRK, on the value of
MCM".

 

BDO Corporate Finance (WA) Pty Ltd (BDO), the Independent Expert and SRK
Consulting (Australasia) Pty Ltd (SRK) have provided a professional
independent valuation in accordance with industry standards.

 

The Independent Expert has concluded that the A$0.16 Offer is neither fair nor
reasonable.

BDO assessed the value of an MCM Share prior to the Offer between A$0.214 and
A$0.356, with a preferred value of A$0.285 per MCM Share (on a controlling
interest basis).

 

2.           Vele Aluwani Colliery (Vele) is not on care and
maintenance

Goldway has continued to falsely assert that Vele has been placed "under care
and maintenance".

As the IBC has previously responded:

(a)          no decision has been taken to place Vele under care and
maintenance;

(b)       no statutory application to the Minister of Mineral Resources
and Energy has been made to place Vele under care and maintenance; and

(c)       no care and maintenance plan or program has been prepared in
respect of Vele.

Goldway's claims that there are "no stated plans or cost estimates to
recommence production" are false. The current production optimisation strategy
for Vele, Operation Shandukani, is progressing and provides for how MCM and
the operator, Hlalethembeni Outsourcing Services (Pty) Ltd (HOS), as well as
representatives from Overlooked Collieries (Pty) Ltd (an associate of
Goldway), plan to use the colliery for underground soft steel coking
production and to optimise production.

3.           The Independent Expert's Market Value approach to
valuation

Goldway has claimed that, the "Independent Expert has adopted a Market Value
approach to valuation which "does not consider any potential future operating
cashflow generated from MCM's assets"".

SRK explained its adoption of the Market Approach to valuation in section 8.1
of its report: "the Mineral Assets being valued are compared with the
transaction values of similar Mineral Assets under similar time and
circumstances on an open market".  By definition, there is no requirement to
consider future operating cashflow generated by the assets using this method,
which is defined in the industry standard VALMIN Code.

4.           The Independent Expert has estimated a ZAR584m (A$46m)
preferred valuation of Vele

Goldway's false assertions that Vele is on care and maintenance and reference
to historical costs for Vele attempts to undermine the Independent Expert's
and SRK's valuation of Vele. The Independent Expert's valuation is based on
comparable market transactions, based on the current standing of Vele and
current and forecast market conditions. Historical costs are not relevant to
the market valuation methodology used.

The IBC has previously reiterated that Vele is not on care and maintenance.
The decision to downscale operations at Vele was taken by HOS, the contractor,
and its subcontractors, including Overlooked Collieries (Pty) Ltd (an
associate of Goldway), after consultation with MCM.

The IBC continues to be of the view that the Offer Price of A$0.16 per Share
significantly undervalues MCM and its assets.

5.           The IBC states "Shareholders who sell their Shares will
forego the opportunity to participate in the exploration and production
potential of MCM's development assets"

Goldway has made various statements about the assets and resources of MCM.
Goldway is attempting to justify its undervalued Offer Price by seeking to
discredit the production and exploration value opportunity upside for
Shareholders. If Goldway genuinely believed there was no production or
exploration upside to MCM's projects it would not be offering to acquire MCM.

The Independent Expert has taken appropriate account of the Company's assets,
their economic and production value.

The IER is based on the current status of MCM's assets and business, which
estimates a value per MCM Share prior to the Offer between A$0.214 and
A$0.356, with a preferred value of A$0.285 per MCM Share (on a controlling
interest basis). MCM's board and management team has changed substantially
since 2010 and the IBC believes that the Company is in a strong position to
complete the fundraising efforts required to advace Makhado into production in
the near term.

For the reasons set out in this announcement and the Company's 21 and 25 March
2024 announcements, as well as in the Target's Statements dated 4 and 18 March
2024, the IBC confirms and reiterates its unanimous recommendation that
Shareholders DO NOT ACCEPT the Offer.

 

For questions, please contact the Target Shareholder Line on +61 461 444 038
between 9.00am and 7.00pm (Sydney time) on Business Days (if calling from
within Australia) or between 11am - 1pm (Johannesburg time) or 9am - 11am
(London time).

The IBC looks forward to your continuing support.

 

Mr Nhlanha
Nene
Mr Khomotso Mosehla

Chairman of MC Mining
Limited
Chairman of the IBC

 

This announcement has been approved for release by MCM's Disclosure Committee.

 

The information contained within this announcement is deemed by MCM to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended.

 

Forward-looking statements

This announcement contains forward-looking statements, including statements of
current intention, statements of opinion and predictions as to possible future
events. All statements other than statements of historical fact are by
definition likely to be forward-looking statements. You should be aware that
such statements are predictions and are subject to inherent risks and
uncertainties, many of which are beyond the control of the MCM.  Refer to
section 9 of the Target's Statements for details about risks associated with
the Offer and MCM.  These forward-looking statements are based on, among
other things, MCM's assumptions, expectations, estimates, objectives, plans
and intentions and the views of the IBC as at the date of this announcement.
Although MCM and the IBC believe that the expectations reflected in any
forward-looking statement included in this announcement are reasonable, no
assurance can be given that such expectations will provide to be correct.
Actual events or results may differ materially from the events or results
expected or implied in any forward-looking statement.

None of MCM, BDO or SRK, nor any of their respective directors, officers,
consultants or employees makes any representation or warranty (whether express
or implied) as to the accuracy or likelihood of fulfilment of any
forward-looking statement, except to the extent required by law. You are
cautioned not to place undue reliance on any such forward-looking statements.

 

 For more information contact:
 Tony Bevan                     Company Secretary                   Endeavour Corporate Services          +61 42 1072 165
 Company advisers:
 Richard Johnson / Rob Patrick  Nominated Adviser                   Strand Hanson Limited                 +44 20 7409 3494

 Rory Scott                     Broker (AIM)                        Tennyson Securities                   +44 20 7186 9031
 Marion Brower                  Financial PR (South Africa)         R&A Strategic Communications          +27 11 880 3924
 BSM Sponsors Proprietary Limited is the nominated JSE Sponsor

About MC Mining Limited:

MC Mining is an AIM/ASX/JSE-listed coal exploration, development and mining
company operating in South Africa. MC Mining's key projects include the
Uitkomst Colliery (metallurgical and thermal coal), Makhado Project (hard
coking coal), Vele Colliery (semi-soft coking and thermal coal), and the
Greater Soutpansberg Projects (coking and thermal coal).

 

 

 

 1  The Independent Expert's Report (IER) prepared by BDO Corporate Finance
(WA) Pty Ltd (BDO) and contained in MCM's Supplementary Target's Statement
dated 18 March 2024 concluded that the Offer is neither fair nor reasonable to
Shareholders.

 2  BDO assessed the value of an MCM Share prior to the Offer between A$0.214
and A$0.356, with a preferred value of A$0.285 per MCM Share (on a controlling
interest basis).

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