Asx Media Release
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ASX MEDIA RELEASE 31 July 2019 Notice of Meeting Finalised for GFG Funding of up to $100M Havilah Resources Limited (Havilah) is pleased to provide an update on the proposed investment in Havilah of up to $100 million (Proposed Transaction) by the GFG Alliance. The Proposed Transaction will realise a strategic and mutually beneficial partnership between the two parties (ASX announcement of 1 May 2019). Havilah advises that the independent expert’s report (IER) and regulatory reviews of the notice of meeting (NOM) regarding the Proposed Transaction have now been completed. The NOM has therefore been finalised and sent for printing in preparation of its dispatch ahead of the extraordinary general meeting (EGM) relating to the Proposed Transaction. The NOM will be dispatched to shareholders on 9 August 2019 and the EGM will be held on 12 September 2019. An electronic copy of the NOM is also annexed to this announcement. Details with respect to the planned rights issue at a discount to $0.154 (the subscription price for the initial placement by GFG if the Proposed Transaction is approved) will be provided closer to the EGM. For further information visit www.havilah-resources.com.au Contact: Mr Walter Richards, CEO, on (08) 8155-4500 or email: [email protected] Havilah Resources Limited Website : www.havilah-resources.com.au ASX : HAV Tel : +61 (08) 8155 4500 Email : [email protected] Havilah Resources Limited ACN 077 435 520 Notice of Extraordinary General Meeting Explanatory Notes Date of meeting 12 September 2019 Time of meeting 11:00am (Adelaide time) Place of meeting Adelaide Convention Centre North Terrace Adelaide SA 5000 The independent directors of Havilah Resources Limited recommend that shareholders VOTE IN FAVOUR of the resolution set out in this Notice of Extraordinary General Meeting. This Notice of Extraordinary General Meeting should be read in its entirety. If shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting. Chairman’s letter Dear Fellow Shareholder, I would like to invite you to consider a transformational opportunity for Havilah Resources Limited (Company ) which can potentially unlock the underlying value of the Company. The independent directors of the Company recommend that you vote in favour of the resolution in the attached Notice. The opportunity can be realised by approval of the Company’s transaction with OneSteel Manufacturing Pty Ltd (ACN 004 651 325) ( SIMEC ), a member of the GFG Alliance, that was announced on 1 May 2019 (Transaction ). The Transaction involves SIMEC providing an investment in the Company of up to $100.0 million and consists of a committed staged equity investment in the Company of $49.5 million, plus a further $50.5 million in conditional funding. Funds will be applied via already agreed work programs (see Annexure C), designed to advance the Company’s iron ore projects (collectively the “Iron Genesis Project”) and the Mutooroo copper-cobalt project and prospects in the surrounding area (the “Copper Aura Project”) to the completion of definitive feasibility studies over an anticipated three-year period, as well as providing funding for exploration, corporate and administration costs. The staged equity investment in the Company of $49.5 million will consist of an initial placement of $6.0 million at a price of $0.154 per share, which is the 45-day VWAP at 30 April 2019, followed by a series of subsequent subscriptions at a premium of between 22% (a price of $0.188 per share) to 35% (a price of $0.208 per share), with the upper end of the range applying when SIMEC has a shareholding in the Company of between 30% and 51% in the Company. The Transaction will establish a strategic partnership with the GFG Alliance, which has a major investment in South Australia via operation of the revitalised Whyalla steelworks and Whyalla port and export facility and as such is natural potential purchaser of the Company’s future iron ore production. The GFG Alliance has the capacity to support and facilitate the future growth of the Company through access to global capital markets, capital investment, technical assistance and commercial offtake agreements. Under this Transaction the Company has an opportunity to rapidly advance two major projects, namely the “Iron Genesis Project” and the “Copper Aura Project”, to investment decisions that could result in production at a scale and within a timeframe to meet the Company’s ambition to grow and create long term shareholder value, as well as aligning with the GFG Alliance’s ambitious growth plans in South Australia and worldwide. The Transaction is a logical step in the Company’s long term strategy to realise the value from its multi- commodity portfolio by securing adequate funding, a strategy that was discussed with shareholders at the 2017 annual general meeting. At that meeting it was noted that without adequate funding the Company is constrained in delivering value to shareholders from its mineral assets. The opportunity presented by the Transaction is the outcome of the Company’s long term strategy in acquiring prospective tenements over the Grants Basin iron ore prospect and then seeking a partner with the required expertise and capital to assist in its exploration and development. 35335695v1 The Company identified the GFG Alliance (and more particularly SIMEC) as a suitable strategic partner with the strategic fit and financial capability to create substantial potential value from the Iron Genesis Project. With the right assets at the right time the Company was well placed to negotiate from a position of strength and in mid-2018 the Company commenced discussions with SIMEC regarding funding to advance the project. Those discussions tested and evaluated various alternatives against the Company’s objective of securing a substantial funding package allowing meaningful work to be performed with potential uplift in the value of each of the projects and thereby an uplift in the value of the Company. Following extensive negotiations, the Company and SIMEC agreed to the Transaction in May 2019. The independent directors recommend that you vote in favour of the resolution set out in the attached Notice to approve the Transaction for the following key reasons: • it is potentially transformational for the Company in providing access to funding, including contingency funding, that will allow the Company confidently to advance two of its key projects to definitive feasibility study level within the next three years; • it creates a strategic partnership with the GFG Alliance which has already made significant investment commitments in South Australia and is a natural end user of the iron ore at its Whyalla steelworks and export facility; • staged equity investments are being contributed by SIMEC at a premium to the share price of the Company at the date of the announcement of the Transaction; • dilution to shareholders is managed by structuring the funding so that it may be suspended if the project financial and technical objectives are not being met in accordance with the agreed work plan, milestones and project investment criteria; • it provides funding and resources to accelerate exploration on the Company’s substantial tenement package; and • the Company maintains control of its destiny and its projects as an independently directed and managed ASX-listed entity. The Company engaged BDO Corporate Finance (WA) Pty Ltd (Independent Expert ) as the independent expert to prepare a report expressing its opinion as to whether or not the Transaction is fair and/or reasonable to the shareholders of the Company who are entitled to vote on the Resolution. The Independent Expert has concluded in its report that “in the absence of a superior offer and any other relevant information, the Transaction is not fair but reasonable to the Shareholders of Havilah” (emphasis added) . In concluding that the Transaction is reasonable, the Independent Expert considered both: • advantages and disadvantages of the Transaction; and • other considerations, including the position of Shareholders if the Transaction does not proceed and the consequences of not approving the Transaction. In the Independent Expert’s opinion: “ the position of Shareholders if the Transaction is approved is more advantageous than the position if the Transaction is not approved ” (emphasis added). This report is set out in Annexure D of the Notice and I encourage you to read it in full. 35335695v1 Set out below is an extract from the IER setting out the comprehensive advantages and disadvantages of the Transaction identified by the Independent Expert (refer section 2.5 of the IER). I am of the opinion that the many advantages outweigh the few disadvantages. When reading the independent expert report ( IER ), shareholders should bear in mind the following: • given that shareholder approval of the Transaction is being sought under item 7 of section 611 of the Corporations Act, the Transaction is required to be analysed as a “control transaction” as per ASIC guidance under RG 111 (refer to Section 3 of the IER for further details). However, the Company notes that control by SIMEC is not a guaranteed outcome of the Transaction and if it occurs, will occur over a period of time and subject to a number of protections; • a premium for control is therefore only appropriate if and when that situation materialises. The Transaction does not result in 100% control with the expected SIMEC shareholding to be at 51%, subject to all conditions being fulfilled; • section 10.2 of the IER sets out that a premium for control is justified where there is control over decision making and strategic direction, access to cash flows, control over dividend policies, and 35335695v1 access to tax losses. None of these benefits will be obtained by SIMEC or the GFG Alliance pursuant to this Transaction; • the Independent Expert identified that the presence of a significant shareholder (SIMEC or the GFG Alliance) may reduce the attractiveness of the Company’s shares to potential investors post the transaction.