| 1. Introduction |
| The board of directors of Mantengu (“Board”) is pleased to inform shareholders that the Company has entered into a Purchase Agreement: Movable Assets (“Agreement”) dated 5 February 2025 (“Signature Date”) with Park Village Auctions & Property Sale Proprietary Limited as “the Agent”, appointed by Ntandazo Aviwe Ndyamara, Mohammed Yaseen Khammissa and Ebrahim Mehnaaz being the “Joint Liquidators” representing Masorini Iron Beneficiation Proprietary Limited (“MIB” or “the Seller”) (in liquidation), to acquire certain assets owned by the Seller (“Assets”), for R18 975 000.00 (including VAT) (“Purchase Price”) (“the Acquisition”). |
| Neither MIB, nor the Joint Liquidators, nor the Agent, are related parties to Mantengu. |
| 2. The Acquisition |
| 2.1. Nature of the Assets |
| The Assets, as detailed in the Agreement, constitute an iron beneficiation plant (“Iron Plant”), which is located in Phalaborwa, Limpopo (“Site”). The Iron Plant converts superfine iron ore into high-quality metallic products using low-cost thermal coal. The Iron Plant is modular by design and will be deployed at strategic locations to significantly reduce the cost of production, in terms of feedstock, logistics, and energy consumption. The process itself is energy efficient with significantly lower emissions than other traditional iron-making processes. |
| 2.2. Rationale |
| The Assets were owned by MIB, a company owned by IMBS Proprietary Limited (“IMBS”) (62.70%) and the Industrial Development Corporation of South Africa Limited (“IDC”) (37.30%). Having borrowed funds from the IDC to acquire the Iron Plant, the IDC, as MIB’s only secured creditor, has a (i) pledge and cession of IMBS’ 62.70% stake in MIB; and (ii) security over the Iron Plant. |
| In July 2024, MIB entered into final liquidation and the Joint Liquidators appointed the Agent to auction the Assets. Mantengu has acquired the Assets through the auction process. |
| The Acquisition will complement Mantengu’s current investments in the metals sector. The Iron Plant/s will produce high-grade iron units at the lowest section of the production cost curve. The Acquisition is expected to create significant value for its shareholders whilst, at the same time, combatting areas exposed to the environmental risk of superfine iron ore. |
| 2.3. Purchase Price |
| 2.3.1. The Purchase Price is payable by Mantengu to the Agent on behalf of the Seller as follows: |
| 2.3.1.1. a deposit equal to 20% of the Purchase Price (“Deposit”), being R3 795 000.00 (including VAT), which amount has been settled by the Company; and |
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| 2.3.1.2. the balance of the Purchase Price (“Balance”), being R15 180 000.00 (including VAT), which amount is expected to be settled by the Company on or before 28 February 2025. |
| 2.3.2. In addition to the Purchase Price, Mantengu will pay a commission on the Acquisition to the Agent (“Commission”), calculated at 10% of the Purchase Price, being R1 897 500.00 (including VAT), simultaneously with the Balance. |
| 2.3.3. Payment of the Purchase Price and the Commission (“Payments”) is required for Mantengu to discharge its obligations arising from the Agreement. |
| 2.4. Conditions precedent and effective date |
| Save for the completion of the Payments, the Acquisition is not subject to any conditions precedent. |
| Transfer of ownership, possession and constructive delivery of the Assets will pass and be given to Mantengu at the Site by the Agents or the Seller once the Payments to the Agent have cleared in the Agent’s bank account. |
| 2.5. Financial information |
| In light of the circumstances set out in paragraph 2.2 above, the latest financial information of MIB available to the Board is the audited financial statements for the year ended 31 December 2020. These financial statements have been prepared by International Financial Reporting Standards. |
| The audited equity of MIB in the balance sheet as of 31 December 2020, was negative R203 million. The audited loss of MIB in the income statement for the year ended 31 December 2020 was R10 million. The value of the Plant and Machinery, being the Assets which have been acquired by Mantengu on auction, in the balance sheet as of 31 December 2020, was R210 million. The Board is of the view that the Plant and Machinery is worth significantly more than R210 million. |
| 2.6. Exclusion of warranties |
| In terms of the Agreement, the Assets are sold ‘voetstoots’. No express or implied warranties or guarantees have been given by either the Agent or the Seller in respect of the Assets. |
| 3. Categorisation of the Acquisition |
| The Acquisition is classified as a Category 2 transaction in terms of the Listings Requirements of the JSE Limited (“JSE”). |
| 4. Further potential acquisition |
| Shareholders are further informed that the Joint Liquidators intend to propose a section 155 compromise (“S155 Compromise”) under the Companies Act, 2008 (Act 71 of 2008), as amended, to reach a compromise or arrangement with MIB’s creditors to restructure the company’s financial obligations and take it out of liquidation. Subject to the requisite S155 Compromise approvals being obtained and the sanction of the court, Mantengu intends to acquire IMBS’ 62.70% shareholding in MIB for a nominal value. As of the Signature Date, however, the S155 Compromise process has not yet commenced, and no formal agreements have been concluded by Mantengu with any party in this regard. |
| If the Company’s potential acquisition of IMBS’ stake in MIB were to be formalised, the transaction would be categorised by the JSE Listings and shareholders would be notified by way of a SENS announcement. Mantengu views the IDC as an extremely important stakeholder and looks forward to growing the business of MIB together. |
| For the full document click the link below: |
| Mantengu Mining Limited |
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