Exercise of option to acquire a further 10% interest in Xstrata’s South African coal business, excluding Goesgevonden JV
31 August 2006
Further to the announcements dated 28 February 2006 and 6 July 2006 whereby ARM and Xstrata announced the establishment of a major black controlled coal mining company (“ARM Coal), ARM and Xstrata are pleased to announce that ARM has exercised the option granted by Xstrata South Africa (Proprietary) Limited (“XSA”) to acquire a direct equity based participation interest in XSA’s coal business, excluding the Goedgevonden joint venture, of 10%.
The exercise of the option will result in further meaningful and sustainable empowerment ownership and involvement in XSA’s coal assets. The exercise of the option further strengthens the relationship between ARM and Xstrata and positions the parties to jointly pursue future opportunities.
Terms of the option
Under the terms of the option, ARM will subscribe for new participating preference shares (“preference shares”) in the capital of XSA for a subscription price of R400 million payable in cash. The preference shares will carry the same rights and obligations as the preference shares already in issue save that no facilitation (relating to interest and capital standstill arrangements and the application of the cash upstream principle as more fully described in the announcement dated 28 February 2006) will be provided by XSA. Accordingly, the preference shares will entitle ARM to participate in 10% of the free cash flow of XSA’s existing coal operations and dividends received from the preference shares will flow directly to ARM.
A further announcement will be made on SENS and in the press in due course as soon as the final transaction documents have been signed and the financial effects have been finalised. Accordingly, shareholders of ARM are advised to exercise caution when trading in their securities until such time as a further announcement is made.
31 August 2006
For further details, contact
Executive Director: Investor Relations / New Business Development
Tel: +27 11 779 1476
Tel: +27 11 779 1478
Financial adviser and sponsor to ARM
Deutsche Securities (SA) (Pty) Ltd
Investment Bank to Xstrata
Attorneys to ARM
Attorneys to Xstrata