Just to give you guys a 'heads up' - no doubt there will be an announcement in the morning.
RNS Number : 5516G Rusina Mining NL 02 February 2010
? Joint Press Release European Nickel and Rusina Mining to Merge Consolidating Assets in the Philippines and becoming a Significant Nickel Development Company 2 February 2010 - Perth and London: European Nickel PLC ("European Nickel" or the "Company") (AIM, PLUS: ENK) and Rusina Mining NL ("Rusina") (AIM: RMLA, ASX: RML) are pleased to announce that they have signed a Merger Implementation Agreement ("MIA") whereby European Nickel proposes to acquire the entire issued share capital of Rusina by way of a Scheme of Arrangement (the "Scheme") under the Australian Corporations Act.
Transaction Summary ? In consideration for the transaction, Rusina shareholders will be offered four European Nickel new ordinary shares ("New Shares") for every five Rusina ordinary shares they own (the "Exchange Ratio"). The Scheme is subject to Australian court approval and approval by Rusina's shareholders. ? The Exchange Ratio represents a 15.5% premium to Rusina's last 10 day's ASX Volume Weighted Average Share Price ("VWAP") of A$0.0933 per share (GBP0.05159 per share) and values Rusina at approximately GBP18.1 million (A$32.7 million) based on European Nickel's last 10 days VWAP of GBP0.0745 per share (the "Initial Offer"). Based on the last 30 days VWAP for each company the premium is 27%. ? The ultimate value of the offer is capped at GBP27.1 million (the "Value Cap"), a 50% premium to the Initial Offer. If an adjustment is made as a result of the Value Cap, the offer would represent a 73.3% premium to Rusina's 10 day VWAP prior to the date of the MIA. A description of the Value Cap is shown below. ? Holders of Rusina share options will be offered New Shares in consideration for the cancellation of their Rusina options, based on the calculated value of each series of options. In total 6,425,329 New Shares will be offered to optionholders. ? The Rusina directors unanimously recommend that Rusina shareholders vote in favour of the proposed Scheme, and each director intends to vote all of the Rusina shares they own or control at the date of the Scheme meeting in favour of the Scheme, in the absence of a superior proposal. ? Upon completion of the Scheme and the Placing, and under the terms of the Initial Offer, current Rusina shareholders will own approximately 27.3% of the merged company. ? European Nickel plans to establish an Australian listing of its shares through ASX-listed CHESS Depositary Interests (CDIs) such that Rusina shareholders can trade the New Shares they receive on the ASX. ? On completion of the Scheme certain changes will be made to the composition of the Board, including the appointment of a new Managing Director, which are detailed below. ? In a related transaction, European Nickel has also announced today that it has placed 172.4 million new ordinary shares (the "Placing Shares") at 7.0 pence each (the "Placing Price") to raise gross proceeds of approximately US$19.4 million (GBP12.1 million) (the "Placing") and an estimated additional 1.25 million new ordinary shares (the "Endeavour Shares") in lieu of interest on the loan provided by Endeavour Financial Corporation.
Benefits of the Merger The merger will create a larger, stronger company that will be better able to finance its development projects and grow into a mid-tier nickel producer. The merger is considered by the Boards of Rusina and European Nickel to be a logical outcome of the joint venture between European Nickel and Rusina at the Acoje nickel project in the Philippines and consolidates the ownership structure of the project ahead of critical development and financing decisions. ? Improved access to development capital through enlarged balance sheet, increased share liquidity and ASX listing. ? Strengthened management team - a management team with a track record of success in international project development and the organisational depth to develop two projects in quick succession. ? Creates a significant nickel development company with a substantial JORC resource base of 1.35 million tonnes of contained nickel and a medium term nickel production target of 50,000 tonnes per annum. ? Geographical and project diversification across Turkey, the Philippines and Albania. ? Ability to pursue further growth opportunities. ? Enables savings in corporate overheads and cost savings from the rationalisation of the Acoje joint venture into a simpler corporate and operational structure. European Nickel currently has a 20% interest in the Acoje project, with a right to earn up to 40%, while Rusina currently has a 72% interest in the project. A Definitive Feasibility Study is due to be completed in 2011. Acoje is European Nickel's next planned heap leach project for commercialisation, after the ?aldag project in Turkey. European Nickel currently owns 8,836,430 Rusina shares, representing 2.9% of the issued capital of Rusina.
The Combined Group Upon implementation of the merger, the combined group will have a total attributable resource base of 1.35 million tonnes of contained nickel, forecast production of 45,000 tonnes per annum from its two projects, ?aldag and Acoje, and a strengthened management team.
The combined market capitalisation of the two companies, based on the value of Rusina under the Initial Offer and yesterday's closing price of European Nickel, is GBP62.5 million. On completion of the Scheme Rusina's CEO, Robert Gregory, and Rusina's CFO, Mark Hanlon, will join the European Nickel board as Managing Director and Finance Director respectively. Simon Purkiss will become Executive Deputy Chairman, David Whitehead will continue as Chairman and Paul Lush will continue as a Non-Executive Director. A further Non-Executive Director will be nominated on completion of the Scheme and the appointment of all of the new directors will be subject to approval by the Board and the Company's nominated adviser. Provided that all proposed appointments are made, the remainder of the Company's Board will step down with effect from completion. Commenting on the merger, Simon Purkiss, Managing Director of European Nickel, said: "Merging with Rusina is a natural step as we seek to grow into a mid-tier nickel producer. Acoje will be our next development project after ?aldag and simplifying the corporate structure, along with bolstering our management team ahead of critical development and financing decisions is logical. I am also delighted that Rob Gregory has agreed to join the Board of European Nickel. He has excellent operational experience and will be invaluable in bringing ?aldag and Acoje into production." Robert Gregory, Managing Director of Rusina, said: "This transaction delivers considerable value to Rusina shareholders as they can now be part of a larger, geographically diversified nickel company with a project at construction stage in Turkey and a pipeline of development projects in the Philippines and Albania."
Merger Implementation Agreement ("MIA") Rusina has entered into a binding MIA with European Nickel under which Rusina has agreed to propose the Scheme to its shareholders pursuant to which all of Rusina's shares will be acquired by European Nickel. A summary of the MIA is attached to this announcement. The merger is subject to the completion of confirmatory due diligence by European Nickel and Rusina prior to 3 March 2010. The merger is also subject to satisfaction of a number of customary conditions precedent, including the receipt of required regulatory and Australian court approvals, as well as the approval of Rusina shareholders. The MIA contains certain customary terms usual for a transaction of this nature, including non-solicitation and no talk provisions and a mutual break fee of US$250,000 payable in certain circumstances detailed in summary of the MIA attached below. As noted above, consideration for the transaction will be European Nickel shares, with Rusina shareholders offered four European Nickel shares for every five Rusina shares they own (the "Exchange Ratio"). The Exchange Ratio values Rusina at approximately GBP18.1 million (A$32.7 million) based on European Nickel's 10 day VWAP prior to the date of the MIA (the "Initial Offer"). Under the terms of the MIA the ultimate value of the offer is capped at GBP27.1 million (the "Value Cap"), a 50% premium to the Initial Offer. The determination of whether an adjustment will be made to the Initial Offer will be made 12 business days prior to the Rusina shareholder meeting to approve the Scheme ("Cap Valuation Date"). If at this date, the value of the offer based on European Nickel's 10 day VWAP prior to the Cap Valuation Date, is greater than the Value Cap then the Exchange Ratio will be adjusted to equal the Value Cap. The Value Cap will be reached if, at the Cap Valuation Date the European Nickel 10 day VWAP prior to the Cap Valuation Date is greater than 11.175 pence, assuming no new Rusina ordinary shares are issued before that date. The Value Cap mechanism has been included on the basis that the European Nickel share price could appreciate strongly, prior to completion of the merger, as a result of a number of initiatives that are currently underway. In a related transaction, European Nickel has placed 172.4 million new ordinary shares at 7.0 pence each to raise gross proceeds of approximately US$19.4 million (GBP12.1 million) and an estimated additional 1.25 million new ordinary shares in lieu of interest on the loan provided by Endeavour Financial Corporation. The Placing Shares have been placed in two tranches. The First Tranche Placing Shares have been placed firm on the basis of not exceeding the Company's current authorised share capital. The remaining Second Tranche Placing Shares, have also been placed firm but are conditional, inter alia, on the passing of a shareholder resolutions to authorise the allotment of the shares and the completion of the Scheme The funds from the First Tranche Placing Shares will be used to repay the Endeavour bridging loan, to meet expenditure commitments at ?aldag and Acoje and for general working capital purposes. The proceeds from the Second Tranche Placing Shares will be used to meet ongoing expenditure commitments for ?aldag, progress the Acoje DFS and for general working capital purposes.
Next Steps It is expected that a meeting of Rusina shareholders will be held in early May 2010 to vote on the proposed Scheme. Rusina shareholders will receive a Scheme Booklet and notice of meeting in March 2010. The Scheme Booklet will contain full details of the proposed transaction and will include an independent expert's report for the benefit of Rusina shareholders. The transaction is expected to be completed by late May 2010.
