sells ruighoek for 41mil market cap 25mil

5th March 2008
Manager of Company Announcements
Australian Stock Exchange Limited
Level 6, 20 Bridge Street
SYDNEY NSW 2000
Dear Sir
Sale of Ruighoek Chrome Project
Chrome Corporation Limited (“the Company”) wishes to advise that it has reached agreement with AMCOL International Corporation (“AMCOL”) for AMCOL to purchase, subject to shareholder approval and South African regulatory approval, the Company’s 74% interest in its Ruighoek Chrome Project in South Africa.
The key terms of the agreement are as follows:
1.
A headline acquisition price of A$41 million (less, if applicable, the estimated liabilities of the Company at closing of the sale) for the Company’s 74% interest in the Ruighoek project.
2.
AMCOL to loan Chrome Corporation Limited US$6m as at the signature date to enable Chrome Corporation Limited to redeem the listed convertible notes (ASX:CCIG) which matured on 28th February 2008. The loan is repayable at settlement from the proceeds of the sale.
3.
The sale is subject to obtaining Chrome Corporation Ltd shareholder approval.
4.
The sale is subject to AMCOL receiving:
a.
Consent in terms of Section 11(1) of the Mineral and Petroleum Resources Development Act from the South African Minister for Minerals and Energy;
b.
Confirmation of the existing Batlhako Mining Ltd Prospecting Right or the grant of the renewal of the Prospecting Right;
c.
Approval from the South African Exchange Control Authorities;
d.
Unconditional approval from South African Competition Authorities; and
e.
Consent from its financiers.
5.
A cut off date of 30th June 2008 or such other date as agreed between the parties.
AMCOL is a New York Stock Exchange listed company (NYSE:ACO) based in Arlington Heights, Illinois that is a leading international producer of value added specialty minerals and related products, operating in 26 countries. AMCOL is a major participant in the global chrome foundry sands market and is looking to increase its presence in the South African chrome industry with this purchase.
The Directors of the Company believe that this is an extremely attractive offer and in the absence of a competing higher offer, have no hesitation in recommending its approval to shareholders. 100% of the project was purchased approximately three years ago by the Company for A$8m. The sale will relieve the Company from the need to conduct another capital raising to fund the capital development of the mine and repay debt. The Directors
Suite B, 150 Hay Street, Subiaco, Western Australia 6008
Phone: (618) 9388 8430 Facsimile: (618) 9388 8450
Suite B, 150 Hay Street, Subiaco, Western Australia 6008
Phone: (618) 9388 8430 Facsimile: (618) 9388 8450
felt it was imprudent to further dilute shareholders at this time, especially after the significant consolidation of share capital and A$6m capital raising in June last year.
Following final completion of the sale and subject to financial and tax advice, the Company presently intends to subsequently seek shareholder approval to utilise the after tax proceeds from the final settlement of the sale of the sole asset to make a return to shareholders of up to A$0.15 per share. The return may consist of a yet to be determined return of capital plus an unfranked dividend (in proportions to be determined). It is uncertain whether this return will occur in this or next financial year.
The Company intends to retain sufficient capital to conduct a detailed assessment of an increasing number of global resources opportunities that are being presented with a view to once again purchasing a significant asset and adding value for shareholders by the application of development capital and management expertise to the permitting and financing process.
The Company will be sending out the Notice of Meeting to shareholders in the next few days to approve the sale of the asset. Full details of the agreement with AMCOL will be disclosed with the Notice of Meeting. If the Company’s shareholders do not approve the sale in circumstances where the Company’s directors recommend a competing offer, then the Company is required to reimburse AMCOL in respect of due diligence and legal costs up to A$150,000.
Yours faithfully
Brian Thomas
Managing Director
Chrome Corporation Ltd
For further information please contact
Tel : (08) 9388 8430
Fax : (08) 9388 8450
Web : www.chromecorp.com
E-mail : [email protected]