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Randgold & Exploration Company Limited
(Incorporated in the Republic of South Africa)
(Registration number 1992/005642/06)
Share Code: RNG & ISIN: ZAE000008819

(“R&E” or “the company”)

 

Distribution in specie and special dividend to R&E Shareholders

1. INTRODUCTION

Shareholders of R&E are advised that the board has approved a distribution in specie of R&E’s shareholding in Gold Fields Limited (“Gold Fields”), comprising 2,270,687 ordinary shares in Gold Fields (“the Gold Fields Shares”), to shareholders of R&E (“R&E Shareholders” or “the Shareholders”) by way of a reduction of share premium and a reduction of reserves in terms of section 90 of the Companies Act, 61 of 1973, as amended. The board also approved a special dividend of 90 cents per share to the R&E Shareholders by way of a payment from retained earnings. The distribution in specie and the special dividend are collectively referred to as “the Distributions” and result in a total distribution of R310 million (at current market prices) or R4,32 per share. The 3 million treasury shares currently held within the R&E group will not participate in the Distributions.

2. RATIONALE

 

During the past five years R&E has focused on the recovery of misappropriated assets and during the same time resumed its trading and operational activities to facilitate the preservation of shareholder value. By 5 July 2010 the company had successfully recovered and distributed over 6 million and 1.5 billion ordinary shares in Gold Fields and JCI Limited respectively. In addition, some R 250 million was recovered from various third parties in the form of assets and cash.

Currently and subsequent to the 5 July 2010 distribution, R&E’s assets effectively consist of net cash (after liabilities) of approximately R 260 million, 2,270,687 ordinary shares in Gold Fields and a suite of prospecting rights.

The company’s current asset base is in excess of its medium term operational requirements and it is therefore an opportune time to release further value to the shareholders by way of the Distributions, as proposed. The Distributions as proposed represent approximately 75% of the current market capitalisation.

3. DISTRIBUTION IN SPECIE

 

R&E Shareholders will receive approximately 3.161 Gold Fields shares for every 100 ordinary shares held in R&E.

 

4. PRO FORMA FINANCIAL EFFECTS

The unaudited pro forma financial effects of the Distributions, as set out below are the responsibility of the directors of R&E. The unaudited pro forma financial effects are presented in a manner consistent with the basis on which the historical financial information has been prepared and in terms of R&E’s accounting policies. The unaudited pro forma financial effects have been presented for illustrative purposes only and, because of their nature, may not give a fair reflection of R&E’s financial position, nor of the effect on future earnings after the Distributions.

The table below sets out the unaudited pro forma financial effects of the Distributions, based on the unaudited consolidated interim financial results for the six months ended 30 June 2010 and on the assumption that:

  • For calculating the earnings per share (“EPS”) and headline earnings per share (“HEPS”), the Distributions were effected on 1 January 2010; and
  • For calculating the net asset value per share (“NAV”) and net tangible asset value per share (“NTAV”), the Distributions were effected on 30 June 2010.

 

Unaudited

 

Unaudited

 

 

Before the Distributions

Distributions

After the Distributions

Change (%)

EPS (cents)

1103

2

1105

+0,2%

HEPS (cents)

1122

-15

1107

-1,3%

NAV per R&E share (cents)

701

-398

303

-56,8%

NTAV per R&E share (cents)

701

-398

303

-56,8%

Shares in issue throughout the period (excluding treasury shares)

71,813,128

-

71,813,128

-

Notes and assumptions:

        • The “Before the Distributions” EPS and HEPS have been extracted without adjustment from the unaudited consolidated statement of comprehensive income for the six months ended 30 June 2010.
        • The “Before the Distributions” NAV per share and NTAV per share have been extracted without adjustment from the consolidated statement of financial position for the six months ended 30 June 2010.
        • The “After the Distributions” EPS, HEPS, NAV per share and NTAV per share have been adjusted to include the effect of the Distributions, as well as estimated transaction costs of R781 576 (excluding VAT) and expected STC and STT of R9,7 million.
        • The profit realised on the disposal of the Gold Fields Shares is assumed to have no tax effect as it is off-set against the Company’s calculated tax losses from prior years.

 

5. SHAREHOLDER APPROVAL AND CIRCULAR

The Distributions are subject to the passing of the requisite resolutions by the shareholders of R&E at a general meeting approving the Distributions.  In this regard, to the extent that the distribution in specie and the special dividend, when taken together, may be considered to be a disposal of the assets of the Company as regulated by section 228 of the Companies Act, the Company will seek the approval of the Distributions by way of a special resolution of the Shareholders, as required by section 228 of the Companies Act. A circular will be posted to shareholders in due course containing full details of the Distributions and incorporating a notice convening the general meeting of shareholders.

6.   US SHAREHOLDERS

US shareholders are referred to the company’s website (www.randgoldexp.co.za), specifically the announcement published on 8 July 2010 for information regarding the US market.

 

Johannesburg

12 October 2010
Sponsor
PSG Capital (Pty) Limited