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 (£0.05159
per share) and values Rusina at approximately £18.1 million (A$32.7 million)
based on European Nickel's last 10 days VWAP of £0.0745 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 £27.1 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 placed172.4 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 (£12.1 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 andconsolidates 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 theÇaldağ
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, Çaldağ and Acoje,
and a strengthened management team.
+-----------------------------------------------------------------------------+
| Combined Group Projects Çaldağ Acoje Combined |
+-----------------------------------------------------------------------------+
| Annual nickel production (tonnes) 20,400 24,500 44,900 |
+-----------------------------------------------------------------------------+
| Total project capital cost (US$m) 428 498 926 |
+-----------------------------------------------------------------------------+
| NPV10 (US$m) - US$6/lb Ni price 2071 3752 582 |
+-----------------------------------------------------------------------------+
| NPV10 (US$m) - US$7/lb Ni price 3791 5862 965 |
+-----------------------------------------------------------------------------+
| Free annual cashflow (US$m) - US$6/lb Ni price 51 108 159 |
+-----------------------------------------------------------------------------+
| Project IRR - US$6/lb Ni price 20.5% 28.3% |
+-----------------------------------------------------------------------------+
| Project IRR - US$7/lb Ni price 28.4% 37.2% |
+-----------------------------------------------------------------------------+
Notes:
1. Geared
2. Ungeared
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 £62.5 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 Çaldağ 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
bringingÇaldağ 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 aproject
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 £18.1 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 £27.1
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 (£12.1 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
Endeavourbridging loan, to meet expenditure commitments at Çaldağ 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 Çaldağ,
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 Rusinashareholders. The transaction is
expected to be completed by late May 2010.
For more information, please visit www.enickel.co.uk <
http://www.enickel.co.uk/>
or www.rusina.com.au <
http://www.rusina.com.au/> or contact:
European Nickel Rusina Mining
Simon Purkiss or Andrew Lindsay Robert Gregory or Mark Hanlon
European Nickel Rusina Mining
Tel:+44 20 7290 3130 (London) Tel: +61 8 9226 1111 (Perth)
Mike Jones or Andrew Chubb Roland Cornish
Canaccord Adams Beaumont Cornish
Tel: +44 20 7050 6500 Tel: +44 20 7628 3396
Alex Buck Kevin Skinner
BuckBias Field Public Relations
Tel: +44 7932 740 452 Tel: +61 8 8234 9555 or / +61 414 822 631
Notes to Editors:
About European Nickel
European Nickel (AIM, PLUS: ENK) is an emerging mid-tier nickel laterite
producer focused on growth. With 869,000 tonnes of attributable JORC nickel
resources and assets in Turkey, the Philippines and Albania, European Nickel is
targeting 50,000 tonnes of annual nickel production within five years. The
Çaldağ project in Turkey is the Company's flagship asset with near-term
production and will be the world's first commercial scale nickel laterite heap
leach operation.
About Rusina Mining
Rusina Mining (ASX: RML, AIM: RMLA) is a Philippine focused mineral exploration
and development company. It has an experienced management team that is highly
knowledgeable on the "soft" issues of mining and has significant partnering
expertise. The Company is developing the Acoje nickel laterite project with
joint venture partner European Nickel PLC, which is expected to complete a
Definitive Feasibility Study in 2011. With an attributable JORC resource of
495,000 tonnes of contained nickel and a diversified exploration portfolio
across nickel, chromite, platinum and copper/gold the Company is focused on
bringing its projects into production as quickly as possible.
APPENDIXAMerger Implementation Agreement Summary
This appendix is a summary only of the key terms to the Merger Implementation
Agreement signed by Rusina and European Nickel. The complete Merger
Implementation Agreement will be provided to Rusina Shareholders as part of the
Scheme Booklet. It is expected that the Scheme Booklet will be despatched to
Rusina Shareholders in April 2010.
Key Conditions
Implementation of the Scheme is subject to a number of conditions precedent,
including:
* the Rusina Board does not change or withdraw its recommendation to vote in
favour of the Scheme and all resolutions (if any) incidental to the Scheme;
* each of Rusina and European Nickel conducting due diligence investigations
on the other that do not reveal any information which, in the reasonable
opinion of the respective boards amounts to a material adverse matter or
change;
* all Rusina Options are exercised or agreed to be acquired or cancelled and
Rusina obtains all necessary waivers from ASX which Rusina and European
Nickel agree are necessary or desirable to acquire or cancel the Rusina
Options no later than 5 business days prior to the Scheme Meeting;
* Rusina Shareholders approving the Scheme;
* European Nickel shareholder approval (if any) for the purpose of the Scheme
and any corporate activity or financing permitted under the Merger
Implementation Agreement;
* Court approval of the Scheme;
* the Independent Expert concluding that the Scheme is in the best interests
of Rusina Shareholders;
* approvals (if any) from applicable regulatory bodies being granted;
* ASX issues or provides such consents or approval required for the admission
of European Nickel to the official list of ASX and the approval for official
quotation of CDI's in respect of the European Nickel Shares to be issued as
consideration to Scheme Participants;
* the European Nickel Shares to be issued as consideration to Scheme
Participants are approved for admission for trading on AIM;
* no takeover proposal is announced or made (other than as contemplated by the
Merger Implementation Agreement) involving Rusina or European Nickel or any
of its subsidiaries, nor is any proposal which could result in a person who
does not already have voting power of 50% in Rusina or European Nickel (as
the context requires), having voting power of more than 50% of Rusina or
European Nickel (as the context requires);
* no prescribed occurrences (such as insolvency, disposal of assets, reducing
share capital etc) occurring in relation to Rusina or European Nickel;
* no material adverse effect occurring in respect of Rusina and European
Nickel;
* all third party consents are granted or obtained in respect of
implementation of the Scheme;
* the Scheme becoming effective before 2 August 2010 (unless extended in
accordance with the terms of the Merger Implementation Agreement).
Exclusivity
Rusina has agreed not to solicit or invite a proposal or competing transaction,
enter into discussions regarding a proposal or competing transaction with a
third party or provide any information to a third party regarding a competing
proposal. These restrictions do not apply to the extent that they restrict
Rusina from taking or refusing to take any action with respect to a bona fide
proposal in relation to a competing proposal in circumstances would result in
Rusina's directors breaching their fiduciary or statutory duties.
Right to Match Third Party Proposal
If Rusina receives a takeover proposal from a third party, Rusina must notify
European Nickel and not take any action regarding the competing proposal until
European Nickel has had 5 business day following notification (and 2 business
days of its intention to enter into the competing proposal) to make a
counterproposal. Rusina must then review any counterproposal from European
Nickel and determine whether it provides an equivalent or superior outcome for
Rusina shareholders than the competing proposal. If the Rusina Board determines
that the counterproposal is equivalent or superior, it must then take steps to
implement such counterproposal.
Reimbursement of costs
Rusina must pay European Nickel US$250,000 as compensation for costs and
expenses incurred by European Nickel in relation to the Scheme and the
performance of its obligations under the Merger Implementation Agreement in the
event that:
* a Rusina prescribed occurrence or takeover proposal occurs as a result of
which the Expert is no longer able to conclude that the Scheme is in the
best interests of Scheme Participants;
* any of the Rusina directors fail to recommend the Scheme or withdraw,
revise, revoke or qualify a recommendation previously made;
* any of the Rusina directors do not exercise any votes attached to any Rusina
Share which he or she holds or controls in favour of the Scheme at the
Scheme Meeting;
* the Scheme does not proceed because Rusina Shareholders do not approve the
Scheme other than in circumstances where the Independent Expert has
concluded that the Scheme is not in the best interests of Rusina
Shareholders;
* Rusina is in breach of its exclusivity obligations;
* the Court fails to approve the Scheme for which Rusina Shareholder Approval
has been obtained as a result of material non-compliance by Rusina of its
obligations under the Merger Implementation Agreement; or
* the Scheme has not become effective before 2 August 2010 (or as otherwise
extended in accordance with the terms of the Merger Implementation
Agreement) because of a material breach by Rusina of its obligations.
European Nickel must pay Rusina US$250,000 as compensation for costs and
expenses incurred by Rusina in relation to the Scheme and the performance of its
obligations under the Merger Implementation Agreement if there is a European
Nickel prescribed occurrence or takeover proposal and, as a result of such
transaction, the Independent Expertconcludes that the Scheme is not in the best
interests of Rusina shareholders, or, the Scheme has not become effective before
2 August 2010 (or as otherwise extended in accordance with the terms of the
Merger Implementation Agreement) because of a material breach by European Nickel
of its obligations.
Termination
Either party may terminate the Merger Implementation Agreement if a condition
precedent cannot be satisfied or is not satisfied before the relevant date, the
Scheme has not become effective by 2 August 2010 (unless otherwise extended in
accordance with the terms of the Merger Implementation Agreement) or if a party
does not remedy a material breach of the Merger Implementation Agreement after
receiving notice from the other party to do so.
Each party has a right to terminate if a material adverse change or prescribed
occurrence occurs in respect of the other party. European Nickel may also
terminate the Merger Implementation Agreement if the Rusina Board withdraws or
adversely modifies its recommendation of the Scheme, or makes a public statement
that it no longer supports the Scheme, or in the event that a Rusina takeover
proposal occurs.
APPENDIX BExample of the Value Cap mechanism
Current 10-day VWAP 30-day VWAP 50% EN share 75% EN share
premium premium
ENK share price 7.05p 7.45p 8.29p 11.18p 13.04
Premium on ENK 0% 6% 18% 50% 75%
current price
Value of offer £17.1m £18.1m £20.1m £27.1m £27.1m
ENK:RML exchange 4:5 4:5 4:5 4:5 4:5.83
ratio
Premium to 10.9% 15.5% 27.0% 73.3% 73.3%
current RML
share price
[HUG#1379748]