VILLAGE MAIN REEF LTD
For immediate release
15 December 2014
114/2014-jk
Shareholders of Village ("Shareholders") are advised that Cons Murch, a 76,6% owned subsidiary of Village, will commence with voluntary business rescue proceedings as provided for by Section 129 of the Companies Act, 2008 (Act 71 of 2008) as amended ("the Companies Act").
Cons Murch operates an antimony and gold mine at Gravelotte in Limpopo and the main cash flows that the company currently receives are revenues from the disposal of antimony and gold produced at its mine in Limpopo.
Cons Murch is in need of a capital injection in order to fund mining activities. Village previously funded the mining activities of Cons Murch and is no longer in a position to do so and has over the past year been involved in negotiations to sell the shares in Cons Murch to Stibium Mining (Pty) Ltd, an Australian company.
However, the negotiated transaction to sell the shares in Cons Murch failed on Wednesday, 10 December
2014 in that Stibium, the purchaser was unable to obtain funding to implement the acquisition of the shares of the company.
After it became clear that the aforementioned transaction would not be consummated Village resolved that it was unable to continue funding Cons Murch, therefore resulting in Cons Murch becoming distressed. The board of directors of Cons Murch resolved to place Cons Murch under business rescue in terms of Section
129 of the Companies Act.
The DMR has been consulted on the granting of various approvals which could assist in Cons Murch in its rescue plan and has indicated a willingness to consider the applications on merit.
Shareholders are further advised that Cons Murch has received demands for immediate payment for expenses incurred which it is unable to pay.
Given the above factors the board of directors of Cons Murch met on Friday, 12 December 2014, and concluded that although Cons Murch is financially distressed, there appears to be a reasonable prospect of rescuing Cons Murch, as the assets, fairly valued, exceed the liabilities of Cons Murch. The decision has therefore been taken that Cons Murch voluntarily commences with business rescue proceedings as provided for by Section 129 of the Companies Act.
The resolution of the board of directors of Cons Murch to this effect is being filed with the Companies and Intellectual Properties Commission. The board of directors of Cons Murch is of the opinion that the implementation of a business rescue will afford the business rescue practitioner the opportunity to develop and implement a business rescue plan in a manner that will optimise the likelihood of Cons Murch continuing as a going concern.
Shareholders are advised that the full impact of the above application is still to be determined and may have a material effect on the price of the Company's securities. Accordingly, Shareholders are advised to exercise caution when dealing in the Company's securities until further information is provided.
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