Glencore to take Katanga Mining private for $53M

CPE News (4/22/2020) – Katanga Mining Limited (TSX: KAT) has entered into a definitive agreement with Glencore International AG pursuant to which Glencore will acquire the common shares of Katanga Mining, other than those held by Glencore, for CDN $0.16 per share.

Glencore currently holds 60,870,439,243 common shares, representing approximately 99.5% of the issued and outstanding common shares. The transaction will value the minority stake at CDN $52.7 million.

Yukon domiciled Katanga Mining Limited operates a major mine complex in the Democratic Republic of Congo producing refined copper and cobalt. The company has the potential to become Africa’s largest copper producer and the world’s largest cobalt producer.

photo credit: Katanga Mining

News Release

Katanga Mining Enters Into Definitive Agreement With Glencore International AG for Going Private Transaction to Be Considered at Telephonic Shareholders Meeting

ZUG, Switzerland, April 22, 2020 /CNW/ – Katanga Mining Limited (TSX: KAT) (“Katanga” or the “Company”) announces that it has entered into a definitive agreement (the “Acquisition Agreement”) with Glencore International AG (“GIAG”) pursuant to which the Company would be taken private by way of an amalgamation (the “Amalgamation”) of the Company with 836074 Yukon Inc. (“Subco”), a wholly owned subsidiary of the Company, under the Business Corporations Act (Yukon) (the “YBCA”). Pursuant to the Amalgamation, holders (“Shareholders”) of common shares of the Company (the “Common Shares”) other than GIAG are entitled to receive C$0.16 in cash for each pre-Amalgamation Common Share held which represents a 100% premium to the closing price of the Common Shares on April 21, 2020, the day prior to this announcement, a 139% premium over the 20-day volume weighted average price of the Common Shares immediately prior to such date, and a 60% premium to the high end of a valuation range provided by KPMG LLP (“KPMG”).

The board of directors (the “Board”) of Katanga has determined that it is essential to have the ability to hold Shareholder meetings when an in-person meeting may not be possible or would be very difficult (such as during the current COVID-19 public health emergency). The Board has amended its by-laws to allow the Company to hold meetings of Shareholders partially or entirely by telephonic or electronic means (the “By-Law Amendments”).

Special Committee and Board Recommendations with respect to the Amalgamation

After careful consideration, a special committee of the Board (the “Special Committee”) determined unanimously that the Amalgamation is in the best interests of the Corporation and is fair to Shareholders (other than GIAG) and recommended that the Board approve the Amalgamation and recommend to Shareholders (other than GIAG) that they vote in favour of the Amalgamation.

The determination of the Special Committee is based on various factors, including the lack of a meaningful public float and limited trading liquidity, the relative costs of a stock exchange listing relative to the market value of Common Shares, the attractive premium being offered to Shareholders (other than GIAG), the current commodity price risks, the ongoing operational risks, the financial risks, the lack of sources of financing without support from GIAG and other risks. The Special Committee reviewed the proposed Amalgamation with advice from independent financial advisors and legal counsel. The Special Committee retained CIBC World Markets Inc. (“CIBC”) and KPMG as financial advisors to advise with respect to the financial fairness of the Amalgamation. CIBC and KPMG have provided fairness opinions to the Special Committee to the effect that, as of April 8, 2020 and subject to the assumptions, limitations and qualifications contained therein, the consideration offered under the Amalgamation was fair, from a financial point of view, to the Shareholders (other than GIAG). KPMG has also prepared and delivered a formal valuation (the “Formal Valuation”) of the Common Shares under the supervision of the Special Committee. KPMG concluded that, subject to the assumptions, qualifications and limitations provided in the Formal Valuation, the fair market value of the Common Shares is in the range of US$0.042 to US$0.069 (or C$0.06 to C$0.10) per Common Share as at April 8, 2020, the date of the Formal Valuation.

Upon the recommendation of the Special Committee and after consultation with the Board’s legal advisors, the Board determined unanimously that the Amalgamation is in the best interests of the Corporation and is fair to Shareholders (other than GIAG) and unanimously recommends that Shareholders (other than GIAG) vote in favour of the Amalgamation.

Copies of the fairness opinions of CIBC and KPMG, the Formal Valuation, and a description of the various factors considered by the Special Committee and the Board in their determination to approve the Amalgamation, as well as other relevant background information, will be included in a management information circular (the “Circular”) to be sent to all Shareholders in the coming weeks, in advance of the special meeting of Shareholders expected to be held on or about June 2, 2020 (the “Meeting”) to consider, among other things, the Amalgamation.

Approval of the Amalgamation and Related Matters

The Amalgamation is subject to approval at the Meeting by a special majority, being 2/3 of the votes cast by the Shareholders present or represented by proxy at the Meeting. GIAG intends to vote all of its 60,870,439,243 Common Shares, representing approximately 99.5% of the issued and outstanding Common Shares, in favour of the Amalgamation.

The completion of the Amalgamation is also subject to the satisfaction of closing conditions customary for transactions of this nature. If the Amalgamation is approved by Shareholders and the other closing conditions are satisfied, the effective date of the Amalgamation is expected to be on or about June 5, 2020.

Following the Amalgamation, the amalgamated corporation (“Amalco”) will apply to the Toronto Stock Exchange to delist the Common Shares and will apply to the Canadian securities regulatory authorities to cease to be a “reporting issuer” under applicable Canadian securities legislation. Following Amalco ceasing to be a reporting issuer, Amalco will no longer be subject to the ongoing continuous disclosure and reporting obligations currently imposed upon the Company as a reporting issuer under such legislation. Amalco will be a private company that is wholly‑owned, directly or indirectly, by GIAG.

Pursuant to the YBCA, a registered Katanga Shareholder may dissent in respect of the special resolution of the Shareholders approving the Amalgamation (each, a “Dissenting Shareholder”). If the Amalgamation is completed, Dissenting Shareholders who strictly comply with the procedures set forth in the YBCA will be entitled to be paid the fair value of their Common Shares pursuant to Section 193 of the YBCA. The Dissenting Shareholders, pursuant to the YBCA, may apply to court for a determination of the fair value of their Common Shares. Failure to comply with the requirements set forth in Section 193 of the YBCA may result in the loss or unavailability of any right to dissent.

Recommendation to Approve the By-Law Amendments

Pursuant to applicable corporate law requirements, the By-Law Amendments must be approved at the Meeting by at least a majority of the votes cast by Shareholders present or represented by proxy at the Meeting. GIAG intends to vote all of its Common Shares in favour of the By-Law Amendments. GIAG owns 60,870,439,243 Common Shares, representing approximately 99.5% of the issued and outstanding Common Shares.

After careful consideration and in light of existing conditions, the Board determined unanimously that the By-Law Amendments are in the best interests of Katanga and unanimously recommends that Shareholders vote in favour of the By-Law Amendments.

As the Board has approved the By-Law Amendments, they will be effective for the Meeting.

The Circular

Copies of the Circular, the Acquisition Agreement, the Amalgamation Agreement and certain related documents will be filed with the applicable Canadian securities regulators and will be available under the Company’s profile on SEDAR at www.sedar.com.

Early Warning Disclosure

GIAG currently holds 60,870,439,243 Common Shares, representing approximately 99.5% of the issued and outstanding Common Shares.

Following completion of the Amalgamation, GIAG will beneficially own and control 100% of the issued and outstanding common shares of Amalco.

GIAG’s purpose for entering into the Acquisition Agreement is to hold 100% of the issued and outstanding common shares of Amalco.

The head office of Katanga is Suite 301, 303 Alexander Street, Whitehorse, Yukon, Canada Y1A 2L5.

The head office of Glencore is Baarermattstrasse 3, CH-6340 Baar, Switzerland.

Counsel and Advisors

The Special Committee engaged Fasken Martineau DuMoulin LLP as its legal advisor. CIBC World Markets Inc. and KPMG LLP acted as financial advisors to the Special Committee.

Bennett Jones LLP is legal counsel to the Company.

McCarthy Tétrault LLP is legal counsel to GIAG.

About Katanga Mining Limited

Katanga Mining Limited operates a major mine complex in the Democratic Republic of Congo producing refined copper and cobalt. The Company has the potential to become Africa’s largest copper producer and the world’s largest cobalt producer. Katanga is listed on the Toronto Stock Exchange under the symbol KAT.

About Glencore International AG

GIAG is one of the world’s largest globally diversified natural resource companies and is a major producer and marketer of commodities, employing 160,000 people around the world. GIAG’s operations comprise around 150 mining and metallurgical sites and oil production assets.

SOURCE Katanga Mining Limited

For further information: Longview Communications Inc.: Joel Shaffer (Toronto), (416) 649-8006, jshaffer@longviewcomms.ca; Alan Bayless (Vancouver), (604) 694-6035, abayless@longviewcomms.ca; Glencore International AG: Paul Smith, T: +41 41 709 24 87, C: +41 79 947 13 48, paul.smith@glencore.com