Last updated on April 18, 2014 at 17:24 EDT

Detailed Further Cautionary Announcement Regarding the Offer by Wits Gold for the Acquisition of Southgold Exploration (Pty) Limited

July 5, 2013


(Incorporated in the Republic of South Africa)

Registration Number 2002/031365/06


ISIN: ZAE000079703


CUSIP Number: S98297104

(“Wits Gold” or the “Company”)

JOHANNESBURG, July 5, 2013 /CNW/ -

1. Introduction

Wits Gold shareholders are referred to the cautionary announcement
released on the Securities Exchange News Service (“SENS“) and on SEDAR on Friday, 21 June 2013, and are advised that the
Company has submitted a final binding offer to Mr Peter van den Steen,
the business rescue practitioner (the “Practitioner“) for Southgold Exploration (Pty) Limited (“Southgold“) an indirect wholly-owned subsidiary of Great Basin Gold Limited (“GBG“), to acquire from N6C Resources Inc.:

        --  the entire issued share capital of Southgold ("Sale Shares"),
            the sole owner of the Burnstone property located in the South
            Rand area of the Witwatersrand Goldfields in the Mpumalanga
            Province, South Africa where the Burnstone mine project is
        --  all shareholder loans and all GBG's inter-group loans against
            Southgold (the "Sale Claims"),

on certain terms and subject to certain conditions, common to a
transaction of this nature, which terms and conditions will be
finalised and will form part of the transaction agreements to be
concluded in due course (the “Proposed Offer” or the “Proposed Transaction“).

2. Background to the Southgold Business Rescue process

In September 2012, Southgold entered into business rescue proceedings
(the “Business Rescue“) under Chapter 6 of the South African Companies Act, 71 of 2008 (the “Companies Act“). Wits Gold submitted the Proposed Offer to the Practitioner on 4 July
2013, and the Proposed Offer has been accepted by the Practitioner.
Accordingly, the Proposed Offer has been incorporated into a Business
Rescue plan prepared by the Practitioner (the “Plan“), which Plan, incorporating a notice of meeting was disseminated to
the creditors of Southgold.

In terms of the notice of meeting included in the Plan a meeting of the
creditors of Southgold has been convened under section 151 and 145 of
the Companies Act on 11 July 2013 to consider and vote on the Plan (“Business Rescue Meeting“).

Certain creditors of Southgold, namely Credit Suisse AG, Standard
Chartered Bank (the “Lenders“,) certain Debentureholders and a trade creditor (collectively, the “Debt Holders“), have each entered into a Restructuring Support Agreement, in terms
of which the Debt Holders have undertaken to vote in favour of the Plan
and accordingly the Proposed Transaction, and to do all things
necessary to implement the Proposed Transaction.

3. Details of the Proposed Offer

3.1 Purchase consideration

Under the terms of the Proposed Offer a nominal purchase consideration
of R100.00 (one hundred South African Rand) will be payable on the
completion date of the Proposed Transaction (the completion date is to
be determined) and will be apportioned as follows:

        --  ZAR50.00 (fifty South African Rand) in respect of the Sale
            Shares; and
        --  ZAR50.00 (fifty South African Rand) in respect of the Sale

(together the “Purchase Consideration“).

3.2 Wits Gold shareholders’ loan

In addition to the Purchase Consideration and subject to fulfilment of
the conditions precedent, Wits Gold will advance up to ZAR950 million
(nine hundred and fifty million South African Rand) (US$100 million
(one hundred million United States dollars) at an exchange rate of
ZAR9.50 / US$1) to Southgold by means of a shareholder loan (“Wits Gold Loan“). The loan will bear interest at a rate of the three month
Johannesburg Interbank Agreed Rate (“JIBAR“) plus 4% (four per cent), on terms and conditions to be agreed.

3.3 Restructuring and write-down of debt owed by Southgold

The Proposed Offer is conditional on, amongst others, the restructure of
all liabilities due by Southgold to, amongst others, the Debt Holders
and the South African Revenue Services (“SARS“), which liabilities include the debtor-in-possession (“DIP“) financing all transaction costs and all costs related to the Business
Rescue, inclusive of all guarantee obligations (but exclusive of the
Sale Claims) being reduced to an amount of US$177.35 million (one
hundred and seventy seven point three five million United States
dollars) (“Total Southgold Liability“).

The Total Southgold Liability will be settled upon the following terms
and conditions:

    a.      An upfront payment of US$7.25 million (seven million two
            hundred and fifty thousand United States dollars) on completion
            of the Proposed Transaction ("Completion Date"), which date is
            yet to be determined);

    b.      From actual free cash flow generated by Southgold, the
            repayments of the Wits Gold Loan and balance of the Total
            Southgold Liability of US$170.1 million, being the Total
            Southgold Liability less the upfront payment in a) above will
            be scheduled as follows, (subject to 3.3 e):

            i.    In a ratio of 90% (ninety per cent) to the Wits Gold Loan
                  and 10% to the balance of the Total Southgold Liability;

            ii.   Once the Wits Gold Loan plus accrued interest has been
                  settled then in a ratio of 70% (seventy per cent) to Wits
                  Gold and 30% (thirty per cent) to the balance of the
                  Total Southgold Liability;

            iii.  33.3% (thirty three point three per cent) of the amounts
                  payable in settlement of the Total Southgold Liability
                  set out in (b) (i) and (ii) will be according to a fixed
                  payment schedule with the remaining repayment to be
                  variable (the "Guaranteed Payment"). The Guaranteed
                  Payment is subject to a real gold price of ZAR410,000 /
                  kg being achieved during the period under review;

    c.      Once the balance of the Total Southgold Liability has been
            settled then the Lenders shall be entitled to participate in
            10% of the free cash flows. This participation right will be
            limited to the current planned Burnstone life of mine (i.e. up
            to 2033), alternatively shall not exceed an amount of
            US$233,003,463.46 (two hundred and thirty three million three
            thousand four hundred and sixty three United States dollars and
            forty six cents) being all the liabilities due by Southgold to
            the Lenders prior to the restructuring under the Business
            Rescue process.

    d.      Terms upon which the balance of the Total Southgold Liability
            will be settled:

            i.    Moratorium on interest and interest and capital
                  repayments for 36 (thirty six) months from the Completion
                  Date; thereafter

            ii.    Interest rate at US$ London Interbank Offered Rate
                  ("LIBOR") plus 4% (four per cent);

            iii.  Southgold to have the option without penalty to settle
                  the outstanding balance of the Total Southgold Liability
                  assumed, in cash at any time post completion of the
                  Proposed Transaction.

    e.      The Lenders agreeing to provide post-commencement financing to
            Southgold from 1 July 2013 until the Completion Date ("Interim
            DIP"). This Interim DIP financing shall not exceed US$5 million
            (five million United States dollars) in total and shall be
            capable of draw down on notice being given to the Lenders and
            shall be settled on the following terms and conditions:

            i.    Provided and repaid in US$ (US dollars);

            ii.   Repaid from free cash flow generated by Southgold, in a
                  ratio of 50:50, with 50% (fifty per cent) going to repay
                  the Wits Gold Loan and 50% (fifty percent) going to repay
                  the Interim DIP financing until the Interim DIP financing
                  has been settled:

                       This repayment will precede the payment schedule
                  a)   listed in b i), until the Interim DIP financing is
                       repaid, whereupon the payment schedule in b i) will

4. Rationale for the Proposed Transaction

In line with Wits Gold’s strategy of owning and developing shallow mines
in South Africa the acquisition of the Burnstone property represents
both a compelling value and strategic proposition for shareholders for, amongst others, the following reasons:

        --  it provides shareholders with access to a cash generative asset
            and facilitates Wits Gold's transformation into a producer in
            the short term;
        --  it provides Wits Gold with access to cash flows generated by
            the Burnstone mine which is anticipated to accelerate
            development of other Wits Gold projects;
        --  80% of the Burnstone mine's capital has been spent to date; and
        --  it creates a solid platform for the re-rating of Wits Gold's
            securities as Wits Gold moves from an explorer to a producer.

Wits Gold CEO Philip Kotze comments: “I am delighted that our offer for
the Burnstone mine has been accepted by the Practitioner. As part of
the Proposed Transaction Wits Gold has formulated a business plan for
the mine which we believe is realistic, deliverable, value accretive to
Wits Gold shareholders and aims to ensure maximum benefit and
participation for each stakeholder in the Proposed Transaction”

5. Conditions precedent to the Proposed Transaction

The Proposed Offer and the implementation of the Proposed Transaction
are each subject to and conditional upon the fulfilment of, or waiver
by Wits Gold of conditions precedent standard to a transaction of this
nature, including but not limited to entering into definitive
transaction agreements, obtaining all necessary shareholder and
regulatory approvals, including, amongst others, the approval of the
Supreme Court of British Columbia, South African competition
authorities, Toronto Stock Exchange (“TSX)”, JSE Limited (“JSE“), and South African Reserve Bank (“SARB“), and Wits Gold obtaining the necessary financing arrangements.

6. Full terms announcement regarding the Proposed Transaction

A full terms announcement including the pro forma financial effects on
the reported financial information of Wits Gold, as well as the salient
dates and times relating to the implementation of the Proposed
Transaction, including the effective date, will be announced to
shareholders in due course, and remains subject to, amongst others, the
approval of the Plan by the creditors of Southgold at the Business
Rescue Meeting.

7. Renewal of cautionary announcement:

Wits Gold shareholders are referred to the cautionary announcement
released by the Company on SENS and on SEDAR on Friday, 21 June 2013,
and are advised that, as the Proposed Offer forming part of the Plan
has not yet been approved by the creditors of Southgold, and the
definitive transaction agreements are still being negotiated, which may
have a material effect on the price at which the Company’s securities
trade, shareholders are advised to continue to exercise caution when
dealing in Wits Gold’s securities until a further announcement is made.


05 July 2013

      Corporate adviser        Legal advisers              Sponsor

     Qinisele Resources        Faskens (South       PricewaterhouseCoopers
            (Pty)                  Africa)            Corporate Finance
           Limited            Stikeman Elliott      (Proprietary) Limited

    Transaction sponsor                                                   

    Macquarie First South
    (Pty) Limited


This press release contains “forward-looking information” within the
meaning of applicable securities laws including information regarding
the business of Wits Gold, the timing and terms and conditions of the
Proposed Offer and Proposed Transaction, as well as the contemplated
benefits from the Proposed Transaction. Readers are cautioned not to
place undue reliance on forward-looking information. Forward looking
information involves known and unknown risks, uncertainties and other
important factors that could cause actual results and developments to
differ materially from those contemplated by this information. Such
risks, uncertainties and other important factors include among others:
the ability to obtain the necessary shareholder and regulatory
approvals; the ability to obtain the necessary financing on
satisfactory terms, or at all; the ability to satisfy all other
conditions precedent to the Proposed Transaction; economic, business
and political conditions in South Africa; decreases in the market price
of gold; hazards associated with underground and surface gold mining;
and changes in laws and government regulations. The statements in this
press release are made as of the date of this release. You should not
place undue importance on forward looking information and should not
rely upon this information as of any other date. The Company undertakes
no obligation to update publicly or release any revisions to these
forward looking statements to reflect events or circumstances after the
date of this document or to reflect the occurrence of unanticipated
events except where required by applicable laws.

SOURCE Wits Gold

Source: PR Newswire