CIRCULAR TO INFRASORS SHAREHOLDERS

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions and interpretations commencing on page 5 of this circular have, where appropriate, been used on this cover page. Action required This circular is important and should be read in its entirety, with particular attention to the section entitled Action required by shareholders on page 2. If you are in any doubt as to what action to take, please consult your stockbroker, CSDP, banker, accountant, attorney or other professional advisor immediately. If you have disposed of all your Infrasors shares, this circular should be handed to the purchaser of such Infrasors shares or to the broker, CSDP, banker or other agent through whom the disposal was effected. (Incorporated in the Republic of South Africa) (Registration number 2007/002405/06) Share code: IRA ISIN: ZAE CIRCULAR TO INFRASORS SHAREHOLDERS Relating to: the proposed Specific Repurchase in terms of section 48 of the Companies Act, No. 71 of 2008, as amended, and the JSE Listings Requirements, by Infrasors of its own ordinary shares held by the Infrasors Empowerment Trust, being a related party in terms of section 10.1(b)(i) of the JSE Listings Requirements; the subsequent cancellation and delisting of the remaining treasury shares held by Infrasors; and the proposed Specific Issue of Infrasors ordinary shares for cash to a BEE investor Joe Kalo Investments, being a related party in terms of section 10.1(b)(ii) of the JSE Listings Requirements including: a notice of general meeting; and a form of proxy (blue) for use by Infrasors shareholders who hold certificated shares and dematerialised shareholders with own-name registration only. Reporting Accountant Sponsor to Infrasors Transfer Secretaries This circular is only available from Friday, 7 November 2014 in English and copies hereof may be obtained from the company s website and during business hours on business days from the registered office of Infrasors, Bridge Capital and the transfer secretaries. The respective addresses of the companies registered offices are set out in the Corporate Information and Advisors section on the inside front cover. Date of issue: Friday, 7 November 2014

2 CORPORATE INFORMATION AND ADVISORS Company Secretary and registered office of Infrasors Mariette Swart Lyttelton Dolomite mine Botha Avenue Lyttelton, 0140 (PO Box 14014, Lyttelton, 0140) Transfer Secretaries to Infrasors Link Market Services South Africa Proprietary Limited (Registration number 2000/007239/07) 13th Floor, Rennie House 19 Ameshoff Street Braamfontein, 2001 (PO Box 4844, Johannesburg, 2000) Reporting Accountant and Auditor of Infrasors Mazars Inc. (Registration number 2005/025794/21) Designated Auditor: Conrad Burger Mazars House Railto Road, Grand Moorings Precinct Century City, 7441 (PO Box 134, Century City, 7446) Sponsor and Corporate Advisor of Infrasors Bridge Capital Advisors Proprietary Limited (Registration number 1998/016302/07) 2nd Floor 27 Fricker Road Illovo, 2196 (PO Box , Benmore, 2010) Independent Expert BDO Corporate Finance Proprietary Limited (Registration number 1983/002903/07) 22 Wellington Road Parktown, 2195 (Private Bag X60500, Houghton, 2041)

3 Page Corporate information and advisors Inside front cover Action required by Infrasors shareholders 2 Important dates and times 4 Definitions and interpretation 5 Circular to Infrasors shareholders 1. Introduction, rationale and purpose of the circular 8 2. Details of the Specific Repurchase 8 3. Details of the Specific Issue Adequacy of capital Pro forma financial effects per share Opinions and recommendations Statutory requirements for the Specific Repurchase Estimated cost of Transactions General Meeting Irrevocable undertakings Salient information on Infrasors Other information Documents available for inspection 20 Annexure I: Independent Expert s opinion 21 Annexure II: Pro forma financial effects 26 Annexure III: Independent reporting accountants report on the pro forma financial effects 32 Annexure IV: Relevant sections from the Companies Act 34 Annexure V: Share price history of Infrasors on the JSE 39 Annexure VI: Information on the Directors of Infrasors 41 Annexure VII: Corporate governance 42 Annexure VIII: Extracts of the Memorandum of Incorporation 48 Annexure IX: Historical financial information of Infrasors 49 Notice of general meeting of shareholders 107 Form of proxy (blue) Attached 1

4 ACTION REQUIRED BY INFRASORS SHAREHOLDERS This circular is important and requires your immediate attention. The action you need to take is set out below. The definitions and interpretations commencing on page 5 of this circular have been used in this section. If you are in any doubt as to what action to take, consult your broker, attorney or other professional adviser immediately. If you have dematerialised your Infrasors shares without own name registration: (a) Voting at the general meeting (i) Your CSDP/broker is obliged to contact you in the manner stipulated in the agreement concluded between you and your CSDP/broker to ascertain how you wish to cast your vote at the general meeting and thereafter to cast your vote in accordance with your instructions. (ii) (iii) (iv) If you have not been contacted, it would be advisable for you to contact your CSDP/broker and furnish it with your voting instructions. If your CSDP/broker does not obtain voting instructions from you, it will be obliged to vote in accordance with the instructions contained in the agreement concluded between you and your CSDP/broker. You must NOT complete the attached form of proxy (blue). (b) Attendance and representation at the general meeting In accordance with the agreement between you and your CSDP/broker, you must advise your CSDP/ broker if you wish to attend the general meeting in person or if you wish to send a proxy to represent you at the general meeting and your CSDP/broker will issue the necessary letter of representation for you or your proxy to attend the general meeting. If you have not dematerialised your Infrasors shares or you have dematerialised your Infrasors shares with own name registration: (a) Voting, attendance and representation at the general meeting (i) You may attend and vote at the general meeting in person. (ii) Alternatively you may appoint a proxy to represent you at the general meeting by completing the attached form of proxy (blue) in accordance with the instructions it contains and returning it to the registered office of the company or the transfer secretaries to be received by no later than 10:00 on Monday, 1 December If you wish to dematerialise your Infrasors shares, please contact your broker. If you have disposed of your Infrasors shares, this circular, together with the attached proxy (blue), should be handed to the purchaser of such Infrasors shares or the broker or other agent who disposed of your Infrasors shares for you. Dissenting Shareholders Appraisal Rights Special Resolution At any time before the Special Resolution approving the Specific Repurchase in terms of section 115 of the Companies Act is to be voted on at the general meeting, a shareholder may give the Company written notice objecting to the Special Resolution. Within 10 business days of the Company having adopted the Special Resolution approving the Specific Repurchase, the Company must send a notice that the Special Resolution has been adopted to each shareholder who gave the Company written notice of objection and has not withdrawn that notice and has voted against the Special Resolution. 2

5 A shareholder who has given the Company written notice objecting to the Special Resolution, who is present at the general meeting and votes against the Special Resolution and has complied with all the procedural regulations set out in section 164 of the Companies Act may, if the Special Resolution has been adopted, then demand in writing within: 20 business days after receipt of the aforementioned notice; or if the shareholder does not receive the aforementioned notice from the Company, 20 business days after learning that the Special Resolution has been adopted, that the Company pay the shareholder fair value for all the shares in the Company held by that shareholder. A copy of section 164 of the Companies Act is set out in Annexure IV to this circular. 3

6 IMPORTANT DATES AND TIMES The definitions and interpretations commencing on page 5 of this document have been used in the following table of important dates and times: Record date to determine which Infrasors shareholders are eligible to receive the circular and notice of general meeting on Friday, 31 October Circular posted to Infrasors shareholders and notice convening the general meeting released on SENS on Friday, 7 November Notice convening the general meeting published in the South African press on Monday, 10 November Last day to trade in order to be eligible to vote at the general meeting on Monday, 21 November Record date in order to vote at the general meeting on Friday, 28 November Last day to lodge forms of proxy by 12:00 on Monday, 1 December General meeting to be held in Centurion at 12:00 on Wednesday, 3 December Results of general meeting released on SENS on Wednesday, 3 December Cancellation and delisting of shares on or about Monday, 8 December Notes: 1. Shareholders will be notified of any amendments to the above dates or times on SENS and in the South African Press. 2. All times indicated above are South African Standard Times

7 DEFINITIONS AND INTERPRETATIONs In this circular, the annexures and attachment hereto, unless otherwise stated or the context otherwise clearly indicates, the words in the first column shall have the meaning stated opposite them in the second column. Words in the singular shall include the plural and vice versa, words signifying any one gender shall include the other genders and references to natural persons shall include juristic persons and associations of persons: Act or Companies Act Afrimat BEE B-BBEE business day certificated shares certificated shareholders the Companies Act, No 71 of 2008, as amended; Afrimat Limited (Registration number 2006/022534/06), a public company incorporated in accordance with the laws of South Africa, the ordinary shares of which are listed and traded on the JSE; Black Economic Empowerment; Broad-Based Black Economic Empowerment; any day other than a Saturday, Sunday or an official public holiday in South Africa; Infrasors ordinary shares held in the form of certificates or other documents of title and which have not yet been surrendered for dematerialisation in terms of Strate; Infrasors shareholders holding certificated shares; circular this circular and the annexures hereto issued on Friday, 7 November 2014; the common monetary area Companies Regulations court CSDP dematerialised dematerialised shares dematerialised shareholders Dissenting Shareholders South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland; the Companies Regulations 2011, promulgated in terms of section 223 of the Act (which includes the Takeover Regulations); any South African court with competent jurisdiction to approve the implementation of the Special Resolution pursuant to section 115 of the Companies Act and/or to determine the fair value of Infrasors shares and make an order pursuant to section 164(14) of the Companies Act; a Central Securities Depository Participant registered as a participant in terms of the Securities Services Act and licenced as a central securities depository under the Securities Services Act; the process whereby paper share certificates or other documents of title are replaced with electronic records of ownership of shares or securities as contemplated in section 49(5) of the Act under the Strate system with a CSDP or stockbroker; Infrasors ordinary shares, which have been dematerialised and incorporated into Strate and which are no longer evidenced by share certificates or other physical documents of title; Infrasors shareholders holding dematerialised shares; Infrasors shareholders who: (i) validly exercise their Appraisal Rights by demanding, in accordance with the requirements of sections 164(5) to 164(8) of the Companies Act, that the Company pay them the fair value of all of their Infrasors shares; (ii) do not withdraw that demand before the Company makes an offer to them in accordance with the requirements of section 164(11) of the Companies Act; and (iii) do not, after an offer is made to them by Infrasors in accordance with the requirements of section 164(11) of the Companies Act, allow such offer to lapse; 5

8 Exchange Control Regulations Financial Markets Act form of proxy Hanchurch independent board independent expert Infrasors or the Company the Exchange Control Regulations, 1961, as amended, made in terms of section 9 of the Currency and Exchanges Act, 1933 (Act 9 of 1933), as amended; the Financial Markets Act, No 19 of 2012, as amended; the blue form of proxy attached to and forming part of this circular; Hanchurch Asset Management Incorporated (Registration number E68019), a private company incorporated in accordance with the laws of British Virgin Islands. The company was represented on the board of Infrasors by Mr CH Boulle; the members of the independent board of Infrasors comprising M Noge, PFC Ying and JCP Bekker; BDO Corporate Finance Proprietary Limited, the independent expert appointed by the board to advise as to whether the terms of the Specific Repurchase are fair and reasonable to shareholders in terms of section 114(3) of the Companies Act; Infrasors Holdings Limited (Registration number 2007/002405/06), a public company incorporated in accordance with the laws of South Africa, the ordinary shares of which are listed on the Main Board of the JSE; Infrasors Empowerment Trust Infrasors Empowerment Trust (Trust number IT7305/2007) whose beneficiaries are any black person employed by any company within the Infrasors group and may include at the discretion of the trustees an employee who is entitled to a disability benefit in terms of the Infrasors group disability fund and/or any person who falls within the definition contained in the Seventh Schedule and/or any person who falls within the definition of employee contained in section 213 of the Labour Relations Act, No 66 of 1995, as amended; Infrasors shareholders or shareholders Infrasors shares or ordinary shares or shares Issue Price all registered holders of Infrasors shares; ordinary shares in the capital of the company with a par value of 0.5 cent each, which are listed on the JSE; the price of R1.00 per share payable by Joe Kalo Investments; Joe Kalo Investments Joe Kalo Investments Proprietary Limited (Registration number 2007/016177/07), a company duly registered and incorporated under the laws of South Africa, a 100% black-owned company, whose beneficiaries are Johannes Mzamo Kalo and Nonceba Robertha Kalo; JSE JSE Limited, a company duly registered and incorporated with limited liability under the company laws of South Africa under registration number 2007/022939/06, licenced as an exchange under the Financial Markets Act; last day to trade being Monday, 21 November 2014; last practicable date Link Market Services or transfer secretaries Mazars or independent reporting accountant memorandum of incorporation 29 October 2014, being the last practicable date prior to finalisation of this circular; (2000/007239/07), a private company incorporated in accordance the laws of South Africa; Mazars Inc. (Registration number 2005/025794/21), the independent reporting accountants reporting on the pro forma financial information; the memorandum of incorporation of the company, as amended from time to time, extracts of which are set out in Annexure VIII; 6

9 Ordinary Resolution own name dematerialised shareholders Rand repurchase price SARB SENS Special Resolution the Specific Issue the Specific Repurchase Strate Takeover Regulations Transactions TRP VWAP the ordinary resolution to be proposed at the general meeting for approval of the proposed Specific Issue of shares for cash in the notice of general meeting attached to and forming part of this circular; Infrasors shareholders who have dematerialised their shares through a CSDP and have instructed CSDP to hold their shares in their own name on the sub-register, being the list of shareholders maintained by the CSDP and forming part of the register of Infrasors; the lawful currency of South Africa; the price of R0.48 per share payable by Infrasors; South African Reserve Bank; Stock Exchange News Service of the JSE; the special resolution to be proposed at the general meeting for approval of the proposed Specific Repurchase in the notice of general meeting attached to and forming part of this circular; the proposed specific issue by Infrasors of ordinary shares as set out in this circular; the proposed specific repurchase by Infrasors of ordinary shares as set out in this circular; Strate Limited (Registration number 1998/022242/06), the company operating the electronic settlement system for transactions that take place on the JSE and off-market transactions; the Takeover Regulations issued in terms of section 120 of the Companies Act, as amended; the Specific Issue and the Specific Repurchase of Infrasors shares as set out in this circular; the Takeover Regulation Panel established in terms of section 196 of the Companies Act; and volume weighted average price. 7

10 (Incorporated in the Republic of South Africa) (Registration number: 2007/002405/06) Share code: IRA ISIN: ZAE Directors Infrasors Louis Ronald Loubser (Managing Director) Hendrik Philippus Verreynne (Interim Financial Director) Non-executive Mochele Noge # (Chairman) Percy Ford Chuang Ying # Jacobus Coenrad Petrus Bekker # Andries Johannes van Heerden* * Non-executive director # Independent non-executive director CIRCULAR TO INFRASORS SHAREHOLDERS 1. INTRODUCTION, RATIONALE AND PURPOSE OF THIS CIRCULAR On 18 March 2014 Infrasors announced on SENS that it intends to repurchase Infrasors ordinary shares from the Infrasors Empowerment Trust. On 1 July 2014 Infrasors announced on SENS that it intends to issue Infrasors shares for cash to Joe Kalo Investments. The rationale for the repurchase is to settle the outstanding liability owed by the Infrasors Empowerment trust to the Company and in respect of the Specific Issue of shares for cash is to meet the Department of Mineral Resources mining licence requirement that Infrasors should have 26% BEE shareholding. The purpose of this circular is to provide Infrasors shareholders with information relating to the Specific Repurchase of Infrasors shares from Infrasors Empowerment Trust and the Specific Issue of Infrasors shares to Joe Kalo Investments as set out in this circular. The notice of general meeting at which shareholders will be asked to approve the Special Resolution required to implement the Specific Repurchase and the Ordinary Resolution required to implement the Specific Issue of shares for cash is attached to this circular. After the finalisation of the Specific Repurchase the remaining treasury shares will be cancelled and deliπsted. 2. DETAILS OF THE SPECIFIC REPURCHASE 2.1 Introduction to the Specific Repurchase On 27 July 2007, Infrasors Holdings Limited ( Infrasors or the Company ) entered into a loan agreement ( First Agreement ) with the Infrasors Empowerment Trust ( Borrower ) in order to facilitate a Broad-Based Black Economic Empowerment ( B-BBEE ) transaction. The total capital advanced to the Borrower amounted to R and the Borrower acquired Infrasors ordinary shares, at a purchase price of R5.50 per share. The First Agreement contained a Deed of Pledge that stipulates that as security for the obligation to discharge the capital amount of R and all interest raised thereon, the Borrower pledged in favour of Infrasors the Infrasors ordinary shares ( First Pledge ) ( First Pledge Shares ). 8

11 On 27 July 2007, Hanchurch Asset Management Inc. ( Hanchurch ) entered into a loan agreement ( Second Agreement ) with the Borrower in order to facilitate a B-BBEE transaction. The total capital advanced was R and the Borrower acquired Infrasors ordinary shares, also at a purchase price of R5.50 per share. The Deed of Pledge contained in the Second Agreement stipulates that as security for the obligation to discharge the capital amount R and all interest raised thereon, the Borrower pledged in favour of Hanchurch the Infrasors ordinary shares ( Second Pledge ) ( Second Pledge Shares ). On 2 May 2008 Hanchurch subordinated its loan ( Subordination Agreement ) in favour of Infrasors following a significant deterioration in the market value of the Infrasors ordinary shares held by the Borrower. On 7 October 2013 Infrasors agreed to cancel the First Pledge and the loan to the Borrower on condition that the First Pledge Shares, a further Infrasors ordinary shares (paid in cash by the Borrower) and the Second Pledge Shares be returned by the Borrower to Infrasors. In addition, on 7 October 2013 Hanchurch agreed to cancel the Second Pledge and the loan to the Borrower and agreed that Infrasors may repossess and cancel the Second Pledge Shares held by the Borrower. Given the extent of exposure relative to the value of the underlying securities, and the inability to obtain restitution through any other means, Infrasors has decided as a last resort to exercise its rights according to the first agreement and the subordination agreement and repossess the , and Infrasors shares ( Specific Repurchase ). 2.2 Terms of the Specific Repurchase and conditions precedent Infrasors, through its 100% held subsidiary, Infrasors Management Services Proprietary Limited, has agreed to acquire a total of Infrasors ordinary shares from the Borrower in accordance with the pre-existing loan agreements and information contained in the introduction above. The ordinary shares are being repurchased at a value of R0.48, which is a 46.1% discount to the 30-day Volume Weighted Average Price ( VWAP ) of an Infrasors Share of R0.89 up to and including 17 March The Infrasors ordinary shares represent 13,15% of the total issued share capital of Infrasors. Subsequent to the approval of the Specific Repurchase the Infrasors ordinary shares will revert to authorised but unissued shares in the capital of the Company and will then be cancelled and delisted. Infrasors currently holds Infrasors shares in treasury which will subsequently also be cancelled and delisted following the Specific Repurchase. Subsequent to the Specific Repurchase, Infrasors will as a result hold no treasury shares. Hanchurch is not considered to be a related party according to the Listings Requirements, however, as the Borrower is a material shareholder, it is considered to be a related party, as described in paragraph 10.1(b)(i) of the Listings Requirements. As the Specific Repurchase is not at a premium to the weighted average price of the Company s shares measured over the 30 business days prior to the date on which the terms of the Specific Repurchase were announced, the Specific Repurchase will not require a fairness opinion in terms of paragraph 5.69(e) of the Listings Requirements. However, as the Specific Repurchase will result in the Company acquiring in excess of 5% of the entire issued share capital of the Company, the Specific Repurchase is, in terms of section 48.8(b) of the Companies Act, subject to the provisions of sections 114 and 115 of the Companies Act. Attached as Annexure I to this circular is the independent expert s report prepared by BDO Corporate Finance Proprietary Limited relating to the Specific Repurchase as provided to the board of Infrasors. In terms of the Listings Requirements, the votes of the Borrower will be taken into account in determining whether quorum of shareholders are present at the General Meeting, but such votes will not be taken into account in determining the results of the voting at the General Meeting. The Specific Repurchase is subject to: The Company having complied with all necessary requirements of the Listings Requirements and the Companies Act; and Infrasors shareholders in general meeting approving the necessary resolutions in terms of the Companies Act and the JSE Listings Requirements, to effect the Specific Repurchase. 9

12 In terms of the Listings Requirements and the provisions of section 115(4) of the Companies Act, the subsidiaries (and their associates) will be excluded from voting on the Special Resolution of shareholders required to authorise the Specific Repurchase. A statement informing dissenting shareholders of their rights under section 164 of the Companies Act is set out in Annexure IV forming party of this circular. The repurchase of the Infrasors ordinary shares in terms of the Specific Repurchase will take place on the third business day after the fulfilment of the last of the conditions precedent referred to above ( Repurchase Date ). 3. DETAILS OF THE SPECIFIC ISSUE 3.1 Introduction to the Specific Issue As a result of the Specific Repurchase detailed in paragraph 2 of the circular, and should Shareholders approve the Specific Repurchase, the Company will no longer satisfy the BEE shareholding requirement in order to comply with the mining licence requirement of the Department of Mineral Resources. This Transaction ensures that the Infrasors BEE shareholding exceeds the minimum requirement of 26% upheld by the Department of Mineral Resources. The effect of the Specific Issue of shares on the BEE shareholding of Infrasors is shown below: Shareholder Number of shares Effective BEE shareholding Afrimat % Specific Issue of shares for cash Joe Kalo Investments % Total BEE shareholding % The Infrasors Specific Issue will be implemented in terms of a Specific Issue of shares for cash and will thus require Infrasors shareholder approval. Furthermore the Specific Issue is subject to the approval by shareholders of the Specific Repurchase of shares from the Infrasors Empowerment Trust. 3.2 Terms of the Specific Issue The Company has reached agreement with Joe Kalo Investments, subject to shareholder approval of the Specific Repurchase detailed in section 2 of the circular, to allot and issue Infrasors ordinary shares for a cash subscription price of R1.00 per Infrasors share. The terms of the Infrasors Specific Issue were agreed on 24 January 2014, at which time the 30-day volume weighted average price of an Infrasors share traded on the JSE was R1.00 per share, up to and including 24 January The Specific Issue is subject to a suspensive condition being the approval by Infrasors shareholders of a specific repurchase by Infrasors relating to the shares held by the Infrasors Empowerment Trust as contemplated in section 2 of this circular. Afrimat has provided financial assistance to Joe Kalo Investments in respect of the Specific Issue of shares for cash. The funding is subject to interest at the prime overdraft rate less 3 percentage points and is repayable over five years with the final repayment date of loan being 23 January Repayments will commence once dividends are paid by Infrasors to shareholders. Joe Kalo Investments may not dispose of the Infrasors shares to any third party or use the shares as security under any circumstances for the duration of the loan agreement. Afrimat does not have any security over these shares. 3.3 Related party issue Johannes Mzamo Kalo is a director of various Infrasors and Afrimat subsidiaries. Afrimat is a material shareholder of Infrasors, and is therefore considered a related party under section 10.1(b)(ii) of the JSE Listings Requirements ( Listings Requirements ). As the issue price is not at a discount 10

13 to the 30-day VWAP prior to the date on which the terms of the share issue was agreed, being 24 January 2014, the specific issue will not require a fairness opinion in terms of section 5.51(f)(ii) of the Listings Requirements. The subsidiaries are detailed in the table below: Afrimat Afrimat BEE Trust Afrimat Empowerment Investments Proprietary Limited AFT Aggregates Proprietary Limited Afrimat Aggregates (Operations) Proprietary Limited Capmat Proprietary Limited Prima Quarries Namibia Proprietary Limited Afrimat Contracting International Proprietary Limited Boublok Proprietary Limited Afrimat Readymix (Cape) Proprietary Limited Afrimat Concrete Products Proprietary Limited Rodag Properties Proprietary Limited Infrasors Delf Sand Proprietary Limited Pienaarspoort Ontwikkeling Proprietary Limited Delf Silica Proprietary Limited Delf Silica Coastal Proprietary Limited Delf Cullinan Proprietary Limited Lyttleton Dolomite Proprietary Limited Infrabric Proprietary Limited Infrasors Management Services Proprietary Limited Infrasors Empowerment Trust Rodag Holdings Proprietary Limited Afrimat Aggregates (KZN) Proprietary Limited Afrimat Aggregates (Trading) Proprietary Limited Community Quarries Proprietary Limited Olympic Sand Proprietary Limited ASBE Community Empowerment Proprietary Limited Malric Properties Proprietary Limited Propateez 66 Proprietary Limited Labonte 3 Proprietary Limited Jeffreys Bay Crushers Proprietary Limited Afrimat Aggregates (Eastern Cape) Proprietary Limited Scottburgh Quarries Proprietary Limited Maritzburg Quarries Proprietary Limited Sunshine Crushers Proprietary Limited Glen Douglas Dolomite Proprietary Limited Clinker Supplies Proprietary Limited SA Block Proprietary Limited Meepo Ya Mmu Proprietary Limited Johannes Mzamo Kalo and his associates are excluded from voting for Ordinary Resolution 1: Specific Authority to Issue Shares to Joe Kalo Investments. 4. ADEQUACY OF CAPITAL The directors of Infrasors have considered the impact of the Transactions and are of the opinion that, following the Transactions, the: provisions of section 4 and section 48 of the Companies Act have been complied with; Company and the group will be able to in the ordinary course of business to pay its debt for a period of 12 months after the day of approval of the circular; 11

14 assets of the company and the group will be in excess of the liabilities for the company and the group for a period of 12 months after the date of approval of the circular. For this purpose the assets and liabilities were recognised and measured in accordance with the accounting policies used in the latest audited consolidated annual financial statements of the company; share capital of the company and the group will be adequate for ordinary business purposes for a period of 12 months after the date of approval of this circular; and working capital of the company and the group will be adequate for ordinary business purposes for a period of 12 months after the date of approval of the circular. In addition, in terms of section 46(1) of the Companies Act it is stated as follows: the board has authorised the Transactions by resolution; and the board has, by resolution, acknowledged that it has applied the solvency and liquidity test as set out in section 4 of the Companies Act, and reasonably concluded that the Company will satisfy the solvency and liquidity test immediately after completing the Specific Repurchase. 5. PRO FORMA FINANCIAL EFFECTS PER SHARE The tables below sets out the pro forma financial effects of the Transactions on the reviewed provisional basic earnings, diluted basic earnings, headline earnings, diluted headline earnings per Infrasors share for the year ended 28 February 2014 and the net asset value and tangible net asset value for Infrasors share at that date. The pro forma financial effects have been prepared in accordance with the Listings Requirements, the Guide on Pro forma Financial Information issued by SAICA and the measurement and recognition requirements of International Financial Reporting Standards (IFRS). The accounting policies used to prepare the pro forma financial effects are consistent with those applied in the preparation of the financial statements for the year ended 28 February The pro forma financial effects have been prepared for illustrative purposes only, are the responsibility of the Directors, and are presented in order to provide information on how the Transactions may have affected the financial results and position of Infrasors and, because of their nature, they may not fairly present Infrasors financial position at 28 February 2014 and the results of its operations for the year then ended. During the 2014 financial year Infrasors consolidated the Infrasors Empowerment Trust and as a result reflected the Infrasors shares held by the Infrasors Empowerment Trust as treasury shares. 5.1 Pro forma financial effects of the Specific Repurchase per share Per Infrasors share As published 28 Feb 2014 (cents) Adjustments (cents) After the Specific Repurchase (cents) % change EPS for the year ended 28 February HEPS for the year ended 28 February Diluted EPS for the year ended 28 February Diluted HEPS for the year ended 28 February NAV as at 28 February TNAV as at 28 February Number of ordinary shares in issue at 28 February 2014 (million) (27 021) (14.56) Weighted average number of ordinary shares in issue for the year ended 28 February 2014 (million) (1 048) (0.66) Diluted weighted average number of ordinary shares in issue for the year ended 28 February 2014 (million) (1 048) (0.66) 12

15 Notes to the pro forma financial effects per share 1. The As published 28 February 2014 column reflects the basic earnings, diluted basic earnings, headline earnings, diluted headline earnings per Infrasors share for the year ended 28 February 2014 and the net asset value and the tangible net asset value per Infrasors share as at 28 February The were treated as treasury shares in the consolidated annual financial statements as at 28 February The After the Specific Repurchase column is based on the assumption that the Infrasors shares was repurchased from the Infrasors Empowerment Trust for a total consideration of R million with effect from 1 March 2013 Infrasors will therefore hold a total of Infrasors ordinary shares in treasury (including the shares currently held in treasury). Infrasors will cancel and delist shares after the Specific Repurchase is finalised. 4. The weighted average number of shares, diluted weighted average number of shares and total number of shares in issue have been adjusted for the cancellation and delisting of the Infrasors shares held in treasury. 5.2 Pro forma financial effects of the Specific Issue per share Per Infrasors share After the Specific Repurchase (cents) Adjustments (cents) After the Specific Repurchase and Specific Issue (cents) % change EPS for the year ended 28 February HEPS for the year ended 28 February (0.02) Diluted EPS for the year ended 28 February Diluted HEPS for the year ended 28 February (0.2) 6.02 (0.33) NAV as at 28 February (2.60) (3.03) TNAV as at 28 February (2.54) (3.02) Number of ordinary shares in issue at 28 February 2014 (million) Weighted average number of ordinary shares in issue for the year ended 28 February 2014 (million) Diluted weighted average number of ordinary shares in issue for the year ended 28 February 2014 (million) Notes to the pro forma financial effects per share 1. The After the Specific Repurchase column is based on the assumption that the Infrasors shares were repurchased from the Infrasors Empowerment Trust for a total consideration of R million with effect from 1 March 2013 Infrasors will therefore hold a total of Infrasors ordinary shares in treasury (including the shares currently held in treasury). Infrasors will cancel and delist shares after the Specific Repurchase is finalised. 2. The After the Specific Repurchase and Specific Issue column is based on the assumption that the Infrasors shares were repurchased from the Infrasors Empowerment Trust and that Infrasors ordinary shares will be issued to Joe Kalo Investments.. 3. The weighted average number of shares, diluted weighted average number of shares and total number of shares in issue have been adjusted for the Infrasors treasury shares to be issued to Joe Kalo Investments. 6. OPINIONS AND RECOMMENDATIONS 6.1 Appointment of an Independent Expert In accordance with the Companies Act and the Takeover Regulations, the independent board has appointed BDO Corporate Finance Proprietary Limited as the independent expert to provide the independent board with its opinion as to whether the terms of the Specific Repurchase is fair and 13

16 reasonable to Infrasors shareholders. The independent expert s opinion is included in Annexure I to this circular and has not been withdrawn prior to the publication of this circular. 6.2 View of the Independent Board The Independent Board, after due consideration of the report of the Independent Expert regarding the Specific Repurchase, and in accordance with its responsibilities in terms of regulation 110 of the Takeover Regulations, has formed a view of the range of the fair value of the Infrasors Shares, which accords with the valuation range contained in the report of the Independent Expert. The price does not exceed either the fair value per Infrasors share or the current traded price per Infrasors share as at the last practicable date. The Independent Board, taking into account the report of the Independent Expert regarding the Specific Repurchase, has considered the terms and conditions thereof, and are unanimously of the opinion that the terms and conditions of the Specific Issue are fair and reasonable to Infrasors shareholders and, accordingly, recommend that Infrasors shareholders vote in favour of the Special Resolution to be proposed at the general meeting. 6.3 View of the Board The Board, after due consideration of the report of the Independent Expert regarding the Specific Repurchase, has considered the terms and conditions thereof, and is of the opinion that the Specific Repurchase is fair and reasonable to Infrasors shareholders and accordingly, recommends that Infrasors shareholders vote in favour of the Special Resolution to be proposed at the general meeting. 7. STATUTORY REQUIREMENTS 7.1 Statutory requirements of the Specific Repurchase As the Specific Repurchase will result in the Company acquiring in excess of 5% of the entire issued share capital of the Company, the Specific Repurchase is, in terms of section 48.8(b) of the Companies Act, subject to the provisions of sections 114 and 115 of the Companies Act. Section 114 of the Companies Act The Independent Board has appointed BDO as the Independent Expert to provide an opinion on the Specific Repurchase in the form of a report contemplated in section 114(3) of the Companies Act. Shareholders are referred to Annexure I to this circular which sets out the full text of the report of the Independent Expert regarding the Specific Repurchase. Section 115 of the Companies Act In terms of section 115 of the Companies Act, a copy of which is set out in Annexure IV to this circular, the Specific Repurchase may only be implemented if: approved by a special resolution adopted by Infrasors shareholders entitled to exercise voting rights on such a matter, at a meeting called for that purpose and at which sufficient Infrasors shareholders are present to exercise, in aggregate, at least 25% of all of the voting rights that are entitled to be exercised on that matter; and the Panel has issued a compliance certificate in respect thereof, in terms of section 119(4)(b) of the Companies Act Despite the special resolution having been adopted, the Specific Repurchase may not be implemented without the approval of the court if: the special resolution was opposed by at least 15% of the voting rights that were exercised on that special resolution and, within five business days after the vote, any person who voted against the special resolution requires the Company to seek court approval; or the court, on an application within 10 business days after the vote by any person who voted against the special resolution, grants that person leave, in terms of paragraph below, to apply to a court for a review of the transaction in accordance with paragraph below. 14

17 On an application contemplated in above, the court may grant leave only if it is satisfied that the applicant: is acting in good faith; appears prepared and able to sustain the proceedings; and has alleged facts which, if proved, would support an order in terms of paragraph below On reviewing a resolution that is the subject of an application in terms of paragraph above, or after granting leave in terms of paragraph above, the court may set aside the resolution only if: the resolution is manifestly unfair to any class of holders of the Company s securities; or the vote was materially tainted by conflict of interest, inadequate disclosure, failure to comply with the Companies Act, the Company s Memorandum of Incorporation or any applicable rules of the Company, or other significant and material procedural irregularity The holder of any voting rights in the Company is entitled to seek relief in terms of section 164 of the Companies Act, a copy of which is set out in Annexure IV to this circular, if that person: notified the Company in advance of the intention to oppose the special resolution contemplated in the aforementioned section; and was present at the meeting and voted against that special resolution Shareholders should, before exercising their rights under section 164 of the Companies Act, have regard to the report of the Independent Expert set out in Annexure I to this circular which concludes that the Specific Repurchase is fair and reasonable to Infrasors shareholders. 8. ESTIMATED COSTS OF TRANSACTIONS The approximate costs of the Transactions are anticipated to be: Description of services Name of service provider R Printing, publishing and distribution expense INCE Securities Transfer Tax SARS JSE documentation fees JSE Sponsor fees Bridge Capital Reporting Accountant fees Mazars Inc TRP Fees TRP Fees Total GENERAL MEETING The General Meeting of Infrasors Shareholders to consider and, if deemed fit, pass with or without modifications the resolutions set out on the Notice of General Meeting, will be held at 12:00, at 27 Fricker Road, Illovo, Johannesburg, 2196 on Wednesday, 3 December The Notice of General Meeting and a form of proxy (blue) for use by Certificated Shareholders and Dematerialsed Shareholders with own name registration who are unable to attend the General Meeting are attached to this circular. A duly completed form of proxy (blue) must be received by the Transfer Secretaries by no later than 12:00 on Monday, 1 December

18 9.1 Resolutions in respect of the Specific Repurchase Infrasors Shareholders are requested to consider and approve Special Resolution 1 approving the Specific Repurchase by Infrasors of of its own shares from the Infrasors Empowerment Trust contained in the Notice of General Meeting, and if deemed fit, to pass them, with or without modifications. For the resolutions to be passed, votes in favour of the resolutions must represent at least 75% of the voting rights exercised by Infrasors Shareholders entitled to vote on the resolutions at the General Meeting. The Infrasors Empowerment Trust and his associates are excluded from voting for Special Resolution 1: Specific Authority to repurchase shares from the Infrasors Empowerment Trust. 9.2 Resolutions in respect of the Specific Issue The issues of the Infrasors ordinary shares to Joe Kalo Investments as envisaged in paragraph 3 constitute a specific issue of Infrasors Ordinary Shares for cash in terms of the Listings Requirements. Each such issue require the passing by Infrasors Shareholders of an ordinary resolution by a 75% majority vote to be cast in favour of such resolution by all Infrasors Shareholders entitled to vote on that resolution present in person or represented by proxy at the General Meeting. The Notice of General Meeting contains Special Resolution 1 and Ordinary Resolution 1 and is required to be approved by Infrasors Shareholders in order to give effect to the Transactions. Joe Kalo Investments and his associates are excluded from voting for Ordinary Resolution 1: Specific authority to issue shares to Joe Kalo Investments. 10. IRREVOCABLE UNDERTAKINGS As set out in the table below, Infrasors has received irrevocable undertakings from shareholders holding in aggregate 79.6% of the shares eligible to vote the Specific Repurchase and Specific Issue, in favour of Special Resolution 1 and Ordinary Resolution 1. Name of shareholder Number of shares held Percentage of total shares entitled to vote Afrimat Limited SALIENT INFORMATION ON INFRASORS 11.1 Background information on Infrasors Infrasors is a South African resources company, mining and producing a spread of minerals for the industrial, metallurgical, mining and construction sectors. The Company, with its proven track record in the mining industry, aims to leverage its well established and recognised brands, empowerment credentials, balanced business portfolio and proven financial performance. The Company was initially listed on the Alternative Exchange of the JSE on 31 July 2007 after the Company had been formed on 19 April With effect from 1 March 2007, Infrasors acquired Lyttelton Dolomite Proprietary Limited, Delf Sand Proprietary Limited and K&F Bricks. On 1 February 2010, Infrasors moved onto the Main Board of the JSE housed under the General Mining sector. On 1 March 2013 the JSE-listed entity Afrimat obtained a majority shareholding in the Company. Lyttelton Centurion Mine The mine in 2007 was integrated into Infrasors. The mine has continued to be an important supplier of metallurgical grade aggregate, and during the latter half of 2000s has invested in plant which has increased the supply of construction aggregate and powders. The mine is currently capable of producing 1.6 million tons per annum. The mine, being situated in a built-up area, has always had a working relationship with the surrounding community. Currently communication and understanding of its business is conducted through the Environmental Committee Forum which meet regularly to discuss the mine s progress. The forum is represented by a number of interested bodies. 16

19 Marble Hall Mine The mine was first established in 1919 for the purpose of extracting and cutting marble. In the early 1940s, being state-owned land, Marble Lime Associated Industries, who were undertaking mining activities, was requested to produce tanning salts for the manufacturing of military footwear. The plant continued to produce until In 1976 Northern Lime Limited obtained a Mining lease agreement and related mining right to mine limestone. Sometime thereafter the company name was changed to PPC Lime Limited. In September 1988 the lease and mining rights were sold to Samancor Limited. The mine up to this point had been producing hydrated lime using the original kilns from the tanning operations. In the late 1980s this activity ceased. In 1999 the lease and mining right formed part of a management buy-out and was incorporated into Lyttelton Dolomite Proprietary Limited together with the Lyttelton Centurion mine. This in turn was sold onto Infrasors in The mine has matured into producing metallurgical grade aggregate, construction aggregate and powders. Delf Sand Mine The business supplied building and plaster sand mainly to Pretoria and surrounding developing areas. In 1999, Delf Sand recognised the importance of the strong demand for high-quality silica sand products, particularly within the foundry industry. A processing plant was therefore constructed to produce graded silica products that would conform to international standards, enabling Delf to become a leading supplier of alluvial silica sand in South Africa. In 2007 the mine was incorporated into Infrasors. It has continued to supply silica sand to the foundry industry and has expanded its customer base to include supply to the tile adhesive industry, golf courses and recreational facilities Prospects The Group expects to remain a key supplier to the local construction and metallurgical markets and should in future also benefit from current cost reduction initiatives and its renewed focus on marketing. Infrasors key focus areas will remain expanding sales volumes, further reducing costs, continually improving efficiencies and developing the required skills level of its employees. It is the intention of Infrasors to delist after these Transactions are approved by shareholders Major shareholders At the Last Practicable Date, Infrasors Ordinary Shareholders who, in so far as is known to Infrasors, beneficially interested in 5% or more of a class of securities issued by Infrasors, are as follows: Shareholder Number of shares Percentage of issued share capital Afrimat Limited Infrasors Empowerment Trust Total