SouthGold Exploration Report HIGHLIGHTS for GBG Shareholders!
3. LITIGATION
3.1 The application to the High Court far a declaratory order to the effect that the rescue proceedings was properly instituted and are valid, was launched on 31 January
2013, with a hearing date scheduled far 19 February 2013. Notice of the availability of the applicatian papers will be sent out shortly to all affected persons.
3.2 The arbitration referred to in my last report is set down far hearing on 15 Aprii 2013.
There are, however, currently settlement negotiations underway.
4. THE RESCUE OF THE COMPANY
4.1 l remain of the view that there is a reasonable prospect that the company will be rescued through proceeds generated by either the sale of the shares or the sale of the Burnstone mine. As you are aware, JP Morgan was appointed as the transactional adviser. JP Morgan and J have now:
4.1 1 Finalised and distributed the process letter which contains the following timetable and sale guidelines;
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4.1.2 Before potential bidders will be permitted access to Southgold Management or the Burnstone site a pre-bid letter containing the following information is required:
4.1.2.1 Bidder information;
4.1.2.2 Technical expertise;
4.1.2.3 Financial capacity;
4.1.2.4 Approvai process; and
4.1.2.5 Black Economic Empowerment (''BEE") plan.
4.2 lf selected as a potential bidder, that company will be notified and invited to submit a detailed binding offer to J.P. Morgan by Spm South Africa time an Friday, 29 March, 2013.
4.3 Prior to submitting the offer, the potential bidder will be given an opportunity (at the discretion of the Company) to engage with me, the Company's legai counsel and other Company representatives in order to clarify key legal issues and to discuss the potential bidder's proposed offer structure in detail.
4.4 Any offer should contain at least the following terms and information:
4.4.1 the cash consideration offered for 100% of the shares in and any shareholder loans or other claims against the Company, expressed in US$ ("the Consideration");
4.4.2 detail and evidence of the bidder's ability to pay the Consideration in full and in cash upon completion of the transaction;
4.4.3 Propositions regarding whether Southgold assumes any of the debt currently owed by GBG as well as a financial forecast for a period of at least five years;
4.4.4 a preliminary outline of the bidder's proposed post-transaction development plans far the Company;
4.4.5 a description of the bidder's proposed plans regarding the Company's existing management and contract employees and their role and participation in the business following the transaction;
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4.4.6 confirmation that the Offer is made as a principal for the bidder's own account;
and
4.4.7 any other conditions to the Offer.
4.5 JP Morgan continues to investigate and vet its network of potential bidders. The data room has been opened and access given to potential bidders.
4.6 A number of site visits have been held and l am in the process of arranging a series of meetings to explain the business rescue framework.
4.7 At present, there are at least six serious and potentially suitable bidders.
4.8 As you are aware, l was not in a position to publish a business rescue pian by 15 January 2013 and sought an extension of the publication date from the holders of a majority of the creditors' voting interests, as contemplated by s 150(5) of the Act. l obtained the requisite consent and the date for the publication of the Business Rescue Plan has been extended to 31 May 2013.
5. PROOF OF CLAIMS
5.1 A deadline of 15 February 2013 is hereby set for the submission of claims by all creditors.
SIGNED AT CAPE TOWN THIS 5TH DAY OF FEBRUARY 2013
Peter Van den Steen
Business Rescue Practitioner for Southgold Exploration (Pty) Ltd
