Katanga Mining Announces that it has Obtained Receipt for Final Prospectus for Rights Offering Backstopped by Glencore to Fund Debt Repayment

ZUG, Switzerland, Nov. 18, 2019 /CNW/ - Katanga Mining Limited (TSX: KAT) ("Katanga" or the "Company") announces that it has filed with securities regulatory authorities in each of the provinces and territories of Canada and obtained a receipt for a final short form prospectus (the "Final Prospectus") in respect of the previously announced offering of rights ("Rights") to purchase common shares of the Company ("Common Shares") to raise CDN$7,678,388,000 (the "Rights Offering").

Pursuant to the Rights Offering, all eligible shareholders of Katanga (subject to applicable law) will receive one Right for every Common Share held as of the close of business on November 22, 2019 (the "Record Date"). The Rights Offering will include an additional subscription privilege entitling holders of Rights who have fully exercised their Rights to subscribe for additional Common Shares (the "Additional Subscription Privilege"), if available, that are not otherwise subscribed for under the Rights Offering.

In accordance with the rules of the Toronto Stock Exchange ("TSX"), and as provided in the standby purchase agreement entered into between the Company and Glencore (the "Standby Purchase Agreement"), the subscription price for the Common Shares upon exercise of the Rights is CDN$0.1295 per Common Share (the "Subscription Price"), which represents a 25 percent discount to the volume weighted average price of the Common Shares for the five trading days immediately prior to the date of the Final Prospectus.

Each Right entitles an eligible shareholder to purchase 31.0858657370516 Common Shares (the "Basic Subscription Privilege"). Where the exercise of Rights would otherwise entitle a holder of Rights to receive fractional Common Shares, the holder's entitlement will be reduced to the next lowest whole number of Common Shares. The Company will not issue fractional Common Shares or pay cash in lieu thereof.

The Rights will also entitle any shareholder who exercises in full the Basic Subscription Privilege attached to their Rights to subscribe for additional Common Shares not otherwise subscribed for under the Rights Offering by other shareholders under their Basic Subscription Privilege, pursuant to the Additional Subscription Privilege. The period during which Rights may be exercised under the Rights Offering will begin on midnight (Eastern time) on November 22, 2019 (the "Record Date") and end at 11:59 p.m. (Eastern time) on December 17, 2019. Katanga has received conditional approval to have the Rights listed for trading on the TSX.

Glencore plc, together with its affiliates ("Glencore") has agreed to accept the Rights Offering proceeds of CDN$7,678,388,000 or the equivalent in Common Shares issued from treasury under the Rights Offering to repay US$5.8 billion of debt owed to Glencore (based on a five day average CDN$/US$ exchange rate as of November 15, 2019, which is 1.32386). Glencore, which owns approximately 86.3% of the Company's issued and outstanding Common Shares, has provided a standby commitment such that all Common Shares available for purchase under the Rights Offering will be fully subscribed. The Company will use the entirety of the proceeds of the offering to repay US$5.8 billion of debt owed to an affiliate of Glencore under the Glencore Loan Facilities (as described below), with approximately US$1.5 billion of debt owed to Glencore ("Glencore Debt") being retained by the Company. Accordingly, Glencore is not committing any new monies to Katanga pursuant to the Rights Offering. The Offering will lead to a reduction of the Glencore Debt by US$5.8 billion and a corresponding increase in Common Shares in Katanga held by Glencore (or, to the extent that other shareholders take up their Rights, repaying by cash to Glencore in respect of the Glencore Debt).

Subject to applicable law, a certificate representing the Rights issued, together with the Final Prospectus will be distributed to all eligible registered shareholders who own Common Shares on the Record Date along with instructions explaining the number of Common Shares that can be purchased for those Rights, how to subscribe for the purchase of Common Shares pursuant to those Rights or instruct such shareholder's broker to subscribe for the purchase of Common Shares on the shareholder's behalf, and how to sell Rights in the market or otherwise transfer them to another party.

Further details concerning the Rights Offering, including the terms of the Standby Purchase Agreement, are contained in the Final Prospectus which is available under the Company's SEDAR profile. A copy of the Standby Purchase Agreement is also available under the Company's SEDAR profile accessible via at www.sedar.com.

Early Warning Disclosure

Glencore currently holds 1,646,613,928 Common Shares, representing approximately 86.3% of the issued and outstanding Common Shares.

Following completion of the Rights Offering, assuming (i) holders of Rights take up their Basic Subscription Privilege in full; and (ii) no holder of securities having any other right to acquire Common Shares (including Glencore) exercises any such right, following closing of the Rights Offering, Glencore would acquire 51,186,419,486 additional Common Shares and as a result Glencore would beneficially own, or exercise control or direction over 52,833,033,414 Common Shares, representing approximately 86.3% of the 61,199,951,841 then issued and outstanding Common Shares.

Assuming none of the holders of Rights, other than Glencore, exercise their Basic Subscription Privilege and accordingly Glencore acquires all of the Common Shares pursuant to the full exercise of Rights under the Rights Offering, any additional Common Shares subscribed pursuant to the Additional Subscription Privilege and the standby commitment, following closing of the Rights Offering, Glencore would acquire 59,292,571,428 Common Shares and would be deemed to beneficially own, or exercise control or direction over, 60,939,185,356 Common Shares representing approximately 99.6% of the 61,199,951,841 then issued and outstanding Common Shares. All such Common Shares acquired by Glencore will be newly issued shares from treasury.

In the event that Glencore becomes the beneficial owner of 90% or more of the Common Shares of Katanga, Glencore will be able to take Katanga private without obtaining minority shareholder approval pursuant to the exemption in section 4.6(1)(a) of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

Glencore has no current intention to take Katanga private. Any decision by Glencore to take Katanga private and the timing of any such take private transaction or other action will depend on various factors including Glencore's ongoing assessment of material capital investment required to deliver on Kamoto Copper Company's mine plan over the near-term and its evolving understanding of material country risks including those arising from the fiscal regime in the Democratic Republic of the Congo (the "DRC"), the ability to effectively repatriate cash from the DRC in the future as well as political conditions. Glencore will weigh these factors from time to time to assess whether Katanga's ability to obtain financing from outside sources justifies the ongoing costs of maintaining its status as a listed public company.

The head office of Katanga is Suite 300, 204 Black Street, Whitehorse, Yukon, Y1A 2M9, Canada. The head office of Glencore is Baarermattstrasse 3, CH-6340 Baar, Switzerland.

A copy of the early warning report corresponding to the above can be obtained by contacting the persons named below and will be filed on SEDAR at www.sedar.com.

This news release does not constitute an offer to sell, nor the solicitation of an offer to buy, the securities in any jurisdiction; nor shall there be any sale of securities mentioned in this news release in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

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.

Forward Looking Statements

This press release may contain forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. This press release may contain forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

All forward-looking statements reflect the Company's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Company's forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions listed below. Although the Company believes that these assumptions are reasonable, this list is not exhaustive of factors that may affect any of the forward-looking statements.

Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Although Katanga has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws.

SOURCE Katanga Mining Limited

Longview Communications Inc., Joel Shaffer (Toronto), [phone], [email protected]; Alan Bayless (Vancouver), [phone], [email protected]; Katanga Mining Limited, Paul Smith, T: [phone], C: [phone]; [email protected]

Related Links

http://www.katangamining.com/