South32 announces termination of forward agreement in respect of Arizona Mining

South32 Limited (ASX, JSE, LSE: S32; ADR: SOUHY)

PERTH, Australia, May 11, 2018 /CNW/ - South32 announced today that it has elected to terminate its previously announced over-the-counter equity forward contract (the "Forward Agreement") for the purchase of shares of Arizona Mining Incorporated (TSX: AZ) (Arizona Mining).

On 14 September 2017, South32 entered into the Forward Agreement with an arm's length third-party financial institution (the "Third Party") to purchase up to 15 million shares of Arizona Mining (equivalent to 4.9% of the shares of Arizona Mining at the time the Forward Agreement was entered into) over a maximum period of 12 months.

South32 has elected to terminate the Forward Agreement as it believes it is no longer an effective instrument. 

Under the Forward Agreement, South32 acquired 5,932,600 common shares at a price of C$3.44 per share for a total consideration of C$20.4 million. The price per share was determined based on the daily volume weighted average price of the shares during the term of the Forward Agreement. As the contract had been settled in full in advance of commencing the program, South32 will receive the unused cash amount in addition to the acquired shares.

Following receipt of the acquired shares, South32 has ownership and control over 53,201,861 common shares representing approximately 17.0% of the issued and outstanding shares of Arizona Mining, consistent with our right to increase our interest to 19.9% under the terms defined by the investor rights agreement.

South32 remains supportive of Arizona Mining and is committed to working with the company to unlock the full potential of the Hermosa Project.

Early Warning Disclosure

The following information is issued pursuant to National Instrument 62-103 ? The Early Warning System and Related Take-Over Bid and Insider Reporting Issues of the Canadian Securities Administrators.

South32 International Investment Holdings Pty Ltd (the "Acquiror") has elected to terminate its previously announced over-the-counter equity forward transaction (the "Forward Agreement") with an arm's length financial institution (the "Third Party").

Pursuant to the Forward Agreement, the Third Party was engaged to acquire up to 15 million common shares of Arizona Mining (the "Acquisition Shares") from the Third Party. Pursuant to the Forward Agreement, the Third Party agreed to use its best efforts to acquire the Acquisition Shares through purchases in the market for a period of up to 12 months.

On 11 May 2018, the Acquiror acquired 5,932,600 common shares acquired by the Third Party under the Forward Agreement (the"Acquisition Shares"). Following receipt of the Acquisition Shares, the Acquiror currently has ownership and control over 53,201,861 common shares representing approximately 17.0% of the issued and outstanding common shares of Arizona Mining.

The Acquiror elected to terminate the Forward Agreement as it does not believe it is an effective instrument. The Acquiror will evaluate its investment in Arizona Mining from time to time and may, based on such evaluation, market conditions and other circumstances, increase or decrease shareholdings as circumstances require through market transactions, private agreements, or otherwise.

The Acquiror remains subject to the standstill provisions agreed to in connection with the private placement completed on May 16, 2017 whereby it agreed that it will not acquire ownership of 20% or more of the common shares of Arizona Mining without the consent of Arizona Mining until the end of the standstill period on November 15, 2018.

A copy of the Acquiror's early warning report will appear with Arizona Mining's documents on the System for Electronic Document Analysis and Retrieval and may also be obtained by contacting South32's Company Secretary at +61 8 9324 9000.

The Acquiror's address is South32 International Investment Holdings Pty Ltd, Level 35, 108 St Georges Terrace, Perth WA 6000 Australia.

SOURCE South32 Limited