| Wed 4 Jul 2007, 8:30 | | PAF / PAN - Pan African - Proposed acquisition and |
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PANAF
PAF / PAN - Pan African - Proposed acquisition and secondary listing on
Altx
Pan African Resources plc
(Incorporated and registered in England and Wales under Companies Act 1985
with registration number 3937466 on 25 February 2000)
Share code on AIM: PAF & ISIN: GB0004300496
Share code on JSE: PAN
("Pan African" or the "Company")
Date 4 July 2007
PROPOSED ACQUISITION OF BARBERTON MINES (PTY) LIMITED ("BARBERTON MINES"),
RE-ADMISSION TO AIM, AND EXPECTED ADMISSION ON AIM AND SECONDARY LISTING ON
ALTX OF THE ENLARGED SHARE CAPITAL OF 1,071,743,711 ORDINARY SHARES OF 1
PENCE EACH
The Directors of Pan African are pleased to provide more details of the
Company`s proposed acquisition of 74 per cent. of Barberton Mines which
will establish Pan African as a gold production company. Shareholders are
also informed that a combined document incorporating an admission document
for AIM and pre-listing statement for ALTX (the "Document") has been
published today, together with a notice convening an Extraordinary General
Meeting of the Company to be held at 10h30 on 27 July 2007 (or as soon
thereafter as the Annual General Meeting of the Company convened for the
same date and place shall have been concluded or adjourned).
The Existing Ordinary Shares of the Company were suspended from trading
pending the publication of the Document and have recommenced trading today.
A copy of the Document is available from the Company`s web site,
www.panafricanresources.com and is expected to be posted to Shareholders
shortly.
Captalised terms used in this announcement but not otherwise defined have
the meanings given to them in the Document
Summary
- Proposed acquisition of a 74 per cent. interest in Barberton Mines
resulting in the issue of 593,740,476 Ordinary Shares
- Proposed issue of 60,000,000 Ordinary Shares to Pangea
- Adoption of the new share option plan
- Admission of Enlarged Share Capital to trading on AIM
- Secondary listing of the Enlarged Share Capital on Altx
Jan Nelson, Chief Executive Officer of Pan African said, "The proposed
transaction will result in Pan African being transformed from a junior gold
explorer to a mid-tier gold producer and explorer that can fund its own
exploration activities. It allows the Company to form a strategic
partnership with Metorex which brings with it access to seasoned
entrepreneurial, management and technical skills. This will not only
greatly assist the Company in the development of its projects but also
enhance its ability to source new projects. In addition, the Company also
gains Shanduka Resources as a shareholder and strategic partner providing
the Company with another avenue to source exploration opportunities. The
Company will also gain an extremely capable mining team with a proven track
record for delivering results at Barberton Mines. Pangea Exploration
remains as a shareholder and strategic partner in pursuing our future
exploration ambitions. The transaction unlocks significant shareholder
value and provides a platform for the Company to realise that value. The
Board would like to thank our current shareholders for their patience
during the suspension period and encourage them to vote in favour of the
proposed transaction."
For more information please contact:
Pan African Resources: Ambrian Partners Sansara Financial
Limited: Services:
Jan Nelson, CEO Richard Brown/Richard Amanda Markman
Greenfield
+27 (0) 82 494 5628 +44 (0) 207 776 6400 + 27 (0) 82 499 2911
Colin Bird, Chairman FD Beachhead (Public Parkgreen
Relations - South Communications (Public
Africa): Relations - United
Kingdom):
+44 (0) 20 7584 2155 Jennifer Cohen/Louise Justine Howarth/Claire
Brugman Irvine
+27 (0) 82468 6469/+ 27 + 44 (0) 207 851 7480
(0) 83n 504 1186
or visit www.panafricanresources.com
The following details are summarised from Part I of the Document and should
be read in the context of the whole of that Document when received by
Shareholders:
1. INTRODUCTION:
Pan African has signed a conditional acquisition agreement under which it
has agreed to acquire, from Metorex, 4,440,000 Barberton Shares (being 74
per cent. of the issued ordinary share capital of Barberton Mines) and all
of the Barberton Preference Shares held by Metorex for a total
consideration of GBP35.6 million, which is to be satisfied by the issue by
the Company of the Metorex Shares, to Metorex credited as fully paid at 6p
per share. The remaining 1,560,000 ordinary shares in Barberton Mines
(being 26 per cent. of the issued share capital of Barberton Mines) are
held by Shanduka, a BEE group, in order to comply with the MPRDA and the
BBEC for the South African Mining Industry. Shanduka has an option to sell
its 26 per cent. holding in Barberton Mines to Pan African in consideration
for additional Ordinary Shares, equating to approximately 19 per cent. of
the Enlarged Share Capital of the Company.
The Barberton Acquisition constitutes a reverse takeover for the purposes
of the AIM Rules and therefore Pan African requires the prior approval of
its Shareholders at the EGM before it can conclude the Barberton
Acquisition.
In addition, the Company has applied for, and has been granted, a Listing
on Altx as required by the South African Reserve Bank`s approval of the
Barberton Acquisition. Such Listing will become effective on completion of
the Barberton Acquisition.
It is intended that the Pan African board is strengthened by the
appointment, upon Admission and Listing, of the Proposed Directors, both of
whom are currently directors of Metorex. Further details of the Proposed
Directors are set out below.
The purpose of the Document is to explain the background to and reasons for
the Proposals and why the Directors believe that the Proposals are in the
best interests of the Company and Shareholders as a whole and to recommend
that Shareholders vote in favour of the Resolutions.
Shareholders are therefore invited to vote on the Resolutions at the EGM.
If the Resolutions are passed in their entirety, and without amendment, by
the Shareholders, the Proposals will be implemented.
2. BACKGROUND TO AND REASONS FOR THE BARBERTON ACQUISITION
Pan African is committed to continue to deliver on the Company`s vision of
"acquiring a portfolio of mineral deposits in Africa with world-class
potential in favourable areas of Africa and develop them to enhance
shareholder value".
Further to this commitment, the Company announced on 28 June 2007 the
acquisition of exploration rights in Ghana which the Directors believe
will:
- provide the Company with an advanced exploration project that could,
within five years, contribute to the planned growth in the annual gold
production profile;
- provide the Company with the necessary exploration base to consolidate
additional properties in this area; and
- potentially provide the opportunity to acquire a lease over mining rights
in the immediate vicinity.
However, the Directors recognise that to achieve scale and visibility in
the gold sector, the Company has to acquire the necessary skills and funds
not only to fast track the development of current projects but also to be
strategically placed to take advantage of new acquisition opportunities.
The mining industry is currently experiencing a critical shortage of
managerial, project development and operational skills across the globe. It
is as a result of these factors that the Directors made a strategic
decision to acquire a production base in Africa that could provide critical
mass for the Company in terms of cash flow, skill-set and assets, which
would ensure continued growth to enhance Shareholder value.
Completion of the Barberton Acquisition will:
- provide Pan African with the necessary skills base (not only at Barberton
Mines; but also from Metorex) to enable the Company to fast track the
development of current projects by applying the full range of proven
technical capability from metallurgical, engineering through to mining
skills;
- allow Pan African to unlock previously unrealised value at Barberton
Mines through the application of its geological expertise;
- establish Pan African as a gold producer and therefore provide Pan
African with cash flow to fund its ongoing exploration activities;
- position Pan African such that additional acquisition opportunities can
be realised;
- provide necessary momentum for the Company`s regional exploration
ambitions in Ghana; and
- add additional premium exploration potential close to the mines being
acquired.
In addition, the Company through the Proposed Directors will gain the
involvement of seasoned entrepreneurs who will assist the Company in its
deal-flow.
3. PRINCIPAL TERMS AND EFFECTS OF THE BARBERTON ACQUISITION
3.1 Principal terms
Completion of the Barberton Acquisition is subject to certain conditions
precedent. These include, inter alia, a valuation from an auditor (Deloitte
& Touche) on the assets to be acquired for a non-cash consideration (to
comply with section 103 of the Act) which has been obtained, South African
Reserve Bank approval which has been obtained, the secondary listing on
Altx of the Ordinary Shares, Shareholder approval for the purposes of the
AIM Rules, waiver of the pre-emption rights of the remaining shareholder in
Barberton Mines (that is Shanduka) and Pan African`s re-admission to AIM.
As a further condition precedent of the Barberton Agreement and in
accordance with the terms of the Pangea Agreement, Pan African will issue
an additional 60,000,000 Ordinary Shares to Pangea credited as fully paid
up at 6p per share in consideration for the acquisition of the 20 per cent.
Free carried interest it holds in the Manica Project (taking the Company`s
stake to 100 per cent. In the Manica Project and which is itself
conditional upon a valuation, which has been obtained, from an auditor
(Grant Thornton) on the assets to be acquired for a non-cash consideration)
and the remaining payments due to Pangea in respect of the gold projects in
the CAR will be cancelled.
Shanduka has agreed to waive its tag along and pre-emptive rights in
Barberton Mines in consideration for an option to convert its 26 per cent.
Shareholding in Barberton Mines into 208,611,519 new Ordinary Shares which
would represent approximately 19 per cent. Of the Enlarged Share Capital.
Shanduka may exercise this option at any stage up to 30 June 2008 following
the approval of the DME to the conversion of Barberton Mines old order
rights into new order rights (or, if such approval is not granted before 30
June 2008, until 31 August 2008) failing which the option lapses. Shanduka
may not sell any Ordinary Shares acquired by it prior to 1 July 2008. In
addition Pan African has granted Shanduka a further option to acquire
64,304,622 new Ordinary Shares which would represent 6 per cent. Of the
Enlarged Share Capital. The option is exercisable at anytime during the 12-
month period beginning on the date which is six months after the date of
Admission. The option price is the volume weighted average trading price of
Ordinary Shares in the three month period preceding the date of exercise of
the option less 15 per cent. Should Pan African undertake a placement of
Ordinary Shares for the purpose of fundraising (save for any fundraising
undertaken by Pan African in the period six months from Admission) during
the period of the option, Shanduka may participate in such placement for
all or 50 per cent. Of the placing shares at the trading price of the
Ordinary Shares on all markets less 15 per cent. Shanduka has agreed not to
sell any of the shares so acquired for a period of 12 months following the
Admission date.
Metorex intends to hold the Metorex Shares as an investment and has
undertaken not to dispose of any of its Pan African shareholding for a
period of 12 months from the date of issue other than by way of a
distribution in specie. Pan African has the right to place such shares if
required. Metorex will appoint two directors to the board of Pan African
even though the Acquisition Agreement entitles Metorex to appoint one
director to the board of Pan African for each 10 per cent. Of the issued
share capital of Pan African that Metorex holds. Pan African will have the
right to appoint three directors onto the board of Barberton Mines, which
will have a total of five directors.
Immediately following Admission, Pan African`s issued share capital will
have risen from 418,003,235 shares to 1,071,743,711 shares in issue. The
Existing Ordinary Shares include the issue of the Explorata Shares and the
Goldiam Shares and 1,677,273 Ordinary Shares issued on the partial exercise
of an option by a former director of Pan African (amounting to a total of
10,250,000 Ordinary Shares) as announced on 11 May 2007. The Goldiam Shares
and the Explorata Shares have been issued in respect of mineral rights in
the CAR and Mozambique upon certain conditions being fulfilled (as
announced by the Company on 13 March 2006 and 9 January 2006,
respectively).
Should the Resolutions proposed in the notice of EGM be approved, all other
conditions precedent having been satisfied, the Barberton Acquisition would
be completed in all respects by the Admission of Pan African to AIM.
3.2 Ownership of shares in Barberton Mines
The share capital of Barberton Mines consists of ordinary shares and the
Barberton Preference Shares. Those ordinary shares and the Barberton
Preference Shares held by Metorex are to be acquired by Pan African, but
such shares held by Shanduka will be retained by Shanduka, for so long as
Shanduka does not exercise its option under the Shanduka Agreement.
As part of the Shanduka Agreement, Shanduka has agreed to sell all of its
Barberton Preference Shares, to the extent any remain unredeemed, if and
when Shanduka exercises its option to sell its Barberton Mines shares under
the Shanduka Agreement.
The Barberton Preference Shares are redeemable at the instance of the board
of Barberton Mines and carry a variable coupon rate determined by the board
of Barberton Mines. Under South African Law, the maximum amount that a
company may utilise to redeem shares or pay dividends is the amount of the
profits available for distribution. As at the Last Practicable Date,
Metorex held 7,812 Barberton Preference Shares and Shanduka held 269. The
board of Barberton Mines has undertaken not to redeem any of the Barberton
Preference Shares or declare any dividends in respect thereof from the Last
Practicable Date until the date of Admission. As part of the acquisition of
Barberton Mines, Pan African will acquire all the Barberton Preference
Shares held by Metorex which are unredeemed at the date of Admission.
4. PURPOSE OF THE LISTING ON THE JSE
Pan African wishes to obtain a secondary listing of its Ordinary Shares on
AltX in order to:
- satisfy the requirements of Exchange Control with respect to Metorex`s
disposal of Barberton Mines to Pan African in exchange for Ordinary Shares;
- fulfill the conditions precedent of the Barberton Acquisition;
- provide a further funding mechanism through which Pan African can realise
opportunities in the gold sector in both South Africa and Southern Africa;
- enhance South African investors` awareness of Pan African thereby
potentially enlarging Pan African`s investor base and increasing trade in
its shares; and
- facilitate direct investment by South African residents in Pan African.
The main activities of the Enlarged Group, following completion of the
Proposals, will comprise gold production, mineral exploration and
development, and the Directors and Proposed Directors consider that the
Enlarged Group on entering into the Relationship Agreement will be an
independent business that controls the majority of its assets.
5. NATURE OF BUSINESS, STRUCTURE AND STRATEGY OF THE ENLARGED GROUP
5.1 Nature of business and Enlarged Group structure
Pan African is a mining exploration and development company with a focus on
the gold sector on the African continent. Pan African has developed a
prospective portfolio of exploration assets that provide a balance between
a project with near-term production potential (Manica gold project in
Mozambique), two projects that provide a large ground holding in a
previously unexplored region with the potential to develop into a major new
gold camp (Bogoin and Dekoa gold projects in the CAR) and a 90 per cent.
Interest in the Akrokerri property in Ghana.
The Barberton Acquisition immediately provides the Company with a
production base and cash flow to aid the financing of its ongoing
exploration activities. It also provides an additional advanced exploration
project.
Barberton Mines comprises three operating mines, Fairview, New Consort and
Sheba, situated in the Magisterial District of Barberton, Mpumalanga
Province, South Africa, some 370km east of Johannesburg and 47km south west
of Nelspruit. Gold production in this area commenced more than 100 years
ago. Barberton Mines produced approximately 100,000 ounces of gold for the
financial year ended 30 June 2006 at a recovered grade of 9.8g/t.
The Company has reviewed the extensive exploration dataset at Barberton
Mines which has not previously been collectively modelled and accessed and
believes that the potential for additional gold discoveries at or near
surface exist. As such the Company intends to initiate a US$2 million stand-
alone surface exploration programme at Barberton Mines over the next two
years to test the geological prospectivity of the lease area and follow-up
on previously unexplored exploration results.
Barberton Mines has an experienced management team that will become part of
the Enlarged Group. This team not only forms an independent business unit
of the Enlarged Group, but also provides additional skill sets within the
Enlarged Group for other projects. The management team at Barberton Mines
is responsible for approximately 1,475 employees and reports directly to
the Board of Barberton Mines. The Board of Barberton Mines consists of five
directors of which Pan African has a right to appoint three directors.
Pan African intends to continue complying with a management agreement
currently in existence between Barberton Mines and Metorex. This management
agreement provides for additional financial and technical services that
allow the board of Barberton Mines to fulfil certain of its management
functions. Although Pan African will be intimately involved in the
management of the mines, such additional financial and technical assistance
will not only allow for a detailed focus and review, but will also have a
significant cost saving for the Enlarged Group.
All technical and financial skill sets for exploration projects throughout
Africa is out-sourced. The projects are managed by the executive management
of the Enlarged Group with assistance from the Technical Committee. The
exploration projects account for approximately 15 technical and financial
people employed on a contract basis.
5.2 Strategy
The Barberton Acquisition will allow the Company to continue pursuing its
current exploration and growth strategy intended to grow the Enlarged Group
to an annual production base of 500,000 ounces of gold per annum and a
total gold resource base of 10Moz, both within a five-year period. This
strategy will be pursued by:
- growing current production levels at Barberton Mines in South Africa to
150,000 ounces per annum over a five year period (which could include the
acquisition of additional gold mining and exploration opportunities in the
vicinity of Barberton Mines which could enable the Company to consolidate
the gold fields situated within the Barberton Greenstone belt as a result
of: (a) Barberton Mines strategic geographical position: (b) extensive
technical and management experience base: (c) an already producing BIOX and
CIL plant and (d) access to financing within the Enlarged Group);
- initiating a US$ 2,000,000 exploration programme at Barberton Mines over
a two-year period;
- advancing the Manica Project in Mozambique to a BFS and commence mine
development to achieve annual production of 86,000 ounces per annum;
- defining the exploration resource potential of Bogoin and Dekoa in the
CAR together with its joint venture partner, CARgold;
- completing transfer of the company holding a 90 per cent. interest in the
Akrokerri Property and initiate the exploration programme; and
- identifying and acquiring other advanced exploration opportunities and
production targets.
The Directors and Proposed Directors of Pan African further intend to
establish the Company as a mid-tier gold stock on AIM and Altx by
valuation, through continuing to grow the exploration activity and
advancing projects to add to the production base at Barberton Mines.
6. FINANCIAL INFORMATION
The following is an extract of the financial and non-financial information
of Barberton Mines for the three years ended 30 June 2006 translated at an
exchange rate of GBP1:R14 (as appropriate.)
12 months 12 months 12 months
ended 30 ended 30 ended 30
June 2006 June 2005 June 2004
GBP000 GBP000 GBP000
Revenue 23,172 21,990 23,282
Income before exceptional 2,330 616 2,179
items
Total assets 25,085 26,357 27,750
Employees 1,475 1,478 1,451
7. CURRENT TRADING AND FUTURE PROSPECTS
The Directors and Proposed Directors of Pan African are of the opinion
that:
- the Enlarged Group will have a balanced portfolio of assets in terms of
geological potential and country risk;
- the delineation of major gold-in-soil anomaly at the Bogoin Project in
the CAR could lead to exciting future developments over and above any
future gold finds at the Dekoa Project;
- that current scoping studies on the Manica Project indicate that, with
further optimisation work currently underway, the development of an open
pit gold mine with an annual production rate of 86,000oz per annum for a
period of 8.5 years is possible;
- Barberton Mines can sustain current production levels of around 100,000oz
per annum based on a resource depletion schedule of 15 years and has the
potential for further growth;
- initiation of a US$2,000,000 exploration programme over a two year period
could lead to additional major gold discoveries at Barberton Mines; and
- regional exploration reconnaissance work in Ghana could add to the
exploration portfolio in the foreseeable future.
The Directors and Proposed Directors of Pan African are also satisfied with
the exploration results at the Manica Project in Mozambique and are
satisfied that a pre-feasibility study will be completed by the end of the
second quarter of 2007. The results of the pre-feasibility study, if
favourable, would allow the Enlarged Board to initiate a BFS on the
project.
8. DIRECTORS AND PROPOSED DIRECTORS OF THE ENLARGED GROUP
8.1 Directors and Proposed Directors of Pan African
The Enlarged Group will have a senior management team that, including the
Directors and Proposed Directors, brings many years of experience in
discovering, acquiring, funding, developing, and operating gold projects in
Africa. The following table sets out, for each of the Directors, the
person`s name, age, citizenship, positions within the Company and principal
occupation and function:
Name, age and Business address Principal Date appointed to
nationality occupation and board
function
Colin Bird (63) 4th Floor, 2 Non-Executive 8 September 2004
British Cromwell Place, Chairman
South Kensington,
London, United
Kingdom
Jan Petrus Nelson Viewpoint House, Chief Executive 1 September 2005
(36) Cnr Main Street & Officer
South African Orchard Avenue,
Bordeaux,
Randburg, South
Africa
Nathan Anthony Manfield House, Financial 10 March 2000
Steinberg (53) 2nd Floor, 1 Director
British Southampton
Street, London,
United Kingdom
Robert George Pangea House, Cnr Non-Executive 9 September 2004
Still (51) Main Street &
South African Orchard Avenue,
Bordeaux,
Randburg, South
Africa
Hendrik Johan 3 Hoflaan, Non-Executive 9 January 2006
Blignault (64) Uniepark,
South African Stellenbosch,
South Africa
In addition, the following two Proposed Directors will be appointed to the
Pan African board in accordance with the terms of the Barberton Agreement
subject to the approval of the Barberton Acquisition by Shareholders and
Admission:
Name, age and Business address Principal Date to be
nationality occupation and appointed to board
function
Anthony Simon 2nd Floor Non-Executive 31 July 2007
Malone (63) Cradock Heights
South African 21 Cradock Avenue
Rosebank, 2146
Johannesburg,
South Africa
Charles Denby 2nd Floor Non-Executive 31 July 2007
Stockton Needham Cradock Heights
(53) 21 Cradock Avenue
South African Rosebank, 2146
Johannesburg,
South Africa
Following the Barberton Acquisition, Metorex will be entitled to appoint
one director to the board of Pan African for every 10 per cent. Of the
issued share capital of Pan African that Metorex holds. There is no limit,
other than as specified by the Act for a public company, to the number of
directors which Metorex or the Shareholders can appoint.
It is the intention of the Board to appoint a full-time financial director,
within a period not exceeding three months after the EGM, assuming approval
of the Barberton Acquisition by Shareholders. The current financial
director of the Company (who fulfils his duties on a part time basis) will
assume a non-executive role with a focus on UK compliance issues from the
date of this new appointment. The Board, within the mandate from its
Shareholders and Articles (as amended from time to time), has the authority
to make additional changes to the Board structure and will, as appropriate,
consider appointments to fulfil independence requirements and ensure the
effective management of the business of the Enlarged Group.
8.2 Experience and qualifications of the Directors and Proposed Directors
8.2.1 Colin Bird, Non-Executive Chairman
C.Eng, FIMM
Colin Bird has more than 30 years experience in resource operations
management, corporate management and finance. His experience covers a
number of sectors including; gold, copper and coal. In October 1995, he
joined Lion Mining Finance Limited in London as Technical Manager and is
now the Managing Director. He is a director of the listed Canadian mining
company, Freegold Ventures Inc., as well as the Chief Executive of Jubilee
Platinum PLC an AIM-quoted company.
8.2.2 Jan Nelson, Chief Executive Officer
B.Sc (Hons)
After obtaining his honours degree in Geology, Jan Nelson embarked on a
career in gold exploration and mining in South Africa, Zimbabwe and
Tanzania. He has over 14 years` of experience and, within this period, held
positions in mine management and operations with Harmony Gold Mining
Company Limited, Hunter Dickenson and Gold Fields Limited. He also has
experience in dealing with institutional analysts, institutional investors
as well as shareholders.
8.2.3 Nathan Steinberg, Finance Director
FCA, CF, FCCA, TEP
A chartered accountant, Nathan Steinberg is a partner in the London
practice Munslows, through which his services are provided to Pan African.
He is an experienced tax adviser and has considerable corporate experience
of public companies. He is also a member of council of the Institute of
Chartered Accountants in England and Wales.
8.2.4 Rob Still, Non-Executive
B.Com (Hons), CTA, CA(SA
Rob Still has over 22 years` of experience in mining, specialising in
mining finance. He started his career as a chartered accountant, becoming a
partner of Ernst & Whinney before leaving in 1986 to co-found Rhombus
Exploration Limited. Since then he has been involved in the mining industry
worldwide and has held executive and non-executive directorships in
companies listed in South Africa, Australia, Canada and the UK. He has
participated in the evaluation and development of several new mining
projects including Rhovan, Ticor Titanium, Pangea Gold Fields Limited,
Southern Mining Corporation Limited (Corridor Sands), Great Basin Gold
Limited (Burnstone) and Zimbabwe Platinum Mines Limited. Mr Still is
currently chief executive of Pangea Diamondfields PLC, an AIM-quoted
company.
8.2.5 Hennie Blignault, Non-Executive
Ph.D
Hennie Blignault is an experienced geologist who has, since 1989, been
working as an independent consultant for a number of clients. He has been
active in the mining industry since 1967, and has held a number of senior
positions within major mining companies including Group Geologist at Gold
Fields Limited. In 1977, he received his Ph.D. from the University of Cape
Town. He is experienced in a wide spectrum of deposit types and geological
terrains and has extensive knowledge of the African geological and
metallogenic framework.
8.2.6 Simon Malone, Proposed Non-Executive
B.Sc., MBL, SAIMM, Pr.Eng.
Simon Malone is a mining engineer with a business degree who has been
involved in the mining and exploration sector throughout his career. His
expertise lies in the identification, evaluation and development of mining
assets and interface between corporate and operational management. He was
initially employed by JCI Limited, thereafter Chapman Wood and Griswald in
Canada before returning to South Africa where he formed Metorex in 1975.
7.2.7 Charles Needham, Proposed Non-Executive
Charles Needham is the chief executive officer of Metorex and has been the
financial director of Metorex for the past 20 years, prior to which he
spent six years with an auditing firm. He has been involved in the mining
sector his entire career and has specific expertise in financing, financial
reporting, management reporting, hedging and company matters.
9. CORPORATE GOVERNANCE
The Enlarged Board is committed to maintaining high standards of corporate
governance. The Company has developed appropriate measures to ensure that
it complies, as far as possible, with the Combined Code so far as is
practicable for a company of its size and stage of development.
The Board considers that the current non-executive Directors and Proposed
Directors bring a wealth of experience to the Company and a range of skills
appropriate to facilitate the next stage of the Company`s growth. The Board
recognizes none of the Directors or Proposed Directors would be regarded as
independent non-executive directors under the Listings Requirements and the
Combined Code and therefore the Company is not compliant with the Combined
Code in this respect.
The Enlarged Board has also considered the guidance published by the
Institute of Chartered Accountants in England and Wales (commonly known as
the Turnbull Report) concerning the internal control requirements of the
Combined Code. The Enlarged Board will regularly review and manage key
business risks in addition to managing financial risks facing the Company
in the operation of its business.
The Enlarged Board has established a Remuneration Committee comprising
three of the non-executive directors. The Remuneration Committee reviews
the performance of the executive Directors and determines the remuneration
of the executive Directors and the basis of their service agreements with
due regard to the interests of Shareholders. The Remuneration Committee
also determines the payment of any bonuses to executive Directors and the
grant of options to employees, including executive Directors, under the
Company`s share option scheme. The Remuneration Committee shall comprise
Colin Bird, Charles Needham and Rob Still. Colin Bird acts as Chairman.
The Enlarged Board has established an Audit Committee. The Audit Committee
is responsible for ensuring that the financial performance, position and
prospects of the Company are properly monitored, controlled and reported on
and for meeting the auditors and reviewing their reports relating to
accounts and internal controls. The Audit Committee will, following
Admission comprise Charles Needham and Rob Still. Charles Needham will act
as Chairman.
The Board has established a Technical Committee, which following Admission
will comprise Simon Malone, Colin Bird, Keith Spencer, Hennie Blignault,
Anton Esterhuizen and Jan Nelson. Simon Malone will act as Chairman of the
Committee. The Technical Committee is responsible for continuous evaluation
of the Enlarged Group`s existing and potential projects and operations. In
addition, the Technical Committee is to ensure exploration programmes and
capital expenditure at operations are adhered to within allocated budgets.
Simon Malone will act as Chairman.
10. RELATIONSHIP WITH METOREX
Immediately following Admission, Metorex will own 55 per cent. Of the
Ordinary Shares and will be regarded as a controlling shareholder of the
Company.
Metorex and the Company entered into the Relationship Agreement on 4 July
2007 to regulate the ongoing relationship between themselves. The Directors
and Proposed Directors believe that the terms of the Relationship Agreement
as described below will enable the Enlarged Group to carry on its business
independently of Metorex and ensure that all transactions and relationships
between the Company and/or it subsidiaries (on the one hand) and Metorex
(on the other) are, and will be, at arm`s length and on a normal commercial
basis.
Under the Relationship Agreement, for so long as Metorex holds 10 per cent.
Or more of the issued share capital of the Company:
- Metorex and its related parties agree to vote at all times in the manner
required so as to ensure that:
- the Enlarged Group is capable at all times of carrying on its business
and making in the best interests of the Enlarged Group;
- all transactions, agreements or arrangements entered into between any
member of the Enlarged Group and Metorex or any of its related parties will
be made on an arm`s length basis and on normal commercial terms; and
- no variations are made to the Articles which would be contrary to the
maintenance of the Company`s independence.
- Metorex and its related parties agree not to exercise its voting rights
as a Shareholder, other than in relation to the management agreement, in
relation to any transaction involving an actual or potential conflict of
interest between any member of the Enlarged Group and Metorex or any
related party of Metorex or in which Metorex or any related party of
Metorex has a material interest, other than solely as a Shareholder.
- The parties agree that any Director who is also a Metorex shareholder or
who is appointed by Metorex should be free of any conflict of interest and
acknowledge that the Director owes a fiduciary duty to the Company and
shall be obliged to act in what he perceives to be the best interests of
the Company. Where there is perceived to be a conflict of interest, such
Directors shall not be permitted to vote and in any event, decisions on
such matters shall require the approval of a majority of the Directors who
are not and have not previously been a director, officer, employee or
shareholder (in the preceding two years) (directly or indirectly) of
Metorex. Under the management agreement, Metorex will continue to be
retained as an independent contractor to provide management services to
Barberton Mines within certain limitations of authority.
11. TAKEOVER CODE
The Panel considers that, although the Company is incorporated in the UK,
because the Company`s central place of management and control is not in the
UK, the Channel Islands or the Isle of Man, the Company is not currently
subject to the provisions of the Takeover Code.
For so long as the Panel considers that the Company is not subject to the
provisions of the Takeover Code, a takeover offer for the Company will not
be regulated by the UK takeover authorities.
12. DIVIDEND POLICY
The Company has not declared or paid any dividends since its incorporation
and has no present intention to pay any dividends in the near future. Any
decision to pay dividends will be made by the Enlarged Board on the basis
of the Company`s earnings, financial requirements and other conditions
existing at the time, subject to approval by the Shareholders in general
meeting.
13. TAXATION
In terms of tax legislation in the UK, certain tax benefits accrue to the
holders of AIM-quoted securities. Some of these tax benefits arise due to
the classification of AIM securities as "unquoted" and "business assets"
for the purposes of calculation of tax. Following the listing of Pan
African on Altx, the share capital of the Company will continue to be
regarded as unquoted by HM Revenue & Customs in the UK. The tax benefit in
the UK will accordingly continue. Shareholders should consult their
professional advisors for further details as to the implications for them.
14. SHARE OPTIONS
Subject to the approval of Shareholders at the EGM, the Company proposes to
adopt a new share option plan to incentivize directors, employees and
consultants as appropriate.
In order to continue to incentivize the Directors, certain options
previously granted have been extended for a period of three years, subject
to Admission as follows:
Director Number of Option Previous New expiry
Options price expiry date date
Colin Bird 4,000,000 4p 08/ 09/ 2007 08/ 09/ 2010
Rob Still 4,000,000 4p 08/ 09/ 2007 08/ 09/ 2010
Nathan Steinberg 4,000,000 4p 08/ 09/ 2007 08/ 09/ 2010
Nathan Steinberg 1,200,000 4p 18/ 05/ 2007 18/ 05/ 2010
The option granted to Pangea to subscribe for up to 7,500,000 Ordinary
Shares at 4p per share at any time before 8 September 2007 has also been
extended, subject to Admission so as to expire on 8 September 2010 as a
condition of the Pangea Acquisition.
15. EGM
A notice convening the EGM will be sent to Shareholders along with the
Document. The EGM will be held at the offices of Fasken Martineau Stringer
Saul LLP, 17 Hanover Square, London, W1S 1HU, at 10h30 on 27 July 2007 (or
as soon thereafter as the Annual General Meeting of the Company convened
for the same date and place shall have been concluded or adjourned) at
which the following resolutions will be proposed:
* an ordinary resolution to approve the Barberton Acquisition for the
purposes of the AIM Rules;
* an ordinary resolution to increase the authorised share capital of the
Company to GBP20,000,000;
* an ordinary resolution to give authority to the directors of the Company
under section 80 of the Act to allot relevant securities up to an aggregate
amount of GBP15,819,967.65 such authority expiring at the conclusion of the
Company`s next annual general meeting (or if earlier, 15 months from the
date of the resolution);
* an ordinary resolution to approve the Pan African Share Option Scheme;
and
* a special resolution to dis-apply the statutory pre-emption rights
contained in section 89(1) of the Act for the purpose of certain future
issues including: the issue of 57,822,727 Ordinary Shares upon the exercise
of options already granted to Directors, certain employees and others; the
issue of up to 107,174,371 Ordinary Shares (representing approximately 10
per cent. of the Enlarged Share Capital) in connection with the exercise of
options in terms of the Pan African Share Option Scheme to be granted to
members of the Enlarged Board and certain employees; the issue of up to
64,304,622 Ordinary Shares (representing approximately 6 per cent. of the
Enlarged Share Capital) in connection with the option granted to Shanduka
to subscribe for Ordinary Shares; the issue of up to 208,611,579 Ordinary
Shares (representing approximately 19 per cent. of the Enlarged Share
Capital) in connection with the option granted to Shanduka to require the
Company to acquire its 26 per cent. interest in Barberton Mines and for the
allotment of equity securities for cash in other circumstances up to an
aggregate nominal amount of GBP1,071,743.71 (representing approximately 10
per cent. of the Enlarged Share Capital).
16. ACTION TO BE TAKEN
Whether or not you propose to attend the EGM in person you are requested to
complete the Form of Proxy in accordance with the instructions printed
thereon. To be valid, completed Forms of Proxy must be returned by post or
by hand to Capita Registrars, Proxy Processing Centre, Telford Road,
Bicester OX26 4LD or by hand to Capita Registrars, The Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible, but in any
event so as to arrive no later than 10h30 on 25 July 2007, whether or not
you propose to be present at the EGM.
If you complete and return the Form of Proxy you may still attend and vote
at the EGM in person should you decide to do so.
17. RECOMMENDATION
The Board considers the Proposals to be in the best interests of the
Company and its Shareholders as a whole. Accordingly, the Directors
unanimously recommend Shareholders to vote in favour of the Resolutions to
be proposed at the EGM as they themselves intend to do in respect of their
beneficial interests in Ordinary Shares held directly or indirectly by them
amounting, in aggregate, 35,550,000 Ordinary Shares representing
approximately 8.5 per cent. of the Company`s current issued ordinary share
capital.
18. AVAILABILITY OF DOCUMENT
This announcement is an abridged version of the Document. The full
Document, in English only, is available, free of charge, to the public
during normal business hours on any weekday (Saturdays and public holidays
excepted) at the Company`s registered office, Manfield House, 2nd Floor, 1
Southampton Street, London, WCZR 0LR, United Kingdom and administration
office, Viewpoint House, Corner Main Street and Orchard Avenue, Bordeaux,
Randburg, South Africa and from the offices of Ambrian, 8 Angel Court,
London, EC2R 7HP, United Kingdom and Sansara, 1st Floor, Block C, 65
Central Street, Houghton, South Africa from today and for a period of one
month after Admission and Listing.
NOTES
The Directors and Proposed Directors accept responsibility for the
information contained in this announcement. To the best of the knowledge
and belief of the Directors and Proposed Directors (who have taken all
reasonable care to ensure that such is the case), the information contained
in this announcement for which they are responsible is in accordance with
the facts and does not omit anything likely to affect the import of such
information.
This announcement does not constitute an offer or an invitation to purchase
any securities.
Ambrian Partners Limited, which is regulated and authorised in the United
Kingdom by the Financial Services Authority, is acting exclusively for Pan
African and no one else in relation to the matters described above and will
not be responsible to anyone other than Pan African or providing the
protections afforded to clients of Ambrian Partners Limited nor for
providing advice in relation to any matter referred to in this
announcement.
Sansara Financial Services (Pty) Limited and Sansara Independent Sponsor
Services (Pty) Limited ("Sansara"), as corporate adviser and sponsor to
Pan African, have advised Pan African on the proposed acquisition of
Barberton Mines and the proposed secondary dual listing on ALTX. Sansara is
acting exclusively for Pan African and no one else in relation to the
matters described above and will not be responsible to anyone other than
Pan African nor for providing advice in relation to any matter referred to
in this announcement.
ENDS
Date: 04/07/2007 08:30:01 Produced by the JSE SENS Department.
