| Wed 26 Mar 2008, 12:47 | | SAM - SA Mineral Resources Corporation - Acquisition Of Oil Concessions By |
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SAM
SAM
SAM - SA Mineral Resources Corporation - Acquisition Of Oil Concessions By
Samroc And Further Cautionary Announcement
SA MINERAL RESOURCES CORPORATION LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
Share code: SAM
ISIN: ZAE000012019
("Samroc"")
ACQUISITION OF OIL CONCESSIONS BY SAMROC AND FURTHER CAUTIONARY ANNOUNCEMENT
Samroc shareholders are advised that agreement was reached on 17 March 2008
("the agreement") in terms of which Samroc will, subject to the conditions set
out below, acquire the entire issued share capital and shareholder loan accounts
of South Africa Congo Oil Company (Pty) Limited ("SacOil") ("the Acquisition").
SacOil will, on acquisition by Samroc, be the South African registered holding
company of interests in the oil concessions located in the Albertine Graben area
of the Democratic Republic of the Congo ("DRC") ("the Oil Concessions").
The objective of the transaction is to reverse SacOil into a listed vehicle, so
as to enable SacOil and its partners to effectively fund an exploration and
development programme in the Albertine Graben area. As previously announced, it
is proposed that the name of Samroc will change to SacOil.
SacOil has been established by a consortium of companies, led by Divine
Inspiration Group (Pty) Limited ("Divine") and Encha Group Limited ("Encha") to
pursue investment opportunities in the oil sector in DRC. The consortium has
committed to the DRC Government that it will develop the oil sector in DRC and
that it will promote community development and local participation.
Terms of the agreement
Vendors
The vendors of the shares and loan accounts in SacOil are: (i) Divine, a company
controlled by Ms A Brown; (ii) Encha, a company controlled by the Moseneke
family; (iii) Columbia Falls Properties 114 (Pty) Limited, a company controlled
by Mr Phatudi Maponya, and (iv) The Kulsum Moosa Family Trust.
Purchase consideration
The aggregate purchase consideration is R516.9 million, to be settled by the
payment to the vendors of the Rand equivalent of USD$5 318 002 (approximately
R42.9 million) and by the issue of 451 360 000 Samroc shares to the vendors at
an issue price of R1.05 per share. The issue price of the Samroc shares equates
to a 10% discount to the volume weighted average trading price 30 days prior to
11 March 2008, the date on which the Samroc board determined to proceed with the
acquisition.
Suspensive conditions
The agreement is subject to the fulfilment by not later than 31 May 2008 of
certain suspensive conditions, the material ones being:
The granting of all necessary regulatory approvals including a listing of the
new shares to be issued by the JSE Limited ("JSE");
Samroc completing a due diligence investigation of SacOil to its satisfaction;
Approval of the agreement by a resolution of the shareholders of Samroc in a
general meeting;
The assignment to SacOil of all rights in respect of the Oil Concessions; and
The issue by the President of the DRC of an Ordinance or equivalent
authorisation of the relevant Production Sharing Agreements in respect of the
Oil Concessions.
In the event that the Ordinance referred to in the last condition above is
received for one of the oil concessions but not the other, the purchase
consideration will be adjusted pro rata for the authorised oil concession.
Warranties
The vendors have given warranties normal for a transaction of this nature,
including warranties that SacOil has exclusive, binding, valid and enforceable
legal title to the oil concessions and that, other than as expressly stipulated
in the relevant Production Sharing Agreements, no other authorisations or
approvals are required to enable Samroc to conduct exploration and in due course
exploitation activities on the Oil Concessions.
The Oil Concessions
The Oil Concessions are located in the Albertine Graben area, which is part of
the Rift Valley and is situated in the area of Lake Albert, which is on the
boundary between the DRC and Uganda. The Albertine Graben area is a proven
petroleum region. Bituminous shales are known to be present in the Albertine
Graben area and are known to be mature, as evidenced by numerous oil seeps and
recent positive drill results in adjacent oil concessions. Notwithstanding the
existence of positive evidence in the region, shareholders are advised that oil
exploration prospects of this nature are highly risky and will remain so until
the resources are satisfactorily proven. Should they be successfully proven,
however, the accretion of value becomes exponential.
In terms of further agreements concluded separately with Divine and SacOil,
Samroc advanced a total amount of approximately USD$3.5 million payable direct
to the DRC Government in lieu of signature bonus obligations for the oil
concessions, The loans advanced are secured by pledges and sureties normal for a
transaction of this nature. On the conclusion of the acquisition, the amounts
advanced will be extinguished.
Categorisation of the acquisition
Encha directly and indirectly controls approximately 65% of the issued shares in
Samroc. Accordingly, the acquisition will be categorised as a related party
transaction in terms of the JSE Listings Requirements. As such, it will require
a valuation contained in an approved competent person`s report and the agreement
will require approval by Samroc shareholders, excluding Encha, in general
meeting.
The transaction will also be categorised as a reverse takeover in terms of the
JSE Listings Requirements and accordingly will necessitate a category 1 circular
and revised listing particulars as if Samroc were a new applicant for listing.
Financial effects of the acquisition
The financial effects of the acquisition, based on the published, audited
results of Samroc for the year ended 30 June 2007 and taking into account the
restructure implemented on 31 December 2007 and the issue of shares for cash
announced on 6 March 2008 are set out below. The pro forma financial effects
have been prepared for illustrative purposes only to provide information on how
the acquisition may have impacted on the results and financial position of
Samroc. Preparation of the pro forma financial effects is the responsibility of
the directors. Because of their nature, the pro forma financial effects may not
fairly present Samroc`s financial position after the acquisition or the effect
on future earnings:
Before 1 After the After the After the % change
capital general acquisition 4
restructu issue 3
re 2
Publishe Pro forma Pro forma Pro forma
d
Audited
(Loss) per (0.23) (0.08) (0.07) (0.03) (59)
share (cents)
Headline (0.23) (0.08) (0.07) (0.03) (59)
(loss) per
share (cents)
Net asset 0.30 8.764 17.40 69.11 297
value per
share (cents)
Tangible net 0.30 8.764 17.40 1.51 (91)
asset value
per share
(cents)
Number and 374 275 272 427 313 292 764 652 144
weighted
number of
shares in
issue (000)
Notes:
The "Before" financial information is based on Samroc`s published reviewed
results for the twelve months ended 30 June 2007.
The "After the capital restructure" financial information is based on the
consolidation on a 1 for 10 basis of the issued share capital of 374 274 923
ordinary shares of 1 cent each into 37 427 492 ordinary shares of no par value
and the subsequent specific issue of shares for cash implemented on 31 December
2007.
The "After the general issue" financial information is based on the issue of 40
864 120 shares at 75 cents per share as set out in the announcement released on
SENS on 6 March 2008. It is assumed that no interest income will flow from the
moneys received.
The "after the acquisition" financial information is based on the acquisition as
set out in this announcement.
Background and rationale
Samroc was restructured and recapitalised on 31 December 2007. In the circular
to shareholders dated 8 November 2007 it was stated that Samroc would focus on
acquiring mineral prospects, taking them up the value chain, and entering into
joint venture agreements with recognised operators to turn such resources into
account. The current initiative is intended to pursue a strategy that will
translate Samroc into a pan African controlled oil and gas focused company with
exploration and, in time, oil and gas producing assets in Africa.
Further cautionary announcement
Further to the announcement released on SENS on 28 February 2008, shareholders
are advised that negotiations in relation to the acquisition of other mineral
exploration assets by Bushveld Pioneer (Pty) Limited ("Bushveld Pioneer) are at
an advanced stage. Shareholders are reminded that it is intended to distribute
shares in Bushveld Pioneer (Pty) to Samroc shareholders, and Bushveld Pioneer
will acquire exploration assets and apply for a listing on the JSE.
Accordingly, Samroc shareholders are advised to continue to exercise caution
when dealing in their Samroc shares until a further announcement is made.
Woodmead
26 March 2008
Sponsor
Sasfin Capital
A division of Sasfin Bank Limited
Corporate adviser to Samroc
Lonsa
Legal adviser to Samroc
Deneys Reitz
Date: 26/03/2008 12:47:05 Produced by the JSE SENS Department.
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