| Tue 15 Apr 2008, 8:30 | | ARQ/ANO - Anooraq - Concludes definitive agreement |
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ARQ
ARQ
ARQ/ANO - Anooraq - Concludes definitive agreements with Anglo Platinum for the
acquisition
Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
JSE share code: ARQ & ISIN: CA03633E1088
TSXV share code: ARQ & ISIN: CA03633E1088
AMEX share code: ANO & ISIN: CA03633E1088
("Anooraq" or "the Company")
ANOORAQ CONCLUDES DEFINITIVE AGREEMENTS WITH ANGLO PLATINUM FOR THE ACQUISITION
OF A CONTROLLING INTEREST IN LEBOWA PLATINUM MINES AND IN THEIR CURRENT JOINT
VENTURE PROJECTS BEING THE GA-PHASHA, BOIKGANTSHO AND KWANDA PROJECTS
Anooraq announces that it has executed definitive transaction agreements with
Anglo Platinum Limited ("Anglo Platinum") giving effect to its acquisition of a
majority interest in Lebowa Platinum Mines ("Lebowa"), an operating platinum
group metals ("PGM") mine, together with an additional 1% controlling interest
in the parties` current joint venture projects being the Ga-Phasha PGM Project
("Ga-Phasha"), Boikgantsho PGM Project ("Boikgantsho") and Kwanda PGM
Project("Kwanda") ("the Lebowa transaction"). These agreements relate to the
transaction described in the Company`s news release of 4 September 2007.
The execution of the definitive agreements with Anglo Platinum represents a
major step towards Anooraq`s transition from an exploration and development
company into a significant independent PGM producer.
To date, Anooraq has been actively engaged in the exploration and development of
PGM mineral properties in the Bushveld Complex, South Africa. The Company`s
primary assets are Ga-Phasha, Boikgantsho and Kwanda, which are currently held
as 50/50 joint ventures with Anglo Platinum. Pursuant to implementation of the
Lebowa transaction, Anooraq will acquire a controlling interest in these assets.
Once the Lebowa transaction is complete, the potential for synergies between Ga-
Phasha and Lebowa will be assessed.
Lebowa Platinum Mines Operations & Growth Plan
Lebowa is located on the North-Eastern limb of the Bushveld Complex, to the
north of and adjacent to Ga-Phasha.
Lebowa consists of a vertical shaft and a decline shaft system to access the
underground development on the Merensky (
85,000 tonnes per month (tpm)) and UG2
Reefs (
45,000 tpm), as well as two concentrator plants.
Production at Lebowa in 2007(1) was approximately 187,700 refined ounces of
platinum, palladium, rhodium and gold from 1.33 million tonnes (Mt) of ore
milled.
Anglo Platinum has approved a long term growth plan for Lebowa, which includes
various replacement and expansion projects. Anooraq, as a controlling
shareholder, supports this growth plan which will result in existing mining
operations at Lebowa increasing in two stages. Technical studies conducted by
Anglo Platinum indicate that Lebowa`s value is maximized at a mining rate of
375,000 tpm, comprising steady state Merensky production at 120,000 tpm and
steady state UG2 production of 255,000 tpm.
- Stage 1 (2008-2013) comprises an expansion of Merensky and UG2 ore
production to 245,000 tpm, with Merensky production being increased to 120,000
tpm, initially from the Brakfontein Merensky decline shaft system and UG2
production being increased to 125,000 tpm, initially from the Middelpunt Hill
UG2 decline shaft system.
- Stage 2 (2016 onwards) sees the further expansion of UG2 production to
255,000 tpm with Merensky production remaining at 120,000 tpm.
Both the Stage 1 and Stage 2 expansions at Lebowa will access the Merensky Reef
and UG2 Reef from near surface to approximately 650m below surface. Anooraq
considers this an advantage; given that there will be no need for material
refrigeration at depths above 650m below surface, resulting in a less
constrained power requirement for the Lebowa mine than would be required for
operations and projects accessing the reef at deeper levels.
Anooraq will acquire control of an operating PGM mine at Lebowa and a
significant portfolio of PGM projects at various stages of development. On
implementation of the Lebowa transaction Anooraq, through Richtrau No 179
(Proprietary) Limited ("Lebowa Holdco"), will control the third largest PGM
reserve and resource base in South Africa.
(1) Anglo Platinum Annual Report, 31 December 2007.
Group Structure
Lebowa Holdco has been established to hold all of the parties` interests in
Lebowa, Ga-Phasha, Boikgantsho and Kwanda. The group structure is as follows:
Anooraq and Anglo Platinum will hold 51% and 49% respectively in Lebowa Holdco.
Lebowa Holdco will hold 100% in Ga-Phasha, Boikgantsho, Kwanda and Lebowa.
Salient Terms & Conditions
The cash acquisition price for the Lebowa transaction is ZAR3.6 billion (C$ 467
million).
Anooraq intends to fund the purchase price through a combination of debt and
equity. An exercise of share purchase warrants by Pelawan in December 2007, in
an aggregate amount of ZAR 1.586 billion, will provide a portion of the funds
required by Anooraq for this purpose. Details of the Pelawan warrant exercise
were set out in a Company news release dated 24 December 2007.
Anglo Platinum will provide Anooraq with an interest bearing standby loan
facility. This facility enables Anooraq to utilize up to 80% of all cash flows
generated from the Lebowa operations should this be required to support external
acquisition senior debt finance secured by Anooraq for the purposes of the
Lebowa transaction.
The parties have agreed to various financing arrangements between them to
implement the Anglo Platinum approved long term growth plan at Lebowa, as
follows:
- Anglo Platinum will incur for its own account the first ZAR 200 million
required for development of the Middlepunt Hill UG2 decline expansion project;
- Anglo Platinum will provide Lebowa with a project finance facility of ZAR1.6
billion, representing the balance of the capital budget estimate for
implementation of the Middlepunt Hill UG2 decline expansion project ("The MPH
Facility"). The MPH Facility has a 8 year term, with a capital repayment holiday
of one year, will bear interest at a facilitation interest rate and is
subordinated in priority of repayment against certain other funding instruments
within the Lebowa group; and
Beneficiation
Lebowa has entered into a 5-year Concentrate Off-Take Agreement with Anglo
Platinum for the sale of Lebowa concentrates at competitive market rates,
renewable at Lebowa`s election for a further 5 years.
In seeking to facilitate Anooraq`s ambition of becoming a "mine to market"
company, Anglo Platinum has extended Anooraq`s option to acquire an ownership
interest in Anglo Platinum`s Polokwane Smelter, which ownership interest will be
relative to Anooraq`s group concentrate feed into the Polokwane Smelter from
time to time and subject to certain conditions precedent.
Conditions
The Lebowa Transaction is subject to a number of conditions precedents,
including:
- completion of due diligence investigations by both Anglo Platinum and Anooraq,
which investigations have already been substantially progressed;
- debt and equity capital raising by Anooraq in order to fund the full purchase
consideration for the Lebowa transaction;
- Anooraq shareholder approval of all resolutions necessary to implement the
Lebowa transaction;
- Approval by the South African Competition Commission;
- consent by the United Kingdom Treasury for Anglo Platinum to undertake the
transaction;
- approval of the transaction and of certain transfers of mineral title
relating to Ga-Phasha, Boikgantsho and Kwanda by the South African Department of
Minerals and Energy; and
- other regulatory approvals including, where necessary, the Exchange Control
department of South African Reserve Bank, the JSE Limited, the TSX Venture
Exchange and the American Stock Exchange.
The parties remain committed to closing the Lebowa transaction as soon as
reasonably practicable. The long-stop date for closing the Lebowa transaction is
30 November 2008.
Sale of Shares Agreement
Pursuant to the terms of the Sale of Shares Agreement concluded with Anglo
Platinum, Anooraq will acquire 51% of the shares in, and claims on shareholders
loan account against, Lebowa Holdco. The joint venture agreements in respect of
the Ga-Phasha, Boikgantsho and Kwanda will be terminated and these projects will
be transferred into separate companies, established as wholly-owned subsidiaries
of Lebowa Holdco.
Anglo Platinum has given Anooraq appropriate sale warranties in relation to the
Lebowa transaction.
It has also been agreed that Anglo Platinum`s current rehabilitation provision
in respect of Lebowa will be transferred into a new rehabilitation trust fund to
be established for the operations of Lebowa Holdco. Anglo Platinum`s current
rehabilitation guarantees in respect of Lebowa will remain in place for one year
after the implementation of the Lebowa Transaction for the benefit of Lebowa
Holdco.
Shareholders Agreement
Pursuant to the terms of the Shareholders Agreement concluded between Anooraq
and Anglo Platinum, Anooraq has the ability to appoint the majority of the
directors to the board of Lebowa Holdco and all of its subsidiaries. Anglo
Platinum will participate in key management decisions through committees
established for that purpose.
Furthermore, in order to ensure a successful transition at Lebowa, Anglo
American plc Group has agreed to provide certain essential services to Lebowa at
a cost which is no greater than the costs charged to another Anglo American plc
Group company for the same or similar services, for an initial period of one
year.
Anooraq has given certain undertakings to Anglo Platinum in relation to the
maintenance of its status as a company controlled by Historically Disadvantaged
Persons ("HDP"), as envisaged in the South African Mineral and Petroleum
Resources Development Act No.28 of 2002 and the Mining Charter. The effect of
these undertakings is that HDPs must maintain beneficial ownership of at least
26% in the assets of Lebowa Holdco until the repayment of at least 60% of the
MPH Facility (approximately 6 years) ("Initial Term"). These undertakings
include that Pelawan Investments (Pty) Ltd, the HDP controlling shareholder of
Anooraq, will not allow either its own level of HDP shareholding or its
shareholding in Anooraq, to fall below 26% HDP beneficial ownership interest. If
these shareholding levels should be breached, and Anooraq fails to exercise its
rights to remedy such a breach, Anooraq may be required to dispose of its shares
in Lebowa Holdco to another HDP.
It is important from Anglo Platinum`s perspective that the Anooraq group retain
its current HDP control status and that Anooraq retains control of Lebowa
Holdco. Should there be a change of such control then Anglo Platinum may require
Anooraq to acquire its shares in Lebowa Holdco at a market-related price. In
addition, should Anooraq wish to sell its entire interest in Lebowa Holdco to a
third party then Anglo Platinum has a tag along right relating to such sale. The
parties have also granted each other reciprocal rights of first refusal relating
to a proposed sale of their interests in Lebowa Holdco.
Ongoing Funding
The board of Lebowa Holdco, which will be controlled by Anooraq, has the right
to call for funding either by way of shareholder loan or equity. If a
shareholder should default on a cash call, the other shareholder may increase
its equity interest in Lebowa HoldCo by funding the entire cash call, provided
that during the Initial Term, Anooraq`s shareholding in Lebowa Holdco cannot be
diluted for default in respect of equity contributions.
Employees and Communities
The parties have agreed to:
- establish an Employee Share Ownership Plan ("ESOP") for the benefit of
employees of Lebowa. Anglo Platinum will contribute an amount of approximately
ZAR138 million (based on current market prices) to the ESOP Trust to facilitate
its establishment, and approximately ZAR112 million of this amount will be
utilized by the ESOP Trust to subscribe for shares in Anooraq. The balance of
the funds will be used to pay benefits to the employees of Lebowa over the next
seven years; and
- establish a Communities Trust for the benefit of communities affected by the
operations of Lebowa Holdco. Anglo Platinum will contribute an amount of
approximately ZAR104 million to the Communities Trust, which funds will be
utilized to subscribe for shares in Anooraq and facilitate annual payments to
the benficiaries of the community trust. Anooraq will issue warrants to the
trust with an option value of ZAR 108 million.
Accordingly, pursuant to Anooraq`s equity financing for implementation of the
Lebowa transaction, the Company will receive an inflow of approximately ZAR195
million from the ESOP Trust and Communities Trust.
Anooraq`s Acting President and CEO, Tumelo Motsisi, comments that "This
transaction is a win-win for both parties. It represents a solid foundation for
Anooraq to fulfill its objective of becoming a significant PGM producer and
creates a good platform for enhancing our existing relationship with Anglo
Platinum"
Further information
For further details on Anooraq and its properties in South Africa, please visit
the Company`s website at www.anooraqresources.com or contact Investor Services
at (604) 684-6365 or, within North America, at 1-800- 667-2114.
On behalf of the Board of Directors
Tumelo Motsisi
Acting President and CEO
Sandton
14 April 2008
Sponsor
QuestCo Sponsors
FOR FURTHER INFORMATION PLEASE CONTACT:
Anooraq Resources Corporation (South Africa)
Joel Kesler
Head of Business Development
+27 11 883 0831
OR
Anooraq Resources Corporation - North America
Shawn Wallace
Investor Services
(604) 684-6365 or Toll Free: 1-800-667-2114
(604) 684-8092 (FAX)
Website: www.anooraqresources.com
Cautionary and Forward Looking Information
This release includes certain statements that may be deemed "forward looking
statements". All statements in this release, other than statements of
historical facts, that address potential acquisitions, future production,
reserve potential, exploration drilling, exploitation activities and events or
developments that Anooraq expects are forward looking statements. Anooraq
believes that such forward looking statements are based on reasonable
assumptions, including assumptions that: the Lebowa transaction will complete;
Lebowa will continue to achieve production levels similar to previous years; the
planned Lebowa expansions will be completed and successful; Anooraq will be able
future debt and equity financing on favourable terms; and the Ga Phasha and
Platreef Project exploration results will continue to be positive. Forward
looking statements however, are not guarantees of future performance and actual
results or developments may differ materially from those in forward looking
statements. Factors that could cause actual results to differ materially from
those in forward looking statements include market prices, exploitation and
exploration successes, changes in and the effect of government policies with
respect to mining and natural resource exploration and exploitation and
continued availability of capital and financing, and general economic, market or
business conditions. Investors are cautioned that any such statements are not
guarantees of future performance and those actual results or developments may
differ materially from those projected in the forward looking statements. For
further information on Anooraq, investors should review the Company`s annual
Form on 20-F with the United States Securities and Exchange Commission and its
home jurisdiction filings that are available at www.sedar.com.
Date: 15/04/2008 08:30:06 Produced by the JSE SENS Department.
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