| Thu 20 Nov 2008, 9:06 | | AFO - Aflease - Execution of an Acquisition Agreement by Aflease and BMA in |
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AFO
AFO
AFO - Aflease - Execution of an Acquisition Agreement by Aflease and BMA in
Relation to a Scheme of Arrangement and Further Cautionary
Aflease Gold Limited
(Incorporated in the Republic of South Africa)
(Registration number 1984/006179/06)
JSE Share code: AFO
ISIN: ZAE0000758867
International Prime QX (OTCQX): AFSGY
("Aflease")
BMA Gold Limited
(Incorporated in Australia)
(ACN: 094 265 746)
ASX Share code: BMO
ISIN: AU000000BMO7
("BMA")
EXECUTION OF AN ACQUISITION AGREEMENT BY AFLEASE AND BMA IN RELATION TO A
SCHEME OF ARRANGEMENT AND FURTHER CAUTIONARY
1 Background
Aflease Gold Limited ("Aflease"), which is listed on the JSE Limited
("JSE"), and BMA Gold Limited ("BMA"), which is listed on the Australian
Securities Exchange ("ASX"), have entered into an agreement regarding a
conditional transaction which provides for the dual primary inward listing
of BMA on the JSE and the subsequent acquisition by BMA of all the issued
ordinary shares of Aflease ("the acquisition"), to be implemented in South
Africa through a scheme of arrangement ("the scheme") in terms of section
311 of the Companies Act, 1973 ("the Companies Act") between Aflease and its
ordinary shareholders. On completion of the scheme, Aflease ordinary
shareholders will receive BMA ordinary shares in the ratio of 1 BMA ordinary
share for each Aflease ordinary share after the proposed 20:1 consolidation
of the BMA ordinary shares ("acquisition consideration"). Aflease will be
delisted from the JSE, the enlarged BMA will be renamed Gold One
International Limited ("Gold One") and Gold One will commence trading on the
ASX and JSE.
2 Rationale
The transaction will create an attractive gold exploration, development and
mining business with:
an attractive portfolio of gold assets in Southern Africa and Australia,
including the Modder East mine on the East Rand of Gauteng in South Africa
which is close to production;
a gold resource of more than 15 million ounces (31.81m tonnes at 2.87g/t
for 2.94m ounces of measured and indicated material and 100.79m tonnes at
3.73g/t for 12.07m ounces of inferred material in South Africa and 195 000
ounces of gold at 7.3g/t Au including 70 000 ounces of inferred material at
7.8g/t Au in Australia) providing it with a robust project pipeline and
growth profile;
a strong executive team with significant industry experience and a
diverse skills set;
direct access to the South African and Australian capital markets; and
the capability to grow into a mid-tier international precious metals
producer with a premium market rating.
3 Aflease
Aflease is a South African gold development company listed on the JSE (share
code AFO). It is also traded in the United States with an over-the-counter
American Depositary Receipt ("ADR") (symbol AFSGY) programme on the OTCQX
International Prime market.
Aflease is currently developing the shallow underground Modder East project
in the East Rand Basin of the Witwatersrand. The project, which has a
probable gold reserve of 7.65m tonnes at 5.51g/t Au for 1.36 million ounces,
is on target to pour its first gold in the latter half of 2009. The Modder
East Feasibility Study, independently audited by SRK Consulting Pty Ltd
("SRK") in June 2007 and then updated by management in June 2008, and again
independently audited for the competent persons report ("CPR") by SRK in
October 2008, has determined a life-of-mine of eight years with peak
production in excess of 180 000 ounces per year for three of the eight
years, at an average cash cost of US$250 per ounce over the life-of-mine.
Despite recent cost pressures in the South African mining industry,
management is confident of achieving these cost levels. Aflease`s Sub-Nigel
mine, which is being brought back into production at present, will utilise
the nearby Modder East plant and will be used to train mine workers for the
Modder East operation with costs being offset by production that will build
up to 6 000 ounces per annum.
Aflease also has a number of other projects in South Africa`s major mining
districts, as well as the greenfields Etendeka project in Namibia and the
Tulo concession in Mozambique.
At 10 November 2008, Aflease had net cash of R331 million.
In light of difficult international financial markets, Aflease has focused
on the development of Modder East with a view to establishing an operating
cashflow. Aflease has also reviewed its project and exploration programmes
such that:
capital expenditure that can be rescheduled without affecting the start
up or ramp up of the Modder East mine has been deferred to a later date;
underground development at the Modder East mine has not been reduced and
thus Aflease will continue to benefit from maximum stoping flexibility at
production start up; and
exploration activities have been reduced without compromising Aflease`s
legal tenure or optionality of such rights.
The net result is that Aflease has reduced its short term funding
requirements to approximately R120 million. Aflease is in discussions
regarding the raising of a significant portion of the capital shortfall
prior to the end of November and is confident the balance will be raised by
June 2009.
4 BMA
BMA is an Australian gold exploration and development company listed on the
ASX (share code BMO).
BMA owns the Twin Hills tenements within the Drummond Basin of Central
Queensland and has recently restated its resources at a 3g/t cut off to give
195 000 ounces of gold at 7.3g/t Au including 70 000 ounces of inferred
material at 7.8g/t Au.
At 10 November 2008, BMA had net cash of approximately A$1 million.
5 Gold One
Gold One`s primary focus will be to ensure the successful development and
start up of both the Modder East and Sub-Nigel projects to ensure a
sustainable cash flow capable of funding future growth.
Gold One`s strategic objectives will be:
to complete the development of the high-margin Modder East mine to
generate operating cashflow;
to advance its other low-risk, near-surface assets;
to grow both organically and through value-accretive acquisitions; and
to maximise shareholder returns through capital appreciation.
Neal Froneman, Aflease`s chief executive officer will be appointed president
and chief executive officer of Gold One. Mark Wheatley, the chief executive
officer of BMA will be appointed as non-executive chairman of Gold One.
Existing shareholders of Aflease will hold approximately 95.6 percent of
Gold One and existing BMA shareholders will hold approximately 4.4 percent
of Gold One.
6 Terms of the scheme
The scheme will be based on the following transaction structure:
the dual primary inward listing of BMA on the JSE;
the acquisition by BMA of all the issued ordinary shares of Aflease by
way of a scheme of arrangement in terms of section 311 of the Companies Act,
such that Aflease becomes a wholly-owned subsidiary of BMA;
the issue of BMA ordinary shares to all Aflease ordinary shareholders in
consideration for their Aflease ordinary shares in the ratio of 1 BMA
ordinary share for each Aflease share held after the proposed 20:1
consolidation of BMA ordinary shares such that the previous Aflease
shareholders thereafter hold the majority of the BMA shares;
the delisting of Aflease from the JSE;
the renaming of BMA to Gold One International Limited; and
the classification of Gold One as an "African" company and confirmation
of Gold One`s eligibility for the African company special allowance.
The options, ADRs and convertible bonds within Aflease will be dealt with
appropriately, i.e. the Aflease options will be replaced with BMA options,
the Aflease ADR programme will be replaced with a BMA ADR programme and the
Aflease convertible bonds will be replaced with BMA convertible bonds
subject to certain adjustments to the terms and conditions of the
convertible bonds.
7 Conditions for the scheme
7.1 The implementation of the scheme is subject to a number of conditions,
which are specified in the agreement governing the acquisition, and must be
satisfied no later than 5 (five) business days before application is made to
the court to sanction (i.e. finally confirm) the scheme. These conditions
include the following:
7.1.1 there will be in existence legally binding arrangements to ensure
that all of the Aflease convertible bonds have been or will be cancelled or
transferred to BMA in consideration for the issue of the BMA convertible
bonds;
7.1.2 the Aflease shareholders and the BMA shareholders shall have
approved the amended or new terms of the convertible bonds to be issued by
BMA in consideration for the transfer of the Aflease convertible bonds;
7.1.3 Aflease option holders shall either have exercised their Aflease
share options or have agreed to accept BMA share options instead thereof;
7.1.4 the requisite majority of Aflease shareholders shall have duly
approved the scheme, at a scheme meeting convened by an order of court;
7.1.5 the BMA shareholders shall have approved all resolutions necessary
to implement the scheme and associated transactions;
7.1.6 the JSE and the ASX shall have approved the listing on their
respective exchanges of BMA`s shares, including the shares to be issued in
terms of the scheme;
7.1.7 the scheme shares will not be subject to any resale restrictions in
Australia;
7.1.8 the scheme shares shall be exempt from registration under the
securities laws of the United States and the distribution of scheme shares
in the United States pursuant to the BMA ADR programme which is intended to
replace the Aflease ADR programme will not contravene any law of the United
States; and
7.1.9 all governmental, regulatory, court approvals and all other
approvals required for the scheme, including South African Reserve Bank
approval and Competition Commission approval (if required), shall have been
obtained in both South Africa and Australia.
South African Reserve Bank approval has already been obtained with the
exception of African company status which will be applied for in due time.
8 Financial effects
The pro forma financial effects are being finalised and will be issued in
due course.
9 Details of holdings
BMA does not own or control any shares of Aflease.
There is no party who is acting in concert with BMA.
BMA does not have an option to purchase any shares of Aflease.
10 Arrangements
There is no arrangement which exists with BMA, with Aflease or with any
person acting in concert with BMA or with Aflease in relation to Aflease
shares and no dealings have taken place or will take place pending
finalisation of the scheme. However, there may be potential transactions to
raise development capital (see paragraph 12 below).
11 Timing
The dates and times below are subject to amendment. Any changes to the
dates and times below will be released on the Securities Exchange News
Service ("SENS") and published in the press.
2008
Court hearing to convene scheme meeting
(at 10:00 or so soon thereafter as counsel
may be heard) Wednesday, 17 December
Notice of BMA general meeting given to
BMA shareholders Friday, 19 December
Notice of scheme meeting and Order of
Court released on SENS (at 07:00) Friday, 19 December
Notice of scheme meeting and Order of
Court published in the press
(Business Day and Beeld) Friday, 19 December
Notice of scheme meeting and Order of
Court published in the press
(Sunday Times and Rapport) Sunday, 21 December
Notice of Scheme meeting published in
the Government Gazette Wednesday, 24 December
2009
Last day to trade Aflease ordinary
shares on the JSE in order to be
recorded in the register on the
voting date Friday, 9 January
Voting record date, being the date
on which Aflease ordinary shareholders
must be in the register in order to be
eligible to vote at the scheme
meeting Friday, 16 January
Last day to lodge form of proxy for BMA
general meeting Saturday, 17 January
Last day to lodge form of proxy for the
scheme meeting (by 09:00) Monday, 19 January
Date by which the conditions (listed
In paragraph 7 above) must be
fulfilled Monday, 19 January
BMA general meeting Monday, 19 January
Scheme meeting held (at 09:00) Wednesday, 21 January
Results of scheme meeting to be
released on SENS Wednesday, 21 January
Results of scheme meeting to be
published in the press Thursday, 22 January
The report of the chairperson
to be available for inspection Thursday, 22 January
Court hearing to sanction the
scheme (at 10:00 or so soon thereafter
as counsel may be heard) Tuesday, 3 February
Outcome of Court hearing to be
released on SENS Tuesday, 3 February
Outcome of Court hearing to be
published in the press Wednesday, 4 February
Order of Court sanctioning the
scheme registered by the Registrar
of Companies Thursday, 5 February
Finalisation date announcement to
be released on SENS Friday, 6 February
Finalisation date announcement to
be published in the press Monday, 9 February
Last day to trade ordinary shares
on the JSE in order to be recorded in
the register on the Consideration
Record Date* Friday, 13 February
Suspension of Aflease`s listing on
the JSE from the commencement of
trading on the JSE Monday, 16 February
BMA ordinary shares will be listed
and trading will commence on the
JSE at the commencement of trading
on the JSE under JSE code "GDO"
(ISIN to be advised) Monday, 16 February
Consideration Record Date, being
the date on which Aflease ordinary
shareholders must be recorded in
the register in order to be eligible to
receive the scheme consideration Friday, 20 February
Operative Date of the scheme, from
the commencement of trading on the
JSE Monday, 23 February
Termination of Aflease`s listing on
the JSE, from the commencement of
trading Monday, 23 February
* Share certificates in the name of Aflease may not be dematerialised or
rematerialised after Friday, 13 February 2009.
12 Further cautionary
Given that the financial effects are still to be provided and the fact that
Aflease has entered into discussions regarding transactions aimed at raising
development capital, the outcome of which may continue to have a material
effect on the price of Aflease`s shares, shareholders are advised to
continue to exercise caution when dealing in Aflease`s shares until a
further announcement is made.
13 Competent person
The references to gold resources or reserves in this announcement have been
prepared in accordance with both the Australasian Code of Reporting of
Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code")
and the South African Code for the Reporting of Mineral Resources and Ore
Reserves (the "SAMREC Code").
Such statements in this news release relating to Modder East Mine and Sub
Nigel 1, 2, and 3 are based on information compiled by Mark Wanless
PrSciNat, BSc(Hons), who was a principal geologist of SRK Consulting
("SRK"), and has sufficient experience relevant to the style of
mineralisation and type of deposits under consideration and to the activity
he is undertaking to qualify as a Competent Person as defined by both the
JORC Code and the SAMREC Code. In respect of the the 5.26 million ounces
contained in SubNigel 6, statements in this news release are based on
information compiled by Charles Muller PrSciNat, BSc(Hons), who is a
director of Minxcon (Pty) Limited, and has sufficient experience relevant to
the style of mineralisation and type of deposits under consideration and to
the activity he is undertaking to qualify as a Competent Person as defined
by both the JORC Code and the SAMREC Code.
The Competent Person with overall responsibility for reporting of Mineral
Reserves and the compilation of the CPR is Collin Hey, PrEng (ECSA), FSAIMM,
AMMMASA, MSc(Eng), MDP, who is an associate consultant of SRK. Collin is a
mining engineer with 39 years` experience in the mining industry and has
supervised numerous due-dilligence reviews and various technical studies in
Southern Africa and internationally during the past five years.
Collin Hey has consented to the inclusion in the announcement of the
statements based on his information in the form and context in which those
statements appear.
The individuals who have contributed to the CPR in matters relating to the
BMA assets, who are listed below, have extensive experience in the mining
industry and are members in good standing of appropriate professional
institutions.
Jason Berton, BEc, BSc (Hons), MAusIMM
Richard Clayton, MSc, BSc (Hons), MAusIMM, CGeol
Richard Clayton is the "qualified person" (as such term is defined in
SAMREC/JORC) who is responsible for the technical information relating to
BMA`s projects.
Richard Clayton and Jason Berton are both employees of SRK which is the
independent technical expert to both Aflease and BMA.
The references to gold resources or reserves in this news release have been
prepared in accordance with both the Australasian Code of Reporting of
Exploration Results, Mineral Resources and Ore Reserves (the "JORC Code")
and the South African Code for the Reporting of Mineral Resources and Ore
Reserves (the "SAMREC Code").
Parktown, Johannesburg
20 November 2008
Forward-looking statements
This announcement contains certain forward-looking statements. These
forward-looking statements are subject to a variety of risks and
uncertainties which are beyond Aflease`s and BMA`s ability to control or
predict (including among others regulatory and shareholder approval of the
transaction, the general availability of capital in the international
capital markets for short-term funding requirements, as well as the risks
outlined in Aflease`s and BMA`s most recent annual and periodic reports),
which could cause actual events or results to differ materially from those
anticipated in such forward-looking statements. In this announcement,
predictions about the transaction being approved and finalised, as well as
statements regarding the ability to raise capital for short term funding
requirements, are forward-looking statements. Readers should not place
undue reliance on forward-looking statements.
Notice to Investors
This announcement does not constitute an offer to sell or an invitation to
purchase or subscribe for any securities. The securities offered by way of
exchange pursuant to the transaction described herein have not been and will
not be registered under the U.S. Securities Act of 1933, and may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements.
MACQUARIE
Corporate advisor and sponsor in South Africa
HARTLEYS
Corporate advisor in Australia
Date: 20/11/2008 09:06:21 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
