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ARQ
ARQ
ARQ - Anooraq Resources Corporation - Annual Information Form For the year ended
December 31, 2008
Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
JSE share code: ARQ
TSXV share code: ARQ
NYSE Alternext share code: ANO
ISIN: CA03633E1088
("Anooraq" or "the company")
ANNUAL INFORMATION FORM
For the year ended December 31, 2008
Prepared as of March 27, 2009
Annual information forms are filed by Canadian companies on SEDAR and, in the
interest of full disclosure, the Anooraq annual information form for the year
ended 31 December 2008, as filed on SEDAR on 31 March 2009, is presented below.
TABLE OF CONTENTS
ITEM 1. CORPORATE STRUCTURE ............................................. 2
ITEM 2. GLOSSARY ........................................................ 4
ITEM 3. GENERAL DEVELOPMENT OF THE BUSINESS ............................. 9
ITEM 4. DESCRIPTION OF THE B USINESS.................................... 17
ITEM 5. MINERAL PROJECTS ............................................... 21
ITEM 6. RISK FACTORS.................................................... 35
ITEM 7. DIVIDEND RECORD AND POLICY ..................................... 41
ITEM 8. DESCRIPTION OF CAPITAL STRUCTURE ............................... 41
ITEM 9. MARKET FOR SECURITIE S ......................................... 41
ITEM 10. ESCROW SECURITIES .............................................. 42
ITEM 11. DIRECTORS AND OFFICERS ......................................... 43
ITEM 12. AUDIT COMMITTEE ................................................ 52
ITEM 13. LEGAL PROCEEDINGS .............................................. 54
ITEM 14. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS...... 54
ITEM 15. TRANSFER AGENTS AND REGISTRARS ................................. 55
ITEM 16. MATERIAL CONTRACTS ............................................. 56
ITEM 17. INTERESTS OF EXPERTS ........................................... 56
ITEM 18. ADDITIONAL INFORMATION ......................................... 56
ITEM 19. CONTROLS AND PROCEDURES ........................................ 58
ITEM 20. AUDIT COMMITTEE, CODE OF ETHICS, ACCOUNTANT FEES AND EXEMPTIONS 59
ITEM 21. OFF BALANCE SHEET ARRANGEMENTS ................................. 60
ITEM 22. TABULAR DISCLOSURE O F CONTRACTUAL OBLIGATIONS ................. 60
ITEM 1. CORPORATE STRUCTURE
Name, Address and Incorporation
Anooraq Resources Corporation (herein "Anooraq" or the "Company") was
incorporated on April 19, 1983 under the laws of the Province of British
Columbia, Canada. The Company was transitioned under the Business Corporations
Act on June 11, 2004, on which date the Company altered its Notice of Articles
to change its authorized share structure from 200,000,000 common shares without
par value to an unlimited number of common shares without par value.
The Canadian head office of the Company is located at Suite 1020 - 800 West
Pender Street, Vancouver, British Columbia, Canada V6C 2V6, telephone (604)
684-6365, facsimile (604) 684-8092 and the registered office is in care of its
Canadian attorneys McCarthy Tetrault LLP at Suite 1300 - 777 Dunsmuir Street,
Vancouver, British Columbia, Canada V7Y 1K2, telephone (604) 643-7100,
facsimile (604) 643 -7900. The South African head office of the Company is
located at 4th Floor - 82 Grayston Drive, Off Esterhysen Lane, Sandton, South
Africa 2146, telephone: +27 11 883 0831, facsimile: +27 11 883 0836.
Summary Corporate History and Intercorporate Relationships
From 1996 to mid 1999 the Company`s mineral exploration was focused on metal
prospects located in Mexico. In October 1999, the Company refocused its
exploration on a South African platinum group metals project, the Platreef
Project (see Item 5, "The Platreef Project"). The Company has two active Cayman
Islands subsidiaries, N1C Resources Inc. ("N1C") and N2C Resources Inc.
("N2C"). These two subsidiaries were incorporated on December 2, 1999 under the
laws of the Cayman Islands, and their use represents a common method for
Canadian mining companies to hold foreign resource assets through
outside-of-Canada corporations for legitimate Canadian tax planning
considerations. The two subsidiary structures was adopted by the Company with a
view to minimizing exposure to potential capital gains taxes if the Company`s
South African exploration is successful. The Company holds 100% of the shares
of N1C, which in turn holds 100% of the N2C shares. N2C holds 100% of the
shares of Plateau Resources (Proprietary) Limited ("Plateau"), a private South
African mining corporation purchased by Anooraq on August 28, 2001. Plateau
holds the legal rights to the mineral interests ("farms") comprising the
Platreef Project.
In January 2004, the Company announced it had agreed to terms whereby the
Company and Pelawan Investments (Proprietary) Limited ("Pelawan"), a private
South African company, would combine their respective PGM assets, comprising
the Company`s PGM projects on the Northern and Western Limbs of the "Bushveld
Complex" and Pelawan`s 50% participation interest in the Ga-Phasha (previously
known as "Paschaskraal") Project on the Eastern Limb of the Bushveld in the
Republic of South Africa. The Ga-Phasha property, located approximately 250
kilometres northeast of Johannesburg, has significant mineral resources already
outlined as well as excellent additional potential. The Ga-Phasha property
consists of four farms - Portion 1 of Paschaskraal 466KS, and the whole of
farms Klipfontein 465KS, De Kamp 507KS and Avoca 472KS - covering an area of
approximately 9,700 hectares.
The mineral title relating to the Ga-Phasha Project is held by Ga-Phasha
Platinum Mine (Proprietary) Limited ("GPM"), previously called Micawber 277
(Proprietary) Limited, a private South African corporation owned 50% by Anglo
Platinum Limited ("Anglo Platinum") and 50% by the Company, through its wholly
owned subsidiary Plateau, pursuant to Anglo Platinum`s planned PGM project
expansion on the Eastern Limb. The Ga-Phasha Project is a 50/50 joint venture
between Plateau and Rustenburg Platinum Mines Limited, a subsidiary of Anglo
Platinum, governed by, among other things, a shareholders` agreement relating
to GPM entered into on September 22, 2004. Work on the Ga-Phasha Project will
continue toward the preparation of a pre-feasibility study.
Pursuant to the terms of the Pelawan transaction, which was completed in
September 2004, and which constitutes a reverse take-over ("RTO") under the
policies of the TSXV, the Company acquired Pelawan`s 50% shareholding in GPM
and the rights to its 50% participation interest in the Ga-Phasha Project in
return for 91.2 million Anooraq common shares (the "Consideration Shares") and
a cash payment of 15.7 million South African Rand ("ZAR"). The number of
Consideration Shares issued took into account the potential dilutive effect of
financings to be undertaken in the future to develop PGM mines, for example on
the Ga-Phasha and the Drenthe-North Overysel deposits, such that Pelawan`s
ownership (initially 63%) of the issued and outstanding shares of Anooraq would
remain at a certain mi nimum level (defined at 52%) on a going forward basis in
order to maintain Anooraq qualifying as a Black Economic Empowerment ("BEE")
company and consequently affording Anooraq with additional opportunities and
greater flexibility under South Africa`s new mining laws. Further, the dilution
calculation allowed for Consideration Shares having an aggregate value of
$9.875 million to be sold by Pelawan during the twelve month period subsequent
to the closing, all of which shares were sold by Pelawan on March 28, 2005. Of
the remaining Consideration Shares, approximately 83.3 million shares (the
"Lock up Shareholding") is being held in escrow until the earlier of September
29, 2010 or twelve months after the commencement of commercial production from
the Ga-Phasha Project. Under the Mineral Development Act, and as specified in
the agreements in respect of the Ga-Phasha Project related to the terms of BEE
requirements, Pelawan would at all future times be required to hold a certain
minimum number of the Consideration Shares, currently defined as 52%, in order
to ensure that Anooraq retains its classification as a BEE Company. In December
2006, the Company entered into a Settlement Agreement with Pelawan to waive the
deemed dilutive financing arrangement contemplated in the 2004 share exchange
agreement (described further under Item 3 below). In December 2007, the Company
entered into an amending agreement (the "Amending Agreement") with Pelawan to
amend the exercise procedures of warrants that were issued pursuant to the
Settlement Agreement (described further under Item 3 below).
In this Annual Information Form ("AIF"), a reference to the "Company" or
"Anooraq" includes a reference to its wholly-owned subsidiaries, unless the
context clearly otherwise requires otherwise. Certain terms used herein are
defined in the text and others are included in the glossary of this AIF. This
AIF is prepared as of March 30, 2009.
Documents incorporated by reference in this AIF include all audited and interim
financial statements, proxy circulars, news releases and other continuous
disclosure documents filed by Anooraq, copies of which are available on request
from the offices of the Company or on SEDAR at www.sedar.com.
ITEM 2. GLOSSARY
Certain terms used herein are defined as follows:
Anglo Platinum Anglo Platinum Limited, previously known as
Anglo American
Platinum Corporation Limited, a public company
incorporated under the laws of South Africa;
August 2004 Circular the management information circular dated
August 11, 2004 in respect of the extraordinary
general meeting of the Company held on September
10, 2004;
BEE Black Economic Empowerment, a strategy aimed at
substantially increasing participation by HDSA at
all levels in the economy of South Africa. BEE is
aimed at redressing the imbalances of the past caused
by the Apartheid system in South Africa by seeking to
substantially and equitably increase the ownership
and management of South Africa`s resources by the
majority of its citizens and so ensure broader and
more meaningful participation in the economy by HDSA;
Charter the Broad Based Socio -Economic Empowerment Charter
for the South African mining industry, released in
October 2002 and formally published in August 2004;
DME the Government of South Africa acting through the
Minister of Minerals and Energy and the Department
of Minerals and Energy and their respective successors
and delegates;
Ga-Phasha Project the Ga-Phasha PGM Project, a BEE joint venture located
on the Eastern Limb of the Bushveld Complex in
South Africa;
GPM Ga-Phasha Platinum Mine (Proprietary) Limited,
previously known as Micawber 277 (Proprietary)
Limited, a private company incorporated under the laws
of South Africa which holds the mineral title in
respect of the Ga-Phasha Project;
HDSI Hunter Dickinson Services Inc., a corporation
incorporated under the laws of Canada which is a
related party to Anooraq;
HDSA Historically Disadvantaged South Africans (and
entities controlled by them) who suffered under the
discriminatory practices of the system of Apartheid;
Lebowa Lebowa Platinum Mine, a PGM mine located on the Eastern
Limb of the Bushveld Complex in South Africa;
Lebowa Transaction the transaction pursuant to which the Company will
acquire an effective 51% interest in Lebowa and an
additional 1% interest in the Ga-Phasha, Boikgantsho
and Kwanda projects;
May 2006 Circular the management information circular dated as at
May 12, 2006 in respect of the annual and
extraordinary general meeting of the Company held on
June 22, 2006;
Mineral Development
Act the Mineral and Petroleum Resources Development Act,
2002 (South Africa);
NYSE Amex the NYSE Amex stock exchange, the successor to the
American Stock exchange;
Pelawan Pelawan Investments (Proprietary) Limited, a private
company incorporated under the laws of South Africa;
Pelawan RTO Share the Share Exchange Agreement between Pelawan and
Anooraq made
Exchange Agreement as of January 21, 2004;
Pelawan RTO
Shareholders the Shareholders Agreement between Pelawan, Anooraq
Agreement and the Pelawan Trust made as of September 19, 2004;
Pelawan Settlement Settlement Agreement between Pelawan, Anooraq and the
Pelawan
Agreement Trust made as of December 2006;
Pelawan Amending Amending Agreement between Pelawan, Anooraq and the
Pelawan
Agreement Trust made as of December 2007, to amend the
exercise procedures of warrants that were issued
pursuant to the Settlement Agreement
Pelawan Trust the independent South African trust established in
accordance with the Pelawan Trust Deed dated September
2, 2004, the present trustees of which are Deneys
Reitz Trustees (Proprietary) Limited, Tumelo Moathlodi
Motsisi and Asna Chris Harold Motaung;
PGM platinum group metals or elements including platinum,
palladium, rhodium and others; gold commonly occurs
with PGM;
Plateau Plateau Resources (Proprietary) Limited, a corporation
incorporated under the laws of South Africa, being an
indirect wholly owned subsidiary of Anooraq;
Platreef Project the Platreef PGM Project located on the Northern Limb
of the Bushveld Complex in South Africa, which includes
the Kwanda JV, the Boikgantsho JV, and the Rietfontein
and Central Block properties;
PPRust Potgietersrust Platinum Limited, a public company
incorporated under the laws of South Africa, being a
wholly owned subsidiary of Anglo Platinum;
Royalty Bill the third draft of the Mineral and Petroleum Resources
Royalty Bill, placed before the parliament of South
Africa as a money bill by the South African Minister
of Finance on December 6, 2007 in relation to proposed
royalties to be levied by the state in respect of
mining rights;
RPM or Rustenburg Rustenburg Platinum Mines Limited, a public company
incorporated under the laws of South Africa, being a
wholly owned subsidiary of Anglo Platinum;
SARB the Exchange Control Department of the South African
Reserve Bank;
South Africa the Republic of South Africa;
TSXV TSX Venture Exchange Inc.;
ZAR South African Rand, the currency of South Africa.
Geological/Exploration Terms
Farm A term commonly used in South Africa to describe the
area of a mineral interest.
Feldspar A group of abundant rock-forming minerals, the most
widespread of any mineral group and constituting 60%
of the earth`s crust.
Feldspathic Containing feldspar as a principal ingredient.
Gabbro Coarse grained mafic igneous rock.
Mafic Composed of dark ferromagnesian minerals.
Mineral Deposit A deposit of mineralization that may or may not be
ore. Ore is determined by a full feasibility study.
Mineral Symbols Pt - Platinum; Pd - Palladium; Au - Gold ;
Ag - Silver; Cu - Copper; Cr - Chromium; Ni - Nickel;
Pb - Lead; Rh - Rhodium; Ru - Ruthenium.
Mineralized Material A mineralized body that has been delineated by
appropriately spaced drilling and/or underground
sampling to support a sufficient tonnage and average
grade of metals to warrant further exploration. Such a
deposit does not qualify as a reserve, until a
comprehensive evaluation based upon unit cost, grade,
recoveries, and other materials factors conclude legal
and economic feasibility. "Mineralized material" does
not include materials classed as "inferred", a
classification that is acceptable under Canadian
regulations (see "Resource Category (Classification)
Definitions" below).
Norite A coarse-grained plutonic rock in which the chief
constituent is basic plagioclase feldspar
(labradorite) and the dominant mafic mineral is
orthopyroxene (hypersthene).
Pyroxenite A medium or coarse-grained rock consisting essentially
of pyroxene, a common rock-forming mineral.
Currency and Measurement
All currency amounts in this AIF are stated in Canadian dollars unless
otherwise indicated.
Conversion of metric units into imperial equivalents is as follows:
Metric Units Multiply by Imperial Units
hectares 2.471 = acres
metres 3.281 = feet
kilometres 0.621 = miles (5,280 feet)
grams 0.032 = ounces (troy)
tonnes 1.102 = tons (short) (2,000 lbs)
grams/tonne 0.029 = ounces (troy)/ton
Resource Category (Classification) Definitions
The discussion of mineral deposit classifications in this AIF adheres to the
resource/reserve definitions and classification criteria developed by the
Canadian Institute of Mining and Metallurgy ("CIM") in 2005. Estimated mineral
resources fall into two broad categories dependent on whether the economic
viability of them has been established and these are namely "resources"
(economic viability not established) and ore "reserves" (viable economic
production is feasible). Resources are sub-divided into categories depending on
the confidence level of the estimate based on level of detail of sampling and
geological understanding of the deposit. The categories, from lowest confidence
to highest confidence, are inferred resource, indicated resource and measured
resource. Reserves are similarly sub-divided by order of confidence into
probable (lowest) and proven (highest). These classifications can be more
particularly described as follows:
A "Mineral Resource" is a concentration or occurrence of diamonds, natural
solid inorganic material, or natural solid fossilized organic material
including base and precious metals, coal, and industrial minerals in or on the
Earth`s crust in such form and quantity and of such a grade or quality that it
has reasonable prospects for economic extraction. The location, quantity,
grade, geological characteristics and continuity of a Mineral Resource are
known, estimated or interpreted from specific geological evidence and
knowledge.
An "Inferred Mineral Resource" is that part of a Mineral Resource for which
quantity and grade or quality can be estimated on the basis of geological
evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information
and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes.
An "Indicated Mineral Resource" is that part of a Mineral Resource for which
quantity, grade or quality, densities, shape and physical characteristics can
be estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and
grade continuity to be reasonably assumed.
A "Measured Mineral Resource" is that part of a Mineral Resource for which
quantity, grade or quality, densities, shape, and physical characteristics are
so well established that they can be estimated with confidence sufficient to
allow the appropriate application of technical and economic parameters, to
support production planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration, sampling
and testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.
A "Mineral Reserve" is the economically mineable part of a Measured or
Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility
Study. This Study must include adequate information on mining, processing,
metallurgical, and economic and other relevant factors that demonstrate, at the
time of reporting, that economic extraction can be justified. A Mineral Reserve
includes diluting materials and allowances for losses that may occur when the
material is mined.
A "Probable Mineral Reserve" is the economically mineable part of an Indicated
and, in some circumstances, a Measured Mineral Resource demonstrated by at
least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic, and other relevant
factors that demonstrate, at the time of reporting, that economic extraction
can be justified.
A "Proven Mineral Reserve" is the economically mineable part of a Measured
Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of
reporting, that economic extraction is justified.
ITEM 3. GENERAL DEVELOPMENT OF THE BUSINESS
Anooraq is in the business of acquiring and exploring mineral exploration
properties. Anooraq`s principal focus is exploration of PGM prospects in South
Africa through Plateau. On March 28, 2008, Anooraq, through Plateau, entered
into acquisition agreements with Anglo Platinum and certain of its wholly-owned
subsidiaries in respect of the Lebowa Transaction (described in more detail
below), which will transform the Company into a PGM producer.
Prior to January 2004, Anooraq had mainly focused on the acquisition and
exploration of mineral properties on the Northern Limb of the Bushveld Complex,
approximately 250 kilometres north of Johannesburg. The Northern Limb has
excellent potential for discovery and development of large scale PGM deposits
that are amenable to open pit mining. From 2000-2003, programs were carried out
in three areas of Anooraq`s large land package in the Northern Limb, with
promising results from the Drenthe Farm and the Rietfontein Farm.
Work in 2004 continued to delineate the mineralization within the Platreef
horizon on the Drenthe and Witrivier farms and the northern part of the
Overysel Farm, under a joint venture named the Boikgantsho Joint Venture
("Boikgantsho JV"), between Anooraq and a subsidiary of Anglo Platinum, with
Anooraq as the operator. The Company expanded the Drenthe PGM deposit,
discovered the Overysel North PGM deposit, and announced estimates of the
indicated and inferred mineral resources for the deposits in the fourth quarter
of fiscal 2004. Preliminary results of metallurgical test work for the deposits
were also released.
As a result of the transaction with Pelawan (see Item 1, "Summary Corporate
History and Intercorporate Relationships") in 2004, the Company acquired a 50%
interest in the Ga-Phasha Project on the Eastern Limb of the Bushveld Complex,
approximately 250 kilometres northeast of Johannesburg, South Africa. Ga-Phasha
has measured, indicated and inferred resources outlined in the UG2 and Merensky
Reefs. Operations that mine the UG2 and Merensky Reefs usually do so by
underground methods.
In 2005, an infill drilling program was carried out on the Drenthe deposit
under the Boikgantsho JV. Result s confirmed the continuity of the
mineralization within a provisional pit established during engineering work in
2004. In addition, a prefeasibility study was initiated in 2005 but work on it
was deferred in 2006 and 2007.
In November 2006, Anooraq concluded an agreement with Anglo Platinum, whereby
Anglo Platinum provided South African Rand ZAR 70 million in funding to Anooraq
via a term loan. On November 30, 2008, the Company reached an agreement with
RPM whereby RPM amended the existing term loan facility by advancing an
additional amount of ZAR 30 million to Anooraq on the same terms and conditions
as the existing loan.
Anooraq completed an inward secondary listing on the JSE Limited in 2006, and
began trading on December 19, 2006 under the trading symbol of ARQ. The Company
also trades on the TSX-V (symbol ARQ) and NYSE Amex (symbol ANO). In December
2006, the Company entered into a Settlement Agreement with Pelawan to waive the
deemed dilutive financing contemplated in the 2004 share exchange agreement.
Anooraq`s activities in 2006 and 2007 mainly focused on monitoring and
providing input to exploration work by Anglo Platinum on the Ga-Phasha
Project. The work included exploration drilling and preliminary mining,
infrastructure and related studies toward completion of a prefeasibility study.
In September 2007, Anooraq entered into a transaction framework agreement with
Anglo Platinum whereby Anooraq would purchase an effective 51% interest in
Lebowa and increase its interest in the Ga-Phasha Project from 50% to 51%. The
parties also announced that they had reached an agreement in principle for
Anooraq to increase its interest in the Boikgantsho and Kwanda Projects from
50% to 51%.
On March 28, 2008, Anooraq, through Plateau, entered into acquisition
agreements with Anglo Platinum and certain of its wholly -owned subsidiaries
(collectively, "Anglo Platinum") in respect of the Lebowa Transaction to
acquire an effective 51% of Lebowa and an additional 1% of the Ga-Phasha
Project, the Boikgantsho Project and the Kwanda Project, for an aggregate cash
consideration of ZAR 3.6 billion.
As part of its due diligence for the Lebowa Transaction, Anooraq engaged
international mining industry consultants to conduct a technical review of
Lebowa. Since announcing the results of the Technical Review and agreement
earlier in the year, the Company has focused on fulfilling the conditions
precedent to the Lebowa Transaction, including taking steps to obtain all
necessary shareholder and regulatory approvals, as well as to complete the
financings necessary to complete the Lebowa Transaction.
During the period July to October 2008, global economic conditions deteriorated
significantly, contributing to a material decline in platinum group metal
prices and resulting in constrained debt and equity capital markets.
On October 23, 2008, Anglo Platinum announced that it was reviewing the costing
and scheduling of all its capital projects in light of current metal price
levels and uncertainty in global markets. Anooraq participated in the review of
the costing and scheduling of the Middlepunt Hill project ("MPH project"), part
of the Lebowa expansion. Anglo Platinum and Anooraq also agreed to review the
current Anglo Platinum approved mine plan and capital program at Lebowa. As a
result of these developments, the parties undertook to review the basis of the
Lebowa Transaction.
On March 11, 2009, Anooraq announced that the joint technical review of the
current Anglo Platinum- approved mine plan and capital program for Lebowa is
currently being finalised. In addition, negotiations regarding the Lebowa
Transaction and its associated financing strategy are at an advanced stage.
Anooraq does not have any operating revenue although historically it has had
annual interest revenue as a consequence of investing surplus funds pending the
completion of exploration programs.
The Company does not have any resource properties on which commercial mining
operations exist.
Further information on the Pelawan Agreement
The Pelawan transaction was completed on September 29, 2004 and consequently
Anooraq became a BEE company, by virtue of being majority owned by Historically
Disadvantaged South Africans ("HDSA"). The Ga-Phasha Project is a 50/50 joint
venture between the Company, through Plateau, and Anglo Platinum, through its
wholly owned subsidiary Rustenburg, governed by, among other things, a
shareholders` agreement relating to GPM entered into in September 2004. Work on
the Ga-Phasha Project is continuing toward the preparation of a
pre-feasibility study.
The share exchange agreement which gave effect to the combination provided that
if any financings in relation to the Ga-Phasha and Drenthe-Overysel
(subsequently renamed "Boikgantsho") Projects (the "Projects") took place prior
to a particular date (the "Finalization Date") and the shareholder dilution
associated with of such financings caused Pelawan`s shareholding in Anooraq to
fall below a 52% minimum shareholding, Anooraq would issue additional common
shares to Pelawan in order to maintain that minimum. Such 52% minimum
shareholding would allow for compliance with BEE equity requirements under
South African mineral legislation and was also a requirement of the South
African Reserve Bank for approving the transaction. Originally, the
Finalization Date was September 30, 2005 but that date, by agreement in
November 2005 between Anooraq and Pelawan, was extended.
The share exchange agreement further provided that, to the extent that if no
such dilutive financings had taken place by the Finalization Date, certain
dilutive financings were deemed to have occurred by that date. The purpose was
to make allowance for the dilutive effect on Pelawan`s shareholding of the
anticipated financings for mine development of the Projects and safeguard the
status of Anooraq as a BEE company. For the purposes of calculating whether, by
virtue of such deemed dilutive financings, any common shares were required to
be issued to Pelawan in order to maintain a minimum 52% shareholding, the share
exchange agreement provided that the quantum of such deemed financings would
equal: (a) 30% of the estimated development costs in accordance with the
bankable feasibility studies in respect of the Projects, less cash on hand, or
(b) to the extent that such bankable feasibility studies had not been prepared
as at the Finalization Date, $70.8 million related to the Ga-Phasha Project and
$27.6 million related to the Drenthe-Overysel Project, less cash on hand (the
"Deemed Dilutive Financings"). Following the Finalization Date, Anooraq has the
right but not the obligation to issue additional common shares to Pelawan in
order to maintain Pelawan`s minimum shareholding.
Neither additional financings nor bankable feasibility studies for the Projects
had been completed by Anooraq as at September 30, 2005 and, in the absence of
an amending agreement between the parties, a dilutive financing totalling $98.4
million and share issuances (based on the share price at the date of the deemed
dilutive financing) would have been deemed to have taken place as at such date
and the Company would have been obligated to issue to Pelawan that number of
shares which, after notionally giving effect to the Deemed Dilutive Financings,
would have resulted in Pelawan continuing to hold a 52% interest in the
Company. In November 2005, Anooraq and Pelawan agreed to extend the
Finalization Date.
Pelawan Settlement and Amending Agreement
In December 2006, the Company entered into a Settlement Agreement with Pelawan
to waive the deemed dilutive financing contemplated in the 2004 share exchange
agreement. Under the terms of the Settlement Agreement:
(i) Anooraq issued 36 million common shares ("Adjustment Consideration Shares")
to Pelawan as consideration for the settlement (completed in June 2007).
(ii) Anooraq issued to Pelawan share purchase warrants for the purchase of 167
million common shares in Anooraq ("BEE Warrants"). The BEE Warrants were
exercisable until December 31, 2008. The BEE Warrants can be exercised at the
higher of (a) $1.35 if exercised on or before December 31, 2007 or $1.48 if
exercised after December 31, 2007 or (b) at a price that is 50% less than the
price per Anooraq common share payable by arms length parties under an equity
financing undertaken by the Company that either raises a n amount of at least
$98.4 million or is undertaken pursuant to a material transaction (a
"Concurrent Financing").
(iii) From the date of issue (June 14, 2007) of the Adjustment Consideration
Shares to Pelawan (i) or as a result of the exercise of any of the BEE Warrants
up to the closing date of the Concurrent Financing, the common shares issued to
Pelawan pursuant thereto will be subject to a lock up arrangement and Pelawan
will not be entitled to dispose of any of these shares, save for the exemption
referred to in (iv) below and the payment of taxes. After the closing date of
the Concurrent Financing, the disposal of such shares shall remain subject to
the original lock up agreement entered into between Pelawan and Anooraq under
the terms of the original RTO transaction ("the BEE Lock Up"), which is the
earlier of September 29, 2010 or twelve months after the commencement of
commercial production from the Ga-Phasha Project.
(iv) Anooraq granted Pelawan an exemption to the BEE Lock Up for the purposes
of facilitating Pelawan`s financing of the exercise of the BEE Warrants. In the
event that Pelawan exercises any BEE Warrants, Pelawan shall, in its sole
discretion, be entitled to dispose that number of common shares up to 25% (or
such greater amount as is required to facilitate the financing of the exercise
of the BEE Warrants) of the aggregate common shares issued to Pelawan pursuant
to such exercise, provided that all of the proceeds received by Pelawan from
such disposal shall be applied by Pelawan to support the financing of the
exercise of the BEE Warrants and reasonable expenses related to such exercise.
(v) On the occurrence of a Concurrent Financing, Pelawan shall be obliged to
exercise the BEE Warrants to ensure that, at a minimum; Anooraq retains its
status as a 52% controlled Black Economic Empowerment ("BEE") company, in
compliance with undertakings given by Pelawan and the Company in favour of the
South African Reserve Bank and Anglo Platinum Limited.
On December 20, 2007, the Company entered into an amending agreement (the
"Amending Agreement") with the Pelawan Trust to amend the exercise procedure of
167,000,000 share purchase warrants held by the Pelawan Trust, to allow Pelawan
to finance the exercise of the BEE Warrants by way of a bridge loan "from Rand
Merchant Bank ("RMB"). Pursuant to the Amending Agreement, the Pelawan Trust
conditionally exercised the Warrants on December 20 2007, by depositing an
escrowed amount equal to the aggregate exercise price for the Warrants ($225
million or ZAR 1.6 billion) into an interest bearing account (the "Deposit
Account") of RMB, to be released upon the satisfaction of certain release
conditions
The release conditions were not satisfied by December 31, 2008 and Anooraq did
not receive the exercise proceeds of the BEE Warrants or the interest earned
thereon by that date. As a result, the BEE Warrants expired on December 31,
2008 and the Company did not issue 167 million common shares to Pelawan as
contemplated.
Lebowa Transaction
Pursuant to the terms of the Acquisition Agreements, Anooraq would acquire 51%
of the shares in, and claims on shareholders loan account against, Richtrau No.
179 (Proprietary) Limited, a private company incorporated under the laws of
South Africa, which would be renamed Bokoni Platinum Holdings (Proprietary)
Limited following completion of the Lebowa Transaction and which is the holding
company ("Holdco") through which Anooraq and Anglo Platinum would hold their
interests in Lebowa. The joint venture agreements in respect of the Ga-Phasha
Project, Boikgantsho Project and Kwanda Project would be terminated and these
projects will be transferred into separate companies, established as
wholly-owned subsidiaries of Holdco. Anglo Platinum has provided Anooraq with
appropriate sale warranties in relation to the Lebowa Transaction.
Closing of the Lebowa Transaction is conditional upon satisfaction (or waiver)
of various conditions, including:
- the completion by all parties of their respective due diligence reviews and
satisfaction with the results thereof (the due diligence was satisfactorily
completed in April 2008);
- the approval of the South African Competition Authorities which approval was
obtained on August 13, 2008;
- the consent of the United Kingdom Treasury for Anglo Platinum to undertake
the transaction;
- Anooraq and Plateau obtaining sufficient debt and equity financing to fund
the Lebowa Transaction purchase price;
- the approval of the shareholders of Anooraq of the Lebowa Transaction and
related transactions;
? approval of the Lebowa Transaction and of certain transfers of mineral title
relating to the Ga-Phasha, Boikgantsho and Kwanda Projects by the South
African Department of Minerals and Energy ("DME"); and
- other regulatory approvals including, where necessary, the Exchange Control
department of South African Reserve Bank (which approval was obtained in August
2008), the JSE Limited, the TSX Venture Exchange ("TSX-V") and the NYSE Amex
(formerly the American Stock Exchange).
Lebowa Transaction update
As part of its due diligence for the Lebowa Transaction, Anooraq engaged
international mining industry consultants to conduct a technical review of
Lebowa. Since announcing the results of the Technical Review and agreement
earlier in 2008, the Company focused on fulfilling the conditions precedent to
the Lebowa Transaction, including taking steps to obtain all necessary
shareholder and regulatory approvals, as well as to complete the financing
arrangements necessary to complete the Lebowa Transaction.
On April 14, 2008, detailed commercial terms of the Lebowa transaction were
announced. The announcements included commercial terms surrounding the
development and financing of the Middelpunt Hill UG2 expansion project ("MPH
project") at Lebowa. The MPH project would have been developed by Anooraq and
Anglo Platinum as part of the then current mine plan and capital development
program for Lebowa, which had been approved by Anglo Platinum in May 2007.
During the period July to October 2008, global economic conditions deteriorated
significantly, contributing to a material decline in platinum group metal
prices and resulting in constrained debt and equity capital markets.
On October 23, 2008, Anglo Platinum announced that it was reviewing the costing
and scheduling of all its capital projects, including the MPH project, in light
of current metal price levels and uncertainty in global markets. Anooraq
participated in the review of the costing and scheduling of the MPH project.
Anglo Platinum and Anooraq also agreed to review the current Anglo Platinum
approved mine plan and capital program at Lebowa. As a result of these
developments Anglo American plc, Anglo Platinum, Anooraq and Pelawan
Investments (Pty) Ltd ("the parties") undertook to review the basis of the
Lebowa Transaction.
Anooraq announced on March 11, 2009 that the joint technical review of the
current Anglo Platinum-approved mine plan and capital program for Lebowa,
referred to in the cautionary announcement dated 14 November 2008, is currently
being finalised. As a result, the Company expects to file an updated technical
report on Lebowa in compliance with National Instrument 43-101 in April 2009.
Lebowa Transaction Funding
As announced on April 14, 2008, Anooraq intended to fund the purchase price for
the Lebowa Transaction through a combination of debt and equity financing. On
October 2, 2008, the Company announced that it will not be affecting a general
public offering of new Anooraq shares.
Anooraq entered into an amending agreement (the "Amending Agreement") with the
Pelawan Trust to amend the exercise procedure of 167,000,000 common share
purchase warrants to allow Pelawan to finance the exercise of the BEE Warrants
by way of a bridge loan from Rand Merchant Bank ("RMB"), to be released
pursuant to a deposit account agreement between RMB, Pelawan and Anooraq upon
the satisfaction of certain release conditions by December 31, 2008. Pelawan
conditionally exercised the BEE Warrants in December 2007, by depositing an
escrowed amount equal to the aggregate exercise price for the BEE Warrants
($225 million or ZAR 1.6 billion) into an interest bearing account with RMB.
The Common Shares underlying the BEE Warrants were to be issued to the Pelawan
Trust upon receipt by the Company of the exercise price per Common Share, plus
the interest accrued thereon up to the date of release.
The release conditions were not satisfied by December 31, 2008 and Anooraq did
not receive the exercise proceeds of the BEE Warrants by December 31, 2008. As
a result, the BEE Warrants expired and have been cancelled. Anooraq did not
issue 167 million Anooraq Common Shares to Pelawan as contemplated.
On May 20, 2008, Anooraq announced that it had entered into a credit approved
term sheet with Standard Chartered Bank ("SCB") for sole underwritten debt
financing of up to ZAR 1.7 billion for the purpose of funding a portion of the
Lebowa Transaction purchase price. Anooraq`s mandate with SCB expired on
November 30, 2008. The mandate with SCB was subsequently extended. SCB is
currently reviewing the terms and conditions of the proposed senior debt
facility and is expected to provide a revised term sheet to Anooraq for
consideration in the second quarter of 2009.
In view of global economic conditions the Company and Anglo Platinum are
reviewing the financing strategy of the Lebowa Transaction, which is expected
to be completed early in the second quarter of 2009.
Other Commercial Terms of the Lebowa Transaction
In terms of the Acquisition Agreements, Anglo Platinum agreed to 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.
Lebowa entered into a five year concentrate off-take agreement with Anglo
Platinum for the sale of Lebowa concentrates at competitive market rates,
renewable at Plateau`s election for a further five years (provided that Plateau
is at the time at least a 51% shareholder on Holdco). Anglo Platinum will
extend to Anooraq the option to acquire an ownership interest in Anglo
Platinum`s Polokwane Smelter, which will be calculated relative to the Anooraq
group`s concentrate feed into the Polokwane Smelter from time to time and
subject to certain conditions.
Management and Control of Lebowa and Holdco
Anooraq and Anglo Platinum have entered into a shareholders` agreement to
govern the management of Holdco. Pursuant to this shareholders` agreement,
Anooraq will have the ability to appoint the majority of the directors to the
board of Holdco and all of its subsidiaries. Anglo Platinum will participate in
key management decisions through especially established committees.
Anooraq has provided certain undertakings to Anglo Platinum in relation to the
maintenance of its status as a company controlled by Historically Disadvantaged
South Africans ("HDSA"), as envisaged in the South African Mineral and
Petroleum Resources Development Act ("MPRDA") and the Mining Charter. The
effect of these undertakings is that HDSAs must maintain "effective" or "the
equivalent" beneficial ownership of at least 26% in the assets of Holdco for
approximately six years ("Initial Term"). These undertakings include that
Pelawan, the HDSA controlling shareholder of Anooraq, will not allow either its
own level of HDSA shareholding or its shareholding in Anooraq to fall below 51%
HDSA 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 Holdco to another HDSA It
is important from Anglo Platinum`s perspective that the Anooraq group retain
its current HDSA control status and that Anooraq retains control of Holdco.
Should there be a change of such control then Anglo Platinum may require
Anooraq to acquire its shares in Holdco at a market-related price. In addition,
should Anooraq wish to sell its entire interest in Holdco to a third party then
Anglo Platinum have a tag along right relating to such sale. The parties will
also grant each other reciprocal rights of first refusal relating to a proposed
sale of their interests in Holdco.
In order to ensure a successful transition at Lebowa, Anglo American plc 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.
Lebowa Employees and Communities
Anooraq and Anglo Platinum, at the time of announcing the Lebowa Transaction
agreed to establish:
(i) the Bokoni Platinum Mine Employee Share Ownership Plan ("ESOP") Trust (the
share ownership trust to be established for the benefit of eligible Lebowa
employees to which Anglo Platinum will contribute an amount of approximately
ZAR 40 million. A portion of this funding will be retained by the ESOP Trust to
facilitate annual cash payments to beneficiaries with the balance used to
subscribe for Common Shares in Anooraq. The final amount of funding to be
contributed to the ESOP Ownership Trust will vary from time to time according
to movements in the Anglo Platinum share price and the number of eligible
beneficiaries at the time of implement action; and
(ii) The Anooraq Community Participation Trust (the "Community Trust") to be
established for the benefit of the communities interested in or affected by
Anooraq`s operations, to which Anglo Platinum will contribute an amount of
approximately ZAR 103.8 million. A portion of this funding will be retained by
the Community Trust to facilitate annual cash payments to the communities with
the balance used to subscribe for Common Shares in Anooraq.
The purpose of the ESOP and the Community Trust is to provide the employees of
Holdco and the members of the communities affected by Anooraq`s operations,
respectively, with the opportunity to participate in, and benefit from,
Anooraq`s future success.
As a result of the subscription by the ESOP and Community Trust, Anooraq will
receive proceeds of approximately ZAR 120 million.
The ESOP and Community Trust will subscribe for the Common Shares in Anooraq,
at a subscription price equal to the market price of the Common Shares, being
the closing price of the Common Shares on the TSX-V on the day prior to the
announcement or reservation of the subscription price, less any allowable
discount, determined in accordance with the applicable TSX-V policies.
The Community Trust will hold the Common Shares, along with other investments,
for the purpose of making distributions to their beneficiaries in accordance
with their governing trust deed. The issuance to or purchase by the ESOP of
Common Shares is subject to regulatory approvals.
Lebowa Technical Information
Lebowa is an operating mine located on the north eastern limb of the Bushveld
Complex, to the north of and adjacent to the Ga-Phasha Project. The Lebowa
property consists of seven mining licenses covering an area of 15,459.78
hectares. On May 12, 2008, the DME granted a conversion of the "old order"
mining rights related to Lebowa to "new order" mining rights.
Lebowa consists of, a vertical shaft and a number of decline shaft systems to
access the underground development on the Merensky Reef and UG2 Reef, as well
as, two concentrator plants. Approximate monthly production from the Merensky
Reef is 50,000 tonnes per month ("tpm") and from the UG2 Reef is 40,000 tpm.
According to the Anglo Platinum 2008 Annual Report, production at Lebowa in
2008 was approximately 74,200 equivalent refined ounces of platinum.
Previous technical studies conducted by Anglo Platinum indicate that Lebowa`s
maximum value is achieved at a mining rate of 375,000 tpm, comprising steady
state Merensky Reef production at 120,000 tpm and steady state UG2 Reef
production of 255,000 tpm. Anglo Platinum has approved a long term growth plan
for Lebowa, which includes various replacement and expansion projects, expected
to increase production to approximately 375,000 tpm. The initial plan was to
increase existing mining operations at Lebowa in two stages:
- Stage 1 (2008-2013) comprises an expansion of Merensky Reef and UG2 Reef ore
production to 245,000 tpm, with Merensky Reef production being increased to
120,000 tpm, initially from the Brakfontein Merensky Reef decline shaft system,
and UG2 Reef production being increased to 125,000 tpm, initially from the
Middelpunt Hill UG2 Reef decline shaft system.
- Stage 2 (2016 onwards) sees the further expansion of UG2 Reef production to
255,000 tpm with Merensky Reef 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 650 meters below surface.
Anooraq considers this an advantage, as there will be no need for refrigeration
at depths above 650 meters below surface.
Anglo Platinum continues to progress with the Brakfontein project towards
producing 120,000 tpm of Merensky Reef. Production has commenced on two levels.
The 45,000 tpm replacement project at Middelpunt Hill is also progressing well.
These development and replacement projects are expected to increase the total
production of Lebowa to reach 160,000 tpm in the short term, which will utilize
current mill capacity.
An initial technical review of Lebowa was completed in April 2008 and a
technical report compiled by Snowden Mining Industry Consultants was filed.
Towards the latter part of 2008 a joint technical review of the current Anglo
Platinum-approved mine plan and capital program for Lebowa was initiated. The
Company expects to file an updated technical report in compliance with National
Instrument NI 43-101. Anooraq engaged Deloitte Mining and Advisory Services to
update the NI 43-101 technical report.
ITEM 4. DESCRIPTION OF THE BUSINESS
Anooraq`s Business Strategy and Principal Activities
Anooraq is in the business of acquiring and exploring prospective mineral
properties. On March 28, 2008, Anooraq, through Plateau, entered into
acquisition agreements with Anglo Platinum and certain of its wholly- owned
subsidiaries in respect of the Lebowa Transaction (described in more detail
below), which will transform the Company into a PGM producer.
The Company`s PGM Projects are situated on the geological trend known as the
"Bushveld Complex" in South Africa. The area covered by the Boikgantsho and
Ga-Phasha Projects, which the Company is actively exploring, is of interest
geologically because it is a layered mafic intrusive complex, a geological
setting known to be associated with PGM deposits.
During 2007, the Company`s initial focus was the Ga-Phasha Project on the
Eastern Limb of the Bushveld Complex, a 50/50 joint venture with Anglo
Platinum. The Company acquired its interest in the Ga-Phasha Project in 2004
through the transaction with Pelawan (see Item 1, "Summary Corporate History
and Intercorporate Relationships").
The Company also holds a PGM prospect on the Drenthe and Witrivier farms (held
through its South African subsidiary Plateau) and the northern part of the
Overysel Farm (held by a subsidiary of Anglo Platinum) though the Boikgantsho
Joint Venture. The Boikgantsho JV is a 50/50 joint venture with Anglo Platinum.
Anooraq is the operator.
The Company also has early stage properties on the Northern Limb (part of the
Platreef Project) of the Bushveld Complex.
No ore is known to exist on any of the Company`s projects and a great deal of
exploration is still required before any economic feasibility can be
considered.
Anooraq does not have any operating revenue although historically it has had
annual interest revenue as a consequence of investing surplus funds pending the
completion of exploration programs.
Anooraq is part of the Hunter Dickinson Service Inc. ("HDSI") group of
companies. HDSI is a private corporation, consisting of technical and financial
specialists that have been managing projects for publicly listed companies
throughout the world for twenty years. A key aspect of HDSI`s approach to
project development is to develop and maintain strong relationships with local
communities, employees and government authorities from the start of exploration
and as the project advances towards becoming a mine. Personnel have experience
in multiple foreign jurisdictions, and the perspective gained has assisted with
the integration of local communities in the exploration and development
programs.
Activities are guided by two simple principles - projects must be developed in
a manner that respects local socio -economic priorities and incorporates the
highest quality of environmental management. This is done by actively fostering
close partnerships with local governments and community leaders to ensure that
projects create the kind of local benefits that residents both want and need.
When undertaking projects in the developing world, HDSI seeks opportunities to
improve local infrastructure such as roads and educational systems. Training is
undertaken to ensure local residents are equipped to gain employment, and high
standards of occupational health and safety are an integral part of HDSI`s
work.
For example, the consortium of about 16 groups that comprises Pelawan includes
community-based organizations, some of which are the beneficiaries of
underlying trusts. These include professional organizations, educational
organizations, health and women`s groups.
Beyond compliance with government regulations and standards, the Company is
committed to structuring the best environmental management plan for each
specific site through innovation, experience and the contributions of
specialized consultants and local experts. Environmental management programs
begin with rigorous baseline assessments, and include ongoing monitoring of
water quality, wildlife impacts and other key indicators. The ecological
footprint of all project components is minimized, operational impacts are
consistently monitored and controlled, and site restoration is conducted at the
end of each project`s working life.
Anooraq has less than ten employees as much of its work is done by consultants
at the request of management of the Company. Many of the Company`s technical,
financial and legal services are provided by HDSI.
Mining and Exploration in South Africa Generally
The South African mining sector has undergone a series of significant
legislative changes in the past four years.
In order to understand these legislative changes, the form of "old order"
mineral tenure that currently prevails in South Africa and which will be
significantly altered and replaced by a "new order" form of mineral tenure by
virtue of such changes must first be discussed.
Old Order Mineral Tenure in South Africa
South African mineral tenure was governed primarily by the common law and the
Minerals Act 1991 ("Minerals Act"). The South African system of mineral rights
developed over many years under a dual system in which some of the mineral
rights are owned by the State, and some by private holders. The State
controlled the exercise of prospecting and mining rights under the
administrative system of prospecting permits and mining authorizations referred
to below. Mineral rights were officially registered and were tradable. They
have historically been the subject of considerable financial investment that
has resulted in the acquisition and registration of rights by prospectors and
miners over relevant areas of interest.
Old order mineral rights represent a parcel of rights including the rights to
prospect and mine (although the exercise of such rights is subject to
authorization under the Minerals Act) together with ancillary rights to do what
is reasonably necessary in order to effectively carry on prospecting or mining
operations. The holder of mineral rights could grant subordinate rights to
prospect under a prospecting contract or grant subordinate rights to mine under
a mineral lease or could sell or otherwise dispose of the rights. The mineral
rights owner is ordinarily compensated by the exploiter of the minerals for the
depletion of the non-renewable resource through the outright purchase of the
mineral rights, or, less commonly, through the payment of royalties.
The mineral right owner was not permitted to prospect or mine for minerals
without having obtained a prospecting permit or mining authorization from the
State. These licenses were not transferable. They were aimed at controlling
prospecting and mining, having regard to considerations of health and safety,
environmental rehabilitation and responsible extraction of the ore. Conversely,
a prospecting permit or mining authorization could not be granted unless the
applicant was the holder of the relevant mineral right or has acquired the
holder`s consent to prospect or mine. Reconnaissance work could and did take
place without the necessity to hold a permit, provided the work did not fall
within the definition of "prospecting" in the Minerals Act.
New Order Mineral Tenure in South Africa
The Mineral Development Act was assented to on October 3, 2002 and came into
effect on May 1, 2004. The Mineral Development Act is an ambitious statute with
wide-ranging objectives, including sustainable development and the promotion
of equitable access to South Africa`s mineral wealth by the inclusion of HDSA
in the industry.
The Mineral Development Act legislates the abolition of private mineral rights
in South Africa and replaces them with a system of state licensing based on the
patrimony over minerals being vested in the nation, as is the case with the
bulk of minerals in other established mining jurisdictions such as Canada and
Australia. "Use it or lose it" principles will now apply in respect of mineral
rights. Provision is made in the Mineral Act for compensation to be paid to any
person who is able to establish their property has been expropriated under the
Development Act. On May 3, 2004, the DME announced that it was seeking legal
advice on the implications of the Mineral Act in light of South Africa`s
international agreements. Most of the complexity of the new regime lies in the
transitional provisions which deal with the conversion of so called "old order"
rights to "new order" rights. Private holders of old order mineral rights have
limited exclusive time periods to convert these rights to new order rights once
the Mineral Development Act comes into effect. Holders of old-order mining
rights in respect of which a mining authorization has been granted under the
Minerals Act have until April 30, 2009 to lodge their rights for conversion
into new order mineral rights. Old order mineral rights in respect of which a
prospecting permit has been issued under the Minerals Act needs to be converted
to new order prospecting or mining rights no later than April 30, 2006.
Applications have been made, but the Company has not yet received a response on
them from the government. All old order rights will continue in force during
the conversion period, subject to terms and conditions under which they were
granted. Security of tenure will thereafter be guaranteed for a period of up to
5 years with respect to prospecting rights, and up to 30 years with respect to
mining rights, subject to ongoing compliance with the conditions of grant.
In order to be able to convert old order rights to new order rights,
the holder:
- must hold the underlying right (to mine or prospect, as the case may be) in
terms of the common law or legislation prevailing immediately before May 1,
2004;
- must hold a mining authorisation or prospecting permit, as the case may be,
issued in terms of the Minerals Act ;
- must be actively conducting mining or prospecting operations, as the case may
be, on the relevant property on May 1, 2004 (that is, the right must not be an
"unused old order right");
- must lodge its old order right for conversion at the relevant office of the
DME;
- for mining rights, is required (under Schedule II, item 7, of the Mineral
Development Act) to "give effect to" the BEE and socio-economic objectives set
out in Sections 2(d) and (f) of the Mineral Development Act (the "Objectives");
and
- for mining rights, must submit a prescribed social and labour plan.
If the above requirements have been met, DME must grant the conversion of the
old order right to a new order mining right.
In relation to any old order right with respect to which a mining authorization
or prospecting permit was not issued, or in respect of which prospecting or
mining was not being conducted, on May 1, 2004 (that is, an "unused old order
right") the holder had an exclusive right to apply for a new order right no
later than May 1, 2005. Further details of the Company`s applications for new
order rights are provided under Item 5 "Mineral Projects". A person converting
an existing mining right has to commit to giving effect to the Objectives. In
general, these Objectives are embodied in the Charter and are discussed below.
No undertaking to promote the Objectives is expressly required under the
Mineral Development Act for the conversion of existing prospecting rights. A
person applying for a new mining right (as opposed to converting an old order
mining right) will have to demonstrate, among other requirements, that the
Objectives and the imperatives of the Charter will be advanced by the grant of
the right. In practice, this will probably mean that the applicant will already
have to have met the BEE targets set out in the Charter for the purposes of
that application. In relation to applications for new prospecting rights, it is
unclear whether DME will require applicants to be in strict compliance with
these targets.
In general, the Objectives are embodied in the Charter which was signed by the
DME, the South African Chamber of Mines and others on October 11, 2002, and
which was followed on February 18, 2003 by the release of the appendix to the
Charter known as the Scorecard. The Charter and Scorecard have since been
published for information during August 2004. The Charter is based on seven key
principles, two of which are focused on ownership targets for HDSA and
beneficiation, and five of which are operationally oriented and cover areas
focused on improving conditions for HDSA.
Regarding ownership targets, the Charter (as read with the Scorecard) requires
each mining company to achieve the following HDSA ownership targets for the
purpose of qualifying for the grant of new order rights: (i) 15% ownership by
HDSA in that company or its attributable units of production by May 1, 2009,
and (ii) 25% ownership by HDSA in that company or its attributable units of
production by May 1, 2014. The Charter states that such transfers must take
place in a transparent manner and for fair market value. It also states that
the South African mining industry will assist HDSA companies in securing
financing to fund HDSA participation, in the amount of ZAR100 billion within
the first five years. The Charter does not specify the nature of the assistance
to be provided.
The Scorecard is a check-list that requires mining companies to indicate the
extent of their achievement in the aspirational areas for empowerment
identified by the Charter. Each company`s points on the Scorecard will be used
by the Minister in deciding applications for new order rights by that company.
In March 2003, the Government released the Royalty Bill outlining the State`s
policies with regard to the payment of royalties by mining companies. The Bill
proposes that companies producing PGM pay a royalty of 4% from the sales of
those metals. The royalty would be payable on gross revenue. The Royalty Bill
is presently under discussion and comment. In his annual budget speech on
February 18, 2004 the South African Minister of Finance announced that the
implementation of the Royalty Bill, even once finalized, will occur only in
2009. Currently, State prospecting fees range from ZAR3 per hectare in year one
to ZAR7 per hectare in year five. Currently, State royalties on precious metals
are 1% of gross revenue. This royalty rate is currently being reviewed and may
be amended by the State. These amounts will become payable to the State upon
conversion of "old order" rights to "new order" rights, and do not take
existing commitments towards current mineral rights holders into account.
New Order Mineral Tenure of Anooraq
Anooraq has been advised that:
- the old order mining rights held by GPM in relation to the Ga-Phasha Project
constitute "used" old order rights in relation to which GPM has until April 30,
2009 to apply for conversion to new order mining rights.
- new order rights have been received by Plateau in relation to the Platreef
Project.
Organizational Structure
Anooraq operates through one indirect wholly owned principal subsidiary,
Plateau, which holds various rights to the mineral projects in South Africa.
Mineral Projects - Overview
The principal properties of Anooraq are located on the northern and eastern
limbs of the Bushveld Complex.
For further information about the Company`s mineral projects, see Item 5
"Mineral Projects".
ITEM 5. MINERAL PROJECTS
The Platreef and the Ga-Phasha Properties are located in the Bushveld Complex,
a geological province in the Republic of South Africa.
Regional Geology
The Bushveld Complex was formed when a large body of mafic magma was emplaced
in the earth`s crust. As the magma slowly cooled, silicate, sulphide, oxide and
other minerals crystallized and sank to the bottom of the magma chamber, to
form texturally and mineralogically distinctive layers. The removal of the more
refractory minerals in this way depleted the magma in the crystallising
components and enriched the residual magma in the less refractory elements.
During this process PGM, nickel and copper (usually occurring with, or as,
sulphide minerals) became sufficiently enriched to form mineralized horizons at
predictable levels within the intrusion. As a result, the Bushveld Intrusive
Complex plays host to layered PGM deposits, usually with significant nickel and
copper contents.
Many of the layers within the Complex, including the economically important
horizons, are continuous over tens of kilometres. However, the uniformity of
the Merensky and UG2 horizons is disrupted in places by small circular
depressions known as potholes.
In the Western and Eastern Bushveld Complex, PGM mineralization is currently
extracted from two main horizons within the layered sequence of intrusive
rocks: the Merensky Reef and the UG2 chromitite (a layer consisting largely of
the mineral chromite). The UG2 layer lies below and essentially parallel to the
Merensky Reef but the two units are separated by 50 to 400 metres of
intervening layered intrusive rocks. The Merensky Reef is platinum rich
relative to the UG2, where platinum and palladium occur in more or less equal
proportions. The UG2 typically contains significantly more rhodium than the
Merensky Reef (i.e. 10% or more of total PGM in places). The Platreef occurs on
the Northern Limb of the Complex. It lies at a similar stratigraphic level to
the Merensky Reef but at 100-250 metres, is much thicker. The Platreef is also
mineralogically similar to the Merensky Reef but its platinum-palladium ratios,
at
1:1, are more like those in the UG2 horizon.
The Platreef Project
The Platreef Project has no mining, plant or equipment located thereon although
the project has field accommodation and miscellaneous exploration equipment on
site.
Location and property description
The Platreef Project is located near the town of Mokopane (formerly
Potgietersrust) in South Africa, approximately 275 km northeast of
Johannesburg. The property holdings comprise all or parts of 20 mineral
properties, totalling 37,492 ha. The Platreef Project is divided into four
geographical regions: the North Block, the Central Block, the Rietfontein Block
and the South Block (Table 1 and Figure 2), further described below.
The Drenthe and Witrivier farms are part of the Boikgantsho JV. The North and
South Blocks fall under the Kwanda JV.
No surface rights have been secured on the Anooraq property to date. Once the
required area has been established, it would be necessary to negotiate a
purchase agreement with the surface rights owner(s). Prices are expected to
range between ZAR 2,000/ha ($294) and ZAR 5,000/ha ($736) depending on the
infrastructure required to be developed on the farms.
Prospecting or mineral rights held by Anooraq, through Plateau Resources, and
its joint venture partners are listed in the table below:
Table 1. Platreef Mineral Rights
Property or Farm Type and status of mineral Duration of New Order
rights prospecting right
Kwanda North:
Ham 699 LR
This right commenced
on 11
Gilead 729 LR December 2007, and
endures for 5 years
to 10 December 2012.
Elberfield 731 LR New order prospecting rights
Gideon 730 LR have been granted. They are
hold jointly by Plateau and
Chlun 735 LR RPM.
Swerweskraal 736 LR
Kwanda South: These apply to PGM`s and
Rondeboschje 295 KR extend, as well, to gold,
silver, This right commenced
on 23 July 2008 and
Cyferkuil 321 KR copper and nickel. endures for 5 years
Haakdoornkuil 323 KR to 22 July 2013.
Vaalkop 325 KR
Naboomfontein 320 KR Portion 2 of
Elandsfontein 766
LR Portions 2, 3 and
the Remaining Extent
of Portion 1 and
Central Block: New order prospecting rights Mineral Area 1 of
have been granted to Plateau. Dorstland 768 LR
Remaining Extent and
Portion 2 of the
Farm Elandsfontein
766 LR Malokongskop
780 LR
Portion 1 of the
farm Elandsfontein LR Dortsland and Malokongskop Holland 775 LR
Portion
1 of Elandsfontein
Hamburg 737 LR coverall al minerals and oil and 766 LR and Hamburg
gas. 737 LR rights
Portion 2 (a portion
of portion 1) of
Dorstland 768 LR
Portion 3 (a portion
of portion 1) of
Dorstland 768 LR Noord Holland Right does not commenced 20 March
include oil and gas. 2007, and endure for
Noord Holland 775 LR 5 years to 19 March
2012.
Mineral Area 1,
excluding Mineral
Area 2, on the
Remaining Extent
of Dorstland 768 LR
Portion 1 of
Elandsfontein 766
Remaining Extent
of Portion 1 of
Dorstland 768 LR LR and Hamburg 737 LR, Malokongskop 780 LR right
includes all minerals.
commenced on 28 November
2006 and endures for 5
years to 27 November 2011.
The Witrivier right
commenced on 20 March 2007
and endures for 5 years to
19 March 2012.
Boikgantsho:
Drenthe 778 LR New order prospecting rights
Remaining Extent have been granted to Plateau.
of the Farm Drenthe includes all minerals.
Witrivier 77 LR
Portion 1 of the
Farm Witrivier 77 LR The Drenthe right commenced
on 28 November 2006 and
endures for 5 years to 27
November 2011.
New order prospecting right
has been granted to Plateau. This right commenced on 28
precious stones and oil and November 2006 and endures
Rietfontein Block: gas. for 5 years to 27 November
It includes all mineral
except 2011.
Rietfontein 2 KS
Central Block
The Central Block consists of eight farms acquired by Plateau prior to its
joint ventures with Anglo Platinum. It also includes one portion of the
Dorstland farm acquired by way of an agreement with Rustenberg (see Kwanda
Joint Venture below). Rietfontein 2KS, Drenthe 778LR, Witrivier 777LR and
Dorstland 768LR were acquired through an agreement with Pinnacle Resources in
1999. Others are administered by the DME.
Rietfontein Block
On October 10 2001, Plateau entered into an agreement with African Minerals
Limited, now Ivanhoe Platinum ("Ivanplats"), whereby Ivanplats had the right
to earn a 50% joint venture interest in the Company`s 2,900 ha Rietfontein 2KS
Farm. Under the terms of this agreement, Ivanplats was to incur at least
C$750,000 in expenditures pursuant to exploration activities undertaken on
Rietfontein 2KS in accordance with an approved program in each of the ensuing
two years (of which the year one program has been completed) to obtain the
right to form a 50/50 joint venture with the Company on Rietfontein 2KS .
There continues to be disagreement over whether Ivanplats ever presented an
`exploration program` as contemplated by the parties and their agreement.
Further disagreement exists with respect to the expenditure budgets,
compilation and analysis of the exploration results, and the overall adequacy
and completeness of Ivanplats` exploration activities. This affects whether or
not Ivanplats completed its earn-in requirements. Plateau and Ivanplats are
currently in an arbitration process, pursuant to the terms of the earn-in
agreement. The outcome of the arbitration is not currently determinable
Kwanda JV (North Block and South Block)
On May 16, 2002, the Company completed an agreement with Rustenburg Platinum
Mines Limited ("Rustenburg"), a wholly owned subsidiary of Anglo American
Platinum Corporation Limited ("Anglo Platinum"), for the right to acquire up to
an 80% interest in twelve PGM properties located on the Northern Limb of the
Bushveld Complex.
Under the agreements with Anglo Platinum, the Company has acquired an initial
50% interest in the PGM rights to the twelve farms and can maintain this
interest by making staged exploration expenditure totalling ZAR 25 million
within five years. The Company is required to, and did, spend ZAR 2.5 million
in year one, ZAR 5 million in year two, and is required to spend ZAR 5 million
in each of years three and four and ZAR 7.5 million in year five. The Company
has not completed its exploration expenditure requirement from year three to
five, and both parties have mutually agreed to suspend indefinitely the
expenditures requirements for years three to five.
If a mineral resource is identified, the Company can earn an additional 30%
interest by bringing the property into commercial production. Rustenburg will
retain a 20% interest in the joint venture. The agreements also include plans
to involve local communities in future development of the properties. Any
participation by local and regional communities will be provided out of
Rustenburg`s interest and any participation in the venture by a Historically
Disadvantaged South Africans ("HDSA") partner will be provided out of the
Company`s interest.
Boikgantsho JV (Drenthe, Witrivier and Overysel North)
On November 26, 2003, the Company announced that it had entered into a Joint
Venture Agreement with Potgietersrust Platinum Limited ("PPRust"), a wholly
owned subsidiary of Anglo Platinum. The Joint Venture was formed to explore and
develop PGMs, gold and nickel mineralization on the Company`s Drenthe 778LR and
Witrivier 777LR farms and a portion of PPRust`s adjacent Overysel 815LR farm.
These farms are located on the Northern Limb of the Bushveld Complex.
The objective is to explore and develop a large-scale open pit deposit with the
potential to utilize nearby milling, smelting and refining facilities which
could provide substantial cost advantages to a new mining project. The Company
contributed its rights to the Drenthe 778LR farm on which a large PGM -nickel
resource has been outlined in the Drenthe deposit, and will contribute the
Witrivier 777LR farm if the deposit extends north on to Witrivier 777LR. PPRust
is contributing its rights to the northern portion of the Overysel 815LR farm
which lies south of and contiguous to the Drenthe 778LR farm.
Pursuant to the terms of the Joint Venture Agreement, the Company and Anglo
Platinum formed an initial 50/50 Joint Venture (the "Boikgantsho JV") to
explore these farms for a period of up to five years. During that period,
Anooraq will operate the exploration programs , and spend up to ZAR 12.35
million (of which the entire amount has been spent) on behalf of the
Boikgantsho JV. Anooraq will then have the option to proceed on a year-by-year
basis and to take the project to a bankable feasibility study ("BFS") level.
Once a BFS has been completed, the parties, by agreement, may proceed to
exploitation subject to relevant regulatory requirements. If both partners
decide to proceed, then a joint management committee will be established to
oversee development and operations. At commencement of exploitation, the joint
venture interest allotted to each of Anooraq and Anglo Platinum will be
determined in proportion to the relative value of the metals contained in each
contributed property as reflected in the BFS. Anooraq or Anglo Platinum, as the
case may be, each has the right to make a cash payment to the other party or to
fund additional capital contributions to equalize their respective
contributions. During development, the Boikgantsho JV will be seeking a Black
Economic Empowerment ("BEE") partner to participate in the project (which may
be Anooraq itself) with the original Boikgantsho JV partners dividing the
remaining interest.
Should the Company choose not to proceed, Anglo Platinum has the option of
acquiring the Company`s interest at the aggregate of (i) the net present value
of exploiting the Company`s mineral rights as a standalone mining operation, by
applying an agreed discount rate as determined in the BFS, and (ii) all
exploration expenditures (as defined in the agreement) incurred by the Company
up to the completion of the BFS. Should Anglo Platinum decide not to contribute
to exploitation, its interest will be diluted over time pursuant to a formula
taking into account expenditure on the project by the contributory parties.
Anglo Platinum will remain entitled to a minimum 12.5% non-contributory
interest, adjusted depending on the final PGM royalty to be established under
the South African Mineral and Petroleum Royalty Bill, to a maximum of 15%.
Anglo Platinum has the right to enter into a PGM Ore or Concentrate Purchase
and Disposal Agreement at the exploitation phase, based on standard commercial
terms, whereby PGM produced from the operation would be treated at Anglo
Platinum`s facilities.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
Access from Johannesburg to the central portion of the Platreef Project area is
via highway N1 to the city of Mokopane, then 35 kilometres to the north
northwest via well maintained secondary roads. There are nearby highways,
railways, and high capacity electrical transmission lines.
The climate is semi-arid with moderate winter temperatures in the 20 degrees C
range, typically increasing to 35 degrees C in summer.
Water from existing community wells and a well sunk by Anooraq is available for
drilling on the property.
Groundwater studies will be required to identify adequate supplies of process
water for any mining operation.
The terrain is relatively flat, with a mean elevation of 1,100 metres;
therefore, there are no prohibitive physical obstacles to inhibit exploration
of the Platreef Properties. Vegetation is generally sparse and consists mostly
of various thorn bushes.
History
Exploration on the Platreef Properties prior to the involvement of Plateau in
1998 had been sporadic in spite of numerous historic drill holes in identifying
extensive PGM mineralization on the Farm Drenthe 778LR.
Rietfontein Block
Drilling by Ivanplats to test the Platreef target on Rietfontein began in July
2002. Thirty-six vertical core holes were drilled at spacings of 100 to 200
metre intervals along strike and 50 to 150 metres across the width of the
Platreef pyroxenite. A further 31 diamond drill holes, totalling 6,374 metres,
were drilled in 2003. This drilling has outlined a zone of PGM mineralization
in the Platreef over a strike length of 1,600 metres on Farm Rietfontein,
adjacent to the Turfspruit boundary. No work was done on the Rietfontein Block
in 2006, 2007 or 2008.
Kwanda JV
In 2002, Plateau carried out an integrated exploration program of airborne
geophysics, grid geochemistry and geological mapping in the area, tracing a
pyroxenite unit that hosts a PGM deposit on an adjacent farm for six kilometres
on the South Block property. A diamond drilling program, comprising 15 holes
(2,465 metres) conducted in 2003 did not encounter significant PGM
mineralization. An airborne geophysical survey was flown over the Platreef
properties, including the North Block during the same period. No work has been
done on the South or North Blocks in 2006, 2007 or 2008.
Central Block
Between 1998 and 2002, Plateau drilled 44 diamond drill holes completed on the
farms Drenthe 778LR and Witrivier 777LR, confirming mineralization in the
Drenthe deposit as well as tracing the mineralized horizon along the 4.5
kilometres.
A Preliminary Assessment of the Drenthe deposit done in 2003 based on the
resources estimated to that time and a preliminary open pit design provided
encouraging results.
Drilling programs prior to 2004 had established a mineralized corridor
extending for approximately 2,100 metres, within which several 10-20 metre
thick zones of mineralization with PGM concentrations in the range 0.5-2.5 g/t
4PGM, defining the Drenthe deposit.
Boikgantsho Joint Venture
Two phases of drilling were completed in 2004 to further delineate mineral
resources and provide samples for metallurgical testing. Forty-six holes
(19,570 metres) were drilled on the Drenthe Farm, 27 holes (5,261 metres) on
the Witrivier Farm and 64 holes (12,739 metres) on the northern part of the
Overysel Farm. Drill holes were generally spaced at 100 metre intervals along
lines 100 metres apart on all three farms, except on the Drenthe farm where
large areas were drilled at 50 metre spacing along lines 100 metres apart. The
drilling programs expanded the Drenthe deposit and outlined a new deposit
called the Overysel North. A resource estimate was done based on drilling to
mid September 2004 (see Estimates of Mineralization, below). Mineralization
remains open to the north and down dip to the west.
Metallurgical studies were carried out by Mintek, under the supervision of
Dowding Reynard & Associates, an engineering company that specializes in
management and process plant design. Mineralogical investigations showed the
PGM grains to be quite coarse (45 microns average) with 80 percent of the PGM
grains occurring as discrete grains separate from the base metal sulphides, and
less than 10 percent associated with gangue. Initial rougher flotation tests
showed high recoveries (Pd - 89%, Pt - 84%, Ni - 83%) at a relatively coarse
grind of 60 percent finer than 75 microns.
Anooraq commissioned an updated Preliminary Assessment based on an open pit
operation utilizing indicated and inferred mineral resources (Tables 2 and 3)
estimated for the Drenthe and Overysel North deposits, which was completed in
March 2005. As the Preliminary Assessment included inferred mineral resources
that are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as
mineral reserves, there is no certainty that the results of the Preliminary
Assessment will be realized. For the study, the in-pit resource was capped for
a mine life of 32 years or 160 million tonnes grading 1.05 g/t 3PGM (0.44 g/t
Pt, 0.53 g/t Pd, 0.08 g/t Au), 0.12% Ni and 0.08% Cu at a US$10.50/tonne cut
-off. The mill feed rate used was 5 million tonnes per year. A conventional
mill circuit, comprising crushing, grinding and two-stage flotation was
envisaged, using head grade driven concentrator recoveries of:
platinum 75%, palladium 75%, gold 75%, copper 80% and nickel 75%. Mining and
processing costs for the study were based on estimates provided by South
African contractors and consultants. Administrative and environmental costs
were based on contract submissions. The Preliminary Assessment used a ZAR: US$
exchange ratio of 7:1 and expected long term metal prices of US$650/oz for
platinum, US$250/oz for palladium, US$375/oz for gold, US$4.00/lb for nickel
and US$1.00/lb for copper. The pre -tax and pre-royalty model forecasted
positive economics for the Project.
Drilling in 2005 focused on the Drenthe deposit and tested the entire area
within the provisional open pit design for the Drenthe deposit used for the
March 2005 Preliminary Assessment. The 24,400-metre program was comprised of
136 vertical holes drilled at 50-metre intervals along 50-metre spaced lines.
The results were consistent with previous, wider spaced drilling, and confirmed
the continuity of the PGM mineralization within the Drenthe deposit. The
information was compiled and the block model was updated. Engineering studies
toward a prefeasibility study on the Boikgantsho JV Project were also initiated
in 2005, but further work has been deferred.
Geological Setting and Mineralization
Regional mapping, geophysical data and drilling at various spacing`s suggest
that the Platreef extends for some 12 kilometres on the Platreef property. PGM
mineralization within this 70-250 metres thick succession is commonly
associated with pyrrhotite (iron sulphide), chalcopyrite (copper sulphide) and
pentlandite (nickel sulphide).
The entire Platreef rock package is `mineralized` to some extent, containing
anything from 100 ppb up to approximately 10,000 ppb PGM in places. The
configuration of a `mineralized zone` is therefore a function of chosen cut
-off grade, and typically, at cut -offs in the range 0.5 g/t to 1.0 g/t, PGM
`mineralized zones` are not confined to individual rock units. Nevertheless,
these chemically defined zones typically form `layer-like` bodies, or `reefs`
in South African terminology, which lie sub-parallel to the general igneous
strike and dip of the Platreef rock package.
The weathering profile is variable and can extend as deep as 66 metres.
Generally, less than 50% of drill holes exhibit any degree of strong
weathering, to a mean depth of 14.2 metres.
Sampling and Analysis, and Security of Samples
The flow chart in Figure 3 illustrates the sampling and analytical protocol for
the Platreef cored drill holes.
The boxed core was picked up at the drill rig and transported to a secure core
logging facility near Mokopane for geotechnical logging, geological logging,
sample selection, quality control designation and sampling by Anooraq
personnel. Half core is retained at the secure Anooraq warehouse near Mokopane.
Master pulps are also retained at the warehouse. Pulps remaining after analyses
at Acme have been shipped for long term storage at a secured warehouse at Port
Kells, B.C.
Anooraq monitored the sampling and analytical procedures of the project with a
detailed quality assurance/quality control (QAQC) program. Typically, the
additional analytical work involved in the QAQC program was greater than 10% of
the basic analytical requirement for a project. The QAQC program was separate
from the internal procedures used by the analytical laboratories.
Mineral Resource Estimates
Resource estimates were completed for the Drenthe and Overysel North deposits
as outlined by drilling to mid- September 2004. Indicated and inferred
resources for the deposits are tabulated below:
Table 2. BOIKGANTSHO INDICATED MINERAL RESOURCES
Nov 2004 at a US$20 GMV/t cut -off
DEPOSIT Tonnes Pt Pd Au
(millions) 3PGM (g/t) (g/t) (g/t) (g/t)
Drenthe 132.24 1.25 0.53 0.62 0.09
Overysel North 44.42 1.64 0.67 0.87 0.10
Total 176.66 1.35 0.57 0.69 0.09
DEPOSIT % Ni (%) % Cu (%)
Drenthe 0.14 0.09
Overysel North 0.10 0.06
Total 0.13 0.08
Table 3. BOIKGANTSHO INFERRED MINERAL RESOURCES
Nov 2004 at a US$20 GMV/t cut -off
Tonnes Pt Pd Au
DEPOSIT (millions) 3PGM (g/t) (g/t) (g/t) (g/t)
Drenthe 88.64 1.16 0.49 0.58 0.09
Overysel North 15.71 1.63 0.65 0.88 0.10
Total 104.35 1.23 0.52 0.63 0.09
DEPOSIT % Ni (%) % Cu (%)
Drenthe 0.15 0.09
Overysel North 0.11 0.06
Total 0.14 0.09
Notes to tables 2 and 3:
Mineral resources that are not mineral reserves do not have demonstrated
economic viability.
Gross Metal Value per tonne (GMV/t) is sum of Pt, Pd, Au, Cu and Ni grades
multiplied by the following metal prices:
Pt - US$650/oz; Pd - US$250/oz; Au - US$375/oz; Ni - US$4/lb; Cu - US$1/lb.
G.J. van der Heever, Pr.Sci.Nat., of GeoLogix, an independent qualified person,
is responsible for the resource estimate. The resource estimate is described in
December 2004 and March 2005 technical reports, filed at www.sedar.com.
Recent Exploration
Work on the Platreef Properties, including the Boikgantsho pre-feasibility
study, was deferred in 2006 and 2007 as the Company focused its financial
resources on the Ga-Phasha Project, and in 2008 as the Company focused on
advancing the Lebowa Transaction.
Plan of Operation - 2009
Planning is underway to resume work on the Boikgantsho Project technical
program and studies.
The Ga-Phasha Project
Property Description and Location
The Ga-Phasha Project is located on the Eastern Limb of the Bushveld Igneous
Complex in South Africa, approximately 45 kilometres north northwest of the
Limpopo Province town of Steelpoort and 250 kilometres northeast of
Johannesburg. The property consists of four farms, covering an area of
approximately 9,700 hectares, held by Ga-Phasha Platinum Mine (Proprietary)
Limited (previously called Micawber 277 (Proprietary) Limited,) a private South
African corporation owned 50 percent by Anglo Platinum through its wholly owned
subsidiary Rustenburg and 50 percent by Anooraq through its wholly owned South
African subsidiary Plateau. The 50:50 joint venture between Plateau and
Rustenburg is governed by, among other things, a shareholders agreement
relating to GPM dated September 22, 2004.
Mineral rights for the PGM within the UG2 and Merensky Reefs on the farms
Klipfontein 465KS and a portion of Paschaskraal 466KS are held by GPM. In
addition, GPM has a lease over the PGM mineral rights for the remainder of
Paschaskraal 466KS, which are held by the state. There are nominal annual fees
to maintain the farms.
Table 4. Ga-Phasha Mineral Rights
Ga-Phasha Project: GPM holds old order mining rights to all
four properties. In terms of the MPRDA,
these old order mining rights are valid until
Klipfontein 465 KS 30 April 2009, after which they will expire
Paschaskraal 466 KS and revert to the South African State if not
De Kamp 507 KS converted into applicable new order
Avoca 472 mining rights. GPM intends to apply for
new order mining rights before expiry.
Surface rights on Paschaskraal 466KS, Klipfontein 465KS, De Kamp 507KS and
Avoca 473KS are held by the state in trust for local tribal authorities.
Accessibility, Climate, Local Resources, Infrastructure and Physiography
The Ga-Phasha site is located in a region of sparse development with little
infrastructure. Access to the site is gained via gravel roads from Steelpoort
or Burgersfort to the southeast and from Polokwane approximately 80 kilometres
to the northwest.
Recent development at the neighbouring Twickenham-Hackney mine has improved the
local infrastructure considerably. This includes paved roads, power lines, and
water supplies.
The climatic conditions of the Ga-Phasha area are typical of the Limpopo
Province. Summer day temperatures are warm to hot, averaging 26 to 30 degrees
C, and the winter months are moderate to cool. The area is considered
semi-arid, with annual rainfall of 529 mm, which is below the average for South
Africa. The rainy season extends over the summer months of October through
April.
The general topography of the area is defined by a relatively flat valley,
flanked by pronounced north-west to south-east trending mountain ranges that
are located on the north-eastern and south-western sections of the property.
Extensive settlements have been developed at the foot of both these mountain
ranges. The area between the villages where the land is flatter has been broken
up into small farming units or plots for cultivating crops.
History
There has been a considerable amount of exploration on the Klipfontein and
Paschaskraal farms by past operators such as JCI, Anglovaal and Anglo Platinum,
with well over 300 drill holes completed.
Initial metallurgical test work by Anglo Platinum showed a very good flotation
response with negligible effects from dilution and with platinum group element
recoveries ranging from 92.7% to 96.5%. The good flotation response was
attributed to the predominant association of PGM with base metal sulphides,
which are coarser than those present in UG2 in the western Bushveld. Nickel,
copper and sulphur recoveries were good for UG2 type ore, namely: 14-24%
nickel, 77-86% copper and 83-90% sulphur.
In 2002, Anglo Platinum completed an economic study on the UG2 deposit
(equivalent to a preliminary assessment because inferred resources were also
used). This study envisioned an underground mine very similar to that being
developed on the neighbouring Twickenham Farm, using down dip semi mechanized
reef mining and access by twin shaft declines. Each decline shaft comprises
three barrels: a decline ramp for equipment, a conveyor decline, and a
chairlift decline for moving personnel. Ore was to be treated at the Twickenham
concentrator. Based on twin declines producing 100,000 tonnes per month from
the UG2 Reef only, Anglo Platinum concluded the project was an attractive
investment and subsequently encouraged BEE group participation.
In February 2004, Anooraq commissioned a resource estimate for the Ga-Phasha
Project utilizing drill hole information made available by Anglo Platinum from
299 drill holes drilled between 1966 and 2002. For the farms Paschaskraal and
Klipfontein for the Merensky Reef, the resource estimation excluded the first
40 metres below surface, which is considered as an oxidized zone. Specific
Gravity for the Merensky Reef was 3.1 and the UG2 Reef was 4.25. A 40%
geological loss factor was applied, which includes 10% for faulting, 15% for
potholes, 10% for intrusions and 5% for iron replacement bodies.
The Avoca and De Kamp farms adjoin Paschaskraal and Klipfontein on the down dip
side of the UG2 and Merensky Reefs. No boreholes were drilled on these farms,
but it could be assumed that the reefs developed on Paschaskraal/Klipfontein
farms would be developed on Avoca and De Kamp.
At a 2 g/t 4PGM cut-off the Merensky Reef estimates were:
- Measured and indicated resources of 43.2 million tonnes grading 4.39 g/t 4PGM
- Inferred resources of 39.8 million tonnes grading 4.28 g/t 4PGM on the
Paschaskraal and Klipfontein farms
- Inferred resources of 97.6 million tonnes grading 4.34 g/t 4PGM on the Avoca
and DeKamp farms
At a 4 g/t 4PGM cut-off, the UG2 Reef estimates were:
- Measured and indicated resources of 65.7 million tonnes grading 6.97 g/t 4PGM
- Inferred resources of 33.9 million tonnes grading 7.20 g/t 4PGM on the
Paschaskraal and Klipfontein farms
- Inferred resources of 77.6 million tonnes grading 7.05 g/t 4PGM on the Avoca
and DeKamp farms
To June 2006, the drill hole database is comprised of 127 Merensky drill holes
and 322 UG2 drill holes. Of these, 116 parent drill holes intersected the
Merensky Reef (plus deflections there are 257 Merensky Reef intersections) and
230 parent drill holes intersected the UG2 Reef (with deflections there are a
total 616 UG2 reef intersections). These databases were used to estimate the
mineral resources (see Estimates of Mineralization). Measured, indicated and
inferred resources in the UG2 deposit, and indicated and inferred resources in
the Merensky Reef deposit increased from the 2004 estimates above.
Anooraq and Anglo Platinum undertook a property review in 2006. Several
approaches were considered to optimize mining of the deposits at Ga-Phasha. UG2
was identified as the primary focus for development and the Merensky reef as
warranting further study through additional drilling programs. As a result of
this work, Anooraq and Anglo Platinum agreed on the parameters for a
pre-feasibility study for the Project.
Geological Setting and Mineralization
The Ga-Phasha Project area is underlain by rocks of the Upper Critical and Main
Zones. The Main Zone is comprised of gabbros and ferro gabbros (iron and
magnesium rich igneous rocks).
The two platinum-bearing horizons at Ga-Phasha are the UG2 chromitite and the
Merensky Reef, both of which occur within the Upper Critical Zone. The sequence
strikes northwest southeast and dips in a westerly direction towards the center
of the Bushveld Complex. The dip decreases on a regional scale from
approximately 30 degrees in the north to approximately 10 degrees in the south.
In general, the Reefs are separated by a package of norites and anorthosites,
averaging some 390 metres in thickness.
The UG2 Reef is a chromitite layer that hosts PGM and some base metal
sulphides. Mineralization occurs throughout the UG2 Reef chromitite with
usually significantly higher values associated with the hanging wall and
footwall contacts. Mineralization may also occur within the footwall
pyroxenite, mainly associated with disseminated chromite and chromitite
stringers/lenses, with grades of up to 10 g/t 4PGM. The hangingwall units do
not contain significant PGM values although values in excess of 5 g/t can occur
where associated with the chromitite stringers or disseminated chromitite.
The feldspathic pyroxenite rocks within the Merensky package host chromite,
base and precious metal sulphide accumulations. PGE mineralisation occurs as
discrete metals that are typically associated with and enclosed within the base
metal sulphides and silicates. There is a strong association of the PGMs with
the chromitite stringers usually demarcating the upper and lower contacts of
the Reef, with higher grades at the contacts.
Sampling and Analysis, and Security of Samples
The following is a summary of the core logging and sampling procedures used by
Anglo Platinum. Core logging is undertaken by qualified geologists on site at
the Driekop Exploration Base, where all boreholes and their deflections are
accurately logged in terms of lithology, mineralization, alteration and
structure. Specialized geotechnical and structural logging is also carried out
by rock engineering and structural geologists. After the bagging of samples on
site at the Driekop core yard, the samples were transported to Anglo Platinum
Research Centre ("ARC") in Germiston, near Johannesburg, by 3 ton Dyna or
pickup truck. ARC processed the samples from pre -2000 drilling. Post-2000
samples are processed by Anglo American Research Laboratory ("AARL"). When
transported to AARL, the samples were delivered by ARC staff and vehicles.
Generally the recovered reef intersections of Merensky Reef and UG2 are assayed
for 4PGM (Pt, Pd, Rh, Au) and Cu and Ni contents. Individual Pt, Pd, Rh and Au
contents of each sample were determined.
ARC Procedures
All samples are duplicated and run on an A and B stream at different times.
Internal Quality control occurs with every batch. ARC did not use blanks, and
integrated an internal Quality Control sampling once a week.
Comparative results from A and B streams are available.
All samples were pulverized to 80% +/-5% <75 microns. For Fire Assay - 4
elements (Pb collector), there is loss of PGM and these results then often
required a correction factor to be applied. In the borehole database, samples
assayed using Pb collector fire assay methods were not corrected. The precious
metal concentration was reported as the sum of Pt, Pd, Rh, and Au. For Fire
Assay-ICP, silver was used to collect Pd, Pt, and Au, and Pd was used to
collect Rh. Using the Ag/Pd collectors reduced random losses of the PGM,
providing a more precise analysis as well as a lower detection limit.
AARL Procedures
Samples are crushed in a jaw crusher to 2 millimetres. The entire sample is
then milled to 85 per cent - 75 microns or finer. An 8-minute milling time is
required. For Atomic Absorption, pulped samples are digested with a triple acid
attack with perchloric, nitric and hydrofluoric acids. The acid attack is
performed three times after which the solutions are transferred to 100 ml
flasks and read on the Atomic Absorption Spectrometry for Cu and Ni. Four per
cent of the samples are replicated. Two blanks and three reference standards
are included in every batch.
Prior to X-ray fluorescence analyses, pulped samples are mixed with a styrene -
wax binder (SASMU) and milled to mix in the binder and further reduce particle
sizes. The samples are pressed into briquettes. The briquettes are read on the
AARL PW 1404 X-Ray Fluorescope for Cu and Ni. Mineralogical effects are evident
in the briquettes - hence separate `type` calibrations are critical for UG2 and
Merensky type samples. Approximately 5 per cent on the samples are replicated.
Two reference materials are analyzed with every batch (max 100).
For Fire Assay and ICP, all assays are done in duplicate and the average of
acceptable replicate pairs is reported. Samples are weighed out and mixed with
an appropriate flux for the material type. Silver is used as a co-collector.
The samples are fire assayed and the prills (material remaining from this
process) are dissolved in aqua regia and read on the inductively coupled plasma
("ICP") spectrometer for Pt, Pd and Au. One blank and two reference materials
are analyzed with every worksheet (max 35).
For Rhodium, all assays are done in duplicate and the average of acceptable
replicate pairs is reported. Samples are weighed out and mixed with an
appropriate flux for the material type. Palladium is used as a co collector.
The samples are fire assayed and the prills (material remaining from this
process) dissolved in aqua regia and read on the ICP for Rh. One blank and two
reference materials are analyzed with every worksheet (max 35).
AARL, an ISO 17025 registered company, has a comprehensive quality control
system that includes blanks, certified reference materials, in-house reference
materials, and twin streaming/replicate analyses.
Mineral Resource Estimates
The UG2 and Merensky Reef "resource cut widths" were established through a
combination of model estimates of the geotechnical hanging wall thickness, the
reef thickness and a minimum footwall dilution of 0.10 m. For the Merensky
Reef, composited footwall components with a grade greater than 2.0 g/t 4PGM
were also included. Grades and widths for both reefs are specific gravity and
length weighted.i
The weathered and oxidized horizon, called Regolith in the tables below,
extends to an average depth of 40 m below surface. The tonnages in the tables
are after geological loss factors are applied. Geological losses are related to
the presence of potholes and other structural features such as faults and
dykes.
For UG2, the loss factors are Regolith, from 17% (measured) to 26% (inferred);
Mining Footprint, 15% (measured and indicated); and Remnant, from 24%
(indicated) to 25% (measured and inferred).
Table 5a. Paschaskraal and Klipfontein Farms
UG2 Reef Measured and Indicated Resources 1,4
Over a minimum width of 0.90 m
Horizon Category Tonnes 4PGM 2 Pt 3
(millions) (g/t) (g/t)
Regolith Measured 0.97 6.33 2.74
Indicated 1.43 6.45 2.74
Mining Measured 7.17 6.74 2.80
Footprint Indicated 0.07 7.04 2.91
Remnant Measured 16.71 6.40 2.71
Indicated 55.95 6.56 2.77
Total Measured + Indicated 82.30 6.53 2.76
Horizon Category Pd 3 Rh 3 Au 3
(g/t) (g/t) (g/t)
Regolith Measured 2.99 0.49 0.11
Indicated 3.08 0.52 0.12
Mining Measured 3.28 0.55 0.12
Footprint Indicated 3.41 0.60 0.13
Remnant Measured 3.05 0.54 0.11
Indicated 3.14 0.53 0.11
Total Measured + Indicated 3.13 0.53 0.11
Table 5b. Pascha skraal and Klipfontein Farms
UG2 Reef Inferred Resources 1,4
Over a minimum width of 0.90 m
Horizon Tonnes 4PGM 2 Pt 3 Pd 3 Rh 3 Au 3
(millions) (g/t) (g/t) (g/t) (g/t) (g/t)
Regolith 1.13 6.28 2.68 2.99 0.50 0.11
Remnant 67.36 6.47 2.72 3.09 0.54 0.11
Total Inferred 68.49 6.47 2.72 3.09 0.54 0.11
For the Merensky Reef, a geological loss factor of 27% has been applied to each
horizon.
Table 6a. Paschaskraal and Klipfontein Farms
Merensky Reef Measured and Indicated Resources 1,4
Over a minimum width of 0.90 m
Horizon Category Tonnes 4PGM 2 Pt 3
(millions) (g/t) (g/t)
Regolith Measured 0.83 4.05 2.44
Indicated 4.15 4.16 2.52
Remnant Measured 7.54 4.35 2.63
Indicated 44.05 4.70 2.94
Total Measured + Indicated 56.57 4.61 2.86
Horizon Category Pd 3 Rh 3 Au 3
(g/t) (g/t) (g/t)
Regolith Measured 1.25 0.14 0.23
Indicated 1.23 0.13 0.28
Remnant Measured 1.33 0.15 0.24
Indicated 1.30 0.17 0.28
Total Measured + Indicated 1.29 0.17 0.27
Table 6b. Paschaskraal and Klipfontein Farms
Merensky Reef Inferred Resources1,4
Over a minimum width of 0.90 m
HorizonTonnes 4PGM 2 Pt 3 Pd 3 Rh 3 Au 3
(millions) (g/t) (g/t) (g/t) (g/t) (g/t)
Remnant57.51 4.40 2.67 1.30 0.16 0.28
Mineral Resources for the Avoca and De Kamp farms were estimated over a minimum
0.9 metre width, but honouring reef widths (0.96 metres for UG2 and 1.3 metres
for Merensky). Grade, width and specific gravity were derived from the up -dip
resources for Paschaskraal (for De Kamp) and Klipfontein (for Avoca).
Geological loss factor applied was 32% for Merensky Reef tonnage and an average
of 25% for the UG2. The inferred mineral resources are estimated to be:
Table 8. Avoca and DeKamp farms
Inferred Resources 1,4
Over a minimum width of 0.90 m
Deposit Width Tonnes 4PGM 2 Pt 3 Pd 3 Rh 3 Au 3
(metres) (millions) (g/t) (g/t) (g/t) (g/t) (g/t)
Merensky Reef 1.30 122.50 4.48 2.71 1.33 0.16 0.28
UG2 0.96 118.11 6.49 2.73 3.11 0.54 0.12
Notes to the Tables:
1 A mineral resource is an inventory of mineralization that, under
realistically assumed and justifiable technical and economic conditions, might
become economically viable. A mineral resource that is not a mineral reserve
does not have demonstrated economic viability.
2 4PGM = platinum + palladium + rhodium + gold ;
3 Grades for individual elements are estimated from prill assays to tally 4PGM.
4 The resource estimate represents 100% of the Ga-Phasha resource of which 50%
is attributable to Anooraq.
5 Metallurgical recoveries are assumed to be 100%.
The resource estimates were completed under the supervision of Gordon Chunnett,
Pr.Sci.Nat., of Anglo Platinum Limited, who is a qualified person as defined by
Canadian Securities Administrators, National Instrument 43-101.
According the October 2007 technical report, using metal prices of US$778/oz
for platinum, US$288/oz for palladium, US$1374/oz for rhodium and US$400/oz for
gold and an ZAR: US$ exchange rate of 8.16, the cut- off for the UG2 resources
would be 1.76 g/t 4PGE cut -off and the Merensky Reef would be 2.6 g/t PGM.
Recent Exploration
Anooraq and Anglo Platinum undertook a program review between April and October
2006. Several approaches were considered to optimize mining of the deposits at
Ga-Phasha. The Review confirmed that the UG2 reef deposit would remain the
primary focus for development, and the Merensky reef warrants further study
through additional drilling.
Engineering and other work directed toward completion of a prefeasibility was
initiated, with the following parameters/objectives:
- a Phase 1 study to exploit the UG2 reef to a depth of some 650 meters below
surface;
- identification of a single preferred option by which to proceed to a bankable
feasibility phase; and
- contemplate and assess optimization of economies of scale between the
Parties` operations in the area, and in that regard, evaluate the possible
usage of joint infrastructure and processing facilities between Anglo
Platinum`s adjacent Twickenham Platinum Mine and Ga-Phasha.
Work toward completion of a pre-feasibility level study of mining the UG2
deposit to a depth of 650 metres was initiated near the end of 2006.
Over the past year, studies on mining method and infrastructure have been
underway. Labour, socio-economic and environmental studies were also done.
Preliminary work suggests developing two declines, one in each of the
Paschaskraal and Klipfontein areas, and a centrally located vertical shaft to
access the deposits for mining. The most appropriate mining method appears to
be conventional breast stoping, supported by rail bound, footwall
infrastructure.
Work on the pre-feasibility study has been deferred in 2008 as the Company has
focused on completion of the Lebowa Transaction.
Plan of Operation - 2009
Once the Lebowa Transaction is complete, the potential for synergies between
the Ga-Phasha Project and Lebowa as well as other opportunities to maximize
efficiencies will be assessed prior to completion of the pre- feasibility
study.
ITEM 6. RISK FACTORS
Investment in developmental stage ventures such as Anooraq is highly
speculative and subject to numerous and substantial risks.
The Company faces risks in executing its business plan and achieving revenues.
The following risks are material risks that the Company faces. The Company also
faces the risks identified elsewhere in this AIF. If any of these risks occur,
the Company`s business and its operating results and financial condition could
be seriously harmed and the Company may not be able to continue business
operations as a going concern.
Exploration and Development
The exploration for and development of mineral deposits involves significant
risks, which even a combination of careful evaluation, experience and knowledge
may not eliminate. Although the discovery of an ore body may result in
substantial rewards, few properties explored are ultimately developed into
producing mines. Significant expenditures may be required to locate and
establish mineral reserves, to develop metallurgical processes and to construct
mining and processing facilities at a particular site. It is impossible to
ensure that the current exploration programs planned by Anooraq and its joint
venture partners will result in a profitable commercial mining operation.
Significant capital investment is required to achieve commercial production
from successful exploration efforts.
The commercial viability of a mineral deposit is dependent upon a number of
factors. These include deposit attributes such as size, grade and proximity to
infrastructure, current and future metal prices (which can be cyclical), and
government regulations, including those relating to prices, taxes, royalties,
land tenure, land use, importing and exporting of minerals and necessary
supplies and environmental protection. The complete effect of these factors,
either alone or in combination, cannot be entirely predicted, and their impact
may result in Anooraq not receiving an adequate return on invested capital.
The figures for mineral resources incorporated by reference herein are
estimates and no assurance can be given that the anticipated tonnages and
grades will be achieved or that the indicated level of recovery will be
realized. Market fluctuations and the prices of metals may render resources
uneconomic. Moreover, short- term operating factors relating to the mineral
deposits, such as the need for orderly development of the deposits or the
processing of new or different grades of ore, may cause a mining operation to
be unprofitable in any particular accounting period.
No Ore
The Platreef Project and the Ga-Phasha Project are in the exploration as
opposed to the development stage and have no known body of economic
mineralization. The known mineralization at these projects has not been
determined to be ore. Although the Company believes that exploration data
available is encouraging, particularly in respect to the Platreef and Ga
-Phasha properties, there can be no assurance that commercially mineable ore
bodies exist. There is no certainty that any expenditure made in the
exploration of the Company`s mineral properties will result in discoveries of
commercially recoverable quantities of ore. Such assurance will require
completion of final comprehensive feasibility studies and, possibly, further
associated exploration and other work that concludes a potential mine at each
of these projects is likely to be economic. In order to carry out exploration
and development programs of any economic ore body and place it into commercial
production, the Company must raise substantial additional funding.
Economic Risk
The likelihood of the future profitability of Anooraq`s operations may be
significantly affected by changes in the market price of the metals it mines or
explores for. The prices of PGM are volatile, and are affected by numerous
factors beyond Anooraq`s control. The level of interest rates, the rate of
inflation, world supply of PGM and stability of exchange rates can all cause
fluctuations in these prices. Such external economic factors are in turn
influenced by changes in international investment patterns, monetary systems
and political developments. The prices of PGM have fluctuated in recent years,
and future significant price declines could cause commercial production to be
uneconomic and may have a material adverse effect on Anooraq`s business,
results of operations and financial condition.
Additional Funding Requirements
The further development and exploration of the various mineral properties in
which it holds interests is dependent upon Anooraq`s ability to obtain
financing through any or all of the joint venturing of projects, debt
financing, equity financing or other means. There is no assurance that Anooraq
will be successful in obtaining the required financing.
Mining
Mining operations generally involve a high degree of risk. Anooraq`s operations
are subject to all the hazards and risks normally encountered in the
exploration, development and production of minerals. These include unusual and
unexpected geological formations, rock falls, flooding and other conditions
involved in the drilling and removal of material, any of which could result in
damage to, or destruction of, mines and other producing facilities, damage to
life or property, environmental damage and possible legal liability. Although
adequate precautions to minimize risk will be taken, milling operations are
subject to hazards such as equipment failure or failure of retaining dams which
may result in environmental pollution and consequent liability which will have
a material adverse effect on Anooraq`s business and results of operation and
financial condition.
Government Regulation
The exploration and mining activities of Anooraq are subject to various South
African national, provincial and local laws governing prospecting, development,
production, taxes, labour standards and occupational health, mine safety, toxic
substance and other matters. Exploration activities and mining are also subject
to various national, provincial and local laws and regulations relating to the
protection of the environment. These laws mandate, among other things, the
maintenance of certain air and water quality standards, and land reclamation.
These laws also set forth limitations on the generation, transportation,
storage and disposal of solid and hazardous waste. Although Anooraq`s
activities are currently carried out in accordance with all applicable rules
and regulations, no assurance can be given that new rules and regulations will
not be enacted or that existing rules and regulations will not be applied in a
manner which could limit or curtail production or development. Amendments to
current laws and regulations governing operations and activities of
exploration, mining and milling or more stringent implementation thereof could
have a material adverse effect on Anooraq`s business, results of operation and
financial condition.
In March 2003, the Government of South Africa released the Royalty Bill
outlining the state`s policies with regard to the payment of royalties by
mining companies. The Royalty Bill proposes that companies producing PGM pay a
royalty of 4% from the sales of those metals. The royalty would be payable on
gross revenue. This may reduce the viability of projects undertaken by the
Company. The Royalty Bill is presently under discussion and comment. In his
annual budget speech on February 18, 2004, the South African Minister of
Finance announced that the implementation of the Royalty Bill, even once
finalized, will occur only in 2009.
South African Government Empowerment Initiatives
The mining industry in South Africa, where the Company`s projects are located,
is subject to extensive regulation. The regulatory environment is developing,
lacks clarity in a number of areas and is subject to interpretation, review and
amendment as the mining industry is further developed and liberalized. In
addition, the regulatory process entails a public comment process, which makes
the outcome of the legislation uncertain and may cause delays in the regulatory
process. A number of significant matters have not been finalized, including the
Royalty Bill, as well as legislation dealing with beneficiation. Anooraq cannot
predict the outcome or timing of any amendments or modifications to applicable
regulations or the interpretation thereof, the release of new regulations or
their impact on its business.
In October 2002, the South African Government enacted the Mineral Development
Act that deals with the state`s policy towards the future of ownership of
minerals rights and the procedures for conducting mining transactions in South
Africa. The Mineral Development Act is an ambitious statute with wide-ranging
objectives, including sustainable development and the promotion of equitable
access to South Africa`s mineral wealth by the inclusion of HDSA into the
industry. The Mineral Development Act came into effect in May 2004.
The South African Government has stated it will be issuing permits and licenses
for prospecting and mining rights to applicants using a "scorecard" approach.
Applicants will need to demonstrate their eligibility for consideration based
upon the number of credits accumulated in terms of quantifiable ownership
transformation criteria, such as employment equity and human resource
development.
Future amendments to, and interpretations of, the economic empowerment
initiatives by the South African Government and the South African courts could
adversely affect the business of Anooraq and its operations and financial
condition.
Joint Venture Risks
Anooraq holds the bulk of its assets in the form of participation interests of
Plateau in joint ventures. Plateau`s interests in these projects are subject to
the risks normally associated with the conduct of joint ventures. The existence
or occurrence of one or more of the following circumstances and events could
have a material adverse impact on Plateau`s profitability or the viability of
its interests held through joint ventures, which could have a material adverse
impact on Anooraq`s future cash flows, earnings, results of operations and
financial condition: (i) disagreement with joint venture partners on how to
proceed with exploration programs and how to develop and operate mines
efficiently; (ii) inability of joint venture partners to meet their obligations
to the joint venture or third parties; and (iii) litigation between joint
venture partners regarding joint venture matters. See Item 5, "The Platreef
Project - Location and Property Description - Rietfontein Block " for a
discussion of a current dispute with a joint venture partner.
Title Matters
While Anooraq has no reason to believe that the existence and extent of any of
its properties is in doubt, title to mining properties is subject to potential
claims by third parties claiming an interest in them. The mineral properties
may be subject to previous unregistered agreements or transfers, and title may
be affected by undetected defects or changes in mineral tenure laws. The
Company`s mineral interests consist of mineral claims, which have not been
surveyed, and therefore, the precise area and location of such claims or rights
may be in doubt. The failure to comply with all applicable laws and
regulations, including the failure to pay taxes or to carry out and file
assessment work, may invalidate title to portions of the properties where the
mineral rights are held by Anooraq.
Insurance and Uninsured Risks
Anooraq`s exploration operations are subject to a number of risks and hazards
generally, including adverse environmental conditions, industrial accidents,
labour disputes, unusual or unexpected geological conditions, ground or slope
failures, cave -ins, changes in the regulatory environment and natural
phenomena such as inclement weather conditions, floods and earthquakes. Such
occurrences could result in damage to mineral properties or production
facilities, personal injury or death, environmental damage to Anooraq`s
properties or the properties of others, delays in mining, monetary losses and
possible legal liability.
Although Anooraq maintains insurance to protect against certain risks in such
amounts as it considers is reasonable, its insurance will not cover all the
potential risks associated with a mining company`s operations.
Anooraq may also be unable to maintain insurance to cover these risks at
economically feasible premiums.
Insurance coverage may not continue to be available or may not be adequate to
cover any resulting liability. Moreover, insurance against risks such as
environmental pollution or other hazards as a result of exploration and
production is not generally available to Anooraq or to other companies in the
mining industry on acceptable terms. Anooraq might also become subject to
liability for pollution or other hazards which may not be insured against or
which Anooraq may elect not to insure against because of premium costs or other
reasons. Losses from these events may cause Anooraq to incur significant costs
that could have a material adverse effect upon its financial performance and
results of operations.
Political Risk
Substantially all of the assets of Anooraq are located in a jurisdiction
outside of Canada. As a result, it may be difficult for investors in Canada to
enforce judgments obtained against Anooraq in Canada.
South Africa has recently undergone major constitutional changes to effect
majority rule, and affecting mineral title. Accordingly, all laws may be
considered relatively new, resulting in risks such as possible
misinterpretation of new laws, unilateral modification of mining or exploration
rights, operating restrictions, increased taxes, environmental regulation, mine
safety and other risks arising out of a new sovereignty over mining, any or all
of which could have an adverse impact upon Anooraq. Anooraq`s operations may
also be affected in varying degrees by political and economic instability,
terrorism, crime, extreme fluctuations in currency exchange rates, and
inflation.
Changes, if any, in mining or investment policies or shifts in political
attitude in South Africa may adversely affect Anooraq`s operations or
likelihood of future profitability. Operations may be affected in varying
degrees by government regulations with respect to, but not limited to,
restrictions on production, price controls, export controls, currency
remittance, income taxes, expropriation of property, foreign investment,
maintenance of claims, environmental legislation, land use, land claims of
local people, water use and mine safety.
The political situation in South Africa introduces a certain degree of risk
with respect to Anooraq`s activities. The Government of South Africa exercises
control over such matters as exploration and mining licensing, permitting,
exporting and taxation, which may adversely impact on Anooraq`s ability to
carry out exploration, development and mining activities. Failure to comply
strictly with applicable laws, regulations and local practices relating to
mineral right applications and tenure, could result in loss, reduction or
expropriation of entitlements, or the imposition of additional local or foreign
parties as joint venture partners with carried or other interests.
Competition
The mineral exploration and mining business is competitive in all of its
phases. Anooraq competes with numerous other companies and individuals,
including competitors with greater financial, technical and other resources
than Anooraq, in the search for and the acquisition of attractive mineral
properties. Anooraq`s ability to acquire properties in the future will depend
not only on its ability to develop its present properties, but also on its
ability to select and acquire suitable producing properties or prospects for
mineral exploration. There is no assurance that Anooraq will continue to be
able to compete successfully with its competitors in acquiring such properties
or prospects.
Environmental Risks
Environmental legislation is evolving in a manner that will require stricter
standards and enforcement, increased fines and penalties for non-compliance,
more stringent environmental assessments of proposed projects and a heightened
degree of responsibility for companies and their officers, directors and
employees. There can be no assurance that future changes to environmental
regulation, if any, will not adversely affect Anooraq`s operations.
Environmental hazards may exist on the properties in which Anooraq holds
interests which are unknown to Anooraq at present and which have been caused by
previous or existing owners or operators of the properties. Furthermore,
compliance with environmental reclamation, closure and other requirements may
involve significant costs and other liabilities. In particular, Anooraq`s
operations and exploration activities are subject to South African national and
provincial laws and regulations governing protection of the environment. These
laws are continually changing and, in general, are becoming more restrictive.
Dependence on Key Personnel
Anooraq is dependent on a relatively small number of key employees, the loss of
any of whom could have an adverse effect on Anooraq. HIV/AIDS is prevalent in
Southern Africa. Employees or contractors of the Company may have or could
contract this potentially deadly virus. There has been a steady emigration of
skilled personnel from Southern Africa in recent years. Generally, the
prevalence of HIV/AIDS could cause lost employee man hours and the emigration
of skilled employees could adversely affect Anooraq`s ability to retain its
employees.
Exchange Rate Fluctuations
Anooraq conducts operations in currencies other than Canadian dollars. Of
particular significance is the fact that Anooraq`s operations in South Africa
are almost entirely paid for in South African Rand, which has historically
devalued against the United States dollar, but which recently has shown
unexpected and substantial strength against most major world currencies,
including the United States dollar. The strength in the South African Rand, if
it continues, will negatively impact the potential profitability of Anooraq`s
mining operations.
The price of PGM is denominated in United States dollars and, accordingly,
Anooraq`s revenues, if any, will be denominated and paid in United States
dollars. In order to earn or maintain property interests, certain of Anooraq`s
payments are to be made in ZAR. As a result, fluctuations in the United States
dollar against the South African Rand could have a material adverse effect on
Anooraq`s financial results which are denominated and reported in Canadian
dollars.
Foreign Subsidiaries
Anooraq conducts operations through foreign subsidiaries and joint ventures,
and substantially all of its assets are held in such entities. Accordingly, any
limitation on the transfer of cash or other assets between the parent
corporation and such entities, or among such entities, could restrict Anooraq`s
ability to fund its operations efficiently. Any such limitations, or the
perception that such limitations may exist in the future, could have an adverse
impact upon Anooraq`s valuation and stock price.
Anooraq Has No History of Earnings and No Foreseeable Earnings
Anooraq has a long history of losses and there can be no assurance that Anooraq
will ever be profitable. Anooraq has paid no dividends on its shares since
incorporation. Anooraq anticipates that it will retain future earnings and
other cash resources for the future operation and development of its business.
Anooraq does not intend to declare or pay any cash dividends in the foreseeable
future. Payment of any future dividends is at the discretion of Anooraq`s board
of directors after taking into account many factors including Anooraq`s
operating results, financial conditions and anticipated cash needs.
Going Concern Assumption
Anooraq`s consolidated financial statements have been prepared assuming Anooraq
will continue as a going concern; which contemplates the realization of assets
and settlement of liabilities in the normal course of operations as they come
due. The Company is currently in the process of completing a proposed
transaction to acquire an operating mine, which would result in immediate cash
flows from operations but requires debt and equity financing to complete the
transaction. The Company continues to incur expenditures related to the
completion of the proposed transaction. Furthermore, as the Company is an
exploration-stage company, the Company does not have any sources of revenues
and historically has incurred recurring losses.
Management recognizes that the Company will need to acquire additional
financial resources in order to meet its planned business objectives. The
Company is monitoring all expenditures and implementing appropriate cash
management strategies to ensure that it has sufficient cash resources to fund
expenditure requirements until June 2009 at which time the Company expects
regulatory, governance and shareholder approval to have been obtained for the
proposed transaction.
Management is confident of completing the proposed transaction. However, there
can be no assurances on the outcome of the approval process, the timing or
availability of additional financial resources required, or the ability of the
Company to achieve profitability or positive cash flows subsequent to the close
of the proposed transaction. If the proposed transaction does not close, the
Company expects that additional debt or equity financing will be required in
order to continue normal operations and the required financing may not be
readily available on acceptable terms. If adequate additional financing is not
obtained, the Company will be required to curtail operations and exploration
activities. Furthermore, failure to continue as a going concern would require
that the Company`s assets and liabilities be restated on a liquidation basis.
Anooraq`s Share Price is Volatile
The market price of a publicly traded stock, especially a resource issuer like
Anooraq, is affected by many variables not directly related to the exploration
success of Anooraq, including the market for junior resource stocks, the
strength of the economy generally, the availability and attractiveness of
alternative investments, and the breadth of the public market for the stock.
The effect of these and other factors on the market price of the common shares
suggests Anooraq`s shares will continue to be volatile.
Certain of Anooraq`s Directors and Officers are Part-Time and Serve as
Directors and Officers of Other Companies
A majority of the directors and officers of Anooraq serve as officers and/or
directors of other resource exploration companies and are engaged in, and will
continue to be engaged in, the search for additional resource opportunities on
their own behalf and on behalf of other companies, and situations may arise
where these directors and officers will be in direct competition with Anooraq.
Such potential conflicts, if any, will be dealt with in accordance with the
relevant provisions of British Columbia corporate and common law. In order to
avoid the possible conflict of interest which may arise between the directors`
duties to Anooraq and their duties to the other companies on whose boards they
serve, the directors and officers of Anooraq expect that participation in
exploration prospects offered to the directors will be allocated between the
various companies that they serve on the basis of prudent business judgement
and the relative financial abilities and needs of the companies to participate.
The success of Anooraq and its ability to continue to carry on operations is
dependent upon its ability to retain the services of certain key employees and
members of its board of directors.
Significant Potential Equity Dilution
As at March 27, 2009 there were 8,966,000 options of Anooraq outstanding, of
which all the options were significantly below the option price. Pursuant to
the Amending Agreement, Pelawan would have exercised 167,000,000 BEE Warrants
by depositing an escrowed amount equal to the aggregate exercise price for the
Warrants ($225 million or ZAR1.586 billion) into an interest bearing account
with RMB, to be released pursuant to a Deposit Agreement between RMB, Pelawan
Investments (Pty) Ltd and Anooraq upon the satisfaction of certain release
conditions. The common shares underlying the Warrants would have been issued to
Pelawan upon receipt by the Company of the exercise price per common share,
plus the interest accrued thereon up to the date of receipt by the Company of
the exercise price.
The common shares underlying the Warrants was not issued as Pelawan could not
meet the release conditions at the expiry date of December 31,2008 and the BEE
Warrants have expired. Anooraq will not receive the proceeds of the exercise of
the BEE Warrants.
ITEM 7. DIVIDEND RECORD AND POLICY
The Company has not declared or paid any dividends or distributions on its
outstanding common shares since its incorporation and does not anticipate that
it will do so in the foreseeable future. All funds of the Company are being
retained for exploration of its Projects.
ITEM 8. DESCRIPTION OF CAPITAL STRUCTURE
The authorized share capital of the Company consists of an unlimited number of
common shares without par value.
Each common share carries one vote at all meetings of shareholders,
participates rateably in any dividend declared by the directors and carries the
right to receive a proportionate share of the assets of the Company available
for distribution to holders of common shares in the event of a liquidation,
dissolution or winding -up of the Company. The holders of common shares have no
pre-emptive or conversion rights.
ITEM 9. MARKET FOR SECURITIES
Anooraq`s common shares are listed and posted for trading in Canada on the
TSX-V under the symbol-ARQ. Anooraq`s common shares have traded on the TSX-V
(and its predecessors, the Canadian Venture Exchange and the Vancouver Stock
Exchange) since September 24, 1987. Until March 12, 2004, Anooraq`s common
shares traded in the United States on the OTCBB under the symbol ARQRF.
Commencing March 15, 2004, Anooraq`s common shares have traded in the United
States on the American Stock Exchange and, since the purchase of that exchange
by the New York Stock Exchange, on the NYSE Amex. under the symbol ANO.
Commencing December 19, 2006, Anooraq`s common shares have traded in the
Republic of South Africa on the Johannesburg Stock Exchange under the symbol
ARQ.
The following table sets out the historical high and low prices for trades and
the volume of trading of the Anooraq`s common shares as reported by the TSX-V,
AMEX (NYSE Amex) and JSE for the periods indicated
ARQ.V (in CAD)
Avg
High Low Volume
Last twelve months
Mar-09 $0.85 $0.33 29,700
Feb-09 $0.48 $0.36 18,900
Jan-09 $0.58 $0.37 46,100
Dec-08 $0.48 $0.22 77,500
Nov-08 $0.54 $0.34 41,000
Oct-08 $1.11 $0.35 56,000
Sep-08 $1.90 $0.86 15,700
Aug-08 $2.52 $1.65 26,000
Jul-08 $2.95 $1.89 43,400
Jun-08 $3.41 $2.63 24,500
May-08 $3.84 $3.04 41,900
Apr-08 $3.96 $3.16 41,300
ANO (in USD)
Avg
High Low Volume
Last twelve months
Mar-09 $0.73 $0.26 170,100
Feb-09 $0.39 $0.27 74,800
Jan-09 $0.44 $0.33 127,400
Dec-08 $0.38 $0.14 125,600
Nov-08 $0.47 $0.30 68,000
Oct-08 $1.10 $0.35 157,100
Sep-08 $1.80 $1.01 108,200
Aug-08 $2.34 $1.51 83,500
Jul-08 $2.91 $1.85 131,700
Jun-08 $3.40 $2.56 95,900
May-08 $3.90 $3.01 136,200
Apr-08 $3.94 $3.10 122,500
ARQ (in ZAR)
Avg
High Low Volume
Last twelve months
Mar-09 560 270 679,696
Feb-09 350 285 557,199
Jan-09 500 310 307,436
Dec-08 450 295 276,949
Nov-08 800 430 880,170
Oct-08 918 440 883,669
Sep-08 1,400 900 489,071
Aug-08 1,710 1,250 666,777
Jul-08 2,300 1,450 885,145
Jun-08 2,780 2,100 467,564
May-08 3,100 2,370 606,203
Apr-08 3,130 2,460 890,399
ITEM 10. ESCROW SECURITIES
The following table sets out the number of securities of the Company held, to
the knowledge of the management of the Company, in escrow as of March 27, 2009
and the percentage that number represents of the outstanding securities of that
class.
Number of Securities
Designation of Class held in Escrow Percentage of Class
Common Shares 118.6 million approximately 64%
Notes:
(1) These shares are registered in the name of the Pelawan Trust, which holds
such shares in trust for Pelawan pursuant to escrow arrangements described in
"The Acquisition - Description of Lockup Arrangements for Consideration Shares"
in the August 2004 Circular. The total amount of shares held by the Pelawan
Trust at March 27, 2009 was 118.6 million.
ITEM 11. DIRECTORS AND OFFICERS
Name, Occupation and Security Holding
The following table states the name, province or state, and country of
residence of each of the directors and executive officers of the Company, the
positions and offices presently held by them and the period or periods of time
during which each has served as a directors of the Company. Each director`s
terms of office expires at the next annual general meeting of the Shareholder`s
of the Company.
Name, position with
the Company
and province or state
and Period(s) as a Director of Common shares
country of residence the Company beneficially owned,
controlled or directed
(1) (2)
Scott Cousens Since September 1996 1,015,400
Director
British Columbia,
Canada
Fikile Tebogo De Buck
(6) Since November 2008 Nil
Johannesburg, South
Africa
Anu Dhir Since July 2008 Nil
Director
London, UK
Robert Dickinson (November 1990 - 620,000 (3)
Director and
Co-Chairman September 2004)
British Columbia,
Canada Since October 2004
David Elliott (6) (7) Since April 2005 Nil
Director
British Columbia,
Canada
Wayne Kirk (6) (7) Since July 2005 Nil
Director
California, United
States
Philip Kotze Since July 2008 Nil
Director, President
and Chief Executive
Officer
Randfontein, South
Africa
Popo Molefe (6) (7) Since September 2004 Nil
Director and
Co-Chairman
North West Province,
South Africa
Harold Motaung Since September 2004 8,299,000 (4)
Director and Chief
Operating Officer
Gauteng, South Africa
Name, position with
the
Company and province
or state and Period(s) as a Director of Common shares
country of residence the Company beneficially owned,
controlled or directed
(1) (2)
Tumelo Motsisi (8) Since September 2004 14,227,000 (5)
Director and Deputy
Chairman
Gauteng, South Africa
Sipho Nkosi Since November 2004 Nil
Director
Gauteng, South Africa
Rizelle Sampson Since September 2004 Nil
Director
Gauteng, South Africa
Ronald Thiessen (8) Since April 1996 740,923
Director
British Columbia,
Canada
Iemrahn Hassen Since July 2008 Nil
Chief Financial
Officer
Johannesburg , South
Africa
Trevor Thomas Since November 2007 Nil
Secretary
British Columbia,
Canada
Notes:
(1) The information as to number of common shares beneficially owned controlled
or directed is not within the knowledge of the management of the Company and
has been furnished by the respective nominees as reported in their filings at
www.sedi.ca.
(2) Directors personally own or control a total of 24,902,323 common shares
which represent approximately 13% of the current outstanding shares. The
directors also hold 6,527,000 options.
(3) Certain of these shares are held in the name of United Mineral Services
Ltd., a private company controlled by Mr. Dickinson.
(4) Indirect holdings being 70 of the 1,000 ordinary shares in the issued and
outstanding share capital of Pelawan Investments (Proprietary) Limited,
multiplied by the number of common shares of Anooraq (118,559,000) held by the
Pelawan Trust.
(5) Indirect holdings being 120 of the 1,000 ordinary shares in the issued and
outstanding share capital of Pelawan Investments (Proprietary) Limited,
multiplied by the number of common shares of Anooraq (118,559,000) held by the
Pelawan Trust.
(6) Member of the Audit Committee.
(7) Member of the Nominating and Governance Committee.
(8) Member of the Compensation Committee.
Additional details including the principal occupation for the past five years
of the above directors are as follows:
SCOTT D. COUSENS - Director
Scott D. Cousens provides management, technical and financial services to a
number of publicly traded companies. Mr. Cousens` focus since 1991 has been the
development of relationships within the international investment community.
Substantial financings and subsequent corporate success has established strong
ties with North American, European and Asian investors. Mr. Cousens is, or was
within the past 5 years, an officer and/or director of the following public
companies:
Company Positions Held From To
Anooraq Resources Corporation Director September 1996 Present
Amarc Resources Ltd. Director September 1995 Present
Continental Minerals Corporation Director June 1994 Present
Farallon Resources Ltd. Director December 1995 April 2007
Great Basin Gold Ltd. Director March 1993 November 2006
Northern Dynasty Minerals Ltd. Director June 1996 Present
Rockwell Diamonds Inc. Director November 2000 November 2008
Taseko Mines Limited Director October 1992 Present
FIKILE TEBOGO DE BUCK, CA - Director
Fikile Tebogo De Buck Ms. De Buck is a Fellow of the Association of Chartered
Certified Accountants FCCA (UK) and has extensive experience in business
operations and financial affairs with companies in the mini ng sector. She
holds a BA degree in Economics and Accounting from the University of Swaziland.
Ms De Buck is currently a non-executive director of Harmony Gold Mining Company
Ltd and is a member of various board committees of Harmony including the Audit
Committee. She has also served in various positions at the Council for Medical
Schemes in South Africa.
Ms. De Buck is, or was within the past 5 years, an officer and/or director of
the following public companies:
Company Positions Held From To
Harmony Gold Company Limited Director April 2006 Present
Rand Uranium (Pty) Ltd. Director January 2008 Present
ANU DHIR, BA, JD - Director
Anu Dhir holds a Bachelor of Arts degree from the University of Toronto and a
Juris Doctor (professional graduate law degree) from Quinnipiac University in
Hamden, Connecticut. Ms. Dhir has extensive experience in international
business, operations and legal affairs in private equity and publicly-held
companies in the mining, oil and gas, and technology sectors. Ms. Dhir is
currently the Vice President, Corporate Development of Katanga Mining Limited.
During the past five years, Ms. Dhir is, or has been, a director of the
following public companies:
Company Positions Held From To
Anooraq Resources
Corporation Director July 2008 Present
Katanga Mining Limited Director March 2004 November 2004
Vice President,
Corporate Development January 2006 Present
Andina Minerals Inc. Officer January 2006 November 2006
ROBERT A. DICKINSON, B.Sc., M.Sc. - Co-Chairman of the Board and Director
Robert A. Dickinson is an economic geologist who serves as a member of
management of several mineral exploration companies, primarily those for whom
Hunter Dickinson Services Inc. provides services. He holds a Bachelor of
Science degree (Hons. Geology), and a Master of Science degree (Business
Administration - Finance) from the University of British Columbia. Mr.
Dickinson has also been active in mineral exploration over 40 years. He is a
director of Hunter Dickinson Services Inc. He is also President and Director of
United Mineral Services Ltd., a private investment company.
Mr. Dickinson is, or was within the past 5 years, an officer and/or director of
the following public companies:
Company Positions Held From To
Anooraq Resources
Corporation Director November 1990 September 2004
Director October 2004 Present
Chairman April 2004 September 2004
Co-Chairman October 2004 Present
Amarc Resources Ltd. Director April 1993 Present
Co-Chairman September 2000 April 2004
Chairman April 2004 Present
Continental Minerals
Corporation Director June 2004 Present
Chairman June 2004 January 2006
Co-Chairman January 2006 December 2006
Detour Gold
Corporation Director August 2006 February 2009
Farallon Resources
Ltd. Director July 1991 April 2007
Chairman April 2004 September 2004
Co-Chairman September 2004 April 2006
Great Basin Gold Ltd. Director May 1986 November 2006
Co-Chairman September 2000 April 2004
Chairman April 2004 December 2005
Co-Chairman December 2005 November 2006
Company Positions Held From To
Northern Dynasty
Minerals Ltd. Director June 1994 Present
Co-Chairman November 2001 April 2004
Chairman April 2004 Present
Rockwell Diamonds
Inc. Director &
Chairman November 2000 September 2006
Taseko Mines Limited Director January 1991 Present
Chairman April 2004 July 2005
Co-Chairman July 2005 May 2006
DAVID ELLIOTT, B. Comm., ICD.D. FCA - Director
David Elliott graduated from the University of British Columbia with a Bachelor
of Commerce degree and then acquired a Chartered Accountant designation. In
2006, he became a certified director with the Institute of Corporate Directors.
Mr. Elliott joined BC Sugar Company in 1976, working in a number of senior
positions before becoming President and Chief Operating Officer of the
operating subsidiary, Rogers Sugar. In 1997, he joined Lantic Sugar in Toronto
as Executive Vice President. He also served as Chairman of the Canadian Sugar
Institute. He became President and Chief Operating Officer of the International
Group based in St Louis, Missouri in 1999, a company involved with food
distribution as well as manufacturing and distribution of pet and animal feed.
For several years, he worked with companies developing e-mail and data
management services. Currently, Mr. Elliott is a director and audit committee
chairman of Anooraq Resources Corporation, Great Basin Gold Ltd., Northern
Dynasty Minerals Ltd. and Taseko Mines Limited.
Mr. Elliott is, or was within the past five years, an officer and/or director
of the following public companies:
Company Positions Held From To
Anooraq Resources Corporation Director April 2005 Present
Great Basin Gold Ltd. Director July 2004 Present
Northern Dynasty Minerals Ltd. Director July 2004 Present
Taseko Mines Limited Director July 2004 Present
IEMRAHN HASSEN, CA - Chief Financial Officer and Director
Iemrahn Hassen has 33 years of experience in the service, manufacturing and
mining sectors. Mr. Hassen received his Chartered Accountant designation in
1991. For the past two years, Mr. Hassen has worked as a financial consultant
in the mining sector for Mintek and Gold Fields Limited. Prior to that, Mr.
Hassen was the Chief Financial Officer for Mobile Telephone Networks in South
Africa for two years, spent three years as the Senior Manager of Finance of
Gold Fields Limited, and spent one and a half years with the accounting firm
Deloitte and Touche. From October 1974 to January 1999, Mr. Hassen worked for
several companies in the service and manufacturing sectors, rising from Group
Accountant in the early 1980`s to roles of Business Development Manager and
Financial Manager for Samancor Limited in June 1999. Mr. Hassen commenced his
role as Chief Financial Officer for Anooraq on June 1, 2007.
During the past five years, Mr. Hassen is, or has been, a director of the
following public companies:
Company Positions Held From To
Anooraq Resources Corporation Director July 2008 Present
WAYNE KIRK, LLB - Director
Wayne Kirk is a retired California State Attorney and Professional Consultant.
With over 35 years professional experience Mr. Kirk also has over 10 years
senior executive experience in the mining industry.
Mr. Kirk is a citizen of the United States and is a resident of California. A
Harvard University graduate, Mr. Kirk received his law degree in 1968. From
1992 to 2001 Mr. Kirk was the Vice President, General Counsel and Corporate
Secretary of Homestake Mining Company. Prior to his retirement in June 2004 he
spent two years as Special Counsel for the law firm, Thelen Reid & Priest in
San Francisco.
During the past five years, Mr. Kirk is, or has been, a director of the
following public companies:
Company Positions Held From To
Anooraq Resources Corporation Director July 2005 Present
Gabriel Resources Ltd. Director June 2008 Present
Great Basin Gold Ltd. Director July 2004 Present
Northern Dynasty Minerals Ltd. Director July 2004 Present
Taseko Mines Limited Director July 2004 Present
PHILIP KOTZE, Pr.Eng., - President, CEO and Director
Philip Kotze is a mining engineer with over 26 years of experience in the
mining industry, including both operations and executive positions at AngloGold
Limited, Kalahari Goldridge Mining Company Limited, and Harmony Gold Mining
Company Limited. A graduate of the University of Witwatersrand with a Graduate
Diploma in Engineering (Mining Economics), Mr Kotze also holds a National
Higher Diploma in Metalliferous Mining (WITS Technikon) as well as
qualifications in Industrial Relations and Management.
During the past five years, Mr. Kotze is, or has been, a director of the
following public companies:
Company Positions Held From To
Anooraq Resources Corporation Director July 2008 Present
POPO S. MOLEFE, PhD. - Co-Chairman of the Board and Director
Dr. Molefe is a South African citizen. He completed his second successful term
as the Premier of the Northwest Province in April 2004. He is a member of the
National Executive Committee of the African National Congress ("ANC"). He was
awarded the Harvard University Certificate in Conflict Resolution and has
diplomas in leadership from the Wharton School of Business and the Harvard JFK
School of Governance. Over the last ten years Dr. Molefe has been instrumental
in facilitating the development of businesses in the North West Province,
particularly in the mining and tourism sector. He, therefore, brings a depth of
leadership experience to Anooraq.
During the past five years, Dr. Molefe is, or has been, a director of the
following public companies:
Company Positions Held From To
Anooraq Resources Corporation Director September 2004 Present
Simeka BSG (formerly Xantium
Technology Holdings) South Africa Director July 2004 Present
A. H. C. HAROLD MOTAUNG, BSc, MBA - Director and Chief Operating Officer
Harold Motaung was previously employed at the Free State and Vaal River
operations of Anglo American Corporation of South Africa Limited for six years
as a mining engineer and as a production supervisor. Mr. Motaung then moved to
the South African Government`s Department of Minerals and Energy (DME) as a
director within the Mine Inspectorate. As a Deputy Chief Inspector, he was
responsible for implementing the Mine, Health and Safety Act. Subsequently he
was appointed Chief Director within the Mine Inspectorate.
His portfolio included the gold, platinum and coal regions of South Africa.
In Mr. Motaung`s capacity as a Chief Director of the Mine Inspectorate, he was
appointed on numerous boards of government-associated institutions including
the National Nuclear Reactor, the Deep Mining Board and the Mining
Qualifications Authority. Mr. Motaung also chaired the Mines Research Board,
which administered a mining safety fund. Mr. Motaung also represented the South
African government in a number of international and bi-national engagements
with foreign countries, and was a member of the DME executive team responsible
for the briefs and presentations at the Parliamentary Portfolio Committee on
the status of minerals and energy within the country, which culminated in the
enactment of the Minerals Development Act. Mr. Motaung left the DME to
establish a mining and geological consultancy, African Minerals Professionals
(Pty) Limited . Mr. Motaung has been a director of Anooraq since September 2004
and is not a director of any other public companies.
TUMELO M. MOTSISI, BA, LLM, MBA - Deputy Chairman and Director
Tumelo Motsisi is a prominent South African businessperson with experience in
the South African financial services, mining and energy sectors. Between 1994
and 1998 he was employed first as a senior manager and then as a director
within the negotiated benefits division of the sizeable South African financial
services company, Alexander Forbes Limited.
In 1998 he established Kopano Ke Matla Investment Company, the investment arm
of South Africa`s largest trade union federation, the Congress of South African
Trade Unions ("Cosatu"). He was subsequently appointed as the Chief Executive
Officer of Kopano Ke Matla. Mr. Motsisi recently resigned his position as
Executive Chairperson of Prosperity Holdings, a financial services company
established between Kopano Ke Matla, NBC Financial Services and Peregrine
Holdings, in order to pursue his interests in the mining and energy sectors.
Mr. Motsisi is a member and director of several South African companies. Mr.
Motsisi has been a director of Anooraq since September 2004 and is not a
director of any other public companies.
SIPHO A. NKOSI, B.Comm, MBA - Director
Mr. Nkosi is South African and holds a Bachelor of Commerce degree from the
University of South Africa and a Master of Business Administration from the
University of Massachusetts in the eastern United States. He has an extensive
background in the mining and power industries. He is a founder of and is
currently Chief Executive Officer of Eyesizwe Coal (Pty) Ltd ("Eyesizwe").
Eyesizwe is one of the country`s largest coal producers. Prior to founding
Eyesizwe in 2001, Mr. Nkosi spent three years with Asea Brown Boveri Sub Sahara
Africa (Pty) Ltd and Alstom SA (Pty) Ltd, initially as Managing Director of ABB
Power Generation (SA) , and then as Country Manager of ABB/Alstom Power until
December 2000. From 1993 to 1997, he was Marketing Manager for Billiton Ltd.,
an international mining company.
During the past five years, Mr. Nkosi is, or has been a director of the
following public companies:
Company Positions Held From To
Anooraq Resources Corporation Director November 2004 Present
Exxaro Resources Limited Director November 2006 Present
Great Basin Gold Ltd. Director August 2003 Present
RIZELLE M. SAMPSON, H. Dip Education - Director
Ms. Sampson is a South African citizen and holds a Certificate in
Telecommunications Policy, Regulation and Management from the University of
Witwatersrand and a Higher Diploma in Education from the University of the
Western Cape.
Following positions as a Portfolio Administrator (Institutional Clients) at
Investec Asset Managers, Chief of Staff at the Ministry of Communications and
Manager (Office of the CEO) at Sentech Ltd. She is a co-founder and executive
director of African Footprint Investment Holdings (Pty) Ltd ("AFIH"), an
investment holding company that is wholly black women owned and managed. Ms.
Sampson represents AFIH on the boards of Tellumat (Pty) Ltd, BD Sarens (Pty)
Ltd and Lefatshe Technologies (Pty) Ltd. She is also a member of the Sentech
Educational Fund Advisory Board and the board of the National Electronic
Institute of South Africa (Nemisa). Ms. Sampson has been a director of Anooraq
since September 2004 and is not a director of any other public companies.
RONALD W. THIESSEN, CA - Director
Ronald Thiessen is a Chartered Accountant with professional experience in
finance, taxation, mergers, acquisitions and re-organizations. Since 1986, Mr.
Thiessen has been involved in the acquisition and financing of mining and
mineral exploration companies. Mr. Thiessen is employed by Hunter Dickinson
Services Inc., a company providing management and administrative services to
several publicly-traded companies and focuses on directing corporate
development and financing activities. He is also a director of Hunter Dickinson
Services Inc.
Mr. Thiessen is, or was within the past five years, an officer and/or director
of the following public companies:
Company Positions Held From To
Anooraq Resources
Corporation Director April 1996 Present
President and
Chief Executive Officer September 2000 August 2007
Amarc Resources Ltd. Director September 1995 Present
President and
Chief Executive Officer September 2000 Present
Continental Minerals
Corporation Director November 1995 Present
President and
Chief Executive Officer September 2000 January 2006
Co-Chairman January 2006 Present
Detour Gold Corporation Director and Chairman July 2006 Present
Farallon Resources Ltd. Director August 1994 Present
President and
Chief Executive Officer December 1999 September 2004
Co-Chairman September 2004 December 2005
Chairman December 2005 Present
Great Basin Gold Ltd. Director October 1993 Present
President and
Chief Executive Officer September 2000 December 2005
Co-Chairman December 2005 November 2006
Chairman November 2006 Present
Northern Dynasty
Minerals Ltd. Director November 1995 Present
President and
Chief Executive Officer November 2001 Present
Rockwell Diamonds Inc. Director November 2000 September 2007
President and CEO November 2000 September 2006
Chairman September 2006 September 2007
Taseko Mines Limited Director October 1993 Present
President and
Chief Executive Officer September 2000 July 2005
Co-Chairman July 2005 May 2006
Chairman May 2006 Present
Tri-Gold Resources Corp. Director July 1992 December 2006
TREVOR THOMAS, LLB - Assistant Secretary
Trevor Thomas has practiced in the areas of corporate commercial, corporate
finance, securities and mining law since 1995, both in private practice
environment as well as in house positions and is currently in-house counsel for
Hunter Dickinson Services Inc. Prior to joining Hunter Dickinson Services Inc.;
he served as in house legal counsel with Placer Dome Inc.
Company Positions Held From To
Anooraq Resources Corporation Assistant
Secretary November 2007 Present
Amarc Resources Ltd. Secretary February 2008 Present
Continental Minerals Corporation Secretary February 2008 Present
Farallon Resources Ltd. Secretary December 2007 Present
Northern Dynasty Minerals Ltd. Secretary February 2008 Present
Rockwell Diamonds Inc. Secretary February 2008 Present
Taseko Mines Limited Secretary July 2008 Present
Conflicts of Interest
Effective May 1, 2005, all employees of Pelawan were absorbed into the Company.
Between that date and the finalization of the RTO there was an interim resource
sharing arrangement between the Company and Pelawan in relation to the South
African office and activities of the Company, which could have represented a
potential conflict of interest for two of the directors of the Company, namely
Messrs. Motsisi and Motaung, who are related to Pelawan. Under this resource
sharing arrangement, the Company reimbursed Pelawan in respect of certain of
its overhead expenditures, subject to fixed budget arrangements.
Directors and officers of Anooraq may from time to time serve as directors of
and have an interest, either directly or indirectly, in other companies
involved in natural resource exploration and development. As a result, a
director of Anooraq may be presented, from time to time, with situations, which
give rise to an apparent conflict of interest. On any conflict situation, a
director may abstain from voting on resolutions of the Board of Directors that
evoke such conflict in order to have the matter resolved by an independent
Board, or the situation may be presented to the shareholders of Anooraq for
ratification. In any event, the directors of Anooraq must, in accordance with
the laws of British Columbia, act honestly and in good faith and in the best
interests of Anooraq, and must exercise the care, diligence and skill of a
reasonably prudent person in dealing with the affairs of Anooraq.
ITEM 12. AUDIT COMMITTEE
The Audit Committee`s Charter
The text of the Company`s Audit Committee charter is available on www.sedar.com
and its corporate governance manual on the company`s website
(www.anooraqresources.com).
Composition of the Audit Committee
As at the date hereof, the members of the Audit Committee of the Company are
Anu Dhir, Fikile De Buck, David Elliott and Wayne Kirk, all of whom are
financially literate and all of whom are "independent" within the meaning
Multilateral Instrument 52-110 - Audit Committees.
Relevant Education and Experience
In addition to each member`s general business experience, the education and
experience of each Audit Committee member that is relevant to the performance
of his responsibilities as an Audit Committee member is as follows:
Fikile Tebogo De Buck is a Fellow of the Association of Chartered Certified
Accountants FCCA (UK) and has extensive experience in business operations and
financial affairs with companies in the mining sector. She holds a BA degree in
Economics and Accounting from the University of Swaziland. Ms De Buck is
currently a non-executive director of Harmony Gold Mining Company Ltd and is a
member of various board committees of Harmony including the Audit Committee.
She has also served in various positions at the Council for Medical Schemes in
South Africa.
Anu Dhir holds a Bachelor of Arts degree from the University of Toronto and a
Juris Doctor (professional graduate law degree) from Quinnipiac University in
Hamden, Connecticut. Ms. Dhir has extensive experience in international
business, operations and legal affairs in private equity and publicly-held
companies in the mining, oil and gas, and technology sectors. Ms. Dhir is
currently the Vice President, Corporate Development of Katanga Mining Limited.
David Elliott has a strong and diverse background as a public accountant and
corporate executive. He graduated from the University of British Columbia with
a Bachelor of Commerce degree and acquired a Chartered Accountant designation
in 1973 with KPMG LLP. Mr. Elliott joined BC Sugar Company in 1976, working in
a number of senior positions before becoming President and Chief Operating
Officer of the operating subsidiary, Rogers Sugar, in 1995. In 1997, he joined
Lantic Sugar in Toronto as Executive Vice President. He has served as Chairman
of the Canadian Sugar Institute. He became President and Chief Operating
Officer of the International Group based in St Louis Missouri in 1999, a
company which was involved with food distribution as well as manufacturing and
distribution of pet and animal feed. Since 2002, he has been working with
companies developing e-mail and data management services.
Wayne Kirk holds an undergraduate degree in economics from the University of
California, Berkeley, and a law degree from Harvard University. He was called
to the bar in California in 1969. Mr. Kirk was an associate and partner in the
San Francisco law firm of Thelen, Marrin, Johnson & Bridges from 1969 until
1992, specializing in corporate and mining law. He was Vice President, General
Counsel and Corporate Secretary of Homestake Mining Company from 1992 until
Barrick Gold Corporation`s acquisition of Homestake in December 2001. Mr. Kirk
was a director of Prime Resources Group Inc. (gold mining) (TSX;
AMEX) from February 1996 until January 1999. From March 2002 until his
retirement in July 2004, he was special counsel to the New York/San Francisco
law firm of Thelen Reid & Priest LLP.
Pre-Approval Policies and Procedures
The following procedures govern the engagement of audit and non-audit services
to be provided by the Company`s auditors:
1. The Audit Committee will approve once per fiscal year those services which
are pre-approved for the fiscal year, and the maximum amounts which may be
incurred on such services.
2. Additions to the schedule of pre-approved audit and non-audit services may
be approved at any time by a majority of the members of Audit Committee. Any
such approvals will be reported by the approving members to the full Audit
Committee at its next meeting.
3. The Company`s auditors are required to provide an independence letter once
per fiscal year.
ITEM 13. LEGAL PROCEEDINGS AND REGULATORY ACTIONS
The Company is not involved in any outstanding litigation or legal proceedings
and to the knowledge of the management of the Company, no material legal
proceedings involving the Company or its subsidiaries are contemplated.
ITEM 14. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
To the knowledge of management of Anooraq, no insider or nominee for election
as a director of Anooraq had any interest in any material transaction during
the financial year ended December 31, 2008 or has any interest in any material
transaction in the current year except as herein disclosed.
Pelawan Settlement and Amending Agreement
In December 2006, the Company entered into a Settlement Agreement with Pelawan
to waive the deemed dilutive financing contemplated in the 2004 share exchange
agreement. Under the terms of the Settlement Agreement:
(i) Anooraq issued 36 million common shares ("Adjustment Consideration Shares")
to Pelawan as consideration for the settlement (completed in June 2007).
(ii) Anooraq issued to Pelawan share purchase warrants for the purchase of 167
million common shares in Anooraq ("BEE Warrants"). The BEE Warrants were
exercisable until December 31, 2008. The BEE Warrants can be exercised at the
higher of (a) $1.35 if exercised on or before December 31, 2007 or $1.48 if
exercised after December 31, 2007 or (b) at a price that is 50% less than the
price per Anooraq common share payable by arms length parties under an equity
financing undertaken by the Company that either raises an amount of at least
$98.4 million or is undertaken pursuant to a material transaction (a
"Concurrent Financing").
(iii) From the date of issue (June 14, 2007) of the Adjustment Consideration
Shares to Pelawan (i) or as a result of the exercise of any of the BEE Warrants
up to the closing date of the Concurrent Financing, the common shares issued to
Pelawan pursuant thereto will be subject to a lock up arrangement and Pelawan
will not be entitled to dispose of any of these shares, save for the exemption
referred to in (iv) below and the payment of taxes. After the closing date of
the Concurrent Financing, the disposal of such shares shall remain subject to
the original lock up agreement entered into between Pelawan and Anooraq under
the terms of the original RTO transaction ("the BEE Lock Up"), which is the
earlier of September 29, 2010 or twelve months after the commencement of
commercial production from the Ga-Phasha Project.
(iv) Anooraq granted Pelawan an exemption to the BEE Lock Up for the purposes
of facilitating Pelawan`s financing of the exercise of the BEE Warrants. In the
event that Pelawan exercises any BEE Warrants, Pelawan shall, in its sole
discretion, be entitled to dispose that number of common shares up to 25% (or
such greater amount as is required to facilitate the financing of the exercise
of the BEE Warrants) of the aggregate common shares issued to Pelawan pursuant
to such exercise, provided that all of the proceeds received by Pelawan from
such disposal shall be applied by Pelawan to support the financing of the
exercise of the BEE Warrants and reasonable expenses related to such exercise.
(v) On the occurrence of a Concurrent Financing, Pelawan shall be obliged to
exercise the BEE Warrants to ensure that, at a minimum; Anooraq retains its
status as a 52% controlled Black Economic Empowerment ("BEE") company, in
compliance with undertakings given by Pelawan and the Company in favour of the
South African Reserve Bank and Anglo Platinum Limited.
On December 20, 2007, the Company entered into an amending agreement (the
"Amending Agreement") with the Pelawan Trust to amend the exercise procedure of
167,000,000 share purchase warrants held by the Pelawan Trust, to allow Pelawan
to finance the exercise of the BEE Warrants by way of a bridge loan "from Rand
Merchant Bank ("RMB"). Pursuant to the Amending Agreement, the Pelawan Trust
conditionally exercised the Warrants on December 20 2007, by depositing an
escrowed amount equal to the aggregate exercise price for the Warrants ($225
million or ZAR 1.6 billion) into an interest bearing account (the "Deposit
Account") of RMB, to be released upon the satisfaction of certain release
conditions
The release conditions were not satisfied by December 31, 2008 and Anooraq did
not receive the exercise proceeds of the BEE Warrants or the interest earned
thereon by that date. As a result, the BEE Warrants expired on December 31,
2008 and the Company did not issue 167 million common shares to Pelawan as
contemplated.
Management Contracts
Hunter Dickinson Services Inc. ("HDSI") is a private company owned equally by
several public companies, one of which is Anooraq. HDSI provides geological,
corporate development , administrative and management services to, and incurs
third party costs on behalf of the Company on a full cost recovery basis,
pursuant to an agreement dated December 31, 1996. HDSI is one of the largest
independent mining exploration groups in North America and has supervised
mineral exploration projects in Canada (British Columbia, Manitoba, Ontario,
Quabec, Yukon and Northwest Territories) and internationally in the United
States, Nevada, Mexico, China and South Africa. HDSI allocates the cost of
staff input into projects based on the time records of involved personnel.
Costs of such personnel and third party contractors are billed to the
participating public companies on a full cost recovery basis (inclusive of HDSI
staff costs and overhead) for amounts which are considered by the Company
management to be at a cost that is competitive with arm`s-length suppliers. The
shares of HDSI are owned by each of the participating public corporations
(including the Company) for as long as HDSI`s services are retained by such
participating company. However a participant surrenders its single share of
HDSI at the time of termination of the standard form of services agreement. The
agreement can be cancelled on 30 days` notice. HDSI is managed by some of the
directors of the Company, who are also directors of the other corporate
participants in the arrangements with of HDSI.
Pelawan is a significant shareholder of the Company and has certain directors
in common with the Company. Pelawan became a majority shareholder on September
29, 2004. During the year ended December 31, 2008 and 2007, Pelawan did not
provide any services to the Company.
ITEM 15. TRANSFER AGENTS AND REGISTRARS
Computershare Trust Company of Canada (Vancouver) and Computershare Investor
Services 2004 (Pty) Ltd. (Johannesburg) are the co-transfer agents and co
-registrars for the common shares of Anooraq.
ITEM 16. MATERIAL CONTRACTS
Except for contracts entered into in the ordinary course of business, the only
material contracts entered into by Anooraq in the financial year ended December
31, 2008, or before the financial year ended December 31, 2008 but which are
still in effect, are the following:
(i) the Pelawan RTO Share Exchange Agreement, as described under the heading
"The Acquisition - Description of the Share Exchange Agreement" in the August
2004 Circular; and
(ii) The Pelawan RTO Shareholders Agreement, as described under the heading
"The Acquisition - Description of the Shareholders Agreement" in the August
2004 Circular.
(iii) The Pelawan Settlement Agreement, as described under the heading above
"Pelawan Settlement and Amending Agreement"
(iv) Term Loan Agreement between Rustenburg Mines Limited and Plateau Resources
(Pty) Limited signed on October 31, 2006
(v) Phase 3 Implementation Agreement amongst RPM, Plateau and Richtrau No 179
(Proprietary) Limited (the "Phase 3 Implementation Agreement")
(vi) Holdco Sale Of Shares Agreement amongst Plateau, RPM and Anglo Platinum
(vii) Sale of Rights Agreement amongst RPM, Plateau and Richtrau No. 207
(Proprietary) Limited
(viii) Umbrella Services Agreement amongst Anglo Platinum, Anooraq and Richtrau
No. 179 (Proprietary) Limited
(ix) Term Loan Agreement between Rustenburg Mines Limited and Plateau Resources
(Pty) Limited signed on November 23, 2008
ITEM 17. INTERESTS OF EXPERTS
D.B. Gray, Pr.Sci.Nat., and B.C. Rip, Pr.Eng., FSAIMM, are persons
(a) who are named as having prepared, or co-prepared, a report described in a
filing, or referred to in a filing, made under National Instrument 51-102 by
the Company during, or relating to, the Company`s most recently completed
financial year; and
(b) whose profession or business gives authority to the report made by him.
Mr. Gray and Mr. Rip are persons whose interests in the common shares of the
Company, directly or indirectly, or through stock options, represent less than
1% of the Company`s outstanding share capital.
ITEM 18. ADDITIONAL INFORMATION
Additional information relating to the Company may be found on SEDAR at
www.sedar.com.
Additional information, including directors` and officers` remuneration and
indebtedness, principal holders of the Company`s securities and securities
authorized for issuance under the Company`s equity compensation plans, where
applicable, is contained in the May 2008 Management Information Circular.
Additional financial information is provided in the Company`s consolidated
financial statements for the year ended December 31, 2008 and its management`s
discussion and analysis in relation thereto.
The following documents can be obtained upon request from the Company`s
Shareholder Communication Department by calling +1 (604) 684-6365:
(i) this AIF, together with any document incorporated herein by reference;
(ii) any interim financial statements filed with Securities Commissions
subsequent to the audited financial statements for the Company`s most recently
completed financial year; and
(iii) the May 2008 Circular; and
(iv) the May 2007 Circular.
The Company may require the payment of a reasonable charge from persons, other
than security holders of the Company, requesting copies of these documents.
ITEM 19. CONTROLS AND PROCEDURES
Internal Controls over Financial Reporting Procedures
The Company`s management is responsible for establishing and maintaining
adequate internal control over financial reporting. The Company`s internal
control system was designed to provide reasonable assurance to the Company`s
management and the board of directors regarding the preparation and fair
presentation of published financial statements. Internal control over financial
reporting includes those policies and procedures that: (1) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the Company, (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts
and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company, and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company`s assets that could have a
material effect on the financial statements. All internal control systems, no
matter how well designed, have inherent limitations.
Therefore, even those systems determined effective can provide only reasonable
assurance with respect to financial statement preparation and presentation.
The Company`s management, with the participation of the Chief Executive Officer
and the Chief Financial Officer, has evaluated the effectiveness of internal
control over financial reporting based on the framework and criteria
established in Internal Control - Integrated Framework, issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, our management has concluded that internal control over financial
reporting was effective as of December 31, 2008 to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements in accordance with GAAP.
There have been no significant changes in internal controls over financial
reporting during the fiscal period ended December 31, 2008 that could have
materially affected or are reasonably likely to materially affect the Company`s
internal control over financial reporting.
Disclosure Controls and Procedures
Disclosure controls and procedures are those controls and procedures that are
designed to ensure that the information required to be disclosed in the filings
under applicable securities regulations is recorded, processed, summarized and
reported within the time periods specified. As at December 31, 2008, under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of
the effectiveness of the design and operation of the Company`s disclosure
controls and procedures. Based on this evaluation, the Chief Executive Officer
and the Chief Financial Officer have concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures were
effective.
There have been no significant changes in the Company`s disclosure controls and
procedures during the fiscal period ended December 31, 2008 that could have
materially affected or are reasonably likely to materially affect the Company`s
disclosure controls and procedures.
ITEM 20. AUDIT COMMITTEE, COD E OF ETHICS, ACCOUNTANT FEES AND EXEMPTIONS
A. AUDIT COMMITTEE FINANCIAL EXPERT
The board of directors has determined that Mr. David Elliott is a member of the
audit committee of the Company who qualifies as an audit committee "financial
expert" based on his education and experience. Mr. Elliott is "independent", as
that term is defined by the rules of the NYSE Amex. Mr. Elliott is an
accredited Chartered Accountant in Canada.
B. CODE OF ETHICS
The Company has adopted a code of ethics that applies to all personnel of the
Company. A copy of the Code of Ethics is attached to the Company`s Corporate
Governance Manual, which is available on the Company`s website at
www.anooraqresources.com.
C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table discloses the aggregate fees billed for each of the last
two fiscal years for professional services rendered by the Company`s audit
firm, KPMG LLP, for various services.
Year ended Year ended
Services: December 31, 2008 December 31, 2007
Audit Fees (1) $ 311,500 $ 135,000
Audit-Related Fees (2) 42,500 32,500
Tax Fees (3) - -
All Other Fees - -
$ 354,000 $ 167,500
Note:
(1) Audit fees consist of fees billed for the annual audit services engagement
and other audit services, which are those services that only the Company`s
external auditor reasonably can provide, and include audits, interim reviews,
comfort letters and consents, other attest services related to the audit or
regulatory filings, and services associated with the filing of documents with
regulatory authorities.
(2) Audit-related fees consist of fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of the Company`s financial statements or that are traditionally performed by
the external auditor, and include consultations related to financial accounting
and reporting matters and standards, and other periodic reports.
(3) Tax fees include fees billed for tax compliance services, advice on
original and amended tax returns and claims for refund, tax consultations (such
as assistance in connection with tax audits and appeals), tax advice related to
mergers and acquisitions, transfer pricing, tax planning services and
expatriate tax planning and services.
From time to time, management of the Company recommends to and requests
approval from the audit committee for audit and non-audit services to be
provided by the Company`s auditors. The audit committee routinely considers
such requests at committee meetings, and if acceptable to a majority of the
audit committee members, pre-approves such non-audit services by a resolution
authorizing management to engage the Company`s auditors for such non-audit
services, with set maximum dollar amounts for each itemized service.
During such deliberations, the audit committee assesses, among other factors,
whether the services requested would be considered "prohibited services" as
contemplated by the US Securities and Exchange Commission, and whether the
services requested and the fees related to such services could impair the
independence of the auditors.
ITEM 21. OFF BALANCE SHEET ARRANGEMENTS
None.
ITEM 22. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Payments due by period
Less than
Total one year 1 to 3 years
Contractual obligation Nil Nil Nil
Long term debt obligations (1) 18.9M 4.2M 14.7M
Operating lease obligations (2) 1.5M 0.3M 1.2M
Purchase obligations Nil Nil Nil
Other Nil Nil Nil
Total Nil Nil Nil
Payments due by period
More than 5
3-5 years years
Contractual obligation Nil Nil
Long term debt obligations (1) Nil Nil
Operating lease obligations (2) Nil Nil
Purchase obligations Nil Nil
Other Nil Nil
Total Nil Nil
The term purchase obligation means an agreement to purchase goods or services
that is enforceable and legally binding on the registrant that specifies all
significant terms, including: fixed or minimum quantities to be purchased;
fixed, minimum or variable price provisions; and the approximate timing of the
transaction.
(1) The Company`s long term debt obligations are denominated in South African
Rand ("ZAR"). Payments and settlement on the obligation is denominated in ZAR.
Long term obligations have been presented at an exchange rate of 1 Canadian
dollar = 7.63 ZAR.
(2) The Company has routine market-price leases on its office premises in
Johannesburg, South Africa.
Date: 03/04/2009 07:33:03 Produced by the JSE SENS Department.
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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,
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