| Thu 14 May 2009, 15:00 | | AMS/ARQ - Anglo Platinum/Anooraq/ Pelawan - Announcement Relating to the |
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AMS ARQ
ANANP ARQ
AMS/ARQ - Anglo Platinum/Anooraq/ Pelawan - Announcement Relating to the
revised terms of the proposed Black Economic Empowerment transaction
between Anglo Platinum, Pelawan and Anooraq
Anglo Platinum Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1946/022452/06)
(ISIN: ZAE000013181)
(Share Code: AMS)
("Anglo Platinum")
Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
Share code: ARQ
ISIN: CA03633E1088
("Anooraq")
Pelawan Investments (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2002/017920/07)
("Pelawan")
ANNOUNCEMENT RELATING TO THE REVISED TERMS OF THE PROPOSED BLACK ECONOMIC
EMPOWERMENT TRANSACTION BETWEEN ANGLO PLATINUM, PELAWAN AND ANOORAQ
1. Introduction
The boards of directors of Anglo Platinum, Pelawan, Anooraq`s controlling
shareholder, and Anooraq (collectively "the Parties"), in a joint
announcement released on 4 September 2007, announced details of a proposed
empowerment transaction ("the Transaction") involving the acquisition by
Anooraq of an effective 51% of the Lebowa Platinum Mine ("Lebowa") together
with an additional 1% controlling interest in the Parties` current joint
venture projects, namely the Ga-Phasha, Boikgantsho and Kwanda projects
(collectively "the Project Assets").
Since the end of the third quarter of 2008, the deterioration of global
economic conditions has resulted in a weakening of platinum group metal
("PGM") prices and high volatility in commodity-focused share prices. The
deterioration in credit and equity market conditions has also increased the
cost of obtaining capital and limited the availability of funds. Due to
this deterioration of market conditions, a complete review of the Lebowa
long-term plan and project pipeline, as well as the key commercial terms
for the Transaction, was initiated jointly by the Parties in the fourth
quarter of 2008.
Based on the review process, the consideration payable by Anooraq to Anglo
Platinum ("Transaction Consideration") has been renegotiated, and a revised
Lebowa mining plan has been determined.
To ensure the sustainability of the Transaction, the Parties have
renegotiated the Transaction Consideration from ZAR 3.6 billion to ZAR 2.6
billion, with Anglo Platinum agreeing to re-invest a portion of the
consideration in order to share in expected future equity upside in
Anooraq. The transaction agreements entered into in April 2008 have been
amended to incorporate the revised terms and detailed term sheets regarding
the funding of the Transaction have been entered into. The transaction
agreements and term sheets remain subject to the conditions precedent in
paragraph 4.
The mining plan for Lebowa has been revised to reflect new forecasts for
production of platinum ounces ("oz") in concentrate of 150,000 oz per annum
by 2012. The decrease from the previous forecast of 200,000 oz per annum
reflects the current constrained market conditions, which have also
necessitated the deferral of the Middelpunt Hill UG2 capital expansion
project at Lebowa. Estimated capital expenditure on this project is ZAR 3.2
billion over a four year period. The Parties remain of the view that the
Lebowa resource, together with the mine`s established infrastructure, is of
the highest quality, comprising a significant near surface PGM resource
base, represented by 26 kilometres of continuous strike length along the
Merensky and UG2 reef horizons when combined with Ga-Phasha.
2. Rationale
The Transaction is aligned with the continued commitment of Anglo Platinum
to the transformation of the South African PGM mining landscape through the
sale by Anglo Platinum of mining assets to create a significant and
sustainable, Historically Disadvantaged South African ("HDSA") managed and
controlled PGM producer.
The Transaction is distinguished by the following:
- the creation of one of the largest HDSA managed and controlled PGM
producers;
- substantial transfer of PGM resources into HDSA control, establishing
Anooraq as a material global participant in the platinum industry,
controlling the third largest PGM resource base in South Africa;
- ensuring that Anooraq is a sustainable PGM producer with critical mass
and growth potential;
- substantial vendor funding support from Anglo Platinum to ensure the
sustainability of the Transaction;
- the inclusion of women as meaningful shareholders in line with Anglo
Platinum`s transformation objectives for the mining sector;
- the meaningful participation of communities associated with the
operating mines and from labour sending areas; and
- continued employee participation through a broad-based employee share
trust for eligible employees of Lebowa.
3. Transaction steps
As a preliminary step to the implementation of the Transaction, Anglo
Platinum transferred its 100% interest in Lebowa into a new wholly-owned
subsidiary ("Lebowa Holdco"). In addition, two new corporate entities were
created in order to hold the 50% joint venture interests owned by Anooraq
and Anglo Platinum in Boikgantsho and Kwanda (namely, "Boikgantsho SPV" and
"Kwanda SPV").
The Transaction, which is subject to the fulfilment or waiver of the
conditions precedent detailed in paragraph 4, comprises the following
indivisible and inter-conditional transaction steps:
- Anglo Platinum and Anooraq contribute their respective 50% interests in
Boikgantsho and Kwanda to Boikgantsho SPV and Kwanda SPV, respectively,
in exchange for shares in Boikgantsho SPV and Kwanda SPV;
- Anglo Platinum and Anooraq sell their 50% interests in Ga-Phasha,
Boikgantsho SPV and Kwanda SPV to Lebowa Holdco in return for shares in
Lebowa Holdco such that Lebowa Holdco owns 100% of Lebowa and 100% of Ga-
Phasha, Boikgantsho SPV and Kwanda SPV; and
- Anooraq acquires shares and shareholder loans in Lebowa Holdco from
Anglo Platinum such that Lebowa Holdco is owned 51% by Anooraq and 49% by
Anglo Platinum.
The current and resultant ownership structures can be viewed as part of the
press release the home page of www.angloplatinum.com under "Latest News".
3.1 Transaction funding
The Transaction Consideration of ZAR 2.6 billion will be funded as follows:
- Plateau Resources (Proprietary) Limited, a wholly owned subsidiary of
Anooraq ("Plateau"), has agreed credit-approved financing terms with
Standard Chartered Bank plc ("Standard Chartered") to raise ZAR 750 million
of senior debt funding in terms of the Standard Chartered Debt Facility, of
which ZAR 500 million is immediately available for drawdown and the balance
will be applied to allow an interest and capital repayment holiday during
the first three years whilst the Lebowa mine completes its initial ramp up
stage to 2012. Anooraq will apply ZAR 300 million of the Standard Chartered
Debt Facility in part settlement of the Transaction Consideration. The
balance of the funding received by Plateau from this facility will be used
to settle Anooraq`s transaction costs and repay its existing bridge loan
outstanding to Anglo Platinum.
- The remainder of the Transaction Consideration will comprise a fixed
and variable component, as follows:
- Fixed component: Plateau will raise ZAR 1.2 billion through the issue
of cumulative redeemable "A" preference shares (""A" Prefs") to Rustenburg
Platinum Mines Limited ("RPM", a wholly
owned subsidiary of Anglo Platinum) in terms of the "A" Preference
Share Facility, as detailed in paragraph 3.1.1 below; and
- Variable component: Plateau will raise ZAR 1.1 billion through the
issue of cumulative convertible "B" preference shares (""B" Prefs") to the
Pelawan Finance SPV in terms of the "B" Preference Share Facility, as
detailed in paragraph 3.1.2 below.
In order to ensure the sustainability of Anooraq and Lebowa Holdco, Anglo
Platinum will make two further facilities available to Plateau:
_ an operating cash flow shortfall facility of up to a maximum of ZAR 750
million, which Plateau may utilise to fund its share of any operating
cash flow shortfall that may arise in Lebowa Holdco for the first three
years post closing of the Transaction ("Closing Date"); and
- a standby loan facility up to a maximum of 29/49 of RPM`s attributable
share of the free cash flows from Lebowa Holdco, which Plateau may utilise
to settle any cash flow shortfall that may arise in funding any accrued
and/or capitalised interest and scheduled capital payments on the Standard
Chartered Debt Facility not funded by Plateau`s attributable share of free
cash flows from Lebowa Holdco, for the term of the Standard Chartered Debt
Facility.
Anglo Platinum has further agreed to provide approximately ZAR 150 million
to facilitate the participation of communities and Lebowa employees in the
Transaction (as described in paragraphs 3.2.1 and 3.2.2 below).
Anglo Platinum is willing to provide the additional funding support to
Anooraq due to its continued belief in the fundamental value proposition at
Lebowa and the Project Assets as well as to further its ongoing commitment
to broad-based BEE as a strategic transformation initiative. The overall
impact of these measures is that Anooraq has fully secured financing for
the Transaction, whilst ensuring that it maintains a meaningful and
substantial flow of benefits to HDSAs.
3.1.1 Key terms of the "A" Preference Share Facility
The "A" Prefs will have an initial term of six years from the Closing Date
("Initial Maturity Date"), which can be extended by an additional three
years ("Final Maturity Date"), and attract a preference dividend of 12%
(nominal annual compounded annually). Prior to the Initial Maturity Date,
Plateau will be obliged to undertake a mandatory debt refinance process on
terms and conditions as have been agreed between the Parties and apply as
much of the funding raised from such debt refinancing ("Refinance
Proceeds") as is required to settle as much of the outstanding obligations
owing to Anglo Platinum as possible. Any balance outstanding on the "A"
Preference Share Facility on the Final Maturity Date will become due and
payable in cash.
3.1.2 Key terms of the "B" Preference Share Facility
Anglo Platinum has agreed to reinvest ZAR 1.1 billion of the Transaction
Consideration proceeds into Anooraq through a special purpose financing
vehicle ("Pelawan Finance SPV") established between Anglo Platinum and
Pelawan for this purpose. The Pelawan Finance SPV will subscribe for "B"
Prefs in Plateau.
The "B" Prefs will have a term of nine years from the Closing Date. RPM and
Pelawan will have the right to convert all or some of their "B" Prefs into
115.8 million and 111.6 million Anooraq common shares ("Anooraq Shares")
respectively, which conversion may be effected at any time before the Final
Maturity Date. All of the "B" Prefs will be compulsorily convertible on the
Final Maturity Date. On conversion of all of the "B" Prefs, Anglo Platinum
will have received a 26% direct shareholding in Anooraq and Pelawan will
have diluted its shareholding in Anooraq to 51%, which Pelawan shareholding
will be restricted for sale up until approximately 75% of the Standard
Chartered Debt Facility repayments are scheduled to have been repaid.
3.2 Broad-based participation
3.2.1 Community participation
Anglo Platinum and Anooraq have agreed the key commercial principles in
respect of the involvement of communities associated with Lebowa and
Ga-Phasha and the associated community participation will benefit in excess
of 35,000 HDSAs. The Anooraq Community Participation Trust (the "Community
Trust") has been established for the benefit of the communities interested
in or affected by Anooraq`s operations and Anglo Platinum will contribute
an amount of ZAR 103.8 million to the Community Trust to facilitate this
broad-based empowerment. ZAR 24.5 million will be retained by the Community
Trust to facilitate annual cash distributions to the communities with the
balance of ZAR 79.3 million being used to acquire Anooraq Shares.
3.2.2 Employee participation
An employee share trust ("ESOP Trust"), which is broadly aligned with the
Anglo Platinum Employee Share Participation Scheme ("Kotula Scheme"), will
be provided for all eligible employees of Lebowa and is expected to benefit
approximately 3,700 employees. Anglo Platinum will contribute approximately
ZAR 45.6 million to the ESOP Trust, with approximately ZAR 9.1 million to
be retained by the ESOP Trust to facilitate annual cash distributions to
beneficiaries and the balance of approximately ZAR 36.5 million used to
acquire Anooraq Shares. The final amount to be contributed by Anglo
Platinum to the ESOP Trust will be equal to the value in the Kotula Scheme
accruing to Lebowa employees on the day that the conversion is determined.
The Community and ESOP Trusts will collectively hold approximately 3.1% of
Anooraq following conversion of all the "B" Prefs.
4. Conditions precedent
The implementation of the Transaction is subject, inter alia, to the
fulfilment or, where appropriate, waiver of the following remaining
outstanding conditions precedent:
- Funding agreements (including relevant security arrangements) for the
Standard Chartered Debt Facility as well as Anglo Platinum`s vendor funding
facilities to be entered into and become unconditional;
- Approval by the relevant regulatory authorities, including the South
African Department of Minerals and Energy, the Toronto Venture Exchange
("TSX-V"), the stock exchange operated by JSE Limited ("JSE") and the
New York Stock Exchange AMEX ("NYSE AMEX"); and
- Approval by Anooraq shareholders.
Additional information relating to the Transaction and the financing terms
are disclosed in the announcement to Anooraq shareholders released on SENS
on 14 May 2009.
5. Background information
5.1 Background on Anooraq
Anooraq is engaged in the exploration and development of PGM properties in
the Bushveld Complex and has a long-term objective of becoming a
significant and independent PGM producer in South Africa through organic
and acquisitive growth. Anooraq, through its wholly owned South African
subsidiary Plateau, holds interests in several PGM projects, including the
advanced stage Ga-Phasha and Boikgantsho projects, and the early stage
Kwanda project. All of these projects are currently 50/50 joint ventures
with Anglo Platinum.
Anooraq, incorporated in the Province of British Columbia, Canada, is
currently 61.8% owned and controlled by Pelawan. Anooraq has a primary
listing on the TSX-V and secondary listings on the NYSE AMEX and the JSE
5.2 Background on Pelawan
Pelawan is a 100% HDSA entity and is primarily led by Tumelo Motsisi,
Harold Motaung and Meta Maponya. Pelawan`s shareholder base comprises 15
broad-based BEE entities, including women`s investment groups, which
account for approximately 42% of Pelawan, cultural trusts and Limpopo-based
rural groups within the proximity of Anooraq`s proposed mining activities.
Pelawan is one of the leading mining companies committed to ownership by
women in the mining sector. Women`s interests include Mookodi Trading,
Africa Without Boundaries Mining and Leswika Women`s Investments. Each of
these women`s groups is committed to the advancement of women`s interests
and provides a meaningful contribution to Pelawan at board level.
The proposed transaction with Anglo Platinum will result in a sustainable
PGM producing company, controlled by Anooraq, with the third largest PGM
resource base in South Africa. Pursuant to the Transaction, Anooraq will
achieve its objective of becoming a significant and independent PGM
producer.
5.3 Overview of the Transaction assets
Lebowa is located on the North-Eastern Limb of the Bushveld Complex in
South Africa with annual refined production of 147,600 4E oz (refined
platinum 72,600 oz) in 2008 from its current 91,500 tonnes per month
operation exploiting the Merensky and UG2 reefs. As at 31 December 2008,
Lebowa had proven and probable reserves of 68.38 million tonnes of Merensky
and UG2, containing 10.86 million 4E oz at an average 4E grade of 4.94 g/t,
as well as measured and indicated resources of 233.7 million tonnes of
Merensky and UG2 containing some 47.77 million 4E oz at an average 4E grade
of 6.36 g/t* plus significant inferred resources. Lebowa is currently 100%
owned by Anglo Platinum.
Ga-Phasha is also situated on the North-Eastern Limb of the Bushveld
Complex, contiguous to Lebowa, and is at a pre-feasibility stage of
development. Ga-Phasha has significant PGM mineral resources outlined in
the Merensky and UG2 reefs that are open to further expansion, including
138.8 million tonnes of total measured and indicated resources containing
some of 25.6 million 4E oz at an average 4E grade of 5.74 g/t* plus
significant inferred resources.
Boikgantsho, situated on the Northern Limb of the Bushveld Complex, is at
an exploration stage of development. Boikgantsho has indicated resources of
176.6 million tonnes in the Platreef horizon, containing some 7.7 million
3E oz at an average 3E grade of 1.35 g/t* plus significant inferred
resources. Kwanda, situated on the Northern Limb of the Bushveld Complex,
is at a very early stage of development and does not yet have defined
reserves and resources.
*See Information for Anooraq Investors at end of this release
Johannesburg
14 May 2009
Sponsor
Merrill Lynch South Africa (Pty) Limited
For further information please contact:
Anglo Platinum
Anna Poulter
Head of Investor Relations
+27(0)11 373 6683
Anooraq
Philip Kotze / Joel Kesler
+27(0)11 779 6800
www.angloplatinum.com
www.anooraqresources.com
* Information for Anooraq Investors
See May 2009 Technical Report, filed on www.sedar.com. The Mineral Resource
and Reserve estimates were compiled by Anglo Platinum. The following
independent qualified persons, G. Guler, Pr. Eng, FSAIMM, S. de Waal,
Pr.Sci.Nat, and J. Schweitzer, Pr.Sci.Nat, FSAIMM, associates of Deloitte
Mining Advisory Services accepted the estimates with certain qualifications
that are detailed in the abovementioned Technical Report.
The qualified person for the Ga-Phasha mineral resource estimate is Anglo
Platinum`s in-house qualified person for the project, Gordon Chunnett,
Pr.Sci.Nat. In his opinion, the definitions and standards of the SAMREC
Code are substantively similar to the definitions and standards of the
Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM
Standards") which are recognized by the Canadian regulatory authorities and
NI 43-10 and a reconciliation of the resources between the SAMREC Code and
the CIM Standards does not provide a materially different result. There
have been no changes in the Ga-Phasha mineral resources from the October
2007 estimates.
The independent qualified person for the Boikgantsho mineral resource
estimate is G.J. van der Heever, Pr.Sci.Nat. The estimate was conducted in
2004 and no further changes to the estimates have been undertaken.
4E is platinum + palladium + rhodium + gold
3E is platinum + palladium + gold
The TSX Venture Exchange does not accept responsibility for the adequacy or
accuracy of this release.
The New York Stock Exchange AMEX has neither approved nor disapproved the
contents of this press release.
Cautionary and Forward Looking Information
This release includes certain statements that may be deemed "forward
looking statements". All statements in this release, other than statements
of historical facts, that address, future production, reserve potential,
exploration drilling, exploitation activities and events or developments
that Anooraq expects are forward looking statements. Anooraq believes that
such forward looking statements are based on reasonable assumptions,
including the assumptions that: the Transaction will complete; Lebowa will
continue to achieve production levels similar to previous years; Anooraq
will be able to complete its financing strategy on relatively favourable
terms; and the Ga-Phasha and Platreef Project exploration results will
continue to be positive. Forward-looking statements, however, are not
guarantees of future performance and actual results or developments may
differ materially from those in forward looking statements. Factors that
could cause actual results to differ materially from those in forward
looking statements include market prices, exploitation and exploration
successes, changes in and the effect of government policies with respect to
mining and natural resource exploration and exploitation and continued
availability of capital and financing, and general economic, market or
business conditions. Investors are cautioned that any such statements are
not guarantees of future performance and those actual results or
developments may differ materially from those projected in the forward
looking statements. For further information on Anooraq, investors should
review the Company`s annual Form on 20-F with the United States Securities
and Exchange Commission and its home jurisdiction filings that are
available at www.sedar.com.
Information Concerning Estimates of Measured, Indicated and Inferred
Resources
This news release also uses the terms "measured resources", "indicated
resources" and ""inferred resources". Anglo Platinum, Anglo American,
Pelawan and Anooraq advise investors that although these terms are
recognized and required by Canadian regulations (under National Instrument
43-101 Standards of Disclosure for Mineral Projects), the U.S. Securities
and Exchange Commission does not recognize them. Investors are cautioned
not to assume that any part or all of the mineral deposits in these
categories will ever be converted into reserves. In addition, "inferred
resources" have a greater amount of uncertainty as to their existence, and
economic and legal feasibility. It cannot be assumed that all or any part
of an Inferred Mineral Resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of Inferred Mineral Resources may not form
the basis of feasibility or pre-feasibility studies, or economic studies
except for a Preliminary Assessment as defined under National Instrument 43-
101. Investors are cautioned not to assume that part or all of an inferred
resource exists, or is economically or legally mineable.
Date: 14/05/2009 15:00:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
