| Wed 31 Mar 2010, 8:02 | | PAN - Pan African Resources Plc - Conditional acquisition of a 25% stake in |
|
PAN
PAN
PAN - Pan African Resources Plc - Conditional acquisition of a 25% stake in
the RK1 Consortium which operates a Platinum Group Metals Concentrator Plant,
and cautionary announcement
Pan African Resources Plc
(Incorporated and registered in England and Wales under Companies Act 1985
with registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496
(`Pan African` or the `company`)
CONDITIONAL ACQUISITION OF A 25% STAKE IN THE RK1 CONSORTIUM WHICH OPERATES A
PLATINUM GROUP METALS CONCENTRATOR PLANT, AND CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Pan African has signed a conditional Sale and Purchase Agreement with Ivanhoe
Nickel & Platinum Limited (`Ivanhoe`) to acquire 100% of the issued share
capital Ivanhoe holds in GB Mining UK Limited (`GB Mining`) and RKR Mining
Limited (`RKR Mining`) for a total consideration of ZAR53 million
(approximately GBP4.8 million) (the `Transaction`). The consideration is
payable by Pan African in cash within three business days of the fulfillment
of the last of the conditions precedent set out in paragraph 4 below.
2. STRUCTURE AND NATURE OF BUSINESS
2.1. STRUCTURE
GB Mining and RKR Mining, through their wholly owned South African
subsidiaries, hold a 25% participating interest in the RK1 Consortium.
The other members of the RK1 Consortium are Aquarius Platinum Limited
(`Aquarius`) and Sylvania Resources Limited (`Sylvania`). Aquarius holds a
50% participating interest in the RK1 Consortium through its wholly owned
subsidiary Aquarius South Africa Corporate Services (Pty) Limited whilst
Sylvania holds a 25% participating interest in the RK1 Consortium through its
wholly owned subsidiary, Sylvania South Africa (Pty) Limited.
2.2. CHROMITE TAILINGS RETREATMENT PLANT
The RK1 Consortium owns a Chromite Tailings Retreatment Plant (`CTRP`)
situated at Kroondal on the Western Limb of the Bushveld Complex in the North
West Province of South Africa, which produces Platinum Group Metals (`PGM`)
concentrate.
2.3. CTRP PRODUCTION
The CTRP treats old dump material and current tailings streams derived from
the beneficiation processes employed by nearby chromite mines. Aquarius
operates the CTRP on behalf of the RK1 Consortium in terms of a management
agreement. The CTRP produced 6,824 ounces (246,600 tons at 2.34g/t) of four
Platinum Group Elements (Platinum (60.9%), Palladium (21.9%), Rhodium (16.9%)
and Gold (0.2%) (`4PGM`)) at an average cost of US$332 per ounce for the 12-
month period ended 30 June 2009. The profit before tax attributable to the
CTRP for the same period was approximately ZAR3.09 million (GBP243,040). For
the 12-month period ended 30 June 2008, the CTRP produced 9,849 ounces
(274,000 tons at 4.20g/t) of 4PGM at an average cost of US$360 per ounce.
Attributable profit before tax for the same period was approximately ZAR50
million (GBP4.5 million). The reduction in production from 2008 to 2009 was
mainly the result of variations in the supply of current tailings streams
from the chromite processing plant currently supplying the CTRP and secondly
the relocation of the reclamation facilities on the tailings dump. According
to information in the public domain, significant progress has been made in
securing medium- and long-term tailings supply sources.
3. TRANSACTION RATIONALE
The Transaction will allow Pan African to:
- Gain access to low cost attributable PGM ounces;
- Further strengthen its earnings and operating cash flows;
- Gain further insight into operating skills and technical expertise
with regard to CTRP operations;
- Benefit from anticipated strong medium- and long-term demand for
PGM`s; and
- Potentially unlock further growth opportunities and synergies.
4. CONDITIONS PRECEDENT
The Transaction is subject to the fulfillment of the following conditions
precedent:
- The successful completion of a technical and financial due
diligence investigation by Pan African into the affairs of GB
Mining, RKR Mining, and their wholly owned South African
subsidiaries; and
- Such other statutory and regulatory approvals as are customary to a
transaction of this nature.
It is anticipated that the due diligence investigation by Pan African will
have been completed by the end of April 2010. Shareholders will be kept
informed of the outcome of the due diligence investigation through the
release of further announcements on the JSE Limited (`JSE`) Securities
Exchange News Service (`SENS`) and the London Stock Exchange Regulatory News
Service (`RNS`).
5. PRO FORMA FINANCIAL EFFECTS IN TERMS OF THE LISTINGS REQUIREMENTS OF THE
JSE
The pro forma financial effects of the Transaction will be announced in due
course. Until such time as the pro forma financial effects of the Transaction
have been announced, shareholders are referred to the cautionary announcement
set out in paragraph 7 below.
6. CATEGORISATION OF THE TRANSACTION IN TERMS OF THE LISTINGS REQUIREMENTS
OF THE JSE
The Transaction is deemed to constitute a Category II transaction in terms of
section 9.5 (a) of the Listings Requirements of the JSE.
7. CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the pro forma financial effects of the
Transaction are currently being determined and may have a material effect on
the price of the securities of the company. Accordingly, shareholders are
advised to exercise caution when dealing in the securities of the company
until the pro forma financial effects of the Transaction have been announced
on SENS and RNS.
Jan Nelson, Chief Executive Officer of Pan African, stated:
"This Transaction not only brings PGM ounces to the Group but potentially
unlocks further PGM growth opportunities. The RK1 CTRP is a low cost
platinum operator with high margins. This strategic interest fits well with
Pan African`s objective."
For further information on Pan African Resources please visit the website at
www.panafricanresources.com
Rosebank
31 March 2010
JSE Sponsor
MACQUARIE FIRST SOUTH ADVISERS (PTY) LIMITED
ENQUIRIES
Pan African Resources
Jan Nelson (CEO) +27 (0) 11 243 2900
Nicole Spruijt (Public Relations) +27 (0) 11 243 2900
RBC Capital Markets
Martin Eales /Brett Jacobs +44 (0) 20 7029 7881
Macquarie First South Advisers
Melanie de Nysschen /Thembeka Mgoduso +27 (0) 11 583 2000
St James`s Corporate Services Limited
Phil Dexter +44 (0) 20 7499 3916
Nedbank Capital (Transaction Advisers)
Jan Geenen +27 (0) 11 294 1586
Date: 31/03/2010 08:02:01 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.
