| Fri 2 Feb 2001, 0:00 | | Gilboa Invest In Mining Sector |
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GILBOA PROPERTIES LIMITED
Incorporated in the Republic of South Africa.
Registration number: 1986/004649/06
(Gilboa)
Announcement in respect of the acquisition by Gilboa of the controlling
interest in East African Gold and Land Extraction Company Ltd and other assets.
1. INTRODUCTION
With reference to the cautionary announcement dated 11 January 2001 it is
hereby announced that agreements have been concluded in terms whereof Gilboa
acquires the controlling shareholding and loan accounts in the following
companies:
1.1 East African Gold and Land Exploration Company Ltd ("Eagle"); and
1.2 Afruex Trading (Proprietary) Ltd. ("Afruex")
- Eagle is a company incorporated in the United Republic of Tanzania
(Tanzania) and has been incorporated with a view to conclude a joint venture
agreement with The People's Defence Force of Tanzania to organise, regulate and
protect the gold and diamond mining activities in the major gold and diamond
producing regions of Tanzania.
- Afruex is a privately owned company that has been successful in the
acquisition of mineral and mining projects and combining the efforts of leading
geologist and mining engineers in the R S A but also as far afield as Zambia,
Namibia en Zimbabwe.
2. OBJECTIVES OF GILBOA
2.1 To date Gilboa's principal business has been investment in and management
of real estate. In terms of the stated policy of the board of directors of
Gilboa, as reported in the Annual Financial Statements 2000, the company has
decided to diversify into more dynamic and lucrative businesses.
2.2 Gilboa now has an opportunity to diversify into gold, diamond and base
metals in the R S A and other African Countries.
2.3 Gilboa has concluded agreements to acquire 51% of the authorised share
capital of "Eagle" and "Afruex". However, these agreements are subject to the
ratification by the boards of directors of the constituent parties.
2.4 The objectives of Gilboa will be amended and extended to allow the company
to conduct the business of a mining and mineral exploration company.
3. DIRECTORS AND MANAGEMENT
3.1 The acquisitions as are more fully described in 4 below will not result in
the change of control of Gilboa. The board of directors will be extended and
suitable persons from the mining and mining finance fraternity have been
invited to join the board.
3.2 Negotiations have been concluded with senior management personnel to head
the mine management team. These appointments will be announced as soon as all
appointees have formally accepted the invitations to join Gilboa.
3.3 The new board of Gilboa will be announced once the agreements of the
acquisitions have been ratified and consummated.
4. PROJECTS TO BE ACQUIRED
4.1 Eagle
The East African Gold and Land Extraction Company Limited is a company
incorporated in the United Republic of Tanzania in terms of the Companies
Ordinance (Cap 212) under Reg No 40363 and holds the following:
- A valid Business Licence Tax Clearance Certificate no 264510 issued by the
Tanzania Revenue Authority and
- A valid Gold Dealers License no DL 242/2000 issued by the Minister for
Energy and Minerals of Tanzania.
- Eagle has applied for a similar licence to the Minister of Energy and
Minerals to also deal in diamonds, gems and other minerals.
4.1.1 The properties
The "properties" on which the planned mining operations will be conducted on
behalf of the parties, are the following:
4.1.1.1 Kiabakari in the Musona District with proven gold deposits as more
fully described in the following documents:
Special Mining Licence (SML);
Title Deeds (No and Description);
Size, Area and Borders;
Locality Plan;
Site Plans with Measurements and Lay-Out of existing buildings and structures.
4.1.1.2 Kizumbi in the Shinyanga District with proven diamond and gold
deposits as more fully described in the following documents:
Special Mining Licence (SML);
Title Deeds (No and Description)
Size, Area and Borders;
Locality Plans;
Site Plans with Measurements and Lay-Out of existing buildings and structures.
4.1.2 Mining Rights
The TPDF hold certain mineral and mining rights on the properties mentioned in
clause 4.1 above and more fully described in the Special Mining Licences, which
was granted to the TPDF by the Central Government of the United Republic of
Tanzania in accordance with the provisions of Section 39 of the Mining Act,
1998 ("Mining Act") .
4.1.3 The Rights
The rights referred to is the exclusive right to mine, search for, dig, mill,
process, transport, use and/or market gold, diamonds, various gems, and other
precious stones as well as minerals on the properties. The rights also include
the purifying, transport, marketing and export of the above mentioned precious
metals and stones.
The SML also includes water permits to extract water from boreholes for the
proposed mining operations.
4.2 Eagle Projects
The Eagle Projects include:
4.2.1 Kiabakari gold deposits in the Musoma district of Tanzania and the gold
sourcing agreements with a multitude of artisinal gold mines.
The take-over of existing ore-milling plant and the establishment of an
ore-milling, beneficiation and refinery plant.
The establishment of a gold and commodity trading and exporting subsidiary.
4.2.2 Kizumbi diamond and gold deposits in the Shinyanga district of Tanzania.
The establishment of kimberlite diamond mines.
To establish alluvial diamond diggings.
The establishment of a central diamond buying organisation to organise,
regularise and control the diamond production of legal and clandestine diamond
diggings throughout the region and which will also oversee the selling of
diamond production on international markets.
4.2.3 The establishment of a central administrative organisation from where
mineral exploration projects could be launched throughout Tanzania and
neighbouring territories.
4.3 The Afruex trading projects
These projects include;
4.3.1 The Monestary Diamond Mine in the Marquard district of the Free State
Province Republic of South Africa.
The infrastructure of a complete D M S plant is capable of the mining milling
and treating of 30 000 t. of kimberlite ore, per month.
4.3.2 Copperfields
This mining project is located in the Soutpansberg district of the Northern
Province of the R S A and comprises some 82 million t. of copper bearing ore.
Mining operations will entail the mining, the milling and treating of some 250
000 t. of ore per month, to a concentrate of >54%.
5. INFORMATION ON WHICH THE INFORMATION IS FOUNDED
5.1 Eagle Projects
5.1.1 The licences and concessions granted to The People's Defence Force (of
Tanzania) (TPDF) and which extend the area of influence of "Eagle" over a major
region of gold, diamonds and other mineral deposits.
5.1.2 The Joint Venture Agreement concluded between Eagle and TPDF, which
determines the parameters, rights, obligations and constraints imposed on Eagle
and of the potential of the projects.
5.1.3 Kiabakari Geological Reports, which is a compendium of geological and
factual information, compiled from reports of consulting geologists, reports by
various governmental departments, historical and current production data.
5.1.4 Forecasts done by members of the Joint Venture and TPDF based on
observations and investigations done in situ, of the current gold and diamond
production in these regions.
5.1.5 Current trade (legal and clandestine) in gold and diamonds by the local
miners and diggers, who will form part of the mining development plan of the
Joint Venture and Eagle.
5.1.6 It is recorded that these reports and information have not been verified
by our consulting team and have been taken at face value. It is recommended
that a complete and thorough geological investigation be made and a business
plan and feasability study done on each one of these projects. The
confirmation of the Eagle agreement is subject to a due diligence investigation
5.1.7 Gilboa and the J V members are competent to manage or have ready access
to competent Management to manage these projects.
5.2 Afruex Trading Project
5.2.1 Monestary Diamond Mine
The geological and historical information on the diamond mine, is copious and
well documented. The geological reports have been prepared by some of the most
competent geologists in the R S A.
The historical information on production and quality of diamonds is reflected
in the Synopsis of information contained in this document in 7.2
5.2.2 Tsipise Copperfields
A comprehensive study has been made by Gilboa's consulting geologist. His
report confirms the exposition as set out in the synopsis of the information as
set out in 7.3
6. CONSIDERATION FOR AND OTHER CONDITIONS PERTAINING TO THE ACQUISITIONS
6.1 The purchase price to be paid to the Vendors of the acquisitions are being
settled with the issue and allotment of shares by Gilboa.
The authorised share capital under the control of the directors, will be
allotted and issued to the vendors as follows:
- The members of Eagle for the sale of 51% of the equity of Eagle 42 000 000
Gilboa shares
- To Afruex for the sale of 51% of the equity of Afruex 143 000 000 shares.
The payment to Afruex will incorporate a portion of the payment to the funders
of the Projects
- To the promotors and professional team, 28 100 000 Gilboa shares
These shares are being issued at 12 cent per share, pari passu with all other
Gilboa shares.
6.2 The acquisition agreements are subject to a due diligence investigation
and reports by competent persons.
The agreements will lapse should the following conditions not be met before 28
February 2001. (or such later date as the parties may agree upon).
6.2.1 The ratification of the agreements by the board of directors of Gilboa,
Eagle and Afruex;
6.2.2 The consent of the J S E
6.2.3 The consent of the Securities Regulatory Panel (S R P).
6.2.4 Waiver of the rights of shareholders at a general meeting of the rights
to receive an offer tot minorities in terms of paragraph 8.7 of the rules of
the S R P.
6.2.5 Consent of the Competition Board in as much as it may be required.
6.3 VENDORS
The following of the vendors in respect of Eagle :
Pieter Andre Venter;
David Jacobus Pieterse;
Both are resident in Tanzania.
In respect of Afruex:
Pieter van den Berg;
Scholtzenheimer Trust;
J P van Niekerk;
Spiros Aspiotes (resident in Lichtenstein);
Fourtmill Trust Company Limited (Isle of Man);
7. FINANCIAL IMPLICATIONS OF THE ACQUISITIONS.
The board of Gilboa is not in a position to divulge the financial implications
of the acquisitions as yet. This information will be published as soon as the
accounting auditors have submitted a fair and reasonable report and also report
on the financial implications and forecast on the projects.
8. FUNDING
8.1 The financial requirements have been assessed at R52m. This figure may
change after the completion of a due diligence investigation and planning of
the mining projects have been completed. The financial forecast indicates the
appropriation of the capex.
8.2 The funding will be done in two ways:
- medium term loan agreements are in the process of being concluded with
international financial institutions and to be secured by redeemable
convertable debentures (to be redeemed or converted after the second
anniversary). The amount of the loan agreements is US$7million with an option
to increase the loan to US$11,5mil.
- the issue of shares to the vendors and funders as set out in 6 above
- the present assets of Gilboa or its subsidiaries will not be compromised in
terms of the loan agreements
8.3 These loan agreements are subject to the due diligence investigations and
the competent persons report and a fair and reasonable report by the accounting
auditors on the cost of acquisition and financial forecast of the projects.
- the consent of the R S A Reserve Bank to be obtained
- ratification by the board of directors of Gilboa
9. ADVANTAGES OF THE AGREEMENTS FOR THE SHAREHOLDERS OF GILBOA
9.1 Although the issued share capital of Gilboa will be increased from 186 900
000 to 400 000 000 shares, the advantages to the present shareholders of Gilboa
are manifold.
- The activities of the company will be transformed from a long term
investment to a dynamic and high yielding enterprise
- The shareholders will gain the opportunity to participate in the R S A and
in Tanzania in mining ventures with unprecedented potential.
- The Eagle project will provide an opportunity not only to empower the local
community but also to obtain a foothold in a mineral rich country.
- The growth potential of the Gilboa shares will be twofold: long term asset
accumalation and consistently high sustainable income.
- Gilboa will become the focal point around which the informal gold, diamond
mining and trading activities in Tanzania and adjacent regions will develop.
- Simultaneously, it will obtain a foothold in the South African mining
industry both in precious stones and base metals.
- The present asset base of the company will not be placed on risk: on the
contrary, the derived income from the mining sector will ensure that growth in
long term assets will continue.
10. MINING SECTOR
Application will be made to the J S E and S R P to move the listing to the
Mining Section of the J S E.
11. SHARES ISSUED FOR CASH
The issue of shares to the promotors and the vendors for the finanancing of the
projects is regarded as an issue for cash and will be dealt with accordingly.
12. CAUTION
The shareholders and public are advised to exercise caution when dealing in the
share of Gilboa until such time as the financial effects on Gilboa of the
transactions refereed to the above are announced.
By order of the Board of Directors
2 February 2001
