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MINING AND EQUIPMENT LIMITED ("ASKARI") AND THE GILBOA / INDUSTROTECH
HOLDINGS LIMITED ("IHL") JOINT VENTURE AGREEMENT
GILBOA PROPERTIES LIMITED
(Registration number 1986/004649/06)
("Gilboa")
REFOCUSING GILBOA INTO THE MINING INDUSTRY , THE ACQUISITION OF ASKARI
MINING AND EQUIPMENT LIMITED ("ASKARI") AND THE GILBOA / INDUSTROTECH
HOLDINGS LIMITED ("IHL") JOINT VENTURE AGREEMENT
INTRODUCTION
In the Annual Financial Statements for the year ended 30 June 2000, Gilboa
shareholders were advised that it had been decided that the company would
diversify out of property into fields that were not as long term, nor as
capital intensive as property. Shareholders were also advised that the
company was negotiating to acquire mining interests. In the announcement
dated 9 March 2001, Gilboa shareholders were advised of the acquisition of
Askari group of companies that has interests in gold, platinum and diamond
projects.
The purpose of this announcement is to update shareholders on the progress
being made with the acquisition of Askari and to advise on a joint venture
agreement the company has entered into to exploit certain sea concessions to
mine marine diamonds on the west coast of South Africa
THE ACQUISITION OF ASKARI
The acquisition of 70,7 percent of Askari is subject only to the approval of
shareholders of Askari in general meeting. A circular calling for the
meeting to approve the transaction has been prepared and is currently being
approved by the various regulatory authorities. It is expected that the
circular will be posted to Askari shareholders on or about 10 August 2001.
Should the transaction be approved by the shareholders of Askari, Gilboa
will, in terms of the Securities Regulation Code and Rules, make an offer to
the shareholders of Askari to acquire the shares they hold in Askari. The
purchase consideration will be one Gilboa share for every three Askari
shares tendered. It is Gilboa's intention to invoke the provisions of
section 440K of the Act to compulsorily acquire the shares held by minority
shareholders who do not accept the offer should they acquire 90% or more of
the issued share capital of Askari.
THE IHL / GILBOA JOINT VENTURE RELATING TO THE NAMAGROEN CONCESSIONS
Gilboa has signed a joint venture agreement with IHL securing the right to
mine diamonds in the sea concessions 8a, 9a and 8b on the west coast of
South Africa ("the Namagroen Concessions").
The Namagroen Concessions comprise an area of approximately 180 square
kilometres in the area of Hondeklip Bay. Small-scale diamond recovery
operations since 1984 , recent sampling operations and the fact that
successful mining operations are being conducted on sites adjacent to the
Namagroen Concessions demonstrate the economic potential of the Namagroen
Concessions.
Gilboa proposes to begin mining operations by mining the shallow water
concessions of 8a and 9a in terms of the existing mining license numbers ML
31/93 and ML 32/93 on or before 31 July 2002.
DIAMOND RESOURCES OF THE NAMAGROEN CONCESSIONS
The Competent Persons' Reports, , commissioned by Namagroen , and available
to Gilboa, confirm the existence of specific high-grade diamond target areas
at Barnards Bay ( with proven resources of 84 412 carats and inferred
resources of 650 ,821 carats ) and at Rooiwal Bay (proven resources of 54
413 carats). These proven resources represent 4 to 5 years of production for
one jack-up barge / mining unit and constitute approximately 2% (2.1 square
kilometres) of the combined concession area. Total Resource estimates for
the combined Namagroen Concessions 8a and 9a amounts to 2,67 million carats
in the inferred resource category.
NEW JACK-UP BARGE / MINING UNIT TECHNOLOGY
Gilboa will be employing the recently developed Jackup Barge / Mining Unit
technology to access and mine the two shallow water concessions. The
advantages of the Jackup Barge / Mining Unit technology is that it enables
operations to continue during periods of heavy seas, as well as enabling
more efficient cleaning of the sea floor bedrock because of its stability.
The capital cost of a barge / mining unit is estimated at R10 million and
the first unit is expected to be deployed on the concessions in July 2002.
GILBOA'S OBLIGATIONS AND COMMITMENTS
In terms of the joint agreement with IHL, Gilboa has the following
obligations and commitments:
Gilboa will issue 15 million Gilboa shares to IHL, its associates and
facilitators for the right to mine the concessions , an introductory
commissions as well as for access to and the use of all documents,
inclusive of regional surveyed maps, competent person's reports and
technical data relating to the Namagroen Concession.
Gilboa will be responsible for raising R10 million before 31 December 2001
to be used to fund the manufacture of the first shallow water jack-up barge
/ mining unit and the initial operating costs thereof.
Gilboa will contribute a further R500 000 towards a Rehabilitation Fund
before the commencement of mining operations.
Gilboa will obtain the necessary Public Liability Insurance.
Gilboa will ensure that all the Government regulations and Mining
Requirements, regarding the Namagroen concessions are complied with.
Gilboa will enter into a black empowerment partnership and implement local
training schemes.
RATIONALE FOR ENTERING INTO JOINT VENTURE
The rationale for and advantages that flow from the IHL / Gilboa joint
venture on the Namagroen concessions are:
Immediate and direct access to mineable high priority diamond targets.
A short lead-time to recovery/ production of diamonds.
Elimination of the capital expenditure associated with mineral rights
acquisition and exploration.
Access to shallow-water mining technology.
The opportunity to mine for high quality diamonds which are know to occur in
the West Coast Concessions.
DOCUMENTATION
Documentation is currently being prepared which will describe recent
developments within Gilboa and propose certain amendments to the company's
Memorandum and Articles of Association.
Johannesburg
August 2001
Sasfin Bank Limited KPMG Attorney's
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