| Fri 9 May 2003, 17:03 | | African Gem Resources Limited - Acquisition |
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African Gem Resources Limited - Acquisition
African Gem Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/007292/06)
Share code: AFG ISIN: ZAE000025540
CUSIP code (Level 1 ADR programme): 008283103
("Afgem")
Acquisition
Afgem has acquired ("the acquisition") the remaining 15% of the issued share
capital of, and loan accounts against, Merelani Mining Limited ("MML"), a
Tanzanian registered subsidiary company of Afgem, from Mr A R Mpungwe for R19
012 500, settled by the issue of 12 675 000 Afgem shares ("the acquisition
consideration"). All acquisition conditions have been satisfied and the
acquisition, which is effective from 1 April 2003, has increased Afgem"s equity
holding in MML to 100%.
MML will be consolidated as a 100% held subsidiary with effect from 1 April
2003, and accordingly, Afgem will benefit from its 100% ownership of MML as
opposed to its 85% ownership prior to the acquisition. MML is the group
subsidiary company domiciled in Tanzania that mines tanzanite, which is then
either sold in rough form to dealers or is cut and polished and then sold to the
jewellery trade.
Mr A R Mpungwe is a director of Afgem and is therefore a related party in terms
of the Listings Requirements of the JSE Securities Exchange South Africa ("the
Listings Requirements"). However, because the acquisition consideration is less
than 10% of Afgem"s market capitalisation and less than 10% of Afgem"s issued
share capital, the acquisition is not classified as a related party transaction.
The acquisition consideration, together with the previous acquisition of 10% of
MML (from a vendor that is not connected or related to Mr A R Mpungwe), which
was announced on SENS on 21 February 2003, results in an aggregate consideration
of approximately R 23.76 million, which is 12.2% of Afgem"s market
capitalisation. In accordance with the Listings Requirements aggregation
requirement, the acquisition is classified as a Category 3 transaction.
Rationale
The acquisition has been made in accordance with Afgem"s aim of simplifying its
existing group structure. At the time of dual listing onto the Dar es Salaam
Stock Exchange, which is expected to be during 2003 or 2004, it is proposed that
a number of Afgem ordinary shares, equivalent to the acquisition consideration,
will be made available to Tanzanian citizens and institutions for subscription.
This will afford Tanzanians the opportunity of acquiring a shareholding in Afgem
and will also ensure that an adequate number of shares is made available for
trading purposes in the Tanzanian secondary market.
Financial effects
If the acquisition had been effected on 1 March 2002 for Afgem"s headline
earnings and earnings per share purposes, or on 30 September 2002 for Afgem"s
net asset value per share purposes, the financial effects of the acquisition for
the interim period ended 30 September 2002 would have been as follows:
Before After the %
the acquisiti change
acquisiti on
on
Earnings and headline
earnings per share 4,23 6,05 43,0%
(cents)
Net asset value per
share (cents) 119 121 1,7%
Johannesburg
9 May 2003
Sponsor Attorneys
HSBC H R Levin
