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RANDGOLD - SHARE SWAP TRANSACTION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
RANDGOLD & EXPLORATION COMPANY LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number 1992/005642/06)
Share code: RNG ISIN: ZAE000008819
Nasdaq trading symbol: RANGY
(`Randgold`)
SHARE SWAP TRANSACTION BETWEEN RANDGOLD AND THE AFRIKANDER LEASE LIMITED
(`AFLEASE`) (`THE SHARE SWAP TRANSACTION`) AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT
1. THE SHARE SWAP TRANSACTION
Shareholders were advised on 12 February 2004 that Randgold had entered
into an agreement with Aflease in terms of which Randgold would subscribe
for 24 million Aflease shares and receive an option to subscribe for
further Aflease shares which would have increased Randgold`s interest in
Aflease to approximately 34%. Subsequent to entering into this agreement,
and due to changing market conditions principally driven by the
strengthening of the rand, Randgold and Aflease have agreed to renegotiate
the terms for future funding of Aflease, and the parties have agreed that:
- Randgold will acquire 94 million Aflease shares in exchange for the
allotment and issue to Aflease of 9,4 million Randgold shares (`the
Randgold shares`) (`the acquisition`). Based on the closing price of
Aflease shares on the JSE Securities Exchange South Africa (`the JSE`)
on 29 July 2004, being the last practicable trading date before the
finalisation of this announcement, the value of the consideration for
the acquisition amounts to approximately R125 million; and
- Randgold will make a R50 million facility available to Aflease which
will be repayable in Aflease shares (`the Randgold loan`). Aflease
will pledge the Randgold shares to Randgold as security for the due
and punctual payment by Aflease to Randgold of all amounts due and
owing by Aflease to Randgold in terms of the Randgold loan.
Randgold shareholders are referred to the accompanying Aflease announcement
for further information.
The acquisition is subject to various shareholder and regulatory approvals,
including Aflease shareholders approving the issue of the 94 million
Aflease shares as a specific issue of shares for cash, Aflease
shareholders, other than Randgold, agreeing to waive a mandatory offer by
Randgold to Aflease shareholders as a consequence of the acquisition and to
Aflease increasing its authorised share capital.
2. RATIONALE FOR THE SHARE SWAP TRANSACTION
Aflease requires funding for gold projects at its Bonanza South mine in the
Klerksdorp area and its Modder East project on the East Rand. The proceeds
from the disposal by Aflease of the Randgold shares and the Randgold loan
will enable Aflease to fund these developments which, when completed, are
expected to add substantial value to Aflease shareholders, including
Randgold. In addition, Aflease has the largest uranium resources in South
Africa and one of the largest in the world for which Aflease will shortly
commence a pre-feasibility study. The acquisition is thus consistent with
Randgold`s strategy of making strategic investments in the mining resource
sector.
Randgold currently owns 7,3 million Aflease shares and has a 75% non-voting
economic participation right in an empowerment structure which owns 23
million Aflease shares. Following the acquisition, Randgold`s direct
shareholding in Aflease will increase from 3,4% to 32,8% and its economic
interest from 11,4% to 38,4%.
3. FINANCIAL EFFECTS OF THE ACQUISITION
The pro forma financial effects of the acquisition on Randgold are
presented below for illustrative purposes only, based on the audited annual
financial statements of Randgold for the year ended 31 December 2003 and on
the assumption that for balance sheet purposes, the acquisition was
effective on 31 December 2003, and that for income statement purposes, the
acquisition was effective for the year then ended:
Change
Before(1) After(2) %
Net asset value per share (cents) 1 848 1 774 (4)
Net tangible asset value per share (cents) 1 848 1 709 (8)
Earnings per share (cents) 367 78 (79)
Headline loss per share (cents) (12) (105) -
Number of shares in issue (`000) 55 281 64 681 17
The significant losses incurred by Aflease for the year ended 31 December
2003 were as a result of the suspension of open pit mining operations,
impairment and right-down of Klerksdorp related mining assets. The pro
forma financial effects of the acquisition on Randgold illustrated above
are not representative of the inherent value potential of the Aflease`s
other mining resources described above, which were confirmed by a technical
review by Randgold.
Notes
(1) Extracted from the audited financial statements of Randgold for the
year ended 31 December 2003.
(2) Prepared on the basis that Randgold after the acquisition equity
accounts its resultant interest in Aflease based on Aflease`s pro
forma net asset value, tangible asset value, loss and headline loss
per share after the share swap transaction illustrated in the
accompanying Aflease announcement.
4. CATEGORISATION OF THE ACQUISITION
In terms of the acquisition, Randgold will issue 9,4 million shares,
equivalent to 14,9% of the 63 253 785 Randgold shares presently in issue.
Accordingly, the acquisition is a category 3 transaction in terms of the
Listings Requirements of the JSE.
5. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Further to the above and the cautionary announcement released on the SENS
on 28 July 2004, shareholders are advised that they no longer need to
exercise caution when dealing in Randgold`s shares.
Johannesburg
2 August 2004
Corporate adviser
Newfound
Sponsor
Sasfin Corporate Finance
A division of Sasfin Bank Limited
Attorney
Tabacks
