| Wed 15 Jun 2005, 18:01 | | Updated Pro Forma Financial Effect |
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Afgem - Updated Pro Forma Financial Effects, Notification Of Release Of
Preliminary Audited Financial Results, Proposed Modification Of
Resolution And Change Of Registered Address
African Gem Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/007292/06)
JSE code: AFG ISIN: ZAE000025540
(`Afgem` or `the Company`)
UPDATED PRO FORMA FINANCIAL EFFECTS, NOTIFICATION OF RELEASE OF PRELIMINARY
AUDITED FINANCIAL RESULTS, PROPOSED MODIFICATION OF RESOLUTION AND CHANGE OF
REGISTERED ADDRESS
Shareholders are referred to the announcement dated 26 May 2005, which
contained inter alia an abridged revised listing statement for the Company and
details of certain proposed transactions (`the transactions`) including the
acquisition of the entire issued share capital of and shareholders` claims
against Bellsbank Consolidated Diamond Mine (Proprietary) Limited, Loxton
Exploration (Proprietary) Limited and Rex Diamond Corporation (Proprietary)
Limited (collectively referred to as `the Mining Companies`) (`the
acquisition`), the introduction of black economic empowerment shareholders
(`the BEE transaction`) and the specific issue of shares for cash and grant of
an option to an existing shareholder (`the equity line of credit`). The JSE
Securities Exchange South Africa (`the JSE`) has approved the continued listing
of the Company, subject to the approval of the transactions by shareholders at
the general meeting to be held at 10:00 on Friday, 17 June 2005 (`the general
meeting`). The Company furnished the following documents to the JSE, as
required in terms of the circular to shareholders dated 26 May 2005:
- a qualified audit opinion on the trial balances of the Mining Companies for
the year ended 31 March 2005 as proper accounting records were not maintained
by the Mining Companies for the period from 1 April 2004 to 31 July 2004.
Accordingly, the auditors were unable to satisfy themselves as to the
completeness, existence and accuracy of the opening balances and the amounts
included in the trial balance up to 31 July 2004. Because of the significance
of the above in relation to the operations for the year ended 31 March 2005, no
opinion was expressed on the results of the Mining Companies` operations for
the year then ended. In addition, it was emphasised by the auditors that,
although the trial balances of the Mining Companies fairly present, in all
material respects, the financial positions of the Mining Companies at 31 March
2005 in accordance with the recognition and measurement of South African
Statements of Generally Accepted Accounting Practice, the trial balances are
not intended to and do not comply with all the presentation and disclosure
requirements of South African Statements of Generally Accepted Accounting
Practice;
- an unqualified audit report in respect of the Company for the 15 months
ended 31 March 2005; and
- an independent reporting accountants` report on the revised pro forma
financial information of the Company following the transactions based on the
aforementioned audited results of the Company and the Mining Companies.
Copies of the aforementioned audit opinions and independent reporting
accountants` report are available for inspection during normal business hours
at the new registered address of the Company, 381 Ontdekkers Road, Florida
Park Ext 3, Roodepoort, 1709, as well as at the physical office of the
Company, 3rd floor, 10 Melrose Boulevard, Melrose Arch, Melrose North,
Johannesburg, 2196.
The purpose of this announcement is to provide shareholders with the updated
pro forma financial effects of the transactions, based on the audited results
of Afgem for the 15 months ended 31 March 2005 and the unaudited pro forma
consolidated balance sheet at 31 March 2005 of the Mining Companies (based on
the individual audited trial balances of the Mining Companies). The pro forma
financial effects of the equity line of credit and the transactions set out
below have not been updated in respect of the proposed modification of the
resolution authorising the equity line of credit.
The table below illustrates the unaudited pro forma financial effects of the
acquisition on the audited financial statements of Afgem for the 15 months
ended 31 March 2005. The pro forma net asset value and net tangible asset
value per share have been calculated assuming that the acquisition took place
at 31 March 2005.
Before the After the
acquisition acquisition %
(cents)(1) (cents)(2) change
Net asset value and net
tangible asset value per share 20,07 25,60 27,6
Number of shares in issue (`000) 143 798 204 598 42,3
Notes:
1. The `Before the acquisition` net asset value and net tangible asset
value per share have been calculated based on the audited financial statements
of Afgem at 31 March 2005.
2. The `After the acquisition` net asset value and net tangible asset value
per share have been adjusted to include the unaudited pro forma consolidated
balance sheet of the Mining Companies at 31 March 2005.
The table below illustrates the unaudited pro forma financial effects of the
BEE transaction (the BEE specific issue and exercise of the option, as defined
in the circular to shareholders dated 26 May 2005) on the audited financial
statements of Afgem for the 15 months ended 31 March 2005. The pro forma net
asset value and net tangible asset value per share have been calculated
assuming that the BEE specific issue and exercise of the option took place at
31 March 2005.
Before the BEE After the BEE
specific issue and specific issue and
the exercise of the exercise of
the options the options %
(cents)(1) (cents)(2) change
Net asset value and net
tangible asset value per share 20,07 30,08 49,9
Number of shares in issue (`000) 143 798 216 105 50,3
Notes:
1. The `Before the BEE specific issue and the exercise of the options` net
asset value and net tangible asset value per share have been calculated based
on the audited financial statements of Afgem at 31 March 2005.
2. The `After the BEE specific issue and the exercise of the options` net
asset value and net tangible asset value per share have been adjusted to
include the increase in cash received and shareholders` interest as a result
of the BEE specific issue and the exercise of the options.
The table below illustrates the unaudited pro forma financial effects of the
equity line of credit on the audited financial statements of Afgem for the 15
months ended 31 March 2005. The pro forma net asset value and net tangible
asset value per share have been calculated assuming that the equity line of
credit took place at 31 March 2005.
Before the After the
equity line of equity line of %
credit (cents)(1) credit (cents)(2) change
Net asset value and net
tangible asset value per share 20,07 22,12 10,2
Number of shares in issue (`000) 143 798 155 798 8,35
Notes:
1. The `Before the equity line of credit` net asset value and net tangible
asset value per share have been calculated based on the audited financial
statements of Afgem at 31 March 2005.
2. The `After the equity line of credit` net asset value and net tangible
asset value per share have been adjusted to include the increase in cash
received and shareholders` interest as a result of the equity line of credit.
The table below illustrates the unaudited pro forma financial effects of the
transactions on the audited financial statements of Afgem for the 15 months
ended 31 March 2005. The pro forma net asset value and net tangible asset
value per share have been calculated assuming that the transactions took place
at 31 March 2005.
Before the After the
transactions transactions %
(cents)(1) (cents)(2) change
Net asset value and net tangible
asset value per share 20,07 32,59 62,4
Number of shares in issue (`000) 143 798 288 905 100.9
Notes:
1. The `Before the transactions` net asset value and net tangible asset
value per share have been calculated based on the audited financial statements
of Afgem at 31 March 2005.
2. The `After the transactions` net asset value and net tangible asset
value per share have been adjusted to include the increase in cash received
and shareholders` interest as a result of the BEE specific issue and exercise
of the options, the equity line of credit and the unaudited pro forma
consolidated balance sheet of the Mining Companies.
The results of the general meeting will be released on SENS on Friday, 17 June
2005 and published in the South African press on Monday, 20 June 2005.
Proposed modification of resolution
In terms of the equity line of credit, Firebird Asset Management LLC
(`Firebird`), an existing shareholder of Afgem, agreed to provide equity
funding to Afgem in the amount of approximately USD1 million. Due to the
recent weakening of the Rand against the US Dollar, Afgem now has the
opportunity to raise more capital in Rand terms from Firebird at a substantial
premium to the current market price of Afgem if the maximum number of shares
in respect of the equity line of credit is increased. Accordingly, the
directors propose to modify the ordinary resolution in respect of the equity
line of credit, which currently reads the specific issue of a maximum of 6 000
000 shares at 46 cents per share to Firebird (Afgem has a put option) and a
maximum of 6 000 000 shares at 47,5 cents per share to Firebird (Firebird has
a call option). The directors propose to modify the resolution to authorise
the Company to issue 8 000 000 shares at 46 cents per share to Firebird (Afgem
has a put option) and a maximum of 8 000 000 shares at 47,5 cents per share to
Firebird (Firebird has a call option). The proposed amendment to the
resolution has an immaterial positive impact on the updated pro forma
financial effects set out in this announcement.
Notification of change of registered address
Shareholders are hereby notified that the Company`s registered address has
changed, with immediate effect, to 381 Ontdekkers Road, Florida Park Ext 3,
Roodepoort, 1709. The Company`s physical address remains unchanged.
Notification of release of preliminary audited financial results
Shareholders are further notified that the Company`s preliminary audited
financial results for the 15 months ended 31 March 2005 were released in a
separate announcement on SENS today. The preliminary results have been audited
by the Company`s auditors, KPMG Inc. Their audit report is available for
inspection at the Company`s registered office and its physical office.
By order of the board
M R Summers Melrose Arch
Company Secretary 15 June 2005
Corporate advisor and lead sponsor
ABSA
Corporate & Merchant Bank
Corporate Finance
ABSA Bank limited
Reg no 1986/004794/06
Sponsor
JAVACAPITAL
Independent reporting accountants and auditors
KPMG
