| Tue 19 Jul 2005, 16:10 | | Acquisition of Weltevreden |
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Aflease Gold and Uranium Resources Limited - Acquisition by Aflease of the
Weltevreden deposit from AngloGold Ashanti Limited
Aflease Gold and Uranium Resources Limited
(Formerly The Afrikander Lease Limited)
(Incorporated in the Republic of South Africa)
AFL (JSE) AFLUY (NASDAQ)
(Registration number 1921/006955/06)
ISIN: ZAE000061461 Share Code : AFL
(`Aflease` or `the Company`)
Acquisition by Aflease of the Weltevreden deposit from AngloGold Ashanti Limited
1. Introduction
Aflease ordinary shareholders are advised that Aflease has concluded an
agreement with AngloGold Ashanti Limited (`AngloGold Ashanti`) in terms of which
Aflease will purchase the Weltevreden gold mine (`the Asset`) near Klerksdorp
from AngloGold Ashanti (`the Transaction. The Asset has an indicated gold
resource of 3 194 463 ounces grading at 4.75g/t. The purchase consideration for
the Asset is R75 000 000, which amount excludes VAT, and will be paid through
the issue of 23 618 785 Aflease ordinary shares to AngloGold Ashanti at a price
of R3.62 per Aflease ordinary share, which was the 30-day volume-weighted moving
average at the time Aflease submitted its offer. The Transaction will result
in AngloGold Ashanti becoming a shareholder in Aflease, with a shareholding just
in excess of 5%. The purchase consideration results in a cost per indicated
resource ounce of US$3.44.
2. The Asset
The Asset to be acquired by Aflease will comprise:
* the servitude rights to an area of one hectare for a ventilation shaft, an
area for a road and an area for mining purposes on the farm Bellevue No. 365;
* immovable property being the farm Weltevreden number 130 in the district of
Viljoenskroon (`the Property`);
* the mining right to be granted to the holder of the portion of mining licence
ML 19/2000 (`Old Order Mining Right`) on the conversion of the Old Order Mining
Right into the New Order Mining Right in terms of Section 7 of schedule II to
the Mineral and Petroleum Resources Development Act No. 28 of 2002 (as amended
from time) (`MPRD`), collectively `the Conversion`;
* the decline shaft which is situated approximately five kilometres west of
Orkney and which is currently flooded, and
* the rock dump, the partially built metallurgical plant and redundant office
block and building.
AngloGold Ashanti has applied for the Conversion and intends, on the granting of
the Conversion, to apply for the consent of the Minister of Minerals and Energy
(`the Minister`) in terms of Section 11 of the MPRDA in respect of the cession
and transfer of the New Order Mining Right by AngloGold Ashanti to Aflease (`the
Consent`).
3. The Transaction
Aflease is purchasing those sections of the Weltevreden gold asset which lie
near the surface, while AngloGold Ashanti will continue to access deeper levels
from its neighbouring operation. Existing exploration data related to the
Property is to be shared with Aflease, to assist in developing a mine plan,
which will be based on mining the Ventersburg Contact Reef (VCR) to a depth of
approximately 500m below the surface.
4. Rationale for the Transaction
The Transaction compliments the existing high margin, shallow-level asset base
of Aflease. The Transaction specifically provides further critical mass to
Aflease`s gold portfolio which is a necessary requirement for the unbundling of
the pure gold assets. This unbundling will transform the Company into a focused
uranium group.
5. Conditions precedent
The Transaction is subject to, inter alia, the following conditions precedent
being fulfilled by no later than 31 December 2005:
* removal of the Asset from AngloGold Ashanti`s nuclear authorisation in terms
of the National Nuclear Regulatory Act No. 47 of 1999 (`NNR Act`);
* obtaining by Aflease of the necessary nuclear authorisation in respect of the
Asset in terms of the NNR Act;
* obtaining of the Conversion and Consent;
* obtaining of the written approval of the Department of Minerals and Energy in
respect of the Environmental Management Plan or Programme in respect of the
Asset, or the prospecting or mining operations relating to the Asset, in terms
of section 38 of the MPRDA;
* the furnishing by Aflease of the prescribed financial provision in terms of
section 41 of the MPRDA to the satisfaction of the Minister; and
* the receipt of the unconditional written approval for the Transaction of the
Competition Commission, or the Tribunal, as the case may be.
6. Effective date
The effective date of the Transaction is the day on which the last condition
precedent will be fulfilled.
7. Unaudited pro-forma financial effects of the Transaction
The unaudited pro forma financial effects on Aflease`s earnings per ordinary
share, headline earnings per ordinary share, net asset value per ordinary share
(`NAV`) and tangible net asset value per ordinary share (`TNAV`) which are based
on the published audited financial results for the year ended 31 December 2004
are set out below. These pro forma financial effects which are a responsibility
of the directors of Aflease, are given for illustrative purposes only and
because of their pro forma nature may not give a fair reflection of Aflease`s
financial results and position after the Transaction.
Before the After the Percentage
Transaction Transaction change
(1) (2)
Earnings (36.08) (32.87) 8.9%
(cents per
ordinary
share)
Headline (33.27) (30,31) 8,9%
earnings
(cents per
ordinary
share)
NAV (cents 62.08 85.82 38.2%
per
ordinary
share)
TNAV (cents 62.08 85.82 38.2%
per
ordinary
share)
Weighted 241,903 265,522 9.7%
average
shares in
issue
(`000)
Number of 336,451 360,070 7.0%
shares
(`000)
Notes:
1. Based on the published audited results of Aflease for the year ended 31
December 2004.
2. Based on the assumption that the Transaction was effected on 1 January 2004
for income statement purposes and 31 December 2004 for balance sheet purposes.
3. The Asset did not operate during the past financial period, consequently no
results have been taken into account in the effects on earnings and headline
earnings.
4. The purchase consideration of 23 618 785 ordinary shares is to be fair valued
at the effective date of the Transaction for accounting purposes. The 30-day
volume weighted moving average traded share price of R4.24 has been assumed to
illustrate the effects on NAV and TNAV. The assets will be subjected to an
impairment exercise and any impairment determined will be charged to the income
statement.
5. It has been assumed that the tax value of the Asset is equal to the purchase
consideration.
8. Categorisation of the Transaction
The Transaction is a Category 3 transaction as defined in terms of Section 9.5
(a) of the JSE Listings Requirements.
9. Aflease`s proposed merger with SXR
The Transaction will not affect the merger with Southern Cross Resources Inc
(`Southern Cross`), that was announced on 5 July 2005. The intention to
conclude the Transaction was disclosed to Southern Cross prior to signing the
definitive Pre-Merger Agreement, and is supported by Southern Cross.
The merger ratio of 0.9 of one Southern Cross common share for every Aflease
ordinary share remains the same.
AngloGold Ashanti has irrevocably agreed to support and vote in favour of the
Aflease merger with Southern Cross.
10. Black Economic Empowerment
Aflease will include 26% of the Asset into a BEE transaction, similar to that
which was recently announced for its Klerksdorp assets.
Johannesburg
19 July 2005
Investment bank and sponsor
Nedbank capital
