| Thu 15 Sep 2005, 10:33 | | Aflease and Southern Cross sign definitive acquisi |
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Aflease and Southern Cross sign definitive acquisition agreement
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`)
AFLEASE AND SOUTHERN CROSS SIGN DEFINITIVE ACQUISITION AGREEMENT
September 15, 2005, JOHANNESBURG, SOUTH AFRICA and TORONTO, CANADA -- Aflease
Gold and Uranium Resources Limited (Aflease, `AFL`) and Southern Cross Resources
Inc. (`SXR`) are pleased to announce the signing today of a definitive agreement
providing for the acquisition of Aflease by SXR. The acquisition agreement,
which is subject to customary closing conditions, follows completion by Aflease
and SXR of due diligence in accordance with the pre-merger agreement signed by
the parties on July 5, 2005, and has been approved by the boards of directors of
both companies.
The combined company will unite Aflease`s South African uranium and gold assets
with the Australian and Canadian uranium assets of SXR. The new company, which
will be focused on the growth and development of its uranium business, will also
have an initial 80% interest in Aflease Gold, a new vehicle being formed to
develop the pure gold assets of Aflease and Sub Nigel. The combined entity,
which is planning to commence uranium production in the first quarter of 2007,
expects to produce over 4 million pounds of uranium and 90,000 ounces of gold
per year from its current projects by 2010.
Said Aflease`s CEO Neal Froneman:
`We welcome the signing of this agreement, which marks an important step forward
in our corporate strategy, and we look forward to joining forces with SXR. Once
this transaction is completed, the combined company will have quality assets on
three key uranium producing continents, and will be positioned to become an
important player in the global uranium market. Investor interest in uranium in
North America is strong and growing, and this transaction will ensure we have
improved access to the international capital markets, which we require to bring
our Dominion uranium mine into operation. We look forward to presenting this
transaction to our shareholders for approval, as we await receipt of required
regulatory approvals from the South African Reserve Bank, the JSE and other
authorities.`
Said SXR`s Chairman and CEO Mark Wheatley:
`We are now one step closer to creating a unique mid-tier uranium company with
tremendous growth potential, at a time when uranium supply and demand
fundamentals are very positive. Aflease`s recently announced gold strategy,
with plans to create a self-sufficient, separately-listed gold vehicle, has been
well received by investors and will allow shareholders of the combined company
to achieve maximum value from the development of Aflease`s pure gold assets. The
support from respective shareholder groups since the announcement of the merger
is encouraging and augurs well for the future of the combined company.`
Terms of Transaction
The acquisition agreement includes a 5:1 consolidation of the common shares of
SXR, in order to both increase the capital raising options open to the combined
company, as well as to enhance its investment appeal, particularly among
international institutional investors.
Under the terms of the acquisition agreement, with the implementation of the 5:1
consolidation, the holders of Aflease ordinary shares will receive 0,18 of a
common share of SXR for each Aflease ordinary share (equivalent to a pre-
consolidation ratio of 0,90). The current issued share capital of SXR consists
of 76,7 million common shares, which will be consolidated into approximately
15,3 million common shares. Holders of SXR common shares will receive one new
common share for each five common shares currently held.
The issued share capital of Aflease, as at 14 September 2005 is 377,4 million
ordinary shares, which will translate to approximately 67,9 million common
shares pursuant to the implementation of the acquisition. Accordingly, after
the acquisition and consolidation, the combined issued share capital of SXR will
be approximately 83,3 million common shares.
Resource Capital Fund L.P. and Resource Capital Fund II L.P., which hold
approximately 16% of the outstanding SXR common shares, have agreed subject to
fiduciary obligations to vote their shares in favour of both the acquisition and
the share consolidation.
Completion of the acquisition is conditional upon, among other things, SXR
retaining its primary listing on the Toronto Stock Exchange and obtaining a
secondary listing on the JSE Limited. Neal Froneman, Aflease Chief Executive
Officer, has agreed to serve as the CEO of the combined company and Jean
Nortier, Aflease Chief Financial Officer, will be its CFO. The combined company
will have a seven-member Board of Directors, including Neal Froneman, Mark
Wheatley, CEO of SXR as a non-executive director, two additional nominees of
Aflease as non-executive directors, and three independent non-executives to be
mutually agreed, one of whom will serve as Chairman of the Board. SXR will be
renamed SXR Uranium One Inc. as part of the implementation of the transaction.
Pursuant to the acquisition agreement, each company has agreed not to solicit
third party interest in alternative transactions. Each company has also agreed
to pay a termination fee to the other of Cdn $1 million if it terminates the
acquisition agreement to accept a superior proposal, or if its shareholders fail
to approve the acquisition. The acquisition will be effected by way of a court-
sanctioned scheme of arrangement under the provisions of applicable South
African law. The parties anticipate that, subject to the receipt of all
required regulatory and shareholder approvals, the acquisition will be completed
by the end of November.
The acquisition is also conditional upon the approval of the shareholders of
each company. The SXR shareholder meeting will be held in mid-November, 2005 in
Toronto, Ontario. Subject to the terms of an order of the South African High
Court, salient times of the merger will be made available to Aflease ordinary
shareholders when the scheme announcement is published.
BMO Nesbitt Burns is acting as exclusive financial adviser to Aflease. Nedbank
Capital is Aflease`s South African investment bank and sponsor. SXR is being
advised by RBC Capital Markets.
About Aflease Gold and Uranium Resources Limited
Aflease owns the Dominion and Rietkuil uranium properties, and the Bonanza South
gold mine, located near Klerksdorp, South Africa, as well as the Modder East
gold project located east of Johannesburg.
Aflease`s Board of Directors recently approved the development and construction
of the Dominion Uranium mine. The Dominion Uranium asset was previously owned
and operated by Anglo American. This brownfield project has significant
infrastructure in place and a substantial information database of both
geological and metallurgical information. Core from over 250 boreholes is
available and the geological structure is well understood as a result of
previous mining and seismic surveys. Current process testwork has confirmed the
use of pressure leaching resulting in recoveries exceeding those used in
planning models. The Directors of Aflease have approved the expenditure of
US$2.16 million to complete a bankable feasibility study. Completion of this
document is expected by April 2006 and production of uranium is expected to
commence in the first quarter of 2007. From 2010, annual production from the
mine is expected to be 4 million pounds per year.
Aflease recently announced a uranium resource at its Dominion, Rietkuil and
Bonanza South properties, comprising total SAMREC-compliant inferred resources
of 113.3 million pounds of contained U3O8, at an average grade of 0.064%, and
total measured and indicated resources of 9.8 million pounds of contained U3O8,
at an average grade of 0.066%. In addition, the Bonanza South property has a
measured and indicated resource of 723,000 pounds U3O8, at an average grade of
0.009%, as a gold by-product.
Aflease`s gold assets consist of in excess of 400,000 ounces of proven and
probable reserves, at an average grade of 5.5 grams/tonne, at Bonanza, and in
excess of 1 million ounces of proven and probable reserves, at an average grade
of 5.2 grams/tonne, at Modder East. On June 29, 2005 Aflease announced its
first gold pour from Bonanza.
Aflease`s gold and uranium reserve and resource estimates were audited and
confirmed by SRK Consulting, an independent firm of consulting engineers and
geologists (`SRK`). The focus of SRK`s audit and review was on areas where there
was sufficient information to comply with the SAMREC code. Aflease is in the
process of obtaining independent technical reports complying with NI 43-101 in
respect of its Dominion, Rietkuil, Bonanza and Modder East properties. The
report is substantially complete and Aflease does not expect that the reserves
and resources calculated in accordance with NI 43-101 will be materially
different from the SAMREC compliant estimates.
On July 19, 2005, Aflease agreed to purchase the Weltevreden mine in South
Africa from AngloGold Ashanti. Weltevreden has a SAMREC-compliant indicated
resource of 3.1m oz, grading at 4.75 g/tonne. The transaction will be funded
through the issue of approximately 23.6 million Aflease shares, priced at R3.62
per share (the 30 day volume-weighted moving average at the time Aflease
submitted its purchase offer). AngloGold Ashanti will therefore own over 5% of
Aflease.
On August 23, 2005, Aflease offered to acquire a controlling interest in Sub
Nigel, a South African gold mining company listed on the JSE Securities
Exchange. This will be achieved through the transfer of Aflease`s wholly-owned
New Kleinfontein Mining Company, which holds the Modder East project, to Sub
Nigel in return for the issuance of ordinary shares in Sub Nigel. This
transaction, which has the support of approximately 62% of Sub Nigel`s current
shareholders, including the major shareholder Gold Fields, is intended to
crystallise the value of Modder East and to provide a clearer commodity focus
for the company`s pure gold assets. The new company, which will retain its JSE
listing, will also be able to raise capital for its gold projects without any
associated dilutionary impact on SXR. The Sub Nigel transaction is subject to
the approval of Sub Nigel`s shareholders, but Aflease has received irrevocable
commitments of approximately 62% of Sub Nigel`s shareholders.
The ordinary shares of Aflease are traded in South Africa on the JSE Limited
under the symbol `AFL` and over the counter in the U.S. in the form of a Level I
American Depositary Receipts under the symbol `AFLUY`.
About Southern Cross Resources Inc.
SXR owns the fully permitted, in-situ leach, Honeymoon Project and the Goulds
Dam and Karkarook exploration projects in South Australia. Honeymoon, including
the contiguous East Kalkaroo, hosts combined NI 43-101 compliant indicated
resources of 9.3 million pounds of uranium and the project is expected to be
developed as uranium prices improve. A decision on whether and when to proceed
with the Honeymoon project is expected to be taken following the merger. The
Goulds Dam project includes a NI 43-101 compliant indicated resource of 4.4
million pounds and an inferred resource of 7.9 million pounds. Drilling of the
large ground position surrounding Goulds Dam is underway to test a number of new
targets.
In 2004, SXR entered into an option agreement with Pitchstone Exploration Ltd.
to earn a 50% joint venture interest in uranium exploration properties located
in the prolific Athabasca Basin of Saskatchewan. This region hosts some of the
largest and highest-grade uranium deposits in the world, including Cigar Lake
and McArthur River. Geophysical test work has been completed and drilling is
scheduled to commence over the next couple of months.
Project generation efforts have also recently yielded a number of new projects
in South Australia, where the targets are geologically similar to those found in
the Athabasca Basin.
The common shares of SXR are traded on the Toronto Stock Exchange under the
symbol `SXR`.
Forward-looking Statement
This press release contains certain forward-looking statements. These forward-
looking statements are subject to a variety of risks and uncertainties beyond
the company`s ability to control or predict, which could cause actual events or
results to differ materially from those anticipated in such forward-looking
statements. In this news release, predictions about the transaction being
approved and finalized are forward-looking statements. Accordingly, readers
should not place undue reliance on forward-looking statements.
Mineral resources which are not mineral reserves do not have demonstrated
economic viability.
The ordinary shares of Aflease Gold and Uranium Resources Limited (`AFL`) and
the common shares of Southern Cross Resources Inc. (`SXR`) have not been and
will not be registered under the U.S. Securities Act of 1933, as amended. This
press release does not constitute an offer of securities for sale in the United
States. Securities may not be offered or sold in the United States absent
registration or an exemption from registration. Any public offering of
securities to be made in the United States will only be made by means of a
prospectus that may be obtained from AFL and/or SXR and that will contain
detailed information about these companies and management, as well as financial
statements.
For further information, please contact:
Neal Froneman, Chief Executive Officer
Aflease Gold and Uranium Resources Limited
Mobile: +27 (0) 83 628 0226
Office: +27 (0) 11 482 3605
Carol Smith + 27 (0) 82 338 2228
John Fraser + 27 (0) 82 331 7330
Mark Wheatley, Chairman & Chief Executive Officer
Southern Cross Resources Inc.
Telephone: +61 417 688539
Don Falconer, VP Corporate Development
Southern Cross Resources Inc.
Telephone: (416) 350-3657
Date: 15/09/2005 08:58:13 AM
Produced by the JSE SENS Department
