| Fri 28 Oct 2005, 10:47 | | Aflease--abridged pre-listing statement |
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Southern Cross Resources Inc. - Abridged pre-listing statement
Southern Cross Resources Inc
(Incorporated in Canada)
(Registration number: 15096422420)
Share code on the JSE: SXR & ISIN: CA8429021089
Share code on the TSX: SXR & ISIN: CA8429021089
("Southern Cross" or "the Company")
Abridged pre-listing statement
This abridged pre-listing statement is not an invitation to the public to
subscribe for or an offer to the public to purchase Southern Cross common
shares, but is issued in compliance with the Listings Requirements of the
JSE Limited (the "JSE") for the purpose of giving information to the
public with regard to Southern Cross. The JSE has granted a listing to
Southern Cross by way of an introduction in the "Resources, Mining -
Other minerals" sector of the JSE list, with effect from the commencement
of business on Monday, 19 December 2005 of 88 069 487 Southern Cross
common shares which represents approximately all of the Southern Cross
common shares that will be on issue after the acquisition of Aflease is
approved.
1. INTRODUCTION TO SOUTHERN CROSS
1.1 Background to the listing
Southern Cross already has a primary listing on the Toronto
Stock Exchange. The listing on the JSE will occur prior to the
acquisition by Southern Cross of all the issued ordinary shares
of Aflease Gold and Uranium Resources Limited ("Aflease"), a
company listed on the JSE ("the acquisition"). The acquisition
will be by way of a scheme of arrangement ("the scheme") in
terms of section 311 of the South African Companies Act, 1973
(Act 61 of 1973), as amended, proposed by Southern Cross
between Aflease and the Aflease ordinary shareholders,
excluding Southern Cross, which will become effective from the
commencement of trade on the JSE on the operative date of the
scheme, expected to be Tuesday, 27 December 2005. This abridged
Pre-listing Statement has been prepared on the assumption that
the acquisition will become unconditional and that Aflease will
become a wholly-owned subsidiary of Southern Cross.
Southern Cross will be renamed SXR Uranium One Inc. after the
implementation of the acquisition.
1.2 Nature of the business
Southern Cross is engaged in the acquisition, exploration and
development of uranium properties, with significant uranium
assets located in Canada and Australia. Southern Cross has
built up expertise in project development and project
management skills which it will continue to apply in order to
bring the Company"s project to production in a structured and
professional manner.
The acquisition by Southern Cross of Aflease after its listing
on the JSE will unite the Australian and Canadian uranium
properties of Southern Cross with Aflease"s South African
uranium and gold assets to create project diversification by
geography and mining method. Southern Cross will be focused on
the growth and development of its uranium business, as well as
on realising value from Aflease"s existing gold assets.
Southern Cross holds the in-situ leach Honeymoon Project, for
which all permits required to proceed into production have been
granted and the Goulds Dam and Kalkaroo exploration projects in
South Australia. Honeymoon, including the contiguous East
Kalkaroo, hosts combined indicated resources of 9.3 million
pounds of uranium and the project is expected to be developed
as uranium prices improve. The Goulds Dam Project includes an
indicated resource of 4.4 million pounds of uranium and an
inferred resource of 7.9 million pounds of uranium. Drilling is
underway at Goulds Dam to test a number of new targets.
During 2004, Southern Cross entered into an option agreement
with Pitchstone Exploration Limited to earn a 50% joint venture
interest in uranium exploration properties located in the
Athabasca Basin in Saskatchewan, Canada. 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 later
this year.
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.
1.3 Southern Cross" business model
The Company"s business model entails the identification and
exploration of uranium targets after which the Company will
develop these targets in a structured manner using the
following approach:
- conducting an exploration and drilling programme in order
to be able to classify the target into coded resources and
reserves;
- performing a feasibility study together with independent
credible technical advisors;
- developing the project;
- managing the steady-state project; and
- marketing the end product.
2. PURPOSE OF THE LISTING ON THE JSE
Southern Cross wishes to obtain a secondary listing of its common
shares on the JSE due to the strategic benefits that this could
provide to the Company, including:
- to provide a mechanism to facilitate the acquisition of
Aflease;
- to provide a further funding mechanism through which Southern
Cross can raise capital to fund opportunities to develop its
uranium resources; and
- to enhance South African investors" awareness of Southern
Cross, thereby enlarging the Company"s investor base and
increasing trade in its common shares.
3. FUTURE PROSPECTS
The acquisition of Aflease by Southern Cross after its listing on
the JSE will unite Aflease"s South African uranium and gold assets
with the Australian and Canadian uranium properties of Southern
Cross to create project diversification by geography and mining
method. Southern Cross will be focused on the growth and development
of its uranium business, as well as on realising value from its
existing gold assets. Southern Cross expects to commence uranium
production in the first quarter of 2007 from its brown-fields
development, Dominion and Rietkuil, currently owned by Aflease and
expects to produce by 2010 at least 4 million pounds of uranium per
year and at least 90,000 ounces of gold as by-product, from current
uranium projects. In addition to its brown-fields development the
Company will hold the Honeymoon development project in Australia
(for which an Environmental Impact Statement has been approved and a
mining license granted) and a portfolio of advanced exploration
projects.
In South Australia, the Company will continue drilling to assess the
potential to expand resources at Goulds Dam. The Company has also
recently signed a Letter Agreement to exclusively explore for
uranium mineralisation on EL 2114 Karkarook, which has a similar
geological setting to the Athabasca Basin in Canada. In Canada, the
Company and its joint venture partner, Pitchstone, started
exploration of their properties in the Athabasca Basin through the
application of airborne geophysics and more recently a diamond
drilling program.
Southern Cross will have a substantial resource base as estimated in
accordance with the South African Mineral Resources Committee for
Aflease and the National Instrument 43-101 Standards of Disclosure
for Mineral Projects of the Canadian Projects Securities
Administrators.
4. FINANCIAL INFORMATION
Set out below are the unaudited pro forma income statement and
balance sheet of Southern Cross, following the implementation of the
scheme. The unaudited pro forma income statement and balance sheet
have been prepared for illustrative purposes to provide information
about Southern Cross following implementation of the scheme.
Because of its nature, the unaudited pro forma income statement and
balance sheet may not give a fair reflection of the financial
position or the effect of income going forward in Southern Cross
following implementation of the scheme. The unaudited pro forma
income statement and balance sheet are the responsibility of the
Southern Cross directors.
No effect has been given to various transactions concluded by
Aflease since 30 June 2005, specifically the acquisition by Aflease
of the Weltevreden deposit or the disposal of an undivided 26% share
of Aflease"s Klerksdorp business in the pro forma income statement
and balance sheet. The effects of these transactions were separately
announced to shareholders on 30 June 2005.
PRO FORMA INCOME STATEMENT
Afle South Adjus Pro forma
ase (1) ern Cross tments (3) following
(2) implemen-
tation
of the
scheme
R"000 R"000 R"000
R"000
Revenue 176 - - 176
Sundry 176 232 - 408
Cash (3,8 - -
operating costs 79) (3,879)
Cash (3,7 232 -
operating 03) (3,471)
(loss)/profit
Amortisation (587) (673) -
and (1,260)
depreciation
Non-cash - - - -
movement
in lock-up
General and (10, (15,4 (47,3 (73,3
administrative 501) 95) 81) 77)
expenditure
Decommissioni (6) - - (6)
ng and retrenchment
costs
Funding (1,6 - -
expenses and legal 63) (1,663)
fees
Share options (5,1 - -
expensed 62) (5,162)
Exploration (22, - -
expenditure 027) (22,027)
Impairment of - - - -
property, plant and
equipment
Write down of (31) - - (31)
heap leach and other
stock items
Rehabilitatio - - - -
n provision
Profit on 1,20 - - 1,207
disposal of property, 7
plant and equipment
Operating (42, (15,9 (47,3 (105,
loss 473) 36) 81) 790)
Interest paid (15, (1,94 -
121) 9) (17,070)
Interest 862 574 - 1,436
received
(Loss)/profit (8) - - (8)
on disposal of
investments
Mark-to- 5,80 - - 5,807
market of listed 7
investments
Loss before (50, (17,3 (47,3 (115,
derivative 933) 11) 81) 625)
adjustments
Mark-to- (87, - -
market of derivative 265) (87,265)
financial instrument
Loss before (138 (17,3 (47,3 (202,
taxation ,198) 11) 81) 890)
Taxation - 1,341 - 1,341
Net loss for (138 (15,9 (47,3 (201,
the period ,198) 69) 81) 548)
Headline loss (139 (202,
,397) 747)
Weighted 338, 402,4
average shares in 983 63
issue (4)
Loss per (40. (45.0
equivalent Aflease 77) 7)
share
(cents)
Headline loss (41. (45.3
per equivalent 12) 4)
Aflease share
(cents)
Notes
1.Extracted from the unaudited financial results of Aflease for
the six month period ended 30 June 2005.
2. Extracted from the 2005 Second quarter report to shareholders of
Southern Cross as adjusted for differences between Canadian Generally
Accepted Accounting Principles ("GAAP") and International Financial
Reporting Standards ("IFRS"), converted for convenience purposes, at a
exchange rate of R5.52.
3. Adjustment relating to the vesting of share options in terms of the
merger agreement.
4. Weighted average shares in issue represent the weighted average
number of Aflease ordinary shares in issue at 30 June 2005 (before) and
pro forma weighted average number of common shares in issue in Southern
Cross following implementation of the scheme.
PRO FORMA BALANCE SHEET
Afl Sou Ca Co Pro forma
ease (1) thern Cross pital nsoli- following
(2) raising dation implemen-
(3 tation
) (4) of the
scheme
R"0 R" R" R"0
R"000 00 000 000 00
ASSETS
Non-current 346 200 - 737
assets ,614 ,094 190,791 ,500
Property, 270 200 - 660
plant and ,070 ,094 190,791 ,956
equipment
Investments 76, - - -
544 76,544
Current 27,967 21,821 15 -
assets 7,195 206,983
Inventories 3,4 - - -
57 3,457
Receivables 14, 2,0 - -
and prepayments 754 59 16,813
Amounts 165 - - - 165
owing by related
parties
Short-term - - -
investments 3,450 3,450
Bank and 9,5 16, 15 -
cash balances 91 312 7,195 183,098
Total 374 221 15 19 944
assets ,581 ,915 7,195 0,791 ,482
EQUITY AND
LIABILITIES
Capital and 108 219 14 13 609
reserves ,994 ,243 7,811 3,554 ,602
Ordinary 6,9 271 15 72 507
share capital 09 ,319 7,195 ,094 ,517
Share 708 - - -
premium ,633 708,633
Warrants - - -
6,563 (6,563)
NDR - - -
1,733 (1,733)
Share-based 23, 5,6 - 60,
payment reserve 704 86 31,602 992
Accumulated (63 (66 (9 38 (66
losses 0,252) ,058) ,384) ,154 7,540)
Non-current 38, - - 96,
liabilities 964 57,237 201
Interest 14, - - -
bearing borrowings 214 14,214
Rehabilitat 24, - - -
ion 750 24,750
and closure
cost
obligation
Deferred - - - 57,
tax 57,237 237
Current 226 2,6 9, -
liabilities ,623 72 384 238,679
Derivative 103 - - -
financial ,801 103,801
instrument
Short term 88, - - -
loans 028 88,028
Current 9,591 - - -
portion of 9,591
interest bearing
borrowings
Trade and 20, 2,6 9, -
other payables 829 72 384 32,885
Provisions 4,3 - - -
74 4,374
Total 374 221 15 19 944
equity and ,581 ,915 7,195 0,791 ,482
liabilities
Shares in 345 408
issue ("000) (5) ,426 ,399
NAV per 31. 134
equivalent Aflease 6 .3
share
Notes
1. Extracted from the unaudited financial results of Aflease for the
six month period ended 30 June 2005.
2. Extracted from the 2005 Second quarter report to shareholders of
Southern Cross as adjusted for differences between Canadian GAAP and
IFRS, converted for convenience purposes,
at an exchange rate of R5.52.
3.Represents capital raised, net of associated costs, by means of a
private placing by Aflease and Southern Cross subsequent to 30 June
2005.
4.Represents issue of shares by Southern Cross in consideration for the
acquisition of the shares in Aflease and consolidation entries giving
effect to the reverse acquisition in terms of IFRS3: Business
Combinations.
5.The cost of the business combination is based on a price per Aflease
share of R4.62, being the share price at 30 June 2005. The cost of the
business acquisition will be determined on the effective date of the
transaction and a purchase price allocation exercise will be performed
at such date, which could result in the financial effects of the
acquisition differing from that set out in this pro forma balance
sheet.
6.Shares in issue represent the number of Aflease shares in issue at 30
June 2005 (before) and pro forma shares in issue in Southern Cross
following implementation of the scheme.
5. DIRECTORS OF SOUTHERN CROSS
The names, ages, nationalities, business addresses and occupations
of the directors of Southern Cross following the implementation of
the scheme, will be as follows:
Name, age and Business address Occupation
nationality
Executive directors
Neal John Froneman (45) Empire Park, Block A Chief
South African 55 Empire Road, Executive
Parktown, Johannesburg Officer
2193
Non-executive directors
Mark Wheatley (44) North Manly, New South Businessman
Australian Whales, Australia
John M Sibley (52) Davis & Company
Canadian Suite 2800
666 Burrard Street
Vancouver, BC, V6C 2Z7
Terry Rosenberg (57) 65 Abrey Road Businessman
South African Kloof
KwaZulu-Natal, 3610
The Company is in the process of finalising the appointment of three
additional non-executive directors, which appointments will be announced
in due course.
6. SHARE CAPITAL
IN TERMS OF A DEFINITIVE ACQUISITION AGREEMENT, ENTERED INTO BETWEEN
SOUTHERN CROSS AND AFLEASE, ON 14 SEPTEMBER 2005, (IN WHICH THE
FINAL TERMS OF THE ACQUISITION OF ALL THE ISSUED SHARES IN AFLEASE
WAS AGREED), SOUTHERN CROSS" COMMON SHARES WILL BE CONSOLIDATED IN
THE RATIO OF 5:1 ("SHARE CONSOLIDATION"). UPON THE COMPLETION OF THE
SHARE CONSOLIDATION, EACH SOUTHERN CROSS SHAREHOLDER WILL RECEIVE
ONE NEW SOUTHERN CROSS COMMON SHARE FOR EVERY FIVE SOUTHERN CROSS
COMMON SHARES CURRENTLY HELD. THE SHARE CONSOLIDATION IS SUBJECT TO
SOUTHERN CROSS SHAREHOLDER APPROVAL AT THE SHAREHOLDER MEETING OF
SOUTHERN CROSS SHAREHOLDERS, TO BE HELD ON TUESDAY, 22 NOVEMBER
2005.
At the date of listing on the JSE, the authorised share capital
of Southern Cross will comprise unlimited common shares, while the
issued share capital of Southern Cross will comprise 88 069 487 fully
paid common shares of no par value, which assumes the approval and
implementation of the share consolidation.
7. FORWARD-LOOKING STATEMENT
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law and therefore persons
in any such jurisdictions into which this announcement is released,
published or distributed should inform themselves about, and
observe, such restrictions. Any failure to comply with the
applicable restrictions may constitute a violation of the securities
laws of any such jurisdiction. This announcement does not
constitute an offer to sell or issue, or the solicitation of an
offer to purchase or subscribe for, any shares or other securities
or a solicitation of any vote or approval in any jurisdiction in
which such offer or solicitation would be unlawful.
This announcement contains statements about Southern Cross that are
or may be forward looking statements. All statements other than
statements of historical facts included in this announcement, may be
forward looking statements. Any statements preceded or followed by
or that include the words "targets", "plans", "believes", "expects",
"aims", "intends", "will", "may", "anticipates" or similar
expressions or the negative thereof are forward looking statements.
Forward looking statements include statements relating to the
following:
(i) future capital expenditures, acquisitions, divestitures, expenses,
revenues, economic performance, financial condition, dividend policy,
losses and future prospects;
(ii) business and management strategies and the expansion and growth of
Southern Cross" operations; and
(iii)the effects of government regulation on Southern Cross"
businesses.
These forward looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of any such person, or industry results,
to be materially different from any results, performance or
achievements expressed or implied by such forward looking
statements. These forward looking statements are based on numerous
assumptions regarding the present and future business strategies of
such persons and the environment in which each will operate in the
future. All subsequent oral or written forward looking statements
attributable to Southern Cross or any member of Southern Cross or
any persons acting on their behalf are expressly qualified in their
entirety by the cautionary statement above. Southern Cross expressly
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statements contained herein, to
reflect any change in their expectations with regard thereto, or any
change in events, conditions or circumstances on which any such
statement is based. This announcement is not for distribution within
the provinces and territories of Canada.
8. DETAILED PRE-LISTING STATEMENT
Copies of the detailed pre-listing statement, together with the
scheme circular to Aflease ordinary shareholders, will be available
on the Aflease and Southern Cross website www.aflease.com and
www.southerncrossres.com, respectively. English copies of the
detailed pre-listing statement and the scheme circular may be
obtained during business hours from Friday, 28 October 2005 until 19
December 2005 both days inclusive, at the following addresses:
Aflease, Empire Park, Block A, 55 Empire Road, Parktown,
Johannesburg;
Nedbank Capital, 3rd Floor, F Block, Corporate Place, 135 Rivonia
Road, Sandown;
PricewaterhouseCoopers Inc, 2 Eglin Road, Sunninghill;
Deneys Reitz Inc, 82 Maude Street, Sandton;
Webber Wentzel Bowens, 10 Fricker Road, Illovo Boulevard,
Johannesburg; and
Computershare Investor Services 2004 (Proprietary) Limited, Ground
Floor, 70 Marshall Street, Johannesburg.
Johannesburg
28 October 2005
South African investment bank, corporate advisor and sponsor
Nedbank Capital
South African legal counsel to Aflease
Deneys Reitz
South African legal counsel to Southern Cross
Webber Wentzel Bowens
South African independent reporting accountants
PricewaterhouseCoopers Inc
International legal counsel to Aflease
Davis & Company
International legal counsel to Southern Cross
Beach, Hepburn LLP
Canadian independent reporting accountants
KPMG LLP
Date: 28/10/2005 09:04:18 AM Produced by the JSE SENS Department
