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Tawana Resources NL - Abridged pre-listing statement
TAWANA RESOURCES NL
(Incorporated in Australia)
Registration number ACN 085 166 721
Share code on the JSE Limited: TAW & ISIN: AU000000TAW7
Share code on the Australian Stock Exchange Limited: TAW & ISIN: AU000000TAW7
("Tawana" or "the Company")
ABRIDGED PRE-LISTING STATEMENT
Prepared in terms of the Listings Requirements of the JSE Limited
The securities of Tawana are presently listed on the Australian Stock Exchange
Limited ("the ASX") in the "Metals and Mining" sector of that stock exchange.
This abridged Pre-listing Statement is neither an invitation to the public to
subscribe for, nor an offer to the public to purchase ordinary shares in Tawana,
but is issued in compliance with the Listings Requirements of the JSE Limited
("JSE") for the purpose of providing salient information to the public in regard
to the listing of the ordinary shares of Tawana on the JSE.
The JSE has granted a listing, by way of an introduction, of all of the ordinary
shares in issue in Tawana, in the "Resources, Mining - Diamond" sector of the
JSE list under the abbreviated name "Tawana", with effect from the commencement
of trading on the JSE on Monday, 14 November 2005.
Due to the inherent risks associated with investment in companies the nature of
Tawana, prospective investors are advised to carefully consider all matters
contained in the Pre-listing Statement, copies of which can be obtained as
indicated in paragraph 9 below, and, if required, to consult their professional
advisers before taking any action.
1. INTRODUCTION TO THE TAWANA GROUP
Tawana, which means, "we have found it" in the Shona African language, was
incorporated as a public company on 16 November 1998 in Australia.
Operating through its various subsidiary operations, the Tawana group is
involved in the exploration for and evaluation of diamondiferous kimberlites and
alluvials, primarily in South Africa, and also in Australia, with the objective
of establishing viable ore reserve and turning such projects to account. In
attaining its business objective, Tawana will often partner in joint ventures
with major mining houses such as the BHP Billiton group ("BHP Billiton") and the
De Beers group ("De Beers").
On 14 March 2001, Tawana listed on the ASX by way of an initial public offering
of 10 million shares at A$0,50 per share. In the intervening period since its
ASX listing, Tawana has facilitated its additional capital needs through various
private placements and the issue to shareholders of ASX-listed share options.
At 14 October 2005, being the last practicable date prior to the finalisation of
the Pre-listing Statement, the ASX market capitalisation of Tawana was
approximately A$45,3 million, based on an issued share capital of 60 360 628
shares and a closing ASX market price of A$0,75 per Tawana share. Applying an
exchange rate on the last practicable date of ZAR4,91, equates to an indicative
JSE market capitalisation for Tawana of ZAR222,3 million. Such market
capitalisation does not take account of the approximately 17 774 121 ASX-listed
share options at the last practicable date. These share options, which entitle
the holders thereof to subscribe for new ordinary shares in Tawana at a price of
A$0,75 per share, will expire on 30 November 2005, unless exercised prior
thereto. These share options will not be listed on the JSE.
2. TAWANA GROUP"S DIAMOND PROJECTS
A brief overview of the Tawana group"s diamond projects which are located in
prospective areas are as follows:
2.1 South African Projects
Tawana Alluvial Project, Limeacres District, South Africa
(74% owned and operated by Tawana, 26% owned by Seven Falls Trading 155
(Proprietary) Limited ("Seven Falls") and with BHP Billiton participating in a
2,5% gross revenue royalty)
The Tawana Alluvial Project ("TAP") area encompasses two alluvial deposits, the
Feeder Channel and the Eastern Gravels, which extend from 300 metres from the De
Beers-owned Finsch mine, for a distance of approximately 18 kilometres from the
mine. The key interest in the TAP relate to the discovery by means of Falcon
technology of a large previously unknown occurrence of diamondiferous alluvial
deposit, immediately down slope of one of the world"s most significant hard rock
diamond mines.
Daniel Kimberlite Project, Limeacres District, South Africa
(51,8% owned by BHP Billiton, 26% owned by Seven Falls and 22,2% owned and
operated by Tawana)
The Daniel Kimberlite Project ("DKP") is a joint venture between Tawana and BHP
Billiton and encompasses an area 25 kilometres in radius centred on the
De Beers-owned Finsch Mine. Utilisation of Falcon technology has led to the
identification of kimberlitic targets situated in the Limeacres District of
South Africa.
Daniel Alluvial Project
(44,4% owned by BHP Billiton, 26% owned by Seven Falls and 29,6% owned and
operated by Tawana)
The Daniel Alluvial Project ("DAP") encompasses the Main Channel of an ancient
river course that was initially discovered by BHP Billiton utilising its Falcon
technology. Following a program of drilling and bulk sampling, the Company
confirmed the DAP to be a palaeochannel carrying diamond bearing "ancient"
gravels, strikingly large in area and volume and that in situ diamonds were most
likely the product of the erosion of the nearby De Beers-owned Finsch Mine
kimberlitic pipe.
Kareevlei Wes Kimberlite Project, Kimberley region, South Africa
(74% owned and operated by Tawana and 26% owned by Seven Falls)
The Kareevlei Wes Kimberlite Project ("KWP") comprises a cluster of five
kimberlitic pipes, which vary in surface areas from 0,3 Ha to 5,8 Ha. The key
interest in this project relates to the size of the pipes in the cluster and,
particularly, the exceptional quality of the diamonds in the kimberlites.
Perdevlei Kimberlite Project, Kimberley region, South Africa
(74% owned and operated by Tawana, 26% owned by Seven Falls and with Trans Hex
Group Limited participating in a 5% royalty to a maximum of ZAR2 million)
The Perdevlei Kimberlite Project ("PKP") comprises two kimberlite pipes having a
surface area of approximately 1,7 Ha and 0,2 Ha, respectively.
From previous analysis, both of these kimberlites, K1 and K2, are known to be
diamondiferous. The key interest in PKP relates to the fact that K1 contains
diamonds that are believed to be of good quality and with proximity to the KWP
being favourable, possible future mining synergies and economies of scale exist.
2.2 Project in Botswana
Seolo Diamond Project, Botswana
(100% owned by Tawana)
Seolo Botswana (Proprietary) Limited ("Seolo"), a subsidiary, presently has
three diamond exploration licenses covering an area of 2 010 square kilometres
in the prospective northern part of Botswana, between the city of Francistown
and the Orapa kimberlite province. The licenses cover areas, which are known to
be geologically favourable for kimberlite intrusions and which were known to
include sites where kimberlitic indicator minerals had been recovered by earlier
explorers.
2.3 Projects in Australia
Timber Creek Project, Northern Territory
(100% owned by Tawana)
The Timber Creek Project, which was originally acquired from De Beers, comprises
a cluster of five kimberlitic intrusions and the surrounding potential for
alluvial diamond placers. The key interest in this project is the apparent high
grade of the kimberlite.
Flinders Island Project, South Australia
(80% owned by Tawana and 20% owned by Orogenic Exploration Pty Limited)
Flinders Island is some 39 square kilometres in extent situated 28 kilometres
west of the Eyre Peninsula of South Australia. The island is formed of granite
and is covered by some 10 to 30 metres of younger sediments and sands.
Results of earlier soil sampling and drilling in this area have shown an
abundance of kimberlitic indicator minerals from surface to bedrock contact at
approximately 15 metres below surface.
Eyre Peninsula Project, South Australia
(80% owned by Tawana and 20% owned by Orogenic Exploration Pty Limited)
Results of chemical analyses of kimberlitic indicator minerals recovered from
samples in this project area show a high percentage of picroilmenites displaying
chemical attributes which are characteristic of minerals associated with diamond
bearing kimberlites.
Whirlwind Plains Project, Northern Territory
(100% owned by Tawana)
The Whirlwind Plains Project covers 500 square kilometres and is located in the
Northern Territory some 200 kilometres from the Western Australian border. A
ground-based gravity survey was conducted over an area of the project to test
the hypothesis that several ancient palaeo river channels exist in this area.
The survey results indicate that such channels do occur in the project area and
the gravity survey data will be analysed in greater detail to define specific
locations for further work.
3. REASONS FOR THE LISTING OF TAWANA ON THE JSE AND OF THE PRE-LISTING
STATEMENT
The reasons for the listing of Tawana on the JSE are, inter alia, as follows:
* to add further impetus and credibility to the Tawana group"s South African and
African diamond exploration aspirations, activities and projects;
* to provide Tawana with an additional market through which the efficient
funding of the group"s South African Projects and other African exploration and
acquisition opportunities may be facilitated and funded;
* to assist in the execution of any additional Black Economic Empowerment
("BEE") transactions that may present themselves as opportunities to the Tawana
group, thus enabling the Company to further enhance its BEE status and
credibility vis a vis the Mining Charter, Minerals and Petroleum Resources
Development Act, 2002, and the Minerals Act, 1991;
* to focus attention of prospective South African investors on the merits of
investing in Tawana, thereby helping to enlarge the potential investor pool for
Tawana shares and, over time, improving the liquidity and marketability of
Tawana shares; and
* to facilitate direct share investment by South African residents in Tawana,
being a company providing the opportunity to partake in a pure-play diamond
resources business.
The reasons for the Pre-listing Statement are as follows:
* to provide the South African public and general investment community with all
relevant information regarding the operations, directors and management of the
Tawana group; and
* to set out historical financial and other information relating to Tawana, so
as to enable Tawana to obtain a listing of its shares on the JSE.
4. BEE AND CORPORATE Governance WITHIN THE TAWANA GROUP
4.1 During April 2005, Seven Falls, a BEE-owned company, entered into an
agreement whereby Seven Falls would acquire a 26% interest in the South African
Projects of Tawana. The South African Projects comprise five projects as well as
certain new project applications. Seven Falls will also be BHP Billiton"s BEE
partner in the DKP and DAP.
The Seven Falls transaction, implemented by way of a joint venture between
Tawana and Seven Falls, progresses substantially the commitment of Tawana to the
Mining Charter as published in terms of the Mineral and Petroleum Resources
Development Act, No. 28 of 2002, which requires that mining and exploration
companies establish joint ventures and/or partnerships with South African
companies controlled by previously historically disadvantaged South Africans.
The directors believe that the Seven Falls transaction is significant in
strategically bringing the investment profile of the Tawana group in South
Africa into line with South African upliftment legislation in a manner
commercially sustainable and justifiable to shareholders.
Furthermore, security of exploration tenure for Tawana is achieved in a value-
enhancing manner. The involvement of Seven Falls will facilitate and expedite
the granting of outstanding prospecting and mining right applications and will
provide an opportunity for the directors and employees of Seven Falls to
participate directly in Tawana"s exciting diamond projects through the aligning
of interests in the economic success of Tawana"s projects.
4.2 Corporate Governance Statement
The ASX Listing Rules were amended, effective 1 January 2003, requiring
companies to disclose the extent to which they have complied with the best
practice recommendations of the ASX Corporate Governance Council - Principles of
Good Corporate Governance and Best Practice Recommendations ("ASX Council").
Whilst implementation of the ASX Council"s recommendation is not mandatory, the
Board understands their importance and has acted to implement such principles in
a manner consistent with the practicalities and size of the Company.
5. PROSPECTS FOR THE TAWANA GROUP AND RECENT DEVELOPMENTS
For just over two years, Tawana has explored, drilled and sampled for diamonds
within the DAP. This palaeochannel, originally identified by BHP Billiton"s
Falcon technology, contains significantly large volumes of diamond bearing
ancient gravels derived from the erosion of the Finsch Mine kimberlite pipe
located 300 meters from the boundary of the project. By 2005, the DAP has been
shown to comprise three separate, but related, diamondiferous gravel deposits.
Due to the high risk/reward nature of the diamond exploration business, the
Company has, from inception, adopted a portfolio approach whereby successful
projects will be developed sequentially, with cash flow from a successful
project being available for the financing of the next and to contribute to
exploration of others. With constrained administrative outlays, as well as
effective cash flow management, Tawana"s approach is to enhance shareholder
value by maintaining the tightest possible capital structure.
The Perdevlei Kimberlite Project and the KWP are in the position of having
advanced to the pre-feasibility stage with the potential for developing medium-
sized profitable mines in the short term. The two projects, located only 25
kilometres apart, afford efficiency and synergies in operational and security
structures through being able to utilise a single centrally located X-ray
diamond recovery facility as well as the potential for shared services.
The Company"s Australian-located Timber Creek diamond project is still in the
evaluation stage with possible development likely in the medium term. The
Flinders Island and Eyre Peninsula projects are at an early stage of
exploration.
In addition to the aforementioned, Tawana also has two high-quality exploration
ventures. Firstly, there are the kimberlite targets to be explored as part of
the DKP joint venture with BHP Billiton. These targets, like the DAP, were also
discovered by the Falcon technology but remain to be tested. Secondly,
exploration is continuing on Whirlwind Plains, in the Northern Territory of
Australia, where a diamondiferous palaeochannel has been identified.
On 6 September 2005, Tawana announced its intention to proceed with a bonus
issue to shareholders of April 2008 share options. The issue of the share
options, expected to take place to shareholders registered at the close of
trading on the JSE and ASX on or about Thursday, 15 December 2005, will further
provide the Company with an avenue to fund and to substantially upgrade the
envisaged future production from the KWP and Tawana Alluvial Project in South
Africa. Such additional funding will also be required to maintain future
exploration momentum, including participation in the joint venture with BHP
Billiton over the Main Channel and the DKP.
In a recent development, Tawana announced on 14 October 2005 that a Memorandum
of Understanding with De Beers Australia Exploration Limited to establish a
50/50 Joint Venture Company ("JV") into which Tawana and De Beers will transfer
their existing Australian exploration projects had been signed.
The Memorandum of Understanding provides for the valuation of each company"s
contribution equally at A$3 million and for a future alliance in terms of which
the JV will have a right of first refusal to any new diamond project developed
in Australia by De Beers from its existing data base.
Tawana will advance funding for the JV on a convertible loan basis so that
Tawana"s equity in the JV can increase. The immediate exploration program is
budgeted to cost A$0,4 million and is expected to commence in early November
2005. Key De Beers technical staff are to be retained to maintain exploration
excellence.
6. DIRECTORS OF THE TAWANA GROUP
6.1 Directors of Tawana
The names, ages, nationalities, business addresses and capacities of the
directors of Tawana are as follows:
Name, age
and nationality Business address Capacity
Brian Phillips (62) Suite 213, 530 Little Collins Street Chairman
(Australian) Melbourne VIC 3000
Australia
Wolf T Marx (59) Suite 213, 530 Little Collins Street Managing director
(Australian) Melbourne VIC 3000
Australia
Leon Daniels (48) PO Box 10775, Tatitown Executive director
(South African) Botswana
Euan Luff (59) 154a Beckett Street Non-executive
(Australian) Melbourne VIC 3000 director
Australia
6.2 Holdings of Tawana shares by directors
At the last practicable date, the directors had the following holdings of Tawana
shares:
Direct Indirect Issued
Beneficial Non- Beneficial Non- share
Director beneficial beneficial Total capital
L Daniels - - 5 391 499 - 5 391 499 8,9%
R E Luff - - 5 564 436 - 5 564 436 9,2%
W T Marx - - 5 998 500 - 5 998 500 9,9%
B Phillips - - 123 400 - 123 400 0,2%
7. FINANCIAL INFORMATION
With effect from 1 January 2005, all Australian reporting entities are required
to prepare and report accounts in compliance with International Financial
Reporting Standards ("IFRS"). In this regard, Tawana is in the process of
managing its transition from the reporting requirements of the Australian
Accounting Standards Board to IFRS. Accordingly, the results of Tawana in
respect of its financial year ending 31 December 2005, will be in compliance
with IFRS.
7.1 Consolidated income statements for the years ended 31 December 2004, 31
December 2003 and 31 December 2002
Consolidated income statements
2004 2003 2002
A$ A$ A$
Revenue from ordinary activities 245,466 361,787 211,688
Expenses from ordinary activities:
Cost of sales - (87,422) (110,806)
Borrowing costs expense (46,613) (69,371) -
Depreciation and amortisation (394,910) (152,204) (96,596)
Other expenses from ordinary
activities (1,327,475) (871,856) (1,222,645)
Loss from ordinary activities
before
income tax expense (1,523,532) (819,066) (1,218,359)
Income tax attributable to
ordinary activities - - (3,582)
Loss for ordinary activities
after income
tax expense (1,523,532) (819,066) (1,221,941)
Net loss/(gain) attributable to
outside
equity interest 20,005 (6,853) 37,180
Net loss attributable to members
of Tawana (1,503,527) (825,919) (1,184,761)
Total revenue, expense and
valuation
adjustments attributable to
members of
Tawana and recognised directly in
equity - - (1,133)
Total changes in equity, other
than those
resulting from transactions with
owners as
owners attributable to Tawana (1,503,527) (825,919) (1,185,894)
Basic loss per share (cents) (0.029) (0.019) (0.034)
Diluted loss per share (cents) (0.029) (0.019) (0.022)
7.2 Consolidated balance sheets for the years ended 31 December 2004, 31
December 2003 and 31 December 2002
Consolidated balance sheets
2004 2003 2002
A$ A$ A$
Current assets
Cash assets 221,410 200,192 1,493,669
Term deposit 2,819,051 4,517,795 672,200
Receivables 1,080,578 237,484 348,690
Inventories 11,974 10,670 4,722
Total current assets 4,133,013 4,966,141 2,519,281
Non-current assets
Receivables 33,200 21,833 -
Investments 225,449 - -
Property, plant and equipment 1,915,494 912,236 162,854
Other - 29,218 58,490
Exploration expenditure 9,618,085 6,175,728 3,903,077
Intangibles 148,919 209,653 270,387
Total non-current assets 11,941,147 7,348,668 4,394,808
Total assets 16,074,160 12,314,809 6,914,089
Current liabilities
Payables 149,173 372,527 266,426
Interest bearing liabilities - 29,445 23,551
Total current liabilities 149,173 401,972 289,977
Non-current liabilities
Non-interest bearing liabilities - - 787
Interest bearing liabilities - 282,351 296,264
Total non-current liabilities - 282,351 297,051
Total liabilities 149,173 684,323 587,028
Net assets 15,924,987 11,630,486 6,327,061
Equity
Contributed equity 20,361,252 14,631,617 8,509,126
Reserves 22,884 657,460 657,460
Accumulated losses (4,459,149) (3,492,824) (2,666,905)
Total parent entity interest in
equity 15,924,987 11,796,253 6,499,681
Total outside equity interest - (165,767) (172,620)
Total equity 15,924,987 11,630,486 6,327,061
7.3 Share capital
The issued share capital of Tawana, at the last practicable date, comprises 60
360 628 shares of no par value.
It should be noted that, unlike South African incorporated companies, Australian
companies are not required to stipulate or provide for an authorised share
capital.
At the last practicable date, 17 774 121 November 2005 share options remain in
issue.
8. LISTING ON THE JSE AND TRADING OF THE SHARES OF TAWANA
The JSE has granted a listing for all of the issued shares of Tawana in the
"Resources, Mining - Diamond" sector of the JSE list under the abbreviated name
"Tawana", with effect from the commencement of trading on the JSE on Monday, 14
November 2005. The JSE code will be TAW and the ISIN AU000000TAW7.
At the last practicable date, Tawana has in issue:
* 60 360 628 ordinary shares of no par value; and
* 17 774 121 share options entitling the holders thereof to subscribe for new
ordinary shares in Tawana at a price of A$0,75 per share at any time on or prior
to 30 November 2005. The share options, currently listed on the ASX, will expire
at the close of business on Wednesday, 30 November 2005 and a listing on the JSE
in respect thereof has not been made.
To facilitate settlement of the trade in Tawana shares, a mechanism has
been established by the directors.
The directors are confident that as opportunities present themselves for growth
by Tawana, such opportunities will, wherever possible and feasible, be
structured in a manner that will facilitate and enhance liquidity in the trading
of the Company"s shares.
9. COPIES OF THE PRE-LISTING STATEMENT
Copies of the Pre-listing Statement, in English only, can be obtained during
normal business hours from Friday, 4 November 2005 to Wednesday, 30 November
2005 from the following South African entities:
* PricewaterhouseCoopers Corporate Finance (Pty) Limited, 2 Eglin Road,
Sunninghill, 2157, South Africa (Private Bag X36, Sunninghill, 2157, South
Africa);
* Investec Bank Limited, 100 Grayston Drive, Sandown, Sandton, 2196, South
Africa (PO Box 785700, Sandton, 2146, South Africa);
* Attorneys, Adrian B Horwitz & Associates, Ground Floor, Barnet House, 45 du
Toitspan Road, Kimberley, 8031, South Africa (PO Box 1601, Kimberley, 8300,
South Africa);
* Attorney, Charles Cohen, 108 Fances Street, Norwood, Johannesburg, 2192, South
Africa
(PO Box 95260, Grant Park, 2051, South Africa); and
* Computershare Investor Services 2004 (Proprietary) Limited, Ground Floor, 70
Marshall Street, Johannesburg, 2001, South Africa (PO Box 61051, Marshalltown,
2107, South Africa).
Represenative office:
Kimberley
3 November 2005
Corporate adviser and sponsor
PricewaterhouseCoopers
Corporate Finance (Pty) Ltd
(Registration number 1970/003711/07)
Attorneys
ADRIAN B HORWITZ & ASSOCIATES
Independent mining expert
SNOWDEN
Date: 03/11/2005 10:18:40 AM Produced by the JSE SENS Department
