| Fri 31 Mar 2006, 14:41 | | Teal Exploration & Mining Incorporated - Abridged |
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Teal Exploration & Mining Incorporated - Abridged Pre-Listing Statement
TEAL EXPLORATION & MINING INCORPORATED
Corporate Access Number: 31403
ISIN: CA8781511099
(Incorporated in Yukon, Canada on 1 June 2005)
SA Company Registration Number: 2006/003229/10
JSE share code: TEL
JSE short name: TEAL
("TEAL" or "the Company")
ABRIDGED PRE-LISTING STATEMENT
Prepared and issued in terms of the Listings Requirements of the JSE Limited
("JSE") relating to a secondary listing of TEAL on the JSE
This is not an invitation to the public to subscribe for shares, but is issued
in compliance with the Listings Requirements of the JSE for the purposes of
giving the public information about TEAL.
This announcement contains the salient information in respect of TEAL which is
more fully described in the Pre-listing Statement. For a full appreciation of
the proposed listing of TEAL Common Shares on the JSE, the Pre-listing
Statement, which is available on request as set out in paragraph 8 below, should
be read in its entirety.
1 INTRODUCTION
TEAL wishes to obtain a secondary listing of its Common Shares on the JSE,
by way of introduction, in order to derive the various strategic benefits
that this could provide.
The main purposes of the listing on the JSE are to:
- enhance South African investors" awareness of TEAL, thereby enlarging
TEAL"s potential investor base, which could lead to increased
liquidity in TEAL"s Common Shares; and
- facilitate direct investment by South African residents in TEAL.
TEAL will be listed on the JSE on 3 April 2006.
2. TSX LISTING
TEAL is listed on the TSX under the share code "TL" and classified under
"Mining".
TEAL listed on the TSX on 15 November 2005 following its Initial Public
Offering ("IPO") that raised US$33.3 million (net of expenses). As part of
the IPO, TEAL had granted the underwriting syndicate an option to purchase
up to 2.67 million additional Common Shares. The option was exercisable, in
whole or in part, within 30 days from 15 November 2005 to cover over-
allotments, if any. On 14 December 2005, the underwriters purchased 1.1
million treasury Common Shares from TEAL at the IPO price of C$2.25
(US$1.95) per share for gross proceeds of C$2.5 million (US$2.13 million)
in connection with the closing of the exercise of the over-allotment
option. This brought the total gross proceeds raised from the IPO to US$36
million.
3 NATURE OF BUSINESS AND GROUP STRUCTURE
TEAL is a growth-oriented mineral development and exploration company. The
Company"s management team is building on its track record in Southern
Africa, including its recent gold discovery at the Otjikoto Gold Project in
Namibia. Over the past decade, TEAL"s management has assembled a portfolio
of near to medium term development projects and exploration areas. The
Company is currently focused on its properties located in Zambia, Namibia
and the Democratic Republic of Congo ("DRC"), and continues to seek other
opportunities, mainly in southern and central Africa.
Management has targeted four specific projects, the Konkola North,
Mwambashi and Kalumines copper projects, as well as the Otjikoto Gold
Project, each of which is being progressed towards feasibility and
development decisions and each of which, management believes, has the
potential to be brought into production in the near to medium-term.
Management currently expects to complete feasibility studies on the
Mwambashi Copper Project by the end of the June 2006 financial year and on
its three other targeted projects within 19 to 36 months of the IPO.
All the assets of the Company formerly comprised the non-South African
exploration and development portfolio of African Rainbow Minerals Limited
("ARM"), a JSE listed company. ARM is a leading South African diversified
black economic empowerment mining company. ARM is a significant shareholder
of the Company holding 64.9% of the issued and outstanding Common Shares.
TEAL"s senior management team is supported by about 22 full-time personnel
(including contract employees) comprised of geologists, geotechnicians,
mining engineers, accountants and 11 support staff based in established
offices in Namibia and Zambia. In addition, TEAL staff is supplemented by
various external contractors with appropriate geological and technical
skills.
3.1. TEAL business model
3.1.1 Corporate Strategy
TEAL"s objective is to become a significant producer of base
and precious metals by pursuing the following strategies:
- Generating value from its existing mineral projects by
progressing each through clearly defined and
articulated milestones, including increasing miner
resources and completing feasibility studies, which,
subject to the receipt of positive results, will lead
to the commencement of mining operations;
- Continuing exploration of high priority targets in the
prospective areas currently controlled by TEAL;
- Seeking additional development and production
opportunities and complementary exploration properties;
and
- Building on TEAL"s history of operating in the region
where it has established positive relationships with
governments and service providers, and has gained
regional credibility.
3.1.2 Business Strengths
Since the early 1990s, TEAL has developed a broad
portfolio of mineral projects, certain of which are
nearing development decisions. TEAL"s key strengths
include:
- Near Production Mineral Projects: Management
believes that its mineral projects have the
potential to be in production in the near to
medium-term following completion of feasibility
studies. Each of these projects is located in
close proximity to infrastructure and various
geological and metallurgical work has already been
undertaken.
- Significant Discovery Potential: Management
believes that significant discovery potential
exists in its large exploration portfolio and has
identified high priority, drill-ready targets in
regions of considerable metal endowment.
- Management Experience: TEAL"s management team and
its board of directors have considerable
operational experience in southern and central
Africa and are supported by an experienced and
knowledgeable technical team. TEAL has the benefit
of extensive proprietary geological data and
knowledge of the political, regulatory, economic
and cultural aspects of the region.
- Early Mover Status: TEAL benefits from `early
mover status" in Zambia and the DRC, countries
that for 30 years experienced under-investment in
mineral exploration and development as a result of
former nationalisation policies. During the early
stages of subsequent privatisation by these
governments, TEAL was able to acquire majority
stakes in strategic tenements within the
Copperbelt in central Africa. In Namibia, TEAL was
among the first mineral exploration companies to
develop a geological understanding in the Otavi
Exploration Area that resulted in the recognition
of the gold potential of, and the subsequent
discovery in, a region with limited previous
exploration.
3.1.3 Development of the Business
TEAL has pursued a growth strategy in southern and
central Africa. The Company has been an early-mover in
Zambia and the DRC and continues to focus on areas that
have recently experienced economic and investment
liberalisation. In addition, TEAL"s established
presence in the region assists the Company in its
dealings with local governmental and regulatory bodies.
TEAL has developed an extensive database of local and
regional geology, mineral deposits, operating mines and
processing facilities, as well as a general awareness
of corporate mining activities and developments in
southern and central Africa.
Since commencing operations in Zambia, Namibia and the
DRC, ARM had invested, as of 30 June 2005, a current
equivalent of US$29.8 million in TEAL"s businesses.
Given ARM"s recent corporate transactions and the
ongoing opportunities within ARM"s core businesses in
South Africa, funding for TEAL"s activities has been
limited over the past three years, until the closing of
the IPO. However, exploration activity has progressed
at the Company"s projects, particularly at the Otjikoto
Gold Project.
In Zambia, TEAL established a development office in
1995, the year in which the privatisation of state-
owned mines commenced. As a result, the Company has had
the opportunity to evaluate numerous potential mineral
and exploration projects in the country, and the
Company believes that it has secured some of the most
prospective ground in Zambia. The Company"s current
interests in the Zambian Copperbelt include the Konkola
North Copper Project and the Copperbelt Joint Venture
Exploration Area, within which is TEAL"s Mwambashi
Copper Project. These projects were acquired from the
Zambian government between 1995 and 1997. The Company
focuses on projects that it believes can be producing
in the near to medium-term and offer the potential for
long-term production. The Company focuses its
exploration on areas that may host mineralisation in
structures not previously explored. TEAL"s experience
and relationships in Zambia have also led to the
Company"s participation in the Kafue Joint Venture
Exploration Area, along with Billiton Development
(Zambia) Limited ("BHP Billiton") in respect of three
licences covering approximately 2,168 square
kilometres.
In Namibia, TEAL established a development office in
1992 in that country"s capital, Windhoek. Following a
period of regional exploration, TEAL was awarded
various concessions in the country and, for most of the
1990s, focused on base metal exploration. Target
generation studies, systematic exploration and, in
particular, extensive airborne geophysical surveys, led
to the Company"s discovery of gold mineralisation in
the Otavi area. In 2003, TEAL drilled and completed a
resource estimation of a portion of this
mineralisation. TEAL has used this discovery, along
with its geological knowledge of the local region, to
acquire a licence-holding in excess of 3,000 square
kilometres, including a recently granted licence
(Licence No. 3177), in the vicinity of the Otjikoto
Gold Project.
In the DRC, TEAL has been evaluating and reviewing
numerous operations, prospects and mineral occurrences
since 1999. In the process, the Company has established
an extensive geological and mining database. TEAL
participated in the drafting of the World Bank
sponsored New Mining Code enacted in the DRC in 2002.
TEAL has developed a strategy of seeking partially
defined copper mineralisation with up-side potential
and has identified the Kasonta-Lupoto region as meeting
its criteria. In early 2005, TEAL was able to secure
the Kalumines Copper-Cobalt Project pursuant to a joint
venture with La Generale des Carrieres et des Mines
("Gecamines"). The Company believes the project has
potential for near to medium-term production.
4. OVERVIEW OF ASSETS
Mineral Projects and Exploration Areas
TEAL has four near to medium-term development projects that it is
progressing simultaneously, with the goal of achieving production status in
order to generate cash flow. TEAL also has interests in varius other
mineral licence areas on which the Company is continuing exploration
drilling and other activities. All resources quoted are in accordance with
the standards of the Canadian Institute of Mining, Metallurgy and Petroleum
and National Instrument 43-101 of the Canadian Securities Administrators.
See "Summary Mineral Resources Information" below.
4.1 Zambia - Copper Projects
4.1.1 Konkola North Copper Project - TEAL currently 100%
The Konkola North Copper Project is located within the
greater Konkola area of the Zambian Copperbelt and consists
of a single large scale mining licence covering an area of
approximately 44 square kilometres. The development of this
project is a high priority for the Company. In the opinion
of RSG Global (Pty) Limited ("RSG Global"), TEAL"s Technical
Advisor on the IPO, the greater Konkola area represents one
of the largest undeveloped copper resources in the world.
Pursuant to a drilling program in excess of 47,000 metres,
TEAL has identified inferred mineral resources of 78.8
million tonnes at 2.14% copper. This resource is contained
within only the East and South Limb areas of the project.
Historic records and more recently drilled results relating
to other areas of the project indicate a further inferred
mineral resource of approximately 107 million tonnes at
grades of 2.30% and 63 million tonnes at grades of 3.88%
copper. At the South Limb, TEAL is focussing on the
development of a high-grade region of the deposit and re-
equipping of the existing infrastructure, which includes a
423 metre vertical shaft, two ventilation shafts and three
ore haulage levels. At the East Limb, the Company is
considering the sinking of a decline shaft to access the
mineralisation. The Konkola North Copper Project is adjacent
to the existing Konkola Mine, owned by Konkola Copper Mines
plc, which has existing operational mining infrastructure.
The Konkola North Copper Project is subject to a buy-in
right of up to 20% (including a 5% carried interest) by ZCCM
IH, a company controlled by the Zambian government.
4.1.2 Mwambashi Copper Project - TEAL 70%
The Mwambashi Copper Project is located within TEAL"s
Copperbelt Joint Venture Exploration Area, a joint venture
with Korea Zinc Company, Limited ("KZC"). The project
represents TEAL"s nearest to production prospect as small-
scale mining operations are anticipated to commence within
12 months. An indicated mineral resource of approximately
8.6 million tonnes at 2.43% copper and 0.07% cobalt has been
identified. The Company is currently conducting a
feasibility study that it expects to be completed by 30 June
2006. With a positive outcome, TEAL would pursue open-pit
development, which TEAL anticipates would have low capital
requirements primarily due to the likely availability of
nearby processing facilities.
4.2 Namibia - Gold Project and Exploration Area
4.2.1 Otjikoto Gold Project and Otavi Exploration Area - TEAL 100%
The Otjikoto Gold Project is situated within TEAL"s 100%
owned Otavi Exploration Area, which totals 3,084 square
kilometres in north-central Namibia, where the Company
recently discovered vein-hosted gold mineralisation. TEAL
has undertaken resource estimation work at the Otjikoto Gold
Project and an inferred mineral resource of approximately
870,000 ounces of gold has been defined to date. The Company
believes the resource is open-ended and has potential for
the delineation of further resources. TEAL has conducted
airborne geophysics and geological compilation over the
Otjikoto Gold Project and has identified targets, several of
which are high priority and in close proximity to the known
deposit. TEAL plans to expand and upgrade the current
resource base through further drilling and expects to
undertake a feasibility study of the Otjikoto Gold Project
within 36 months. The project is located close to a
developed system of road, rail, electrical power, ground
water and communications.
4.3 Democratic Republic of Congo - Copper-Cobalt Projects
4.3.1 Kalumines Copper-Cobalt Project - TEAL 60%
Situated in the DRC in close proximity to the city of
Lubumbashi, the Kalumines Copper-Cobalt Project, a joint
venture with Gecamines, comprises approximately 77 square
kilometres. The project area hosts four near surface areas
of copper mineralisation that the Company believes may be
exploitable using open-pit mining techniques. Drilling,
trenching and pitting were undertaken by previous owners and
copper and cobalt mineralisation was identified over a
strike length in excess of 3 kilometres. The Company has
agreed with Gecamines to conduct a drilling program to
define the resource and to complete a feasibility study on
the project by May 2007. The nearby city of Lubumbashi and
the historic Kipushi Mine have most necessary support
infrastructure in place.
4.4 Zambia - Exploration Areas
4.4.1 Copperbelt Joint Venture Exploration Area - TEAL 70%
The Copperbelt Joint Venture Exploration Area consists of
five large scale prospecting licences, subject to a joint
venture with KZC, covering approximately 2,800 square
kilometres adjacent to producing copper mines on the Zambian
Copperbelt. TEAL is focussing its immediate exploration
activities based on results obtained from the Company"s
application of two geological models: a newly-identified
Kansanshi type copper and gold (polymetallic) style and the
classical Zambian Copperbelt style of mineralisation. TEAL
has identified several high-priority targets where copper
mineralisation is known and intends to assess these targets
through drilling.
4.4.2 Kafue Joint Venture Exploration Area - TEAL 51%
The Kafue Joint Venture Exploration Area consists of three
exclusive exploration licences covering an area of
approximately 2,168 square kilometres in central Zambia and
is subject to joint venture agreements with BHP Billiton.
These licences cover geological terrains adjacent to the
historic Kabwe Zinc and the operating Nampundwe
Pyrite/Copper mines and within 50 kilometres of the newly
discovered Munali Nickel Deposit. The Company has identified
targets resulting from the application of BHP Billiton"s
airborne FalconTM gravity survey technology. TEAL intends to
explore the licence area by drill-testing several of these
high priority targets for base metal mineralisation. Also
within this exploration area is the Lusaka West nickel-PGM
exploration target that the Company plans to evaluate by
drilling.
4.4.3 Additional Zambian Exploration Licences
TEAL has four additional wholly-owned large scale
prospecting licences covering 6,679 square kilometres of
prospective geological terrain in Zambia, three of which are
located between the towns of Lusaka and Kabwe and one being
located within Zambia"s Eastern Province. The Company
considers the properties that are subject to the Company"s
licences to have the potential for carbonate hosted, high-
grade zinc silicate, sediment-hosted copper and magmatic
nickel sulphides mineralisation.
Summary Mineral Resources Information
The table below sets forth a summary of the mineral resources at TEAL"s material
projects as at 16 September 2005, estimated in accordance with the standards of
the Canadian Institute of Mining, Metallurgy and Petroleum and National
Instrument 43-101 of the Canadian Securities Administrators. In the opinion of
RSG Global, the reported resources are reasonable based on the methods used.
Mineral resources are not mineral reserves and have not demonstrated economic
viability, but are believed to have reasonable prospects for economic
extraction. Indicated mineral resources are sufficiently well defined to allow
geological and grade continuity to be reasonably assumed and permit the
application of technical and economic parameters in assessing the economic
viability of the resource. Inferred mineral resources are estimated on limited
information not sufficient to verify geological and grade continuity and to
allow technical and economic parameters to be applied. Inferred mineral
resources are too speculative geologically to have economic considerations
applied to them to enable them to be categorised as mineral reserves and there
is no certainty that mineral resources will be upgraded to mineral reserves
through continued exploration.
Mineral Project Licence Current Mineral
Number Ownership Resource Tonnes
Category (000)
Current Mineral Resource
Estimates
Konkola North Copper
Project(1)
East Limb(2)(3) 20 100% Inferred 29,430
South Limb(2)(3) 20 100% Inferred 49,400
Mwambashi Copper 72 70% Indicated 8,614
Project(2)(3)
Otjikoto Gold 2410 100% Inferred 25,581
Project(4)
Historical Mineral Resource
Estimates
Konkola North Copper
Project(1)
Area `A"(5) 20 100% Inferred 107,157
Area `A" 20 100% Inferred 63,254
Extension(5)
Kalumines Copper-
Cobalt Project(2)(6)
Lupoto(7) 2590 60% Inferred 6,700
Kasonta(7) 2590 60% Inferred 1,500
Mineral Project Gold Contained Copper Contained Copper
Grade Gold Grade
(g/t) (oz) (%)
Tonnes Pounds
(000) (millions)
Current Mineral Resource
Estimates
Konkola North Copper
Project(1)
East Limb(2)(3) - - 2.52 742 1,636
South Limb(2)(3) - - 1.92 948 2,091
Mwambashi Copper - - 2.43 209 461
Project(2)(3)
Otjikoto Gold 1.06 873,000 - - -
Project(4)
Historical Mineral Resource
Estimates
Konkola North Copper
Project(1)
Area `A"(5) - - 2.30 2,460 5,427
Area `A" - - 3.88 2,450 5,410
Extension(5)
Kalumines Copper-
Cobalt Project(2)(6)
Lupoto(7) - - 3.13 210 462
Kasonta(7) - - 5.18 78 171
Notes:
(1) ZCCM-IH has buy-in rights for up to 20% (including a 5% carried
interest) of the Konkola North Copper Project.
(2) Although the mineralised zones were modelled on a 1% copper cut-off,
using the soft boundary method, the boundaries of the mineralisation
zones were extended by 1 metre when calculating resources and grade.
(3) Estimates dated February 2005.
(4) Although the mineralised zones were modelled on a 0.5 grams/tonne gold
cut-off, using the soft boundary method, the boundaries of the
mineralised zones were extended by 1 metre when calculating resources
and grade. Current estimates dated 2004.
(5) Historical estimates dated June 1999 and pre-dating National
Instrument 43-101. The source of these estimates is ARM. RSG Global
concurs with the Company that these historical estimates are relevant,
however, due to insufficient data, RSG Global is unable to verify
these estimates in terms of National Instrument 43-101. Nevertheless,
RSG Global equates these estimates with an inferred mineral resource
category.
(6) Potentially subject to a 5% transfer obligation to the DRC government
under the DRC"s New Mining Code.
(7) Historical estimates dated March 1996 and pre-dating National
Instrument 43-101. The source of these estimates is Gecamines. RSG
Global concurs with the Company that these historical estimates are
relevant and with the Company treating these estimates as inferred
mineral resources. These mineral resource estimates were unclassified
by Gecamines and are not verifiable.
5. FUTURE PROSPECTS
In Zambia, management is assessing the potential of upgrading the resource
to a reserve category for the Mwambashi Copper Project followed by the
completion of a bankable feasibility study to optimise the development of
this resource. It is expected that by end of calendar 2006, TEAL will have
completed the necessary permitting requirements, finalised marketing and
off-take arrangements; mine site establishment will be concluded, and open-
pit mining will have commenced. This is expected to enable the build-up to
full production during the first-half of calendar 2007.
At Konkola North, management intends to upgrade the resource base and
complete feasibility studies to access the high-grade, shallow copper
resource, including the South Limb, using the existing infrastructure.
These studies will also assess the viability of the East Limb resource and,
in addition, the intention is to further investigate Area `A" and Area `A"
Extension, which currently has approximately 170 million tonnes of mineral
resource derived from historical drilling and data.
At Kasonta-Lupoto Mines s.p.r.l. ("Kalumines"), an agreement has been
signed with NOVA Mining s.p.r.l. ("NOVA"), a subsidiary of Australian-
listed New World Alloys Limited. NOVA has an exclusive right, in terms of
the contract, to work in collaboration with small-scale miners on certain
of TEAL"s properties to purchase and remove up to 1,000 tonnes a month of
high-grade ore currently being mined from surface. NOVA processes the
material at its facility in the DRC and TEAL receives an agreed percentage
of the London Metal Exchange price based on the copper content of the ore
supplied. NOVA"s activities on Kalumines" properties will also enable TEAL
to conduct its future exploration programs more efficiently.
The remaining exploration areas in Zambia and the DRC are, or will be, the
subject of additional exploration, including verifying the Falcon gravity
results in the Kafue Joint Venture Exploration Area. In the DRC, management
aims to delineate resources and complete a feasibility study on the Lupoto-
Kasonta project.
In Namibia, management is conducting resource extension and delineation
drilling at the Otjikoto Gold Project and aims to complete a full
feasibility study on a possible new gold mining operation. The Otavi
Exploration Area will be the subject of further regional surveys and phase
2 drill testing will be undertaken on specific targets.
6. SECONDARY LISTING ON THE JSE
The JSE has approved the application for a secondary listing of the 53 900
001 issued Common Shares of TEAL in the "Industrial Metals - Nonferrous
Metals" sector of the JSE list under the abbreviated name "TEAL", share
code "TEL", with effect from the commencement of business on Monday, 3
April 2006.
7. DIRECTORS
The following table sets out, for each of the Company"s directors, the
person"s name, age, citizenship (if not South African), positions with the
Company and principal occupation / function:
Name and Nationality Business address Principal Occupation and
TEAL function
Patrice Motsepe (44) 29 Impala Road, Executive chairman, ARM
Chislehurston Chairman, TEAL
Sandton, 2146, South
Africa
Joaquim Chissano (66) 56 Main Street, Corporate director,
(Mozambique) (1) Johannesburg, 2001, Deputy chairman, TEAL
South Africa
Rick Menell (50) 56 Main Street, President and Chief
Johannesburg, 2001, Executive Officer, TEAL
South Africa
Frank Abbott (50) (2) (3) 29 Impala Road, Financial director, ARM
Chislehurston Sandton, Director, TEAL
2146, South Africa
Norman Hardie (68) (Canada) BCE Place, TD Canada Business consultant
*(1)(3) Trust Tower, 161 Bay Non-executive Director,
Street, Suite 2662, TEAL
Toronto, ON M5J 2S1,
Canada
Dr. Murray W. Hitzman (51) Colorado School of Head of the Geology and
(United States of America) Mines, Golden, CO 80401 Geological Engineering
*(1) USA Department at the
Colorado School of Mines
Non-executive Director,
TEAL
George Jones (63) (Canada) BCE Place, TD Canada Corporate director
*(1)(2)(4) Trust Tower, 161 Bay Non-executive Director,
Street, Suite 2662, TEAL
Toronto, ON M5J 2S1,
Canada
Michael King (68) (1)(2)(4) 56 Main Street, Corporate director
Johannesburg, 2001, Non-executive Director,
South Africa TEAL
Andre Wilkens (57) (3) (4) 29 Impala Road, Chief Executive Officer,
Chislehurston Sandton, ARM
2146, South Africa Director, TEAL
Notes:
* Independent director
(1) Independent within the meaning of Multilateral Instrument 52-110
- Audit Committees of the Canadian Securities Administrators
(``52-110"").
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Corporate Governance and Nominating Committee.
8. COPIES OF THE PRE-LISTING STATEMENT
Copies of the Pre-listing Statement (in English only) can be obtained from
the Company on the 7th Floor, 56 Main Street, Johannesburg, 2001, during
normal business hours from Monday, 3 April 2006, for a period of 14 days.
Additional investor relations queries can be directed to Julian Gwillim at
the Company"s corporate office in Toronto, Canada, or on +1 (416) 572 2117,
or julian@tealmining.com.
31 March 2006
Investment Bank and Sponsor:
Investec Bank Limited
Reporting accountants and auditors:
Ernst & Young LLP
Technical advisor:
RSG Global
Date: 31/03/2006 02:41:43 PM Produced by the JSE SENS Department
