| Wed 23 Aug 2006, 7:00 | | Aflease Gold Limited - BEE transactions by Aflease |
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AFO
AFO
Aflease Gold Limited - BEE transactions by Aflease Gold
AFLEASE GOLD LIMITED
(Formerly Sub Nigel Gold Mining Company Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1984/006179/06)
Share Code: AFO & ISIN Code: ZAE000075867
("Aflease Gold" or "the Company")
BEE TRANSACTIONS BY AFLEASE GOLD
1. Introduction
Aflease Gold shareholders are advised that the Company has entered
into two agreements, dated 12 April 2006 and 16 August 2006 with
Micawber 400 (Proprietary) Limited ("Micawber 400") and Micawber 472
(Proprietary) Limited ("Micawber 472"), respectively ("the
Agreements"). Both Micawber 400 and Micawber 472 are 100% owned by
historically disadvantaged South Africans ("HDSA"s") (hereinafter
collectively referred to as "the Purchasers").
Aflease Gold has, in terms of the Agreements, sold with effect from
the fulfilment of all suspensive conditions ("the Effective Date") to
each of the Purchasers respectively, an undivided 26% share of the
Company"s right, title and interest in and to the business consisting
of the following assets and liabilities:-
- the exploration and mining activities in respect of the Company"s
Modder East and Spaarwater mining area (in the case of Micawber
400) and the Ventersburg mining areas (in the case of Micawber
472) and including the Company"s entire gold prospecting and
planned mining activities in those areas;
- the associated prospecting areas including, inter alia, New
Kleinfontein / Turnbridge, Holfontein and other Sub Nigel areas,
in respect of which Aflease Gold has applied for prospecting
rights under section 16 of the Mineral and Petroleum Resources
Development Act, 28 of 2002 ("MPRD Act");
- the rehabilitation obligations relating to the above mentioned
mining and prospecting activities;
(collectively the "Sale Assets"); and
- the aggregate of the liabilities at the Effective Date in respect
of the abovementioned Sale Assets (the "Sale Liabilities").
The undivided 26% shares of the Sale Assets and the Sale Liabilities
purchased by each of the Purchasers at the Effective Date are
collectively referred to as the "Micawber 2 Share", to distinguish it
from a similar sale and purchase entered into with Micawber 397
(Proprietary) Limited by the Company"s affiliate Uraniumone Africa
Limited (formerly Aflease Gold and Uranium Resources Limited).
In addition to the Agreements, Aflease Gold has also entered into the
other contracts with the Purchasers, referred to in paragraph 3 below
("the Other Contracts"). The Agreements and the Other Contracts are
collectively referred to as the "Transactions".
2. Rationale for the Transactions
The purpose of the Transactions is to provide Aflease Gold with Black
Economic Empowerment ("BEE") partners in compliance with the
requirements of the Broad-Based BEE Act, 2003, the Codes of Good
Practice published in terms thereof and the Broad-Based Socio-Economic
Empowerment Charter for the South African Mining Industry, developed
in terms of Section 100 of the MPRD Act.
The shareholder profile of each of the Purchasers will enable Aflease
Gold to achieve its required BEE status as set out above, which
shareholder profile will be as follows:
In the case of Micawber 400:
The Aflease Gold Community Trust 30%
The Aflease Gold Employee Trust 30%
Africa Vanguard Resources (Proprietary) 20%
Limited, a wholly HDSA owned entity
Zakothu Gold Mines (Proprietary) Limited 5%
Emseni Investments (Proprietary) Limited 5%
Bunengi Holdings (Proprietary) Limited 5%
Nkumane Mining (Proprietary) Limited 5%
In the case of Micawber 472:
A local community trust, to be established 30%
The Aflease Gold Employee Trust 30%
Africa Vanguard Resources (Proprietary) 20%
Limited, a wholly HDSA owned entity
Zakothu Gold Mines (Proprietary) Limited 5%
Bunengi Holdings (Proprietary) Limited 5%
South African Women in Mining association 5%
Emseni Investments (Proprietary) Limited 5%
3. Details and terms of the Transactions
3.1 The Other Contracts
3.1.1 Aflease Gold and each of the Purchasers have entered
into an unincorporated joint venture ("JV") agreement
("JV Agreement") in terms of which the following will
be contributed to each JV:
- by each of the Purchasers: its portion of the
Micawber 2 Share; and
- by Aflease Gold: an undivided 74% share of each
Business.
In consideration of the contributions of Aflease Gold
and the Purchasers to a JV, their participation in such
JV will be 74% and 26%, respectively ("Participation
Interests").
3.1.2 Each JV will enter into a Management and Skills
Transfer Agreement with Aflease Gold in terms of which
Aflease Gold will undertake the management of the
business of the JV, market and distribute the product
produced by the JV as well as assist in the transfer of
skills to HDSA"s. The management committee of each JV,
which will comprise members from the Purchasers and
Aflease Gold, will oversee the management of the
affairs and operations of the JVs.
3.2 Funding
The parties to a JV will contribute to the funding of the JV in
proportion to their Participation Interests. Until a Purchaser
has paid Aflease Gold for its Micawber 2 Share, Aflease Gold
shall lend to the Purchasers its proportionate share of the
funding of the JV ("Micawber 2 Loan"). Aflease Gold will be
entitled to the payment of interest by the Purchasers on the
Micawber 2 Loan at the same rate and payment terms obtainable by
Aflease Gold in the international lending market. The Micawber 2
Loan plus accrued interest will be repayable by the Purchasers
from the profits to which the Purchasers are entitled out of the
JV.
Aflease Gold will make available to the JV whatever equipment and
other resources which the JV may require for the purpose of the
proper management and conduct of its business and operations and
which do not form part of the Sale Assets.
3.3 Purchase Price
The purchase price for the Micawber 2 Share in respect of each of
the Purchasers will be as follows:
3.3.1 In the case of Micawber 400 it will be equal to the
lower of:
3.3.1.1 26% of the Net Present Value ("NPV") of the Sale
Assets and the Sale Liabilities at the time of the
Purchaser giving notice in writing to Aflease Gold
("the Election") described in paragraphs 3.4.2 and
3.4.3 below; or
3.3.1.2 the 30 day weighted average traded price of the
shares in Aflease Gold, calculated for the 30
business days prior to the date of the Election,
amended for the Aflease Gold assets which do not
form part of the Sale Assets, and
3.3.2 In the case of Micawber 472 it is equal to 26% of R21.2
million, i.e. R5,512,000.00
(collectively the "Purchase Price")
3.4 Payment of the Purchase Price
3.4.1 The Purchase Price for the Micawber 2 Share will be
debited as a loan account in the records of Aflease
Gold and will be paid as set out in 3.4.2 and 3.4.3
below.
3.4.2 Each Purchaser shall be obliged to give notice in
writing to Aflease Gold within 3 years of receipt the
first dividend distribution by the JV that it wishes to
pay for at least a 5/26 tranche of the Purchase Price.
3.4.3 After payment of the first 5/26 tranche referred to in
paragraph 3.4.2 above, a Purchaser will be obliged to
pay for at least 5/26 of the Purchase Price during each
subsequent 3 year period, until the Purchase Price has
been paid in full.
3.4.4 Payments made by the Purchasers for the Purchase Price
will be credited to the respective loan accounts
referred to in 3.4.1 above.
3.5 Suspensive Conditions
The Transactions are subject to, inter alia, the fulfilment of
the following suspensive conditions:
3.5.1 The grant by the Minister of Minerals and Energy
("Minister"), of New Order Rights under the MPRD Act.
3.5.2 The grant by the Minister of consent in terms of
Section 11 of the MPRD Act in respect of:
3.5.2.1 the transfer of an undivided 26% share of the New
Order Rights to the Purchasers in terms of the
Agreement;
3.5.2.2 the Purchaser"s shareholders and Aflease Gold
entering into a shareholders agreement; and
3.5.2.3 the contribution by Aflease Gold and the
Purchasers of their respective undivided shares of
the New Order Rights to the JV.
3.5.3 The obtaining of all regulatory approvals required to
conclude and implement the Agreements, including but
not limited to, approvals in terms of the Competition
Act 1998 and the JSE Limited.
Should all of the suspensive conditions precedent not have been
fulfilled or waived by the Effective Date or such date as Aflease
Gold and the Purchasers may agree to in writing, the Agreements
shall lapse and be of no further force or effect and neither
Aflease Gold nor the Purchasers shall have any rights or
obligations hereunder.
4. Financial effects
Accounting for the Transactions
Immediately following the Effective Date of the Transactions, there
will be no financial effect from an accounting perspective. The
Transactions will only be accounted for following the election by the
Purchasers to pay for at least the first 20% tranche of the Purchase
Price and then only to the extent of the instalment paid at such date
and thereafter to the extent of each further Election at the dates of
such further Elections.
Following the application of IFRIC 8 Scope of IFRS 2, which will
become effective for Aflease Gold for its financial period commencing
1 January 2007, the Company will immediately recognise the
Transactions in terms of IFRS 2 Share Based Payments with
retrospective effect.
Pro forma financial effects
The unaudited pro forma financial effects of the Transactions, on the
assumption that the Purchase Price is settled in full, are based on
the published unaudited interim financial results of Aflease Gold for
the twelve months ended 30 June 2006 and are set out below. These pro
forma financial effects, the correctness of which are the
responsibility of the directors of Aflease Gold, are given for
illustrative purposes only and because of their pro forma nature may
not give a fair reflection of Aflease Gold"s financial results and
position after the Transactions.
Before the After the Percentage
Transactions Transactions change
(1) (2)
Earnings (cents per (2.41) 49.98 n/m
Aflease Gold ordinary
share) (3)
Headline earnings (2.41) 1.65 n/m
(cents per Aflease Gold
ordinary share) (3)
NAV and NTAV (cents per 27.00 44.98 66.6%
Aflease Gold ordinary
share) (4)
Weighted average shares 380 818
in issue (`000)
Number of shares (`000) 440 015
Notes:
1. Based on the published unaudited interim financial results of
Aflease Gold for the twelve months ended 30 June 2006.
2. Reflects the effect of the Transactions assuming the Purchase
Price was settled in full.
3. Earnings and headline earnings effects are based on the following
assumptions:
i) The Transactions were effective and the Purchase Price was
settled in full on 1 July 2005;
ii) The Purchase Price is based on the weighted average market
price of Aflease Gold ordinary shares, which is assumed to
include R21.2 million in respect of the Ventersburg
business. The final purchase price for Micawber 400 shall
be determined based on the lower of 26% of the net present
value of the Business consisting of the Sale Assets and the
Sale Liabilities (specific to Micawber 400) and the 30 day
weighted moving average of the Aflease Gold share price,
amended for the Aflease Gold assets which do not form part
of the Business, at the time of the Election;
iii) Taxation on the profit on disposal has been determined at
the maximum rate applicable. The actual taxation payable on
the Transactions will be determined according to the Gold
Formula on the date of the Election; and
iv) The Purchase Price was invested at an average rate of 5.5%
per annum.
4. Net asset and tangible net asset value per Aflease Gold ordinary
share effects are based on the following assumptions:
i) The Transactions were effective and the Purchase Price was
settled in full on 30 June 2006; and
ii) The Purchase Price is based on the weighted average market
price of Aflease Gold ordinary shares, which is assumed to
include R21.2 million in respect of the Ventersburg
business. The final purchase price for Micawber 400 shall
be determined based on the lower of 26% of the net present
value of the Business consisting of the Sale Assets and the
Sale Liabilities (specific to Micawber 400) and the 30 day
weighted moving average of the Aflease Gold share price,
amended for the Aflease Gold assets which do not form part
of the Business, at the time of the Election.
5. Related Parties
As certain of the shareholders of the Purchasers, including Sandile
Zungu, (the non-executive chairman of Aflease Gold), Savannah Maziya
and Sandile Swana (both non-executive directors of Aflease Gold) are
directors of Aflease Gold, the Transactions are regarded as "related
party transactions" in terms of the JSE Limited"s Listings
Requirements.
Aflease Gold will therefore appoint an independent professional expert
to review the terms and conditions of the Transactions to ensure that
they are fair and reasonable to Aflease Gold shareholders. The
independent opinion will be contained in the circular to be sent to
shareholders as mentioned in paragraph 6 below.
6. Circular to Aflease Gold shareholders
A circular containing full details of the Transactions will be posted
to Aflease Gold shareholders in due course.
Johannesburg
22 August 2006
Investment bank and Sponsor Reporting accountants Attorneys
Nedbank Capital PricewaterhouseCoopers Inc. Deneys Reitz
Date: 23/08/2006 07:00:08 AM Produced by the JSE SENS Department
