| Wed 15 Nov 2006, 7:30 | | Lonmin Plc - Pre-conditional offer to acquire Afri |
|
LON
LOLMI
Lonmin Plc - Pre-conditional offer to acquire AfriOre
Lonmin Plc
(Incorporated in England and Wales)
(Registered in the Republic of South Africa under registration number
1969/000015/10)
JSE code: LON
Issuer Code: LOLMI & ISIN: GB0031192486
("Lonmin")
15 November 2006
Pre-conditional offer to acquire AfriOre
Lonmin Plc (``Lonmin"") is pleased to announce that it has entered into a
binding agreement ("Agreement") with AfriOre Ltd ("AfriOre") under which
AfriOre agrees to support and recommend an offer from Lonmin to acquire
AfriOre by means of a cash offer to shareholders at C$8.75 (US$7.74) per
AfriOre share. Such an offer, which would be undertaken according to
Canadian securities market regulations, would value AfriOre at around
US$441 million (C$500 million).
AfriOre is a BVI domiciled company that trades on the TSX in Toronto and
AIM in London. AfriOre"s primary asset is a 74% stake in the Akanani PGM
deposit located on the northern limb of the South African Bushveld complex.
The remaining 26% interest in Akanani is held by a number of Black Economic
Empowerment investors. As at 28 February 2006, AfriOre had total assets of
C$42.6m and reported a net loss of C$3.5m for the previous 12 months.
The Akanani deposit has a strike length of around 9 km and the Platreef ore
body lies at a depth of between 800 metres and 2,000 metres. The average
true width of the targeted P2 horizon is 19 metres. Akanani has reported
total inferred P2 resources of 249.1 million tonnes containing 33.7 million
ounces of PGMs at a grade of 4.2 g/t - details below. Akanani was awarded a
new order exploration licence in June 2006. Lonmin"s preliminary evaluation
suggests that the current resource could support an initial mine
development producing around 500,000 ounces of PGMs per annum including
around 250,000 ounces of Platinum. Attributable capital expenditure for
mine, concentrator and infrastructure development is estimated at US$600-
700 million.
The obligation for Lonmin to make an offer for AfriOre is subject to a
number of pre-conditions, including the completion of documentation and
satisfactory geological, financial and legal due diligence by Lonmin. It
is currently anticipated that due diligence will be completed in December
2006 following which the parties intend to implement the offer. Regulatory
approval and completion of the transaction, if it proceeds, is currently
expected by the end of January 2007.
Completion of the offer would be subject to the customary conditions
including South African competition approval and that a minimum of 66 2/3 %
of AfriOre shares on a fully diluted basis are tendered to the offer. In
today"s agreement, AfriOre has granted Lonmin the right to match any
unsolicited superior offer and has agreed to pay a compensation fee of
C$15m to Lonmin in the event that the offer is not completed in certain
circumstances.
Lonmin will fund the acquisition from existing banking facilities. Initial
cash expenditure before interest is estimated at around US$25m a year for
the first two years of ownership. Lonmin is advised by BMO Capital
Markets.
Commenting on the agreement with AfriOre, Brad Mills Chief Executive said:
"I am pleased that we have been able to reach this binding agreement with
AfriOre. We are excited by the potential of the Akanani deposit which our
preliminary evaluation suggests can be developed into a low cost, fully
mechanised mine. The deposit fits into our portfolio of high quality
growth projects and will be another step in our strategy to build growth
into Lonmin to take advantage of our confidence in the continued strength
of the Platinum market."
Enquiries:
Alex Shorland-Ball +44 (0) 20 7201 6060
Vice President, Investor Relations & Communications
Summary of Akanani P2 unit Mineral Resources, 12 September 2006
Category Tonnes 3PGE+Au Pt Pd Rh Au Ni % Cu %
m g/t g/t g/t g/t g/t
Inferred 249.1 4.2 1.8 2.0 0.2 0.2 0.24 0.14
Source - AfriOre / Akanani Platinum Project NI 43-101 Technical Report, 02
November 2006
Forward Looking Statements:
This announcement includes forward-looking statements. Information
contained in this announcement relating to AfriOre has been compiled from
public sources. All statements other than statements of historical fact
included in this announcement, including without limitation those regarding
Lonmin"s plans, objectives and expected performance, are forward-looking
statements. Lonmin has based these forward-looking statements on its
current expectations and projections about future events, including
numerous assumptions regarding its present and future business strategies,
operations, and the environment in which it will operate in the future.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "ambition", "may", "will", "could",
"would", "expect", "intend", "estimate", "anticipate", "believe", "plan",
"seek" or "continue", or negative forms or variations of similar
terminology. Such forward-looking statements involve known and unknown
risks, uncertainties, assumptions and other factors related to Lonmin,
including, among other factors: (1) the risk that the businesses of Lonmin
and AfriOre will not be integrated successfully; (2) material adverse
changes in economic conditions generally or in relevant markets or
industries in particular; (3) fluctuations in demand and pricing in the
mineral resource industry and fluctuations in exchange rates; (4) future
regulatory and legislative actions and conditions affecting Lonmin"s and
AfriOre"s operating areas; (5) obtaining and retaining skilled workers and
key executives; and (6) acts of war and terrorism. By their nature, forward
looking statements involve risks, uncertainties and assumptions and many
relate to factors which are beyond Lonmin"s control, such as future market
conditions and the behaviour of other market participants. Actual results
may differ materially from those expressed in forward-looking statements.
Given these risks, uncertainties, and assumptions, you are cautioned not to
put undue reliance on any forward-looking statements. In addition, the
inclusion of such forward-looking statements should under no circumstances
be regarded as a representation by Lonmin that Lonmin will achieve any
results set out in such statements or that the underlying assumptions used
will in fact be the case. Other than as required by applicable law or the
applicable rules of any exchange on which Lonmin"s securities may be
listed, Lonmin has no intention or obligation to update or revise any
forward-looking statements included in this announcement after the release
of this announcement.
Date: 15/11/2006 07:30:06 AM Produced by the JSE SENS Department
