15th Nov 2006 07:00
Lonmin PLC15 November 2006 Pre-conditional offer to acquire AfriOre Lonmin Plc (''Lonmin'') is pleased to announce that it has entered into abinding agreement ("Agreement") with AfriOre Ltd ("AfriOre") under which AfriOreagrees to support and recommend an offer from Lonmin to acquire AfriOre by meansof a cash offer to shareholders at C$8.75 (US$7.74) per AfriOre share. Such anoffer, which would be undertaken according to Canadian securities marketregulations, 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 inLondon. AfriOre's primary asset is a 74% stake in the Akanani PGM depositlocated on the northern limb of the South African Bushveld complex. Theremaining 26% interest in Akanani is held by a number of Black EconomicEmpowerment investors. As at 28 February 2006 AfriOre had total assets ofC$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 bodylies at a depth of between 800 metres and 2,000 metres. The average true widthof the targeted P2 horizon is 19 metres. Akanani has reported total inferred P2resources of 249.1 million tonnes containing 33.7 million ounces of PGMs at agrade of 4.2 g/t - details below. Akanani was awarded a new order explorationlicence in June 2006. Lonmin's preliminary evaluation suggests that the currentresource could support an initial mine development producing around 500,000ounces of PGMs per annum including around 250,000 ounces of Platinum.Attributable capital expenditure for mine, concentrator and infrastructuredevelopment is estimated at US$600-700 million. The obligation for Lonmin to make an offer for AfriOre is subject to a number ofpre-conditions, including the completion of documentation and satisfactorygeological, financial and legal due diligence by Lonmin. It is currentlyanticipated that due diligence will be completed in December 2006 followingwhich the parties intend to implement the offer. Regulatory approval andcompletion of the transaction, if it proceeds, is currently expected by the endof January 2007. Completion of the offer would be subject to the customary conditions includingSouth African competition approval and that a minimum of 66 2/3 % of AfriOreshares 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 andhas agreed to pay a compensation fee of C$15m to Lonmin in the event that theoffer is not completed in certain circumstances. Lonmin will fund the acquisition from existing banking facilities. Initial cashexpenditure before interest is estimated at around US$25m a year for the firsttwo 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 withAfriOre. We are excited by the potential of the Akanani deposit which ourpreliminary evaluation suggests can be developed into a low cost, fullymechanised mine. The deposit fits into our portfolio of high quality growthprojects and will be another step in our strategy to build growth into Lonmin totake advantage of our confidence in the continued strength of the Platinummarket." Enquiries:Alex Shorland-Ball +44 (0) 20 7201 6060Vice President, Investor Relations & Communications Summary of Akanani P2 unit Mineral Resources, 12 September 2006 +---------+-----------+--------------+--------+-------+-------+-------+-------+--------+|Category | Tonnes m | 3PGE+Au g/t | Pt g/t |Pd g/t |Rh g/t |Au g/t | Ni % | Cu % |+---------+-----------+--------------+--------+-------+-------+-------+-------+--------+|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, 02November 2006 Forward Looking Statements: This announcement includes forward-looking statements. Information contained inthis announcement relating to AfriOre has been compiled from public sources. Allstatements other than statements of historical fact included in thisannouncement, including without limitation those regarding Lonmin's plans,objectives and expected performance, are forward-looking statements. Lonmin hasbased these forward-looking statements on its current expectations andprojections about future events, including numerous assumptions regarding itspresent and future business strategies, operations, and the environment in whichit will operate in the future. Forward-looking statements generally can beidentified 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 ofsimilar terminology. Such forward-looking statements involve known and unknownrisks, uncertainties, assumptions and other factors related to Lonmin,including, among other factors: (1) the risk that the businesses of Lonmin andAfriOre will not be integrated successfully; (2) material adverse changes ineconomic conditions generally or in relevant markets or industries inparticular; (3) fluctuations in demand and pricing in the mineral resourceindustry and fluctuations in exchange rates; (4) future regulatory andlegislative actions and conditions affecting Lonmin's and AfriOre's operatingareas; (5) obtaining and retaining skilled workers and key executives; and (6)acts of war and terrorism. By their nature, forward-looking statements involverisks, uncertainties and assumptions and many relate to factors which are beyondLonmin's control, such as future market conditions and the behaviour of othermarket participants. Actual results may differ materially from those expressedin forward-looking statements. Given these risks, uncertainties, andassumptions, you are cautioned not to put undue reliance on any forward-lookingstatements. In addition, the inclusion of such forward-looking statements shouldunder no circumstances be regarded as a representation by Lonmin that Lonminwill achieve any results set out in such statements or that the underlyingassumptions used will in fact be the case. Other than as required by applicablelaw or the applicable rules of any exchange on which Lonmin's securities may belisted, Lonmin has no intention or obligation to update or revise anyforward-looking statements included in this announcement after the release ofthis announcement. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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