30th Sep 2005 07:30
African Gold PLC30 September 2005 Major acquisition of Producing, Exploration and Development assets in Africa through purchase of Mwana Group Proposed acquisition of Mwana Africa Holdings (Proprietary) Limited New management team Re-admission to AIM Placing of 8.7 million Ordinary Shares of 10p each at 50p per share Consolidation of Share Capital Adoption of new articles of association and Change of name to Mwana Africa plc Notice of EGM London, 30th September 2005 - African Gold plc ("African Gold" or "Company"),the AIM listed African gold explorer and miner, today announced that it hasconditionally agreed to acquire the entire issued share capital of Mwana AfricaHoldings (Propietary) Ltd ("Mwana")("Acquisition"), a privately held miningcompany with producing assets in Zimbabwe and exploration and development assetsin the Democratic Republic of the Congo ("DRC"). The Acquisition will bring tothe Enlarged Group three new Directors highly experienced in the mining industryin Africa, all having previously held senior management positions within AngloAmerican Plc. Immediately following completion of the Acquisition shareholders in Mwana willhold 110,681,366 Ordinary Shares representing approximately 70.8% of theenlarged group's fully diluted share capital. The acquisition of Mwana byAfrican Gold constitutes a reverse takeover of African Gold under the AIM rulesand therefore requires the prior approval of African Gold shareholders at anEGM. The Company is also seeking authorisation from shareholders to consolidateits share capital so that every ten 1p ordinary shares will be consolidated intoone 10p ordinary share and to adopt new Articles of Association. A circular inrespect of the Acquisition and re-admission to AIM was posted to African Goldshareholders today and it is expected that African Gold's shares will be liftedfrom suspension and re-commence trading on AIM at 08.00 today. Canaccord Capital (Europe) Limited is Nominated Adviser and Broker to AfricanGold Plc and will act as Nominated Adviser and Broker to the combined group.Copies of the circular will be available at the offices of Canaccord Capital (Europe) Limited, 1st Floor Brook House, 27 Upper Brook Street, London W1K 7QF. Summary •Proposed acquisition of Mwana for 110,681,366 Ordinary Shares •Transaction will transform African Gold into a cash generative production and exploration company •In 2004, Mwana produced 30,000oz gold at Freda Rebecca mine, and 10,500 tonnes nickel at the Bindura Nickel operation, Zimbabwe •The Acquisition brings opportunities to capitalise on new development and exploration opportunities across Africa and access to substantial acquisition opportunities in Ghana, Zimbabwe, The DRC and elsewhere in Africa •Proposed new management team highly experienced in mining in Africa •The enlarged group will change its name to Mwana Africa Plc (loosely translated in a number of indigenous Southern African languages as "Sons of Africa") Kalaa Mpinga, Mwana Africa plc Chief Executive, commented: "There are some valuable assets across Africa that with the right management andappropriate investment can be made highly profitable. By combining the AIMlisted African Gold and African-based Mwana we are creating an entity to seizethis current opportunity in the African resources sector. We believe that MwanaAfrica Plc will have an exciting combination of entrepreneurship and experiencepositioning it well to create real value for its shareholders" Oliver Baring, Africa Gold's Chairman, commented: "This is a truly transformational transaction. It brings together twocomplementary sets of assets and fulfils the strategic targets of both companiesfor their next stage of development. Crucially, it enables the newly combinedmanagement team to pursue ambitious plans to acquire valuable exploration,development and production assets on the ground in Africa, supported by thefinancial backing and governance of a London-listed company. Mwana Africa Plc,has an opportunity to become an African Major with exploration, development andproducing assets across the continent" The company being acquired - Mwana Africa Holdings (Proprietary) Limited. Mwana is a pan-African mining company with production as well as excitingdevelopment and exploration opportunities. Mwana currently has production assetsin Zimbabwe and development prospects and exploration licenses in Zimbabwe andthe DRC. Mwana's existing operations include the Bindura Nickel Corporation andthe Freda Rebecca gold mine and it intends to capitalise on development andexploration opportunities across Africa. After leaving the Anglo American group, Kalaa Mpinga, David Fish and Tim Wadesonformed Mwana in 2003. Mwana has completed three major mining acquisitions todate: the Bindura nickel mine in 2003, the Anmercosa base metal and goldprospects in the Katanga copper belt in 2004 and the Freda Rebecca gold mine in2005. The shareholder group which funded these acquisitions involved Kalaa Mpinga,David Fish and Tim Wadeson from South Africa and several prominent members ofthe business communities in Angola, Zimbabwe, Kenya and Zambia. Kalaa Mpinga,who was born and raised in the DRC, is the Chairman of and largest shareholderin Mwana. Bindura Nickel In July 2003 Mwana purchased a 52.9 per cent. interest in Bindura NickelCorporation from Anglo American Corporation of Zimbabwe. Bindura is listed onthe Zimbabwean Stock Exchange. Bindura operates two nickel mines: Shangani which is 90 km from Bulawayo on theHarare road and Trojan which is near the town of Bindura, about 90km north eastof Harare. Both mines produce concentrates which are processed at Bindura'ssmelter and refinery in the town of Bindura. Bindura produces about 11,000tonnes of refined nickel per annum of which about 7,000 tonnes are ownproduction and the balance is toll material from Botswana and South Africa. Themine lives at Shangani and Trojan are currently estimated to be approximatelyfour years and nine years respectively. The Trojan shaft is currently beingdeepened by some 600 metres to access new reserves which are open at depth, andthe Directors believe these will extend the life of the mine considerably. TheShangani mine is open at depth to a limited extent and a study is currentlyunderway to determine how best to extend the shaft system to access itsadditional resources. Bindura also holds exploration licenses over a number of properties, the mostsignificant of which is Hunters Road, where a modelling of the metallurgicaldomains identified has recently been completed and a feasibility study fornickel deposits is about to be conducted. The Enlarged Group's Directors expectthe nickel concentrate from Hunters Road to be physically capable of replacingthe nickel concentrate presently sourced from Shangani when it eventuallycloses. Anmercosa and the DRC Mwana purchased Anmercosa Exploration (Congo) s.p.r.l. from Anglo American Plcin early 2004. At the time of purchase, Anmercosa had (and still has) miningexploration rights over approximately 10,000 square kilometres in the Katangacopper belt ("Concession"), which has showings of copper, zinc, cobalt and gold.As part of the purchase arrangements, Mwana entered into a joint venture withAnglo American in respect of these mining exploration rights in which Anmercosais the contracting party under the joint venture. The joint venture will only be in respect of specific permits within theConcession to be agreed upon by both parties. Under the joint venture, Anmercosais responsible for all feasibility study and other costs, and Anglo American hasa 5% free carried interest in the joint venture. In the event that a resource ofmore than one million tonnes of contained metal is discovered, Anglo Americanwill take over the funding for the specific target to completion of a bankablefeasibility study. At that point it will hold an 80% interest in the jointventure and Mwana will hold a 20% interest in the joint venture in respect ofthat specific project, and Mwana will have to contribute 15% towards developmentof that project. For any resources below 1 million tonnes, Mwana will hold an80% interest in the joint venture in respect of that specific project, and AngloAmerican may elect to hold a 20% interest in the joint venture of that specificproject and will have to contribute 15% of the development costs of the project. In certain other circumstances, outside the areas jointly selected, Mwana hasthe option to form joint ventures with third parties. Since the acquisition of Anmercosa, Mwana has spent approximately US$ 1.5million on the ground and the intention is to carry out sufficient work toenable about 80 per cent. of this ground to be relinquished. As from the end ofMarch 2006, the costs of holding it rise significantly. Anglo Americanpreviously spent approximately US$7 million on the same area. Other companiessuch as Union Miniere have also worked the ground. As a result Mwana hascompiled substantial data and information from such earlier activity which it isusing to prepare its own development plan. Mwana is in negotiations with Gecamines (the DRC state copper mining company)relating to a previously worked copper/cobalt mine near Anmercosa's explorationground in Katanga. The Mwana Directors believe that production of copper/cobaltcould begin within a year from the finalisation of the agreement with Gecamines. Mwana also has an agreement with Office des Mines d'Or de Kilo Moto (commonlyreferred to as 'Okimo') over an exploration property in the north east of theDRC. This 3,000 square kilometre property is in a highly prospective goldprovince. In addition there are numerous artisanal miners working on theproperty which is an encouraging sign. The property has two existing shaftswhich were sunk in the 1960's, but abandoned due to unrest at the time. No newwork has started on this area as it is in a politically volatile region but theMwana Directors are hopeful that international efforts to bring peace to theregion, including the recent deployment of United Nations peacekeeping forces,will permit operations to resume. Freda Rebecca Mine In April 2005, Mwana completed a transaction with Anglogold Ashanti for theacquisition of Ashanti Goldfields Zimbabwe Limited, the owner and operator ofthe Freda Rebecca mine ("FRM"). Mwana has since agreed in principal (subject todocumentation) to sell 15% of FRM to a consortium of local investors. Gold hasbeen mined at the site of the Freda Rebecca mine, since as early as 1912. Themine which was re-opened in 1988, was designed for the production of 100,000 ozsof gold a year. It produced on average over 100,000 ozs of gold a year from thelate 1990's up to as recently as 2002. Since then its output has severelydeclined due to Zimbabwe's deteriorating economic situation and the inability ofits gold miners to obtain realistic prices. However, since 2004 new policieshave been implemented in Zimbabwe which would help FRM's situation improve. TheFreda Rebecca mine, which involves both underground and open-pit working, iscurrently producing about 30,000 ozs of gold a year but a programme is in placeto refurbish the mine to increase production to approximately 100,000 ozs ofgold a year. Mwana is negotiating a US $8m facility to finance thisrefurbishment and has been informed that the Reserve Bank of Zimbabwe hasapproved this facility in principle. Final documentation is expected to becompleted shortly. FRM has rights over a number of exploration properties in theimmediate vicinity of the Freda Rebecca mine, and further near-pit targets arebeing explored with a view to extending the life of surface operations at theFreda Rebecca mine. The Mwana Directors are confident that open pit mining inthese areas should extend the life of the mine beyond its current 10 yearestimate. The New Management Team Kalaa Mpinga is to be appointed Chief Executive Officer of the Enlarged Group,David Fish is to be appointed Finance Director and Tim Wadeson will be itsacting Technical Director and a non-executive Director. Oliver Baring (aged 61) Chairman Oliver Baring has recently retired as a managing director of UBS in theCorporate Finance Division, having had responsibility for the Africa and Miningdivisions. Before the merger with SG Warburg, he was a partner of Rowe & Pitman,having spent five years with the Anglo American/De Beers Group in the US, UK andSouth Africa. He is Chairman of Ridge Mining PLC, non-executive Chairman ofFirst Africa Holdings Limited, a non-executive director of Merrill Lynch WorldMining Trust and of the Tiedmann Trust Company, and a Council member of TheSentient Resources Fund. Kalaa Mpinga (aged 45) Chief Executive Kalaa Mpinga, a citizen of the DRC, worked for Bechtel Corporation in SanFrancisco before joining the LTA Group, a subsidiary of the Anglo American Groupin 1991 where he became a director. In 1995, he joined the New Mining Divisionof Anglo American, the division responsible for exploration and acquisition ofresources in Africa. He was appointed a director of Anglo American Corporationof South Africa in 1997. Mr. Mpinga left the Anglo American Group in December2001 to pursue business opportunities in mining and founded Mwana AfricaHoldings (Pty) Ltd in 2003. He is currently the Chairman of Mwana. David Fish (aged 58) Finance Director David Fish qualified as a Chartered Accountant with Peat Marwick Mitchell &Company ("KPMG"), where he gained wide experience within numerous industries. In1988 Mr. Fish joined Anglo American as a Finance Manager, initially toreorganise the group's internal audit function and to report using bestaccounting practice. He headed up various financial and investment functionsduring his employment with Anglo American, including that of Finance Directorfor the New Mining Business Division that conducted exploration andacquisitions, feasibility studies and the building of new mines. Until hisretirement in September 2002, Mr. Fish held the position of Executive VicePresident - Finance, Exploration and Acquisition and Alternate Director of AngloAmerican Corporation of South Africa Ltd. He is currently the Executive Director- Finance at Mwana. Tim Wadeson (aged 69) Technical Director Tim Wadeson graduated (with honours) as a Mining Engineer from the CamborneSchool of Mines. He was General Manager of Bindura Nickel Corporation from 1975to 1978; Consulting Engineer and Technical Director of Anglo Zimbabwe from1978-1985; Deputy Technical Director (Mining) of Anglo American Corporation from1985 to 1989; Technical Director of Minorco from 1989 to 1994; Group TechnicalDirector and Executive Director of Anglo American Corporation and Anglo AmericanPlc from 1995 to 1999; Chief Executive Officer of Konkola Copper Mines Zambiafrom 2000 to 2001. He is currently a Non-Executive Director of Cluff Gold Plcand Highland Gold Mining Limited. Mr. Wadeson is currently technical consultantto Mwana. Hank Slack (aged 55) Henry (Hank) Slack is Chairman of Terra Industries Inc. (NYSE), an internationalnitrogen-based fertiliser company. He is also a director of E. Oppenheimer & SonInternational Limited, of Engelhard Corporation (NYSE), of First Africa HoldingsLimited and of Firecrest Hambro Limited in the UK. Until June of 1999 he wasChief Executive of Minorco and a director of Anglo American Corporation of SouthAfrica concurrent with the merger of those two companies resulting in theformation of Anglo American plc. In 1983 he joined the board of Anglo Americanand became a member of its Executive Committee and was actively involved in thefull range of its mining, financial and industrial activities in Africa andworldwide. In addition he was for many years a director of Salomon Brothers(NYSE) and more recently of SABMiller plc. The Board of the Enlarged Group will comprise Kalaa Mpinga (CEO) and David Fish(Finance Director) as executive Directors, and Tim Wadeson (Technical Director)and Oliver Baring and Hank Slack as non-executive directors. On CompletionOliver Baring will be appointed Chairman of the Enlarged Group and JohnAnderson, James Finn, David Horgan, John Anderson and Guy Young will step downas Directors. The Board would like to express its thanks to those Directors who are resigningand to John Teeling who resigned on 29 September 2005, for their commitment andcontribution towards the development of African Gold plc. In addition to the Directors and Proposed Directors of the Enlarged Group,referred to above, the Enlarged Group will have approximately 3,000 employeeslocated in Zimbabwe, South Africa, Ghana and DRC. Terms of the Acquisition Under the terms of the Acquisition Agreement, the Company has conditionallyagreed to acquire the whole of the issued share capital of Mwana for aconsideration comprising the issue of the Consideration Shares upon Completion.The Acquisition Agreement is conditional, inter alia, on the approval byShareholders, the Placing, Admission and the applicable consent of the SouthAfrican Reserve Bank. The Consideration Shares will represent 73.24 per cent. of the Enlarged ShareCapital of the Company immediately following Admission. Details of the Placing The Company is seeking to raise £4.35 million by the issue of 8,700,000 OrdinaryShares at 50p per share pursuant to the Placing, to help finance the costs ofthe Acquisition and the Placing and to provide working capital for the enlargedgroup. Change of company name To reflect the proposed changes to the Company, its management and operations asa result of the Acquisition, it is proposed that conditional on Completion, theCompany will change its name to Mwana Africa plc. Consolidation of share capital The Company is also taking the opportunity to consolidate its share capital. Itis proposed that every ten 1p Ordinary Shares will be consolidated into oneOrdinary Share of 10p. Adoption of new articles of association To provide the Company with articles of association which incorporate the latestcorporate governance practice it is proposed that the Company will adopt the NewArticles Extraordinary General Meeting An Extraordinary General Meeting is to be held at 8-10 New Fetter Lane, London,EC4A 1RS at 11.00 a.m. on 25th October 2005 at which resolutions will beproposed to (1) approve the Acquisition Agreement, (2) consolidate the Company'sshare capital, (3) increase the authorised share capital of the Company, (4)authorise the Directors to allot up to 239,606,212 Ordinary Shares (includingthe Placing Shares and the Consideration Shares), (5) disapply pre-emptionrights over up to 131,368,173 Ordinary Shares, (6) conditional upon Completionto change the name of the Company to Mwana Africa plc and (7) to adopt the NewArticles of Association. In addition to the Placing the Enlarged Group will need further finance in theshort to medium term, either through debt and/or equity, to enable it to expandand for certain of its operations to progress from care and maintenance status.If the Company raises such funds through equity it will most likely utilise someor all of the share allotment authority and disapplication of pre-emption rightsbeing sought at the Extraordinary General Meeting. Transaction Statistics Number of Ordinary Shares in issue prior to the Acquisition 31,739,788Number of Consideration Shares being issued under the Acquisition 110,681,366Number of Ordinary Shares in issue immediately following Admission 151,121,154Percentage of the Enlarged Share Capital held by the Vendorsfollowing Admission 73.24%Percentage of the Enlarged Issued Share Capital held by theVendors following Admission (assuming full exercise of alloutstanding options over Ordinary Shares and Warrants) 70.82% Expected Timetable Latest time and date for receipt of Forms of Proxy for theExtraordinary General Meeting 11 a.m. on 23 October 2005Extraordinary General Meeting 11 a.m. on 25 October 2005Admission and dealings commence in the Ordinary Shares (including New OrdinaryShares) on AIM at 8 a.m. on 26 October 2005 Enquiries: Kalaa Mpinga, Chief Executive/ Oliver Baring, Chairman Tel: 020 7654 5588Mwana Africa Plc Tom Randell / David Simonson Tel: 020 7653 [email protected] African Gold is an AIM listed company (AFG) with gold mining interests in Africa www.africangoldplc.com Mwana Africa is a pan-African mining company www.mwanaafrica.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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