VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Apr 14, 2008 -- Anooraq Resources Corporation ("Anooraq" or the "Company")
(CDNX:
ARQ.V -
News)(AMEX:
ANO -
News)(JSE: ARQ) announces that it has
executed definitive transaction agreements with Anglo Platinum
Limited ("Anglo Platinum") giving effect to its acquisition
of a majority interest in Lebowa Platinum Mines ("Lebowa"),
an operating platinum group metals ("PGM") mine, together
with an additional 1% controlling interest in the parties'
current joint venture projects being the Ga-Phasha PGM Project
("Ga-Phasha"), Boikgantsho PGM Project ("Boikgantsho") and
Kwanda PGM Project ("Kwanda") ("the Lebowa transaction").
These agreements relate to the transaction described in
the Company's news release of 4 September 2007.
The execution of the definitive agreements with Anglo Platinum
represents a major step towards Anooraq's transition from
an exploration and development company into a significant
independent PGM producer.
To date, Anooraq has been actively engaged in the exploration
and development of PGM mineral properties in the Bushveld
Complex, South Africa. The Company's primary assets are
Ga-Phasha, Boikgantsho and Kwanda, which are currently held
as 50/50 joint ventures with Anglo Platinum. Pursuant to
implementation of the Lebowa transaction, Anooraq will acquire
a controlling interest in these assets. Once the Lebowa
transaction is complete, the potential for synergies between
Ga-Phasha and Lebowa will be assessed.
Lebowa Platinum Mines Operations & Growth Plan
- Lebowa is located on the North-Eastern limb of the Bushveld
Complex, to the north of and adjacent to Ga-Phasha.
- Lebowa consists of a vertical shaft and a decline shaft
system to access the underground development on the Merensky
(approximately 85,000 tonnes per month (tpm)) and UG2 Reefs
(approximately 45,000 tpm), as well as two concentrator
plants.
- Production at Lebowa in 2007(1) was approximately 187,700
refined ounces of platinum, palladium, rhodium and gold
from 1.33 million tonnes (Mt) of ore milled.
- Anglo Platinum has approved a long term growth plan for
Lebowa, which includes various replacement and expansion
projects. Anooraq, as a controlling shareholder, supports
this growth plan which will result in existing mining operations
at Lebowa increasing in two stages. Technical studies conducted
by Anglo Platinum indicate that Lebowa's value is maximized
at a mining rate of 375,000 tpm, comprising steady state
Merensky production at 120,000 tpm and steady state UG2
production of 255,000 tpm.
-- Stage 1 (2008-2013) comprises an expansion of Merensky
and UG2 ore production to 245,000 tpm, with Merensky production
being increased to 120,000 tpm, initially from the Brakfontein
Merensky decline shaft system and UG2 production being increased
to 125,000 tpm, initially from the Middelpunt Hill UG2 decline
shaft system.
-- Stage 2 (2016 onwards) sees the further expansion of
UG2 production to 255,000 tpm with Merensky production remaining
at 120,000 tpm.
- Both the Stage 1 and Stage 2 expansions at Lebowa will
access the Merensky Reef and UG2 Reef from near surface
to approximately 650m below surface. Anooraq considers this
an advantage; given that there will be no need for material
refrigeration at depths above 650m below surface, resulting
in a less constrained power requirement for the Lebowa mine
than would be required for operations and projects accessing
the reef at deeper levels.
- Anooraq will acquire control of an operating PGM mine
at Lebowa and a significant portfolio of PGM projects at
various stages of development. On implementation of the
Lebowa transaction Anooraq, through Richtrau No 179 (Proprietary)
Limited ("Lebowa Holdco"), will control the third largest
PGM reserve and resource base in South Africa.
Group Structure
- Lebowa Holdco has been established to hold all of the
parties' interests in Lebowa, Ga-Phasha, Boikgantsho and
Kwanda. The summarized group structure may be depicted as
follows:
To view the summarized group structure please click on the
following link: http://media3.marketwire.com/docs/arqchart.pdf
Salient Terms & Conditions
- The cash acquisition price for the Lebowa transaction
is ZAR3.6 billion (C$ 467 million).
- Anooraq intends to fund the purchase price through a combination
of debt and equity. An exercise of share purchase warrants
by Pelawan in December 2007, in an aggregate amount of ZAR
1.586 billion, will provide a portion of the funds required
by Anooraq for this purpose. Details of the Pelawan warrant
exercise were set out in a Company news release dated 24
December 2007.
- Anglo Platinum will provide Anooraq with an interest bearing
standby loan facility. This facility enables Anooraq to
utilize up to 80% of all cash flows generated from the Lebowa
operations should this be required to support external acquisition
senior debt finance secured by Anooraq for the purposes
of the Lebowa transaction.
- The parties have agreed to various financing arrangements
between them to implement the Anglo Platinum approved long
term growth plan at Lebowa, as follows:
-- Anglo Platinum will incur for its own account the first
ZAR 200 million required for development of the Middlepunt
Hill UG2 decline expansion project;
-- Anglo Platinum will provide Lebowa with a project finance
facility of ZAR1.6 billion, representing the balance of
the capital budget estimate for implementation of the Middlepunt
Hill UG2 decline expansion project ("The MPH Facility").
The MPH Facility has a 8 year term, with a capital repayment
holiday of one year, will bear interest at a facilitation
interest rate and is subordinated in priority of repayment
against certain other funding instruments within the Lebowa
group; and
Beneficiation
- Lebowa has entered into a 5-year Concentrate Off-Take
Agreement with Anglo Platinum for the sale of Lebowa concentrates
at competitive market rates, renewable at Lebowa's election
for a further 5 years.
- In seeking to facilitate Anooraq's ambition of becoming
a "mine to market" company, Anglo Platinum has extended
Anooraq's option to acquire an ownership interest in Anglo
Platinum's Polokwane Smelter, which ownership interest will
be relative to Anooraq's group concentrate feed into the
Polokwane Smelter from time to time and subject to certain
conditions precedent.
Conditions
The Lebowa Transaction is subject to a number of conditions
precedents, including:
- completion of due diligence investigations by both Anglo
Platinum and Anooraq, which investigations have already
been substantially progressed;
- debt and equity capital raising by Anooraq in order to
fund the full purchase consideration for the Lebowa transaction;
- Anooraq shareholder approval of all resolutions necessary
to implement the Lebowa transaction;
- Approval by the South African Competition Commission;
- consent by the United Kingdom Treasury for Anglo Platinum
to undertake the transaction;
- approval of the transaction and of certain transfers of
mineral title relating to Ga-Phasha, Boikgantsho and Kwanda
by the South African Department of Minerals and Energy;
and
- other regulatory approvals including, where necessary,
the Exchange Control department of South African Reserve
Bank, the JSE Limited, the TSX Venture Exchange and the
American Stock Exchange.
The parties remain committed to closing the Lebowa transaction
as soon as reasonably practicable. The long-stop date for
closing the Lebowa transaction is 30 November 2008.
Sale of Shares Agreement
Pursuant to the terms of the Sale of Shares Agreement concluded
with Anglo Platinum, Anooraq will acquire 51% of the shares
in, and claims on shareholders loan account against, Lebowa
Holdco. The joint venture agreements in respect of the Ga-Phasha,
Boikgantsho and Kwanda will be terminated and these projects
will be transferred into separate companies, established
as wholly-owned subsidiaries of Lebowa Holdco.
Anglo Platinum has given Anooraq appropriate sale warranties
in relation to the Lebowa transaction. It has also been
agreed that Anglo Platinum's current rehabilitation provision
in respect of Lebowa will be transferred into a new rehabilitation
trust fund to be established for the operations of Lebowa
Holdco. Anglo Platinum's current rehabilitation guarantees
in respect of Lebowa will remain in place for one year after
the implementation of the Lebowa Transaction for the benefit
of Lebowa Holdco.
Shareholders Agreement
Pursuant to the terms of the Shareholders Agreement concluded
between Anooraq and Anglo Platinum, Anooraq has the ability
to appoint the majority of the directors to the board of
Lebowa Holdco and all of its subsidiaries. Anglo Platinum
will participate in key management decisions through committees
established for that purpose.
Furthermore, in order to ensure a successful transition
at Lebowa, Anglo American plc Group has agreed to provide
certain essential services to Lebowa at a cost which is
no greater than the costs charged to another Anglo American
plc Group company for the same or similar services, for
an initial period of one year.
Anooraq has given certain undertakings to Anglo Platinum
in relation to the maintenance of its status as a company
controlled by Historically Disadvantaged Persons ("HDP"),
as envisaged in the South African Mineral and Petroleum
Resources Development Act No.28 of 2002 and the Mining Charter.
The effect of these undertakings is that HDPs must maintain
beneficial ownership of at least 26% in the assets of Lebowa
Holdco until the repayment of at least 60% of the MPH Facility
(approximately 6 years) ("Initial Term"). These undertakings
include that Pelawan Investments (Pty) Ltd, the HDP controlling
shareholder of Anooraq, will not allow either its own level
of HDP shareholding or its shareholding in Anooraq, to fall
below 26% HDP beneficial ownership interest. If these shareholding
levels should be breached, and Anooraq fails to exercise
its rights to remedy such a breach, Anooraq may be required
to dispose of its shares in Lebowa Holdco to another HDP.
It is important from Anglo Platinum's perspective that the
Anooraq group retain its current HDP control status and
that Anooraq retains control of Lebowa Holdco. Should there
be a change of such control then Anglo Platinum may require
Anooraq to acquire its shares in Lebowa Holdco at a market-related
price. In addition, should Anooraq wish to sell its entire
interest in Lebowa Holdco to a third party then Anglo Platinum
has a tag along right relating to such sale. The parties
have also granted each other reciprocal rights of first
refusal relating to a proposed sale of their interests in
Lebowa Holdco.
Ongoing Funding
The board of Lebowa Holdco, which will be controlled by
Anooraq, has the right to call for funding either by way
of shareholder loan or equity. If a shareholder should default
on a cash call, the other shareholder may increase its equity
interest in Lebowa HoldCo by funding the entire cash call,
provided that during the Initial Term, Anooraq's shareholding
in Lebowa Holdco cannot be diluted for default in respect
of equity contributions.
Employees and Communities
The parties have agreed to:
- establish an Employee Share Ownership Plan ("ESOP") for
the benefit of employees of Lebowa. Anglo Platinum will
contribute an amount of approximately ZAR138 million (based
on current market prices) to the ESOP Trust to facilitate
its establishment, and approximately ZAR112 million of this
amount will be utilized by the ESOP Trust to subscribe for
shares in Anooraq. The balance of the funds will be used
to pay benefits to the employees of Lebowa over the next
seven years; and
- establish a Communities Trust for the benefit of communities
affected by the operations of Lebowa Holdco. Anglo Platinum
will contribute an amount of approximately ZAR104 million
to the Communities Trust, which funds will be utilized to
subscribe for shares in Anooraq and facilitate annual payments
to the benficiaries of the community trust. Anooraq will
issue warrants to the trust with an option value of ZAR
108 million.
Accordingly, pursuant to Anooraq's equity financing for
implementation of the Lebowa transaction, the Company will
receive an inflow of approximately ZAR195 million from the
ESOP Trust and Communities Trust.
Anooraq's Acting President and CEO, Tumelo Motsisi, comments
that "This transaction is a win-win for both parties. It
represents a solid foundation for Anooraq to fulfill its
objective of becoming a significant PGM producer and creates
a good platform for enhancing our existing relationship
with Anglo Platinum."
(1) Anglo Platinum Annual Report, 31 December 2007.
Further information
For further details on Anooraq and its properties in South
Africa, please visit the Company's website at www.anooraqresources.com.
On behalf of the Board of Directors
Tumelo Motsisi, Acting President and CEO
Cautionary and Forward Looking Information
This release includes certain statements that may be deemed
"forward looking statements". All statements in this release,
other than statements of historical facts, that address
potential acquisitions, future production, reserve potential,
exploration drilling, exploitation activities and events
or developments that Anooraq expects are forward looking
statements. Anooraq believes that such forward looking statements
are based on reasonable assumptions, including assumptions
that: the Lebowa transaction will complete; Lebowa will
continue to achieve production levels similar to previous
years; the planned Lebowa expansions will be completed and
successful; Anooraq will be able future debt and equity
financing on favourable terms; and the Ga Phasha and Platreef
Project exploration results will continue to be positive.
Forward looking statements however, are not guarantees of
future performance and actual results or developments may
differ materially from those in forward looking statements.
Factors that could cause actual results to differ materially
from those in forward looking statements include market
prices, exploitation and exploration successes, changes
in and the effect of government policies with respect to
mining and natural resource exploration and exploitation
and continued availability of capital and financing, and
general economic, market or business conditions. Investors
are cautioned that any such statements are not guarantees
of future performance and those actual results or developments
may differ materially from those projected in the forward
looking statements. For further information on Anooraq,
investors should review the Company's annual Form on 20-F
with the United States Securities and Exchange Commission
and its home jurisdiction filings that are available at
www.sedar.com.
The TSX Venture Exchange does not accept responsibility
for the adequacy or accuracy of this release. The American
Stock Exchange has neither approved nor disapproved the
contents of this press release.