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Pan African Resources plc (LSE:PAF) is to sell its Manica Gold Project in Mozambique for Au$6 million in its plan to focus on its assets in South Africa but will still hold an indirect interest in the project, the company announced Wednesday, 9th August 2012.
In a statement, the company revealed it has entered into an agreement to sell 100% of its stake in the said project to Auroch Minerals Mozambique (Pty) Ltd, a wholly-owned subsidiary of Terranova Minerals NL, a gold and copper exploration company listed on the Australian Stock Exchange. The deal also provides for 96,666,668 shares in Terranova to be issued to Pan African.
“The disposal of our Manica exploration project allows us to remain focused on our strategy of the development and growth of our South African based operating assets,” stated Jan Nelson, Pan African’s Chief Executive.
Pan African has producing gold mines in South Africa and has commenced production at its Phoenix platinum project also located in the country, which were the reasons why the company moved to sell its Mozamique holdings. The company has recently announced shareholder approval of its bid to acquire 100% ownership of Evander Gold Mines, also located in South Africa.
The CEO also said that while the company does not intend to develop exploration projects, the sizable interest the company will earn from the transaction will allow Pan African to “maintain exposure” to the asset that has the potential to produce between 30,000 and 80,000 ounces of gold a year, for 11 years.
Terms of the Sale
Payments for the sale, however, will be given on installment basis tied to several conditions, including fulfillment or waiver of conditions precedent to the transaction – for the first Au$2 million and 25 million shares, achievement of 400,000 ounces of JORC-compliant inferred resources with a cut off grade of 1.25 grams per tonne (g/t) , 1,000,000 ounces of gold at 1.25 g/t cut off grade, subsequently, a Bankable Feasibility Study (BFS) that supports a 10-year mine life capable of producing 50,000 ounces of gold a year, and a production of oxide or sulphide ore at a capacity specified in the BFS.
The sale itself depends on several conditions on the part of Terranova, which has to raise Au$5 million in capital, receive shareholder approval of the deal as well as recommendation of an independent adviser for the transaction, and all necessary regulatory approvals.
“Furthermore, the Transaction remains conditional upon Terranova, within one month of the date of the Agreement, confirming that it is satisfied with the results of a due diligence exercise to be concluded over Manica,” the announcement read.
Company Spotlight
Pan African Resources plc is a mineral exploration company wth a focus on gold and platinum group, concentrating its assets in South Africa. Shares are both listed on the Alternative Investment Market of the London Stock Exchange and the Johannesburg Stock Exchange in South Africa.
In a separate statement issued today, the explorer announced its full year earnings per share (EPS) and headline earnings per share (HEPS) are expected to rise 64% and 74%, respectively, compared to the previous fiscal year’s. Full year results for the year ended 30th June 2012 will be published in the last week of September this year.
