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Share Name | Share Symbol | Market | Type |
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Atlatsa Resources Corporation | AMEX:ANO | AMEX | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.00 | - |
VANCOUVER, Feb. 2, 2012 /PRNewswire/ -
1. | Introduction | |
The boards of directors of Anglo American Platinum Corporation ("Amplats") (JSE: AMS), a 79% held subsidiary of Anglo American plc, and Anooraq Resources Corporation ("Anooraq") (TSXV: ARQ; NYSE Amex: ANO; JSE: ARQ) (collectively "the Parties") are pleased to announce that they have agreed the key terms in respect of a transaction to restructure, recapitalise and refinance Anooraq and the Bokoni group of companies ("Bokoni group") (the "Transaction"). | ||
2. | Background | |
In July 2009, the Parties entered into a transaction that resulted in
the creation of the Bokoni group by consolidating Bokoni Platinum Mine
(formerly Lebowa Platinum Mine), as well as the Ga-Phasha, Boikgantsho
and Kwanda Platinum Group Metals ("PGM") projects under one
consolidated group structure. Anooraq acquired 51% of the Bokoni group,
which acquisition involved Anooraq vending in its existing 50% share in
the Ga-Phasha, Boikgantsho and Kwanda joint venture projects, and
acquiring an additional effective 1% controlling interest in them with
Amplats retaining a 49% shareholding in the Bokoni group. Anooraq
acquired its 51% interest in the Bokoni group for a net cash
consideration of ZAR2.6 billion (US$325 million1). The net cash consideration was settled by way of a cash payment of
ZAR1.5 billion (US$188 million), and through the issue to Amplats of
convertible preference shares ("B preference shares"), which entitled
Amplats to convert its B preference shares into 115.8 million Anooraq
common shares, representing 26% of Anooraq's fully diluted issued share
capital, at any time prior to 1 July 2018 (the "Original Transaction"). |
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The Original Transaction sought to transform the South African PGM mining landscape by Amplats facilitating the transformation of Anooraq into a significant and sustainable, historically disadvantaged South African ("HDSA") controlled PGM producer. It comprised a cornerstone empowerment transaction for Amplats in complying with the 2014 HDSA ownership requirements, as required by the Mining Charter for the conversion of its 'old-order' mining rights to 'new-order' mining rights in terms of the Mineral and Petroleum Resources Development Act. | ||
3. | Transaction rationale | |
In April 2011 the Parties initiated a detailed review of the technical
assumptions informing the Original Transaction and its associated
financing structure. The review has resulted in the Parties agreeing to
a new strategic approach and operating plan for the Bokoni group, as
well as a recapitalisation and refinancing plan to facilitate its new
growth plan. |
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The new strategic plan for the Bokoni group results in the disposal of
undeveloped PGM ounces to Amplats, recapitalisation and refinancing of
Anooraq and the Bokoni group, together with accelerated production
growth at Bokoni Platinum Mine. |
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Results of technical review | ||
3.1 | The emphasis for Bokoni Platinum Mine going forward will be its new Brakfontein Merensky and Middelpunt Hill ("MPH") UG2 expansion projects currently under development, while the mature Merensky operations at Vertical and UM2 shafts will terminate within the next five years. This will allow management to focus on an accelerated development plan for Bokoni Platinum Mine's lower cost new shaft operations, which will replace existing production from mature, high cost operations by 2016. | |
3.2 |
The Parties have agreed that the Bokoni Platinum Mine 2009 development
plan to maintain steady state production at 160,000 tonnes per month
("tpm") through to 2020 is not the optimal extraction strategy for the
large resource base at Bokoni. Accordingly, the Parties have agreed on
a new mineral extraction strategy to accelerate the MPH Delta 80 UG2
expansion plan, which is expected to increase existing UG2 production
at Bokoni Platinum Mine. The expansion project is expected to bring
forward 100,000 PGM ounces per annum of new production at Bokoni
Platinum Mine to 2016, which had previously been scheduled until after
2020. |
|
The total Bokoni Platinum Mine revised development plan will expand its production to a steady state operation of 245,000tpm by 2016. | ||
3.3 |
The Parties have determined to effect a strategic re-alignment of the
Bokoni group's exploration and development mineral assets. Accordingly,
the Parties have agreed to split the Ga-Phasha development project into
an Eastern and Western section. The Eastern section, comprising the
Paschaskraal and De Kamp mineral properties, will be consolidated into
Amplats' adjacent Twickenham operation, while the Western section,
comprising the Klipfontein and Avoca mineral properties, will be
consolidated into the adjacent Bokoni Platinum Mine operations. The
Parties have identified the potential to access the Western section of
Ga-Phasha through existing shaft infrastructure established at Bokoni's
Brakfontein property. |
|
In addition, the Parties have determined that the Bokoni group's
Northern Limb Boikgantsho project has a strong strategic fit with
Amplats' flagship Mogalakwena North expansion plans and that this
project should be consolidated into Amplats' adjacent low cost and open
cast Mogalakwena operations. |
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In summary, Amplats will, through a series of related transactions, acquire the whole of the Boikgantsho project and the Eastern section of the Ga-Phasha project. On implementation of these transactions, the effective net consideration of ZAR1.7 billion received by Anooraq will be applied to reduce its approximately ZAR3.0 billion debt owing to Amplats. | ||
3.4 | The acceleration of the MPH Delta 80 UG2 project will require the establishment of a new UG2 concentrator plant at the Bokoni Platinum Mine to treat the additional UG2 ore generated at the operations. The new UG2 concentrator plant is expected to expand Bokoni Platinum Mine's current UG2 processing capacity from 65,000tpm to 165,000tpm, while total processing capacity is expected to increase to 265,000tpm by 2016. | |
Revised production, cost and capital expenditure estimates | ||
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Results of financial review: | ||
Anooraq assumed ZAR1.7 billion (US$213 million) of acquisition debt to
finance the Original Transaction. In addition, Anooraq assumed a ZAR750
million (US$94 million) cashflow shortfall facility to fund its
operating and capital cashflow requirements at Bokoni Platinum Mine
between 2009 and 2012. With effect from 28 April 2011, Amplats assumed
all of Anooraq's outstanding debt facilities. At 31 December 2011,
Anooraq's attributable debt, including capitalised interest, had
increased to approximately ZAR3 billion (US$375 million). This has
resulted in a highly leveraged balance sheet position for Anooraq,
which management considers excessive and undesirable in light of
current global economic conditions and risks related to being highly
leveraged (as described in Anooraq's annual information form for the
year ended 31 December, 2010 available on SEDAR at www.sedar.com). |
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The Parties have agreed to refinance, deleverage and recapitalise the Anooraq and Bokoni group balance sheets, with current debt terms to be revised, in order to ensure that both Anooraq and the Bokoni group are fully funded on a sustainable basis to finance Bokoni Platinum Mine's growth plans through to 2020. The Parties have agreed to implement this financial restructure plan on the basis described in the Transaction Overview below. | ||
4. | Transaction Overview | |
The key features of the Transaction include, inter alia: | ||
4.1 | Amplats will, through a series of related transactions, acquire the whole of the Boikgantsho project and the Eastern section of the Ga-Phasha project. On implementation of these transactions, the effective net consideration of ZAR1.7 billion received by Anooraq will be applied to reduce its approximately ZAR3.0 billion debt owing to Amplats. | |
4.2 | The Parties will enter into an interest standstill agreement with respect to existing debt owing to Amplats effective 1 July 2011 through to 30 April 2012. This translates into an interest saving of approximately ZAR300 million (US$37.5 million) for Anooraq over the standstill period. | |
4.3 | The net effect of the asset disposal and application of the proceeds thereof against existing debt, together with the interest standstill agreement described above is that Anooraq's existing attributable debt owing to Amplats will reduce by 66% from approximately ZAR3 billion (US$375 million) to approximately ZAR1 billion (US$125 million). | |
4.4 | The historical debt balance owing by Anooraq to Amplats following the asset disposal and interest standstill agreement (approximately ZAR1 billion (US$125 million)) will be consolidated under one new debt facility (the "Consolidated Debt Facility"). | |
4.5 | Amplats will provide further debt funding to Anooraq under the Consolidated Debt Facility of an amount of up to ZAR1.3 billion (US$163 million), with a maximum total facility limit of ZAR2.3 billion (US$288 million). Anooraq will utilise this extended facility to fund its attributable share of the Brakfontein and MPH Delta 80 UG2 expansion projects, including the construction of a new UG2 concentrator plant at Bokoni Platinum Mine. | |
4.6 |
The Consolidated Debt Facility will be available to Anooraq for 9 years
terminating on 31 December 2020 and will attract a variable interest
rate. The variable interest rate will be determined by adding a fixed
margin to 3-month JIBAR. The Consolidated Debt Facility will attract a
reduced interest rate during the initial term (comprising the capital
intensive phase of the growth operations at Bokoni Platinum Mine
through to 2016) and escalating at an increased rate depending on the
amount owing by Anooraq under the Consolidated Debt Facility over the
funding period. The table below sets out the implied variable interest
rate profile payable by Anooraq over the funding period term. |
Debt balance |
2012 (%) |
2013 (%) |
2014 (%) |
2015 (%) |
2016 (%) |
2017 (%) |
2018 (%) |
2019 (%) |
2020 (%) |
First tranche (ZAR1 billion) |
0.0 | 0.0 | 0.0 | 2.5 | 5.0 | 7.5 | 10.0 | 15.0 | 15.0 |
Second tranche (ZAR1 billion) |
5.0 | 5.0 | 10.0 | 10.0 | 12.5 | 15.0 | 15.0 | 20.0 | 20.0 |
Third tranche (ZAR300 million) |
15.0 | 15.0 | 15.0 | 15.0 | 20.0 | 20.0 | 20.0 | 25.0 | 25.0 |
Estimated weighted average interest rate (%) | 0.5 | 1.4 | 4.3 | 6.9 | 9.4 | 10.8 | 11.6 | 15.0 | 15.0 |
The weighted average interest rate is calculated based on the projected opening balance of the Consolidated Debt Facility in each forecast year. The weighted average interest rate under the Consolidated Debt Facility will escalate from 1% to approximately 12% up to 2018, thereby substantially reducing Anooraq's current cost of debt (approximately 16%). | ||||||
4.7 | There will be no fixed repayment term for the Consolidated Debt Facility during the peak funding years while the Brakfontein and MPH Delta 80 UG2 expansion projects are still in their ramp-up phase through to 2016. Anooraq will be required to fully repay the Consolidated Debt Facility to Amplats by 31 December 2020. There will be no penalty for early repayment. Anooraq will be required to reduce the Consolidated Debt Facility owing to Amplats to an outstanding balance (including capitalised interest) of ZAR1 billion (US$125 million) as at 31 December 2018, and ZAR500 million (US$62.5 million) as at 31 December 2019. | |||||
4.8 | Anooraq will be obliged to utilise 90% of its attributable share of free cash flows generated from Bokoni Platinum Mine operations to service the Consolidated Debt Facility and 10% of such free cash flow will be available to Anooraq. | |||||
4.9 | Anooraq will not be required to effect any mandatory refinancing of the Consolidated Debt Facility during the debt term through to 2020. | |||||
4.10 | Bokoni Platinum Mine will extend its existing concentrate purchase agreement with Amplats on the same terms and conditions for a period of eight years, terminating on 31 December 2020. | |||||
4.11 | Anooraq will retain its existing option to acquire an ownership interest in Amplats' Polokwane smelter complex on terms agreed between the Parties. | |||||
4.12 | Amplats will provide Anooraq with a working capital facility at JIBAR plus 4% per annum of up to ZAR90 million (US$11 million) (including capitalised interest) to fund its general and administrative expenses. This will ensure that Anooraq has sufficient working capital to cover its corporate overheads through to 2015. The working capital facility is fully repayable by 31 December 2018. | |||||
4.13 | Anooraq will receive an additional management incentive fee of up to 2% of the Bokoni group's after tax profits if certain technical targets above budget plan, as agreed between the Parties, are met. | |||||
4.14 | Amplats will continue to hold the B preference shares issued at the time of the Original Transaction (representing a 26% interest in Anooraq) until 31 December 2018. Atlatsa Holdings (Proprietary) Limited (formerly Pelawan Investments (Proprietary) Limited), being the 51% Black Economic Empowerment majority shareholder in Anooraq, will also extend its shareholding in Anooraq through to 31 December 2018. | |||||
4.15 | Anooraq will not issue any new equity in terms of the Transaction and its fully diluted shares in issue will remain at 445 million shares in issue with major shareholders as follows: |
Shareholder | # of common shares | % of share capital |
Atlatsa Holdings (formerly Pelawan) | 227 million2 | 51% |
Amplats (B preference shares) | 116 million3 | 26% |
Employee & Community Trusts | 14 million | 3% |
Public (including common shares available pursuant to the incentive stock option plan) | 88 million | 20% |
5. | New management team and operating protocol | |
The Parties have agreed to enhance the Bokoni Platinum Mine management
team and implement a new management operating protocol, which will
increase Amplats' active involvement in areas of the operations
relating to mining, processing and capital projects execution. The new
joint venture operating protocol will see both Amplats and Anooraq
providing management support services at the Bokoni Platinum Mine
operations pursuant to a new management services agreement. |
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The Bokoni Platinum Mine operations will be lead by Mr. Dawid Stander, in his capacity as Managing Director of Bokoni Platinum Mine with effect from 1 February 2012. For further details on Mr. Stander's appointment, please view Anooraq's announcement of 1 February 2012. | ||
6. | Conditions precedent | |
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The implementation of the Transaction will be subject, inter alia, to the fulfillmentof the following conditions precedent:
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7. | Further cautionary announcement | |
Further details relating to the Transaction will be communicated to shareholders in due course. | ||
Further to the cautionary announcements by Anooraq dated 13 May 2011, 28
June 2011, 10 August 2011, 21 September 2011, 2 November 2011 and 15
December 2011, Anooraq shareholders are advised that the financial
effects of the Transaction are still being determined and may have a
material effect on the price of Anooraq securities. Accordingly,
Anooraq shareholders are advised to continue exercising caution when
dealing in Anooraq securities until a further announcement is made. |
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A further announcement will be released on the Securities Exchange News Service, filed on SEDAR and published in the South African press as soon as the definitive agreements have been signed and the financial effects have been finalised. |
Johannesburg
2 February 2012
www.angloamericanplatinum.com
www.anooraqresources.com
1 All financial numbers quoted in US dollars are converted at a rate of
ZAR8:US$1.
2 Includes 111.2 million B preference shares convertible into Anooraq
common stock after 31 December 2018.
3 The B preference shares are convertible into Anooraq common stock after
31 December 2018.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
The NYSE Amex has neither approved nor disapproved the contents of this
press release.
Cautionary and forward-looking information
This document contains "forward-looking statements" that were based on Anooraq's expectations, estimates and projections as of the dates as of which those statements were made, including statements relating to the Transaction and anticipated financial or operational performance. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "may", "will", "outlook", "anticipate", "project", "target", "believe", "estimate", "expect", "intend", "should" and similar expressions.
Anooraq believes that such forward-looking statements are based on material factors and reasonable assumptions, including the following assumptions: that the Transaction will receive necessary regulatory approvals and complete in a timely manner, Bokoni Mine will increase or continue to achieve production levels similar to previous years; the Ga-Phasha, Boikgantsho, Kwanda and Platreef Projects exploration results will continue to be positive; contracted parties provide goods and/or services on the agreed timeframes; equipment necessary for construction and development is available as scheduled and does not incur unforeseen breakdowns; no material labour slowdowns or strikes are incurred; plant and equipment functions as specified; geological or financial parameters do not necessitate future mine plan changes; and no geological or technical problems occur.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. These include but are not limited to:
For further information on Anooraq, investors should review the
Company's annual Form 40-F filing with the United States Securities and
Exchange Commission www.sec.gov and annual information form for the year ended December 31, 2010 and
other disclosure documents that are available on SEDAR at www.sedar.com.
SOURCE Anooraq Resources Corporation
Copyright 2012 PR Newswire
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