Pan African Resources PLC
09 January 2006
9th January 2006
Pan African Resources PLC
('Pan African' or 'the Company')
Acquisition of Manica Project, Mozambique
And Board Appointment
Pan African Resources PLC (AIM : PAF), the African based gold exploration
company, announces that it has elected to exercise its right to acquire a 100%
shareholding in the Manica Project ('the Project'), a gold project in
•Acquisition of 100% of Explorator Limitada ('Explorator'), the
titleholder of the Manica Project. Completion expected by the end of the first
quarter of 2006.
•Explorator is acquired for £150,000 satisfied by the issue of 7,500,000
ordinary shares to its shareholders, representing approximately 2.2% of the
current Pan African issued share capital.
•Share issue represents a renegotiation of the original prospecting and
mining agreement with Explorator that required a cash payment of US $900,000 and
a subsequent exploration commitment of US $1,000,000.
•Manica Project has a surface to near surface defined resource of
800,000 ounces of gold with considerable upside potential
•Dr. H Blignault, a geologist with extensive exploration experience in
Africa, is appointed to the Board of Pan African as a non-executive director.
Background and Original Agreement
Explorator Limitada is a company incorporated in Mozambique and holds title to
the exploration licence covering an area north of Manica in Mozambique referred
to as the Manica Project. The shareholders of Explorator are Bullion Prospects
SA (Pty) Limited ('Bullion') and Geoser Limitada ('Geoser'). The right to
acquire 100% of the Manica Project had been assigned to Pan African under an
acquisition agreement (the 'Acquisition Agreement') dated 19 November 2003
between Pangea Exploration (Pty) Ltd ('Pangea') and Mistral Resource Development
Corporation Limited ('Mistral'), a wholly owned subsidiary of Pan African.
Under the Acquisition Agreement, Pangea assigned to Mistral, all of its rights
and obligations under a prospecting agreement and mining option agreement dated
15 August 2003, that it entered into with the shareholders of Explorator (the '
Original Agreement'). The Acquisition Agreement was secured for a payment to
Pangea of US$800,000, made in two tranches prior to 31 December 2003.
According to the Original Agreement, Pan African would, upon election to
exercise its rights under the Acquisition Agreement, between 31 October 2005 and
31 October 2006:
• pay to Explorator US$900,000;
• pay a further US$1.00 for each ounce of gold by which the measured reserve
exceeded 1,000,000 ounces
• fund the exploration program with a minimum of $500,000 per annum until 30
In addition to the above consideration, under the Acquisition Agreement, Pan
African granted Pangea a 20% carried interest in the Manica Project. The
Acquisition Agreement also provided that Pan African would have the right of
first refusal with respect to any gold projects sourced by Pangea in Africa and
which Pangea develop to such a stage that it is required to raise additional
funding from third parties.
The New Acquisition Agreement
Pan African has successfully renegotiated the terms of the Acquisition Agreement
to extinguish all previous obligations. The terms of the renegotiated agreement
(1)Pan African exercises its right to acquire the Manica Project by acquiring
the entire issued share capital of Explorator, the cost of the share transfer
to be carried by Pan African.
(2)The share capital of Explorator is acquired for £150,000 satisfied by the
issue of 7,500,000 ordinary shares to the shareholders of Explorator.
(3)Pangea will retain its 20% carried interest in the Manica Project under
the terms of the Acquisition Agreement dated 19 November 2003.
(4)Pan African shall retain the right of first refusal with respect to any
gold projects sourced by Pangea under the terms of the acquisition agreement
dated 19 November 2003.
Appointment of Director
Pan African has also appointed Dr. Hennie Blignault, a geologist and one of the
principals of Bullion, with extensive exploration experience and expertise, as a
non-executive director to the board of Pan African. Dr. Blignault's appointment
is effective from the 9th of January 2006 and he holds 5,000,000 share options
granted at an exercise price of 2p (two pence), in accordance with the terms and
conditions of the Company's share option scheme. The Company welcomes Dr
Blignault and looks forward to a long and mutually beneficial relationship.
Jan Nelson, Chief Executive Officer of Pan African, commented: 'The
renegotiation of the Acquisition Agreement allows us to acquire the entire share
capital of Explorator who holds title to the Manica Project through the issue of
7.5m ordinary shares. The cost to Pan African is significantly reduced at
approximately US$260,000 as opposed to a previous cash commitment of US$1.9
million. The Board of Pan African consider this to be a very good deal for the
Company as we are acquiring the Project with a defined resource in excess of
800,000 oz of gold at or near surface with considerable upside potential, for
less than 2.2% of the current issued share capital of Pan African.
'In addition, we gain the experience and expertise of Dr Blignault, a geologist
with an invaluable knowledge of potential exploration projects in Africa, as a
non-executive director and we warmly welcome him to the Board.'
For further information on Pan African Resources please visit the new website at
Pan African Resources Ambrian Partners Parkgreen Communications
Jan Nelson, CEO Richard Brown / Justine Howarth /
+27 11 886 1211 Emma Priestley Victoria Thomas
Colin Bird, Chairman +44 (0) 207 776 6400 +44 (0) 20 7493 3713
+44 (0) 20 7584 2155
This information is provided by RNS
The company news service from the London Stock Exchange