Disposal of Manica Gold Project
Pan African Resources PLC
(Incorporated and registered in England and Wales under Companies Act 1985 with
registered number 3937466 on 25 February 2000)
Share code on AIM: PAF
Share code on JSE: PAN
ISIN: GB0004300496.
("Pan African" or the "Company")
ANNOUNCEMENT REGARDING THE DISPOSAL OF THE MANICA GOLD PROJECT TO TERRANOVA
MINERALS AND FURTHER CAUTIONARY ANNOUNCEMENT
1. Introduction
Pan African is pleased to announce that it entered into an agreement
("Agreement") on 28 August 2012 to dispose of 100% of its Manica Gold Project
("Manica") to Auroch Minerals Mozambique (Pty) Ltd, a wholly owned subsidiary
of Terranova Minerals NL ("Terranova"), for a total potential purchase
consideration ("Purchase Consideration") of AUD 6 million (GBP 4 million / ZAR
52.4 million) payable in cash and 96,666,668 shares in Terranova ("Terranova
Shares"), subject to certain terms and conditions more fully described below
("Transaction").
Pan African CEO, Jan Nelson commented, "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. Although we are no longer
intent on developing exploration projects, we believe that this project and the
Auroch executive team have the potential to develop the project into a
significant gold producer. We are pleased that through our sizable
shareholding, we can maintain an exposure to the Odzi-Mutare-Manica Greenstone
Belt's success".
2. Purchase Consideration
In terms of the Agreement, Pan African shall receive the first portion of the
Purchase Consideration comprising AUD 2 million (GBP 1.3 million / ZAR 17.5
million) and 25 million shares in Terranova upon the fulfilment or, where
possible, waiver of the conditions precedent to the Transaction.
The remaining portion of the Purchase Consideration shall only become payable
in tranches upon achievement of the following milestones by Manica during the
four year period following the completion of the Transaction:
* the delineation of at least 400,000 ounces of Joint Ore Reserves Committee
Code ("JORC") Inferred gold Resource of oxide ore with a cut-off grade of
1.25g/t being defined on the Northern and/or Southern shear zones of
Manica's mining concession ("Concession") ("400koz Milestone");
* the delineation of at least 1,000,000 ounces of a JORC Inferred gold
Resource of oxide ore with a cut off grade of 1.25g/t being defined on the
Northern and/or Southern shear zones of the Concession ("1,000koz
Milestone");
* the completion of a positive Bankable Feasibility Study ("BFS") on either
the oxide or sulphide ore on the Concession which recommends the
construction of a mine with at least a ten year life and production scope
of 50,000 ounces per annum and at any time after completion of the BFS, the
board of directors of Terranova elects to commence construction of the mine
as recommended in the BFS and has financing arranged for the construction
of the mine ("BFS Milestone"); and
* the production of either oxide or sulphide ore at the plant constructed at
Manica to process ore from the Concession at the capacity specified in the
BFS ("Capacity Milestone").
The remaining portion of the Purchase Consideration shall be settled upon the
achievement of the various milestones described above as follows:
* AUD 1,000,000 (GBP 658,700 / ZAR 8,728,300) and 20,066,667 Terranova shares
upon achievement of the 400koz Milestone;
* AUD 1,000,000 (GBP 658,700 / ZAR 8,728,300) and 20,066,667 Terranova shares
to be paid and issued upon achievement of the 1,000koz Milestone;
* AUD 1,000,000 (GBP 658,700 / ZAR 8,728,300) and 24,366,667 Terranova shares
or a payment of AUD 7,310,000 (GBP 4,815,097 / ZAR 63,803,873) in cash, at
Terranova's election, to be paid and/or issued upon achievement of the BFS
Milestone; and
* AUD 1,000,000 (GBP 658,700 / ZAR 8,728,300) and 7,166,667 Terranova shares
or AUD 2,150,000 (GBP 1,416,205 / ZAR 18,765,845) in cash, at Terranova's
election, to be paid and/or issued upon achievement of the Capacity
Milestone.
Pan African expects to utilise the cash portion of the Purchase Consideration
for the funding of the construction and development of its Bramber Tailings
Retreatment Project and expects to retain the Terranova Shares received in
terms of the Transaction so as to continue to participate in the development of
Manica through Terranova.
3. Conditions Precedent to the Transaction
The implementation of the Transaction remains subject to the fulfilment or,
where possible, waiver of, inter alia, the following conditions precedent
within 6 months of the date of the Agreement:
* Terranova raising capital of not less than AUD 5 million (GBP 3.3 million /
ZAR 43.6 million), at a price of not less than AUD 0.30 (GBP 0.20 /
ZAR 2.62) per share, to fund the initial working capital requirements
required for the development of Manica;
* Terranova obtaining a report prepared by an independent expert stating that
the Transaction is fair and reasonable to Terranova's shareholders;
* Terranova obtaining all the necessary regulatory approvals, on acceptable
terms, as are required to give effect to the Transaction; and
* Terranova and Pan African, to the extent required, obtaining all the
necessary shareholder approvals required to implement the Transaction.
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 Transaction shall become effective upon the fulfilment or, where possible,
waiver of all the conditions precedent to the Transaction.
4. Details of Manica and Terranova
Manica is a gold exploration project situated in central Mozambique
approximately 4km north of the town of Manica, which lies approximately 270km
inland of the port city of Beira, Mozambique. The project, which spans 42km2,
is positioned in the Beira Corridor which contains major road and rail
infrastructure linking Zimbabwe to Beira and has a JORC resource of some 3 Moz
at 1.83g/t Au. The area surrounding Manica is well known for hosting gold mines
such as Penhalonga, Rezende, Monarch and Old West. The reefs in these mines
have typically been classified as porphyry mineralisation within
quartz-diorites where gold is hosted in quartz veins.
Listed on the Australian Securities Exchange, Terranova is a mineral
exploration company which is involved in the acquisition, exploration and
evaluation of gold and copper assets. Terranova has gold projects in Western
Australia including the Beete Gold, Peninsula Gold projects in the eastern
fields Region and the Crawford Copper Project in the Crawford Belt of the
Gascoyne Province, although going forward Terranova's primary focus will be on
Manica. Terranova currently has 42.5 million fully diluted shares (this
includes 20 million partially paid shares) in issue.
5. Categorisation and Further Cautionary Announcement
The pro forma financial effects of and categorisation, in terms of the JSE
Limited Listings Requirements, of the Transaction are still to be finalised.
Accordingly, Pan African shareholders are advised to continue exercising
caution when dealing in Pan African shares until such time as a further
announcement has been released containing the pro forma financial effects of
and further details of the Transaction.
Closing exchange rates as at 28 August 2012, being AUD:GBP 0.6587 and AUD:ZAR
8.7283, have been applied throughout this announcement.
Johannesburg
29 August 2012
Sponsor
One Capital
Enquiries UK
South Africa
Pan African Resources Canaccord Genuity Limited - Nomad and
Joint Broker
Jan Nelson, Chief Executive John Prior / Sebastian Jones / Joe
Officer Weaving
+27 (0) 11 243 2900 +44 (0) 20 7523 8350
One Capital finnCap Limited - Joint Broker
Sholto Simpson / Megan Young / Elizabeth Johnson / Joanna Weaving
Nicholas Tyler +44 (0) 20 7220 0500
+27 (0) 11 550 5000
Vestor Investor Relations St James's Corporate Services Limited
Louise Brugman Phil Dexter
+27 (0) 11 787 3015 +44 (0) 20 7499 3916
Gable Communications
Justine James
+44 (0) 20 7193 7463 / +44 (0) 7525
324431
For further information on Pan African, please visit the website at
www.panafricanresources.com
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