Manica - Pro Forma Financial Effects Statement
Pan African Resources PLC
(Incorporated and registered in England and Wales under Companies Act 1985
with registered number 3937466 on 25 February 2000)
AIM Code: PAF
JSE Code: PAN
ISIN: GB0004300496
ISIN for Nil Paid Rights: GB00B85FJG40 (JSE Code: PANN)
ISIN for Fully Paid Rights: GB00B8RCBP62
("Pan African" or the "Company")
UPDATE REGARDING THE DISPOSAL OF THE MANICA GOLD PROJECT ("MANICA") TO AUROCH
MINERALS NL ("AUROCH") AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Pan African shareholders ("Shareholders") are referred to the announcement
published by the Company on 29 August 2012 ("Announcement") regarding the
disposal of 100% of Manica to Auroch Minerals Mozambique (Pty) Ltd, a wholly
owned subsidiary of Auroch (Auroch was previously named Terranova Minerals NL)
("Transaction"). Certain terms of the Transaction have now been amended as
detailed below and the unaudited pro forma financial effects of the Transaction
("Financial Effects") are set out below.
Jan Nelson, CEO of Pan African commented:
"The board of Pan African believes that the management team at Auroch will add
significant value to this project and that Pan African shareholders will
realise value from this transaction in time."
2. AMENDMENT TO THE TRANSACTION TERMS
Pan African and Auroch have agreed to amend the terms and conditions of the
Transaction as follows:
* Pan African was to receive the first portion of the Purchase Consideration
comprising AUD2 million ("Initial Cash Consideration") and 25 million
shares in Auroch ("Consideration Shares") upon the fulfilment or, where
possible, waiver of the conditions precedent to the Transaction ("
Completion"). However, payment of the cash portion of the Initial Cash
Consideration has now been deferred for a period of up to 18 months from
Completion and the issue of 4,100,000 of the Consideration Shares shall
only be issued to Pan African upon the receipt by Auroch of the requisite
approval by its shareholders to issue such shares ("Shareholder Approvals
"). Auroch has undertaken to obtain the Shareholder Approvals by the end of
February 2013; and
* the total purchase consideration payable by Auroch in terms of the
Transaction ("Purchase Consideration") to Pan African in cash and new
shares in Auroch ("AOU Shares"), shall be limited to a maximum of
AUD80 million. The value of the Purchase Consideration shall be calculated
with reference to the aggregate value of the cash paid and the value of the
AOU Shares (calculated with reference to the closing price of such shares
the day before their issue) issued to Pan African as payment of the
Purchase Consideration. Any adjustment required shall only be made through
a reduction in the number of AOU Shares issued to Pan African i.e. the cash
portion of the Purchase Consideration shall remain unchanged and only the
number of AOU Shares to be issued in terms of the Transaction may be
adjusted.
The adjustments to the Transaction terms described above were agreed so as to
allow Auroch to comply fully with its obligations in terms of the Transaction
agreements whilst obtaining further certainty with respect to the extent that
its shareholders would be diluted through the future issue of AOU Shares for
purposes of settling the Purchase Consideration.
3. FINANCIAL EFFECTS OF THE TRANSACTION
The table below sets out the Financial Effects. The Financial Effects have been
prepared for illustrative purposes only, in order to provide information about
how the Transaction might have affected Shareholders had the Transaction been
implemented on the dates indicated in the notes below.
Due to their nature, the Financial Effects may not fairly present the financial
position or the effect on earnings of Pan African after the Transaction. The
preparation of the Financial Effects is the responsibility of Pan African's
directors.
The Financial Effects have been prepared using accounting policies that comply
with International Financial Reporting Standards ("IFRS") and that are
consistent with those applied in the published audited results of Pan African
for the year ended 30 June 2012.
The figures included in the "Before the Transaction" column of the Financial
Effects have been extracted from the "After the Transaction and Rights Offer"
column of the pro forma financial effects pertaining to the acquisition of
Evander Gold Mines Limited and the related rights offer ("Acquisition and
Rights Offer") by the Company as contained in the announcement published by the
Company on 7 November 2012 ("Evander Announcement"). The Financial Effects are
therefore presented after accounting for the pro forma financial effects of the
Acquisition and Rights Offer.
In order to comply with the requirements of the JSE Limited Listings
Requirements, the Financial Effects have been prepared on the assumption that
all the milestones (as more fully described in the Announcement), in terms of
which the deferred portions of the Purchase Consideration shall be paid to Pan
African, are met. The Financial Effects therefore account for the entire
Purchase Consideration, comprising AOU Shares and cash, being received by Pan
African on 1 July 2011 for purposes of the Statement of Comprehensive Income
and 30 June 2012 for purposes of the Statement of Financial Position. This
results in Auroch being consolidated as a subsidiary of Pan African in
accordance with IFRS for purposes of the Financial Effects. The resultant
effect is that any profit on the sale of Manica is not accounted for in the
Financial Effects. Pan African therefore emphasises that it is highly unlikely
that Auroch will become a subsidiary of Pan African in the near future and as
such, the Financial Effects presented below may not truly reflect the actual
outcome of the Transaction.
Before the After the Change
Transaction Transaction
%
Earnings per share (pence) 5.32 5.23 (1.69)
Diluted earnings per share 5.30 5.21 (1.70)
(pence)
Headline earnings per 2.37 2.28 (3.80)
share (pence)
Diluted headline earnings 2.36 2.27 (3.81)
per share (pence)
Net asset value per share 10.02 9.93 (0.90)
(pence)
Tangible net asset value 8.14 7.91 (2.83)
per share (pence)
Number of shares in issue 1 818 334 263 1 818 334 263 -
Weighted average number of 1 815 274 388 1 815 274 388 -
shares in issue
Diluted number of shares 1 823 359 844 1 823 359 844 -
in issue
Notes:
1. The "Before the Transaction" column has been extracted from the "After the
Transaction and Rights Offer" column contained in the Evander Announcement.
2. The Financial Effects have been prepared on the assumption that the
Transaction was concluded and all the deferred payments were paid in full
on 1 July 2011 for purposes of the Statement of Comprehensive Income and by
30 June 2012 for purposes of the Statement of Financial Position.
3. The Financial Effects are prepared on the assumption that Pan African
received 96 666 668 AOU Shares at an average price of AUD0.29 (GBP0.19) per
share (being the closing price for an AOU Share the day before the
Announcement) and cash in the amount of AUD6 000 000 (GBP3 900 000) as full
payment of the Purchase Consideration. The Financial Effects have therefore
been prepared on the assumption that the total value of the Purchase
Consideration amounts to AUD34 033 334 (GBP22 121 667).
4. The Financial Effects have been prepared on the assumption that Pan African
controls Auroch following the issue of AOU Shares to the Company as part
payment of the Purchase Consideration. Auroch has therefore been
consolidated by Pan African in accordance with IFRS.
5. For purposes of this announcement and the Financial Effects, Australian
Dollars have been converted to British Pounds using an exchange rate of
AUD1.54:GBP1.00.
4. CATEGORISATION AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
The Transaction has been categorised as a category 2 transaction in accordance
with the JSE Limited Listings Requirements.
Holders of Pan African securities are referred to the cautionary announcement
published by the Company on 7 November 2012 and are advised that caution is no
longer required to be exercised when dealing in the Company's securities.
Johannesburg
14 December 2012
Sponsor
One Capital
Enquiries
South Africa UK
Pan African Resources Canaccord Genuity Limited - Nomad and
Joint Broker
Jan Nelson, Chief Executive Rob Collins / Peter Stewart /
Officer Sebastian Jones / Joe 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
+27 (0) 11 550 5000 +44 (0) 20 7220 0500
Vestor Investor Relations St James's Corporate Services Limited
Louise Brugman Phil Dexter
+27 (0) 11 787 3015 +44 (0) 20 7499 3916
+27 83 504 1186
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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