Anooraq announces progress update on empowerment transaction with Anglo Platinumadmin
Anooraq Resources Corporation announces an update on the proposed transaction whereby Anooraq would purchase from Anglo Platinum Limited an effective 51% of the Lebowa Platinum Mine and an effective 1% controlling interest in each of the Ga-Phasha, Boikgantsho and Kwanda joint venture projects located in South Africa, which are currently held by Anooraq and Anglo Platinum in 50-50 joint ventures as well as an update on the financing strategy associated with the Transaction. Shareholders are also referred to the Company’s October 2, 2008 news release, which provided the first update on the anticipated Anooraq financing strategy for the Transaction.
Detailed terms of the Transaction were announced on April 14, 2008. As set out in this announcement, a component of the Transaction, which informed commercial terms, was the development and financing of the Middelpunt Hill UG2 expansion project (“MPH Project”) at Lebowa. It was announced that the MPH Project would be developed by Anooraq and Anglo Platinum as part of the then current mine plan and capital development program for Lebowa, which had been approved by Anglo Platinum in May 2007.
During the period July 2008 to October 2008, global economic conditions deteriorated significantly, contributing to a material decline in platinum group metal prices and resulting in constrained debt and equity capital markets.
On October 23, 2008, Anglo Platinum announced that it was reviewing the costing and scheduling of all its capital projects, including the MPH Project, in light of current metal price levels and uncertainty in global markets. Anooraq is participating in the review of the MPH Project costing and scheduling. Furthermore, Anglo Platinum and Anooraq have agreed to review the current Anglo Platinum approved mine plan and capital program at Lebowa.
As a result of these developments, Anglo Platinum and its parent company, Anglo American plc, and Anooraq and its largest shareholder, Pelawan Investments (Pty) Ltd, (the “Parties”) are currently in advanced stage discussions surrounding the Transaction, as well as the associated financing strategy, and will provide a detailed Transaction update to the market as soon as possible after such discussions have been concluded.
The Parties remain committed to concluding the Transaction as soon as practically possible. However, as a result of the review process referred to above, the Transaction will not close on November 30, 2008, as originally anticipated. The Parties are confident that the Transaction will close during the first quarter of 2009.
Given the delay in Transaction implementation, Anglo Platinum has agreed to increase its existing loan facility to Anooraq by an amount of South African Rand 30 million (Canadian Dollar 3.5 million).