APP.L Regulatory News (APP)

11 Dec 2006 07:01

African Platinum Plc11 December 2006 African Platinum plc / Ticker: APP / Index: AIM / Sector: Platinum and precious metals 11 December 2006 JOINT NEWS RELEASE IMPLATS SIGNS STRATEGIC PARTNERSHIP AGREEMENT WITH AFPLATS TO PARTICIPATE IN THE GREATER LEEUWKOP PROJECT Impala Platinum Holdings Limited (Implats) and African Platinum plc (Afplats)have signed a binding Transaction Framework Agreement (TFA), in terms of whichImplats will acquire 29.9% of Afplats' South African assets. The TFA details the basis on which Implats will subscribe for this equity andassist Afplats in developing these assets. Implats will be granted certainrights / protections commensurate with its investment. A definitive agreementis currently being drafted with the aim to have concluded the transaction in thefirst quarter of 2007, subject to all required regulatory approvals beinggranted, thereby allowing immediate development of the Leeuwkop Project tocommence. Under the terms of the TFA, Afplats will transfer its South Africansubsidiaries, Afplats (SA), Imbasa Platinum and Inkosi Platinum into Newco, anewly formed South African incorporated company held 100% by Afplats. Implatswill subscribe for an effective 29.9% of Newco for a consideration of ZAR 1.068billion and will have an option, subject to Afplats shareholder approval whichwill be sought in early 2007, to convert its shareholding in Newco into Afplatsequity in the future should Implats so wish. The subscription money acquired from this transaction will be used to fundAfplats' ZAR 1 billion commitment to the Leeuwkop Project in terms of therecently signed agreement with their Black Economic Empowerment partners, theBakwena Ba-Mogopa Traditional Community. The cash injected from the proposed transaction will provide funding for thefirst two and a half years of the project's development. This will allow theremaining project funding to be secured at a lower cost once the project hasbeen significantly de-risked and mining has commenced. Implats' technical expertise at the operational level will ensure that theproject is successfully and timeously developed in accordance with the BankableFeasibility Study parameters. David Brown, the CEO of Implats stated, "This transaction is an excellentopportunity for Implats to participate in the development of one of the largestremaining resources in the Western Limb of the Bushveld Igneous Complex andbuilds on our relationship with Afplats. This project is an integral part ofImplats' on-going growth strategy and is the first building block in our plansfor the next phase of growth to 2.8 million ounces of platinum per annum." Afplats CEO Roy Pitchford welcomed Implats as a strategic partner. "The choiceof Implats followed an extensive evaluation process. We believe that thisinvestment validates the technical and commercial viability of the Leeuwkopproject and the proposed along strike expansions. In addition, this investmentmeans that Afplats will not be required to seek funding from either itsshareholders or financiers in the short term." Leeuwkop is located on the western limb of the Bushveld Complex in the NorthWest province of South Africa near the town of Brits. Both the Merensky and theUG2 Reefs are found on the property, but the initial focus of the new mine willbe the UG2 Reef. In respect of the UG2 Reef only, resources total 60.2 millionounces (4E). The initial project, which focuses on the Leeuwkop propertycontains reserves of 6.9 million ounces (4E), which are included in the aboveresources. The initial life of mine is forecast at 20 years at an underground productionrate of 3 million run-of-mine tonnes a year at a head grade of 3.95 g/t. Theunderground mine will be accessed via a twin vertical shaft system and miningoperations will be fully mechanised. At full production, which is forecast tobe achieved during 2010, the mine will produce in the region of 300,000 ounces(4E) in concentrate per annum. Concentrate will be transported to ImpalaPlatinum's Mineral Processes in Rustenburg in terms of the previously signed 10year offtake agreement with Impala Refining Services (IRS). Total development capital expenditure is estimated, in today's money, to be ZAR2.3 billion of which R1 billion is sourced from the Implats capital injection. Implats is one of the world's largest producers of PGMs, and expects to producein excess of 2 million ounces of platinum this year. The company has operationsin South Africa and Zimbabwe and exploration projects in South Africa, Zimbabwe,North America and Madagascar. Implats employs close on 31,500 people. Thecompany is listed on the JSE and the LSE and trades as a sponsored level 1 ADRin the United States. Afplats is an exploration and development business focused on the platinum groupmetals trading on the Alternative Investment Market of the London Stock Exchange(ticker symbol APP). Afplats has three South African subsidiary companies,Afplats (Pty) Ltd, Imbasa Platinum (Pty) Ltd and Inkosi Platinum (Pty) Ltd. Thecompany's primary asset is Afplats (Pty) Ltd, the entity which holds theprospecting permit to the Leeuwkop Project on the western limb of South Africa'sBushveld Complex. Ends For further information, please contact Implats AfplatsDavid Brown Roy Pitchford+27 11 731 9042 +27 11 467 1858investor@implats.co.za info@afplats.com Brenda Berlin Russell Lamming+27 11 731 9023 +27 (11) 467 1858 This information is provided by RNS The company news service from the London Stock Exchange