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21 Aug 2012 07:02
21 August 2012
Mwana Africa PLC
("Mwana", the "Group" or the "Company")
SEMHKAT cooperation and development agreement signed with Hailiang
Mwana Africa is pleased to announce that it has entered into a Cooperation and Development Agreement ("Agreement") for its 100% owned SEMHKAT copper exploration area with Zhejiang Hailiang Company Limited ("Hailiang").
Highlights
• | Under the Agreement, Hailiang will invest US$25 million over a minimum period of four years to earn a 62% voting interest in the Exploration Joint Venture. |
• | Hailiang has the right at any time to transfer a licence into a development company ("DC"). Once in a DC, exploration and development of the selected licence area will be progressed further and a JORC resource report and feasibility study will be produced, and, inter alia, assuming a positive result from the feasibility study, a mine will be developed. |
• | Mwana's 38% shareholding in any development company will be non-dilutable. |
• | Hailiang has a further six month option over the Kibolwe prospect. Should they exercise this option, Kibolwe will be transferred to its own development company, in which Mwana will have a 40% non-dilutable shareholding, and, Hailiang has committed a further US$15m within 12 months after the transfer of the license. |
Detail on the Agreement
The Agreement covers 28 licences owned by Societe d'exploration Miniere du Haut Katanga ("SEMHKAT"), in which Mwana has a 100% beneficial holding, and covers an area of approximately 4,145 square kilometres in the Katanga province of the Democratic Republic of Congo. Under the terms of the Agreement, Hailiang will invest US$25m into an Exploration Joint Venture ("EJV") over a minimum period of four years to earn a 62% voting interest in the EJV. The voting interest will be earned on the basis of 15.5% voting interest per US$6.25m of exploration expenditure invested into the EJV. Hailiang has the right to invest at a faster rate should they choose to do so. Hailiang will also have the right, at any time, to transfer selected licence areas into a development company ("DC"), in which Hailiang will own a 62% shareholding and Mwana will own a 38% shareholding. Mwana's 38% shareholding will be non-dilutable.
The parties have agreed that a DC will be funded first by third party finance, second by pro rata equity contributions from both parties on condition that if Mwana is not able to fund its equity portion, Hailiang has committed to finance the Mwana shortfall by providing a shareholder loan to the DC. Any payment to the shareholders from the profits of the DC will first be made towards settling shareholder loans and thereafter split according to the respective shareholdings. Once in a DC, exploration and development of the selected licence area will be progressed further and a JORC resource report and feasibility study will be produced, and, inter alia, assuming a positive result from the feasibility study, a mine will be developed.
In addition to the US$25m EJV, under the terms of the Agreement, Hailiang has an option for six months to elect to transfer the Kibolwe prospect (an area held by SEMHKAT) into a development company specific to Kibolwe ("KDC"). If Hailiang elects to progress with Kibolwe, once the KDC is established, Hailiang will invest, as equity, US$5m followed by a further US$10m within 12 months which is intended to fund a JORC resource report and feasibility study. The shareholding in the KDC will be 60% and 40% respectively for Hailiang and Mwana. Mwana's 40% will be non-dilutable.
After the initial US$15m investment, the parties have agreed that the KDC will be funded first by third party finance, second by pro rata equity contributions from both parties on condition that if Mwana is not able to fund its equity portion, Hailiang has committed to finance the Mwana shortfall by providing a shareholder loan to the KDC. Any payment to the shareholders from the profits of the KDC will first be made towards settling shareholder loans and thereafter split according to the respective shareholdings.
The Agreement will be enforced through an exploration joint venture agreement and shareholder agreements for the DCs and KDC. The parties have committed to sign these agreements within three months of the date of signing the Agreement. The Cooperation and Development Agreement is governed by Hong Kong law, is legally binding and is not subject to any regulatory approvals.
Information on Hailiang
Hailiang is listed on the Shenzhen Stock Exchange in China with a market capitalisation of approximately RMB 6 billion (approx. US$950m). Since it was founded in 2001, Hailiang has committed itself to the research, development, production, marketing and after-sales service of high-end copper products and has become a world class copper processing enterprise. Hailiang is China's biggest copper tube exporter; the biggest manufacturer of copper alloy tubes; China's second largest manufacturer of copper tubes; and, one of China's main manufacturers of copper bars and precision copper rods. At the end of 31st December 2011, Hailiang had total assets of RMB 6.8 billion (approx. US$1.07 billion) and net assets of RMB 2.5 billion (approx US$396m) with a staff complement of 4,587 employees. In 2011, the company achieved a sales volume of approximately 181,100 tonnes of copper products and an operating income of RMB 11.8 billion (approx. US$1.8 billion). Hailiang has interests in two mining companies, Jinchuan Group Co. Ltd and Honghe Henghao Mining Co. Ltd, as well as an interest in the Bank of Ningxia.
Kalaa Mpinga, Chief Executive Officer of Mwana, commented today:
"The Hailiang Group is an established player in the copper industry and today's US$40m agreement reinforces the prospectivity of our SEMHKAT copper licences in the DRC. This joint venture allows our copper exploration and development programmes, in what is Africa's highest grade copper belt, to be significantly accelerated. We are also very excited at the prospect of advancing Kibolwe in the near term. This agreement is the first example of the Chinese related opportunities available to the Company following the introduction of China International Mining Group Corporation to the share register earlier this year.
We look forward to working closely with Hailiang in what we expect will be a very productive relationship and to updating shareholders with further information on the exploration programme later in the year."
For further information please visit www.mwanaafrica.com or contact:
Mwana Africa PLC Tel: +44 (0)20 7654 5580
Donald McAlister / Lorenz Werndle
Nominated Adviser and Broker
Liberum Capital Limited Tel: +44 (0)20 3100 2000
Michael Rawlinson / Tom Fyson / Christopher Kololian
Public & Investor Relations
Tavistock Communications Tel: +44 (0)20 7920 3150
Ed Portman / Mike Bartlett / Simon Hudson
About Mwana Africa PLC
Mwana Africa PLC is a pan-African, multi-commodity resources company. Mwana's principal operations and exploration activities cover gold, nickel and other base metals, and diamonds in Zimbabwe, the DRC and South Africa. Mwana was the first African owned and managed mining business to be listed on London's AIM market.
Mwana's Freda Rebecca gold mine in Zimbabwe achieved its target production rate of 50,000 ounces gold per annum in 2011.
In February 2012, Mwana announced a gold mineral resource of 2.01 million ounces at its Zani Kodo project in Democratic Republic of Congo.
Further information on the Company can be found at www.mwanaafrica.com.
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