Sylvania Platinum Regulatory News (SLP)

4 Feb 2005 07:15

For immediate release 4 February 2005 SILENTPOINT PLC ("Silentpoint" or "the Company") Update re. Investment in Silvermines Media plc ("Silvermines") Silentpoint, the AIM-listed investment company, is pleased to note today'sannouncement from Silvermines, a company in which Silentpoint currently has a40.1 per cent. interest.Highlights * Silvermines to acquire Zhibek Resources Plc, part owned by Cambrian Mining Plc * Silvermines will comprise the oil & gas exploration and development assets of Zhibek, currently located in Kyrgyzstan * Silvermines' proposed change of name to Cambrian Oil & Gas Plc * Silentpoint invests in placing of new shares alongside Cambrian Mining Plc * Cambrian Mining Plc agreement to offer all of its potential future opportunities in oil and gas interests to the Company in the first instance. Commenting on the proposed Acquisition, Smit Berry, Chief Executive ofSilentpoint PLC, said:"Cambrian Oil & Gas will own interests in two compelling projects in the KrygzRepublic. The Beshkent Togap field contains an estimated 65 million barrels ofoil with upside potential to 76 million barrels and Zhibek will shortly start apilot workover program. There is also a licence (72%) in the Tash Kumyr region,where the company has used seismic to identify five drilling prospects showinggood geophysical evidence of commercially viable oil and gas reserves."Haresh Kanabar, Chairman of Silentpoint PLC, added:"Cambrian Oil & Gas has a focused strategy and the incoming management teamhave been active in Kyrgyzstan for over five years and have established astrong presence in the country through their early involvement. We believe thatthe reversal of the business into Silvermines will deliver further benefitswhich will enable it to maximize the full potential of the opportunities in theresources sector."For further information:Silentpoint plc Haresh Kanabar, Chairman 07802 858893 Smit Berry, Chief Executive 020 8656 4648 BackgroundThe announcement released by Silvermines includes details regarding theproposed acquisition of the entire issued share capital of Zhibek Resources Plc("Zhibek"), an independent oil and gas company operating in Kyrgyzstan, partowned by Cambrian Mining PLC.The proposed acquisition constitutes a reverse takeover for Silverminespursuant to the AIM Rules and is therefore subject to the approval ofSilvermines' shareholders at an extraordinary general meeting.It is also proposed that the name of Silvermines be changed to Cambrian Oil &Gas Plc and that trading in the enlarged share capital is expected to beginduring the first week of March (AIM: COIL).Under the proposals, Silvermines will enter the field of investment in oil andgas exploration and development, through the acquisition of Zhibek, theexisting business of which will be continued and developed. This will bringwith it not only the oil and gas exploration and production, but also acontinuing relationship with Cambrian Mining PLC, which, on implementation ofthe proposals, has agreed to offer all of its potential future opportunities inoil and gas interests to Cambrian Oil & Gas Plc in the first instance.In addition, the announcement details that Silvermines has concluded a placingwhich has raised ‚£2.25 million, before expenses, for the enlarged company.Silentpoint is pleased to report that it subscribed ‚£100,000 for 2,000,000shares in Silvermines pursuant to the placing, alongside Cambrian Mining PLCwhich invested ‚£500,000 in the placing.Following completion of the transaction, Silentpoint will hold 11,280,000shares representing 10.4 per cent. of the issued share capital of Silverminesand 3,093,333 warrants.The full text of the announcement released by Silvermines today is reproducedbelow.For immediate release: 4 February 2005 Silvermines Media Plc ("Silvermines" or "the Company") Proposed Acquisition of Zhibek Resources Plc Approval of waiver to be granted by the Panel on Takeovers and Mergers Proposed change of name to Cambrian Oil & Gas Plc Placing of 45,000,000 Ordinary Shares of 1p each at 5p per share Proposed issue of Warrants Silvermines to hold Extraordinary General Meeting on 28 February 2005 Key Highlights * Silvermines has conditionally agreed to acquire the entire issued share capital of Zhibek in consideration for the issue of 40,000,000 Ordinary Shares at 5p each and the proposed issue of 13,333,333 Warrants * At a closing mid-market price of 7.5p per Ordinary Share on 26 January 2005, the date on which the Ordinary Shares were suspended from trading on AIM, the acquisition values Zhibek at ‚£3 million and Silvermines at ‚£1.7 million * Placing through W.H. Ireland to raise ‚£2.25 million gross (‚£1.95 million net) for working capital for the Enlarged Group * Proposed change of name to Cambrian Oil and Gas Plc * Under the AIM rules, the acquisition constitutes a reverse takeover and requires shareholder approval at an EGM * The Directors and major shareholders, representing approximately 69 per cent. of the existing Ordinary Shares in Silvermines, have irrevocably undertaken to vote in favour of the proposed Resolutions * Enlarged Group will comprise the oil and gas exploration and development assets of Zhibek, currently located primarily in the Kyrgyz Republic Full details of the Proposals are attachedCopies of the Admission Document posted to Shareholders today are availablefrom W.H. Ireland, 26 Bennetts Hill, Birmingham B2 5QP. Suspension of theexisting Ordinary Shares is expected to be lifted following publication of thisannouncement.For further information please contact:WH Ireland Silvermines Media PLC Parkgreen Communications Tim Cofman-Nicoresti Paul Mc Groary, Chief Justine Howarth / Victoria Executive Thomas +44 (0) 121 665 4615 +44 (0) 7930 568 160 +44 (0) 20 7493 3713 SILVERMINES MEDIA PLC ("Silvermines" or the "Company") Proposed Acquisition of Zhibek Resources Plc Approval of waiver to be granted by the Panel on Takeovers and Mergers Proposed change of name to Cambrian Oil & Gas Plc Placing of 45,000,000 Ordinary Shares of 1p each at 5p per share Proposed issue of Warrants W.H. Ireland Limited Nominated Adviser and Broker The Board of Silvermines today announces that the Company has conditionallyagreed to acquire the entire issued share capital of Zhibek (including alloutstanding convertible securities) in consideration for the issue of40,000,000 Ordinary Shares and 13,333,333 Warrants. As of 26 January 2005(being the date on which the Ordinary Shares were suspended from trading onAIM) the closing mid market price of an Ordinary Share was 7.5p, valuing Zhibekat approximately ‚£3 million and Silvermines at approximately ‚£1.7 million.The Company has also conditionally raised ‚£1.95 million, net of expenses, byway of the Placing which is being undertaken in order to provide workingcapital for the Enlarged Group.The Consideration Shares will represent 37 per cent. of the Enlarged ShareCapital and in view of the size of Zhibek relative to the Company, theAcquisition will constitute a reverse takeover of Silvermines under the AIMRules and therefore requires the prior approval of Shareholders at anExtraordinary General Meeting. In conjunction with the Acquisition, Silverminesproposes to change its name to Cambrian Oil & Gas Plc.Additionally, because the members of the Concert Party (comprising certain ofthe Zhibek shareholders and associated parties) will own more than 30 per cent.of its Enlarged Share Capital as a result of the Acquisition and theparticipation of Cambrian in the Placing, the Company is seeking a waiver underRule 9 of the City Code, which would otherwise require the members of theConcert Party to offer to acquire those Ordinary Shares that they do not own. Aproposal seeking Shareholder approval for such a waiver is included in thenotice of the Extraordinary General Meeting set out at the end of the AdmissionDocument which has been posted to Shareholders today.BUSINESS AND STRATEGYThe share capital of Silvermines was admitted to trading on AIM on 15 July2004. The prospectus issued by it at that time stated that the Directorsintended to seek acquisition and investment opportunities in the media,advertising and marketing sectors. However, whilst the Directors believed thatthere were a number of opportunities for such investment, the strengthening inthe advertising sector has, in the opinion of the Directors, caused an increasein price expectations such that the Directors have been unable to findinvestments of the appropriate quality at a price which the Board was preparedto sanction. Accordingly, the Directors have looked at other business sectorsfor opportunities which they consider capable of providing an appropriatereturn on investment.Under the Proposals, the Company will enter the field of investment in oil andgas exploration and development, through the acquisition of Zhibek, theexisting business of which will be continued and developed. This will bringwith it not only the oil and gas exploration and production interests describedin Part II below, but also a continuing relationship with Cambrian, which, onimplementation of the Proposals, will have an interest in 27 per cent. of theEnlarged Share Capital and which has agreed to offer all of its potentialfuture opportunities in oil and gas interests to the Company in the firstinstance.Cambrian's principal business is the exploration for and development of mineraldeposits. However, because Cambrian is actively looking at investmentopportunities in a number of countries that also have oil and gas reserves, itsdirectors often become aware of opportunities to invest in the exploration anddevelopment of such assets. The Directors and Proposed Directors thereforebelieve that the Proposals will enable the Enlarged Group access to a number offurther investment opportunities.DIRECTORS AND PROPOSED DIRECTORSThe Board currently comprises three Directors as follows:Smit Berry (aged 35) Non-Executive ChairmanSmit is the founder of Equitylink Limited, a publisher of two investmentnewsletters which provide research on fully listed and AIM stocks across avariety of industry classifications. He is Chief Executive of Silentpoint plcand, until March 2004, served as a non-executive director of KnowledgeTechnology Solutions PLC which he co-founded in 1999. Smit obtained a BEng(Hons) in Computing Science from Imperial College, University of London in1991.Paul Mc Groary (aged 47) Chief ExecutivePaul is Chairman of Eyeconomy Holdings PLC, an OFEX traded company whichinvests in knowledge based companies. He was until March 2004 commercialdirector of Knowledge Technology Solutions PLC, an AIM quoted publisher ofmarket data solutions on a subscription basis, which he helped to found in1999. He was formerly Chairman of Latin American Copper PLC and is an activeinvestor in the mining industry including most recently taking a personal stakein a prospective Canadian Uranium property. Paul in a personal capacity is aserial investor in a number of private businesses.Haresh Kanabar (aged 46) Finance DirectorHaresh qualified as a certified accountant in 1986. Following a number offinance positions with Fisons plc, Reed International plc and Texas HomecareLimited he became finance director of F E Barber Limited, a subsidiary ofHillsdown Holdings Limited, in 1994. In 1997 he was appointed group financedirector of Whitchurch Group Plc which he left in May 1998 to become financedirector of TMV Finance Limited. In December 1999 he left to join CorvusCapital Inc. as chief executive, and in November 2002 he left to become financedirector of Gaming Insight plc. Haresh is also currently Chief Executive ofBlue Star Capital plc, non-executive Chairman of Greenfield Construction Group,India Outsourcing Services plc and Silentpoint plc and executive director ofBombay Restaurants plc, Knighteagle plc and Aurum Mining Plc. Haresh was also adirector of Spiritel plc until July 2004.Immediately prior to Admission, Smit Berry and Haresh Kanabar will resign fromthe Board, and PaulMc Groary will step down as Chief Executive to become a Non-Executive Directorof the Company.Particulars of all service contracts with more than 12 months to run betweenthe Company and the Directors and the Proposed Directors are set out in theAdmission Document.Save in respect of the executive Directors, Silvermines does not have anyemployees.Details of Proposed DirectorsUpon completion of the Acquisition and Admission, the following directors ofZhibek will join the Enlarged Group Board:John Byrne (aged 55) Non-Executive ChairmanJohn is the Chairman of Western Canadian Coal Corporation and Chief ExecutiveOfficer of Cambrian, and is also on the boards of a number of other companieswhich are listed in Part XI of the Admission Document. John has more than 26years experience in the resource industry as an investor and resource businessdeveloper.Neale Taylor (aged 62) Chief ExecutiveNeale B.Sc (Applied Geology, Hons), MS (Pet Eng), MBA FAICD has over 30 years'technical, operating and commercial experience in oil and gas exploration andproduction. Through his involvement with Esso Australia, Terra Gas Trader andNexus Energy, he has been involved in acquisitions, marketing and joint venturemanagement. He is a non-executive director of the ASX-listed company, Tap OilLtd and of the AIM quoted company Zari Resources Plc. He is a member of theSociety of Petroleum Engineers and a Fellow of the Australian Institute ofCompany Directors.Jonathan Malins (aged 57) Non-Executive DirectorJonathan qualified as a Chartered Accountant in the early 1970s. Afterqualification he founded his own accountancy firm and was in practice until1982. From 1993 to date, he has run his own coal processing equipment supplycompany predominately supplying equipment to Russia. Currently he is anon-executive director of OreVest Plc, a manganese mining company which istrading on OFEX, a non-executive director of the AIM listed Asia Energy Plc, acoal mining and exploration company, as well as an executive director of AIMlisted Cambrian Mining Plc, a London-based mining finance house.Jƒ¼rgen Hendrich (aged 43) Executive DirectorJƒ¼rgen gained his petroleum industry experience with Esso Australia over 12years as a petroleum geologist before joining leading Australian private stockbroking firm, JB Were and Son, as their Energy Analyst in 1996. Following fouryears in this role, Jƒ¼rgen joined boutique equities fund manager BM CapitalManagement as a senior investment analyst. In early 2001 he established his ownconsulting company.Ian Ennis (aged 63) Executive DirectorIan Grad. Dip. Mineral ProcTech. (Bendigo) was a founding director of ActionHydrocarbons Limited and brings skills in international business development,marketing, sourcing of opportunities and shareholder/joint venture relations.He has managed oil and gold exploration programs in Australia, New Zealand, thePhilippines and the Kyrgyz Republic. He is involved in environmental technologydevelopment, including the securing of USEPA grant funding for mine wasteresearch programs.CURRENT TRADINGThe Ordinary Shares of Silvermines were admitted to trading on AIM on 15 July2004. At that time the Company had cash of ‚£610,000 and no other significantassets or liabilities. Since then, Silvermines' business has been solely tolook for an appropriate acquisition and as at 31 December 2004 it had cash of ‚£605,000. Following Completion, Silvermines will assume and undertake thebusiness of the Zhibek Group.Silvermines' interim results were published on 30 December 2004 but have beensuperseded by the information, including the Accountants' Report onSilvermines, set out in the Admission Document.CITY CODE ON TAKEOVERS AND MERGERSThe terms of the Proposals give rise to certain considerations under the CityCode. Brief details of the Panel, the City Code and the protections they affordare described below.The City Code has not, and does not seek to have, the force of law. It has,however, been acknowledged by government and other regulatory authorities thatthose who seek to take advantage of the facilities of the securities market inthe United Kingdom should conduct themselves in matters relating to takeoversin accordance with high business standards and so according to the City Code.The City Code is issued and administered by the Panel. The City Code applies toall takeover and merger transactions, however effected, where the offereecompany is, inter alia, a listed or unlisted public company resident in theUnited Kingdom. The Company is such a company and its shareholders are entitledto the protection afforded by the City Code.Rule 9 of the City Code is designed to prevent the acquisition of control of acompany to which the City Code applies without a general cash offer being madeto all shareholders of that company. Under Rule 9, a person who acquires,whether by a series of transactions over a period of time or not, shares which(taken together with shares held or acquired or acquired by persons acting inconcert with him) carry 30 per cent. or more of the voting rights of a companyis normally required by the Panel to make a general offer to all theshareholders of that company to acquire the balance of the shares not held bysuch person, or group of persons acting in concert, at the highest price paidby him or them or any person acting in concert.Rule 9 also provides, inter alia, that where any person, together with personsacting in concert with him, holds shares carrying not less than 30 per cent.but not more than 50 per cent. of a company's voting rights and such person, orany person acting in concert with him, acquires additional shares whichincrease his percentage of the voting rights in that company, such person isnormally required to make a general offer to all shareholders of that companyat not less than the highest price paid by him or them or any persons acting inconcert.An offer under Rule 9 should be made in cash and at the highest price paid inthe preceding 12 months for any shares in the Company by the person required tomake the offer and/or any person acting in concert with him.The City Code also provides that, where any person, together with personsacting in concert with him, holds more than 50 per cent. of a company's votingrights, no obligations will normally arise under Rule 9 to make a general offerto all shareholders of that company, save as described below, from anyacquisitions by such person or any person acting in concert with him of anyfurther shares carrying voting rights in the company. However, the Panel willregard as giving rise to an obligation to make an offer, the acquisition by asingle member of a concert party of shares sufficient to increase hisindividual holding to 30 per cent. or more of a company's voting rights, or, ifhe already holds more than 30 per cent. but less than 50 per cent., whichincreases his percentage shareholding.For the purposes of the City Code, a concert party arises where persons actingin concert pursuant to an agreement or understanding (whether formal orinformal) actively co-operate, through the acquisition by them of shares in acompany, to obtain or consolidate control of a company, irrespective of whetherthe holding or holdings give de facto control.The Panel has determined that the members of the Concert Party are acting inconcert for the purposes of Rule 9 of the City Code.Under Rule 9, unless a specific waiver is obtained from the Panel and the termsof the Acquisition Agreement for the issue of Consideration Shares and Warrantsto members of the Concert Party together with any participation by the membersof the Concert Party in the Placing are approved by Shareholders on a poll, theConcert Party would be obliged to make a mandatory cash offer for the entireissued ordinary share capital of Silvermines since the Concert Party would holdmore than 30 per cent. of the voting rights in the Company. Your Board believesthat this consequence is not in the best interests of Silvermines or itsShareholders.The expected interests of the Concert Party in the share capital of Silverminesfollowing Admission are summarised below. The percentage of the Enlarged ShareCapital is calculated assuming only the Warrants and Options held by themembers of the Concert Party are exercised. The Warrants are exercisable, inwhole or in part, at any time up to 31 December 2006 and the Options areexercisable at any time up to 1 March 2008. Ordinary Warrants Options % Following % Assuming Shares Admission exercise of Concert Party Warrants and Options Action 19,230,769 4,711,425 - 17.8 18.9 Cambrian 29,230,769 8,244,994 - 27.0 29.6 John Byrne - - 400,000 - 0.3 Neale Taylor - - 2,000,000 - 1.6 Jonathan - - 400,000 - 0.3Malins Jƒ¼rgen 1,076,924 376,914 1,100,000 1.0 2.0Hendrich Ian Ennis - - 1,100,000 - 0.9 Alwyn Davey - - 300,000 - 0.2 Total 49,538,462 13,333,333 5,300,000 45.8 53.8 Immediately following the implementation of the Proposals, the members of theConcert Party will own approximately 45.8 per cent. of the Company's issuedordinary share capital (assuming members of the Concert Party do not exerciseany Warrants or Options).In addition, pursuant to the exercise of the proposed Warrants and Options themembers of the Concert Party could receive up to a further 18,633,333 OrdinaryShares. If all such Warrants and Options were exercised the members of theConcert Party could be interested in up to 53.8 per cent. of the then furtherenlarged share capital of the Company assuming that, prior to such exercise, nofurther Ordinary Shares are issued.The Panel has agreed, subject to the passing of Resolution 2 in the notice ofEGM by independent Shareholders on a poll, to waive the obligation to make ageneral offer that would otherwise arise as a result of the Acquisition.On the assumption that the Proposals are completed, that the Placing is fullysubscribed and that the members of the Concert Party exercise their Warrantsand Options in full, since the members of the Concert Party would hold morethan 50 per cent. of the Enlarged Share Capital of the Company, and so long asthey continue to be acting in concert, the members of the Concert Party wouldbe free to acquire any number of Ordinary Shares without incurring anyobligation under Rule 9 to make a general offer for the Company, so long as noindividual member of the Concert Party thereby becomes obligated to make ageneral offer by increasing its/his individual shareholding to 30 per cent. ormore. Further details concerning the members of the Concert Party are set outin Part II of this announcement.SIGNIFICANT SHAREHOLDERCambrian and Action control voting rights in respect of 96.2 per cent. ofZhibek's equity and following Admission will control 17.8 per cent. and 27 percent. respectively of the Enlarged Share Capital.Cambrian has entered into a controlling shareholder agreement with the Companyand W.H. Ireland pursuant to the terms of which it has given certainundertakings concerning the use of the shares controlled (directly orindirectly) by them to the Company. Further details of this agreement are setout in Part XI of the Admission Document.LOCK-IN AGREEMENTSAll of the Directors (other than Messrs Kanabar and Berry who will step downfrom the Board immediately prior to Admission), the Proposed Directors, Actionand Blue Mount Investments have entered into agreements not to dispose of anyinterests in the securities of the Company within a 12 month period followingAdmission, save in certain circumstances permitted by the AIM Rules, includingconnection with a general or partial takeover offer. Cambrian has also agreedto such restrictions in respect of the 19,230,769 Consideration Shares it willreceive pursuant to the Acquisition. Collectively, these lock-in arrangementswill relate to 40,538,462 Ordinary Shares, representing 37.5 per cent. of theEnlarged Share Capital.PRINCIPAL TERMS OF THE ACQUISITIONUnder the terms of the Acquisition Agreement, the Company has conditionallyagreed to acquire the entire issued share capital of Zhibek and all outstandingconvertible securities in Zhibek in consideration for the issue to the Vendorsof the Consideration Shares and 13,333,333 Warrants. The Acquisition Agreementis conditional, inter alia, on (i) the passing of Resolutions 1 and 2; (ii) thePlacing Agreement becoming unconditional in all respects (other than anycondition relating to completion of the Acquisition Agreement and Admission);and (iii) Admission.The Consideration Shares will represent 37 per cent. of the Enlarged ShareCapital of the Company and, upon their allotment, will rank pari passu in allrespects with the Existing Ordinary Shares and the Placing Shares. Uponexercise of the Warrants to be issued as part of the Consideration, the membersof the Concert Party could control up to 53.8 per cent. of the Enlarged ShareCapital of the Company.In addition, Cambrian has agreed that it will not acquire any further interestsin oil and gas exploration and development and will offer the Company the rightof first refusal for any such opportunities.CHANGE OF NAMEThe name of the Company will be changed to Cambrian Oil & Gas Plc, conditionalupon the passing of Resolution 3 by the Shareholders and completion of theAcquisition.DETAILS OF THE PLACINGThe Company is seeking to raise ‚£2.25 million by the issue of up to 45,000,000Ordinary Shares at 5p per share pursuant to the Placing, to provide workingcapital for the Enlarged Group. The Placing Shares will, following Admission,rank pari passu in all respects with the Existing Ordinary Shares and theConsideration Shares.The Company, the Directors and the Proposed Directors have entered into thePlacing Agreement with W.H. Ireland. The Placing is not being underwritten. ThePlacing Shares have been conditionally placed with institutional and otherinvestors. The Placing is conditional inter alia upon the Placing Agreementbecoming unconditional and not having been terminated in accordance with itsterms, and Admission becoming effective on 1 March 2005 (or such later time anddate as the Company and W.H. Ireland may agree). Cambrian, Silentpoint andEyeconomy have agreed to subscribe for 10,000,000, 2,000,000 and 2,000,000Placing Shares respectively.ISSUE OF WARRANTSPursuant to the terms of the Warrant Instrument, in addition to the 13,333,333Warrants to be issued to the Vendors as part of the Consideration, a further7,705,000 Warrants have been issued, conditional upon Admission, to thoseShareholders on the register as at the Record Date on the basis of 1 Warrantfor every 3 Ordinary Shares then held. There will be no entitlement tofractions of Warrants, which will be aggregated and will be issued at thediscretion of the Board.The Warrants are exercisable in whole or in part at any time up to 31 December2006. The exercise price of the Warrants will be 7p, which represents adiscount of 6.6 per cent. to the closing price of the Ordinary Shares on 26January 2005 (being the date on which the Ordinary Shares were suspended fromtrading on AIM). The Warrants are transferable but will not be admitted totrading on AIM.DIVIDEND POLICYThe Enlarged Group is initially seeking to achieve capital growth for itsShareholders. It is not the presentintention to pay a dividend.EXTRAORDINARY GENERAL MEETINGA notice is set out at the end of the Admission Document convening anExtraordinary General Meeting to be held at 10.00 a.m. on 28 February 2005 atLawrence Graham LLP, 190 Strand, London WC2R 1JN.As the Acquisition constitutes a reverse takeover, Shareholder approval of theAcquisition, as set out in Resolution 1, is required under the AIM Rules. Inaccordance with the requirements of the Panel for granting a waiver of therequirement for the Concert Party to make a general offer under Rule 9 of theCity Code, Resolution 2 is required to approve the Waiver and will be taken ona poll. Pursuant to Resolution 3 it is proposed to change the name of theCompany to Cambrian Oil & Gas PLC.Resolution 1 is conditional on Resolution 2, and Resolution 3 is conditional oncompletion of the Acquisition.Undertakings to vote in favour of the Resolutions have been given by each ofthe Directors, Silentpoint andEyeconomy in respect of all the Ordinary Shares held by them amounting to16,000,000 Ordinary Shares inaggregate (representing 69.2 per cent. of the existing Ordinary Shares).FURTHER INFORMATIONYour attention is drawn to the Admission Document, which provides additionalinformation on the matters discussed above.RECOMMENDATION OF THE DIRECTORSThe Directors, who have been so advised by W.H. Ireland, consider that theterms of the Proposals and the Waiver are fair and reasonable and in the bestinterests of the Company and Shareholders as a whole. In providing advice tothe Board, W.H. Ireland has taken into account the Directors' commercialassessments. Accordingly, the Directors unanimously recommend Shareholders tovote in favour of the Resolutions as they themselves have undertaken to do inrespect of their own beneficial holdings which amount, in aggregate, to3,000,000 Ordinary Shares, representing approximately 13 per cent. of theexisting Ordinary Shares. PART II INFORMATION ON ZHIBEK INTRODUCTIONZhibek was formed as a joint venture between Action and Cambrian in February2004, for the purpose of conducting oil exploration, development and productionactivities in Central Asia and FSU countries.Since its formation, Zhibek has acquired a number of oil production andexploration interests in the Kyrgyz Republic from Action and Cambrian hasprovided initial funding to Zhibek as seed capital for which it has been issuedordinary shares and warrants in Zhibek.Zhibek holds the following existing oil and gas assets in the Kyrgyz Republic:¢â‚¬¢ Beshkent-Togap Water Injection Project - a 50 per cent. participatinginterest in a water injection project being commissioned on the Beshkent-TogapOil Field in the south-western region of the Kyrgyz Republic; and¢â‚¬¢ Tash Kumyr Exploration Project - a 72 per cent. interest in CJSC KNGHydrocarbons, which holds the Tash Kumyr exploration licence NG-72-00 over anarea in close proximity to the major producing oil fields of the KyrgyzRepublic. Previous work in the Licence Area has matured one prospect, at SouthKaragundai, to near-drilling status. The Enlarged Group plans to drill thisprospect in late 2005 and to upgrade already identified adjoining prospects andleads. The Directors and Proposed Directors envisage, once a second welllocation has been identified, and assuming sufficient funds are available thatdrilling will immediately follow drilling of the initial well at SouthKaragundai.In each case Zhibek's partner in these projects is KNG, the state controlledoil and gas company and the Directors and Proposed Directors believe that thesuccessful conclusion of the above projects will enhance Zhibek's existingrelationship with KNG and lead to the introduction of the Enlarged Group toother interesting projects within the Kyrgyz Republic.The Kyrgyz RepublicThe Kyrgyz Republic, formerly part of the USSR, is a landlocked mountainouscountry in Central Asia covering approximately 198,500 square kilometres. Itborders Kazakhstan to the north, China to the east, Uzbekistan to the west andTajikistan to the south. Approximately 94 per cent. of the country has anelevation over 1,000 metres above sea level, with approximately 40 per cent.over 3,000 metres above sea level. Bishkek is the capital city and is situatedin the northern part of the country with Osh, the second largest city, locatedin the south.The population of the Kyrgyz Republic is estimated at approximately 5.1million, with Russian and Kyrgyz being the official languages.The Kyrgyz Republic became independent in August 1991. The country is arepublic with a constitution that was adopted in May 1993. The head of state isthe President, elected through nationwide elections. The Government of theKyrgyz Republic ("the Kyrgyz Government") is the supreme body of executivepower and consists of a Prime Minister, Vice-Prime Ministers, Ministers andChairman of State Committees. The supreme legislative body is the JogorkuKenesh (Parliament), which consists of two chambers. The supreme body ofjudicial power is the Supreme Court of the Kyrgyz Republic.Beshkent-Togap Oil FieldThe Beshkent-Togap Oil Field is located in the south-western region of theKyrgyz Republic. The field is approximately 14 kilometres long and 2 kilometreswide and is situated approximately 300 kilometres west of the Kyrgyz oilrefinery at Jalal Abad and approximately 200 kilometres southwest of theUzbekistan oil refinery in the city of Fergana.The Beshkent-Togap Oil Field was formed by a series of deepening fault blockscreated in Palaeogene sediments structured against a regional thrust fault anduplifted against a localised high of older Palaeozoic rocks.Drilling commenced on the Beshkent-Togap Oil Field in the late 1970s.Currently, there are 43 and 28 producing wells in the Beshkent and Togap areasof the field respectively. The Beshkent-Togap Oil Field is located amongst anumber of producing oil fields in the south-western region of the KyrgyzRepublic. Kyrgyzneftegas has an operating workforce and operations have beenconducted at Beshkent since 1977. Numerous access roads and tracks provideaccess to existing wells and facilities.Electricity is supplied to all wells in the field by multiple grids controlledand maintained by Kyrgyzneftegas. Crude oil production is collected by anextensive field gathering system and pumped through a 15 kilometre pipeline toKyrgyzneftegas' treatment plant at Karakchikum in the Fergana Valley. It isthen trucked a distance of 10 kilometres to a rail siding in the town of Mahramand transported by rail 250 kilometres to the Kyrgyz Petroleum Company's oilrefinery in the city of Jalal Abad.A pilot water injection scheme was initiated in the Togap area in December1988. Although the pilot scheme produced an almost immediate response ofincreased oil production, the planned water injection capacity was notmaintained due to injection well plugging and lack of funding. Major injectionstopped in 1990-91 following the collapse of the FSU. No water is currentlybeing injected.Under the terms of the Beshkent-Togap Agreement, which is summarised in Part XIof the Admission Document, Zhibek must design and fund a pilot project, to beagreed with KNG, prior to committing to further expansion of the project acrossthe whole field. The parties have agreed to a pilot project design and toestablish initial oil production rates for each well in the pilot area in theperiod immediately prior to the start of water injection. Forecasts will alsobe agreed on the applicable rates of oil production decline. This data will beused to determine incremental production from the project.It is expected that increased oil production should be achieved within a fewmonths of the injection of material volumes of water into the reservoir. Onceimproved recovery potential has been verified, the pilot project will bereproduced in modular stages across the entire field.Work on the agreed project has been initiated and Kyrgyzneftegas has drilled awater source well for the project. Equipment has been purchased and is beinginstalled with water injection planned to start in Q1 2005.The Directors and the Proposed Directors believe that a well designed andsustained water injection project can raise the ultimate recovery from anestimated 500,000 barrels to 2.3 million barrels with a possible upside of 7.1million barrels. The current pilot program is designed to assess the responseto selective and sustained injection. Results from the pilot program will beused to design an optimal expansion for water injection into the whole field.Application of additional technologies such as stimulation techniques,including acidisation, polymer injection and mini-fracturing, will also beconsidered.Tash Kumyr Licence AreaThe Tash Kumyr Licence Area is located adjacent to existing oil and gasproduction operations mostly controlled and operated by KNG. These operationsdate back over 50 years. During the Soviet era, substantial infrastructure wasbuilt up around the southern and eastern margins of the Fergana Basin petroleumprovince. KNG's operations include a major oil and gas gathering system andstorage facilities at the Mailisu 4 Oil Field, located approximately 40kilometres from the South Karagundai prospect. The Mailisu 4 Oil Field systemis connected by pipeline to the Jalal Abad oil refinery further to the south.The nearest production operations are currently conducted at the smallerMailisai Oil Field which is approximately seven kilometres from the SouthKaragundai location.The Bishkek-Osh Highway crosses the Licence Area and links this area to thenorthern and southern regions of the Kyrgyz Republic. A series of unsealedroads and tracks provide access to and within most of the Licence Area. Thereis reasonable access to most of the South Karagundai site and a geochemicalsurvey has been successfully conducted over most of the Licence Area. A railwayline passes approximately ten kilometres from South Karagundai and may be usedto transport oil to the Jalal Abad oil refinery. Coal mining and petroleumindustry activities are conducted in close proximity.The Tash Kumyr Licence Area extends over 840 square kilometres. It is locatedin close proximity to the main producing fields in the Kyrgyz Republic,including Mailisu, East Izbaskent and Izbaskent. Several small fields are alsofound in immediately adjacent areas.A number of prospects and leads have been identified in the Licence Area, thelargest being South Karagundai. The prospect is well positioned near existinginfrastructure including an electricity supply grid that crosses the prospectarea, a rail head approximately 10 kilometres away and an oil pipeline at theMailisu 4 Oil Field which is connected to the refinery at Jalal Abad.A recent geochemical survey, using GORE-SORBERTM technology, has shownhydrocarbon type anomalies that occur with the seismically mapped subsurfacestructures at South Karangundai and Shink Sai.The competent person's report set out in Part IV of the Admission Document,estimates that there is a 1:2 to 1:3 chance of discovering at least 20 MB ofrecoverable oil in the Tash Kumyr Licence Area at a relatively low testingcost. The target area includes a number of sub-structures, all of which arecapable of trapping oil in up to three Pay Beds. Each Pay Bed has the potentialfor up to 20 MB recoverable oil.Success in only one Pay Bed in the main South Karagundai sub-structure isassumed for the Enlarged Group's business plan.A substantial upside of up to 60 MB of recoverable oil exists for the mainsubstructure if oil is found in the three target Pay Beds as occurs in thenearby Izbashkent field. If the oil is discovered in multiple Pay Beds in thesmaller adjoining sub structures then potential exists to further increaserecoverable oil volumes to above 60 MB of recoverable oil at the SouthKaragundai prospect.Although the Shink Sai prospect is less well defined by seismic andgeochemistry, the indicated structure is on trend with and of the samestructural fabric as a series of structures tracking back to the nearby Mailisu4 Oil Field. Shink Sai is in a similar setting to South Karagundai where thePalaeogene target Pay Beds have been mildly structured by the over-thrusting ofa flat layer of Mesozoic and Palaeozoic rocks.Similar opportunities, including the Pishkaran lead, are believed to bepossible in a number of additional areas within Zhibek's Tash Kumyr LicenceArea. Geochemistry has indicated several positive anomalies where no seismiccontrol currently exists. These areas will be targeted for seismic andgeochemistry follow-up.Additional seismic and geochemical surveys are currently in progress. Theresults will be combined to identify potential targets for initial drilling inthe second half of 2005.RESOURCE SUMMARYTotal Bishkent Topgap field project, 1.8 MB (upside to over six MB) including pilot: Tash Kumyr Exploration Prospect: 20 MB (upside to 60 MB if multiple Pay Beds contain oil in the main South Karagundai substructure with follow-up potential in adjoining three smaller substructures) These statistics are only a summary of the detailed figures set out in thecompetent person's report found in Part IV of the Admission Document and thecontents of the report should be read in full.PLANNED BUSINESS DEVELOPMENTThe Enlarged Group plans to pursue new oil and gas exploration and developmentsin the Kyrgyz Republic and other areas of the FSU; other areas and commoditieswill also be considered. Cambrian Oil and Gas seeks to build a diversifiedportfolio of oil and gas assets in a range of operating environments.Zhibek is already holding discussions with a private Russian company for thepurpose of jointly funding a study team to identify and pursue oil and gasexploration and development opportunities in the Russian Federation. The planenvisages that recommended projects would be offered for joint participation byboth companies. Recommendation on a first project is planned for the end of thefirst quarter of 2005.MANAGEMENTBiographical details of the Zhibek Directors, who will be joining the EnlargedGroup Board, are summarised in Part I of the Admission Document.Kadyrkan Abdrakhmanov is the local general manager, and also acts as GeneralDirector of CJSC KNG Hydrocarbons and CJSC Zhibek Hydrocarbons. Kadyrkan is aKyrgyz citizen with a technical and management background as a mining engineer.The Enlarged Group intends to continue to retain the services of the existingemployees and may further expand staff numbers as the business develops.FINANCIAL INFORMATIONFinancial information on Zhibek and the two subsidiaries (CJSC KNG Hydrocarbonsand CJSC Zhibek Hydrocarbons) which it acquired from Action on 14 July 2004 isset out in Part VI of the Admission Document. These reports show that at 30June 2004, Zhibek had net assets of $381,159 and that CJSC KNG Hydrocarbons (inwhich Zhibek has an 85 per cent. interest) and CJSC Zhibek Hydrocarbons had netliabilities of $174,000 and $38,000 respectively.CURRENT TRADINGIn the six months to 30 October 2004 the Zhibek Group has incurred $180,000 ofexpenditure on its projects.SHAREHOLDERSThe shareholders of Zhibek, their current interests in Zhibek and theirpotential interests in the share capital of the Company are set out below: Current On Admission Zhibek Zhibek Ordinary % of Warrants % of Shares warrants Shares Enlarged Company's Share Share Capital Capital on exercise of Options and Warrants Action 5,000,000 2,000,000 19,230,769 17.8 4,711,425 17.7 Cambrian 5,000,000 3,500,000 29,230,769 27.0 8,244,994 27.7 Blue Mount 280,000 160,000 1,076,924 1.0 376,914 1.1Investments International 120,000 - 461,538 0.4 - 0.3Petroleum Consulting Pty Ltd The Cambrian holding includes 10,000,000 Placing Shares for which Cambrian willbe subscribing for under the Placing.Cambrian is an investment company which acquires stakes in emerging resourcecompanies and projects and assists in their financing and development. It is apublic company quoted on AIM and at close of business on 2 February 2005, thelast practical date before publication of the Admission Document, it had amarket capitalisation of approximately ‚£162.3 million. In the year ended 30June 2004, the last reported results of Cambrian state that it made a loss of ‚£89,000 from its income in investments and at the period end it had thefollowing net assets: As at As at 30 June 30 June 2004 2003 ‚£'000 ‚£'000 Tangible fixed assets Investments 7,960 3,084 Current assets Investments 24 159 Debtors 1,611 383 Cash at bank and in hand 1,312 47 2,947 589 Creditors: amounts falling due within one year 815 306 Net current assets 2,132 283 Total assets less current liabilities 10,092 3,367 Creditors: amounts falling due after more than one - 565year Net assets 10,092 2,802 Capital and reserves Called up share capital 6,885 2,590 Share premium account 3,200 111 Profit and loss account 7 101 Shareholders' funds 10,092 2,802Action is an unlisted Australian public company with more than 50 shareholders,one of whom, Charles Hider, together with his associates, controls 37.85 percent. of the voting rights. Charles Hider is formerly Chairman of Partners ofRigby Cooke Solicitors, Melbourne. He has been a Barrister and Solicitor of theSupreme Court of Victoria since 1959 and has extensive international legal,commercial and negotiating experience in respect of technology and resources.He was a member of the Victorian Parliament for 10 years. Mr Hider is currentlypracticing as a consultant lawyer with primary emphasis on developinginnovative technologies, resources and corporate strategy. In the year ended 30June 2003, Action had losses of AS$61,629 and at the period end it had netassets of AS$0.7 million comprising principally costs carried forward inrespect of areas of interest in exploration and evaluation phases AS$0.9million, debtors AS$0.2 million and cash AS$0.01 million.Jƒ¼rgen Hendrich, who is beneficially interested in the entire issued sharecapital of Blue Mount Investments, is one of the Proposed Directors, anddetails of his CV are summarised in Part I above. Blue Mount Investments is anon-trading investment holding company. International Petroleum Consulting PtyLtd is a consulting services business based in Australia. Its holding in Actionarose in connection with a fee for the introduction of Action to Cambrian. PART III REGULATORY ENVIRONMENT The mining laws of the Kyrgyz Republic are contained in a document published inBishkek on 2 July 1997 (No.42) and amended on 21 July 1999 (No.82), and againon 4 February 2002 (No.23). It was approved by President A. Akaev and adoptedby the Legislative Assembly of Jogorku Kenesh of the Kyrgyz Republic on 24 June1997. The document is entitled the "Law of the Kyrgyz Republic on Subsoil" andcontains a total of 47 articles. A summary of pertinent information regardinglicensing, exploration, development, exploitation and environmental issues isprovided below.The Law of the Kyrgyz Republic on Subsoil allows local and foreign companies toexplore, develop, and mine properties in the Kyrgyz Republic. There are somerestrictions on the use of subsoil in instances where there is a threat to thelives and health of people, or which may cause damage to economic objects andthe environment. The Kyrgyz Government sets the upper and lower limits forexploration/development expenditures per unit of licensed area.The area licensed to CJSC KNG Hydrocarbons is licensed to it pursuant to anexploration licence which is valid until 31 December 2005. The licence may berenewed for an additional 10 years from the original date of grant (i.e 22 July2013) provided that all necessary conditions have been met. Annual reports,including the total expenditures incurred and development plans for the nextyear, must be submitted to the authorised state body of the Kyrgyz Republic.With respect to any mining operation, the licensee is granted a 20 year periodin which to undertake construction and exploitation, with subsequent extensionsgranted if necessary. These regulations apply to petroleum operations as wellas mining operations.A licensee may have its licence suspended for up to 3 months in the event that:(i) the resource user uses subsoil resources for a purpose other than thepurpose for which such rights were granted, (ii) the resource user violates theconditions set out in the relevant licence agreement or (iii) a force majeureevent occurs. The license may be terminated in the following situations: (i)upon the completion of geological exploration or the exhaustion of reserves orthe liquidation of the enterprise conducting operations, (ii) upon the use oftechnology in the course of project development that threatens the health orsafety of workers or of the population, and also causes harm to the environmentand the deposit, (iii) if the resources user fails to present its technicalprogramme for the conduct of work within the period set out in the licenceagreement, (iv) if the resource user in the course of more than one year fromthe date of licence issuance fails to begin operations on the scale set out inthe licence or (v) if the resources user voluntarily refuses to conduct subsoiluse operations or upon the expiration of the validity of a licence.Foreigners are guaranteed the right to repatriation of capital and the right toexport the profit, or a part of it, in the form of foreign currency or theproduct received by recovery or processing of any raw minerals, including gold.Foreigners may also recover groundwater for their own needs. A licensee mustprotect the subsoil, comply with permissible norms of impact on the physicaland biological state of the environment and make timely and accurate paymentsfor the use of the subsoil.Where any hydrocarbon product is sold or exported, the licensee must notify theNational Bank of the Kyrgyz Republic, or any other agency authorised by theKyrgyz Government, in advance and must grant these agencies the first right ofrefusal to buy all or part of the hydrocarbon product regardless of whether ithas been refined within the Kyrgyz Republic.Subsoil users must make agreements with the holder of the land rights for theuse of the land plots. If a holder of land rights intends to change hisirrigation or other systems for agricultural means, and such measures mayaffect the geological surveying or mining works, then he must obtain permissionfrom the government agency for subsoil use. Where an agreement cannot bereached between the subsoil user and the holder of the land rights, the courtwill make the final decision on the dispute.When a project is at a more advanced stage of final feasibility andpre-production, the licensee must take measures to preserve the life, healthand safety of the employees and of the local population in the relevant area.The subsoil users and the appropriate government agencies must ensurecompliance with legislation and safety standards according to normal practiceand the rules set out by the Kyrgyz Government. Subsoil users who have receivedthe right to develop the subsoil areas must present financial guarantees forthe restoration of the damaged environment, the terms of which are governed byregulations approved by the Kyrgyz Government.Exploration and development enterprises are subject to Section VI, Article 41of the tax legislation of the Kyrgyz Republic. This article also states thatpayments for subsoil use include the following:¢â‚¬¢ payment for subsoil use (bonus);¢â‚¬¢ payment for subsoil use (royalty); and¢â‚¬¢ other payments required by the legislation of the Kyrgyz Republic.The Law of the Kyrgyz Republic "On Oil and Gas" No 77 dated 8 June 1998contains substantially the same provisions in relation to oil and gas as theLaw of the Kyrgyz Republic "On Subsoil", but the former is more detailed interms of the competences of the Government of the Kyrgyz Republic and localadministrative bodies to regulate, inter alia, the oil and gas industry, jointor separate oil and gas ventures and protection of oil and gas consumers'rights. In relation to the licensing procedure, the Law on Oil and Gas refersto the Law of the Kyrgyz Republic "On Licensing".The environmental laws in the Kyrgyz Republic are covered in the followingdocuments: The Law of the Kyrgyz Republic "On Environment Protection", The Lawof the Kyrgyz Republic "On Specially Protected Nature Territories", The Law ofthe Kyrgyz Republic "On Biosphere Territories" and The Law of Kyrgyz Republic"On Atmospheric Air Protection".The Law of the Kyrgyz Republic "On Environment Protection" became effective onthe date of its publication on 7 July 1999. In accordance with the Law onEnvironment Protection both the land and its subsoil are subject to protection.The Law on Environment Protection contains maximum levels of allowableconcentration of hazardous substances in the subsoil, as well as levels ofcharges for natural resources use, pollutant emissions, hazardous effects andplacement of waste. The nature use charges consist of payments for the use ofnatural resources and payments for environmental pollution and other negativeeffects on nature. In addition a payment for the use of natural resources overa fixed limit is established and, in respect of environmental pollution, acharge of 1-2 soms for every ton of contaminant is imposed.During their activities, business and other entities are obliged to observestandard technical regimes, provide effective treatment facilities,decontamination and recycling of waste, introduce environmentally safetechnologies and to provide protection and efficient subsoil use.The Law of the Kyrgyz Republic "On Specially Protected Nature Territories"became effective on the date of its publication on 28 July 1994 and governsprocedures regarding the use of specially protected nature territoriesincluding natural complexes having particular environmental, science, aestheticand sanitary meaning. Specially protected natural territories are given thestatus of state reserves, state natural national parks, state sanctuaries,state nature monuments, botanical gardens, dendrology parks, zoological gardensor natural territories of sanitary meaning.Geological exploration works and deposit development is prohibited onterritories of state reserves, state natural national parks and hydrogeologicalsanctuaries. In relation to territories of state nature monuments, statebotanic gardens, dendrology and zoological parks, which are territories ofsanitary meaning, any activity threatening the safety of such land may beprohibited.The Law of the Kyrgyz Republic "On Biosphere Territories" became effective onthe date of its publication on 25 June 1999. In accordance with the Law onBiosphere Territories exploration works and deposit development on biosphereterritories is prohibited. Biosphere territories are established by theGovernment of the Kyrgyz Republic for safety, ,reclamation and for the use ofnatural territories with rich nature and/or cultural heritage.The Law of Kyrgyz Republic "On Atmospheric Air Protection" became effective onthe date of its publication on 25 June 1999. In accordance with the Law onAtmospheric Air Protection extraction of the minerals and their processing mustbe conducted in conjunction with the implementation of the measures in relationto atmospheric air protection.Business entities whose activities result in the emission of pollutants areobliged to: * establish control areas; * take measures to decrease emissions; * observe rules regarding exploitation of construction and cleaning equipment; * in accordance with established procedures, exercise control over observance of the norms of maximum permissible emissions, keep records and submit statistical reporting; and * carry out evaluation of hazardous effect on environment and health of population in the zone of pollutant objects. In addition, under the Law on Atmospheric Air Protection, legal and physicalpersons who are owners of the polluting objects are obliged to develop andmaintain an ecological passport of the enterprise.The words and expressions used in this announcement shall have the samemeanings as in the Admission Document, unless the context otherwise requires.EXPECTED TIMETABLE OF PRINCIPAL EVENTSLast time and date for receipt of Forms of Proxy 10.00 am on 26 February 2005 Extraordinary General Meeting 10.00 am on 28 February 2005 Completion date of the Acquisition 1 March 2005 Admission effective and dealings in Ordinary Shares 1 March 2005(including New Ordinary Shares) expected to commence on AIM Expected date for CREST accounts to be credited (in 1 March 2005respect of the Placing Shares) Expected date for posting of the share certificates 8 March 2005for the Placing Shares (where applicable) ACQUISITION AND PLACING STATIST