Acquisition Manica Project

9 Jan 2006 09:18

Pan African Resources PLC09 January 2006 9th January 2006 Pan African Resources PLC ("Pan African" or "the Company") Acquisition of Manica Project, Mozambique And Board Appointment Pan African Resources PLC (AIM : PAF), the African based gold explorationcompany, announces that it has elected to exercise its right to acquire a 100%shareholding in the Manica Project ("the Project"), a gold project inMozambique. Highlights •Acquisition of 100% of Explorator Limitada ("Explorator"), the titleholder of the Manica Project. Completion expected by the end of the first quarter of 2006. •Explorator is acquired for £150,000 satisfied by the issue of 7,500,000 ordinary shares to its shareholders, representing approximately 2.2% of the current Pan African issued share capital. •Share issue represents a renegotiation of the original prospecting and mining agreement with Explorator that required a cash payment of US $900,000 and a subsequent exploration commitment of US $1,000,000. •Manica Project has a surface to near surface defined resource of 800,000 ounces of gold with considerable upside potential •Dr. H Blignault, a geologist with extensive exploration experience in Africa, is appointed to the Board of Pan African as a non-executive director. Background and Original Agreement Explorator Limitada is a company incorporated in Mozambique and holds title tothe exploration licence covering an area north of Manica in Mozambique referredto as the Manica Project. The shareholders of Explorator are Bullion ProspectsSA (Pty) Limited ("Bullion") and Geoser Limitada ("Geoser"). The right toacquire 100% of the Manica Project had been assigned to Pan African under anacquisition agreement (the "Acquisition Agreement") dated 19 November 2003between Pangea Exploration (Pty) Ltd ("Pangea") and Mistral Resource DevelopmentCorporation Limited ("Mistral"), a wholly owned subsidiary of Pan African.Under the Acquisition Agreement, Pangea assigned to Mistral, all of its rightsand obligations under a prospecting agreement and mining option agreement dated15 August 2003, that it entered into with the shareholders of Explorator (the "Original Agreement"). The Acquisition Agreement was secured for a payment toPangea of US$800,000, made in two tranches prior to 31 December 2003. According to the Original Agreement, Pan African would, upon election toexercise its rights under the Acquisition Agreement, between 31 October 2005 and31 October 2006: • pay to Explorator US$900,000; • pay a further US$1.00 for each ounce of gold by which the measured reserve exceeded 1,000,000 ounces • fund the exploration program with a minimum of $500,000 per annum until 30 June 2007. In addition to the above consideration, under the Acquisition Agreement, PanAfrican granted Pangea a 20% carried interest in the Manica Project. TheAcquisition Agreement also provided that Pan African would have the right offirst refusal with respect to any gold projects sourced by Pangea in Africa andwhich Pangea develop to such a stage that it is required to raise additionalfunding from third parties. The New Acquisition Agreement Pan African has successfully renegotiated the terms of the Acquisition Agreementto extinguish all previous obligations. The terms of the renegotiated agreementare that: (1)Pan African exercises its right to acquire the Manica Project by acquiring the entire issued share capital of Explorator, the cost of the share transfer to be carried by Pan African. (2)The share capital of Explorator is acquired for £150,000 satisfied by the issue of 7,500,000 ordinary shares to the shareholders of Explorator. (3)Pangea will retain its 20% carried interest in the Manica Project under the terms of the Acquisition Agreement dated 19 November 2003. (4)Pan African shall retain the right of first refusal with respect to any gold projects sourced by Pangea under the terms of the acquisition agreement dated 19 November 2003. Appointment of Director Pan African has also appointed Dr. Hennie Blignault, a geologist and one of theprincipals of Bullion, with extensive exploration experience and expertise, as anon-executive director to the board of Pan African. Dr. Blignault's appointmentis effective from the 9th of January 2006 and he holds 5,000,000 share optionsgranted at an exercise price of 2p (two pence), in accordance with the terms andconditions of the Company's share option scheme. The Company welcomes DrBlignault and looks forward to a long and mutually beneficial relationship. Jan Nelson, Chief Executive Officer of Pan African, commented: "Therenegotiation of the Acquisition Agreement allows us to acquire the entire sharecapital of Explorator who holds title to the Manica Project through the issue of7.5m ordinary shares. The cost to Pan African is significantly reduced atapproximately US$260,000 as opposed to a previous cash commitment of US$1.9million. The Board of Pan African consider this to be a very good deal for theCompany as we are acquiring the Project with a defined resource in excess of800,000 oz of gold at or near surface with considerable upside potential, forless than 2.2% of the current issued share capital of Pan African. "In addition, we gain the experience and expertise of Dr Blignault, a geologistwith an invaluable knowledge of potential exploration projects in Africa, as anon-executive director and we warmly welcome him to the Board." ENDS For further information on Pan African Resources please visit the new website atwww.panafricanresources.com Enquiries: Pan African Resources Ambrian Partners Parkgreen Communications Jan Nelson, CEO Richard Brown / Justine Howarth /+27 11 886 1211 Emma Priestley Victoria ThomasColin Bird, Chairman +44 (0) 207 776 6400 +44 (0) 20 7493 3713+44 (0) 20 7584 2155 This information is provided by RNS The company news service from the London Stock Exchange