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Metorex extends arm in PAF takeover Posted: Wed, 20 Dec 2006 [miningmx.com] -- METOREX is selling its 74% stake in gold producer Barberton Mines into AIM-listed Pan African Resources (PAF) in a deal that will give Metorex 55% control of PAF through a reverse takeover. PAF will be dual-listed on the JSE. The transaction should benefit both sides with Metorex getting a higher market rating on its gold assets than it would by keeping Barberton as part of the current diversified mining group. PAF will be immediately transformed from a pure exploration play into a gold producer with an extensive exploration programme. That could be crucial for PAF’s stock market rating with current investor sentiment in London favouring companies that have mines actually in production and generating cash over pure ‘blue sky’ exploration operations. Said PAF CEO Jan Nelson: "The deal gives us a production base generating cash that we can use to fund our exploration operations in the Central African Republic (CAR), Mocambique and other areas. It means we will not have to keep coming back to the market to raise cash for this exploration work.” “We will get a far higher value for Barberton as part of a pure gold-focussed play like PAF than we ever will keeping it as part of Metorex,” said Metorex CEO Charles Needham in an interview. But investors are in for a longish wait to find out the precise impact the deal will have on PAF because the company’s shares were suspended yesterday on AIM at the request of the company at a level of 6.13 pence. “The shares are going to be suspended for at least three months while we complete all the required documentation and meet all the conditions precedent which involve doing two CPR’s (competent person’s reports),” said Nelson. “In terms of AIM regulations, investors clearly cannot trade in the shares at present because they are not in possession of full information on the company’s prospects,” he said. Nelson declined to specify what he thought might happen to the PAF share price once the company is relisted. “You can look at the enterprise value of the business that is being created and draw your own conclusions,” he said. There are two key conditions precedent. The first is that the London Stock Exchange waive the otherwise mandatory cash bid requirement of the UK code on Takeovers and Mergers given that there is a clear change of control. The second is that Cyril Ramaphosa’s Shanduka Gold must unconditionally waive its “pre-emptive and tag-along rights in Barberton.” Shanduka is Metorex’s BEE partner in Barberton and has pre-emptive rights to Metorex’s stake in the mine in the event of a sale as is now proposed. Said Needham: "We have spoken to Shanduka. The proposal still has to be cleared by the Shanduka board but we are fairly confident they will agree to waive their pre-emptive rights.” There is an obvious link between Metorex and PAF in the form of South African mining entrepreneur Rob Still who is a director of both companies.Free news alerts: click here to subscribe
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