• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Central African Mining & Exploration Company Plc ('CAMEC' or 'the Company') Offer for Katanga Mining Limited

Posted on: Wednesday, 11 July 2007, 12:04 CDT

LONDON, July 11 /PRNewswire-FirstCall/ -- CAMEC , the fully integrated exploration, production and investment company, announces its intention to make an all share offer (the "Offer") for Canadian listed Katanga Mining Limited ("Katanga"). The acquisition will create one of Africa's largest copper and cobalt producers. The Offer is 17 new ordinary shares in CAMEC for each Katanga common share held. This is an increase from the previously announced exchange ratio of 15 to 1 referred to in CAMEC's announcement of July 9, 2007. In connection with the Offer, CAMEC, which already owns 22% of the outstanding common shares of Katanga, also announces that it has entered into agreements with certain shareholders representing approximately 32% of the outstanding shares of Katanga pursuant to which such shareholders have agreed to accept the Offer. Based on yesterday's closing mid-market price of 71p per CAMEC share, the Offer values the entire issued share capital of Katanga at approximately GBP943 million (CDN$ 1.98 billion).

The Offer documentation is expected to be posted to Katanga shareholders in August, 2007.

Summary

- The combination of CAMEC and Katanga will create a leading copper cobalt company with growing production, as well as quantified and increasing resources

- Synergistic deal creates value for both companies' shareholders by pooling production, expertise, logistics, operations and mining fleets

- Offer values the entire issued share capital of Katanga at approximately GBP943 million, based on 17 for 1 share offer

- Lock-up agreements from Katanga shareholders representing approximately 32% of the outstanding Katanga shares

- CAMEC already owns 22% of the outstanding Katanga shares

- Following the conclusion of the Offer, Mr George Forrest, the current vice chairman of Katanga and its largest individual shareholder, will become CAMEC's largest shareholder

- CAMEC's board will be changed accordingly at the conclusion of the Offer

- The Offer consolidates CAMEC's position as a leading African exploration, production and investment company

Background and Reasons for the Offer

Katanga is developing copper-cobalt projects in the Democratic Republic of Congo ("DRC") where CAMEC's flagship operation, the Luita copper and cobalt processing facility, is based. Katanga owns a proven copper producing mine, which is targeted to restart production in late 2007 with first copper expected to be shipped to market in December 2007. Katanga has a 75% interest in the Kamoto Joint Venture which in turn leases the Kamoto property in the DRC. According to Katanga's publicly available information, it is estimated that the Kamoto property currently has total measured and indicated resources of 162 million tonnes at 3.5 per cent copper and 0.38 per cent cobalt. This places Katanga as having the third largest copper resource in Africa. By 2010-11 the combined annual copper production of CAMEC and Katanga is projected to be in the region of 250,000 tonnes and will have the capacity to produce 20,000 tonnes per annum of cobalt.

By consolidating the assets of the two companies, the enlarged group is well placed to become the pre-eminent copper cobalt company in the DRC with quantified resources and production of both copper and cobalt.

CAMEC initially built a 22% investment position in Katanga. Following continued evaluation of Katanga and analysis of the potential synergies between the two companies, the Board of CAMEC took the decision to make a full offer. In connection with the Offer, CAMEC has entered into lock-up agreements with certain shareholders representing approximately 32% of the outstanding shares of Katanga, which fall within the definition of "Permitted Lock-Up Agreement" in the Shareholder Rights Plan adopted by Katanga on May 9 2007.

By accepting the Offer, Katanga shareholders will be able to participate not only in a DRC focused copper and cobalt investment opportunity, but also in a diverse African exploration, production and investment company that has a Board with a proven track record of generating shareholder value.

Further terms of the Offer

The Offer will have the usual conditions for a transaction of this type including that a minimum number of shares be deposited into the bid, that no material adverse change occur at Katanga, that regulatory approvals are obtained, that CAMEC be satisfied with the results of its due diligence review of Katanga, and that the shareholders of CAMEC provide all required approvals including an approval of the necessary increase in the authorised share capital of CAMEC.

The Offer will be extended to the holders of warrants and options in Katanga as appropriate.

Phil Edmonds, Chairman of CAMEC, said:

"By merging the businesses of CAMEC and Katanga, a major international copper and cobalt company will be created. The transaction will deliver significant synergies and create a company with high quality assets in the DRC and a good understanding of the country's value as one of the world's premier copper cobalt districts. CAMEC will continue to invest heavily in operations and infrastructure to support copper and cobalt processing within the DRC. We also understand the importance of establishing community development programmes so that local communities also benefit from the success of the enlarged company.

"CAMEC's development of its assets in the DRC has been rapid and, by working in close conjunction with Katanga, we believe we can fast track developments and rapidly increase production. I'd like to take this opportunity to encourage the remaining Katanga shareholders to accept our Offer and participate in what I believe to be a bright future for the enlarged group."

About Katanga

Katanga is a Toronto Stock Exchange listed company, which is currently focusing on the development of copper and cobalt projects in the Katanga Province of the DRC. Katanga owns a proven copper producing mine with long life and high grade reserves through its 75% interest in the Kamoto Joint Venture. According to Katanga's publicly available information, the Kamoto property, which is targeted to restart production in late 2007, currently has a total measured and indicated resources of 162 million tonnes at 3.5 per cent copper (5.67 million tonnes of metal contained) and 0.38 per cent cobalt (615,000 tonnes of metal contained). The average site cash cost has been estimated by Katanga at circa $0.20 per pound of copper after a credit from the sale of cobalt (based on $1.10/lb copper and $10/lb cobalt). The mine complex contains underground and open pit operations, providing both sulphide and oxide ores, and a concentrator and metallurgical plant, which enables Katanga to produce higher value LME-grade refined copper. All technical information concerning Katanga has been obtained from documents made publicly available by Katanga and has not been verified by CAMEC.

About CAMEC

CAMEC is an integrated exploration, production and investment company, with a primary focus of mining and production of copper in the DRC. Its flagship operation is the 50,000 sq m Luita copper and cobalt processing facility. It is the biggest under-roof facility of its kind in Africa. Annual production at the plant is targeted at 40,000 tonnes of copper and 6,000 tonnes of cobalt, as metal and concentrate, per annum by end of March 2008. The plant has a targeted annual template capacity of 100,000 tonnes of copper cathode and 12,000 tonnes of cobalt cathode by the end of 2008, which will make CAMEC one of the biggest producers of cobalt concentrate in the world.

The Luita metallurgical facility is being fed by mines on the highly prospective 467 and 469 concession areas which Gecamines, the DRC national mining company, has estimated to contain circa 1.5 million tonnes copper and 500,000 tonnes cobalt. These are in the process of being drilled to JORC status but as yet the Board of CAMEC is unable to verify these estimates.

CAMEC's operational areas include the DRC, Mozambique, South Africa, Angola, Mali and Zimbabwe. It has proven implementation skills particularly in the DRC and in SABOT it controls one of southern Africa's largest logistics companies with circa 450 Volvo trucks and trailers. SABOT has been fundamental in the rapid development of Luita into a producing facility and it is envisaged that it will also help in the further advancement of Katanga's operation.

The Board of CAMEC would like to recommend all Katanga shareholders accept the Offer and, through the acceptance of CAMEC shares, participate not only in a DRC focused copper and cobalt investment opportunity, but also in a diverse African exploration, production and investment company that has a Board with a proven track record for generating shareholder value.

Central African Mining & Exploration Company Plc

CONTACT: Phil Edmonds, CAMEC, Tel: 0845-108-6060, Andrew Groves, CAMEC,Tel: 0845-108-6060, Jonathan Wright, Seymour Pierce Ltd, Tel:+44-(0)20-7107-8000, Hugo de Salis, St Brides Media & Finance,Tel:+44-(0)20-7242-4477

Source: PRNewswire-FirstCall

More News in this Category