AFE African Eagle

 
TIDMAFE 
 
 
   African Eagle Resources plc 
 
   ("African Eagle" or the "Company") 
 
   20 November 2014 
 
   Proposed Acquisition of Lime-Chem Resources (Proprietary) Limited 
 
   African Eagle, the investing company that has been seeking opportunities 
within the natural resources, infrastructure and services sectors, is 
pleased to announce that yesterday it, through its newly incorporated 
South African wholly-owned subsidiary ("Buyer"), entered into a 
conditional  agreement ("Agreement") to acquire the entire issued and to 
be issued share capital of Lime-Chem Resources (Proprietary) Limited 
("LCR"), a company that operates an iron ore mine located in the 
Northern Cape province of South Africa ("Acquisition").  It is the 
intention of the Company to seek a Black Economic Empowerment partner in 
South Africa ("BEE Shareholder"), prior to and as a condition of 
completion of the Acquisition, for the purposes of compliance with 
section 11 of the South African Mineral and Petroleum Resources 
Development Act, 28 of 2002, and transfer 26% of the issued share 
capital of the Buyer to such partner.  Following such transfer and 
assuming the Acquisition completes, the Company will hold 74% and the 
BEE Shareholder 26% of the entire issued share capital of LCR on 
completion of the Acquisition ("Completion"). 
 
   LCR owns the mining rights over the Rooinekke property, located in the 
Northern Cape province of South Africa, approximately 180 kilometres 
south of the Sishen Iron Ore Mine. It consists of an old open pit mine 
with numerous crushed ore dumps surrounding the pit.  LCR has entered 
into sales agreements with Interalloys Trading Limited and Interalloys 
Trading und Business Consulting Handelsgesellschaft GmbH (together 
"Interalloys") (companies ultimately wholly owned by Nick Clarke, CEO of 
African Eagle) under which Interalloys Trading Limited has provided 
pre-export financing to LCR.  To date one shipment of ore has been 
completed. In the short term, African Eagle intends to process the ore 
dumps while it assesses the feasibility of re-commencing mining at 
Rooinekke. 
 
   The aggregate consideration for the Acquisition will be US$6 million 
less the value of net debts and trade and other payables owed by LCR 
(except indebtedness to Interalloys  which will remain outstanding, 
other than for realised trading losses to Interalloys).  Following 
Completion, the consideration is to be adjusted by a completion accounts 
mechanism and is to be satisfied partly by the issue of ordinary shares 
in the capital of the Company at 0.275 pence per share (being the 
closing price for an ordinary share of the Company on AIM on the date on 
which trading in ordinary shares of the Company was suspended on AIM and 
on the Alternative Exchange of the JSE Limited ("AltX"), being 11 August 
2014) and the balance by way of a cash payment.  The cash element of the 
consideration will be raised as part of the proposed Placing, details of 
which are set out below.  The Buyer (at its discretion) shall be 
entitled to satisfy up to 50% of the consideration by a cash payment, 
and not more than 75% of the consideration by the issue of ordinary 
shares in the Company. 
 
   The Acquisition will constitute a reverse takeover under the AIM Rules 
for Companies and will be subject to shareholder and regulatory 
approvals. 
 
   The Company will therefore be seeking shareholder approval for, inter 
alia, the Acquisition at a general meeting of shareholders.  Notice of 
the general meeting will be posted to shareholders as soon as reasonably 
practical, together with an admission document of the Company 
("Admission Document") relating to the re-admission of the Company's 
share capital, as enlarged, inter alia, by the proposed Placing and 
proposed share consideration in respect of the Acquisition, to trading 
on AIM and the AltX.  Given that the Company's shares are already 
suspended pursuant to AIM Rule 15, the ordinary shares in African Eagle 
will not re-commence trading on AIM or the AltX until approval has been 
granted by shareholders to, inter alia, the Acquisition at the general 
meeting and the Acquisition has otherwise become unconditional. 
 
   The Acquisition is subject to the following conditions which must be 
fulfilled on or before (i) in respect of the condition in point a. below 
28 November 2014, or such later date as the parties may agree in 
writing; and (ii) in respect of the condition in point b. to f. below 
(except point e.) on or before 31 March 2015, or such later date as 
extended as per the Agreement or as the parties may agree in writing; 
and (iii) in respect of the condition in point e. below on or before 31 
July 2015, or such later date as the parties may agree in writing: 
 
 
   1. the disclosure letter qualifying the warranties being given by the 
      sellers of LCR pursuant to the Acquisition being delivered by the sellers 
      to the Buyer, and the content thereof being agreed to among the parties; 
 
   2. admission of the enlarged ordinary share capital of the Company to 
      trading on AIM and the AltX becoming effective in accordance with the AIM 
      Rules for Companies and the Listings Requirements of JSE Limited, 
      respectively; 
 
   3. completion of a placing of ordinary shares in the capital of the Company 
      to, among other things, raise funds to enable the Buyer to pay the cash 
      element of the consideration; 
 
   4. shareholder and regulatory approvals; 
 
   5. the approval of the Department of Mineral Resources pursuant to section 
      11 of the South African Mineral and Petroleum Resources Development Act, 
      28 of 2002 required for completion of the Acquisition; and 
 
   6. to the extent necessary, the Financial Surveillance Department of the 
      South African Reserve Bank (or an authorised dealer thereof) approving 
      the transaction on the terms of the Agreement. 
 
 
 
 
   The Company retains the right to rescind the Acquisition under certain 
defined circumstances and will give warranties customary for such a 
transaction where all or part of the consideration is payable in shares 
of the buyer. 
 
   The sellers also have a right to rescind the Acquisition in 
circumstances where the sellers become aware of a material breach of any 
of the Buyer's warranties and the monetary impact suffered by the 
sellers as a result of such breach is more than US$500,000.  The sellers 
have provided warranties customary for a seller and agreed to certain 
restrictions relating to the manner in which the business of LCR will be 
conducted prior to Completion. 
 
   As part of the transaction a representative of LCR's largest shareholder 
will be invited to join the Board of African Eagle as a non-executive 
director, subject to satisfactory due diligence being completed on such 
representative and compliance with the AIM Rules. 
 
   In conjunction with the Acquisition, the Company proposes to raise up to 
approximately GBP6 million, such quantum being subject to further 
financial due diligence in terms of the working capital requirement for 
the enlarged group,  by way of a placing of ordinary shares in the 
capital of the Company at 0.275 pence per share ("Placing").  The 
Directors currently intend to use the proceeds of the Placing primarily 
to: 
 
 
   -- finance the cash element of the consideration for the Acquisition; 
 
   -- repay LCR's creditors; 
 
   -- develop further infrastructure at the mine site; and 
 
   -- to provide general working capital for the enlarged group 
 
 
 
   Completion will be subject to regulatory and shareholder approval 
(including dealing with any related party implications of the trading 
relationship between LCR and Interalloys as referred to above). 
 
   Nick Clarke, CEO, commented: "We believe that the proposed transaction 
has the potential to be transformative for the Company, even at the 
prevailing low iron ore prices, and we very much look forward to 
progressing it to completion and will make further announcements in due 
course". 
 
   For further information please visit www.africaneagle.co.uk or contact 
the following: 
 
   Enquiries: 
 
 
 
 
African Eagle Resources plc                   Tel: +44 (0) 20 7002 5361 
 Robert McLearon, Finance Director 
 
Beaumont Cornish Limited (Nominated Adviser)  Tel: +44 (0) 207 628 3396 
Roland Cornish 
 Emily Staples 
Pareto Securities Limited (Broker)            Tel: +44 (0) 20 7786 4370 
 Guy Wilkes 
 Sponsor 
 Merchantec Capital 
 20 November 2014 
 
 
 
   This announcement is distributed by NASDAQ OMX Corporate Solutions on 
behalf of NASDAQ OMX Corporate Solutions clients. 
 
   The issuer of this announcement warrants that they are solely 
responsible for the content, accuracy and originality of the information 
contained therein. 
 
   Source: African Eagle Resources PLC via Globenewswire 
 
   HUG#1872719 
 
 
  http://www.africaneagle.co.uk/ 
 

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