CityView Corporation Ltd has put its Angolan oil project on hold as global financial turmoil forces its joint venture partner to pull away from financing its part of the operation.
CityView Corporation Ltd has put its Angolan oil project on hold as global financial turmoil forces its joint venture partner to pull away from financing its part of the operation.
As a result, the Perth-based CityView has had to review its strategy in Africa, saying it will concentrate on its mineral and diamond interests which offers the opportunity of earlier cash flow.
Joint venture partner Pensador Resources Inc was due to fund a significant component for the development of the offshore oil permits in Angola.
However Pensador advised CityView that it would not be able to complete the financing in the set time frame, and would not be able to do so until financial markets recover.
Meanwhile, CityView said it had approached its JV partner with a proposal to acquire a direct interest in its subsidiary Canzar Resources Ltd, which holds a interest in two diamond concessions in Angola.
Additionally, CityView said it will make an offer to acquire shares in Fortitude Minerals Ltd it does not already own, depending on an independent valuation of the latter company's assets and CityView's share price at the time.
The offer will be subject to a shareholder vote.
Shares in CityView were down 0.7c or 19 per cent to three cents at 12:36 AEST.
Below is the full announcement:
CityView Corporation Limited ("CityView") advises that following the recent turmoil in international financial markets, it has reviewed its strategy in Africa.
It had been the intention that Pensador Resources Inc. ("Pensador") would fund the very large financing obligations required for the development of the offshore oil permits, together with the lesser financing requirements for the minerals and diamond interests in Angola.
CityView has now been advised that in these extreme world financial conditions, Pensador is unable to complete this financing in the necessary time frames and it is unlikely that it would be able to do so until financial markets recover.
Accordingly CityView cannot proceed with the Angolan offshore oil opportunities within an acceptable time scale.
Instead it will concentrate on its mineral and diamond interests, as these offer the opportunity to establish revenue producing operations within a reasonable period.
CityView has approached Pensador with a view to acquiring a direct interest in Pensador's subsidiary Canzar Resources Limited ("Canzar"), which is the beneficial owner of 41% of the Luachisse Diamond Concession and 42% of the Nhefo Diamond Concession. The balance of these concessions is held by Endiama, the Angola Government diamond authority.
CityView is seeking to achieve the following arrangements in consideration of its investment in Pensador:
- Acquire the equity interest in Canzar, as detailed below, to give it an equity and cash flow interest in the Nhefo and Luachisse alluvial diamond licences. These alluvial diamond areas will be brought into production as soon as possible to generate ongoing revenue for CityView;
- To acquire this equity stake in Canzar, CityView would receive a credit for the AU$14 million that it paid for its Pensador shares. CityView would return its Pensador shares and in consideration would receive a percentage of the capital of Canzar as determined by an independent valuation of Canzar's assets.
The 10% net profit interest in Canzar's alluvial diamond operations that CityView already holds would not be affected by this transaction.
It is proposed that CityView will make a share offer to acquire Fortitude Minerals Limited ("Fortitude") on the basis of an independent valuation of Fortitude's assets and the average CityView share price at the time. This offer will be subject to the approval by the CityView shareholders in a General Meeting with the aim of making Fortitude a 100% owned subsidiary of CityView.
In order to meet the immediate funding requirements for the continued development of operations in Angola, CityView has been offered an underwriting facility in relation to a rights issue to be offered to all shareholders. Further details regarding this will be announced shortly.
The priorities for such funds will be:
- To carry out JORC drilling on the known mineralisation of Fortitude's Cachoeiras copper project to confirm the mineralisation (and to seek to extend it) to advance the project towards production; to continue the drilling and exploration programme at Longonjo; to undertake exploration of the Chipindo gold project and to undertake exploration on the other areas held by Fortitude viz. Zenza, Benguela, Benguela South West, Bentiabe and Ucua.
- To establish an alluvial diamond plant at the Nhefo project. This is the most advanced of Canzar's diamond projects. It is envisaged that this funding will be in exchange for 100% of the Nhefo operation's free cash flow up to the time that the full funding is recovered (after taking into account CityView's existing ownership of a part of this cash flow through its Canzar equity ownership and its existing 10% net profit interest) after which CityView's net profit interest in Nhefo will increase to a 20% interest.
In regard to the oil refinery project, meetings are being held over the next fortnight in relation to the possible operational arrangements of the refinery. An update on this project will be given in a separate announcement.
