19/08/2008 - 09:24

International Goldfields, Nkwe merger

19/08/2008 - 09:24

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International Goldfields Ltd has stepped up negotiations on a potential merger with West Perth-based Nkwe Platinum as representatives from both companies meet in London.

International Goldfields Ltd has stepped up negotiations on a potential merger with West Perth-based Nkwe Platinum as representatives from both companies meet in London.

The potential merger follows an announcement earlier this month where both companies signed an option agreement for Nkwe to acquire International Goldfields' (IGC) 15 per cent interest in three South African farms known as the Tubatse project.

Under the six-month option agreement, Nkwe will acquire the interest in Tubatse by way of a scheme of arrangement either by a scrip and or cash deal to acquire all the shares in IGC.

IGC said today it planned to appoint an advisory firm to provide an independent evaluation of its holding in Tubatse and also the scheme of arrangement within the next four to six weeks.

Nkwe has already appointed an independent advisor and expects a valuation in the coming weeks.

IGC said today that if a merger is not a possibility, the 15 per cent sale of Tubatse would still go ahead.

"Despite the six month option period, both parties are committed to the deal and expect to have an agreement finalised by October 2008," IGC said in a statement.

 

Below is the full announcement:

 

Key points:
- International advisory firm to be appointed to provide independent valuation of South African platinum holding,
- IGC and NKWE step up negotiations regarding a potential merger,
- Parties committed to having agreement in place by October 2008

Australian resources company International Goldfields Limited ("International Goldfields" or "the Company") (ASX: IGC) plans to appoint a leading advisory firm to provide an independent valuation of its holding in three platinum-rich "farms" in the Bushveld complex in South Africa.

The imminent appointment of an independent advisor comes as IGC steps up negotiations with fellow Australian platinum company Nkwe Platinum Limited ("Nkwe") regarding a potential merger of the two companies, with representatives of both companies currently meeting in London to further negotiations.

On 7 August 2008 IGC confirmed that it had signed an exclusive Option Agreement with Nkwe in relation to IGCs' 15% interest in the three "farms", Hoepakrantz 291KT, Nooitverwacht 324KT, and Eerste Geluk 327KT that comprise the "Tubatse Project".

Under the Option Agreement, which is valid for six months (with Nkwe being able to extend the option for a further six months), Nkwe paid IGC an option fee of A$100,000 and issued 2.5 million Nkwe shares to IGC.

The agreement gives Nkwe time to facilitate the acquisition of IGC's 15 per cent interest in the Tubatse Project by way of a scheme of arrangement (i.e. cash and/or share offer to acquire all of the issued share capital of IGC).

The purchase price payable under the scheme of arrangement is to be based on two (2) independent expert's valuations as an initial basis. If a scheme of arrangement is not implemented, Nkwe and IGC have agreed to pursue the sale of the 15% interest in the Tubatse Project by way of an asset sale.

Nkwe has already appointed an independent advisor and expects to have its valuation in the coming weeks, with IGC expecting to receive its independent valuation in the coming four to six weeks.

Despite the six month option period, both parties are committed to the deal and expect to have an agreement finalised by October 2008.

International Goldfields is earning the 15 per cent interest in the Tubatse Project by spending US$10 million (A$10.4 million) on exploration.

Nkwe already holds an option to acquire a 59 per cent interest in the Tubatse Project. The option agreement with International Goldfields provides Nkwe with the option to increase its participating interest in the Tubatse Project to 74 per cent, subject to the receipt of necessary shareholder and regulatory approvals. South African black empowerment company, Genorah Resources (Pty) Ltd, holds the remaining 24 per cent interest in the Tubatse Project.

The JORC-compliant resource on portions of Nooitverwacht 324KT and Eerste Geluk 327KT was recently upgraded from 12.4Moz to 20.4Moz (3PGE + Au). The mineralisation potential of the Tubatse Project is independently estimated at approximately 60Moz and 67Moz 3PGE + Au (this includes the 20.4Moz JORC-compliant inferred resource).

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