[miningmx.com] — PAN African Resources will not dilute existing
shareholders by more than 10% should it pursue a rights issue to help fund the
R1.5bn acquisition of Evander from Harmony Gold.
This would place the upper limit of an equity placement at around R280m in
generated funds.
Jan Nelson, Pan African’s CEO, told analysts and journalists on Thursday the company
has not yet decided exactly how much money it would need from an equity placement.
This came after the company said on Wednesday it would acquire Evander on its own
after an initial joint attempt with Witwatersrand Consolidated Gold, for R1.7bn, failed
to materialise.
Around R500m of the R1.5bn purchase price would be funded by debt finance, ring-
fenced to Evander with a requirement to hedge no more than 25% of the mine’s
production.
Another R500m would be paid for from the company’s current R250m cash pile, as well
as income generated from existing operations until the October 31 closing date of the
transaction. Importantly, all cash and profits generated by Evander from April 1 are
for the benefit of Pan African, a figure which Nelson estimated would be in the region
of between R200m and R250m.
The remaining R500m would be generated from the sales of non-core assets,
including the previously announced spin-off of the Manica Gold project in Mozambique,
in addition to the rights issue.
Nelson said the separate listing of Manica should be completed in the next two
months.
“It has taken us longer than we thought because the market is not that favourable,’
Nelson said. “Still, we’re planning to get it away in the next two months.’
While market conditions were counting against a listing of Manica, Nelson said the
same wouldn’t apply to an equity placement for Pan African.
“It is difficult if you want to list an exploration asset,’ he said. “Evander is cash
generating and highly value accretive. It totally changes the company.
“If we do an equity raising it will be a rights issues for all our shareholders to take
part in,’ Nelson said, adding that non-participating shareholders would not be diluted
by more than 10%. The company has a current market capitalisation of R2.87bn.
