31 January 2018

Zimbabwe: JSE Listed Miner Eyes Zim Assets

Johannesburg Stock Exchange listed gold miner, Pan African Resources is negotiating with joint administrators of ASA Resource PLC for acquisition of "certain" assets of the group in Zimbabwe. The reported ongoing negotiations come as 52 percent of ASA shareholders have allegedly accepted a 2,1 pence a share offer from a prospective buyer Rich Pro Investments (RPI).

Interestingly though, RPI is reportedly linked to ousted former chief executive, who was also ASA chairman, Ning Yat Hoi who has a pending arrest warrant over missing company funds amounting to $4,3 million.

The allegations against Yat Hoi relate to one of Asa's current major producing asset, Freda Rebecca, a 75 percent owned asset with a net asset value of $75 million. ASA was put under administration last year and had its shares suspended from trading on Alternative Investment Market in London after struggling to meet its ongoing liabilities and it was concerned about cash flow after it received the takeover bid from Chinese industrialist Feng Hailiang's Rich Pro Investments.

ASA Resource has gold and nickel mines as well as undeveloped nickel assets in Zimbabwe. It intends to develop the assets in the Midlands Province of Zimbabwe once global nickel prices rise to levels that sustain the project.

The AIM listed group, a diversified commodity miner with interests in diamonds and copper, generates annual revenue of about $120 million, the bulk of it emanating from the two producing mines in Zimbabwe.

ASA officially quotes its group net asset value (NAV) at over $200 million. ASA's market capitalisation has fluctuated between £20 million and £35 million throughout 2016 and 2017.

ASA has one producing diamond mine in South Africa and two exploratory projects in the Democratic Republic of Congo (DRC) and two copper exploratory licences in the same mineral rich African country. In a regulatory announcement on the JSE Pan African Resource said discussions were ongoing, but there was no certainty the acquisition will conclude.

"The company is pleased to announce that it has entered into exclusive negotiations with the joint administrators of ASA Resource Group Plc (the "Group") in relation to acquiring certain of the assets and liabilities of the Group ("the Acquisition"), which if successfully concluded may have a material effect on the price of the Company's securities."

Pan African and its subsidiaries are a South African based precious metals mining group which produces in excess of 200 000 ounces of gold and 8 000 ounces of platinum group metals per annum. Its strategic focus is on the exploitation of high grade ore-bodies that yield high margins with a relatively low cost base.

Pan African has successfully grown profitable precious metal production in recent years via organic and acquisitive growth. As a result of ASA entering administration, its directors no longer have any executive authority to act on behalf of the company, which was failing to pay creditors.

The company decided to go into administration to allow itself time to sort its financial and managerial problems. RPI, a BVI company owned controlled by Chinese industrialist Feng Hailiang, who is reportedly closely linked to Yat Hoi and ex- finance director, Yim Kwan.

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