Anooraq Resources Corporation Pre

Transcription

Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
(JSE share code: ARQ
ISIN: CA03633E1088)
(TSXV share code: ARQ
ISIN: CA03633E1088)
(AMEX share code: ANO
ISIN: CA03633E1088)
(“Anooraq” or “the Company”)
The definitions and interpretations beginning on page 9 apply to this Pre-Listing Statement in its entirety.
Pre-Listing Statement
This Pre-Listing Statement is prepared in terms of the JSE Listings Requirements in order for Anooraq to secure a
secondary listing of its entire issued share capital on the JSE. Anooraq currently has a primary listing on the Toronto
Stock Exchange Venture Exchange (“TSXV”) and a secondary listing on the American Stock Exchange (“AMEX”).
This Pre-Listing Statement is not an invitation to the public to subscribe for or an offer to the public to purchase
Anooraq common shares, but is issued in compliance with the JSE Listings Requirements for the purpose of giving
information to the public with regard to Anooraq.
The JSE has granted approval for a secondary listing by way of an introduction of all Anooraq common shares, in the
‘Mining – Platinum and Precious Metals’ sector of the JSE lists under the abbreviated name ‘Anooraq’, with effect from
the commencement of business on 19 December 2006.
At the date of listing, the authorised share capital of Anooraq will comprise an unlimited number of common shares of
no par value. The issued share capital of Anooraq will comprise 148 220 407 common shares of no par value.
The directors, whose names are provided in paragraph 6.1 of this Pre-Listing Statement, collectively and individually,
accept full responsibility for the accuracy of the information given, certify that to the best of their knowledge and belief
there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable
enquiries to ascertain such facts have been made and that this Pre-Listing Statement contains all information required
by the JSE Listings Requirements.
The investment bank, corporate adviser and transaction sponsor, attorneys, independent reporting accountants and
auditors, lead sponsor, and transfer secretaries, whose names are included in this Pre-Listing Statement, have consented
in writing to act in the capacities stated and to their names being included in this Pre-Listing Statement and have not
withdrawn such consents prior to the publication of this Pre-Listing Statement.
The independent reporting accountants and auditors have consented to the inclusion of their respective reports in the
form and context in which these appear and have not withdrawn such consent prior to the publication of this
Pre-Listing Statement.
Copies of this Pre-Listing Statement (in English only) may be obtained during normal business hours between 08:00
and 17:00 from15 December 2006 to 19 January 2007 from the Company’s registered office in South Africa or from
Nedbank Capital, the details of which are set out in the ‘Corporate information relating to Anooraq’ section on page 2
of this Pre-Listing Statement.
An abridged version of this Pre-Listing Statement will be released on SENS and published in the press in South Africa
on or about Wednesday, 13 December 2006 and Thursday, 14 December 2006, respectively.
Date of issue: Wednesday, 13 December 2006
Investment bank, corporate adviser and
transaction sponsor
Independent reporting accountants and
auditors in Canada
Attorneys in South Africa
Attorneys in Canada
Lead sponsor
Q
Co
BDO QuestCo (Pty) Ltd
Forward-looking statements
Certain statements contained in this Pre-Listing Statement, other than historical facts, that address exploration
activities and mining potential, constitute ‘forward-looking statements’. Forward-looking statements are preceded
by, followed by, or include the words ‘believes’, ‘expects’, ‘aims’, ‘estimates’, ‘anticipates’, ‘may’, ‘should’, ‘could’,
‘intends’, ‘plans’, ‘seeks’ or words of similar import. Such forward-looking statements involve risks, uncertainties
and other factors which may cause the actual results, performance or achievements of Anooraq, or industry results,
to be materially different from any future results, performance or achievements expressed or implied by such
forward-looking statements. Such risks, uncertainties and other factors include, among others, exploration results,
technical analysis, the lack of availability to Anooraq of necessary capital on acceptable terms, general economic
and business conditions, industry trends, competition, changes in government regulation, interest rate fluctuations,
currency fluctuations (including in particular the Rand/US$ and Rand/C$ exchange rates), changes in business
strategy or development plans and other risks. Anooraq bases these forward-looking statements on particular
assumptions that it has made in light of its industry experience, as well as its perception of historical trends,
current conditions, expected future developments and other factors that Anooraq believes are appropriate under
the circumstances. As you read and consider the information in this Pre-Listing Statement, you should understand
that these forward-looking statements are not guarantees of performance or results.
Although Anooraq believes that these forward-looking statements are based on reasonable assumptions, and has
used its best endeavours to ensure the accuracy thereof, you should be aware that many factors could affect
Anooraq’s actual financial results or results of operations and could cause actual results to differ materially from
those expressed in the forward-looking statements. Anooraq will not undertake any obligation to release publicly
any revisions to these forward-looking statements to reflect events, circumstances or unanticipated events
occurring after the date of this Pre-Listing Statement except as required by law or by any appropriate regulatory
authority. In light of these risks and uncertainties, there can be no assurance that the results and events
contemplated by the forward-looking statements contained in this Pre-Listing Statement will in fact transpire.
1
CORPORATE INFORMATION RELATING TO ANOORAQ
Secretary
Jeffrey Mason, BCom, CA
Suite 1020-800 West Pender Street
Vancouver
British Columbia, Canada
V6C 2V6
Registered Office in South Africa
1st Floor, 43 Wierda Rd West
Wierda Valley
Sandton, 2196
Attorneys in South Africa
Deneys Reitz Incorporated
(Registration number 1984/003385/21)
82 Maude Street
Sandton, 2196
(PO Box 784903, Sandton, 2146)
Attorneys in Canada
McCarthy Tetrault LLP
1300-777 Dunsmuir Street
Vancouver
V7Y 1K2
Transfer secretaries in South Africa
Computershare Investor Services 2004 (Proprietary) Limited
Ground Floor
70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Qualified Person with regard to the Platreef Project
Keith Roberts
4649A Cruickshank Avenue
Courtnay
V9N 7W6
Date of incorporation of Anooraq
19 April 1983
Place of incorporation of Anooraq
Province of British Columbia, Canada
2
Registered office in Canada
(Incorporation number BC0262963)
Suite 1020-800 West Pender Street Vancouver
V7Y 1K2
Investment bank, corporate adviser and
transaction sponsor
Nedbank Capital, a division of Nedbank Limited
135 Rivonia Road
Sandown, 2196
(PO Box 1144, Johannesburg, 2000)
Independent reporting accountants and auditors
in Canada
KPMG LLP
Registered Accountants and Auditors
9th Floor, 777 Dunsmuir Street
Vancouver
V7Y 1K3
(PO Box 10426, Vancouver)
Lead sponsor
BDO QuestCo (Proprietary) Limited
13 Wellington Road
Parktown, 2193
(Private Bag X60500, Houghton, 2041)
Registrar and transfer secretaries in Canada
Computershare Trust Company of Canada
100 University Avenue
49th Floor
Toronto
Ontario, Canada
M5J 2Y1
Qualified Person with regard to the
Ga-Phasha Project
David Stone
Minefill Services, Inc. (Vancouver Office)
595 Howe St., SSte 200
Vancouver BC V6C 2T5
Canada
TABLE OF CONTENTS
The definitions and interpretations beginning on page 9 of this Pre-Listing Statement apply mutatis mutandis to this
table of contents.
Page
Forward-looking statements
1
Corporate information relating to Anooraq
2
Salient features of the Pre-listing Statement
1. Introduction
5
2. Incorporation and group structure of Anooraq
5
3. Prospects of Anooraq and purpose of the listing on the JSE
6
4. Overview of the assets
6
5. Pelawan RTO Share Exchange Agreement
6
6. Controlling shareholders
8
7. Financial information
8
8. Copies of this Pre-Listing Statement
8
Definitions and interpretations
9
Pre-listing Statement
Part A: The business
1. Introduction
16
2. Incorporation, history and group structure of Anooraq
17
3. Prospects of Anooraq and purpose of the listing on the JSE
18
4. Overview of assets
19
5. Mining regulatory regime in South Africa
29
Part B: Directors and senior management
6. Directors and senior management of Anooraq
32
7. Directors’ service contracts and terms of office
35
8. Remuneration, qualification, borrowing powers and appointment of directors
35
9. Directors’ integrity
36
10. Interests of directors
37
Part C: Financial information
11. Assets, liabilities and other financial information
39
Part D: Share capital
12. Share capital and information relating to Anooraq
41
13. Controlling shareholders
43
14. Major shareholders
43
Part E: General
15. Material contracts
44
16. Litigation statement
47
17. Shareholder protection provisions relating to take-overs
48
18. Material change statement
48
19. Corporate Governance
48
20. Performance incentive schemes
48
21. Preliminary expenses incurred
48
22. Expenses of the listing
48
23. Interests of advisers and promoters
48
24. Listing on other stock exchanges
49
25. Trading history of Anooraq common shares on the TSXV
49
26. STRATE and trading of Anooraq common shares on the JSE
49
27. SARB Exchange Control Regulations
49
28. Corporate information relating to the Company
51
29. Experts’ consents
51
30. Directors’ responsibility statement
51
31. Copies of this Pre-Listing Statement
51
32. Documentation available for inspection
51
3
Table of exhibits
table of exhibits.
Page
Exhibit 1
Anooraq’s subsidiaries
6
Exhibit 2
Anooraq’s group structure
18
Exhibit 3
Location of Anooraq’s projects
19
Exhibit 4
Boikgantsho JV property outline
22
Exhibit 5
Boikgantsho JV November 2004 indicated mineral resource estimates
23
Exhibit 6
Boikgantsho JV November 2004 inferred mineral resource estimates
23
Exhibit 7
Location of the Ga-Phasha Project area
25
Exhibit 8
Ga-Phasha Project January 2004 measured and indicated mineral resource estimates
27
Exhibit 9
Ga-Phasha Project January 2004 inferred mineral resource estimates
27
Exhibit 10 Directors of Anooraq
32
Exhibit 11 Senior management of Anooraq
34
Exhibit 12 Directors’ holdings of Anooraq common shares
37
Exhibit 13 Changes in directors’ holdings of Anooraq common shares
37
Exhibit 14 Details of subsidiary companies of Anooraq
40
Exhibit 15 Details of Anooraq’s share capital
41
Exhibit 16 Pelawan shareholders
43
Exhibit 17 Major shareholders of Anooraq
43
Table of annexures
table of annexures.
Page
Annexure 1
Extracts from the published audited consolidated historical financial statements
53
Annexure 2
Reviewed consolidated financial statements for the nine months ended 30 September 2006
73
Annexure 3
Other directorships or partnerships held by the directors of Anooraq
81
Annexure 4
Extracts from the Articles
84
Annexure 5
Salient features of the Stock Option Plan
98
Annexure 6
Salient terms of the Management Agreement
101
Annexure 7
Principal immovable property owned or leased, or to be acquired or leased
104
Annexure 8
Anooraq’s Corporate Governance practices
106
Annexure 9
Details of Anooraq’s inter-company balances
108
Annexure 10 Trading history of Anooraq’s common shares on the TSXV
109
Annexure 11 Directors’ remuneration
111
Annexure 12 Technical report on the Platreef Project
117
Annexure 13 Auditor’s report on the 31 October 2003 financial statements
153
Annexure 14 Comfort letter from the independent reporting accountants and auditors
154
Annexure 15 Technical report on the Ga-Phasha Project
156
4
ISIN: CA03633E1088)
ISIN: CA03633E1088)
ISIN: CA03633E1088)
The definitions and interpretations beginning on page 9 of this Pre-Listing Statement apply mutatis mutandis to the
salient features.
SALIENT FEATURES OF THE PRE-LISTING STATEMENT
This summary contains the salient features of the secondary listing of the entire issued share capital of Anooraq on the
JSE as set out in this Pre-Listing Statement, which should be read in its entirety for a full appreciation thereof.
Anooraq has undertaken that it will comply in full with the JSE listings requirements from the date of listing on an
ongoing basis, save where such requirements are in direct contravention of any Canadian legislation or regulation.
1.
INTRODUCTION
Anooraq is in the business of acquiring, exploring and developing prospective PGM properties. The Company’s
projects are all situated on the Bushveld Complex. Anooraq’s wholly owned South African subsidiary, Plateau
Resources, holds its properties and conducts its operations in South Africa.
Since completion of the Pelawan transaction Anooraq has been positioned as the first BEE company with a primary
listing on North American capital markets, namely the TSXV and AMEX. Once certain of its project initiatives have
been developed to the appropriate levels, it is Anooraq’s intention to migrate its Canadian listing to the TSX.
Anooraq’s two primary projects, being the Ga-Phasha Project and Boikgantsho JV, are both undertaken in joint
venture with Anglo Platinum. The Ga-Phasha Project was acquired pursuant to the Pelawan RTO Share Exchange
Agreement, which is fully described in paragraph 5 of the salient features below.
During 2005, the Company’s principal focus was the completion of its advanced drilling programmes and
associated studies at the Ga-Phasha Project and Boikgantsho JV. Technical programmes at both of these projects
continue to determine how best to optimally exploit the underlying mineral resources.
The JSE has granted approval for a secondary listing by way of an introduction of all Anooraq common shares, in
the ‘Mining – Platinum and Precious Metals’ sector of the JSE under the abbreviated name ‘Anooraq’, with effect
from the commencement of business on 19 December 2006.
At the date of listing, the authorised share capital of Anooraq will comprise an unlimited number of common
shares of no par value. The issued share capital of Anooraq will comprise 148 220 407 common shares of no par
value.
2.
INCORPORATION AND GROUP STRUCTURE OF ANOORAQ
Anooraq was incorporated on 19 April 1983 under the laws of the Province of British Columbia, Canada. The
Company was transitioned under the Business Corporations Act on 11 June 2004, on which date the Company
altered its Notice of Articles to change its authorized share structure from 200 000 000 common shares without
par value to an unlimited number of common shares without par value.
5
Anooraq operates directly and through its subsidiaries as follows:
Name of subsidiary
Jurisdiction of incorporation
Anooraq ownership interest
Anooraq Mexico (inactive)
N1C Resources
N2C Resources
Plateau Resources
Micawber 277
Mexico
Cayman Islands
Cayman Islands
South Africa
South Africa
100%
100%
100% (held through N1C Resources)
100% (held through N2C Resources)
50% (held through Plateau Resources)
Exhibit 1: Anooraq’s subsidiaries
3.
PROSPECTS OF ANOORAQ AND PURPOSE OF THE LISTING ON THE JSE
Anooraq has a long term objective of becoming a significant PGM producer in South Africa, through organic growth
and project acquisitions as a stand-alone producer or through JVs with other producers.
In line with this objective, Anooraq is currently pursuing two exploration PGM projects in South Africa, the
Ga-Phasha Project and Boikgantsho JV where pre-feasibility studies, including associated drilling, will continue
during 2007 in order to move the projects forward. Furthermore, Anooraq evaluates co-operation opportunities
with various entities, which may or may not lead to corporate action in the future.
The main purposes of the listing on the JSE are to:
• enhance potential investors’ awareness of Anooraq;
• facilitate direct investment in Anooraq by South African investors;
• provide Anooraq with another potential source of capital, including the use of common shares as acquisition
currency;
• provide investors with an additional market for trading Anooraq common shares; and
• comply with the SARB requirement, as more fully described in paragraph 27 of this Pre-Listing Statement,
pursuant to the Pelawan transaction.
In compliance with the JSE Listings Requirements, the purposes of this Pre-Listing Statement are to:
• provide members of the investment community with information relating to Anooraq, its operations, its
directors and management; and
• set out the historical financial information of Anooraq, so as to enable Anooraq to obtain a listing of its common
shares on the JSE.
4.
OVERVIEW OF THE ASSETS
An overview of the assets of Anooraq, including mineral resource estimates, is set out in paragraph 4 of this
5.
PELAWAN RTO SHARE EXCHANGE AGREEMENT
On 21 January 2004, Anooraq and Pelawan entered into a share exchange agreement, as amended by addenda
dated 20 September 2004 and 11 November 2005, pursuant to which Pelawan transferred its shareholding in
Micawber 277 to Plateau Resources and assigned to Plateau Resources its participation interest in the JV with RPM
in respect of the Ga-Phasha Project. This was in consideration for Anooraq issuing 91.2 million common shares in
its capital to Pelawan and making cash payments to Pelawan of R15.7 million. Pursuant to the terms of the Pelawan
RTO Share Exchange Agreement, all common shares held by Pelawan in Anooraq, save for 7.9 million common
shares discussed below, are to be retained in escrow or lock-up until the earlier of 29 September 2010 or twelve
months after the commencement of commercial production from the Ga-Phasha Project and Boikgantsho JV (as
determined under a BFS). Pelawan must also at all future times be owned 100% by HDPs and is required by the
SARB at all material times in the future to hold the Statutory Shareholding, being 52% of the issued share capital
of the Company.
On 28 March 2005, Pelawan sold 7.9 million of the Anooraq common shares it was permitted to sell under the
Pelawan RTO Share Exchange Agreement to strategic stakeholders in Anooraq and the proceeds from such sales
were remitted to Pelawan shareholders through the Pelawan Trust.
6
The Pelawan RTO Share Exchange Agreement provides that if any financings for the Ga-Phasha and Boikgantsho
JV projects (the ‘Projects’) take place prior to the Finalisation Date and the shareholder dilution associated with
such financing causes Pelawan’s shareholding in Anooraq (currently approximately 56.25%) to fall below the
Statutory Shareholding, Anooraq will issue additional common shares to Pelawan in order to maintain the
Statutory Shareholding. The Statutory Shareholding allows for compliance with BEE equity requirements under the
MPRDA, and was also a requirement of the SARB Exchange Control Department’s approval of the Pelawan
transaction. Initially, the Finalisation Date was intended to be 30 September 2005, but by agreement between
Anooraq and Pelawan the date has now been extended, as described in further detail below.
The Pelawan RTO Share Exchange Agreement further provides that, to the extent that no such dilutive financings
have actually taken place by the Finalisation Date, certain dilutive financings are deemed to have occurred by that
date. The purpose is to make allowance for the dilutive effect on Pelawan’s shareholding of the anticipated
financings for mine development of the Projects and, in this way, safeguard the status of Anooraq as a BEE
company. For the purposes of calculating whether, by virtue of such deemed dilutive financings, any common
shares are required to be issued to Pelawan in order to maintain the Statutory Shareholding, the Pelawan RTO
Share Exchange Agreement provides that the quantum of such deemed financings will equal:
• 30% of the estimated development costs in accordance with the BFS’s in respect of the Projects, less cash on
hand; or
• to the extent that such BFS’s have not been prepared as at the Finalisation Date, C$70.8 million related to the
Ga-Phasha Project and C$27.6 million related to the Boikgantsho JV, less cash on hand.
Following the Finalisation Date, Anooraq has the right but no obligation to issue additional common shares to
Pelawan (at the market value of the common shares on the Finalisation Date) in order to maintain Pelawan’s
Statutory Shareholding. However, the SARB requires that Pelawan and/or any other HDPs at all material times in
the future holds the Statutory Shareholding, being 52% of the issued share capital of the Company.
Neither additional financings nor BFS’s for the Projects had been completed by Anooraq as at
30 September 2005 which, in the absence of agreement between the parties, would have meant that a dilutive
financing totalling C$98.4 million (and issuance of common shares based on the then market value of the common
shares) would have been deemed to have taken place as at such date. Based on the then current trading range of
Anooraq’s common shares, such deemed financing would have resulted in a deemed dilution of Pelawan’s current
shareholding of approximately 56.25% to a level well below the Statutory Shareholding and, accordingly, would
have required the issuance of a significant number of additional common shares to Pelawan in order to maintain
its Statutory Shareholding (taking such deemed financings into account). However, Anooraq and Pelawan have
agreed to extend the Finalisation Date to the earlier of:
• the first date at which financing of the Projects shall, in fact, have occurred;
• any date which is within a 60-day period following an announcement by Anooraq of a further material
transaction, being a transaction with a value that exceeds 30% of Anooraq’s market capitalisation at the time
of such announcement; and
• 31 December 2006.
None of the above three events had occurred at the date of this Pre-Listing Statement.
Accordingly, the additional common shares which would, under the original terms of the Pelawan RTO Share
Exchange Agreement, have become issuable to Pelawan by Anooraq as of 30 September 2005 were not required to
be issued at that time and the determination of whether any additional common shares will be required to be
issued to Pelawan in light of any actual or deemed dilutive financings will be made in due course on the Finalisation
Date, as amended. The method for determining whether such additional common shares will be issuable upon the
Finalisation Date remains as described above. Therefore, upon the Finalisation Date, the dilutive financings for the
purposes of calculating whether any additional common shares are issuable to Pelawan will be the actual dilutive
financings undertaken in relation to the Projects to date and, to the extent that no such financings have been
undertaken, will be the deemed dilutive financings as described above.
None of the financings mentioned above will be undertaken by 31 December 2006 and therefore shareholders
of Anooraq, other than Pelawan, would incur significant dilution in their shareholdings as a result of an issue
of additional common shares to Pelawan in accordance with the description above. However, negotiations are
currently underway between Pelawan and Anooraq that may lead to an amendment of the Pelawan RTO Share
Exchange Agreement to avoid an issue of additional common shares to Pelawan at the Finalisation Date.
7
The issue of common shares to Pelawan at the Finalisation Date was approved by Anooraq common shareholders
at the time of the approval of the Pelawan transaction. This arrangement does not however affect Anooraq
common shareholders’ pre-emptive rights at all times as provided for in the Articles, as more described in
paragraph 3 of Annexure 4 to this Pre-Listing Statement.
6.
CONTROLLING SHAREHOLDERS
Pursuant to the Pelawan RTO Share Exchange Agreement, Pelawan, through the Pelawan Trust is the controlling
shareholder of Anooraq with a 56.25% shareholding in the Company. The sole beneficiary of the Pelawan Trust is
Pelawan. The only directors of Anooraq who have interests in Pelawan are Harold Motaung and Tumelo Motsisi,
whose indirect shareholdings in the Company are 3.9% and 6.7% of the issued share capital, respectively.
There will be no change in the controlling shareholder of Anooraq as a result of Anooraq listing on the JSE.
7.
FINANCIAL INFORMATION
An extract of the audited consolidated historical financial statements of Anooraq as at 31 December 2005 and
2004 and at 31 October 2003, and for the year ended 31 December 2005, the fourteen-month period ended
31 December 2004 and the year ended 31 October 2003 is set out in Annexure 1 to this Pre-Listing Statement.
The independent reporting accountants’ reports on the audited consolidated historical financial statements of
Anooraq as at 31 December 2005 and 2004 and at 31 October 2003, and for the year ended
31 December 2005, the fourteen-month period ended 31 December 2004 and the year ended 31 October 2003
are set out in Annexures 13 and 14 to this Pre-Listing Statement.
The reviewed consolidated financial statements as at 30 September 2006 and for the nine-month periods ended
30 September 2006 and 2005 are set out in Annexure 2 to this Pre-Listing Statement.
The independent reporting accountants’ report on the reviewed consolidated financial statements of Anooraq as
at 30 September 2006 and for the nine-month period ended 30 September 2006 is set out in Annexure 14 to this
The audited and reviewed financial information of Anooraq is the responsibility of management.
8.
COPIES OF THIS PRE-LISTING STATEMENT
English copies of this Pre-Listing Statement can be obtained during normal business hours between 08:00 and
17:00 from 15 December 2006 to 19 January 2007, from the following addresses:
• Anooraq Resources Corporation, 1st Floor Wierda Road West, Wierda Valley, Sandton, 2146; and
• Nedbank Capital Corporate Finance, 3rd Floor Corporate Place, 135 Rivonia Road, Sandown, 2196.
8
DEFINITIONS AND INTERPRETATIONS
In this Pre-Listing Statement, unless otherwise stated or the context otherwise indicates, the words in the first column
shall have the meanings stated opposite them in the second column and words in the singular shall include the plural
and vice versa. Words importing natural persons shall include corporations and associations of persons and an
expression denoting any gender shall include the other genders, unless otherwise stated or the context otherwise
indicates.
“4E” or “PGM(4E)” or “4PGE”
or “3PGE+Au”
platinum group metals or elements comprising platinum, palladium, rhodium
and, for the purposes of this Pre-Listing Statement, gold;
“AMEX”
American Stock Exchange;
“Anglo Platinum”
Anglo Platinum Limited (registration number 1946/022452/06), a public
company registered and incorporated in South Africa, all the issued shares of
which are listed on the JSE and the London Stock Exchange, and also
represented on the Brussels Bourse by means of International Depository
Receipts;
“Anooraq group”
Anooraq and its subsidiaries collectively;
“Anooraq Mexico”
Anooraq Minera Mexicana SA de CV (registration number CV-514/98/16293),
a company incorporated under the laws of Mexico;
“Anooraq” or “the Company”
Anooraq Resources Corporation (registration number 10022-2033), a
company incorporated under the laws of the Province of British Columbia,
Canada, and whose shares are listed on the TSXV and AMEX;
“Articles”
the draft Articles of Anooraq which will replace the existing Articles of
Anooraq, subject to shareholder approval at the next annual general meeting
of the Company’s shareholders;
“Au”
gold element;
“BEE”
broad based black economic empowerment as defined in section 1 of the
MPRDA;
“BFS”
a bankable feasibility study, which is a comprehensive and definitive
assessment of the project in terms of commercial, technical, financial,
economic and environmental prerequisites to allow sufficient consideration
of an investment in the project by providers of equity and debt capital;
“BIC” or “Bushveld Complex”
the Bushveld Igneous Complex, a geological region, internationally recognised
for its PGM and chromitite deposits, located in the North West, Limpopo,
Mpumalanga and Gauteng provinces of South Africa;
“Board” or “Anooraq board” or
“directors”
the board of directors of Anooraq;
“Boikgantsho JV”
the JV between RPM and Plateau Resources for the exploration and mining of
PGMs on the Drenthe farm, the Witrivier farm and the northern part of
Overysel farm situated on the Platreef;
“Business Corporations Act”
the Business Corporations Act (British Columbia) from time to time in force
and includes amendments thereto, and all regulations made pursuant
thereto;
“C$”
Canadian dollar, the lawful currency of Canada;
“CEO”
chief executive officer;
“certificated common shares”
Anooraq common shares which have not been dematerialised, title to which
is represented by paper share certificates or other documents of title;
9
“CFO”
chief financial officer;
“cm”
centimetre or centimetres, as the context indicates;
“common monetary area”
the Republics of South Africa and Namibia and the Kingdoms of Lesotho and
Swaziland;
“common shares” or
“Anooraq common shares”
common shares with no par value in the share capital of Anooraq;
“Companies Act”
the South African Companies Act, No. 61 of 1973, as amended;
“Computershare South Africa” or
“South African transfer secretaries”
Computershare Investor Services 2004 (Proprietary) Limited (registration
number 2004/003647/07), a private company registered and incorporated in
South Africa and the South African transfer secretaries to Anooraq;
“CSDP”
a central securities depository participant appointed by individual
shareholders for purposes of and in regard to dematerialisation in terms of
the South African Security Services Act, No. 36 of 2004;
“Cu”
copper element;
“dematerialise” or “dematerialisation”
the process by which certificated common shares are replaced with
dematerialised common shares;
“dematerialised common shares”
common shares in respect of which certificated common shares have been
replaced with electronic records of ownership under STRATE, with a duly
appointed CSDP or broker, as the case may be;
“DME”
the South African Department of Minerals and Energy;
“documents of title”
share certificate(s), certified transfer deed(s) or form(s), balance receipt(s) or
any other document(s) of title acceptable to the Company in respect of
certificated common shares;
“exploration”
the intentional searching for any mineral, but not including mining;
“exploration company”
a company, the principal activity of which is exploration;
“Finalisation Date”
the date by which the capital raising for the development of certain projects
of the Company or the BFS in respect of such projects was contractually
required to have been finalised, being initially 30 September 2005, but which
has now been extended to a future date as more fully explained in
paragraph 15.1 of this Pre-Listing Statement;
“g”
gram or grams, as the context indicates;
“g/t”
grams per metric tonne;
“Ga-Phasha JV Agreement”
the notarial JV agreement dated 29 September 2004, between RPM, Pelawan
and Micawber 277, as more fully described in paragraph 15.4 of this PreListing Statement;
“Ga-Phasha Project”
the Ga-Phasha PGM Project, a JV project located on the Eastern Limb of the
Bushveld Complex;
“GMV/t”
gross metal value per tonne, being the sum of Pt, Pd, Au, Cu and Ni grades
multiplied by the following metal prices: Pt – US$650/oz; Pd – US$250/oz; Au
– US$375/oz; Ni – US$4/lb; and Cu – US$1/lb;
“Great Basin Gold”
Great Basin Gold Limited (Registration number BO436691), a gold focused
public mining company incorporated under the laws of Canada, which is a
primary listing on the TSX and secondary listings on AMEX and the JSE;
“ha”
hectare;
10
“HDI”
Hunter Dickinson Inc., a company registered and incorporated in Canada with
its registered address being Suite 1500, 1055 West Georgia Street, Vancouver,
British Columbia, Canada, V6E 4N7;
“HDP”
a historically disadvantaged person as defined in the MPRDA, being:
(a) any person, category of persons or community, disadvantaged by unfair
discrimination before the Constitution of South Africa Act, No. 108 of
1996, as amended, took effect;
(b) any association, a majority of whose members are persons contemplated
in (a); or
any juristic person other than an association, in which persons contemplated
in (a) own and control a majority of the issued capital or members’ interest
and are able to control a majority of the members’ votes;
“indicated mineral resource”
that part of a mineral resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated with a reasonable
level of confidence. It is based on exploration, sampling and testing
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes. The locations are too widely
or inappropriately spaced to confirm geological and/or grade continuity but
are spaced closely enough for continuity to be assumed;
“inferred mineral resource”
that part of a mineral resource for which tonnage, grade and mineral content
can be estimated with a low level of confidence. It is inferred from geological
evidence and assumed but not verified geological and/or grade continuity. It
is based on information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes that may
be limited or of uncertain quality and reliability;
“IRR”
internal rate of return;
“JSE”
JSE Limited (registration number 2005/022939/06), a public company
registered and incorporated in South Africa, licensed as an exchange under the
South African Securities Services Act, No. 36 of 2004, as amended;
“JSE Listings Requirements”
the Listings Requirements of the JSE, as issued by the JSE from time to time;
“JV”
joint venture;
“King Code”
the King Report on Corporate Governance for South Africa 2002 (Code of
Corporate Practices and Conduct);
“km”
kilometre or kilometres, as the context indicates;
“Kwanda JV”
the JV entered into between RPM and Plateau Resources for the exploration
and mining of PGMs in the north and south blocks of the Platreef Project;
“Land Rights Act”
the South African Restitution of Land Rights Act, No. 22 of 1994, as amended;
“last practicable date”
the last practicable date prior to the finalisation of this Pre-Listing Statement,
being Thursday, 30 November 2006;
“lb”
pound or pounds, as the context indicates, as a unit measure of weight;
“lead sponsor”
BDO QuestCo (Proprietary) Limited (registration number 2004/018276/07),
a private company registered and incorporated in South Africa and, for the
purposes of the listing, the lead sponsor to Anooraq;
“listing” or “listing on the JSE”
the secondary listing of the entire issued share capital of Anooraq on the JSE
in the Resources “Mining – Platinum and Precious Metals’ sector under the
abbreviated name “Anooraq”, with effect from the start of business on
Tuesday, 19 December 2006;
11
“m” or “metre”
metre or metres, as the context indicates;
“Management Agreement”
the management agreement between Anooraq and HDI, dated for reference
31 December 1996, pursuant to which HDI provides Anooraq with geological,
corporate development, administrative and management services;
“measured mineral resource”
that part of a mineral resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated with a high level
of confidence. It is based on detailed and reliable exploration, sampling and
testing information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes. The locations are
spaced closely enough to confirm geological and grade continuity;
“Merensky Reef”
a pyroxenite reef in the BIC containing PGMs, which is one of the principal
PGE orebodies within the BIC and which is mined extensively;
“Micawber 277”
Micawber 277 (Proprietary) Limited (registration number 2002/016481/07),
a private company incorporated under the laws of South Africa and which
holds the mineral title in respect of the Ga-Phasha Project;
“Micawber Shareholders Agreement”
the shareholders agreement dated 22 September 2004 between RPM,
Pelawan and Micawber 277, as more fully described in paragraph 15.3 of this
Pre-Listing Statement;
“mineral reserve”
the economically mineable material derived from a measured mineral
resource and/or indicated mineral resource. It is inclusive of diluting materials
and allows for losses that may occur when the material is mined. Appropriate
assessments, which may include feasibility studies, have been carried out,
including consideration of, and modification by, realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social and
governmental factors. These assessments demonstrate at the time of
reporting that extraction is reasonably justifiable. Mineral reserves are subdivided in order of increasing confidence into probable mineral reserves and
proved mineral reserves;
“mineral resource”
a concentration or occurrence of material of economic interest in or on the
earth’s crust in such form and quantity that there are reasonable and realistic
prospects for eventual economic extraction. The location, quantity, grade,
continuity and other geological characteristics of a mineral resource are
known, estimated from specific geological evidence and knowledge, or
interpreted from a well constrained and portrayed geological model. Mineral
resources are sub-divided, in order of increasing confidence in respect of
geoscientific evidence, into inferred, indicated and measured resources;
“Minerals Act”
the South African Minerals Act, No. 50 of 1991, as amended, which was
repealed by the MPRDA;
“Mining Charter”
the Broad Based Socio-Economic Empowerment Charter for the South African
mining industry, referred to in section 100(2) of the MPRDA;
“Moz”
million ounces;
“MPRDA”
the South African Mineral and Petroleum Resources Development Act, No. 28
of 2002, as amended, which was promulgated on 1 May 2004;
“Mt”
million tonnes;
“N1C Resources”
N1C Resources Incorporated (registration number CR-94610), a whollyowned subsidiary of Anooraq, incorporated on 2 December 1999 under the
laws of the Cayman Islands, BWI;
“N2C Resources”
N2C Resources Incorporated (registration number CR-94611), a whollyowned subsidiary of N1C Resources, incorporated on 2 December 1999 under
the laws of the Cayman Islands, BWI;
12
“Nedbank Capital” or “investment
bank, corporate adviser and
transaction sponsor”
Nedbank Capital, a division of Nedbank Limited;
“Nedbank Limited”
Nedbank Limited (registration number 1951/000009/06), a public company
registered and incorporated in South Africa, and a registered bank in South
Africa;
“Ni”
nickel element;
“NI 43 – 101”
the Canadian National Instrument 43-101-Standards of disclosure for
mineral projects, which describes rules for disclosure of technical information,
including the format and content of technical reports;
“NPV”
net present value;
“oz”
troy ounce or troy ounces, as the context indicates (one troy ounce equals
approximately 31.1035g);
“Pd”
palladium element;
“Pelawan”
Pelawan Investments (Proprietary) Limited (registration number
2002/017920/07), a private company registered and incorporated under the
laws of South Africa;
“Pelawan RTO Share Exchange
Agreement”
the share exchange agreement between Pelawan and Anooraq dated
21 January 2004, as amended and as more fully described in paragraph 15.1
of this Pre-Listing Statement;
“Pelawan Shareholders Agreement”
the shareholders’ agreement between Pelawan, Anooraq and the Pelawan
Trust dated 19 September 2004, as more fully described in paragraph 15.2 of
this Pre-Listing Statement;
“Pelawan transaction”
the transaction, which was completed in September 2004 and which
constitutes an RTO under the policies of the TSXV, in terms of which Anooraq
acquired Pelawan’s 50% shareholding in Micawber 277 and the rights to its
50% participation interest in the Ga-Phasha Project in exchange for
91.2 million Anooraq common shares and a cash payment of ZAR15.7 million;
“Pelawan Trust”
the trust established in accordance with a Trust Deed, dated 2 September
2004, the present trustees of which are Deneys Reitz Trustees (Proprietary)
Limited, Tumelo Moathlodi Motsisi and Asna Chris Harold Motaung and the
sole beneficiary of which is Pelawan;
“PGM” or “PGE”
platinum group metals, minerals or elements comprising mainly platinum,
palladium, rhodium, ruthenium, iridium, osmium and, for the purposes of this
Pre-Listing Statement, gold;
“Plateau Resources”
Plateau Resources (Proprietary) Limited (registration number
1996/013879/07), a company registered and incorporated under the laws of
South Africa, being an indirect wholly-owned subsidiary of Anooraq;
“Platreef”
a thick, open-castable PGM-bearing reef in the Northern Limb of the Bushveld
Complex, currently being mined by PPRust;
“Platreef Project”
the Platreef PGM Project located on the Northern Limb of the Bushveld
Complex, which includes the Kwanda JV, the Boikgantsho JV, and the
Rietfontein and Central Block properties, as more fully described in paragraph 4.1
of this Pre-Listing Statement;
“PPRust”
Potgietersrust Platinums Limited (registration number 1925/008353/06), a
public company registered and incorporated under the laws of South Africa,
being a wholly-owned subsidiary of Anglo Platinum;
“Pre-Listing Statement”
this Pre-Listing Statement and its annexures, dated Wednesday,
13 December 2006, which have been prepared in compliance with the JSE
Listings Requirements;
13
“probable mineral reserve”
the mineable material derived from a measured mineral resource and/or
indicated mineral resource. It is estimated with a lower level of confidence
than a proved mineral reserve. It is inclusive of diluting materials and allows
for losses that may occur when the material is mined. Appropriate
assessments, which may include feasibility studies, have been carried out,
including consideration of, and modification by, realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social and
governmental factors. These assessments demonstrate at the time of
reporting that extraction is reasonably justified;
“proved mineral reserve”
the economically mineable material derived from a measured mineral
resource. It is estimated with a high level of confidence. It is inclusive of
diluting materials and allows for losses that may occur when the material is
mined. Appropriate assessments, which may include feasibility studies, have
been carried out, including consideration of, and modification by, realistically
assumed mining, metallurgical, economic, marketing, legal, environmental,
social and governmental factors. These assessments demonstrate at the time
of reporting that extraction is reasonably justified;
“Pt”
platinum element;
“R” or “Rand” or “ZAR”
the South African Rand, the lawful currency of South Africa;
“Rh”
rhodium element;
“Rietfontein Project”
a project in respect of the Rietfontein 2KS farm forming part of the Platreef
project, as more fully described in paragraph 4.1 of this Pre-Listing Statement;
“Royalty Bill”
the draft South African Mineral and Petroleum Royalty Bill to be implemented
in terms of the MPRDA;
“RPM”
Rustenburg Platinum Mines Limited (registration number 1931/003380/06),
a public company registered and incorporated in South Africa and a whollyowned subsidiary of Anglo Platinum;
“RTO”
reverse take-over;
“SA” or “South Africa” or “RSA”
the Republic of South Africa;
“SARB”
South African Reserve Bank;
“SENS”
the Securities Exchange News Service of the JSE;
“Statutory Shareholding”
the minimum shareholding required to be held (on a fully diluted basis) by
Pelawan and/or any other HDPs in Anooraq in order for Anooraq to qualify as
an HDP, currently being 52% of the issued and outstanding common shares
of Anooraq;
“Stock Option Plan”
the Share Incentive Plan dated for reference 21 May 2004, the salient details
of which are set out in Annexure 6 to this Pre-Listing Statement;
“STRATE”
STRATE Limited (registration number 1998/022242/06), a public company
registered and incorporated in South Africa and the electronic clearing and
settlement system used by the JSE to settle trades;
“t”
tonnes;
“the scorecard”
the mining scorecard for the evaluation and measuring of HDP compliance
contained in the Mining Charter;
“tpm”
tonnes per month;
“TSX”
Toronto Stock Exchange;
“TSX Group”
TSX Group Inc., a company whose common shares are listed on the TSX and
which owns and operates Canada’s two national stock exchanges – the TSX
serving the senior equity market and the TSXV serving the public venture
equity market;
14
“TSXV”
TSX Venture Exchange, a public venture capital market for emerging
companies which is owned and operated by the TSX Group;
“UG2” or “UG2 Reef”
a chromitite reef in the BIC containing PGMs;
“US”
United States of America;
“US$”
United States dollar, the lawful currency of the US;
“VAT”
Value-Added Tax payable in terms of the South African Value-Added Tax Act,
No. 89 of 1991; and
“www.sedar.com”
the internet website address of the System for Electronic Document Analysis
and Retrieval (SEDAR), the repository of electronic regulatory documents that
are required to be filed by Canadian public companies.
15
ISIN: CA03633E1088)
ISIN: CA03633E1088)
ISIN: CA03633E1088)
PRE-LISTING STATEMENT
Directors
Robert Dickinson (Co-chairman)
Popo Molefe* (Co-chairman)
David Elliott*
Wayne Kirk*
Sipho Nkosi*
Rizelle Sampson**
Ronald Thiessen (CEO)
Tumelo Motsisi (Deputy CEO)
Scott Cousens
Phumzile Langeni
Harold Motaung
* Independent non-executive
** Non-executive
This Pre-Listing Statement is prepared in terms of the JSE Listings Requirements in order for Anooraq to secure a
secondary listing of its entire issued share capital on the JSE. Anooraq is currently listed on the TSXV and AMEX.
Anooraq has undertaken that it will comply in full with the JSE listings requirements from the date of listing on an
ongoing basis, save where such requirements are in direct contravention of any Canadian legislation or regulation.
Part A: The business
1.
INTRODUCTION
Anooraq is in the business of acquiring, exploring and developing prospective PGM properties. The Company’s
projects are all situated on the Bushveld Complex.
Since completion of the Pelawan transaction Anooraq has been positioned as the first BEE company with a primary
listing on North American Capital markets, namely the TSXV and AMEX. Once certain of its project initiatives have
been developed to the appropriate levels it is Anooraq’s intention to migrate its Canadian listing to the TSX.
Anooraq’s two primary projects, being the Ga-Phasha Project and Boikgantsho JV, are both undertaken in joint
venture with Anglo Platinum.
During 2005, the Company’s principal focus was the completion of its advanced drilling programs and associated
studies at the Ga-Phasha Project and Boikgantsho JV. Technical programmes at both of these projects continue to
determine how best to optimally exploit the underlying mineral resources.
The Company also has early stage properties on the Northern Limb (part of the Platreef Project) of the Bushveld
Complex. Geological work and preliminary drilling was carried out by the Company on these early stage properties
in 2005, but no work is currently underway or planned for these properties.
No mineral reserves have as yet been classified or established on any of the Company’s projects and further
exploration work at certain projects is still required before any economic feasibility can be considered.
Anooraq does not have any operating revenue although historically it has had annual interest revenue as a
consequence of investing surplus funds pending the completion of exploration programs.
16
Anooraq has a management relationship with HDI. HDI is a private corporation, consisting of technical and
financial specialists who have been providing services on mineral exploration and mining projects for a number of
publicly listed companies for twenty years. A key aspect of HDI’s approach to project development is to develop
and maintain strong relationships with local communities, employees and government authorities from the start
of exploration and as the project advances towards becoming a mine. HDI is one of the largest independent mining
exploration groups in North America and as of 30 April 2006, employed or retained on a substantially full-time
basis, 23 geoscientists; six engineers; one agrologist; one biologist; 11 accountants; and 28 administrative and
support personnel. It has supervised mineral exploration projects in Canada (British Columbia, Manitoba, Ontario,
Québec,Yukon and Northwest Territories) and internationally in Brazil, Nevada, Mexico, China and South Africa. HDI
allocates the cost of staff input into projects, such as the Company’s projects, based on the time records of involved
personnel. Costs of such personnel and third party contractors are billed to the Company on a full cost recovery
basis (inclusive of HDI staff costs and overhead) for amounts which are considered by the Company management
to be at a cost that is competitive with arm’s-length suppliers.
Anooraq has fewer than ten employees, as much of the Company’s technical, financial and legal services are
currently provided by consultants, HDI and the Company’s personnel.
2.
INCORPORATION, HISTORY AND GROUP STRUCTURE OF ANOORAQ
Anooraq was incorporated on 19 April 1983 under the laws of the Province of British Columbia, Canada. The
Company was transitioned under the Business Corporations Act on 11 June 2004, on which date the Company
altered its Notice of Articles to change its authorized share structure from 200 000 000 common shares without
par value to an unlimited number of common shares without par value.
From 1996 to mid 1999 the Company’s mineral exploration was focused on metal prospects located in Mexico. In
October 1999, the Company refocused its exploration on a South African PGM project, the Platreef Project.
The Company has two active Cayman Islands subsidiaries, N1C Resources and N2C Resources. These two
subsidiaries were incorporated on 2 December 1999 under the laws of the Cayman Islands, BWI. Their use
represents a common method for Canadian mining companies to hold foreign resource assets for Canadian tax
planning considerations. The two-subsidiary structure was adopted by the Company with a view to minimizing
exposure to potential capital gains taxes on value realisation. The Company holds 100% of the shares of N1C
Resources, which in turn holds 100% of the N2C Resources shares. N2C Resources holds 100% of the shares of
Plateau Resources, purchased by Anooraq on 28 August 2001. Plateau Resources holds the legal rights to the
mineral interests comprising the Platreef Project, which in turn comprises of Boikgantsho JV, Kwanda JV and
Rietfontein Project. Plateau Resources is the main operating entity of the Company. All of the Company’s
underlying assets are held in 50% joint ventures with Anglo Platinum, other than the Rietfontein Project which is
a JV between Anooraq and Ivanhoe Nickel and Platinum Limited. These joint ventures are in turn held through
Plateau Resources.
In January 2004, the Company announced it had agreed to terms whereby the Company and Pelawan would
combine their respective PGM assets, comprising the Company’s PGM projects on the Northern and Western Limbs
of the Bushveld Complex and Pelawan’s 50% participation interest in the Ga-Phasha (previously known as
“Paschaskraal”) Project on the North Eastern Limb of the Bushveld Complex. The Ga-Phasha Project, located
approximately 250 km northeast of Johannesburg, has significant mineral resources already outlined as well as
excellent additional developmental potential.
The mineral title relating to the Ga-Phasha Project is held by Micawber 277. The Ga-Phasha Project is a 50/50 JV
between Plateau Resources and RPM, governed by, among others, the Micawber Shareholders Agreement and the
Ga-Phasha JV Agreement. Work on the Ga-Phasha Project continues toward the preparation of a BFS.
Pursuant to the terms of the Pelawan transaction, Pelawan’s (and/or any other HDPs) ownership (currently
56.25%) of the issued and outstanding common shares of Anooraq, through the Pelawan Trust, must remain at or
above the Statutory Shareholding, as required by the SARB under the Pelawan RTO Share Exchange Agreement
approval and in order to ensure HDP equity ownership compliance in terms of the MPRDA and Mining Charter
associated with Anooraq’s underlying projects. This will ensure Anooraq’s status as an HDP company and
consequently afford Anooraq with additional opportunities and greater flexibility under South Africa’s new mining
legislation.
Further details on the Pelawan transaction and the Pelawan RTO Share Exchange Agreement are contained in
paragraph 15.1 of this Pre-Listing Statement.
Anooraq Mexico is an inactive wholly-owned subsidiary of the Company.
17
Anooraq, through Plateau Resources, exercises control over its assets through various 50/50 joint ventures with its
partners. The JV agreements allow for the joint control of the asset through the establishment and ongoing
operation of a management committee comprising of equal representatives appointed by Plateau Resources and
JV partner. The management committee appoints a mine manager responsible for the management of the project.
The group structure of Anooraq, as briefly described above, is outlined below:
Exhibit 2: Anooraq’s group structure
3.
PROSPECTS OF ANOORAQ AND PURPOSE OF THE LISTING ON THE JSE
Anooraq has a long term objective of becoming a significant PGM producer in South Africa, through organic growth
and project acquisitions as a stand-alone producer or through JVs with other producers.
In line with this objective, Anooraq is currently pursuing two exploration PGM projects in South Africa, the
Ga-Phasha Project and Boikgantsho JV where pre-feasibility studies, including associated drilling, at both of these
projects will continue during 2007 in order to move the projects forward. Furthermore, Anooraq evaluates
co-operation opportunities with various entities, which may or may not lead to corporate action in the future.
The main purposes of the listing on the JSE are to:
• enhance potential investors’ awareness of Anooraq;
• facilitate direct investment in Anooraq by South African investors;
• provide Anooraq with another potential source of capital, including the use of common shares as acquisition
currency;
• provide investors with an additional market for trading Anooraq common shares; and
• comply with the SARB requirement, as more fully described in paragraph 27 of this Pre-Listing Statement,
pursuant to the Pelawan Transaction.
18
In compliance with the JSE Listings Requirements, the purposes of this Pre-Listing Statement are to:
• provide members of the investment community with information relating to Anooraq, its operations, its
directors and management; and
• set out the audited consolidated historical financial information of Anooraq as at 31 December 2005 and 2004,
and for the year ended 31 December 2005, the fourteen-month period ended 31 December 2004 and the year
ended 31 October 2003, and the interim financial information as at 30 September 2006 and for the nine-month
period ended 30 September 2006 so as to enable Anooraq to obtain a secondary listing of its common shares
on the JSE.
4.
OVERVIEW OF ASSETS
The principal properties of Anooraq are the Platreef Project, whose principal project in turn is the Boikgantsho JV,
and the Ga-Phasha Project, located in the Bushveld Complex in South Africa as outlined in Exhibit 3 below.
Exhibit 3: Location of Anooraq’s projects
19
4.1
Platreef Project
The following is a brief discussion on the Platreef Project. A detailed discussion on the Platreef Project is
contained in the technical report in Annexure 12 to this Pre-Listing Statement.
4.1.1 Location and property description
The Platreef Project is located on the Northern Limb of the Bushveld Complex near the town of
Mokopane (formerly Potgietersrust) in South Africa, approximately 275 km northeast of
Johannesburg.
The region is well serviced by the cities of Mokopane and Polokwane (formerly Pietersburg), which
together provide the infrastructure for the substantial PGM mining industry. Highways and railways
connect the region to the major cities, ports and harbours of South Africa.
The property holdings comprise all or parts of 20 mineral properties, called farms in South Africa,
totalling 37 492 ha. The Platreef Project is divided into four geographical regions: the North Block, the
Central Block, the Rietfontein Block and the South Block. Two farms within the Central Block, i.e.
Drenthe and Witrivier and the northern part of Overysel farm, which lies immediately to the south,
now form the basis of the Boikgantsho JV. The North and South Blocks fall under the Kwanda JV.
The Platreef Project area is readily accessible via the main N1 expressway from Johannesburg to the
city of Mokopane, which is approximately 35 km south of the Central Block. Access from Mokopane
to each of the North Block, the Central Block, the Rietfontein Block and the South Block is via paved
Provincial highways. Individual farms, if not directly accessible from Provincial highways, are well
served by a comprehensive network of well-maintained dirt roads and farm tracks.
4.1.2 History
Historic exploration on the properties comprising the Platreef Project was sporadic, even though a
number of drill holes intersected PGM mineralization on the farm Drenthe 778LR. Since 2000,
Anooraq has been exploring the Platreef Project, completing geological and drilling programs in 2000,
2002, 2004 and 2005.
In 2001, African Minerals Limited, now called Ivanhoe Nickel and Platinum Limited (“Ivanplats’), a
private affiliate of Ivanhoe Capital Corporation, drilled 15 852 m in 73 diamond drill holes on the
Rietfontein farm, outlining PGM mineralization over 1.6 km of the strike length of the Platreef.
In late 2003, the Boikgantsho JV was established to explore the Drenthe, Witrivier and the northern
part of Overysel farms. In 2004, Anooraq as operator completed 36 478 m of infill and step out
drilling on the three farms, significantly increasing the size of the Drenthe deposit and identifying a
second deposit on the northern part of Overysel farm. Drilling to September 2004 outlined total
indicated resources in the two deposits of 176.6 million tonnes grading 1.35 g/t 3PGM and 0.13%
nickel, and additional inferred resources in the two deposits of 104.1 million tonnes grading 1.23 g/t
3PGM and 0.14% nickel, both estimated at a US$20 GMV/t cut-off.
A preliminary assessment of the Boikgantsho JV project was completed in March 2005, indicating
positive returns for an open pit mine with a 32 year mine life. This generated a provisional “pit
outline” for mining the Drenthe deposit, and resource estimation variography indicated that vertical
drill holes on a 50 by 50 m grid spacing would be necessary to upgrade the resource within this pit
outline to the “measured” category. To fulfil this requirement, Anooraq drilled 24 418 m of infill and
step out holes between January and June 2005. Subject to delineating pit optimisation the Company
continues with necessary technical programmes to move the Boikgantsho JV towards completion of
its pre-feasibility study and BFS.
These studies will include all necessary assessments relating to metallurgy, processing, infrastructure
and socio-economic requirements for the development of a large-scale open pit mine at the
properties.
In 2002 an airborne magnetic survey and a preliminary geological survey over the North Block, part
of the Kwanda JV, was undertaken. In June 2005, two exploration holes were drilled on the farm
Swerwerskraal, for a total of 535.1 metres. Although Platreef-like rocks were intersected, only
sporadic thin intervals of PGM mineralization were encountered in these drill holes.
4.1.3 Geology and mineralization
The main PGM-bearing unit on the Northern Limb is the Platreef horizon. The broad stratigraphy of
the layered sequence, including the Platreef horizon, can be correlated with the other limbs of the
Bushveld Complex. From mineralogical evidence, and its general stratigraphic position within the
20
Bushveld suite, the Platreef can be considered the broad equivalent of the Merensky Reef. In other
words, the Merensky Reef and the Platreef were likely derived from the same magmatic package,
which was enriched in PGMs.
The westerly-dipping Platreef pyroxenitic rock package is variable in thickness along the strike of the
Northern Limb, varying from 70–90 m in the south to 250–300 m further north. PGM mineralization
is associated with pyrrhotite, chalcopyrite and pentlandite and is variably distributed throughout the
Platreef unit. On Overysel and southern Drenthe, higher grade mineralization is commonly
concentrated in the upper 20–30 m but further north on Drenthe and on Witrivier, this distribution
is less pronounced and higher grade material may occur at several levels throughout the unit.
Anooraq’s 2000 drilling program in the Central Block outlined a mineralized corridor approximately
200-300 m wide at surface and extending from the southern boundary of Drenthe farm, northward
for approximately 2 100 m onto Witrivier farm. PGM concentrations throughout the corridor were
found to be in the range 0.5–2.5 g/t over 10–20 m intervals (true thickness). Subsequent diamond
drilling in 2002, 2003, 2004 and 2005 confirmed that mineralization also persisted to the south of
Drenthe, onto the northern part of the Overysel farm, extending as far as the southern boundary of
the expanded Platreef property. As a result of the substantial drill programs in 2004 and 2005 the
earlier identification of a mineralized corridor has been confirmed but with a significantly improved
level of confidence accompanying the increase in drill hole density. Furthermore, it is now recognised
that on northern Drenthe-Witrivier, at least two or more 10–20 m intervals or a single 40–50 m thick
interval are frequently present. Nevertheless, mineralization still remains open to the north of the
Drenthe deposit and down-dip to the west along much of the strike length of the Platreef on
Overysel, Drenthe and Witrivier.
4.1.4 Surface rights
No surface rights have been secured on the Anooraq property to date. Once the required area has
been established, it would be necessary to negotiate a purchase agreement with the surface rights
owner(s). Prices are expected to range between R2 000/ha and R5 000/ha depending on the
infrastructure required to be developed on the farms.
4.1.5 Mining and prospecting rights
A schedule of Anooraq’s mining and prospecting rights is contained in paragraph 3 of Annexure 7 to
this Pre-Listing Statement. This schedule is derived from a legal opinion report on the Company’s
rights at the Platreef Project, written by Mike Harrison of Harrison Attorneys, an admitted attorney
and specialist in the area of South African mining and mineral law for the past 11 years.
4.1.6 Rietfontein Block
On 10 October 2001, Plateau Resources entered into an agreement with African Minerals Limited,
now Ivanplats, whereby Ivanplats had the right to earn a 50% JV interest in the Company’s 2 900 ha
Rietfontein 2KS Farm. Under the terms of this agreement, Ivanplats was to incur at least C$750 000
in expenditures pursuant to exploration activities undertaken on Rietfontein 2KS in accordance with
an approved program in each of the ensuing two years (of which the year one program has been
completed) to obtain the right to form a 50/50 JV with the Company on Rietfontein 2KS. There
continues disagreement over whether Ivanplats ever presented an “exploration program” as
contemplated by the parties and their agreement. Further disagreement exists with respect to the
expenditure budgets, compilation and analysis of the exploration results, and the overall adequacy
and completeness of Ivanplats’ exploration activities, which affects whether Ivanplats completed its
earn-in requirements. Plateau Resources and Ivanplats are currently in an arbitration process,
pursuant to the terms of the earn-in agreement. The outcome of the arbitration is not currently
determinable.
4.1.7 Kwanda JV (North Block and South Block)
On 16 May 2002, Plateau Resources completed an agreement with RPM for the right to acquire up
to an 80% interest in twelve new PGM farms located on the Northern Limb of the Bushveld Complex,
which farms are now known as the Kwanda JV. Under the agreements with RPM, the Company has
acquired an initial 50% interest in the PGM rights to the twelve farms and can maintain this interest
by making staged exploration expenditure totalling R25 million within five years. The Company is
required to spend R2.5 million in year one (which has been completed), R5 million in each of years
two, three, and four, and R7.5 million in year five. The Company has not completed its exploration
expenditure requirement from year two to four, and the JV parties have mutually agreed to suspend
indefinitely any outstanding or future expenditure in respect of the Kwanda JV.
21
When a mineral resource is identified, the Company can earn an additional 30% interest by bringing
the property into commercial production. RPM will retain a 20% interest in the Kwanda JV. The
agreements also include plans to involve local communities in future development of the properties.
Any participation in the Kwanda JV by local and regional communities will be provided out of RPM’s
interest and any participation by a HDP partner will be provided out of the Company’s interest.
However, participation by a HDP partner is unlikely since Anooraq is a BEE company.
4.1.8 Boikgantsho JV (Drenthe, Witrivier and Overysel North)
The Boikgantsho JV comprises three properties, namely, Drenthe 778LR, Witrivier 777LR and Overysel
North 815LR. The Boikgantsho JV property outline is shown in Exhibit 4 below.
Exhibit 4: Boikgantsho JV property outline
The Platreef technical report is attached as Annexure 12 to this Pre-Listing Statement.
4.1.8.1 Boikgantsho JV Agreement
On 26 November 2003, Plateau Resources entered into the Boikgantsho JV with PPRust. The
Boikgantsho JV was formed to explore and develop PGM, gold and nickel mineralization on
the Company’s Drenthe 778LR and Witrivier 777LR farms and a portion of PPRust’s adjacent
Overysel North 815LR farm. These farms are located on the Northern Limb of the Bushveld
Complex, situated immediately north of Anglo Platinum’s PP Rust North project expansion
area.
The objective of the Boikgantsho JV is to explore and develop a large-scale, open pit deposit.
The Company contributed its rights to the Drenthe 778LR Farm on which a large PGM-nickel
resource has been outlined in the Drenthe deposit, and will contribute the Witrivier 777LR
farm if the deposit extends north on to Witrivier.
PPRust is contributing its rights to the northern portion of the Overysel 815LR farm, lying
south of and contiguous to the Drenthe 778LR farm.
Pursuant to the terms of the Boikgantsho JV, Anooraq and Anglo Platinum formed an initial
50/50 JV to explore these farms for a period of up to five years. During that period, Anooraq
will operate the exploration programs, and spend up to R12.35 million on behalf of the
Boikgantsho JV, which amount has already been spent to date. Anooraq will then have the
option to proceed on a year-by-year basis and to take the project to a BFS.
Once the BFS has been completed, the parties, by agreement, may proceed to exploitation
subject to relevant regulatory requirements. If both partners decide to proceed, then a joint
management committee will be established to oversee development and operations. At
commencement of exploitation the Boikgantsho JV interest allotted to each of Anooraq and
Anglo Platinum will be determined in proportion to the relative value of the metals
contained in each contributed property as reflected in the BFS. Anooraq or Anglo Platinum,
as the case may be, each has the right to make a cash payment to the other party or to fund
additional capital contributions to equalise their respective contributions.
22
Should Anooraq choose not to proceed, then Anglo Platinum will have the option to acquire
Anooraq’s interest at a price equal to the aggregate of:
• the NPV of exploiting Anooraq’s mineral rights as a stand alone mining operation, by
applying an agreed discount rate, as determined in the BFS; and
• all exploration expenditures incurred by Anooraq up to the completion of the BFS.
Should Anglo Platinum decide not to contribute to exploitation, it will remain entitled to be
diluted to a minimum 12.5% non-contributory interest, adjusted depending on the final
PGM royalty established under the Royalty Bill, to a maximum of 15%.
Anglo Platinum has undertaken to enter into a PGM Ore or Concentrate Purchase and
Disposal Agreement at the exploitation phase, based on standard commercial terms,
whereby PGM produced from the operation would be treated at Anglo Platinum’s processing
facilities.
4.1.8.2 Boikgantsho JV mineral resource estimates
The 2004 program under the Boikgantsho JV was designed to advance the project studies to
the pre-feasibility stage. Two phases of drilling were completed to outline the mineral
resource and to provide samples for metallurgical testing. From January to mid September
2004, 28 570 m were drilled, 46 holes (19 570 m) on the Drenthe Farm, 27 holes (5 261 m)
on the Witrivier Farm and 64 holes (12 739 m) on the northern part of the Overysel Farm.
Mineral resource estimates were completed for the Drenthe and Overysel North deposits as
outlined by drilling to mid-September 2004.
Boikgantsho JV indicated mineral resources for the deposits as announced in November
2004 are tabulated below:
Deposit
Tonnes 3PGM
(Mt)
(g/t)
Pt
(g/t)
Pd
(g/t)
Au
(g/t)
Drenthe
Overysel North
Total
132.24
44.42
176.66
0.53
0.67
0.57
0.62
0.87
0.69
0.09
0.10
0.09
1.25
1.64
1.35
Ni
(%)
0.14
0.10
0.13
Cu 3PGM
(%) (Moz)
0.09
0.06
0.08
5.31
2.34
7.65
Exhibit 5: Boikgantsho JV November 2004 indicated mineral resource estimates
Boikgantsho JV inferred mineral resources for the deposits as announced in November 2004
are tabulated below:
Deposit
Tonnes 3PGM
(Mt)
(g/t)
Pt
(g/t)
Pd
(g/t)
Au
(g/t)
Drenthe
Overysel North
Total
88.64
15.71
104.08
0.49
0.65
0.52
0.58
0.88
0.63
0.09
0.10
0.09
1.16
1.63
1.23
Ni
(%)
0.15
0.11
0.14
Cu 3PGM
(%) (Moz)
0.09
0.06
0.09
3.32
0.81
4.12
Exhibit 6: Boikgantsho JV November 2004 inferred mineral resource estimates
The mineral resources above were estimated at a US$20 GMV/t cut-off by Deon van der
Heever, Pr.Sci.Nat., who is an independent qualified person as defined by Canadian National
Instrument 43-101.
Some of the drill hole samples used have been re-analyzed for Ni since the mineral resource
estimate was done, but the results do not indicate a significant change in grade. A technical
report dated December 2004 describing the mineral resource estimate is filed at
www.sedar.com
4.1.8.3 Preliminary Assessment
In March 2005, an updated Preliminary Assessment of the potential economics of open pit
mining the Drenthe and Overysel North deposits was completed. The Preliminary
Assessment was based on a conventional open pit mining and milling operation with a
32-year mine life. Currencies used were US$ and R, with an R:US$ exchange ratio of 7:1. Total
in-pit resources of 256 Mt grading 1.03 g/t 3PGM (0.43 g/t Pt, 0.52 g/t Pd, 0.08 g/t Au),
0.11% Ni and 0.07% Cu were estimated in two main pit areas at a US$10.50 GMV/t cut-off.
For the study, the in-pit resource was capped for a mine life of 32 years or 160 Mt grading
1.05 g/t 3PGM (0.44 g/t Pt, 0.53 g/t Pd, 0.08 g/t Au), 0.12% Ni and 0.08% Cu.
23
The mill feed rate for the Preliminary Assessment was 5 Mt/year. The average head grade
ranged from 1.1 to 1.4 g/t 3PGM in the first five years of mining and 0.8 to 1.0 g/t in the last
five years. Metallurgical studies on core samples showed good results for a conventional mill
circuit, comprising crushing, grinding and two-stage flotation. From this work, the following
head grade driven concentrator recoveries were used in the study: platinum 75%, palladium
75%, gold 75%, copper 80% and nickel 75%.
Expected long term metal price assumptions of US$650/oz for Pt, US$250/oz for Pd,
US$375/oz for Au, US$4.00/lb for Ni and US$1.00/lb for Cu were used for the base case. The
pre-tax and pre-royalty economic model forecast the NPV of the project at a 5% real
discount rate of US$300.5 million and at a 10% real discount rate the NPV was forecast at
US$138.8 million with an IRR of 25%. The estimated capital cost was US$152.8 million with
a payback of 3.25 years. The total operating cost was estimated at US$9.52/t milled.
At the March 2005 metal prices of US$850/oz for Pt, US$180/oz for Pd, US$400/oz for Au,
US$6.60/lb for Ni and US$1.40/lb for Cu, and a R:US$ exchange rate of 6:1, the economics
for the project were even more robust.
The Preliminary Assessment was based on indicated and inferred mineral resources outlined
in paragraph 4.1.8.2 above. Mineral resources for these deposits were announced in
November 2004 at a US$20 GMV/t cut-off; however, the Preliminary Assessment indicated
favourable financial results using a GMV/t cut-off grade of approximately US$10.50. The
Preliminary Assessment was preliminary in nature and it included inferred mineral resources
that were considered too speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral reserves, and there is
no certainty that the Preliminary Assessment will be realized.
Mining costs for the study were based on budget estimates provided by South African mining
contractors and processing costs were derived from studies by Dowding Reynard &
Associates, the Company’s metallurgical consultants in South Africa. Administrative and
environmental costs were based on estimates from contract submissions.
A technical report on this Preliminary Assessment is filed at www.sedar.com
4.1.8.4 Pre-feasibility study
Following an extensive drill programme and technical assessment, a pre-feasibility study has
been initiated, mainly following up on the recommendations from the Preliminary
Assessment.
Infill drilling program
Drilling in 2005 focused on the Drenthe deposit. The program tested the entire area within
the provisional open pit design for the Drenthe deposit that was used for the March 2005
Preliminary Assessment. 136 vertical holes, totalling approximately 24 400 m, were drilled
at 50 m intervals along 50 m spaced lines. The program confirmed the continuity of the PGM
mineralization within the Drenthe deposit.
Infrastructure
Representatives of the Company are participating in the Olifants River Joint Water Forum.
The purpose is to ensure that the project’s water needs are communicated to the South
African Department of Water Affairs so that they are taken into account when planning or
prioritising of water resource projects for the region is undertaken.
Community engagement
A dialogue has been established between the Company and the local Drenthe community,
which will be affected by mining activities should development proceed. This specific
community will need to be relocated before a mine could be developed. The community has
elected a committee to represent them in these matters, and regular meetings are held
between the parties.
2007 plan of operation
The new mineral resource model is expected to be completed in the near future. Preliminary
results indicate that the mineral resources estimated in November 2004 have been upgraded
in category type and, once the mineral resource model has been finalised, these will be
utilised for the pre-feasibility study and BFS completion purposes.
24
4.2
Ga-Phasha Project
4.2.1 Location and property description
The Ga-Phasha Project (formerly the Paschaskraal Project), a PGM project, is located on the North
Eastern Limb of the Bushveld Complex, approximately 45 km north-northwest of the Limpopo
Province town of Steelpoort and 250 km northeast of Johannesburg.
The project area consists of four farms, Paschaskraal, Klipfontein, De Kamp, and Avoca, which cover an
area of approximately 9 700 ha. It lies immediately between the Lebowa Platinum Mine to the West
and Twickenham Platinum Mine to the East, both of which are owned by Anglo Platinum. Anglo
Platinum is currently undertaking development work at Lebowa Platinum Mine’s Brakfontein farm in
order to effect a Merensky Reef replacement programme. It continues with small scale mining
operations at Twickenham Platinum Mine, with a view to improving confidence levels in the proposed
mining method and geological model.
The location of the Ga-Phasha Project area is shown in Exhibit 7 below:
Exhibit 7: Location of the Ga-Phasha Project area
The Ga-Phasha Project site is located in a region of sparse development with little infrastructure.
Access to the site is gained via gravel roads from Steelpoort or Burgersfort to the southeast and from
Polokwane approximately 80 km to the northwest.
Recent development at the neighbouring Twickenham Platinum Mine, has improved the local
infrastructure considerably. This includes paved roads, power and water supplies.
The Ga-Phasha technical report is attached as Annexure 15 to this Pre-Listing Statement.
25
4.2.2 History
There has been a considerable amount of exploration on the Klipfontein and Paschaskraal farms by
past operators such as JCI Limited, Anglovaal Limited and Anglo Platinum. A total of 327 drill holes
have been completed to date, of which 108 intersected the Merensky Reef, and 176 intersected the
UG2 Reef.
Initial metallurgical testwork by Anglo Platinum indicated a very good flotation response with
negligible effects from dilution and with PGM recoveries ranging from 92.7% to 96.5%. The good
flotation response was attributed to the predominant association of PGM with base metal sulphides,
which are coarser than those present in UG2 in the Western Limb of the Bushveld Complex. Nickel,
copper and sulphur recoveries were good for UG2 Reef type ore, namely: 14%–24% Ni, 77%–86% Cu
and 83%–90% sulphur.
Anglo Platinum prepared a detailed pre-feasibility study on the Paschaskraal Project, as it was
formerly known, in late 2002. This study envisioned an underground mine very similar to that being
developed on the neighbouring Twickenham Platinum Mine, using down dip semi-mechanized reef
mining and access by twin shaft declines. Each decline shaft comprised three barrels: a decline ramp
for equipment, a conveyor decline, and a chairlift decline for moving personnel. Ore was to be treated
at a concentrator situated at the Twickenham farm. Based on twin declines producing approximately
100 000 tpm from the UG2 Reef only, Anglo Platinum concluded the project was an attractive
investment. Since this study was completed the Paschaskraal Project was combined with the down
dip farms, Avoca and De Kamp, contributed by Pelawan and became known as the Ga-Phasha Project.
In September 2004, Anglo Platinum signed the Ga-Phasha JV agreement to develop the Ga-Phasha
Project. On closing of the Pelawan transaction Plateau Resources effectively replaced Pelawan as
Anglo Platinum’s BEE JV partner on the project.
4.2.3 Geology and mineralisation
The Ga-Phasha Project area is situated on the North Eastern Limb of the Bushveld Complex and is
underlain by rocks of the Upper Critical and Main Zones. The Main Zone is comprised of gabbros and
ferro gabbros (iron and magnesium rich igneous rocks), which occupy most of the central and southeastern parts of the Lulu mountain range.
The two platinum-bearing horizons at Ga-Phasha are the UG2 chromitite and the Merensky Reef,
both of which occur within the Upper Critical Zone. These rocks form the range of hills along the
north-eastern boundary of the project area, through which the undulating outcrop of the UG2 Reef
can be traced. The Merensky Reef sub-crops beneath a thick layer of overburden in the centre of the
project area.
The sequence strikes northwest-southeast and dips in a westerly direction towards the centre of the
Bushveld Complex. The dip decreases on a regional scale from north to south, ranging from
approximately 30 degrees near the Olifants River in the north, to approximately 10 degrees near the
Steelpoort Fault to the south. The project area is located some 45 km north of the Steelpoort Fault
and 25 km south of the Olifants River Fault. The Schwerin Fault lies approximately 10 km to the east
but does not appear to have had any influence on the local Bushveld Complex stratigraphy.
The two most important stratigraphic successions within the Upper Critical Zone are the Upper
Group chromitite successions and the Merensky Reef. In general, the Merensky Reef is separated from
the UG2 chromitite horizon (also called the UG2 Reef) by a package of norites and anorthosites,
averaging some 390 m in thickness.
At Ga-Phasha the UG2 chromitite layer averages 61 cm in thickness and is overlain by medium
grained feldspathic pyroxenite. Chromitite-stringers of variable thickness occur in the immediate
hangingwall of the reef horizon and are commonly referred to as the Leader seams of the UG2.
4.2.4 Mining, prospecting and surface rights
A schedule of Anooraq’s mining and prospecting rights is contained in paragraph 3 of Annexure 7 to
this Pre-Listing Statement. This schedule is derived from a legal opinion report on the Company’s
rights at the Ga-Phasha Project, written by Professor Michael Dale of Deneys Reitz Inc., a professor in
the area of South African mining and mineral law.
No surface rights have been secured on the Ga-Phasha Project area to date. Once the required area
has been established, it would be necessary to negotiate a purchase agreement with the surface
rights owner(s). Prices are expected to range between R2 000/ha and R5 000/ha depending on the
infrastructure required to be developed on the farms.
26
4.2.5 Pelawan RTO Share Exchange Agreement
In January 2004, the Company entered into the Pelawan RTO Share Exchange Agreement, pursuant to
which the Company and Pelawan agreed to combine their respective PGM assets, comprising the
Company’s Northern and Western Limb PGM projects and Pelawan’s 50% participation interest in the
Ga-Phasha Project on the Eastern Limb of the Bushveld Complex. Further details of the Pelawan RTO
Share Exchange Agreement are set out in paragraph 15.1 of this Pre-Listing Statement. The Pelawan
transaction was completed on 30 September 2004.
4.2.6 Mineral resource estimates
A total of 327 diamond drill holes had been drilled on the farms Paschaskraal and Klipfontein to the
date of the January 2004 mineral resource estimate: 108 drill holes intersected the Merensky Reef;
176 drill holes intersected the UG2 Reef; and 83 drill holes were drilled for geotechnical purposes
mainly in connection with the originally planned shaft in the southern portion of the Paschaskraal
Farm.
All drill holes used for the mineral resource estimation were vertical and most boreholes were drilled
BQ core size (36.4 mm diameter). In some instances, where ground conditions were poor or core
recoveries in the reef zones were not representative, a NQ core size (47.6 mm diameter) hole was
drilled nearby. The average vertical thickness of the UG2 Reef is 0.74 m and of the Merensky Reef
is 1.17 m.
The January 2004 mineral resource estimate for the Ga-Phasha Project utilized drill hole information
made available by Anglo Platinum from 299 drill holes drilled between 1966 and 2002. Of these
299 drill holes, 41 and 42 holes were used to classify measured and indicated mineral resources
respectively within the UG2 Reef horizon, 40 and 21 holes were used to classify measured and
indicated mineral resources respectively within the Merensky Reef horizon.
In-situ mineral resource figures announced in February 2004 for the farms Paschaskraal and
Klipfontein for the UG2 and Merensky Reefs are summarized in Exhibits 8 and 9 respectively. The
mineral resource estimate excludes the first 40 m below surface, which is considered as an oxidized
zone. A 40% geological loss factor was applied, which includes 10% for faulting, 15% for potholes,
10% for intrusions and 5% for iron replacement bodies. Even though dykes swarms effect the area
more than on the adjoining properties, the mineral resource figures are regarded as conservative,
since the industry average due to these features is around 20%–30%.
January 2004 measured and indicated mineral resource estimates are shown below:
Deposit and
Cut-off
Tonnes
(Mt)
4PG
(g/t)
Pt
(g/t)
Pd
(g/t)
Au
(g/t)
Rh 4PGM
(g/t) (Moz)
UG2 Reef @ 4 g/t cut-off,
Paschaskraal and Klipfontein farms
65.7
6.97
3.07
3.28
0.18
0.44
14.72
Merensky Reef @ 2 g/t cut-off,
43.3
4.39
1.93
2.06
0.11
0.28
6.11
Exhibit 8: Ga-Phasha Project January 2004 measured and indicated mineral resource estimates
January 2004 inferred mineral resource estimates are shown below:
Deposit and
Cut-off
Tonnes
(Mt)
4PG
(g/t)
Pt
(g/t)
Pd
(g/t)
Au
(g/t)
Rh 4PGM
(g/t) (Moz)
UG2 Reef @ 4 g/t cut-off,
33.9
7.20
3.17
3.38
0.19
0.45
7.84
Merensky Reef @ 2 g/t cut-off,
39.8
4.28
1.88
2.01
0.11
0.27
5.48
UG2 Reef @ 4 g/t cut-off, Avoca and
De Kamp farms
77.6
7.05
–
–
–
–
17.59
UG2 Reef @ 4 g/t cut-off, Avoca and
De Kamp farms
97.6
4.34
–
–
–
–
13.62
Exhibit 9: Ga-Phasha Project January 2004 inferred mineral resource estimates
27
Anooraq technical staff carried out a due diligence assessment of the Ga-Phasha Project with the
assistance of certain South African consultants. The independent qualified person for the resource
estimate is Eugene Siepker, Pr.Sci.Nat. A technical report dated August 2004 describing the mineral
resource estimate is filed at www.sedar.com. This technical report recommended the following work
program:
• updating the mineral resource model integrating the additional drilling that has been carried out in
2003–2004;
• additional drilling in those areas that are currently outlined as inferred, and to upgrade the
indicated mineral resources to a measured category;
• additional exploration and analysis to better define the geological losses so that the current 40%
estimate can be refined and/or reduced; and
• data compilation, metallurgical and geo-technical testing, and environmental planning, to prepare
for feasibility studies.
4.2.7 Current Ga-Phasha Project activities
Under a preliminary development plan, proposed in 2001–2002, the UG2 Reef was seen as the
principal target reef horizon for mining, with mineralization being processed through a joint
concentrator situated on Anglo Platinum’s adjacent Twickenham property. However, Anglo Platinum
and Anooraq are currently of the view that the value of Ga-Phasha could be optimised by exploiting
both the Merensky and UG2 Reef horizons. To this end, Anglo Platinum and Anooraq announced on
14 December 2005 that a programme involving further drilling of the Merensky Reef has been
initiated. This programme was completed in April 2006.
A review of the work undertaken in the programme mentioned above was completed in October
2006. An increased number of approaches were considered to optimise mining of the deposits at the
Ga-Phasha Project. As a result of the findings, the JV partners have now agreed to continue with
studies to advance the project and have appointed an independent project manager to conduct a prefeasibility study on the Ga-Phasha Project, which is scheduled for completion by the end of the first
quarter of 2007. A detailed BFS will be conducted after the pre-feasibility study.
The programme review mentioned above confirmed that the UG2 Reef deposit remains the primary
focus for development and the Merensky Reef warrants further study through additional drilling
programmes. Therefore, Anglo Platinum and Anooraq have agreed that the pre-feasibility study will
consist of a phase 1 study to exploit the UG2 Reef to a depth of some 650 m below surface, and will
also seek to identify a single preferred option by which to proceed to the BFS. The pre-feasibility study
will also contemplate optimising economies of scale between the JV partners’ operations on the
North Eastern Limb of the Bushveld Complex, and in that regard, will evaluate the possible usage of
joint infrastructure and processing facilities between Anglo Platinum’s Twickenham Platinum Mine
and the Ga-Phasha Project.
Read, Swatman & Voigt (Proprietary) Limited, a highly reputable South African engineering and
project management company that serves the mining, metallurgical and industrial sectors in South
Africa and the rest of the world, has been appointed as the independent project manager to conduct
the pre-feasibility study. With a staff complement of 300 people, this company has conducted
assessments of numerous PGM projects on the Western and Eastern Limbs of the Bushveld Complex.
Some of its key projects include the Lonmin Platinum Limited’s K4 Shaft project, the Impala Platinum
Limited’s 16 Shaft project and the RPM’s UG2 expansion project.
Funding to BFS
Anglo Platinum, through its wholly-owned subsidiary RPM, and Anooraq concluded a financing
agreement on 1 November 2006 relating to a loan of R70 million from RPM to Plateau Resources.
Plateau Resources will utilise the majority of the funding proceeds to advance the Ga-Phasha Project
to BFS, as part of Anooraq’s objective of becoming a substantial PGM production company.
Pursuant to security agreements entered into in connection with the loan, Plateau Resources has
ceded as security its 50% interest in Micawber 277 relating to the Ga-Phasha Project. The final
repayment date for the loan will be 30 September 2010, however the agreement does allow for early
repayment thereof. The loan bears interest at prime plus two percent, as quoted by the Standard Bank
of South Africa Limited. The first interest payment will become due and payable in 14 months after
the date of the advancement of the funds, with other subsequent interest payments due and payable
in six month intervals thereafter.
28
5.
MINING REGULATORY REGIME IN SOUTH AFRICA
Anooraq’s subsidiaries in South Africa are subject to a variety of mining legislation and regulations. Some of the
principal legislation and regulations regulating the mining industry in South Africa are set out below:
5.1
MPRDA
In terms of the previous mining legislation in South Africa, mineral rights were held privately and in some
instances by the State. The MPRDA now vests all mineral rights in the State. One of the objects of the MPRDA
is to provide for security of tenure in respect of prospecting, exploration and mining.
Through the transitional provisions included in the MPRDA, mining companies can convert their existing “old
order” rights to prospect and/or mine (previously granted under the now repealed Minerals Act) to “new
order” rights introduced by the MPRDA. The transitional provisions contemplate three categories of old order
rights, namely:
• unused “old order” rights, which are mineral rights, prospecting rights or mining rights in respect of which
no prospecting or mining activities took place as at 1 May 2004;
• “old order” prospecting rights, which are rights to prospect in respect of which a prospecting permit, lease,
consent, license or right was obtained under the Minerals Act and prospecting took place as at 1 May
2004; and
• “old order” mining rights, which are rights to mine in respect of which a mining authorisation, lease,
consent, license or right was obtained under the Minerals Act and actual mining activities took place as at
1 May 2004.
Prior to 30 April 2005, holders of unused “old order” rights were required to apply for prospecting or mining
rights under the MPRDA to replace the rights they held before 1 May 2004.
With regard to “old order” prospecting and mining rights, any underlying rights to prospect or mine, including
prospecting permits or mining authorisations granted under the Minerals Act, continued and will continue to
be valid for the period granted under the old legislation, subject to a maximum period of two and five years
respectively beginning on 1 May 2004. In order to continue with their prospecting or mining operations, the
holders of “old order” prospecting or mining rights are required to apply for the conversion of these rights to
the “new order” prospecting or mining rights to be issued under the MPRDA within the aforementioned
periods. In this regard the holders of the “old order” prospecting or mining rights have an exclusive right to
apply for, and subject to compliance with the MPRDA, to be granted conversion of their rights into “new
order” rights.
Under the MPRDA, prospecting rights will be granted initially for a maximum period of five years, and can be
renewed once on application, for a further period not exceeding three years.
The holder of a prospecting right granted under the MPRDA has the exclusive right to apply for, and subject
to compliance with the requirements of the MPRDA, to be granted, a mining right in respect of the mineral
and prospecting area in question.
The MPRDA provides that mining rights will be valid for a maximum period of 30 years and can be renewed,
upon application, for further periods, each of which may not exceed 30 years. Provision is made for the
granting of retention permits in circumstances where prospecting activities and feasibility studies have been
completed but mining is not commercially viable due to prevailing market conditions. These permits, which
will have a maximum term of three years, are renewable only once, upon application, for a further period not
exceeding two years.
A wide range of factors and principles, including proposals relating to BEE, social responsibility and evidence
of an applicant’s ability to conduct mining optimally, will be pre-requisites for all applications.
The mining and prospecting rights held by Anooraq, its subsidiaries and JV partners are detailed in Annexure
7 to this Pre-Listing Statement.
5.2
Mining Charter
Section 100(2) of the MPRDA required the Minister of Minerals and Energy to develop the Mining Charter
within six months from the date on which the MPRDA took effect. Subsequently, the South African
Government appointed a task team to develop the Mining Charter, which was signed on 11 October 2002
by the Minister of the DME, representatives of the mining industry and the National Union of Mineworkers.
29
The Mining Charter embraces a range of criteria against which applications for prospecting rights, mining
rights, and applications for conversion of “old order” rights will be considered. These criteria include issues
such as human resources development, employment equity, procurement, community and rural
development, and HDP ownership of mining assets.
On the issue of ownership specifically, the Mining Charter requires that mining companies achieve HDP
ownership of mining assets of 15% within five years and 26% within 10 years – as at 1 May 2009 and 1 May
2014, respectively. The Mining Charter envisages that transactions pursuant to the required HDP ownership
status will take place in a transparent manner and at fair market value, with stakeholders meeting after five
years to review progress in achieving the 26% target. Anooraq has exceeded the 26% ownership requirement
in its mineral assets through Pelawan’s shareholding in Anooraq, through the Pelawan Trust, currently at
56.25%. Pelawan’s (and/or any other HDPs) shareholding in Anooraq cannot be diluted to below the
Statutory Shareholding as stipulated by the SARB.
On the issue of employment equity, the Mining Charter requires that mining companies aspire to a minimum
of 40% HDP participation in management within five years. The Mining Charter also requires higher levels of
inclusiveness and advancement of women, and mining companies must aspire to a minimum of 10% of
woman participation in the mining industry within five years. Mining companies are required to demonstrate
their commitment to achieving these levels in their employment equity plans.
When considering applications for the conversion of “old order” rights into “new order” rights, the
Government will take a ‘scorecard” approach to the different facets of promoting the objectives of the
Mining Charter. The scorecard, promulgated by the DME along with the Mining Charter, covers human
resources development, employment equity, migrant labour, mine community and rural development,
housing and living conditions, procurement, ownership and JVs, and beneficiation.
The scorecard does not indicate the relative significance of each item, nor does it provide a particular score
that an applicant must achieve in order to be in compliance with the Mining Charter and be granted “new
order” rights in terms of the MPRDA (except in the areas of ownership and employment equity as discussed
above). However, the scorecard does provide that a company must state targets for compliance within five
years (to 1 May 2009) and 10 years (to 1 May 2014), respectively.
5.3
Royalty Bill
In terms of the draft Royalty Bill dated 11 October 2006, the proposed royalties payable to the Government
of South Africa on revenues from mining operations within South Africa are 3% for refined PGMs and 1.5%
for refined gold.
The royalties will be tax deductible. The Royalty Bill will be effective from 1 May 2009.
5.4
Land Rights Act
Land claims are made by claimants under the Land Rights Act. According to section 1 of the Land Rights Act,
persons are entitled to restitution of a right in land if they were dispossessed of a right in land after 19 June
1913 as a result of past racially discriminatory laws or practices. Land claims had to be lodged with the Land
Claims Commission, established in terms of the Land Rights Act, by claimants by no later than 31 December
1998.
Section 11 of the Land Rights Act stipulates that if the Regional Land Claims Commissioner is satisfied that:
• the land claim has been lodged in the prescribed manner;
• the claimant is entitled to claim under section 2 of the Land Rights Act (claimant has not been
compensated in another manner, etc.); and
• the land claim is not frivolous or vexatious,
then the Regional Land Claims Commissioner will publish a notice in the Government Gazette and advise the
owner of the land of the land claim that has been lodged.
The Regional Land Claims Commissioner is then empowered to investigate the land claim, and to mediate if
there are competing land claims over the land or if the landowner disputes the land claim (section 13 of the
Land Rights Act). The Regional Land Claims Commissioner may refer the matter to the Land Claims Court,
established in terms of the Land Rights Act, for a ruling if on completion of the investigation, the parties to
any dispute arising from the land claim agree in writing that it is not possible to settle the land claim by
mediation and negotiation (section 14 of the Land Rights Act).
30
The Chief Land Claims Commissioner is empowered by section 16 of the Land Rights Act to establish rules
regarding the procedure to be followed by the Land Claims Commission in the land claims validation
procedure. The rules established by the Chief Land Claims Commissioner in terms of this section include that
the Regional Land Claims Commissioner will:
• establish the date and the circumstances of the dispossession of the right in such land (regulation 5d
Government Notice 703, Government Gazette 16407 of 12 May 1995); and
• investigate the nature of the right in the land claimed and obtain proof thereof (regulation 5g,
Government Notice 703, Government Gazette 16407 of 12 May 1995).
Once the land claim has been gazetted by the Regional Land Claims Commissioner, any person who wishes
to develop the land must give one month’s notice in writing to the Regional Land Claims Commissioner
(section 7 A of the Land Rights Act).
To the best knowledge of the Company there are no gazetted land claims on any of its surface rights or land
where its mineral properties are situated.
31
Part B: Directors and senior management
6.
DIRECTORS AND SENIOR MANAGEMENT OF ANOORAQ
6.1
Directors of Anooraq
The names, ages, qualifications, nationalities, business addresses, functions and brief curriculum vitae of the
directors of Anooraq are outlined below:
32
Directors
Business address
Abbreviated curriculum vitae
Scott D. Cousens* (41)
Canadian
Director
Suite 1020-800
West Pender Street
Vancouver British
Columbia, Canada
V6C 2V6
Scott D. Cousens provides management, technical and financial services to a
number of publicly traded companies. Mr. Cousens’ focus since 1991 has been
the development of relationships within the international investment
community. Substantial financings and subsequent corporate success has
established strong ties with North American, European and Asian investors. In
addition to financing initiatives he also oversees the corporate
communications programs for the public companies to which HDI provides
services. Some of the companies of which he is a director are Amarc Resources
Ltd, Continental Minerals Corporation and Farallon Resources Ltd.
Robert A. Dickinson** (57)
B.Sc., M.Sc.
Canadian
Co-Chairman of the Board
and Director
Suite 1020-800
West Pender Street
Vancouver British
Columbia, Canada
V6C 2V6
Robert A. Dickinson is an economic geologist who serves as a member of
management of several mineral exploration companies, primarily those for
whom HDI provides services. He holds a Bachelor of Science degree (Hons.
Geology), and a Master of Science degree (Business Administration – Finance)
from the University of British Columbia. Mr. Dickinson has also been active in
mineral exploration over 40 years. He is a director of HDI. He is also President
and Director of United Mineral Services Ltd, a private investment company
and is the Co-Chairman and Director of Gibraltar Mines Ltd a private mining
company, which is a wholly owned subsidiary of Taseko Mines Ltd. Some of the
companies of which he is a director are Farallon Resources Ltd, Great Basin
Gold Ltd and Northern Dynasty Minerals Ltd.
David Elliot*** (61)
BCom, CA
Canadian
Director
Suite 1020-800
West Pender Street
Vancouver British
Columbia, Canada
V6C 2V6
David Elliott graduated from the University of British Columbia with a
Bachelor of Commerce degree and then acquired a Chartered Accountant
designation with KPMG LLP. Mr. Elliott joined BC Sugar Company in 1976,
working in a number of senior positions before becoming President and Chief
Operating Officer of the operating subsidiary, Rogers Sugar. In 1997, he joined
Lantic Sugar in Toronto as Executive Vice President. He also served as
Chairman of the Canadian Sugar Institute. He became President and Chief
Operating Officer of the International Group based in St Louis, Missouri in
1999, a company involved with food distribution as well as manufacturing and
distribution of pet and animal feed. For several years, he worked with
companies developing e-mail and data management services. Mr. Elliott also
serves on the boards of the BC Cancer Foundation and the University of
BC Alumni Association.
Wayne Kirk*** (63)
BA, LLB
American
Director
Suite 1020-800
West Pender Street
Vancouver British
Columbia, Canada
V6C 2V6
Wayne Kirk is a retired California State Attorney and Professional Consultant.
With over 30 years’ professional experience Mr. Kirk also has over nine years
senior executive experience in the mining industry. Mr. Kirk is a citizen of the
United States and is a resident of California. A Harvard University graduate,
Mr. Kirk received his law degree in 1968. From 1992 to 2001 Mr. Kirk was the
Vice President, General Counsel and Corporate Secretary of Homestake Mining
Company. Prior to his retirement in June 2004 he spent two years as Special
Counsel for the law firm Thelen Reid & Priest in San Francisco. During the past
two years, Mr. Kirk has been, a director of the following public companies:
Great Basin Gold Ltd, Northern Dynasty Minerals Ltd and Taseko Mines
Limited.
Directors
Business address
Phumzile Langeni* (32)
BCom
South African
Director, Investor relations
1st Floor
43 Wierda Road West
Wierda Valley
Sandton, 2196
Prior to joining Anooraq, Phumzile Langeni was an executive director of BJM
Securities; a subsidiary of SA listed BJM Holdings Limited. BJM Securities is
South Africa’s largest independent stock broking firm with a presence in the
major financial hubs of the world – London, New York and Edinburgh. She was
head of New Business.
Prior to a transaction concluded between BJM Holdings Limited and Mazwai
Securities, she was one of the founding members and executive director of
Mazwai Securities. She started her career at Real Africa Durolink (RAD)
Securities as a trainee dealer in money market instruments, bonds and equities
before making her home in equities. She later practiced as an equity sales
trader for both local and foreign institutions, and went on to serve as a
director on the board. After a stint as a businesswoman, she joined Standard
Equities as an equity sales trader servicing domestic institutions.
She was schooled at Durban Girls’ College, and read her BCom (Accounting)
degree at the University of Natal, Durban. She completed the JSE Stockbroking course at Wits University, where she attained top marks in 1996. She
is a fellow of the South African Institute of Stockbrokers and a member of the
Association of Black Security and Investment Professionals (ABSIP).
She sits on the JSE Alternative Exchange (ALTX) Advisory board and is the JSE
representative on the Securities Regulation Panel (SRP), where she serves as a
member. She is a non-executive director of two Top 40 listed companies,
transport giant Imperial Holdings Limited and retail group Massmart Holdings
Limited.
She is a columnist for South Africa’s largest Sunday newspaper the City Press,
and her opinion as an expert in the field of investments can be heard on both
the radio and television (Reuters, Bloomberg, I-Net, Summit TV and SABC
Radio and TV). Miss Langeni has presented to local and international
audiences, and has had articles on BEE published. Passionate about
“demystifying” the stock exchange, she was instrumental in the formation of
the People’s Bank/Sowetan Investor Education and Savings Program.
Popo Molefe** (54)
PhD.
South African
Co-Chairman and Director
1st Floor
43 Wierda Road West
Wierda Valley
Sandton, 2196
Popo Molefe holds a Diploma in Governance from Harvard School of
Governance, a Diploma in Business Leadership from the Wharton School of
Business Leadership at the University of Pennsylvania and a Doctorate from
North West University, South Africa. Dr. Molefe is a well known political
activist and currently sits as a member of the National Executive Committee
of the African National Congress (“ANC”), the ruling political party in South
Africa. He also holds the position of Chair – ANC Provincial Executive, North
West Province, and Chancellor of the North West University. The North West
Province is also known as “The Platinum Province” in South Africa as it hosts
some of the largest PGM deposits on the Bushveld Complex.
During 1994 to 2004, Dr Molefe served as Premier of the North West Province,
South Africa. Dr. Molefe is not a director of any other public companies.
A.H.C Harold Motaung* (37)
BSc. Eng., MBA
South African
Director and Chief
Operating Officer
1st Floor
43 Wierda Road West
Wierda Valley
Sandton, 2196
Harold Motaung was previously employed at the Free State and Vaal River
operations of Anglo American Corporation of South Africa Limited for six years
as a mining engineer and as a production supervisor. Mr. Motaung then moved
to the DME as a director within the Mine Inspectorate. As a Deputy Chief
Inspector, he was responsible for implementing the mine, health and safety
legislation. Subsequently he was appointed Chief Director within the Mine
Inspectorate. His portfolio included the gold, platinum and coal regions of
South Africa.
In Mr. Motaung’s capacity as a Chief Director of the Mine Inspectorate, he was
appointed on numerous boards of Government – associated institutions
including the National Nuclear Reactor, the Deep Mining Board and the Mining
Qualifications Authority. Mr. Motaung also chaired the Mines Research Board,
which administered a mining safety fund. Mr. Motaung also represented the
South African Government in a number of international and bi-national
engagements with foreign countries, and was a member of the DME executive
team responsible for the briefs and presentations at the Parliamentary
Portfolio Committee on the status of minerals and energy within the country,
which culminated in the enactment of the MPRDA. Mr. Motaung left the DME
to establish a mining and geological consultancy, African Minerals
Professionals (Proprietary) Limited.
33
Directors
Business address
Tumelo M. Motsisi* (44)
BA, LLM, MBA
South African
Deputy CEO/Managing
Director
1st Floor
43 Wierda Road West
Wierda Valley
Sandton, 2196
Tumelo Motsisi is a prominent South African businessperson with experience
in the South African financial services, mining and energy sectors. Between
1994 and 1998 he was employed first as a senior manager and then as a
director within the negotiated benefits division of the sizeable South African
financial services company, Alexander Forbes Limited.
In 1998 he established Kopano Ke Matla Investment Company, the investment
arm of South Africa’s largest trade union federation, the Congress of South
African Trade Unions. He was subsequently appointed as the Chief Executive
Officer of Kopano Ke Matla. Mr. Motsisi recently resigned his position as
Executive Chairperson of Prosperity Holdings Limited, a financial services
company established between Kopano Ke Matla, NBC Financial Services and
Peregrine Holdings, in order to pursue his interests in the mining and energy
sectors. Mr. Motsisi is a member and director of several South African
companies.
Sipho A. Nkosi*** (52)
BCom, MBA
South African
Director
1st Floor
43 Wierda Road West
Wierda Valley
Sandton, 2196
Sipho Nkosi holds a Bachelor of Commerce degree from the University of
South Africa and a Master of Business Administration from the University of
Massachusetts in the eastern United States. He has an extensive background
in the mining and power industries. He is a founder of and is currently Chief
Executive Officer of Eyesizwe Coal (Proprietary) Limited (“Eyesizwe”) that is
one of the country’s largest coal producers. Prior to founding Eyesizwe in
2001, Mr. Nkosi spent three years with Asea Brown Boveri sub-Sahara Africa
(Proprietary) Limited and Alstom SA (Proprietary) Limited, initially as
Managing Director of ABB Power Generation (SA), and then as Country
Manager of ABB/Alstom Power until December 2000. From 1993 to 1997, he
was Marketing Manager for Billiton Limited, an international mining company.
Rizelle M. Sampson*** (31)
H. Dip Education
South African
Director
1st Floor
43 Wierda Road West
Wierda Valley
Sandton, 2196
Rizelle Sampson holds a Certificate in Telecommunications Policy, Regulation
and Management from the University of the Witwatersrand and a Higher
Diploma in Education from the University of Western Cape. Ms. Sampson is
also currently pursuing a Masters Degree in Management of Technology and
Innovation at the Da Vinci Institute of Technology. Following positions as a
Portfolio Administrator (Institutional Clients) at Investec Asset Managers,
Chief of Staff at the Ministry of Communications and Manager (Office of the
CEO) at Sentech Limited, Ms. Sampson recently took the position of Marketing
Director at BD Sarens (Proprietary) Limited. Ms. Sampson is not a director of
any other public companies.
Ronald W. Thiessen* (54)
CA
Canadian
President and Chief
Executive Officer
Suite 1020-800
West Pender Street
Vancouver British
Columbia, Canada
V6C 2V6
Ronald Thiessen is a Chartered Accountant with professional experience in
finance, taxation, mergers, acquisitions and re-organizations. Since 1986,
Mr. Thiessen has been involved in the acquisition and financing of mining and
mineral exploration companies. Mr. Thiessen is employed by HDI, a company
providing management and administrative services to several publicly-traded
companies and focuses on directing corporate development and financing
activities. He is also a director of HDI.
*Executive director
**Non-executive director
***Independent non-executive director
Exhibit 10: Directors of Anooraq
6.2
Senior management
The senior management has responsibility for the day-to-day running of the business and the execution of
the Anooraq group’s strategy.
The names, ages, qualifications, nationalities, business addresses, functions and brief curriculum vitae of the
senior management of Anooraq are outlined below:
34
Senior management
Business address
Jeffrey R. Mason (49)
BCom., CA
Canadian
Chief Financial Officer
and Secretary
Suite 1020-800
West Pender Street
Vancouver British
Columbia, Canada
V6C 2V6
Jeffrey Mason holds a Bachelor of Commerce degree from the University of
British Columbia and obtained his Chartered Accountant designation while
specializing in the mining, forestry and transportation sectors at the
international accounting firm of Deloitte & Touche. Following senior positions
at an international commodity mercantilist and Homestake Mining Group of
companies including responsibility for North American Metals Corporation
and the Eskay Creek Project, Mr. Mason has spent the last several years as a
corporate officer and director to a number of publicly-traded mineral
exploration companies. Mr. Mason is also employed as Chief Financial Officer
of HDI and his principal occupation is the financial administration of the public
companies to which HDI provides services.
Senior management
Business address
Joel Kesler (34)
BCom., LLB
South African
1st Floor
43 Wierda Road West
Wierda Valley
Sandton, 2196
Joel Kesler is a qualified attorney, having been admitted to practice in South
Africa in 2000. From 1998 he served his articles at the law firm Mallinicks Inc
in Cape Town, where he was later made a partner in 2001. In 2003 Mr. Kesler
left legal practice to act as corporate counsel to Pelawan.
He has considerable experience in legal and corporate finance matters
generally, having developed a particular expertise in the structuring and
financing of BEE transactions in South Africa and resource investment
transactions within Africa generally.
He currently acts as corporate counsel and business development manager to
Anooraq.
Scott D. Cousens
Refer to details under paragraph 6.1 above
Phumzile Langeni
A.H.C Harold Motaung
Tumelo M. Motsisi
Ronald W. Thiessen
Exhibit 11: Senior management of Anooraq
7.
DIRECTORS’ SERVICE CONTRACTS AND TERMS OF OFFICE
There are no service or employment contracts between Anooraq and its directors. There are no restrictions
concerning the non-solicitation of fellow staff after termination of employment and no restraint of trade
provisions. There are no compensatory plans or arrangements with respect to any of the directors of the Company
resulting from the resignation, retirement or any other termination of employment of the director’s employment
or from a change of the directors of the Company or their responsibilities following a change in control.
Directors must be of the age of majority (18), and meet eligibility criteria, including not being mentally infirm, not
being an undischarged bankrupt, and not having fraud related convictions in the previous five years. There is no
mandatory retirement age either under Anooraq’s Articles or under the Business Corporations Act. The term of each
director expires immediately before the election of directors at the next annual general meeting of shareholders
of the Company, at which time such directors may stand for re-election and immediately become available for reelection. There are no terms of office for the directors, except as disclosed in the Articles.
8.
REMUNERATION, QUALIFICATION, BORROWING POWERS AND APPOINTMENT OF DIRECTORS
The Compensation Committee, which operates under defined terms of reference, is responsible for determining
and reviewing compensation arrangements for the directors in accordance with good corporate governance
principles. The Compensation Committee is currently comprised of Messrs. Thiessen and Motsisi, neither of whom
are independent or unrelated directors. The Compensation Committee is elected annually by the directors of
Anooraq at the first meeting of the Board held after Anooraq’s annual general meeting. Its primary function is to
assist the Board in monitoring, reviewing and approving the Company’s compensation practices and administering
the Company’s share compensation plans. Under the Compensation Committee Charter, the Compensation
Committee has the authority to grant share options under the Stock Option Plan. The Compensation Committee
is also responsible for recommending to the Board candidates for senior management positions in the Company.
Details of the remuneration of the directors of Anooraq during the year ended 31 December 2005 are set out in
Annexure 12 to this Pre-Listing Statement. The remuneration receivable by the directors will not be varied as a
result of this listing.
No fees have been paid, accrued or are proposed to be paid to any third party in lieu of directors’ fees, except as
disclosed in annexure 11 to this Pre-Listing Statement. Furthermore, no payment has been made, either in cash or
securities or otherwise, or is proposed to be made, to any director of Anooraq or to any company in which he is
beneficially interested, directly or indirectly, or of which he is a director or to any partnership, syndicate or other
association of which he is a member, as an inducement for that director to become a director of the Company.
A summary of the relevant provisions of the Articles relating to the remuneration of directors, the manner in which
directors may participate in decisions relating to their own remuneration, directors’ terms of office, directors’
qualification criteria, directors’ borrowing powers and the procedure for the appointment of the directors are set
out in Annexure 5 to this Pre-Listing Statement.
35
Directors’ borrowing powers are not restricted. The directors may authorize the Company to make a payment to
purchase or redeem its common shares subject to a resolution by the directors and the Business Corporations Act.
Directors need not own any common shares of Anooraq in order to qualify as directors.
Pursuant to the Pelawan Shareholders Agreement, the Anooraq board is to be comprised of an equal number of
persons who are officers or directors of Pelawan and persons who are officers or directors of HDI, and at least three
independent directors.
9.
DIRECTORS’ INTEGRITY
All the directors of Anooraq have submitted director’s declarations in compliance with Schedule 21 of the
JSE Listings Requirements.
None of the directors and senior management of Anooraq has:
• ever been convicted of an offence resulting from dishonesty, fraud or embezzlement;
• ever been adjudged bankrupt or been sequestrated in any jurisdiction;
• ever been party to a scheme of arrangement or made any other form of composition with the creditors;
• at any time assigned their estate, suspended payment or compounded with their creditors;
• ever been found guilty in disciplinary proceedings by an employer or regulatory authority, due to dishonest
activities;
• ever been barred from entry into any profession or occupation;
• ever acted as an executive director of any company at the time of or within the 12 months preceding any of
the following events in relation to such company: receiverships, compulsory liquidations, creditors, voluntary
liquidations, administrations, company voluntary arrangements or any composition or arrangement with their
creditors generally or any class of creditors;
• ever been disqualified by a court from acting as a director of a company, or from acting in the management or
conduct of affairs of any company; or
• ever been the subject of public criticisms by statutory or regulatory authorities, including recognised
professional bodies.
36
10. INTERESTS OF DIRECTORS
10.1 Directors’ holdings of Anooraq common shares
The directors’ holdings of Anooraq common shares as at 31 December 2005 are set out in the table below:
Direct
Indirect
쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭
쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭
Director
Beneficial Non-beneficial
Beneficial Non-beneficial
Scott Cousen
2 225 200
1.5%
–
–
–
2 225 200
1.5%
772 315
0.5%
–
–
–
772 315
0.5%
David Eliiot
–
–
–
–
–
Wayne Kirk
–
–
–
–
–
Phumzile Langeni
–
–
–
–
–
Popo Molefe
–
–
–
–
–
Harold Motaung(1)
–
–
5 831 000
3.9%
Tumelo Motsisi(2)
–
–
9 996 000
6.7%
–
9 996 000
6.7%
Sipho Nkosi
–
–
–
–
–
Rizelle Sampson
–
–
–
–
–
Ronald Thiessen
625 923
0.4%
–
–
–
625 923
0.4%
Robert Dickinson
Total
5 831 000
3.9%
Exhibit 12: Directors’ holdings of Anooraq common shares
(1) This indirect holding reflects Harold Motaung’s holding of 7% of the ordinary shares in the issued and outstanding share capital of
Pelawan, multiplied by the number of common shares of Anooraq (83 300 000) held by the Pelawan Trust.
(2) This indirect holding reflects Tumelo Motsisi’s holding of 12% of the ordinary shares in the issued and outstanding share capital of
Pelawan, multiplied by the number of common shares of Anooraq (83 300 000) held by the Pelawan Trust.
Changes in the directors’ holdings of Anooraq common shares that occurred between 31 December 2005 and
the last practicable date are set out in the table below:
Nature of
transaction
Date of
transaction
Number of
common shares
Transaction
price
Nature of
holding
Scott Cousens
Disposal
Disposal
Disposal
17-04-2006
18-04-2006
18-04-2006
100 000
75 000
25 000
US$1.2254
US$1.2200
US$1.2285
Direct
Direct
Direct
Robert Dickinson
Disposal
Disposal
Disposal
18-01-2006
18-01-2006
21-04-2006
23 315
49 000
200 000
US$0.7780
US$0.7780
US$1.3836
Direct
Direct
Direct
David Eliiot
–
–
–
–
–
Wayne Kirk
–
–
–
–
–
Phumzile Langeni
–
–
–
–
–
Popo Molefe
–
–
–
–
–
Harold Motaung
–
–
–
–
–
Tumelo Motsisi
–
–
–
–
–
Sipho Nkosi
–
–
–
–
–
Rizelle Sampson
–
–
–
–
–
Ronald Thiessen
Disposal
26-05-2006
5 000
US$1.0000
Direct
Director
Exhibit 13: Changes in directors’ holdings of Anooraq common shares
37
10.2 Directors’ interests in transactions
There are no relevant particulars regarding the nature and extent of any material beneficial interests, whether
direct or indirect, of directors of Anooraq in transactions that were effected by the Company during the
current or immediately preceding financial year, or during an earlier financial year and remain in any respect
outstanding or unperformed, except as herein disclosed.
The interests of directors of the Company, through Pelawan, are disclosed in paragraph 10.1 of this Pre-Listing
Statement.
Some directors of the Company are also directors of HDI, which provides management services to the
Company as more fully described in paragraph 15.5 of this Pre-Listing Statement.
Directors and officers of Anooraq may from time to time serve as directors of and have an interest, either
directly or indirectly, in other companies involved in natural resource exploration and development. As a
result, a director of Anooraq may be presented, from time to time, with situations which give rise to an
apparent conflict of interest. On any conflict situation, a director may abstain from voting on resolutions of
the Board that evoke such conflict in order to have the matter resolved by an independent Board, or the
situation may be presented to the shareholders of Anooraq for ratification. In any event, the directors of
Anooraq must, in accordance with the laws of British Columbia, act honestly and in good faith and in the best
interests of Anooraq, and must exercise the care, diligence and skill that a reasonably prudent individual
would exercise in comparable circumstances when dealing with the affairs of Anooraq.
10.3 Other directorships and partnerships held by the directors of Anooraq
Annexure 6 to this Pre-Listing Statement sets out the names of the companies and partnerships of which the
directors of Anooraq are or have been directors or partners in the past five years.
38
Part C: Financial information
11. ASSETS, LIABILITIES AND OTHER FINANCIAL INFORMATION
11.1
Audited consolidated historical financial statements
The audited consolidated historical financial statements of Anooraq, prepared in terms of Canadian
generally accepted auditing standards, as at 31 December 2005 and 2004 and at 31 October 2003, and for
the year ended 31 December 2005, the fourteen-month period ended 31 December 2004 and the year
ended 31 October 2003 are set out in Annexure 1 to this Pre-Listing Statement. The audited consolidated
historical financial information of Anooraq is the responsibility of management and not directors.
The independent reporting accountants’ reports on the audited consolidated historical financial statements
of Anooraq as at 31 December 2005 and 2004 and at 31 October 2003, and for the year ended
31 December 2005, the fourteen-month period ended 31 December 2004 and the year ended 31 October
2003 are set out in Annexures 13 and 14 to this Pre-Listing Statement.
11.2
Reviewed consolidated financial statements
The reviewed consolidated financial statements as at 30 September 2006 and for the nine-month period
ended 30 September 2006, prepared in terms of Canadian generally accepted auditing standards, are set
out in Annexure 2 to this Pre-Listing Statement. The reviewed consolidated financial information of
Anooraq is the responsibility of management and not directors.
The independent reporting accountants’ report on the reviewed consolidated financial statements of
Anooraq as at 30 September 2006 and for the nine-month periods ended 30 September 2006 and 2005 is
set out in Annexure 14 to this Pre-Listing Statement.
11.3
Material capital commitments, lease payments and contingent liabilities
Other than the information disclosed in note 7 to the consolidated historical financial information in
Annexure 1 to this Pre-Listing Statement, relating to the JV agreements, the Company does not have any
other material capital commitments, operating leases and contingent liabilities.
11.4
Loans and borrowings
The directors have unlimited borrowing powers.
The Company’s subsidiary, Plateau Resources, has concluded a R70 million funding agreement with RPM as
disclosed in paragraph 4.2.7 of this Pre-Listing Statement. There were no other borrowings as at the last
practicable date.
There is no loan capital outstanding.
11.5
Loans receivable
Anooraq and its subsidiary companies had no material loans receivable outstanding as at the last
practicable date.
As at the last practicable date, neither the Company nor any of its subsidiaries had made any loans nor
furnished any security for the benefit of any director or manager of the Company.
11.6
Material inter-company loans
Material inter-company loans have been detailed in Annexure 10 to this Pre-Listing Statement.
39
11.7
Anooraq’s subsidiaries
Details of Anooraq’s subsidiaries as at the last practicable date are as follows:
Item
Issued share capital (R)
Anooraq’s effective interest
Book value of investments (R)
Net indebtedness (R)
Date of incorporation
Place of incorporation
Registration number
Date it became a subsidiary
Principal activity
Listed on the JSE
N1C Resources
N2C Resources
Plateau Resources
54 377
100%
129 629 901
(130 183 465)
2 December 1999
Cayman Islands
CR-94610
2 December 1999
Mining
No
54 377
100%
150 368 963
(129 605 317)
2 December 1999
Cayman Islands
CR-94611
2 December 1999
Mining
No
8 000
100%
811 261 230
(228 670 542)
14 October 1996
South Africa
1996/013879/07
28 August 2001
Mining
No
Exhibit 14: Details of subsidiary companies of Anooraq
Anooraq Mexico is an inactive wholly owned subsidiary of the Company and its details are not included in
the above exhibit.
There have been no changes in Anooraq’s shareholdings in its subsidiary companies during the last financial
period and up to the last practicable date.
Pursuant to security agreements entered into in connection with the RPM loan to Plateau Resources,
Plateau Resources has ceded as security its 50% interest in Micawber 277 relating to the Ga-Phasha Project.
Further details of this agreement are contained in paragraph 4.2.7 of this Pre-Listing Statement.
No person has any rights to change any of the voting rights in any of the above subsidiary companies.
11.8
Principal immovable property owned or leased
Details of principal immovable properties owned or leased, or to be acquired or leased, by Anooraq and its
subsidiaries are set out in Annexure 8 to this Pre-Listing Statement.
11.9
Material acquisitions or disposals of properties, subsidiaries or business assets
Anooraq’s only material acquisition in the last three years was pursuant to the Pelawan transaction, which
is described in paragraphs 4.2.5 and 15.1 of this Pre-Listing Statement. At the last practicable date, there
were no proposed acquisitions of business assets.
The material assets acquired have already been transferred into the name of the Company, through Plateau
Resources. Save as disclosed in paragraph 11.7 of this Pre-Listing Statement, no other material assets have
been ceded or pledged.
The vendor of the material asset above is Pelawan and the consideration paid for the acquisition by the
Company is described in paragraph 15.1 of this Pre-Listing Statement.
Pelawan was granted PGM mineral rights by the DME over PGM mineral properties that were later ceded
to Micawber 277 in exchange for a 50% shareholding. Subsequently, Pelawan sold its 50% shareholding in
Micawber 277 to Anooraq pursuant to the Pelawan transaction, as more fully described in paragraph 15.1
There have been no material disposals of business assets in the last three years.
11.10 Dividends and dividend policy
No dividends have been declared or paid since the incorporation of the Company. The Company anticipates
that, for the foreseeable future, earnings generated by Anooraq and its subsidiaries will not be distributed
to shareholders as dividends but will be retained for the development of the Company’s projects. The
directors will consider an appropriate dividend policy once the Company and its subsidiaries are generating
operating profits.
There is no time limit to the entitlement to dividends and no dividend shall bear interest against the
Company. Entitlement to dividends arises on the record date determined by the directors in accordance
with the Articles.
11.11 Working capital statement
The directors of Anooraq are of the opinion that the working capital available to the Anooraq group will be
sufficient for the present requirements of the Anooraq group, that is for at least the next 12 months from
the date of issue of this Pre-Listing Statement.
40
Part D: Share capital
12. SHARE CAPITAL AND INFORMATION RELATING TO ANOORAQ
12.1 Authorised and issued share capital of Anooraq
The Company’s authorised share capital consists of an unlimited number of common shares without par
value. Anooraq has 148 220 407 issued and outstanding common shares with a value of C$50 207 363.
Details of the share capital of the Company over the past three years are set out below:
Common shares issued and outstanding
Share
price
C$
Balance, 31 October 2002
Issued during fiscal 2003
Shares issued for property option
Share purchase options exercised
Share purchase warrants exercised
Private placement, May 2003, net of issue costs
0.75
0.60
0.72
0.52
Fair value of stock options allocated to shares issued
on exercise
Private placement, December 2003, net of issue costs
Shares issued to acquire Ga-Phasha Project
Share issue cost of Ga-Phasha Project
0.85
–
0.75
0.85
2.10
–
Balance, 31 December 2004
on exercise
Balance, 31 December 2005 and 30 September 2006
Number of
shares
Value of
shares
C$
32 148 463
20 048 474
270 833
1 206 000
5 138 876
1 400 000
203 125
720 090
3 435 560
679 614
40 164 172
25 086 863
400 000
340 000
–
3 419 300
3 313 125
9 523 810
91 200 000
(54 128)
588 560
2 555 390
2 822 529
18 635 143
–
148 020 407
49 974 357
0.79
200 000
157 500
–
–
75 506
148 220 407
50 207 363
Exhibit 15: Details of Anooraq’s share capital
All the issued and outstanding shares of Anooraq are of one class, namely common shares with no par value,
ranking pari passu in all respects. The entire issued share capital of Anooraq will be listed on the JSE.
The common shares are to be listed on the JSE in terms of resolutions passed by the directors of Anooraq
on 28 November 2006.
The share capital of Anooraq has not been consolidated nor subdivided during the preceding three years.
Details of Anooraq common share issues or offers during the preceding three years are as follows:
• on 27 May 2003, the Company completed a private placement financing consisting of 1 400 000 common
shares at a price of C$0.52 per common share to raise gross proceeds of C$728 000 and C$679 614 net of
issue costs. A 6% placing agent’s commission was paid to Williams de Broe Plc of London, England.
Proceeds of the private placement were used for exploration programs in the Platreef Project;
• on 13 November 2003, the Company issued 400 000 common shares as full and final negotiated settlement
to complete the acquisition of Plateau Resources from Pinnacle Resources Incorporated. This was in addition
to the issue of 378 500 common shares during the period October 1999 to November 2003;
41
• during December 2003, the Company completed a C$20 million private placement financing of 9 523 810
units at a price of C$2.10 per unit. Each unit was comprised of one common share and one-half of a
common share purchase warrant, with each whole warrant exercisable at C$2.50 per common share until
1 June 2005. A syndicate of agents, led by Desjardins Securities Incorporated, received 571 429 share
purchase warrants each exercisable into one common share at C$2.50 per common share until 1 June
2005. During the year ended 31 December 2005, these warrants expired unexercised. Proceeds of the
financing were used for general working capital activities, particularly to facilitate the advancement of
Anooraq’s projects in South Africa; and
• on 21 January 2004, Anooraq and Pelawan entered into the Pelawan RTO Share Exchange Agreement, as
amended by addenda dated 20 September 2004 and 11 November 2005, pursuant to which Pelawan
transferred its shareholding in Micawber 277 to Plateau Resources and assigned to Plateau Resources its
participation interest in the JV with RPM in respect of the Ga-Phasha Project in consideration for Anooraq
issuing 91.2 million common shares in its capital to Pelawan and making cash payments to Pelawan of
R15.7 million. The Pelawan Share Exchange Agreement is more described in paragraph 15.1 of this PreListing Statement.
All common share issues and offers were done at market value of the common shares, without a premium
or discount.
There were no special terms, commissions, discounts or brokerages during the three years preceding the date
of the Pre-Listing Statement in connection with the issue or sale of any securities in the capital of the
Company, other than as disclosed in this paragraph 12.1 of this Pre-Listing Statement.
The Company has not effected any repurchase of Anooraq common shares in the preceding three years.
There was no alteration of the share capital of Anooraq’s subsidiaries during the preceding three years.
There were no issues or offers of shares by any Anooraq subsidiaries in the preceding three years.
12.2 Rights attaching to shares and power to issue shares
The Articles detailing the rights attaching to Anooraq common shares, including voting rights, conversion and
liquidation rights and the manner in which directors may issue shares, are detailed in Annexure 4 to this PreListing Statement.
Subject to the Business Corporations Act, the shareholders may, by ordinary resolution, authorize the
Company to effect a change to the authorized share structure of the Company and to the Notice of Articles
and the Articles where applicable, to (inter alia) create special rights or restrictions for, and attach such
special rights or restrictions to, the shares of any class or series of shares whether or not any such shares are
issued, and vary or delete any special rights or restrictions attached to the shares of any class or series of
shares, whether or not any or all of those shares have been issued.
Subject to the Business Corporations Act and any special rights or restrictions as to dividends, the directors
may from time to time by resolution declare and authorize payment of any dividends the directors consider
appropriate out of profits, capital or otherwise, including, without limitation, retained earnings, other income,
contributed surplus, capital surplus, any share premium account or appraisal surplus or any other unrealized
appreciation in the value of the assets of the Company, if any.
Subject to the Business Corporations Act and the rights, if any, of the holders of issued shares of the Company,
the Company may issue, allot, sell or otherwise dispose of the unissued and issued shares held by the
Company, at the times and to the persons, including directors, in the manner, on the terms and conditions and
for the issue prices that the directors may determine, provided that before allotting any unissued shares, the
directors shall first offer those unissued shares to existing shareholders based on each shareholder’s
proportionate holding of shares. The obligation to issue shares to existing shareholders is, however, subject to
various exceptions that accord with the JSE Listing Requirements and/or are in line with corporate practice in
British Columbia with respect to pro-rata entitlements. These exceptions are outlined in the Articles.
Except for Pelawan, pursuant to the Pelawan RTO Share Exchange Agreement described in paragraph 15.1
below of this Pre-Listing Statement, and the Stock Option Plan summarised in Annexure 5 to this Pre-Listing
Statement, there are no contracts or arrangements in place giving options or preferential rights to any person
to subscribe for any securities in Anooraq.
42
13. CONTROLLING SHAREHOLDERS
Pursuant to the Pelawan transaction, the Pelawan Trust is the controlling shareholder of Anooraq with a 56.25%
shareholding in the Company. The sole beneficiary of the Pelawan Trust is Pelawan. Pelawan’s shareholders are
listed below:
Entity
Shareholding in Pelawan (%)
African Minerals Professionals (Proprietary) Limited
African Minerals Professionals Nominee
Tshanduko Investments (Proprietary) Limited
Siyanda Trust
Legakabje Mining & Exploration (Proprietary) Limited
Basadi Ba Bapedi Cultural Development Trust
Zonkizizwe Investment Trust
Isolomzi Investments (Proprietary) Limited
Ditau Investments Company (Proprietary) Limited
Prime Skills Development Trust
African Mining Development Trust
Mookodi Trading (Proprietary) Limited
Africa Without Boundaries Mining (Proprietary) Limited
Leswika Women’s Investments (Proprietary) Limited
Figure Eight Investments (Proprietary) Limited
Miracle Mile Investments 74 (Proprietary) Limited
14.2
2.8
6.9
2.0
6.9
1.6
4.0
0.4
1.2
4.0
4.0
4.0
10.0
10.0
24.0
4.0
Exhibit 16: Pelawan shareholders
There is no single shareholder in the entities mentioned above that has an interest of more than 25% in any single
entity. The trustees of the Pelawan Trust are Harold Motaung and Tumelo Motsisi, who are directors of the
Company, and Deneys Reitz Trustees (Proprietary) Limited.
The only directors of the Company who have interests in any of the entities above are Harold Motaung and Tumelo
Motsisi, whose interests in the Company, both direct and indirect, are disclosed in paragraph 10.1 of this Pre-Listing
Statement.
There will be no change in the controlling shareholder of the Company as a result of the Company listing on
the JSE.
There was no change in controlling shareholders in the last five years preceding the date of this Pre-Listing
Statement, other than as disclosed in this paragraph 13.
There was no change in trading objects in the last five years preceding the date of this Pre-Listing Statement.
To the knowledge of the Company, there is no intention by any non-public shareholder of Anooraq to dispose of
its shareholding in Anooraq after the listing of the Company on the JSE.
14. MAJOR SHAREHOLDERS
The following shareholder, other than those of directors, were beneficially interested in 5% or more of Anooraq’s
common shares as at the last practicable date:
Number of common
shares held
Percentage of common
shares in issue
Pelawan Trust(1)
83 300 000
56.2%
Total
83 300 000
56.2%
Shareholder
Exhibit 17: Major shareholders of Anooraq
(1) These common shares are registered in the name of Pelawan Trust, which holds such common shares in trust for Pelawan.
To the knowledge of the Company, there is no other common shareholder who holds more than 5% of the issued
and outstanding share capital of the Company.
43
Part E: General
15. MATERIAL CONTRACTS
Except the following, neither Anooraq nor any of its subsidiaries has entered into any material contract within the
two years before the date of this Pre-Listing Statement or at any time which contain an obligation or settlement
that is material to Anooraq or its subsidiaries at the date of this Pre-Listing Statement, other than contracts
entered into in the ordinary course of business:
The Company has not acquired any securities in an unlisted subsidiary or associated company where all securities
in that unlisted subsidiary or associated company have not been acquired, except as disclosed in paragraphs 4.1.6,
4.1.7 and 4.2.5 of this Pre-Listing Statement.
15.1 Pelawan RTO Share Exchange Agreement
On 21 January 2004, Anooraq and Pelawan entered into a share exchange agreement, as amended by
addenda dated 20 September 2004 and 11 November 2005, pursuant to which Pelawan transferred its
shareholding in Micawber 277 to Plateau Resources and assigned to Plateau Resources its participation
interest in the JV with RPM in respect of the Ga-Phasha Project. This was in consideration for Anooraq issuing
91.2 million common shares in its capital to Pelawan and making cash payments to Pelawan of R15.7 million.
Pursuant to the terms of the Pelawan RTO Share Exchange Agreement, all common shares held by Pelawan
in Anooraq, save for 7.9 million common shares discussed below, are to be retained in escrow or lock-up until
the earlier of 29 September 2010 or twelve months after the commencement of commercial production
from the Ga-Phasha Project and Boikgantsho JV (as determined under a BFS). Pelawan and/or any other HDPs
must also at all future times be owned 100% by HDPs and is required by the SARB at all material times in
the future to hold the Statutory Shareholding, being 52% of the issued share capital of the Company.
On 28 March 2005, Pelawan sold 7.9 million of the Anooraq common shares it was permitted to sell under
the Pelawan RTO Share Exchange Agreement to strategic stakeholders in Anooraq and the proceeds from
such sales were remitted to Pelawan shareholders through the Pelawan Trust.
The Pelawan RTO Share Exchange Agreement provides that if any financings for the Ga-Phasha and
Boikgantsho JV projects (the “Projects”) take place prior to the Finalisation Date and the shareholder dilution
associated with such financing causes Pelawan’s shareholding in Anooraq (currently approximately 56.2%)
to fall below the Statutory Shareholding, Anooraq will issue additional common shares to Pelawan in order
to maintain the Statutory Shareholding. The Statutory Shareholding allows for compliance with BEE equity
requirements under the MPRDA, and was also a requirement of the SARB Exchange Control Department’s
approval of the Pelawan transaction. Initially, the Finalisation Date was intended to be 30 September 2005,
but by agreement between Anooraq and Pelawan the date has now been extended, as described in further
detail below.
The Pelawan RTO Share Exchange Agreement further provides that, to the extent that no such dilutive
financings have actually taken place by the Finalisation Date, certain dilutive financings are deemed to have
occurred by that date. The purpose is to make allowance for the dilutive effect on Pelawan’s shareholding of
the anticipated financings for mine development of the Projects and, in this way, safeguard the status of
Anooraq as a BEE company. For the purposes of calculating whether, by virtue of such deemed dilutive
financings, any common shares are required to be issued to Pelawan in order to maintain the Statutory
Shareholding, the Pelawan RTO Share Exchange Agreement provides that the quantum of such deemed
financings will equal:
• 30% of the estimated development costs in accordance with the BFS’s in respect of the Projects, less cash
on hand; or
• to the extent that such BFS’s have not been prepared as at the Finalisation Date, C$70.8 million related
to the Ga-Phasha Project and C$27.6 million related to the Boikgantsho JV, less cash on hand.
Following the Finalisation Date, Anooraq has the right but no obligation to issue additional common shares
to Pelawan (at the market value of the common shares on the Finalisation Date) in order to maintain
Pelawan’s Statutory Shareholding. However, the SARB requires that Pelawan and/or any other HDPs at all
material times in the future holds the Statutory Shareholding, being 52% of the issued share capital of the
Company.
44
Neither additional financings nor BFS’s for the Projects had been completed by Anooraq as at 30 September
2005 which, in the absence of agreement between the parties, would have meant that a dilutive financing
totalling C$98.4 million (and issuance of common shares based on the then market value of the common
shares) would have been deemed to have taken place as at such date. Based on the then current trading range
of Anooraq’s common shares, such deemed financing would have resulted in deemed dilution of Pelawan’s
current shareholding of approximately 56.2% to a level well below the Statutory Shareholding and,
accordingly, would have required the issuance of a significant number of additional common shares to
Pelawan in order to maintain its Statutory Shareholding (taking such deemed financings into account).
However, Anooraq and Pelawan have agreed to extend the Finalisation Date to the earlier of:
• the first date at which financing of the Projects shall, in fact, have occurred;
• any date which is within a 60-day period following an announcement by Anooraq of a further material
transaction, being a transaction having a transaction value that exceeds 30% of Anooraq’s market
capitalisation at the time of such announcement; and
• 31 December 2006.
None of the above three events had occurred at the date of this Pre-Listing Statement.
Accordingly, the additional common shares which would, under the original terms of the Pelawan RTO Share
Exchange Agreement, have become issuable to Pelawan by Anooraq as of 30 September 2005 were not
required to be issued at that time and the determination of whether any additional common shares will be
required to be issued to Pelawan in light of any actual or deemed dilutive financings will be made in due
course on the Finalisation Date, as amended. The method for determining whether such additional common
shares will be issuable upon the Finalisation Date remains as described above. Therefore, upon the
Finalisation Date, the dilutive financings for the purposes of calculating whether any additional common
shares are issuable to Pelawan will be the actual dilutive financings undertaken in relation to the Projects to
date and, to the extent that no such financings have been undertaken, will be the deemed dilutive financings
as described above.
None of the financings mentioned above will be undertaken by 31 December 2006 and therefore
shareholders of Anooraq, other than Pelawan, would incur significant dilution in their shareholdings as
a result of an issue of additional common shares to Pelawan in accordance with the description above.
However, negotiations are currently underway between Pelawan and Anooraq that may lead to an
amendment of the Pelawan RTO Share Exchange Agreement to avoid an issue of additional common
shares to Pelawan at the Finalisation Date.
The issue of common shares to Pelawan at the Finalisation Date was approved by Anooraq common
shareholders at the time of the approval of the Pelawan transaction. This arrangement does not however
affect Anooraq common shareholders’ pre-emptive rights at all times as provided for in the Articles, as more
described in paragraph 3 of Annexure 4 to this Pre-Listing Statement.
15.2 Pelawan Shareholders Agreement
On 19 September 2004 Anooraq, Pelawan and the Pelawan Trust entered into a shareholders agreement. The
Pelawan Shareholders Agreement provides that, during the currency of the applicable mining rights,
exploration, development and mining permits and licences, and mining or mineral leases and sub-leases
which are required in order to undertake the Ga-Phasha Project, the Platreef Project and certain other
Anooraq projects (as the case may be), Pelawan is not entitled, without the prior express written consent of
Anooraq, to transfer any of the Anooraq common shares held by it that comprise the Statutory Shareholding,
unless such transfer is:
• to another HDP approved in writing by the DME, Anooraq (by way of a resolution of a disinterested
majority of its Board) and Anglo Platinum, where such HDP meets certain requirements, including
agreeing to be bound by the terms of the Pelawan Shareholders Agreement; and
• approved by SARB and the South African, Canadian and European Union competition authorities, to the
extent required in each case.
The Pelawan Shareholders Agreement also provides that Pelawan will (through the Pelawan Trust) vote its
shareholding in Anooraq to ensure that for so long as it holds the Statutory Shareholding, the Anooraq board
is composed of:
• a majority of persons who are HDPs; and
• an equal number of persons who are officers or directors of Pelawan and persons who are officers or
directors of HDI and at least three independent directors.
The Pelawan Shareholders Agreement also provides that Pelawan and HDI shall agree on the composition of
the management and officers of Anooraq.
45
15.3 Micawber Shareholders Agreement
On 22 September 2004 RPM, Pelawan and Micawber 277 entered into a shareholders agreement pursuant to
which Micawber 277 will apply for conversion of the existing old order mineral tenure to a new order mining
right under the MPRDA and will apply for regulatory approval to lease such new order mining right to RPM
and Plateau Resources who will then undertake the Ga-Phasha Project pursuant to an unincorporated JV in
accordance with the Ga-Phasha JV Agreement. Under the MPRDA, Micawber 277 has until 30 April 2009 to
apply for conversion. The Ga-Phasha JV Agreement will become fully unconditional upon the grant of such
new order mining right and its lease to the JV. In the interim, the relationship between the parties to the GaPhasha Project continues to be regulated in accordance with the Micawber Shareholders Agreement, the
provisions of which are materially similar to the Ga-Phasha JV Agreement, save that the Micawber
Shareholders Agreement is fully unconditional.
15.4 Ga-Phasha JV Agreement
On 29 September 2004 RPM, Pelawan and Micawber 277 entered into a notarial JV agreement (Pelawan
transferred its shareholding in Micawber 277 to Plateau Resources pursuant to the Pelawan RTO Share
Exchange Agreement, as more fully described in paragraph 15.1 of this Pre-Listing Statement).
The salient terms of the Ga-Phasha JV Agreement are as follows:
Objective
Pursuant to the Ga-Phasha JV Agreement, the objectives of the JV participants are, initially, to further define
those preparatory mining operations already performed by Micawber 277 and to produce a BFS for the
financing and development of the mine. The participants will, either jointly or separately, raise the financing
required to establish mining operations and subsequently proceed with construction of the mine. The
participants will develop a mining work program which will seek to optimise the depletion strategy of the
Ga-Phasha Project ore body. The JV will operate and maintain the mine for the duration of the life of mine,
until the closure of the mine if and when appropriate.
Infrastructure
Anglo Platinum and Anooraq have agreed to optimize the utilization of existing infrastructure on a Regional
basis (including infrastructure situated at Twickenham Platinum Mine) within the area where the Ga-Phasha
Project is situated, thereby allowing Anooraq access to required infrastructure on a cost sharing basis. Anglo
Platinum, together with all relevant stakeholders have, to date, initiated and implemented various
infrastructure projects within the region including water and electrification projects that are scaled to
service, inter alia, Anglo Platinum’s Twickenham Platinum Mine and the Ga-Phasha Project.
Where Anooraq contributes financially, through an earn-in or otherwise, towards the development of
infrastructure associated with the processing of Anooraq’s attributable concentrate feed from its various
PGM projects, Anglo Platinum has agreed that Anooraq may acquire an ownership interest in such
infrastructure on agreed terms.
Management
The affairs of the JV shall be administered and governed by a Management Committee comprised of eight
representatives – four appointed by RPM and four appointed by Plateau Resources. The Chairman of the
Management Committee shall be appointed by RPM for the first year and thereafter the Chairmanship shall
be rotated annually. Management of the Ga-Phasha Project will be conducted by a Mine Manager to be
appointed on a joint basis between Plateau Resource and RPM.
Relationship to Micawber 277
Micawber 277 is the current holder of the old order mining rights in respect of the Ga-Phasha Project. It will
need to obtain new order mining rights in accordance with the MPRDA in order to guarantee ongoing security
of tenure. Once such new order mining rights are obtained Micawber 277 will apply to the DME for consent
to lease such mining rights to RPM and Plateau Resources (as the JV participants) to conduct mining
operations.
46
Funding and promotional decision
The JV participants shall convene a meeting within one month of the completion of the BFS at which
meeting the participants shall resolve finally whether or not to continue with mining in and on the JV area.
In the event that the BFS financial model supports the decision to mine and demonstrates that the agreed
project hurdle rate of a 12% real after-tax IRR has been reached and any participant votes not to proceed
with mining, the other participant shall be entitled to start mining at sole risk with consequent dilution in
project interest for the non-participating party should it not contribute its required interest. In the event that
both participants vote not to proceed with mining at the meeting, the participants shall reconvene within a
period of 90 days to reconsider the decision to mine and such a meeting shall be reconvened meeting within
90-day intervals until such stage as one or both of the participants decide to commence mining.
Off Take Agreement
In the event that the JV participants decide to produce concentrate from mine production at the Ga-Phasha
Project, RPM shall have the right to purchase (and Plateau Resources shall have the right to require RPM to
purchase), upon notice, Plateau Resources’ share of concentrate of the JV. Such initial off take agreement (the
“Off Take Agreement”) will endure for an initial term of 10 years from the date of commencement of
production of concentrate. Plateau Resources may terminate the Off Take Agreement on notice before the
end of the 8th year, failing which the Off Take Agreement shall automatically continue for a further 10-year
period beyond the initial term (for a total maximum term of 20 years). During the entire term of the Off Take
Agreement, RPM is obliged to provide smelting and refining capacity for processing the Ga-Phasha Project
concentrate, failing which Plateau Resources may make alternative arrangements with smelters/refiners for
up to 6 months whilst RPM’s capacity is being restored.
Rights of First Refusal (“ROFRs”)
The parties have granted each other ROFRs and deemed offers associated with potential disposal of interests
in favour of 3rd parties and/or non-compliance with relevant undertakings. In order to ensure due
compliance with the HDP requirements under the MPRDA, Pelawan has covenanted in favour of RPM that it
will remain a HDP company at least until 30 April 2014.
15.5 Management Agreement
HDI carries out investor relations, geological, corporate development, administrative and other management
activities for, and incurs third party costs on behalf of Anooraq. Anooraq reimburses HDI on a full cost
recovery basis, in terms of the Management Agreement, details of which are contained in Annexure 7 to this
15.6 Boikgantsho JV Agreement
The agreement that governs the Boikgantsho JV, a JV between RPM and Plateau Resources for the exploration
and mining of PGMs in the Drenthe farm, the Witrivier farm and the northern part of Overysel farm, is more
fully described in paragraph 4.1.8 of this Pre-Listing Statement.
15.7 RPM loan agreement
The agreement relating to the loan from RPM to Plateau Resources, is more fully described in paragraph 4.2.7
The above material contracts will be available for inspection as set out in paragraph 32 of this Pre-Listing
Statement.
16. LITIGATION STATEMENT
Apart from the information disclosed in paragraph 4.1.6.2 of this Pre-Listing Statement, the directors are not
aware of:
• any proceedings which are pending or threatened which may have or have had, in the past 12 months preceding
the last practicable date, a material effect on Anooraq and its subsidiaries’ financial position;
• any legal proceedings that may have an influence on the rights to explore for minerals in respect of any of the
properties in which the Company is interested; and
• any legal proceedings or land claims that may have an influence on the surface rights at any of the properties
in which the Company is interested.
47
17. SHAREHOLDER PROTECTION PROVISIONS RELATING TO TAKE-OVERS
The Articles do not contain any specific provisions that deal with shareholder protection relating to takeovers.
However, Anooraq is registered and incorporated pursuant to the laws of the Province of British Columbia, Canada.
Shareholder protection provisions relating to takeovers are provided for in the Securities Act (British Columbia), and
by regulations, instruments and policies prescribed thereunder and under the securities laws of other Canadian
provinces in which Anooraq is a reporting issuer.
18. MATERIAL CHANGE STATEMENT
Other than the information disclosed in paragraph 15.1 of this Pre-Listing Statement in respect of the Finalisation
Date of the Pelawan transaction, there has been no material change in the Company or its subsidiaries since
31 December 2005 and the last practicable date.
19. CORPORATE GOVERNANCE
The Board believes that good corporate governance improves corporate performance and benefits all shareholders.
The Canadian Securities Administrators (the “CSA”) have adopted National Policy 58-201 Corporate Governance
Guidelines, which provides non-prescriptive guidelines on corporate governance practices for reporting issuers such
as the Company. In addition, the CSA have implemented National Instrument 58-101 Disclosure of Corporate
Governance Practices (NI 58-101), which prescribes certain disclosure by the Company of its corporate governance
practices. Annexure 8 to this Pre-Listing Statement sets out the Company’s approach to corporate governance and
addresses the Company’s compliance with NI 58-101.
Anooraq’s directors and management endorse the objective of conducting the affairs of the Company with
honesty, integrity, astuteness and prudence.
Details of Anooraq’s corporate governance practices and conduct are outlined in Annexure 8 to this Pre-Listing
Statement.
20. PERFORMANCE INCENTIVE SCHEMES
Salient details of Anooraq’s long term performance incentive scheme, the Stock Option Plan, are set out in
Annexure 6 to this Pre-Listing Statement.
21. PRELIMINARY EXPENSES INCURRED
There were no preliminary expenses incurred by Anooraq in relation to this listing in the three years preceding the
date of this Pre-Listing Statement.
22. EXPENSES OF THE LISTING
The expenses of the listing are estimated to be R2 940 300 (all excluding value added tax), and relate to:
• the printing, publication, roadshow, marketing and distribution costs of this Pre-Listing Statement (R350 000);
• documentation and listing fees payable to the JSE (R220 300);
• fees payable to the investment bank, corporate adviser and transaction sponsor as part of one
mandate (R1 350 000);
• fees payable to the attorneys (R670 000);
• fees payable to the lead sponsor (R140 000); and
• fees payable to the independent reporting accountants and auditors (R210 000).
23. INTERESTS OF ADVISERS AND PROMOTERS
• BDO QuestCo is a joint venture between BDO Capital (Proprietary) Limited, a wholly-owned subsidiary of BDO
Spencer Steward (Johannesburg) Incorporated, and QuestCo (Proprietary) Limited (“QuestCo”). Neither BDO
QuestCo nor BDO Capital (Proprietary) Limited has any interest in the issued share capital of Anooraq as at the
last practicable date. However, QuestCo has several mandates with Anooraq in terms of which it acts as
Anooraq’s corporate adviser. One of these mandates relates to the loan of R70 million from RPM to Plateau
Resources as described in paragraph 4.2.7 of this Pre-Listing Statement. In terms of this mandate, QuestCo is
48
entitled to a fee amounting to 3% of the value of the loan, which fee maybe settled in cash or in shares at
Anooraq’s election. If Anooraq elects to settle the fee in shares, 350 000 common shares would be issued to
QuestCo.
• Other than as disclosed above, there are no advisers to Anooraq who have an interest in the issued share capital
of Anooraq as at the last practicable date.
• Except as disclosed in paragraph 12.1 of this Pre-Listing Statement, there were no amounts paid or accrued as
payable within the preceding three years to the date of this Pre-Listing Statement or proposed to be paid to any
promoter, syndicate or other association, and no other benefit or consideration was given to any promoter.
24. LISTING ON OTHER STOCK EXCHANGES
Anooraq common shares are listed on the TSXV and AMEX. There are no other classes of shares of the Company.
25. TRADING HISTORY OF ANOORAQ COMMON SHARES ON THE TSXV
The trading history of Anooraq common shares on the TSXV, Anooraq’s primary listing exchange, is set out
in Annexure 11.
26. STRATE AND TRADING OF ANOORAQ COMMON SHARES ON THE JSE
Anooraq common shares may only be traded on the JSE in electronic form (dematerialised common shares) and
will be trading for electronic settlement in terms of STRATE immediately following the listing.
STRATE is a system of “paperless” transfer of securities. If you have any doubt as to the mechanics of STRATE,
please consult your CSDP, broker or other appropriate adviser. You are also referred to the STRATE website at
www.strate.co.za for more information. Some of the principal features of STRATE are as follows:
• electronic records of ownership replace common share certificates and physical delivery of certificates;
• trades executed on the JSE must be settled within five business days;
• all investors owning dematerialised common shares or wishing to trade their securities on the JSE are required
to appoint either a CSDP or a broker to act on their behalf and to handle their settlement requirements; and
• unless investors owning dematerialised common shares specifically request their CSDP to register them as an
“own name” dematerialised common shareholder (which entails a fee), the nominee company of their CSDP or
broker holding Anooraq common shares on their behalf, will be the common shareholder (member) of the
Company and not the investor. Subject to the agreement between the investor and the CSDP or broker (or the
CSDPs or broker’s nominee company), in terms of the rules of STRATE, the investor is entitled to instruct the
CSDP or broker (or the nominee company of their CSDP or broker), as to how it wishes to exercise the rights
attaching to the Anooraq common shares and/or to attend and vote at shareholders’ meetings.
27. SARB EXCHANGE CONTROL REGULATIONS
A summary of the SARB Exchange Control Regulations relating to the acquisition of Anooraq common shares after
the listing of the Company’s common shares on the JSE is provided below:
Anooraq will qualify as an African company as referenced in Section H(C)(VII) of the SARB Exchange Control
Rulings. As such, upon its listing, the SARB Exchange Control Regulations will apply to the acquisition of Anooraq
common shares by South African residents.
The SARB Exchange Control Regulations restrict the export of capital from the common monetary area, subject to
SARB Exchange Control Department’s approval. These regulations apply to transactions involving South African
residents, for Exchange Control purposes. As such, Anooraq will be subject to the SARB Exchange Control
Regulations on listing.
On 10 June 2004, Anooraq received approval for the Pelawan transaction from the SARB Exchange Control
Department subject to conditions, mainly that:
• Anooraq completes a secondary listing on the JSE within 12 months of the SARB Exchange Control
Department’s approval. The SARB Exchange Control Department subsequently approved the secondary listing
of Anooraq common shares on the JSE to take place on or about 30 September 2006 which deadline was
extended until 31 December 2006; and
• Pelawan and Anooraq obtain prior approval of the Minister of Finance before permitting Pelawan’s interest in
Anooraq, through the Pelawan Trust, to fall below the Statutory Shareholding.
49
The following summary is intended as a guide and is therefore not comprehensive. If you are in any doubt in regard
hereto, please consult your professional advisor or authorised dealer:
27.1 South African individuals
South African individuals will be able to acquire shares of African companies that are listed on the JSE, such
as Anooraq will be, without restriction. Consequently, an acquisition of Anooraq common shares by a South
African individual will not affect such individual’s offshore investment allowance of R2 000 000. A South
African individual need not take any administrative actions and can instruct their broker to buy and sell
Anooraq common shares on their behalf as they would with any other listed security on the JSE.
27.2 South African Institutional Investors
South African retirement funds, long-term insurers, collective investment scheme management companies
and investment managers who have registered with the SARB Exchange Control Department as Institutional
Investors for Exchange Control purposes are entitled to a foreign portfolio investment allowance. In addition
to such Institutional Investor’s general foreign portfolio investment allowance, they will be able to invest an
additional 5% of their total retail assets in the equity securities of African companies that are listed on the
JSE, such as Anooraq will be. Retail assets refer to assets received by such Institutional Investors.
27.3 Member brokers of the JSE
In terms of Section H(E) of the SARB Exchange Control Rulings, a special dispensation was provided to local
brokers to facilitate the trading in shares of African companies. South African brokers are now allowed, as a
book building exercise, to purchase Anooraq common shares offshore and to transfer them to Anooraq’s
South African share register. This special dispensation is confined to shares of inward listed companies and
brokers may warehouse such shares for a maximum period of 30 days only.
27.4 South African corporate entities and trusts
South African corporate entities, including trusts, are not permitted to transact in inward listed shares.
However, in instances where inward listed shares are utilised as acquisition currency in the purchase of South
African assets, the provisions of paragraph 27.5 below will apply.
For the procedure to obtain regulatory approval for foreign investments, South African corporate entities or
trusts should consult their professional advisers or authorised dealer.
27.5 Provisions applicable to South African residents in respect of acquisition issues and rights issues
African companies with listings on the JSE, such as Anooraq, will be allowed to issue shares to South African
residents in consideration for acquisitions. South African Institutional Investors will be given 12 months to
realign their portfolios, should they be in excess of their exchange control foreign exposure limits as a result
of such acquisition issues. South African corporate entities will also be given 12 months to dispose of such
shares. However, should there be:
• benefits to the continued financial involvement of South African corporate entities in the businesses or
assets acquired by African companies with listings on the JSE; and
• the alignment of interests in the extraction of maximum value from the consolidated companies,
the SARB Exchange Control Department will, on application, allow South African corporate entities to retain
such shares.
South African Institutional Investors and corporate entities will be allowed to exercise their rights in terms of
rights offers by African companies with listings on the JSE, such as Anooraq will be. However, the South
African Institutional Investors will be given a period of 12 months to realign their portfolios, should they be
in excess of their offshore investment allowances as a result of exercising their rights. South African corporate
entities will also be given 12 months to dispose of shares taken up in terms of such rights issues.
27.6 Non-residents of the common monetary area
Non-residents of the common monetary area may acquire Anooraq common shares on the JSE, provided
they pay the purchase price from a non-resident account at a South African registered bank in South African
Rands. However, former residents of the common monetary area who have emigrated may not use emigrant
blocked funds to acquire Anooraq common shares.
50
Non-residents of the common monetary area may sell Anooraq common shares on the JSE and repatriate
the proceeds without restriction.
27.7 Movement of Anooraq common shares between registers
Anooraq common shares are fully fungible and may be transferred between registers. Eligible South African
shareholders, being those described in paragraphs 27.1, 27.2 and 27.4 may only acquire Anooraq common
shares, via the JSE, that are already on the South African share register maintained by Anooraq’s South African
transfer secretaries. Member brokers of the JSE may acquire Anooraq common shares on foreign exchanges
and transfer them to the South African share register as described in paragraph 27.3 above. Non-residents
are not subject to the SARB Exchange Control Regulations and may freely transfer Anooraq common shares
between registers.
28. CORPORATE INFORMATION RELATING TO THE COMPANY
The corporate information relating to the Company is detailed on page 2 to this Pre-Listing Statement.
29. EXPERTS’ CONSENTS
The investment bank, corporate adviser and transaction sponsor, attorneys, independent reporting accountants and
auditors, lead sponsor and transfer secretaries, whose names are included in this Pre-Listing Statement, have
consented in writing to act in the capacities stated and to their names being included in this Pre-Listing Statement
and have not withdrawn such consents prior to the publication of this Pre-Listing Statement.
The independent reporting accountants and auditors have consented to the inclusion of their report in the form
and context in which it appears and have not withdrawn such consent prior to the publication of this Pre-Listing
Statement.
30. DIRECTORS’ RESPONSIBILITY STATEMENT
The directors, whose names are provided in paragraph 6.1 of this Pre-Listing Statement, collectively and
individually, accept full responsibility for the accuracy of the information given, and certify that to the best of their
knowledge and belief there are no other facts that have been omitted which would make any statement false or
misleading, and that all reasonable enquiries to ascertain such facts have been made and that this Pre-Listing
Statement contains all information required by the JSE Listings Requirements.
31. COPIES OF THIS PRE-LISTING STATEMENT
English copies of this Pre-Listing Statement can be
17:00 from 15 December 2006 to 19 January 2007:
1st Floor
43 Wierda Road West
Wierda Valley
Sandton, 2196
(Telephone + 27 11 883 0831)
obtained during normal business hours between 08:00 and
Nedbank Capital Corporate Finance
3rd Floor
Corporate Place
135 Rivonia Road
Sandown, 2196
(Telephone: +27 11 295 8602)
32. DOCUMENTATION AVAILABLE FOR INSPECTION
Copies of the following documents will be available for inspection at the South African registered office of Anooraq
during normal business hours (excluding Saturdays, Sundays and South African public holidays) from 15 December
2006 up to and including 19 January 2007:
• the memoranda and articles of association of Anooraq and its subsidiaries;
• the audited consolidated historical financial statements of Anooraq as at 31 December 2005 and 2004 and at
31 October 2003, and for the year ended 31 December 2005; the fourteen-month period ended 31 December
2004 and the year ended 31 October 2003;
• the reviewed financial statements as at 30 September 2006 and for the nine-month periods ended
30 September 2006 and 2005;
51
• the independent reporting accountants’ reports on the audited historical and reviewed financial statements;
• the independent reporting accountant’s report on the audited historical financial statements as at 31 October
2003 and for the year ended 31 October 2003;
• the technical report relating to the Platreef Project;
• the technical report relating to the Ga-Phasha Project;
• the Pelawan RTO Share Exchange Agreement;
• the RPM loan agreement;
• the Pelawan Shareholders Agreement;
• the Management Agreement;
• the Micawber Shareholders Agreement;
• the Ga-Phasha JV Agreement;
• the Boikgantsho JV Agreement;
• the Stock Option Plan;
• the letters of consent received from the investment bank, corporate adviser and transaction sponsor; attorneys;
independent reporting accountants and auditors, lead sponsor, qualified persons as defined in NI 43-101, and
transfer secretaries with regard to the publication of their names in the form and context in which they appear
in this Pre-Listing Statement and confirming that such consents have not been withdrawn at the date of this
Pre-Listing Statement;
• directors’ resolutions in relation to the listing of the Company;
• copies of this Pre-Listing Statement; and
• a signed copy of this Pre-Listing Statement.
Signed at Sandton by or on behalf of all the directors of the Company on Wednesday, 13 December 2006
Scott Cousens
Robert Dickinson
David Elliott
Wayne Kirk
Phumzile Langeni
Popo Molefe
Harold Motaung
Tumelo Motsisi
Sipho Nkosi
Rizelle Sampson
Ron Thiessen
52
Annexure 1
EXTRACTS FROM THE PUBLISHED AUDITED CONSOLIDATED HISTORICAL
FINANCIAL STATEMENTS
The information below has been extracted, without adjustment, from the published audited consolidated historical
financial statements of Anooraq as at 31 December 2005 and 2004, and for the year ended 31 December 2005, the
fourteen-month period ended 31 December 2004 and the year ended 31 October 2003 – expressed in Canadian dollars
(“C$”), unless otherwise stated.
During 2004, Anooraq changed its financial year end from 31 October to 31 December.
A copy of the published audited consolidated financial statements is available for inspection in the manner indicated
in paragraph 32 of this Pre-Listing Statement.
AUDITORS’ REPORT
The Board of Directors
We have audited the consolidated balance sheets of Anooraq Resources Corporation as at December 31, 2005 and 2004
and the consolidated statements of operations, deficit and cash flows for the year ended December 31, 2005 and the
fourteen-month period ended December 31, 2004. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of
the Company as at December 31, 2005 and 2004 and the results of its operations and its cash flows for the year ended
December 31, 2005 and the fourteen-month period ended December 31, 2004 in accordance with Canadian generally
accepted accounting principles.
The consolidated financial statements as at and for the year ended October 31, 2003 were audited by other auditors,
who expressed an opinion without reservation on those statements in their report, dated February 9, 2004.
KPMG LLP
Chartered Accountants
Vancouver, Canada
March 10, 2006, except as to note 12 which is as of November 1, 2006
53
CONSOLIDATED BALANCE SHEETS
The consolidated balance sheets of Anooraq as at 31 December 2005 and 2004, and 31 October 2003 are set out below:
Note
As at
31 December
2005
C$
4
As at
31 December
2004
C$
As at
31 October
2003
C$
(Restated)
ASSETS
Current assets
Cash and equivalents
Amounts receivable
Due from related parties
Prepaid expenses
5
9
Non-current assets
Equipment
Mineral property interests
6
7
Total assets
5 159 433
15 787 528
5 639 716
4 590 284
219 875
233 205
116 069
14 945 355
513 489
190 042
138 642
5 514 398
164 499
–
60 819
8 676 163
8 692 353
4 216 990
174 163
8 502 000
197 995
8 494 358
16 990
4 200 000
13 835 596
24 479 881
9 856 706
378 997
1 413 234
528 277
13 456 599
23 066 647
9 328 429
50 207 363
4 824 697
(41 575 461)
49 974 357
2 363 950
(29 271 660)
25 086 863
485 962
(16 244 396)
13 835 596
24 479 881
9 856 706
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities
9
Shareholders’ equity
Share capital
Contributed surplus
Deficit
8
8.3
Nature of operations
Commitments
Subsequent events
1
7
12
Total liabilities and shareholders’ equity
See accompanying notes to consolidated financial statements
Approved by the Board of Directors
/s/ Tumelo M. Motsisi
/s/ Popo Molefe
Tumelo M. Motsisi
Director
Popo Molefe
Director
54
CONSOLIDATED STATEMENTS OF OPERATIONS
The consolidated statements of operations of Anooraq for the year ended 31 December 2005, the fourteen-month
period ended 31 December 2004 and the year ended 31 October 2003 are set out below:
Note
Expenses
Accounting, audit and legal
Conference and travel
Consulting
Exploration (schedule)
Foreign exchange loss/(gain)
Interest income
Office and administration
Salaries and benefits
Stock-based compensation – office and administration
Stock-based compensation – exploration
Shareholders communications
Trust and filing
Write-off/(Recovery) of amounts receivable
Loss before the following
Future income tax recovery
8.3
8.3
7.2
Loss for the period
Basic and diluted loss per share
Weighted average number of common shares
outstanding
Year ended
31 December
2005
C$
474 422
646 992
965 720
5 240 321
68 720
(119 779)
551 278
1 659 465
1 822 010
714 243
260 155
85 254
–
Fourteen
months ended
31 December
2004
C$
479 731
486 481
536 216
7 860 266
145 199
(485 452)
457 571
834 223
1 426 006
1 040 542
342 848
159 633
(256 000)
Year ended
31 October
2003
C$
32 657
180 613
100 974
1 963 784
(19)
(46 060)
131 216
402 989
477 087
8 875
193 835
17 539
365 924
12 368 801
(65 000)
13 027 264
–
3 829 414
–
12 303 801
13 027 264
3 829 414
0.08
0.18
0.11
148 107 407
73 017 307
34 126 372
See accompanying notes to the consolidated financial statements
CONSOLIDATED STATEMENTS OF DEFICIT
The consolidated statements of deficit of Anooraq for the year ended 31 December 2005, the fourteen-month period
ended 31 December 2004 and the year ended 31 October 2003 are set out below:
Year ended
31 October
2005
C$
Fourteen
months ended
31 December
2004
C$
Year ended
31 December
2003
C$
Deficit, beginning of the period
Loss for the period
(29 271 660)
(12 303 801)
(16 244 396)
(13 027 264)
(12 414 982)
(3 829 414)
Deficit, end of the period
(41 575 461)
(29 271 660)
(16 244 396)
55
CONSOLIDATED STATEMENTS OF CASH FLOWS
The consolidated statements of cash flows of Anooraq for the year ended 31 December 2005, the fourteen-month
Note
Operating activities
Loss for the period
Items not involving cash
Amortisation included in exploration expenses
Stock-based compensation
Unrealised foreign exchange gain
Equity loss in exploration expenditures
Amounts receivable written off
Shares issued for property option payments included
in exploration expenses
Changes in non-cash operating working capital
Amounts receivable
Amounts due to and from related parties
Prepaid expenses
Year ended
31 December
2005
C$
(12 303 801)
(13 027 264)
Year ended
31 October
2003
C$
(3 829 414)
39 121
–
2 466 548
–
195 387
–
20 637
–
485 962
–
–
365 924
340 000
203 125
293 614
(43 163)
22 573
(1 034 237)
(539 032)
–
(77 823)
884 957
(100 715)
–
(7 784)
436 163
(10 392 861)
(9 718 106)
(2 426 102)
–
(24 671)
(95 039)
(4 489 745)
(220 126)
–
–
–
–
(119 710)
(4 709 871)
–
Financing activities
Issuance of common shares
Issue costs
157 500
–
25 380 632
(1 421 698)
5 151 590
(316 326)
Cash and equivalents provided by financing activities
157 500
23 958 934
4 835 264
(10 355 071)
14 945 355
9 530 957
5 414 398
2 409 162
3 005 236
4 590 284
14 945 355
5 414 398
8.3
7
Cash and equivalents used by operating activities
Investing activities
Mineral property acquisition costs
Purchase of equipment
Equity investment
Cash and equivalents used by investing activities
Increase/(Decrease) in cash and equivalents
Cash and equivalents, beginning of period
Cash and equivalents, end of period
Supplementary information
Interest paid
Interest received
Taxes paid
Non-cash operating, financing and investing activities
Shares issued for property option agreements
Increase in mineral property for future income taxes
Fair value of options allocated to shares issued on exercise
56
48 503
(65 000)
2 536 253
(165 312)
317 709
–
Fourteen
months ended
31 December
2004
C$
–
73 855
(193 634)
–
–
–
75 506
23 584
(509 036)
–
–
1 385 255
–
–
(46 060)
–
203 125
–
–
CONSOLIDATED SCHEDULES OF EXPLORATION EXPENSES
The consolidated schedules of exploration expenses of Anooraq for the year ended 31 December 2005, the fourteenmonth period ended 31 December 2004 and the year ended 31 October 2003 are set out below:
Year ended
31 December
2005
C$
Fourteen
months ended
31 December
2004
C$
Year ended
31 October
2003
C$
48 503
1 112 445
2 023 315
501 068
63 316
718 439
2 661
78 777
31 108
247 249
99 561
39 121
1 550 516
2 972 042
788 238
68 689
993 136
47 101
68 628
369 765
480 387
229 157
20 637
207 939
308 552
111 177
63 142
603 000
32 772
72 948
213 125
218 116
112 376
4 926 442
7 606 780
1 963 784
20 963
182 014
37 101
40 896
1 200
–
1 440
29 950
315
–
–
93 539
29 294
8 060
1 554
2 783
4 533
113 723
–
–
–
–
–
–
–
–
–
318 879
253 486
–
5 240 321
714 243
7 860 266
1 040 542
1 963 784
8 875
Exploration expenses
Cumulative expenditures, beginning of period
5 954 564
16 892 216
8 900 808
7 991 408
1 972 659
6 018 749
Cumulative expenditures, end of period
22 846 780
16 892 216
7 991 408
Republic of South Africa
Note
Northern Limb of the Bushveld Complex
Amortisation
Assays and analysis
Drilling
Engineering
Environmental and socio-economic
Geological and consulting
Graphics
Property fees and assessments
Property option payments
Site activities
Transportation
Eastern Limb of the Bushveld Complex
Assays and analysis
Drilling
Engineering
Graphics
Site activities
Transportation
Exploration expenses before the following
8.3
57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated financial statements of Anooraq for the year ended 31 December 2005, the fourteen-month
1.
NATURE OF OPERATIONS
Anooraq Resources Corporation (the “Company” or “Anooraq”) is incorporated in the Province of British Columbia,
Canada and its principal business activity is the exploration of mineral property interests. Since 1999, the Company
has focused on mineral property interests located in the Republic of South Africa (“South Africa”), with particular
attention on the Bushveld Complex (note 7).
During 2004, the Company changed its fiscal year end from 31 October to 31 December.
The Company is in the process of exploring its mineral property interests and has not yet determined whether its
mineral property interests contain economically recoverable mineral reserves. The underlying value and the
recoverability of the amounts shown for mineral property interests are entirely dependent upon the existence of
economically recoverable mineral reserves, the ability of the Company to obtain the necessary financing to
complete the exploration and development of the mineral property interests, and future profitable production or
proceeds from the disposition of the mineral property interests.
The consolidated financial statements are prepared on the basis that the Company will continue as a going
concern. Management recognises that the Company will need to generate additional financial resources in order
to meet its planned business objectives (note 12). However, there can be no assurances that the Company will
continue to obtain additional financial resources and/or achieve profitability or positive cash flows. If the Company
is unable to obtain adequate additional financing, the Company will be required to curtail operations and
exploration activities. Furthermore, failure to continue as a going concern would require that the Company’s assets
and liabilities be restated on a liquidation basis which would differ significantly from the going concern basis.
2.
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
These financial statements have been prepared in accordance with Canadian generally accepted accounting
principles. The consolidated financial statements include the accounts of the Company and its subsidiaries, all of
which are wholly owned.
The Company’s investment in the Ga-Phasha joint venture (note 7.2.1) is accounted for using the equity method
(note 4).
All material inter-company balances and transactions have been eliminated.
3.
SIGNIFICANT ACCOUNTING PRINCIPLES
3.1
Cash and equivalents consist of cash and highly liquid investments, having maturity dates of three months
or less from the date of purchase, that are readily convertible to known amounts of cash.
3.2
Equipment
Equipment is carried at cost less accumulated amortisation. Amortisation is provided on a declining balance
basis at various rates ranging from 15% to 30% per annum.
3.3
Exploration expenses incurred prior to determination of the feasibility of mining operations, and periodic
option payments are expensed as incurred. Mineral property acquisition costs, and exploration and
development expenditures incurred subsequent to the determination of the feasibility of mining operations
and the receipt of required construction and exploration permits, are capitalised until the property to which
they relate is placed into production, sold, allowed to lapse or abandoned.
Mineral property acquisition costs include the cash consideration and the fair market value of common
shares and warrants issued for mineral property interests, pursuant to the terms of the relevant agreement.
These costs will be amortised over the estimated life of the property following commencement of
commercial production, or written off if the property is sold, allowed to lapse or abandoned or when an
impairment in value has been determined to have occurred.
58
3.4
Investments
Investments in entities over which the Company exercises significant influence are accounted for using the
equity method. Investments in joint ventures which the Company jointly controls, which are not variable
interest entities, are accounted for using the proportionate consolidation method. Other investments are
recorded at cost and written down only when the Company has determined that a decline in value that is
other than temporary has occurred.
3.5
Share capital
The Company records proceeds from share issuances net of issue costs. Shares issued for consideration other
than cash are valued at the quoted price on the date the agreement to issue the shares was reached and
announced.
3.6
Income taxes
The Company uses the asset and liability method of accounting for income taxes. Under this method, future
income tax assets and liabilities are computed based on differences between the carrying amounts of assets
and liabilities on the balance sheet and their corresponding tax values, using the substantively enacted or
enacted income tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Future income tax assets also result from unused loss carry
forwards and other deductions. Future tax assets are recognized to the extent that they are considered more
likely than not to be realized. The carrying value of future income tax assets is adjusted, if necessary, by the
use of a valuation allowance to reflect the amount that is considered to be more likely than not of realisation.
3.7
Loss per share
Basic loss per share is calculated by dividing the loss available to common shareholders by the weighted
average number of common shares outstanding during the period. For all periods presented, loss available to
common shareholders equals the reported loss.
Diluted loss per common share is calculated using the treasury stock method. Under the treasury stock
method, the weighted average number of common shares outstanding used for the calculation of diluted loss
per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants
are used to repurchase common shares at the average market price during the year. In the periods presented,
diluted loss per share is the same as basic loss per share as the effect of including outstanding options and
warrants in the loss per share calculation would be anti-dilutive.
3.8
Fair value of financial instruments
The carrying amounts of cash and equivalents, amounts receivable, and accounts payable and accrued
liabilities approximate their fair values due to their short-term nature. It is not practicable to determine the
fair values of amounts receivable due from related parties (note 9) due to the related party nature of such
amounts and the absence of a secondary market for such instruments.
3.9
Translation of foreign currencies
All of the Company’s foreign operations are integrated. Monetary assets and liabilities denominated in a
foreign currency are translated into Canadian dollars at exchange rates in effect at the balance sheet date.
Non-monetary assets and liabilities are translated at historical exchange rates unless such items are carried
at market, in which case they are translated at the exchange rates in effect on the balance sheet date.
Revenues and expenses, except amortisation, are translated at the average exchange rates for the year.
Amortisation is translated at the same exchange rate as the assets to which it relates. Gains or losses on
translation are recorded in the statement of operations.
3.10 Use of estimates
The preparation of financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and expenses during the
reporting year. Significant areas requiring the use of management estimates include the determination of the
impairment of mineral property interests, determination of reclamation obligations, determination of
valuation allowances for future income tax assets, and the assumptions used in determining fair value of
non-cash stock-based compensation. Actual results could differ from these estimates.
59
3.11 Stock-based compensation
The Company has a share option plan which is described in note 8.3. The Company records all stock-based
payments granted on or after 1 November 2003 using the fair value method.
Under the fair value method, stock-based payments are measured at the fair value of the consideration
received or the fair value of the equity instruments issued or liabilities incurred, whichever is more reliably
measurable, and are charged to operations over the vesting period. The offset is credited to contributed
surplus.
Consideration received on the exercise of stock options is recorded as share capital and the related
contributed surplus is transferred to share capital.
3.12 Asset retirement obligations
The Company recognises statutory, contractual or other legal obligations related to the retirement of
tangible long-lived assets when such obligations are incurred, if a reasonable estimate of fair value can be
made. These obligations are measured initially at fair value and the resulting costs are capitalized to the
carrying value of the related asset. In subsequent periods, the liability is adjusted for any changes in the
amount or timing and for the discounting of the underlying future cash flows. The capitalised asset
retirement cost is amortised to operations over the life of the asset.
3.13 Segment disclosures
The Company operates in a single operating segment, being the exploration of mineral properties in South
Africa.
3.14 Comparative figures
Certain of the prior periods’ comparative figures have been restated to conform to the presentation adopted
for the current period.
4.
CHANGE IN ACCOUNTING POLICY
Effective 1 January 2005, the Company adopted the Canadian Institute of Chartered Accountants Handbook
Accounting Guideline 15, “Consolidation of Variable Interest Entities” (“AcG15”). Pursuant to AcG15, the Company
is required to consolidate variable interest entities (“VIEs”), where it is the VIEs primary beneficiary.VIEs are entities
in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional subordinated financial support from other
parties. The primary beneficiary is the party that has exposure to a majority of the expected losses and/or expected
residual returns of the VIE. The Company has concluded that the Ga-Phasha Project qualifies as a VIE but that the
Company is not the primary beneficiary.
Accordingly, under AcG15, the Company’s interest in the Ga-Phasha Project is accounted for using the equity
method. Previously, the Company proportionately consolidated its interest. The Company has retroactively
adopted this standard with restatement of prior periods. On adoption of this new standard at 1 January 2005, the
Company decreased amounts receivable by C$24 045, decreased accounts payable and accrued liabilities by
C$219 423, decreased mineral property interests by C$195 387 and decreased future income tax liability by
C$1 385 255 at 31 December 2004. Deficit at 1 January 2005 and results of operations for the fourteen-months
ended 31 December 2004 and the year ended 31 October 2003 remained unchanged.
The Company has combined the “Investment in Ga-Phasha Project” with mineral property interests, and has
presented the exploration expenses related to the Ga-Phasha Project together with exploration expenses.
60
The effect of the above required change in accounting policy on the Company’s consolidated balance sheets at
31 December 2004 is summarised as follows:
As at
31 December
2004
C$
Consolidated balance sheets
Total assets as originally stated
Exclusion of current assets of Micawber
Equity loss of “Investment in Ga-Phasha Project”
Future income tax related to “Investment in Ga-Phasha Project”
26 025 635
(24 045)
(195 387)
(1 385 255)
Total assets, as restated
24 420 948
Total liabilities as originally stated
Exclusion of current liabilities of Micawber
Future income tax related to “Investment in Ga-Phasha Project”
2 958 988
(219 432)
(1 385 255)
Total liabilities, as restated
1 354 301
Shareholders’ equity as originally stated and as restated
5.
6.
23 066 647
AMOUNTS RECEIVABLE
31 December
2005
C$
31 December
2004
C$
Value-added taxes recoverable
Employee expense advances
Other receivables
31 987
45 196
142 692
495 947
10 354
7 188
Amounts receivable
219 875
513 489
EQUIPMENT
31 December 2005
쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭쎭
Office
Vehicles
31 December 2004
Cost
C$
Accumulated
Amortisation
C$
Net book
Value
C$
Cost
C$
Accumulated
Amortisation
C$
Net book
Value
C$
90 520
253 468
48 462
121 363
42 058
132 105
65 846
253 468
34 794
86 525
31 052
166 943
343 988
169 825
174 163
319 314
121 319
197 955
61
7.
MINERAL PROPERTY INTERESTS
Note
Ga-Phasha Project
Balance, end of period
7.1
31 December
2004
C$
7.2.1
Balance, beginning of period
Acquisition costs during the period
Future income tax liability
Equity loss – exploration expenses
Net investments during the period
Equity gain – future income tax recovery
Equity gain – foreign exchange
Ga-Phasha Project, end of period
Platreef Properties – acquisition costs
31 December
2005
C$
7.1.1
4 294 358
–
–
(317 709)
95 039
65 000
165 312
–
5 875 000
(1 385 255)
(195 387)
–
–
–
4 302 000
4 200 000
4 294 358
4 200 000
8 502 000
8 494 358
Northern Limb of the Bushveld Complex, South Africa
7.1.1 Platreef
In October 1999, the Company acquired a two-stage right to purchase up to 100% of Pinnacle
Resources Inc. (“Pinnacle”) South African subsidiary, Plateau Resources (Proprietary) Limited (“Plateau
Resources’), which holds the Platreef platinum group minerals (“PGM”) properties located on the
Northern Limb of the Bushveld Complex in South Africa.
Pursuant to the acquisition agreement, the Company issued 378 500 common shares during the
period October 1999 to November 2003. On 13 November 2003, the Company issued an additional
400 000 common shares as full and final negotiated settlement under this agreement and thereby
completed its acquisition of Plateau Resources.
In South Africa, many mineral claim areas were historically defined by farm boundaries and are
commonly referred to as “farms”.
On 23 May 2000, the Company added to its mineral rights in the region by acquiring through Plateau
Resources the option to purchase a 100% interest in portion 2 of the Elandsfontein 766LR farm
located contiguous to the pre-existing Platreef properties, pursuant to an agreement with MSA
Projects (Proprietary) Limited. The option required staged issuances of a maximum of 500 000
common shares of the Company (of which 412 500 common shares have been issued to
31 December 2005 and no further share issuances are expected) and aggregate cash payments up to
a maximum of US$350 000 (of which US$69 250 and C$15 000 have been paid).
In July 2001, Plateau Resources acquired the right to purchase a 100% interest in the farm Hamburg
737LR (2 126 hectares) and Portion 1 of the farm Elandsfontein 766LR (428 hectares), located
contiguous to the north end of the then-existing Platreef properties. Consideration for the
exploration rights to these properties, which are in effect for a five year term, consists of payments
of US$2.00 per hectare in year one escalating in stages to US$4.50 per hectare in year five. To
purchase the farms outright, a payment of US$325 per hectare is required if the option is exercised
in year one, escalating in stages to US$600 per hectare in year five.
In August 2002, the Company entered into a five year prospecting contract, expiring August 2007, with
an option to extend the agreement for an additional three years with the South African Department
of Minerals and Energy (“DME”) for farm Noord Holland 775LR (1 229 hectares) bringing the aggregate
land package of its Platreef Property to approximately 13 400 hectares. Annual option fees ranging
from South African Rand (“ZAR”) 3 per hectare to ZAR18 per hectare are payable to the DME.
7.1.2 Rietfontein
On 10 October 2001, the Company completed an agreement with African Minerals Ltd, now Ivanhoe
Nickel and Platinum Ltd (“Ivanplats”), a private affiliate of Ivanhoe Capital Corporation, whereby
Ivanplats has the right to earn a 50% interest in the Company’s 2 900 hectare Rietfontein 2KS farm
62
(“Rietfontein”). Under the terms of this agreement, Ivanplats must incur at least C$750 000 in
expenditures pursuant to exploration activities undertaken on Rietfontein in accordance with an
approved program in each of the ensuing two years (of which the year one program has been
completed) to obtain the right to form a 50/50 joint venture with the Company on Rietfontein. There
is disagreement over budgets, compilation and analysis of the exploration results, and the overall
adequacy and completeness of Ivanplats’ exploration activities. The Company and Ivanplats are
currently in discussions over these matters, both outside of and within a formal arbitration process,
pursuant to the terms of the earn-in agreement.
7.1.3 Kwanda (“Rustenburg”)
On 16 May 2002, the Company completed an agreement with Rustenburg Platinum Mines Limited
(“RPM”), a wholly-owned subsidiary of Anglo American Platinum Corporation Limited (together
“Anglo Platinum”), for the right to acquire up to an 80% interest in twelve PGM properties located
on the Northern Limb of the Bushveld Complex.
Under the agreements with Anglo Platinum, the Company has acquired an initial 50% interest in the
PGM rights to the twelve farms and can maintain this interest by making staged exploration
expenditure totalling ZAR25 million within five years. The Company is required to, and did, spend
ZAR2.5 million in year one, ZAR5 million in year two, and is required to spend ZAR5 million in each
of years three and four and ZAR7.5 million in year five. The Company has not yet fulfilled its
expenditure requirements in respect of year three, but is in negotiations with RPM to amend the
exploration expenditure schedule.
If a mineral resource is identified, the Company can earn an additional 30% interest by bringing the
property into commercial production. RPM will retain a 20% interest in the joint venture.
The agreements also include plans to involve local communities in future development of the
properties. Any participation by local and regional communities will be provided out of RPM’s interest
and any participation in the venture by Historically Disadvantaged South Africans (“HDSA”) partner
will be provided out of the Company’s interest.
7.1.4 Boikgantsho (“Drenthe – Overysel”)
On 26 November 2003, the Company announced that it had entered into a Joint Venture Agreement
with Potgietersrust Platinums Limited (“PPRust”), a wholly owned subsidiary of Anglo American
Platinum Corporation Limited (together “Anglo Platinum”). The Joint Venture was formed to explore
and develop PGMs, gold and nickel mineralization on the Company’s Drenthe 778LR and Witrivier
777LR farms and a portion of PPRust’s adjacent Overysel 815LR farm. These farms are located on the
Northern Limb of the Bushveld Complex.
The objective is to explore and develop a large-scale open pit deposit with the potential to utilize
nearby milling, smelting and refining facilities which could provide substantial cost advantages to a
new mining project. The Company contributed its rights to the Drenthe 778LR farm on which a large
PGM-nickel resource has been outlined in the Drenthe deposit, and will contribute the Witrivier 777LR
farm if the deposit extends north on to Witrivier 777LR. PPRust is contributing its rights to the
northern portion of the Overysel 815LR farm which lies south of and contiguous to the Drenthe
778LR farm.
Pursuant to the terms of the Joint Venture Agreement, the Company and Anglo Platinum formed an
initial 50/50 joint venture (“the Boikgantsho JV”), to explore these farms for a period of up to five
years. During that period, Anooraq will operate the exploration programs, and spend up to ZAR12.35
million (of which the entire amount has been spent) on behalf of the Boikgantsho JV. Anooraq will
then have the option to proceed on a year-by-year basis and to take the project to a bankable
feasibility study (“BFS”) level.
Once a BFS has been completed, the parties, by agreement, may proceed to exploitation subject to
relevant regulatory requirements. If both partners decide to proceed, then a joint management
committee will be established to oversee development and operations. At commencement of
exploitation, the JV interest allotted to each of Anooraq and Anglo Platinum will be determined in
proportion to the relative value of the metals contained in each contributed property as reflected in
the BFS. Anooraq or Anglo Platinum, as the case may be, each has the right to make a cash payment
to the other party or to fund additional capital contributions to equalize their respective
63
contributions. During development, the Boikgantsho JV will be seeking a Black Economic
Empowerment (“BEE”) partner to participate in the project (which may be Anooraq itself) with the
original Boikgantsho JV partners dividing the remaining interest.
Should the Company choose not to proceed, Anglo Platinum has the option of acquiring the
Company’s interest at the aggregate of:
(a) the net present value of exploiting the Company’s mineral rights as a stand alone mining
operation, by applying an agreed discount rate as determined in the BFS; and
(b) all exploration expenditures (as defined in the agreement) incurred by the Company up to the
completion of the BFS.
Should Anglo Platinum decide not to contribute to exploitation, its interest will be diluted over time
pursuant to a formula taking into account expenditure on the project by the contributory parties.
Anglo Platinum will remain entitled to a minimum 12.5% non-contributory interest, adjusted
depending on the final PGM royalty to be established under the South African Mineral and Petroleum
Royalty Bill, to a maximum of 15%.
Anglo Platinum has the right to enter into a PGM Ore or Concentrate Purchase and Disposal
Agreement at the exploitation phase, based on standard commercial terms, whereby PGM produced
from the operation would be treated at Anglo Platinum’s facilities.
7.2
Eastern Limb of the Bushveld Complex, South Africa
7.2.1 Ga-Phasha Project
In January 2004, the Company announced it had agreed to terms whereby the Company and Pelawan
Investments (Proprietary) Limited (“Pelawan”), a private South African BEE company, would combine
their respective PGM assets, comprising the Company’s Northern and Western Limb PGM projects
and Pelawan’s 50% participation interest in the Ga-Phasha (previously known as Paschaskraal) PGM
Project on the Eastern Limb of the Bushveld Complex in South Africa. The Ga-Phasha property consists
of four farms – Portion 1 of Paschaskraal 466KS, and the whole of farms Klipfontein 465KS, De Kamp
507KS and Avoca 472KS – covering an area of approximately 9 700 hectares.
The mineral title relating to the Ga-Phasha Project is held by Micawber 277 (Proprietary) Limited
(“Micawber”), a private South African corporation which was owned 50% by Anglo Platinum and 50%
by Pelawan.
Pursuant to the terms of the agreement between the Company and Pelawan, the Company acquired
Pelawan’s 50% shareholding in Micawber and the rights to its 50% participation interest in the GaPhasha Project in return for 91.2 million common shares of the Company (the “Consideration Shares’)
and cash payments totalling ZAR15 652 744 (C$3 055 416). Approximately 83 million Consideration
Shares are being held in escrow until the earlier of 29 September 2010 or twelve months after the
commencement of commercial production from the Ga-Phasha Project at which time they will be
released.
The transaction was completed on 29 September 2004 and consequently Anooraq became a BEE
company, by virtue of being majority owned by HDSAs. The Ga-Phasha Project is a 50/50 joint
venture between the Company, through Plateau Resources, and Anglo Platinum, through its wholly
owned subsidiary RPM, governed by, among other things, a shareholders’ agreement relating to
Micawber entered into on 22 September 2004. Work on the Ga-Phasha Project is continuing toward
the preparation of a BFS.
The share exchange agreement which gave effect to the combination provides that if any financings
in relation to the Ga-Phasha and Drenthe-Overysel (subsequently renamed “Boikgantsho”) Projects
(the “Projects’) take place prior to a particular date (the “Finalisation Date”) and the shareholder
dilution associated with such financings cause Pelawan’s shareholding in Anooraq to fall below a 52%
minimum shareholding Anooraq will issue additional common shares to Pelawan in order to maintain
that minimum. Such 52% minimum shareholding allows for compliance with BEE equity
requirements under South African mineral legislation and was also a requirement of the South African
Reserve Bank for approving the transaction. Originally the Finalisation Date was 30 September 2005
but that date, by agreement in November 2005 between Anooraq and Pelawan, was extended.
64
The share exchange agreement further provided that, to the extent that no such dilutive financings
had actually taken place by the Finalisation Date, certain dilutive financings were deemed to have
occurred by that date. The purpose was to make allowance for the dilutive effect on Pelawan’s
shareholding of the anticipated financings for mine development of the Projects and, in this way,
safeguard the status of Anooraq as a BEE company. For the purposes of calculating whether, by virtue
of such deemed dilutive financings, any common shares are required to be issued to Pelawan in order
to maintain a minimum 52% shareholding, the share exchange agreement provides that the quantum
of such deemed financings will equal:
(a) 30% of the estimated development costs in accordance with the bankable feasibility studies in
respect of the Projects, less cash on hand; or
(b) to the extent that such bankable feasibility studies have not been prepared as at the Finalisation
Date, C$70.8 million related to the Ga-Phasha Project and C$27.6 million related to the DrentheOverysel Project, less cash on hand (the “Deemed Dilutive Financings”).
Following the Finalisation Date, Anooraq has the right but not the obligation to issue additional
common shares to Pelawan in order to maintain Pelawan’s minimum shareholding.
Neither additional financings nor bankable feasibility studies for the Projects had been completed by
Anooraq as at 30 September 2005 and, in the absence of an amending agreement between the
parties, a dilutive financing totalling C$98.4 million and share issuances (based on the share price at
the date of the deemed dilutive financing) would have been deemed to have taken place as at such
date and the Company would have been obligated to issue to Pelawan that number of shares which,
after notionally giving effect to the Deemed Dilutive Financings, would have resulted in Pelawan
continuing to hold a 52% interest in the Company. In November 2005, Anooraq and Pelawan agreed
to extend the Finalisation Date to the earlier of:
(a) the first date at which both the Drenthe-Overysel financing and the Ga-Phasha financings of the
Projects shall, in fact, have occurred;
(b) any date which is within a 60-day period following an announcement by Anooraq of a further
material transaction, as defined; and
(c) 31 December 2006.
None of these events have occurred at 31 December 2005. Accordingly, the additional common
shares which would, under the original terms of the share exchange agreement, have become issuable
to Pelawan by Anooraq as of 30 September 2005 were not required to be issued at that time and the
determination of whether any additional common shares will be required to be issued to Pelawan in
light of any actual or deemed dilutive financings will be made in due course on the Finalisation Date,
as amended. The method for determining whether such additional common shares will be issuable
upon the Finalisation Date remains as described above. Upon the Finalisation Date, the dilutive
financings for the purposes of calculating whether any additional common shares are issuable to
Pelawan will be the actual dilutive financings undertaken in relation to the Projects to date and, to
the extent that no such financings have been undertaken, the Deemed Dilutive Financings described
above.
The transaction constituted a “reverse take-over” under the policies of the TSX Venture Exchange. This
transaction was accounted for as an acquisition by Anooraq of Micawber’s 50% interest in its mineral
properties. However, because neither the fair value of the Anooraq common shares issued, nor the fair
value of the mineral property interests acquired could be readily determined, the acquisition was
recorded at the net book value, as determined in accordance with Canadian generally accepted
accounting principles, of Micawber’s net assets acquired, being nil, plus related transaction costs.
The acquisition costs were accounted for as follows:
Acquisition costs of Ga-Phasha Project
C$
Cash payments totalling ZAR15 652 744
Financial, legal, advisory, and other fees
Estimated South African stamp duties
Book value of Micawber’s net assets acquired
Future income taxes
3 055 416
1 419 329
15 000
–
1 385 255
Acquisition cost, Ga-Phasha Project
5 875 000
65
Commencing 24 September 2004, the date of completion of the reverse-take over transaction, the
Company accounts for its interest in Micawber, which holds the Ga-Phasha Project, using the equity
method. The Ga-Phasha Project includes for the year ended 31 December 2005 an equity loss relating
to exploration expenses of C$317 709 (fourteen-month period ended 31 December 2004 –
C$195 387), an equity gain for future income tax recovery of C$197 597 (fourteen-month period
ended 31 December 2004 – C$ nil), and an equity gain for foreign exchange of C$195 357 (fourteenmonth period ended 31 December 2004 – C$ nil).
7.3
Western Limb of the Bushveld Complex, South Africa
7.3.1 Thusong Joint Venture
In May 2003, the Company entered into a joint venture agreement with RPM, to form a joint venture
to explore and develop PGMs, gold and nickel mineralisation on the Wachteenbietjieslaagte 4JQ,
Vogelstruiskraal 400KQ and Cyferkuil 1JQ farms, which are located on the Western Limb of the
Bushveld Complex, approximately 75 kilometres north of the town of Rustenburg, adjacent to Anglo
Platinum’s Union operations.
Pursuant to the terms of the joint venture agreement, the Company and Anglo Platinum will form an
initial 50/50 joint venture, (the “Thusong JV”), to explore the three farms for a period of up to five
years from the date of the agreement. During that period, the Company will operate exploration
programs, and spend up to ZAR12 million on behalf of the Thusong JV. The Company will have the
option to proceed to take the project to a BFS level. Once the BFS has been completed, the parties,
by agreement, may jointly or separately proceed to exploitation. During development, the Thusong JV
will be seeking a BEE partner (which could be the Company itself) to participate in the project. If both
partners decide to proceed, then a joint management committee will be established to oversee
development and operations. Should Anglo Platinum decide not to contribute to exploitation, its
interest will be diluted over time pursuant to a formula taking into account expenditure on the
project by the contributing parties. Anglo Platinum will remain entitled to a minimum 17.5% noncontributory interest, adjusted depending on the final PGM royalty established under the South
African Mineral and Petroleum Royalty Bill to a maximum of 20%. Should the Company decide not
to proceed, Anglo Platinum has the right to buy out the Company’s interest at the pro rata net present
value of exploiting the farms as determined in the BFS.
Under current South African legislation, as permits expire (or by 30 April 2006) the Company is required to convert
its old order rights to new order rights, which the Company has commenced. The Company sees no reason to
expect that such conversions will not be approved in the normal course.
8.
SHARE CAPITAL
8.1
Authorized share capital
The Company’s authorized share capital consists of an unlimited number of common shares without par
value.
66
8.2
Issued and outstanding common shares
Note
Number
of
Shares
Dollar
amount of
Shares
C$
32 148 463
20 048 474
0.75
0.60
0.72
270 833
1 206 000
5 138 876
203 125
720 090
3 435 560
0.52
1 400 000
679 614
40 164 172
25 086 863
0.85
400 000
340 000
–
0.75
0.85
–
3 419 300
3 313 125
588 560
2 555 390
2 822 529
2.10
9 523 810
91 200 000
–
18 635 143
–
(54 128)
Share
Price
C$
Private placement, May 2003, net of
issue costs
8.6
Fair value of stock options allocated to
shares issued on exercise
Private placement, December 2003, net of
issue costs
Shares issued to acquire Ga-Phasha Project
Share issue cost of Ga-Phasha Project
7.1
8.5
7.2
Fair value of stock options allocated to
shares issued on exercise
8.3
148 020 407
49 974 357
0.79
200 000
157 500
–
–
75 506
148 220 407
50 207 363
Share option plan
The Company has a share option plan approved by the Company’s shareholders that allows it to grant
options, subject to regulatory terms and approval, to its directors, employees, officers, and consultants to, as
at 31 December 2005, acquire up to 13 453 200 common shares, of which 4 778 200 options were
outstanding and 8 675 000 remained available to grant. The exercise price of each option is set by the Board
of Directors at the time of grant but cannot be less than the market price (less permissible discounts) on the
TSX Venture Exchange. Options have a term of up to a maximum of ten years (however, the Company has
historically granted options for up to a term of five years), and terminate 30 days following the termination
of the optionee’s employment or term of engagement, except in the case of retirement or death. Vesting of
options is at the discretion of the Board at the time the options are granted.
67
The continuity of common share purchase options is as follows:
Weighted average
exercise price
(C$)
Number of
options
Contractual
weighted average
remaining life
(years)
Granted
Exercised
Expired
Cancelled
0.75
1.35
0.60
0.56
0.68
3 756 500
2 852 000
(1 206 000)
(88 500)
(114 000)
1.59
Granted
Exercised
Cancelled
1.12
1.89
0.75
0.97
5 200 000
897 500
(3 419 300)
(68 200)
1.36
Granted
Exercised
Expired
Cancelled
1.87
1.39
0.79
2.00
1.60
2 610 000
4 233 200
(200 000)
(1 522 500)
(342 500)
1.54
1.47
4 778 200
3.61
Options outstanding and exercisable at 31 December 2005 were as follows:
Expiry date
Option price
C$
Number of options
outstanding
1.95
2.00
1.64
0.95
1.40
1.40
1.40
535 000
35 000
200 000
100 000
435 000
408 200
3 065 000
26 October 2006
26 October 2006
26 October 2006
1 July 2007
28 September 2007
14 December 2007
14 December 2010
Total options
4 778 200
Average option price
1.47
The exercise prices of all common share purchase options granted during the period were equal to the market
price at the grant date. Using an option pricing model with the assumptions noted below, the estimated fair
value of all options granted have been reflected in the consolidated statement of operations as follows:
68
Year ended
31 December
2005
C$
Fourteen
months ended
31 December
2004
C$
Period ended
31 October
2003
C$
Stock-based compensation – Exploration
Stock-based compensation – Office and administration
714 243
1 822 010
1 040 542
1 426 006
8 875
477 087
Credited to contributed surplus during the period
Share purchase options exercised, credited to
share capital
Contributed surplus, beginning of the period
2 536 253
2 466 548
485 962
(75 506)
2 363 950
Contributed surplus, end of period
4 824 697
(588 560)
485 962
2 363 950
–
–
485 962
The assumptions used to estimate the fair value of options granted during the period were:
Risk free interest rate
Expected life
Volatility
Expected dividends
8.4
2005
2004
2003
3%
4 years
82%
nil
3%
2 years
88%
nil
3%
2 years
40%
nil
Share purchase warrants
The continuity of common share purchase warrants is as follows:
Note Reference
Expiry date
8.5
28 August
2003
21 December
2003
27 December
2003
1 June
2005
C$0.70
C$0.85
C$0.88
C$2.50
Exercise price
Balance, 31 October
2002
Exercised
8.5
4 500 000
(4 500 000)
TOTAL
3 692 718
(592 000)
259 283
(46 876)
–
–
8 452 001
(5 138 876)
3 100 718
–
(3 100 718)
212 407
–
(212 407)
–
5 333 334
–
3 313 125
5 333 334
(3 313 125)
5 333 334
–
–
(5 333 334)
5 333 334
–
–
(5 333 334)
Issued
Exercised
–
–
–
Issued
Exercised
Expired
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Private placement, December 2003
During December 2003, the Company completed a C$20 million private placement financing of 9 523 810
units at a price of C$2.10 per unit. Each unit was comprised of one common share and one-half of a common
share purchase warrant, with each whole warrant exercisable at C$2.50 per common share until 1 June 2005.
The agents received 571 429 share purchase warrants each exercisable into one common share at C$2.50 per
common share until 1 June 2005. The fair value of warrants issued has been presented on a net basis in share
capital. During the year ended 31 December 2005, these warrants expired unexercised.
8.6
Private placement, May 2003
On 27 May 2003, the Company completed a private placement financing consisting of 1 400 000 common
shares at a price of C$0.52 per common share.
69
9.
RELATED PARTY TRANSACTIONS AND BALANCES
Services rendered by
Hunter Dickinson Inc.
Hunter Dickinson Group Inc.
Pelawan
CEC Engineering Ltd.
Related party balances receivable/(payable)
Pelawan
Tecnicos HD de Mexico SA de CV
Servicios HD de Mexico SA de CV
70
Note
9.1
9.2
9.3
9.4
Note
9.1
9.2
9.3
9.1
9.1
Year ended
31 December
2005
C$
Period ended
31 December
2004
C$
Year ended
31 October
2003
C$
1 297 159
9 600
658 035
166 662
1 512 441
17 360
745 438
135 104
1 281 758
28 722
–
166 969
As at
31 December
2005
C$
As at
31 December
2004
C$
233 205
(48 506)
–
–
–
24 195
24 118
44 080
(58 933)
97 649
9.1
Hunter Dickinson Inc. (“HDI”) is a private company owned equally by nine public companies, one of which is
Anooraq. HDI and its wholly owned subsidiaries, including Tecnicos HD de Mexico SA de CV and Servicios
HD de Mexico SA de CV have certain directors in common with the Company, and provide geological,
corporate development, administrative and management services to, and incur third party costs on behalf of,
the Company on a full cost recovery basis pursuant to an agreement dated 31 December 1996. The balances
receivable from (payable to) HDI and its subsidiaries have resulted from advances against future work,
services, or cost reimbursements, or from HDI providing periodic short-term working capital advances to the
Company.
9.2
Hunter Dickinson Group Incorporated (“HDGI”) is a private company with certain directors in common with
the Company that provides consulting services to, and incurs costs on behalf of, the Company, at market rates.
9.3
Pelawan is a private South African BEE company which is a significant shareholder of the Company and which
has certain directors in common with the Company (note 7.2). Pelawan became a majority shareholder on
29 September 2004. During the year ended 31 December 2005, the Company paid or accrued C$658 035
(fourteen months ended 31 December 2004 – C$745 438) for technical, corporate development,
administrative and management services provided to, and repayment of costs paid on behalf of, the
Company.
9.4
During the year ended 31 December 2005, the Company paid or accrued C$166 662 (fourteen months ended
31 December 2004 – C$135 104) to CEC Engineering Limited, a private company owned by a former director,
for engineering and project management services at market rates.
9.5
Micawber is a private South African corporation which is owned 50% by Anglo Platinum and 50% by the
Company; hence it is a related party. The Company accounts for its investment in Micawber using the equity
method (note 7.2).
10. INCOME TAXES
As at 31 December 2005 the tax effect of the significant components within the Company’s future tax
asset/(liability) were as follows:
31 December 2005
C$
Future income tax assets
Loss carry forwards
Equipment
Resource-related tax pools
Other tax pools
Subtotal
Valuation allowance
(Restated)
31 December 2004
C$
4 428 000
4 408 000
20 000
–
582 000
4 008 000
2 783 000
7 000
–
471 000
9 438 000
(9 438 000)
7 269 000
(7 269 000)
Net future income tax asset
–
–
Future income tax liability
1 154 943
1 385 255
The Company’s future income tax liability relates to its equity investment in the Ga-Phasha Project.
Income tax expense differs from the amount that would result from applying the Canadian federal and provincial
tax rates to earnings before income taxes. These differences result from the following items:
31 December 2005
C$
Combined Canadian federal and provincial statutory rate
Income tax at statutory rates
Non-deductible items
Difference in foreign tax rates
Reduction in statutory tax rates
Benefit of unrealized FX loss
Other
Change due to foreign exchange
Valuation allowance
34.87%
(4 174 000)
905 000
455 000
223 000
(237 000)
(64 000)
658 000
2 169 000
(65 000)
(Restated)
31 December 2004
C$
35.62%
(4 640 000)
709 000
616 000
58 000
–
(312 000)
–
3 569 000
–
At 31 December 2005, the Company had losses available for income tax purposes in Canada totalling
approximately C$8.6 million (2004 – C$6.6 million), expiring in various periods from 2006 to 2015.
71
11. SEGMENTED INFORMATION
Year ended
31 December 2005
Exploration expenditures
Loss for the year
Interest and other income
Total assets
Equipment
Fourteen months ended
31 December 2004
Loss for the period
Total assets
Equipment
Year ended
31 December 2003
Loss for the year
Canada
C$
–
(4 302 015)
190 578
4 645 858
–
Canada
C$
–
(4 086 230)
432 551
14 685 470
–
Canada
C$
–
(1 672 726)
43 978
Mexico
C$
–
(8 841)
–
32 166
–
Mexico
C$
–
(4 323)
–
44 151
–
Mexico
C$
–
(128 681)
–
South Africa
C$
5 240 321
(7 992 945)
(70 799)
9 157 572
174 163
South Africa
C$
7 860 266
(8 936 711)
52 901
9 750 260
197 995
South Africa
C$
1 963 784
(2 028 007)
2 082
Total
C$
5 240 321
(12 303 801)
119 779
13 835 596
174 163
Total
C$
7 860 266
(13 027 264)
485 452
24 479 881
197 995
Total
C$
1 963 784
(3 829 414)
46 060
12. SUBSEQUENT EVENTS
12.1 On 1 November 2006, the Company concluded a financing agreement with Anglo Platinum whereby Anglo
Platinum, through its wholly-owned subsidiary Rustenburg Platinum Mines Limited, will loan an amount of
70 million South African Rand to Plateau Resources (Proprietary) Limited (“Plateau”), a wholly owned South
African subsidiary of the Company. The loan bears interest at prime, as quoted by the Standard Bank of South
Africa plus two percent per annum. The first interest payment will become due and payable fourteen months
after the date of the advancement of the funds, with other subsequent interest payments due and payable
in six-month intervals thereafter. The final repayment date for the loan will be on 30 September 2010,
however, the agreement does allow for early repayment thereof. In conjunction with the loan, the Company
incurred financing fees equal to 3% of the loan, payable in cash or common shares of the Company.
Pursuant to security agreements entered into in connection with the loan, Plateau has ceded as security, its
interest in Micawber 277 (Pty) Ltd (“Micawber”). Micawber, a South African company equally owned by
Rustenburg Platinum Mine and Plateau Resources, owns the parties’ interests in the Ga-Phasha PGM Project.
12.2 In October 2006, the Company terminated its Thusong Platinum Mine Joint Venture (“the Thusong JV”)
agreement, with a subsidiary of Anglo Platinum, to explore and develop PGM, gold and nickel mineralization
on three farms on the Western Limb of the Bushveld.
72
Annexure 2
REVIEWED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE
MONTHS ENDED 30 SEPTEMBER 2006
The published reviewed consolidated financial statements of Anooraq as at 30 September 2006 and 31 December 2005,
and for the nine months ended 30 September 2006 and 2005 are presented below – expressed in Canadian dollars
(“C$”), unless otherwise stated.
A copy of the published reviewed consolidated financial statements is available for inspection in the manner indicated
in paragraph 32 of this Pre-Listing Statement.
CONSOLIDATED BALANCE SHEETS
The consolidated balance sheets of Anooraq as at 30 September 2006 and 31 December 2005 are set out below:
Note
As at
30 September
2006
C$
As at
31 December
2005
C$
(unaudited)
ASSETS
Current assets
Amounts receivable
Due from related parties
Prepaid expenses
3
7
Non-current assets
Equipment
4
5
Total assets
2 336 549
5 159 433
1 961 052
112 427
121 045
142 025
4 590 284
219 875
233 205
116 069
8 698 434
8 676 163
97 837
8 600 597
174 163
8 502 000
11 034 983
13 835 596
478 401
378 997
10 556 582
13 456 599
50 207 363
4 849 043
(44 499 824)
50 207 363
4 824 697
(41 575 461)
11 034 983
13 835 596
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Shareholders’ equity
Share capital
Contributed surplus
Deficit
6
6.3
Continuing operations
Contingency
Subsequent events
1
6.2
6.3 and 9
Total liabilities and shareholders’ equity
Approved by the Board of Directors
/s/ Tumelo M. Motsisi
/s/ Ronald W. Thiessen
Tumelo M. Motsisi
Director
Ronald W. Thiessen
Director
73
CONSOLIDATED STATEMENTS OF OPERATIONS
The consolidated statements of operations of Anooraq for the nine-month period ended 30 September 2006 and 2005,
are set out below:
Note
Nine
months ended
30 September
2006
C$
Nine
months ended
30 September
2005
C$
(unaudited)
(unaudited)
588 419
142 958
301 364
599 724
(267 748)
(21 884)
(22 911)
252 436
1 118 423
9 137
15 209
177 672
127 564
301 698
438 735
882 601
5 224 993
(132 752)
–
(93 272)
427 403
1 193 710
2 189 445
868 742
220 747
82 016
Loss before the following
3 020 363
(96 000)
11 604 066
(181 870)
Loss for the period
2 924 363
11 422 196
0.02
148 220 407
0.08
148 150 353
Expenses
Accounting, audit and legal
Conference and travel
Consulting
Exploration (see schedule of exploration expenses)
Foreign exchange loss/(gain)
Loss/(Gain) on disposal of equipment
Interest expense/(income)
Office and administration
Salaries and benefits
Stock-based compensation – office and administration
Stock-based compensation – exploration
Shareholders communications
Trust and filing
Basic and diluted loss per share
Weighted average number of common shares outstanding
6.3
6.3
CONSOLIDATED STATEMENTS OF DEFICIT
The consolidated statements of deficit of Anooraq for the nine-month period ended 30 September 2006 and 2005 are
set out below:
Nine
months ended
30 September
2006
C$
Nine
months ended
30 September
2005
C$
(unaudited)
(unaudited)
Deficit, beginning of the period
Loss for the period
(41 575 461)
(2 924 363)
(29 271 660)
(11 422 196)
Deficit, end of the period
(44 499 824)
(40 693 856)
74
CONSOLIDATED STATEMENTS OF CASH FLOWS
The consolidated statements of deficit of Anooraq for the nine-month period ended 30 September 2006 and 2005 are
set out below:
Note
Operating activities
Loss for the period
Items not involving cash
Amortisation included in exploration expenses
Future income tax expense/(recovery)
Loss/(Gain) on disposal of equipment
Unrealized foreign exchange loss/(gain)
Equity loss/(gain) on Ga-Phasha Project
Changes in non-cash operating working capital
Amounts receivable
Amounts due to and from related parties
Prepaid expenses
Cash and equivalents used in operating activities
Investing activities
Purchase of equipment
Proceeds on disposal of equipment
Equity investment
Cash and equivalents provided by/(used in) investing activities
6.3
Nine
months ended
30 September
2006
C$
Nine
months ended
30 September
2005
C$
(unaudited)
(unaudited)
(2 924 363)
(11 422 196)
25 585
(96 000)
24 346
(21 884)
(235 000)
252 627
36 318
(181 870)
3 058 187
–
(198 385)
214 062
107 448
112 160
(25 956)
99 404
391 444
(46 588)
(4 005)
(1 003 565)
(2 681 633)
(9 156 598)
(9 731)
82 356
(20 224)
(19 099)
–
–
52 401
(19 099)
Financing activities
Issuance of common shares
–
157 500
Cash and equivalents provided by financing activities
–
157 500
Increase/(Decrease) in cash and equivalents
Cash and equivalents, beginning of period
Cash and equivalents, end of period
Supplementary information
Interest paid
Interest received
Taxes paid
(2 629 232)
4 590 284
(9 018 197)
14 945 355
1 961 052
5 927 158
75 617
(98 528)
–
73 855
(167 127)
–
75
CONSOLIDATED SCHEDULES OF EXPLORATION EXPENSES
The consolidated schedules of exploration expenses of Anooraq for the nine-month period ended 30 September 2006
and 2005 are set out below:
Republic of South Africa
Note
Northern Limb of the Bushveld Complex
Amortisation
Assays and analysis
Drilling
Engineering
Graphics
Property option payments
Site activities
Transportation
Nine
months ended
30 September
2006
C$
(unaudited)
25 585
17 504
–
40 470
10 378
19 797
826
(4 022)
32 548
29 157
2 147
Nine
months ended
30 September
2005
C$
(unaudited)
36 318
1 171 889
2 110 370
465 159
51 498
750 735
3 217
14 978
31 080
226 674
93 723
174 390
4 955 641
21 797
309 842
65 044
28 651
–
–
–
–
190 223
25 997
19 588
1 224
1 468
30 852
425 334
269 352
599 724
15 209
5 224 993
868 742
Exploration expenses incurred during the period
Cumulative expenditures, beginning of period
614 933
22 846 780
6 093 735
16 890 772
Cumulative expenditures, end of period
23 461 713
22 984 507
Eastern Limb of the Bushveld Complex
Assays and analysis
Drilling
Engineering
Graphics
Site activities
Exploration expenses before the following
76
6.3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Notes to the consolidated financial statements of Anooraq for the nine-month period ended 30 September 2006 and
2005 are set out below:
1.
CONTINUING OPERATIONS
These interim consolidated financial statements are prepared in accordance with Canadian generally accepted
accounting principles and are presented in Canadian dollars. They do not include all the disclosures as required for
annual financial statements under generally accepted accounting principles. However, these interim consolidated
financial statements follow the same accounting policies and methods of application as the Company’s most
recent annual financial statements. These interim consolidated financial statements should be read in conjunction
with the Company’s annual consolidated financial statements as at and for the year ended December 31, 2005,
which are available at www.sedar.com
Operating results for the nine months ended 30 September 2006 are not necessarily indicative of the results that
may be expected for the full year ending 31 December 2006.
The consolidated financial statements are prepared on the basis that the Company will continue as a going
concern. Management recognizes that the Company will need to generate additional financial resources in order
meet its planned business objectives. Subsequent to September 30, 2006, the Company entered into a new loan
agreement (note 9.1). However, there can be no assurances that the Company will continue to obtain additional
financial resources and/or achieve profitability or positive cash flows. If the Company is unable to obtain adequate
additional financing, the Company will be required to curtail operations and exploration activities. Furthermore,
failure to continue as a going concern would require that the Company’s assets and liabilities be restated on a
liquidation basis which would differ significantly from the going concern basis.
2.
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
These consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are
wholly owned.
The Company’s investment in the Ga-Phasha joint venture is accounted for using the equity method.
All material inter-company balances and transactions have been eliminated.
3.
AMOUNTS RECEIVABLE
Value-added taxes recoverable
Employee expense advances
Other receivables
Amounts receivable
4.
30 September
2006
C$
31 December
2005
C$
53 616
57 222
1 589
31 987
45 196
142 692
112 427
219 875
EQUIPMENT
31 December 2005
Office
Vehicles
31 December 2004
Cost
C$
Accumulated
Amortisation
C$
Net book
Value
C$
Cost
C$
Accumulated
Amortisation
C$
Net book
Value
C$
9 149
220 194
4 726
126 780
4 423
93 414
90 520
253 468
48 462
121 363
42 058
132 105
229 343
131 506
97 837
343 988
169 825
174 163
77
5.
MINERAL PROPERTY INTERESTS
C$
6.
Ga-Phasha Project
Equity loss – exploration expenses
Net investments during the period
Foreign exchange gains
4 302 000
(252 627)
20 224
235 000
96 000
Ga-Phasha Project, 30 September 2006
4 400 597
Platreef Properties, 31 December 2005 and 30 September 2006
4 200 000
Balance, 30 September 2006
8 600 597
SHARE CAPITAL
6.1
Authorized share capital
The Company’s authorized share capital consists of an unlimited number of common shares without
par value.
6.2
Issued and outstanding common shares
on exercise
Price
C$
Number of
Shares
Dollar
Amount
C$
0.79
148 020 407
200 000
49 974 357
157 500
–
–
75 506
148 220 407
50 207 363
Balance, 31 December 2005 and 30 September 2006
In the event of equity financing or “deemed financing”, Pelawan Investments (Proprietary) Limited, a private
South African Black Economic Empowerment company and significant shareholder of the Company, is
entitled to be topped up in order to maintain a minimum 52% shareholding pursuant to a Share Exchange
Agreement (see note 7.2.1 of the 31 December 2005 consolidated audited financial statements).
6.3
Share option plan
The continuity of share purchase options is as follows:
78
Contractual
weighted
average
remaining life
(years)
Weighted
average
exercise price
C$
Number of
options
Cancelled
1.47
1.92
4 778 200
(235 000)
3.61
Balance, 30 September 2006
1.44
4 543 200
3.07
Options outstanding and exercisable at 30 September 2006 were as follows:
Expiry date
26 October 2006
26 October 2006
26 October 2006
1 July 2007
28 September 2007
14 December 2007
14 December 2010
Option price
C$
Number of
options
outstanding
1.95
2.00
1.64
0.95
1.40
1.40
1.40
320 000
35 000
200 000
100 000
425 000
398 200
3 065 000
Total
Average option price
4 543 200
1.44
At 30 September 2006 a total of 4 543 200 options, at an average exercise price of C$1.44, were exercisable.
Subsequent to 30 September 2006, 555 000 of these options expired unexercised. The exercise prices of all
share purchase options granted by the Company are equal to or above the market price at the grant date.
No options were granted during the nine months ended 30 September 2006. Using an option pricing model
with the assumptions noted below, the estimated fair value of all options granted has been reflected in the
consolidated statement of operations and in contributed surplus as follows:
Nine months ended
Stock-based compensation – Exploration
Stock-based compensation – Office and administration
30 September
2006
C$
30 September
2005
C$
15 209
9 137
868 742
2 189 445
Credited to contributed surplus during the period
Share purchase options exercised, credited to share capital
Contributed surplus, beginning of the period
24 346
–
4 824 697
3 058 187
(75 506)
2 363 950
Contributed surplus, end of period
4 849 043
5 346 631
The assumptions used to estimate the fair value of options granted during the period were:
Nine months ended
Risk free interest rate
Expected life
Volatility
Expected dividends
7.
30 September
2006
C$
30 September
2005
C$
4%
4 years
63%
nil
3%
4 years
78%
nil
RELATED PARTY TRANSACTIONS AND BALANCES
Nine months ended
Sevices rendered by
Pelawan Investments (Proprietary) Ltd.
30 September
2006
C$
30 September
2005
C$
701 765
–
–
89 189
1 154 007
9 600
658 035
96 100
79
As at
30 September
2006
C$
As at
31 December
2005
C$
87 233
33 812
233 205
–
Receivable from related parties
121 045
233 205
Related party balances payable – included in accounts payable
(16 714)
(48 506)
Related party balances receivable
Southgold Exploration (Proprietary) Limited
Southgold Exploration (Proprietary) Limited (“Southgold”) is a wholly-owned subsidiary of Great Basin Gold Ltd.,
a Canadian public company which has certain directors in common with the Company. Southgold shares certain
premises and other facilities with the Company pursuant to a cost-sharing arrangement based on a full cost
recovery basis.
8.
SEGMENTED INFORMATION
As at and for the nine months
ended 30 September 2006
Loss for the period
Interest expense/(income)
Total assets
Equipment
9.
Canada
C$
–
(1 371 840)
73 252
1 839 777
–
Mexico
C$
–
(2 760)
–
29 408
–
South Africa
C$
599 724
(1 549 763)
(50 341)
9 165 798
97 837
Total
C$
599 724
(2 924 363)
22 911
11 034 983
97 837
SUBSEQUENT EVENTS
9.1
On 1 November 2006, the Company concluded a financing agreement with Anglo Platinum whereby Anglo
Platinum, through its wholly owned subsidiary Rustenburg Platinum Mines Limited, will loan an amount of
70 million South African Rand to Plateau Resources (Proprietary) Limited (“Plateau”), a wholly owned South
African subsidiary of the Company. The loan bears interest at prime, as quoted by the Standard Bank of South
Africa plus two percent per annum. The first interest payment will become due and payable fourteen months
after the date of the advancement of the funds, with other subsequent interest payments due and payable
in 6-month intervals thereafter. The final repayment date for the loan will be on 30 September 2010,
however, the agreement does allow for early repayment thereof. In conjunction with the loan, the Company
incurred financing fees equal to 3% of the loan, payable in cash or common shares of the Company.
Pursuant to security agreements entered into in connection with the loan, Plateau has ceded as security, its
interest in Micawber 277 (Pty) Ltd (“Micawber”). Micawber, a South African company equally owned by
Rustenburg Platinum Mine and Plateau Resources, owns the parties’ interests in the Ga-Phasha PGM Project.
9.2
80
In October 2006, the Company terminated its Thusong Platinum Mine Joint Venture (“the Thusong JV”)
agreement, with a subsidiary of Anglo Platinum, to explore and develop PGM, gold and nickel mineralization
on three farms on the Western Limb of the Bushveld.
Annexure 3
OTHER DIRECTORSHIPS OR PARTNERSHIPS HELD BY THE DIRECTORS OF
ANOORAQ
The table below sets out the names of all the companies and partnerships and the nature of the businesses of such
companies and partnerships of which the directors of Anooraq are, or have been, either directors or partners during the
five years preceding the last practicable date:
Designation
Currently
director/
partner
Director
Names of company or partnership
Nature of
business
Scott Cousens
Amarc Resources Ltd.
Continental Minerals Corporation
Farallon Resources Ltd.
Great Basin Gold Limited
Northern Dynasty Minerals Ltd.
Rockwell Ventures Inc.
Taseko Mines Limited
Outland Technoligies Inc.
Legacy Athletic Ltd.
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Technology
Sports
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Robert Dickinson
Dickinson Farms Ltd.
Milch Farms Ltd
491038 BC Ltd.
United Mineral Services Ltd.
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Family
Family
Family
Investment
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
David Elliott
StorageFlow Systems Corporation
Mining
Mining
Mining
Services
Mining
Director
Director
Director
Director
Director
Yes
Yes
Yes
No
Yes
Wayne Kirk
Mining
Mining
Mining
Mining
Director
Director
Director
Director
Yes
Yes
Yes
Yes
81
Director
Phumzile Langeni
Imperial Holdings Limited
Massmart Holdings Limited
Emperor’s Palace
Afropulse Investments (Proprietary) Limited
Born Free Investments 55 (Proprietary)
Limited
Popo Molefe
Armaments Corporation of South Africa
Limited
Central Energy Fund (Proprietary) Limited
Hentiq 22416 (Proprietary) Limited
Imperial Holdings Limited
Lereko Energy (Proprietary) Limited
Lereko Mining Supplies (Proprietary) Limited
Motor Industry Ombudsman of South Africa
(Proprietary) Limited
Petroleum, Oil and Gas Corporation of
South Africa (Proprietary) Limited
Simeka BSG Limited
Harold Motaung
African Minerals Professionals
(Proprietary) Limited
Tsutsuma PetroChemicals (Proprietary)
Limited
National Nuclear Regulator
Designation
Currently
director/
partner
Mining
Transport
Retail
Gaming &
Leisure
Investment
Director
Director
Director
Yes
Yes
Yes
Director
Director
Yes
Yes
Property
Director
Yes
Mining
Director
Yes
Nature of
business
Armaments
Energy
Investment
Holding
Services
Energy
Energy
Director
Yes
Director
Director
Director
Director
Yes
Yes
Yes
Yes
Services
Director
Yes
Energy
Services
Director
Director
Yes
Yes
Mining
Director
Yes
Mining
Speciality
Chemicals
Non-Profit –
Regulatory
Director
Yes
Director
Yes
Director
Yes
Tumelo Motsisi
Madiba Bay (Proprietary) Limited
Cape Diving (Proprietary) Limited
Lazig (Proprietary) Limited
Zwelinzima Investments (Proprietary) Limited
Pan African Group (Proprietary) Limited
Mining
Tourism
Diving
Minerals
Property
Investments
Director
Director
Director
Director
Director
Director
Yes
Yes
Yes
Yes
Yes
Yes
Sipho Nkosi
African life Company (Proprietary) Limited
Amazwi Technologies (Proprietary) Limited
Everest Systems Solutions (Proprietary)
Limited
Eyesizwe Coal (Proprietary) Limited
Eyesizwe Holdings (Proprietary) Limited
Eyesizwe Mining (Proprietary) Limited
Gold Fields Coal Limited
Kumba Resources Limited
Richards Bay Coal Terminal Company
Limited
Insurance
Technology
Mining
Information
Technology
Mining
Mining
Mining
Mining
Mining
Mining
Chairman
Director
Director
Yes
Yes
Yes
Director
Director
Director
Director
Director
Director
Director
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Mining
Director
Yes
Limani Properties (Proprietary) Limited
Mining
Property
Development
Director
Yes
Director
Yes
Rizelle Sampson
82
Director
Nature of
business
Ronald Thiessen
Casamiro Resource Corporation
Tri-Gold Resources Corp.
3537137 Canada Inc.
Colleen Investments Ltd.
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Investment
Designation
Currently
director/
partner
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
83
Annexure 4
EXTRACTS FROM THE ARTICLES
1.
INTERPRETATION
1.1
In these Articles, unless the context otherwise requires:
(a) “these Articles” means the articles of the Company from time to time and all amendments thereto, and
the words “herein”, “hereto”, “hereby”, “hereunder”, “hereof” and similar words refer to these Articles
as so defined and not to any particular article or other subdivision of these Articles;
(b) “board” and “directors” mean the directors or sole director, as the case may be, of the Company for the
time being;
(c) “Business Corporations Act” means the Business Corporations Act (British Columbia) from time to time
in force and includes amendments thereto, and all regulations made pursuant thereto;
(d) “Company” means the Company which is named above;
(e) “Interpretation Act” means the Interpretation Act (British Columbia) from time to time in force and
includes amendments thereto, and all regulations made pursuant thereto;
(f) “share” means a share in the capital of the Company;
(g) “shareholder” means a shareholder of the Company; and
(h) “trustee”, in relation to a shareholder, means the personal or other legal representative of the
shareholder, and includes a trustee in bankruptcy of the shareholder.
2.
1.2
The definitions in the Business Corporations Act apply to these Articles.
1.3
The Interpretation Act applies to the interpretation of these Articles as if these Articles were an enactment.
1.4
If there is a conflict between a definition or rule in the Business Corporations Act and a definition or rule in
the Interpretation Act relating to a term used in these Articles, the definition or rule in the Business
Corporations Act will prevail.
ALTERATIONS
2.1
The shareholders may from time to time, by ordinary resolution, authorize the Company to effect a change
to the authorized share structure of the Company and to the Notice of Articles and these Articles where
applicable, to:
(a) increase, reduce, establish or eliminate the maximum number of shares that the Company is authorized
to issue out of any class or series of shares;
(b) if the Company is authorized to issue a class of shares with par value:
(i) subject to the Business Corporations Act, decrease the par value of those shares; or
(ii) increase the par value of those shares if none of the shares of that class of shares are allotted or
issued;
(c) change all or any of its unissued, or fully paid issued, shares with par value into shares without par value;
(d) change all or any of its unissued shares without par value into shares with par value;
(e) create special rights or restrictions for, and attach such special rights or restrictions to, the shares of any
class or series of shares whether or not any such shares are issued;
(f) vary or delete any special rights or restrictions attached to the shares of any class or series of shares,
where or not any or all of those shares have been issued; or
(g) otherwise alter its authorized share structure or shares when required or permitted to do so by the
Business Corporations Act.
84
2.2
The directors may from time to time, by resolution, authorise the Company to effect a change to the
authorized share structure of the Company and to the Notice of Articles and these Articles where
applicable, to:
(a) create one or more classes or series of shares;
(b) sub-divide all or any of its unissued, or fully paid issued, shares with par value into shares of smaller par
value;
(c) sub-divide all or any of its unissued, or fully paid issued, shares without par value;
(d) consolidate all or any of its unissued, or fully paid issued, shares with par value into shares of larger
par value;
(e) consolidate all or any of its unissued, or fully paid issued, shares without par value;
(f) eliminate any class or series of shares if none of the shares of that class or series of shares are allotted
or issued; or
(g) alter the identifying name of any of the shares of the Company.
2.4
3.
Unless otherwise provided in these Articles, the shareholders may from time to time, by ordinary resolution,
make any alteration to the Notice of Articles and these Articles as permitted by the Business Corporations Act.
SHARES AND SHARE CERTIFICATES
3.8
Subject to the Business Corporations Act and the rights, if any, of the holders of issued shares of the
Company, the Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares
held by the Company, at the times, to the persons, including directors, in the manner, on the terms and
conditions and for the issue prices (including any premium at which shares with par value may be issued)
that the directors may determine, provided that before allotting any unissued shares, the directors shall first
offer those unissued shares to existing shareholders based on each shareholder’s proportionate holding of
shares.
3.9
Directors are not required to offer shares to shareholders in proportion to their shareholdings pursuant to
Article 3.8 where:
(a) shares are to be issued for consideration all or substantially all of which is other than money, including
but not limited to issuance of shares for the acquisition of assets;
(b) shareholders have by ordinary resolution authorized the Company to issue shares, from time to time in
one or more transactions in accordance with the terms of any proposed future acquisitions, issuances of
convertible securities, rights offerings or financings or shares for debt settlements, at such price or prices,
in such amount and to such individuals or entities as may be determined by the directors of the
Company and as are acceptable with the appropriate regulatory authorities; or
(c) shares are to be allotted pursuant to or under:
(i) rights of conversion or exchange attached to any securities of the Company;
(ii) an amalgamation or arrangement under Part 9 of the Business Corporations Act;
(iii) a dividend payable in shares; or
(iv) an employee share ownership plan.
3.10 The Company may at any time pay a reasonable commission or allow a reasonable discount to any person
in consideration of that person purchasing or agreeing to purchase shares of the Company from the Company
or any other person or procuring or agreeing to procure purchasers for shares of the Company.
3.11 The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with
the sale or placement of its securities.
85
5.
PURCHASE OF SHARES
5.1
6.
Subject to the Business Corporations Act and to the special rights and restrictions attached to any class or
series of shares, the Company may redeem, purchase or otherwise acquire any of its shares (or fractions
thereof) if authorized to do so by resolution of the directors, and may cancel, retain, transfer, convert,
consolidate or re-issue any share (or fractions thereof) so redeemed, purchased or otherwise acquired, as
determined by resolution of the directors.
BORROWING POWERS
6.1
The directors may from time to time at their discretion on behalf of the Company:
(a) borrow money for the purposes of the Company in the manner and amount, on the security, from the
sources and on the terms and conditions that they consider appropriate;
(b) raise or secure the repayment of any borrowed money, including by the issuance of bonds, perpetual or
redeemable, debentures or debenture stock and other debt obligations either outright or as security for
any liability or obligation of the Company or any other person;
(c) guarantee the repayment of money by any other person or the performance of any obligation of any
other person; or
(d) mortgage or charge, whether by way of specific or floating charge, grant a security interest or give other
security on the whole or any part of the present and future property and undertaking of the Company,
including uncalled capital.
7.
SHAREHOLDER MEETINGS
7.1
Unless otherwise allowed by the Business Corporations Act, the Company must hold an annual general
meeting at least once in each calendar year and not more than 15 months after the last annual reference
date at such time and place as may be determined by the directors.
7.2
An annual general meeting or other meeting of the Company’s shareholders may be held at any of the
following location or locations or at such other location inside or outside British Columbia as may from time
to time be fixed by a resolution of the directors:
(a) Vancouver, British Columbia; and
(b) Johannesburg, South Africa.
7.4
Subject to the provisions of the Business Corporations Act regarding requisitions for general meetings and
waiver of notice, the Company will send notice of the date, time and location of a meeting of shareholders
to each shareholder entitled to vote at the meeting and to each director at least 21 days before the meeting.
7.8
If and for so long as the Company is a public company listed on the Securities Exchange in South Africa
(“JSE”), the Company shall:
(c) send a notice of general meeting to the JSE at the same time as such notice is sent to shareholders; and
(d) announce general meetings through The Securities Exchange News Service (“SENS”) established by the
JSE.
8.
PROCEEDINGS AT SHAREHOLDER MEETINGS
8.1
At a meeting of shareholders, the following business is special business:
(a) at a meeting of shareholders that is not an annual general meeting, all business is special business except
business relating to the conduct of, or voting at, the meeting;
(b) at an annual general meeting, all business is special business except for the following:
86
(i)
business relating to the conduct of, or voting at, the meeting;
(ii)
consideration of any financial statements of the Company presented to the meeting;
(iii)
consideration of any reports of the directors or auditor;
(iv)
the election or appointment of directors or setting or changing the number of directors if such
number is to be set or changed by shareholders;
(v)
the appointment of an auditor;
(vi)
the setting of the remuneration of an auditor, if such remuneration is to be set by shareholders;
(vii) business arising out of a report of the directors not requiring the passing of a special resolution or
an exceptional resolution; and
(viii) any other business which, under these Articles or the Business Corporations Act, may be transacted
at a meeting of shareholders without prior notice of the business being given to the shareholders.
8.2
The majority of votes required for the Company to pass a special resolution and a special separate resolution
at a meeting of shareholders is two-thirds of the votes cast on the resolution.
8.3
Subject to Article 8.4 and the special rights and restrictions attached to the shares of any class or series of
shares, the quorum for the transaction of business at a meeting of shareholders is three persons present in
person or by proxy who, in the aggregate, hold or represent by proxy not less than 10% of the votes entitled
to be cast at the meeting.
8.4
If there is only one shareholder entitled to vote at a meeting of shareholders:
(a) the quorum is one person who is, or who represents by proxy, that shareholder; and
(b) that shareholder, present in person or by proxy, may constitute the meeting.
8.5
In addition to those persons who are entitled to vote at a meeting of shareholders, the only persons entitled
to be present at the meeting are the directors, the chief executive officer (if any), the president (if any), the
secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company,
any persons invited to be present at the meeting by the directors or by the chair of the meeting, and any
persons entitled or required under the Business Corporations Act, or these Articles to be present at the
meeting, but if any of those persons does attend the meeting, that person is not to be counted in the quorum
and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote
at the meeting.
8.6
No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be
transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the
commencement of the meeting, but such quorum need not be present throughout the meeting.
8.7
If, within 1/2 hour from the time set for the holding of a meeting of shareholders, a quorum is not present:
(a) in the case of a general meeting convened by requisition of shareholders, the meeting is dissolved; and
(b) in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the
next week at the same time and place, unless those shareholders present determine otherwise.
8.8
If a meeting referred to in Article 8.7 was adjourned and if a quorum as provided in Article 8.3 is not present
within 1/2 hour from the time set for the holding of the adjourned meeting, the persons present and being,
or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a
quorum.
8.9
The following individual is entitled to preside as chair at a meeting of shareholders:
(a) the chair of the board, if any; or
(b) if there is no chair of the board or if the chair of the board is absent or unwilling to act as chair of the
meeting, the vice-chair of the board, if any; or
(c) if both the chair of the board and the vice-chair of the board are absent or unwilling to act as chair of
the meeting, the chief executive officer or president, if any.
87
8.10 If, at any meeting of shareholders:
(a) there is no chair of the board or vice-chair of the board or chief executive officer or president present
within 15 minutes after the time set for holding the meeting; or
(b) the chair of the board and vice-chair of the board or chief executive officer or the president are unwilling
to act as chair of the meeting; or
(c) the chair of the board and vice-chair of the board or chief executive officer or the president have advised
the secretary, if any, or any director present at the meeting, that they will not be present at the meeting,
the directors present may choose one of their number to be chair of the meeting or if all of the directors
present decline to take the chair or fail to so choose or if no director is present, the shareholders present in
person or by proxy may choose any person present at the meeting to chair the meeting.
8.11 A meeting of shareholders may be postponed or cancelled by the Company at any time prior to the holding
of the meeting upon such notice or communication to shareholders, if any, as the board may determine, and,
if postponed, the postponed meeting may be held at such time or times, and at such location or locations,
as the board, by resolution, may approve.
8.12 The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting
from time to time and from place to place, but no business may be transacted at an adjourned meeting other
than the business left unfinished at the meeting from which the adjournment took place.
8.13 It is not necessary to give any notice of an adjourned meeting of shareholders or of the business to be
transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or
more, notice of the adjourned meeting must be given as in the case of the original meeting.
8.14 The board may determine the procedures to be followed at any meeting of shareholders including, without
limitation, the rules of order. Subject to the foregoing, the chair of a meeting may determine the procedures
of the meeting in all respects.
8.15 In case of an equality of votes cast at a meeting of shareholders, the chair does not have a casting or
second vote.
8.16 The chair of any meeting of shareholders is entitled to propose or second a motion.
9.
SHAREHOLDERS’ VOTES
9.4
Subject to the Business Corporations Act, every motion put to a vote at a meeting of shareholders will be
decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of
hands, is directed by the chair or demanded by any shareholder entitled to vote who is present in person or
by proxy.
9.5
The chair of a meeting of shareholders must declare to the meeting the decision on every question in
accordance with the result of the show of hands or the poll, as the case may be, and that decision must be
entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary
majority or is defeated is, unless a poll is directed by the chair or demanded under Article 9.4, conclusive
evidence without proof of the number or proportion of the votes recorded in favour of or against the
resolution.
10. ELECTION AND REMOVAL OF DIRECTORS
10.1
The Company will have a board of directors consisting of initially the number of directors that is equal to
the number of the first directors and thereafter:
(a) if the Company is a public company, the greater of four and not more than fifteen; or
(b) if the company is not a public company, not less than one and not more than fifteen.
88
10.2
The actual number of directors of the Company from time to time shall be set by directors’ resolution
provided that Article 10.1 is complied with: and
(a) subject to Article 10.1, the directors may appoint one or more additional directors between annual
general meetings, but the number of additional directors appointed under this sub-paragraph (a)
must not at any time exceed one-third of the number of the current directors who were elected or
appointed as directors other than under this sub-paragraph (a). Any director so appointed under this
sub-paragraph (a) ceases to hold office immediately before the next election of directors under
Article 10.7, but is eligible for re-election;
(b) subject to subparagraph (a), the shareholders may elect the directors otherwise needed to fill any
vacancies in the board of directors arising from any increase in the number of directors pursuant
to Article 10.1 above.
10.3
An act or proceeding of the directors is not invalid merely because fewer than the number of directors set
or otherwise required under these Articles is in office.
10.4
The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time
to time determine. If the directors so decide, the remuneration of the directors, if any, may be determined
by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any
officer or employee of the Company as such, who is also a director.
10.5
The Company must reimburse each director for the reasonable expenses that he or she may incur in and
about the business of the Company.
10.6
If any director performs any professional or other services for the Company that in the opinion of the
directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in
or about the Company’s business, he or she may be paid remuneration fixed by the directors, or, at the
option of that director, fixed by ordinary resolution, and such remuneration may be either in addition to, or
in substitution for, any other remuneration that he or she may be entitled to receive.
10.7
At every annual general meeting:
(a) the shareholders entitled to vote at the annual general meeting for the election of directors are
entitled to elect a board of directors consisting of the number of directors for the time being set under
these Articles; and
(b) all the directors cease to hold office immediately before the election of directors under paragraph (a),
but are eligible for re-election.
10.8
If:
(a) the Company fails to hold an annual general meeting on or before the date by which the annual general
meeting is required to be held under the Business Corporations Act; or
(b) the shareholders fail at the annual general meeting to elect any directors;
then each director then in office continues to hold office until the earlier of:
(c) when his or her successor is elected or appointed; and
(d) when he or she otherwise ceases to hold office under the Business Corporations Act or these Articles.
10.9
If, at any meeting of shareholders at which there should be an election of directors, the places of any of the
retiring directors are not filled by that election, those retiring directors who are not re-elected and who are
asked by the newly elected directors to continue in office will, if willing to do so, continue in office to
complete the number of directors for the time being set pursuant to these Articles until further new
directors are elected at a meeting of shareholders convened for that purpose. If any such election or
continuance of directors does not result in the election or continuance of the number of directors for the
time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at
the number of directors actually elected or continued in office.
89
10.10 Any casual vacancy occurring in the board of directors may be filled by the directors, and any such director
will be deemed to cease office and be eligible for re-election at the proceeding annual general meeting in
accordance with Article 10.7 above.
10.11 The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer
directors in office than the number set pursuant to these Articles as the quorum of directors, the directors
may only act for the purpose of appointing directors up to that number or of calling a meeting of
shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Business
Corporations Act, for any other purpose.
10.12 If the Company has no directors, the shareholders may elect directors to fill any vacancies on the board of
directors.
10.13 A director ceases to be a director when:
(a) the term of office of the director expires;
(b) the director dies;
(c) the director resigns as a director by notice in writing provided to the Company or a lawyer for the
Company; or
(d) the director is removed from office pursuant to Articles 10.14 or 10.15.
10.14 The Company may remove any director before the expiration of his or her term of office by ordinary
resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the
resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy
contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or
appoint by ordinary resolution, a director to fill that vacancy.
10.15 The directors may remove any director before the expiration of his or her term of office if the director is
convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company
and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.
11. ALTERNATE DIRECTORS
11.1
Any director (an “appointor”) may by notice in writing received by the Company appoint any person (an
“appointee”) who is qualified to act as a director to be his or her alternate to act in his or her place at
meetings of the directors or committees of the directors at which the appointor is not present unless (in
the case of an appointee who is not a director) the directors have reasonably disapproved the appointment
of such person as an alternate director and have given notice to that effect to his or her appointor within
a reasonable time after the notice of appointment is received by the Company.
11.2
Every alternate director so appointed is entitled to notice of meetings of the directors and of committees
of the directors of which his or her appointor is a member and to attend and vote as a director at any such
meetings at which his or her appointor is not present.
11.3
A person may be appointed as an alternate director by more than one director, and an alternate director:
(a) will be entitled to attend, speak, act and vote at such meeting as a director in place of his appointor if
his appointor is absent;
(b) will be counted in determining the quorum for a meeting of directors once for each of his or her
appointors and, in the case of an appointee who is also a director, once more in that capacity;
(c) has a separate vote at a meeting of directors for each of his or her appointors and, in the case of an
appointee who is also a director, an additional vote in that capacity;
(d) will be counted in determining the quorum for a meeting of a committee of directors once for each of
his or her appointors who is a member of that committee and, in the case of an appointee who is also
a member of that committee as a director, once more in that capacity;
90
(e) has a separate vote at a meeting of a committee of directors for each of his or her appointors who is
a member of that committee and, in the case of an appointee who is also a member of that committee
as a director, an additional vote in that capacity.
11.4
Every alternate director, if authorized by the notice appointing him or her, may sign in place of his or her
appointor any resolutions to be consented to in writing.
11.5
Every alternate director is deemed not to be the agent of his or her appointor.
11.6
An appointor may at any time, by notice in writing received by the Company, revoke the appointment of
an alternate director appointed by him or her.
11.7
The appointment of an alternate director ceases when:
(a) his or her appointor ceases to be a director and is not promptly re-elected or re-appointed;
(b) the alternate director dies;
(c) the alternate director resigns as an alternate director by notice in writing provided to the Company or
a lawyer for the Company;
(d) the alternate director ceases to be qualified to act as a director; or
(e) his or her appointor revokes the appointment of the alternate director.
11.8
The Company may, but is not obligated to, reimburse an alternate director for the reasonable expenses that
would be properly reimbursed if he or she were a director, and the alternate director is entitled to receive
from the Company such proportion, if any, of the remuneration otherwise payable to the appointor as the
appointor may from time to time direct.
12. POWERS AND DUTIES OF DIRECTORS
12.1
The directors must, subject to the Business Corporations Act and these Articles, manage or supervise the
management of the business and affairs of the Company and have the authority to exercise all such powers
of the Company as are not, by the Business Corporations Act or by these Articles, required to be exercised
by the shareholders of the Company.
12.2
The directors may from time to time, by power of attorney or other instrument, under seal if so required
by law, appoint any person to be the attorney of the Company for such purposes, and with such powers,
authorities and discretions (not exceeding those vested in or exercisable by the directors under these
Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change
the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers
appointed by the directors and to declare dividends) and for such period, and with such remuneration and
subject to such conditions as the directors may think fit. Any such power of attorney may contain such
provisions for the protection or convenience of persons dealing with such attorney as the directors think
fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers,
authorities and discretions for the time being vested in him or her.
13. PROCEEDINGS OF DIRECTORS
13.1
The directors may meet together for the conduct of business, adjourn and otherwise regulate their
meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place,
at the time and on the notice, if any, as the directors may from time to time determine.
13.2
Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of
an equality of votes, the chair of the meeting does not have a second or casting vote.
13.3
The following individual is entitled to preside as chair at a meeting of directors:
(a) the chair of the board, if any;
(b) in the absence of the chair of the board, the vice chair of the board, if any; or
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(c) any other director chosen by the directors if:
(i) neither the chair of the board nor the vice chair of the board is present at the meeting within
15 minutes after the time set for holding the meeting;
(ii) neither the chair of the board nor the vice chair of the board is willing to chair the meeting; or
(iii) the chair of the board and the vice chair of the board have advised the secretary, if any, or any
other director, that they will not be present at the meeting.
13.4
A director may participate in a meeting of the directors or of any committee of the directors:
(a) in person;
(b) by telephone; or
(c) with the consent of all the directors, by other communications medium;
if all directors participating in the meeting, whether in person, by telephone or by other communications
medium, are able to communicate with each other. A director who participates in a meeting in a manner
contemplated by this Article 13.4 is deemed for all purposes of the Business Corporations Act and these
Articles to be present at the meeting and to have agreed to participate in that manner.
13.5
A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a
director must, call a meeting of the directors at any time.
13.6
Other than for meetings held at regular intervals as determined by the directors pursuant to Article 13.1,
reasonable notice before the time fixed for each meeting of the directors specifying the place, day and time
of that meeting shall be given to each of the directors and the alternate directors by any method set out
in Article 20.1 or orally or by telephone.
13.7
It is not necessary to give notice of a meeting of the directors to a director or an alternate director if:
(a) the meeting is to be held immediately following a meeting of shareholders at which that director was
elected or appointed, or is the meeting of the directors at which that director is appointed;
(b) the director or alternate director, as the case may be, has waived notice of the meeting; or
(c) the directors have established a fixed time and place for holding directors’ meetings.
13.8
The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by,
any director or alternate director, does not invalidate any proceedings at that meeting.
13.9
Any director or alternate director may send to the Company a document signed by him or her waiving
notice of any past, present or future meeting or meetings of the directors and may at any time withdraw
that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all
future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given
to that director and, unless the director otherwise requires by notice in writing to the Company, to his or
her alternate director, and all meetings of the directors so held are deemed not to be improperly called or
constituted by reason of notice not having been given to such director or alternate director. Attendance of
a director or alternate director at a meeting of the directors is a waiver of notice of the meeting, unless
that director or alternate director attends the meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully called.
13.10 The quorum necessary for the transaction of the business of the directors may be set by the directors and,
if not so set, shall be a majority of directors then in office or, if the number of directors is fixed at one, shall
be one director. Any interested or conflicted director is to be counted in a quorum notwithstanding his
interest or conflict.
13.11 A meeting of the board at which a quorum is present shall be competent to exercise all or any of the
authorities, powers and discretions for the time being vested in or exercisable by the board generally.
13.12 The continuing director or directors may act notwithstanding any vacancy in their body, but, if and so long
as their number is reduced below the number fixed by or pursuant to these Articles as the quorum of
directors, the continuing director or directors may act for the purpose of increasing the number of directors
to that number or of summoning a general meeting of the Company, but for no other purpose.
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13.13 A resolution of the directors or of any committee of the directors may be passed without a meeting:
(a) in all cases, if two-thirds of all of the directors entitled to vote on the resolution consent to it in writing;
or
(b) in the case of a resolution to approve a contract or transaction in respect of which a director has
disclosed that he or she has or may have a disclosable interest, if two-thirds of all of the other directors
who have not made such a disclosure consent in writing to the resolution.
13.14 A consent in writing under this Article may be by signed document, fax, email or any other method of
transmitting legibly recorded messages. A consent in writing may be in two or more counterparts which
together are deemed to constitute one consent in writing. A resolution of the directors or of any committee
of the directors passed in accordance with Article 13.13 is effective on the date stated in the consent in
writing or on the latest date stated on any counterpart and is deemed to be a proceeding at a meeting of
directors or of the committee of the directors and to be as valid and effective as if it had been passed at a
meeting of the directors or of the committee of the directors that satisfies all the requirements of the
Business Corporations Act and all the requirements of these Articles relating to meetings of the directors
or of a committee of the directors.
13.15 No resolution proposed at a meeting of the directors or at a meeting of a committee of the directors need
to be seconded and the chairman of any meeting shall be entitled to move or propose a resolution.
14. EXECUTIVE AND OTHER COMMITTEES
14.1
The directors may, by resolution, appoint an executive committee consisting of the director or directors
that they consider appropriate, and this committee has, during the intervals between meetings of the board
of directors, all of the directors’ powers, except:
(a) the power to fill vacancies in the board of directors;
(b) the power to remove a director;
(c) the power to change the membership of, or fill vacancies in, any committee of the directors; and
(d) such other powers, if any, as may be set out in the resolution or any subsequent directors’ resolution.
14.2
Subject to the Business Corporations Act and any securities legislation in any province or territory of
Canada, in the federal jurisdiction of the United States or in any states of the United States or in South
Africa that is applicable to the Company and the regulations and rules made and promulgated under that
legislation and all administrative policy statements, blanket orders and rulings, notices and other
administrative directions issued by securities commissions or similar authorities appointed under that
legislation:
(a) the directors shall appoint an audit committee at the times and consisting of the directors that they
consider appropriate;
(b) the audit committee shall exercise the powers and perform the functions and obligations given to it
and required by the Business Corporations Act and by the said securities legislation, regulations, rules,
administrative policy statements, blanket orders and rulings, notices and other administrative
directions;
(c) the directors may, by resolution, delegate to the audit committee, in addition to the powers referred
to in paragraph (b), any of the directors’ powers, except:
(i) the power to fill vacancies in the board of directors;
(ii) the power to remove a director;
(iii) the power to change the membership of, or fill vacancies in, any committee of the directors; and
(iv) the power to appoint or remove officers appointed by the directors; and
(d) the directors may make any delegation referred to in paragraph (c) subject to the conditions set out in
the resolution or any subsequent directors’ resolution.
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14.3
The directors may, by resolution:
(a) appoint one or more committees (other than the executive committee and the audit committee)
consisting of the director or directors that they consider appropriate;
(b) delegate to a committee appointed under paragraph (a) any of the directors’ powers, except:
(i) the power to fill vacancies in the board of directors;
(ii) the power to remove a director;
(iii) the power to change the membership of, or fill vacancies in, any committee of the directors; and
(iv) the power to appoint or remove officers appointed by the directors; and
(c) make any delegation referred to in paragraph (b) subject to the conditions set out in the resolution or
any subsequent directors’ resolution.
14.4
Any committee appointed under Articles 14.1, 14.2 or 14.3, in the exercise of the powers delegated to it,
must:
(a) conform to any rules that may from time to time be imposed on it by the directors; and
(a) report every act or thing done in exercise of those powers at such times as the directors may require.
14.5
The directors may, at any time, with respect to a committee appointed under Articles 14.1, 14.2 or 14.3:
(a) revoke or alter the authority given to the committee, or override a decision made by the committee,
except as to acts done before such revocation, alteration or overriding;
(b) terminate the appointment of, or change the membership of, the committee; and
(c) fill vacancies in the committee.
14.6
Subject to Article 14.4 and, in the case of the audit committee, the Business Corporations Act and the
securities legislation, regulations, rules, administrative policy statements, blanket orders and rulings, notices
and administrative directions referred to in Article 14.2, and unless the directors otherwise provide in the
resolution appointing the committee or in any subsequent resolution, with respect to a committee
appointed under Articles 14.1, 14.2 or 14.3:
(a) the committee may meet and adjourn as it thinks proper;
(b) the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a
meeting the chair of the meeting is not present within 15 minutes after the time set for holding the
meeting, the directors present who are members of the committee may choose one of their number
to chair the meeting;
(c) a majority of the members of the committee constitutes a quorum of the committee; and
(d) questions arising at any meeting of the committee are determined by a majority of votes of the
members present, and in case of an equality of votes, the chair of the meeting does not have a second
or casting vote.
14.7
All acts done by the board, or by a committee of the board, or by any person acting as a director shall,
notwithstanding that it is afterwards discovered that there was some defect in the appointment of any
director or person so acting, or that he was disqualified, be as valid as if every such person were qualified
and had been duly appointed.
15. OFFICERS
15.1
The directors may, from time to time, appoint such officers, if any, as the directors determine and the
directors may, at any time, terminate any such appointment.
15.2
The directors may, for each officer:
(a) determine the functions and duties of the officer;
(b) entrust to and confer on the officer any of the powers exercisable by the directors on such terms and
conditions and with such restrictions as the directors think fit; and
(c) revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.
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15.3
No officer may be appointed unless that officer is qualified in accordance with the Business Corporations
Act. One person may hold more than one position as an officer of the Company. Any person appointed as
the chair of the board or vice chair of the board must be a director. Any other officer need not be a director.
15.4
All appointments of officers are to be made on the terms and conditions and at the remuneration (whether
by way of salary, fee, commission, participation in profits or otherwise) that the directors thinks fit and are
subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration
be entitled to receive, after he or she ceases to hold such office or leaves the employment of the Company,
a pension or gratuity.
16. INDEMNIFICATION
16.1
In this Article 16:
(a) “associated corporation” means a corporation or entity referred to in paragraph (ii) or (iii) of the
definition of “eligible party” below;
(b) “eligible party” means an individual who:
(i) is or was a director, alternate director or officer of the Company;
(ii) is or was a director, alternate director or officer of another corporation:
A. at the time when the corporation is or was an affiliate of the Company; or
B.
at the request of the Company; or
(iii) at the request of the Company, is or was, or holds or held a position equivalent to that of, a
director, alternate director or officer of a partnership, trust, joint venture, or other unincorporated
entity;
(c) “eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in
settlement of, an eligible proceeding;
(d) “eligible proceeding” means a legal proceeding or investigative action, whether current, threatened,
pending or completed, in which an eligible party or any of the heirs and legal personal representatives
of the eligible party, by reason of the eligible party being or having been a director, alternate director
or officer of, or holding or having held a position equivalent to that of a director, alternate director of
officer of the Company or an associated corporation:
(i) is or may be joined as a party; or
(ii) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the
proceeding; and
“expenses” has the meaning set out in the Business Corporations Act.
16.2
(a) Subject to the Business Corporations Act, the Company must indemnify an eligible party and his or her
heirs and legal personal representatives against all eligible penalties to which such person is or may be
liable, and the Company must, as they are incurred in advance of, or if not then paid, after the final
disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person
in respect of that proceeding.
(b) The determination of any action, suit or proceeding by judgment, order, settlement, conviction or
otherwise shall not, of itself, create a presumption that the person did not act honestly and in good
faith and in the best interests of the Company and did not exercise the care, diligence and skill of a
reasonably prudent person and, with respect to any criminal action or proceeding, did not have
reasonable grounds to believe that his conduct was lawful.
(c) In addition to the foregoing, the Company shall indemnify the secretary or an assistant secretary of
the Company (if he shall not be a full time employee of the Company and notwithstanding that he is
also a director) and his respective heirs and legal representatives against all costs, charges and expenses
whatsoever incurred by him or them and arising out of the functions assigned to the secretary by the
Business Corporations Act or these Articles, and the secretary and each assistant secretary shall, on
being appointed, be deemed to have contracted with the Company on the terms of the foregoing
indemnity.
(d) Each eligible party or person entitled to indemnification under this section is deemed to have
contracted with the Company on the terms of the indemnity contained in this Article 16.2.
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17. DISCLOSURE OF INTEREST OF DIRECTORS
17.1
A director may hold any office or position of profit with the Company (other than the office of auditor of
the Company) in addition to his or her office of director for the period and on the terms (as to remuneration
or otherwise) that the directors may determine.
17.2
No director or intended director is disqualified by his or her office from contracting with the Company
either with regard to the holding of any office or place of profit the director holds with the Company or as
vendor, purchaser or otherwise.
17.3
Subject to compliance with the provisions of the Business Corporations Act, a director or officer of the
Company, or any corporation or firm in which that individual has an interest, may act in a professional
capacity for the Company, except as auditor of the Company, and the director or officer or such corporation
or firm is entitled to remuneration for professional services as if that individual were not a director or officer.
17.4
A director or officer may be or become a director, officer or employee of, or may otherwise be or become
interested in, any corporation, firm or entity in which the Company may be interested as a shareholder or
otherwise or a director or officer may contract with the Company, and, subject to compliance with the
provisions of the Business Corporations Act, the director or officer is not accountable to the Company for
any remuneration or other benefits received by him or her as director, officer or employee of, or from his
or her interest in, such other corporation, firm or entity or by contracting directly with the Company.
18. DIVIDENDS
18.1
Subject to the Business Corporations Act and any special rights or restrictions as to dividends, the directors
may from time to time by resolution declare and authorize payment of any dividends the directors consider
appropriate out of profits, capital or otherwise, including, without limitation, retained earnings, other
income, contributed surplus, capital surplus, any share premium account or appraisal surplus or any other
unrealized appreciation in the value of the assets of the Company, if any.
18.9
The directors may set a date as the record date for the purpose of determining shareholders entitled to
receive payment of a dividend. The record date must not precede the date on which the dividend is to be
paid by more than two months. If no record date is set, the record date is 5 p.m. on the date on which the
directors pass the resolution declaring the dividend.
18.11 No dividend bears interest against the Company.
20. NOTICES
20.1
Unless the Business Corporations Act, these Articles or applicable securities legislation provides otherwise,
a notice, statement, report or other record required or permitted by the Business Corporations Act or these
Articles to be sent by or to a person may be sent by any one of the following methods:
(a) mail addressed to the person at the applicable address for that person as follows:
(i) for a record mailed to a shareholder, the shareholder’s registered address;
(ii) for a record mailed to a director or officer, the prescribed address for mailing shown for the
director or officer in the records kept by the Company or the mailing address provided by the
recipient for the sending of that record or records of that class; or
(iii) in any other case, the mailing address of the intended recipient;
(b) delivery at the applicable address for that person as follows, addressed to the person:
(i) for a record delivered to a shareholder, the shareholder’s registered address;
(ii) for a record delivered to a director or officer, the prescribed address for delivery shown for the
director or officer in the records kept by the Company or the delivery address provided by the
recipient for the sending of that record or records of that class; or
(iii) in any other case, the delivery address of the intended recipient;
96
(c) sending the record by fax to the fax number provided by the intended recipient for the sending of that
record or records of that class;
(d) sending the record by email to the email address provided by the intended recipient for the sending of
that record or records of that class;
(e) physical delivery to the intended recipient; or
(f) as otherwise permitted by any securities legislation in any province or territory of Canada, in the
federal jurisdiction of the United States or in any states in the United States or in South Africa that is
applicable to the Company and all regulations and rules made and promulgated under that legislation
and all administrative policy statements, blanket orders and rulings, notices and other administrative
directions issued by securities commissions or similar authorities appointed under that legislation.
22. ALTERATION TO ARTICLES
The directors may, by resolution, alter any part of these Articles unless the Business Corporations Act requires that
such resolution be approved by the shareholders of the Company, and in which case such alteration must be
approved by the type of resolution specified in the Business Corporations Act.
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Annexure 5
SALIENT FEATURES OF THE STOCK OPTION PLAN
1.
OPTIONS
In order to provide incentives to directors, officers, employees, management and others who provide services to
the Company to act in the best interests of the Company, the Company has adopted a Share Incentive Plan (the
“Stock Option Plan” or the “Plan”). The Stock Option Plan was originally approved by shareholders at the
Company’s annual general meeting held on 21 April 1998. A resolution increasing the number of common shares
available for issuance under the Stock Option Plan was approved by shareholders on 23 April 2003 and further
resolutions authorising the number of common shares available for issuance under the Plan were approved by the
shareholders on 21 May 2004 and 17 June 2005. Under the Stock Option Plan, which is dated for reference 21 May
2004, a total of 18 300 000 common shares are reserved for share incentive options to be granted at the discretion
of Anooraq’s board to eligible optionees (the “Optionees”). As of 30 June 2006, an aggregate of 18 300 000
common share incentive options are available under the Plan of which 4 568 200 common share options were
outstanding, 4 846 800 common share options had been exercised, and 8 885 000 common share incentive options
remain available for issuance to future Optionees.
2.
MATERIAL TERMS OF THE STOCK OPTION PLAN
2.1
Eligible Optionees
Under TSXV policy, to be eligible for the issuance of a stock option under the Stock Option Plan an Optionee
must either be an employee, director, officer, consultant or an employee of a company providing
management or other services to the Company or its subsidiary at the time the option is granted.
Options may be granted only to an individual or to a company that is wholly owned by individuals eligible
for an option grant. If the option is granted to a company, the company must provide TSXV with an
undertaking that it will not permit any transfer of its shares, nor issue further shares, to any other individual
or entity as long as the incentive stock option remains in effect without the consent of TSXV.
2.2
Material terms of the Stock Option Plan
The following is a summary of the material terms of the Stock Option Plan:
– all options granted under the Stock Option Plan are non-assignable, non-transferable and are for a period
of up to 10 years;
– for stock options granted to employees or service providers (inclusive of management company
employees), the Company is required to represent that the proposed Optionee is a bona fide employee or
service provider (inclusive of a management company employee), as the case may be, of the Company or
of any of its subsidiaries;
– the exercise price of each option can be set equal to or greater than the closing price of the common
shares on the TSXV on the day prior to the date of the grant of the option less the applicable discount
according to the TSXV policy. An option has a maximum term of up to 10 years and terminates 30 days
following the termination of the Optionee’s employment, except in the case of retirement or death. In the
case of retirement, it terminates 30 to 90 days, at management’s discretion, following retirement. In the
case of death, it terminates at the earlier of one year after the event or the expiry of the option. Vesting
of options is done at the discretion of the Board at the time the options are granted; and
– the minimum exercise price of an option granted under the Stock Option Plan must not be less than the
closing price for common shares of the Company as traded on the TSXV on the last trading day before the
date that the option is granted less allowable discounts as permitted by the TSXV policy (depending on
the price at the time of grant).
2.3
Disinterested shareholder approval
As used in this Pre-Listing Statement, “disinterested shareholder approval” or “DSA” means the approval by a
majority of the votes cast by all shareholders of Anooraq at the shareholders’ meeting excluding votes
98
attached to listed common shares beneficially owned by “Insiders’ of Anooraq (generally officers and
directors) to whom the DSA options have been granted under the Stock Option Plan and associates of those
Insiders.
Anooraq has obtained disinterested shareholder approval of the Stock Option Plan and therefore under the
TSXV policy:
– the number of options granted to Insiders of Anooraq may exceed 10% of Anooraq’s outstanding listed
shares;
– the aggregate number of options granted to Insiders of Anooraq within a one year period may exceed 10%
of Anooraq’s outstanding listed shares; and
– the number of options granted to any one Insider and such Insider’s associates within a one year period
may exceed 5% of Anooraq’s outstanding listed shares,
but always subject to the aggregate limit of 18 300 000 common shares.
2.4
Powers of the Board
The Board will be responsible for the general administration of the Stock Option Plan and the proper
execution of its provisions, the interpretation of the Stock Option Plan and determination of all questions
arising hereunder. Without limiting the generality of the foregoing, the Board has the power to, subject to
regulatory approval, amend, suspend, terminate or discontinue the Stock Option Plan, or revoke or alter any
action taken in connection therewith, exception that no general amendment or suspension of the Stock
Option Plan will, without the written consent of all Optionees, alter or impair any Option previously granted
under the Stock Option Plan unless as a result of a change in the TSXV policies.
2.5
Adjustment to the number of common share options
The number of common shares subject to an option will be subject to adjustment in the events of any
subdivision of common shares; consolidation of common shares; any change of the common shares; and
capital re-organisation, reclassification or change of outstanding common shares (other than a change in the
par value thereof), consolidation, merger or amalgamation of the Company with or into any other company.
2.6
Tax
Participants shall be responsible for their tax liability arising from participation in the Stock Option Plan.
2.7
Interpretation
The Stock Option Plan will be governed and construed in accordance with the laws of the Province of British
Columbia, Canada.
2.8
Amendment of the Stock Option Plan
The Board reserves the right, in its absolute discretion, to at any time amend, modify or terminate the Stock
Option Plan with respect to all common shares in respect of options which have not yet been granted
hereunder. Any amendment to any provision of the Stock Option Plan will be subject to any necessary
regulatory approvals unless the effect of such amendment is intended to reduce (but not to increase) the
benefits of this Stock Option Plan to participants.
99
2.9
As at 30 June 2006, an aggregate of 4 568 200 common shares have been reserved for issuance pursuant to
the following stock options:
Option holder Status
Directors and Officers of the
Company and its Subsidiaries
Date of
Grant
Expiry
Date
Exercise
Price
C$
Number of
Common
Shares
2 May 2005
17 December 2010
1.40
2 180 000
2 180 000
Employees and Consultants
26 May 2004
10 June 2004
27 July 2004
2 May 2005
2 May 2005
22 September 2005
22 September 2005
26 October 2006
26 October 2006
26 October 2006
14 December 2007
17 December 2010
28 September 2007
1 July 2007
1.95
2.00
1.64
1.40
1.40
1.40
0.95
335 000
35 000
200 000
408 200
885 000
425 000
100 000
2 388 200
In the year ended 31 December 2005, 200 000 options were exercised with proceeds of C$157 500 at an
average price of C$0.79 per common share.
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Annexure 6
SALIENT TERMS OF THE MANAGEMENT AGREEMENT
1.
ADMINISTRATION SERVICES
1.1
During the term of this Management Agreement HDI shall provide Anooraq and/or Anooraq’s affiliates with
the following administration services:
1.1.1 use of HDI’s business premises located at Suite 1020, 800 West Pender Street, Vancouver, British
Columbia, on a non-exclusive basis with access to the reception area, the boardroom and other offices
as available and agreed to from time to time;
1.1.2 use of HDI’s reception and telephone answering personnel;
1.1.3 reasonable use of office equipment including telephone systems, photocopying, telecopier and
computers, and other equipment as required; and
1.1.4 administration service personnel including accounting, purchasing, secretarial and like support staff
on an “as needed” and “as available” basis.
2.
1.2
The administration fee payable by Anooraq to HDI for the administration services shall be invoiced by
HDI on a monthly basis based on a fee which represents a full cost-recovery basis to HDI and which fee will
be reasonably described in the invoice. The fee shall represent a reasonable pro-rationing of HDI’s costs
amongst all its client companies with regard to the level of service requirements of each such company.
The fee will be reviewed from time to time and the basis may be changed on notice by HDI in the event
Anooraq’s use of the administration services is in excess of historical experience or HDI’s costs change or in
the event a greater or lesser number of other public companies are using HDI’s services.
1.3
Anooraq acknowledges that HDI has or intends to enter into substantially identical agreements with other
public companies and HDI may add, delete or vary such arrangements with such other companies in HDI’s
sole discretion.
GEOLOGICAL AND MANAGEMENT SERVICES
2.1
In addition to the administration services, HDI shall supply technical geological, management and corporate
development services to Anooraq on a non-exclusive and on an “as needed” and “as available” basis. HDI shall,
at least annually, review the resource property portfolio of Anooraq together with Anooraq’s board and such
other independent consultants as Anooraq desires to involve with a view to recommending and
implementing programs of exploration.
2.2
Such recommendations shall be accompanied by reasonable details of programs including scheduling,
description of activities and related budgets. Upon acceptance (with or without variations) of such
recommendations by Anooraq (which acceptance is in the sole discretion of Anooraq) HDI shall generally
carry out the program as the agent of Anooraq and shall:
2.2.1 retain and/or itself provide the necessary technical and support staff;
2.2.2 negotiate third party service contracts and provide them to Anooraq for execution or execute same
as agent for Anooraq. Such third party contracts shall generally include geophysical and geochemical
surveys, sampling, line cutting, diamond drilling, engineering, environmental, independent analyses
and reporting and such other work as has been recommended by HDI and approved by Anooraq;
2.2.3 apply for necessary government exploration or work permits and licences;
2.2.4 provide field staff to supervise and oversee the work of HDI staff and other contractors and
subcontractors;
2.2.5 obtain insurance and assist in making application and relevant filings pertaining to the maintenance
of titles to the property as well as filing of assessment work respecting exploration work carried out
and paid for by Anooraq;
101
2.2.6 general administration of the exploration program including accounting, payment of third party
invoices and reporting thereon; and
2.2.7 provide assistance with corporate awareness programs regarding Anooraq.
3.
4.
2.3
For purposes of administration of any exploration program Anooraq shall be deemed to be the operator of
all of Anooraq’s JV agreements and HDI’s function shall be as general advisor and agent.
2.4
The fee to HDI for the above technical services shall be included with and agreed as part of budgets which
are provided to and subject to the approval of Anooraq. Except for overruns, significant variations (greater
than 50%) in the planned programs shall require the prior approval of Anooraq but the costs incurred with
respect to such overruns and variations shall notwithstanding, be for the account of Anooraq.
ADDITIONAL RIGHTS AND DUTIES OF HDI
3.1
Anooraq agrees to indemnify and hold harmless HDI (and any subsidiary), their officers, directors, employees
and agents, from any and all claims, suits or demands arising out of the performance of HDI hereunder.
Without restricting the generality of the foregoing Anooraq agrees to promptly pay HDI invoices and to
advance funds against written cash calls wherever reasonably required by HDI to pay for or secure services,
to secure equipment, contractors, deposits and the like and to honour all agreements which HDI enters into
in good faith as agent on behalf of Anooraq with third parties. The foregoing indemnity shall not apply to
losses, claims or suits arising out of HDI’s negligence or wilful misconduct.
3.2
HDI agrees to carry out its advisory, administrative and operating activities hereunder in a competent and
workmanlike manner, in good faith with a view to the best interests of Anooraq.
3.3
HDI shall take reasonable precautions to ensure that only authorised personnel of HDI and Anooraq are
provided with information respecting the business affairs, exploration results and properties of Anooraq. HDI
shall limit access to information respecting exploration developments to its own staff on a need-to-know
basis and shall ensure that its personnel acknowledge the need to protect confidentiality of information
respecting Anooraq which is developed by or comes into the possession of HDI and that they are in a ‘special
relationship” with Anooraq as contemplated by securities legislation. HDI shall generally maintain
confidentiality of Anooraq’s affairs and shall take reasonable precautions to protect the integrity and security
of information developed for Anooraq.
3.4
HDI shall not compete with Anooraq and will not endeavour to acquire any interest in any property of
Anooraq or related to or which can reasonably be said to be derived from any property of Anooraq, without
the prior written consent of Anooraq which consent shall be in Anooraq’s sole discretion.
3.5
HDI shall not be obligated whatsoever to provide any information or advice to Anooraq respecting resource
property prospects and opportunities which come to the attention of HDI personnel unless such prospects
and opportunities can be clearly demonstrated to be presented primarily as a result of the provision of
services by HDI to Anooraq under the terms of this agreements with other resource companies and as a
consequence HDI will be exposed to resources property opportunities in the ordinary course and may receive
resource companies in the ordinary course. As well, Anooraq acknowledges that HDI may receive unsolicited
proposals and opportunities from sources wholly unrelated to Anooraq or any of the other client companies
of HDI and those opportunities are acknowledged by Anooraq to be the sole property of HDI.
3.6
HDI may be retained by other client companies or terminate the relationship with any client company in its
sole discretion and without notice to any client company.
OTHER RIGHTS AND DUTIES OF ANOORAQ
4.1
102
So long as this Management Agreement is in effect Anooraq shall require one of Anooraq’s directors
to be a director of HDI who shall by virtue of such appointment have the right to review all aspects of HDI’s
operations. Anooraq shall obtain an agreement from such nominee director that he shall not seek
confidential information respecting any other client company of HDI (unless such director is also a director
of such other client company) and shall in any event maintain appropriate confidentiality with respect to any
HDI information provided to or obtained by such director and particularly with respect to any other client
company or where such information about another client company or its exploration prospects is
inadvertently acquired by the director. Such nominee shall further agree to promptly resign from the board
of HDI in the event this Management Agreement is terminated for any reason. Such nominee shall not use
any information acquired by virtue of his directorship in HDI for the purpose of competing with HDI or
competing with any other client company of HDI. Such nominee shall be in a ‘special relationship” with any
other client company of which he is not already an “insider”.
5.
6.
4.2
Any authorised representative of Anooraq shall at all reasonable times have full access to all of the records
or information of HDI pertaining to the affairs of Anooraq. Such access shall be extended to the auditors and
other professional advisors of Anooraq.
4.3
HDI shall indemnify and save harmless Anooraq from any claim, suit or demand which may arise by virtue of
any improper act or gross negligence of HDI occurring as a result of the performance by HDI of this
Management Agreement.
4.4
On execution hereof Anooraq shall subscribe for a single common share of HDI for C$1.00 and shall resell
such share to HDI for C$1.00 on termination of this Management Agreement. Anooraq shall in no event sell,
transfer or otherwise dispose of or encumber such share during the currency of this Management Agreement.
The parties acknowledge that HDI shall be owned by its client companies and that each client company shall
own one common share of HDI and that HDI shall not allow any other person to subscribe or be issued shares
in HDI nor will HDI otherwise authorise, create or issue any other shares or any other securities in its capital
stock without the consent of all of its client companies.
TERMINATION
5.1
This Management Agreement may be terminated by either party hereto on 30 days written notice to the
other party. From the date of notice to the date of termination, HDI shall not enter into any new
arrangements on behalf of Anooraq (unless already legally committed to do so) without Anooraq’s prior
consent.
5.2
In the event of termination during the course of implementation of any exploration or other program the
parties shall negotiate in good faith to minimize any interruption of such program and to ensure that the
costs related thereto are properly accounted for and duly discharged by Anooraq. Notwithstanding any
termination of this Management Agreement Anooraq shall continue to be bound by any agreements
contacted for on its behalf by HDI prior to termination.
5.3
The confidentiality and non-competition provisions of this Management Agreement shall survive any
termination of this Management Agreement and continue in full force and effect for three years thereafter.
5.4
Upon termination hereof Anooraq shall cease to use the HDI premises, phone number, etc. and shall make
arrangements for the orderly transition of administrative and accounting responsibilities by advice letter to
HDI. HDI shall turn over all business, technical, and like records pertaining to the affairs and properties of
Anooraq as may be in the possession of HDI although HDI may retain copies for its own records where
reasonably required.
MISCELLANEOUS
6.1
This Management Agreement is not assignable by the parties and any purported assignment thereof
is void ab initio.
6.2
This Management Agreement shall be binding upon and ensure to the benefit of the parties hereto and their
respective successors.
6.3
This Management Agreement shall be construed in accordance with the laws of the province of British
Columbia and the parties agree to attorn to such jurisdiction in the event of a dispute hereunder.
6.4
Notices shall be considered effectively given hereunder when personally delivered to a party by personal
service or fax, in each case addressed to the President of the Company.
103
Annexure 7
PRINCIPAL IMMOVABLE PROPERTY OWNED OR LEASED, OR TO BE
ACQUIRED OR LEASED
The principal immovable property owned or leased, or to be acquired or leased, by Anooraq and its subsidiaries are set
out below:
1.
PLATEAU RESOURCES
Plateau Resources currently leases offices and parking bays belonging to ERF 4 of 8 Sandown (Proprietary) Limited
(registration number 1996/005691/07). The salient features of the lease agreement are as follows:
– the office is located on Portion 4 of ERF 8 Sandown situated at 138 West Street;
– the offices are on the fourth floor and cover 412 square metres;
– the lease covers the office space, 10 basement parking bays, three carport parking bays and three open parking
bays;
– the lease is for an initial period of three years from 1 September 2004 and is renewable for another three years;
and
– the rental consideration per month is R37 526. Of this amount, R30 316 escalates at 9% per annum
compounded and the remaining R7 210 escalates at 12% per annum compounded.
2.
ANOORAQ
Anooraq currently leases offices from Wishbox Properties (Proprietary) Limited (registration number
2001/003921/07). The salient features of the lease agreement are as follows:
– the lessee under the lease agreement is Pelawan Investments (Proprietary) Limited;
– the office is located in Portion 9, ERF1 Wierda Valley at 43 Wierda Road West;
– the offices are on the north east wing on the first floor;
– the lease is for an initial period of two years from 1 June 2003 and renewable for an additional three years;
– the lease of the premises also includes seven parking bays; and
– the rental consideration per month is R45 009.55 escalating at 10% per annum compounded.
3.
PROSPECTING AND MINING RIGHTS
Prospecting or mineral rights held by Anooraq, through Plateau Resources, and its joint venture partners are listed
below:
Property or farm
Type and status of mineral rights
Platreef Project – North Block:
1.
2.
3.
4.
5.
6.
Ham 699 LR
Gilead 729 LR
Elberfield 731 LR
Gideon 730 LR
Chlun 735 LR
Swerweskraal 736 LR
New order prospecting rights in all properties have
been granted and are in the process of being
notarially executed.
Platreef Project – South Block:
1.
2.
3.
4.
5.
104
Rondeboschje 295 KR
Cyferkuil 321 KR
Haakdoornkuil 323 KR
Vaalkop 325 KR
Naboomfontein 320 KR
Conversion application for the old order
prospecting rights to new order prospecting rights
has already been lodged and approval is still
pending. Legal opinion has confirmed that Plateau
Resources, together with its joint venture partners,
are competent applicants for conversion since
they held old order prospecting rights to these
properties.
Property or farm
Type and status of mineral rights
Platreef Project – Central Block:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Portion 2 of the Farm Elandsfontein 766 LR
Malokongskop 780 LR
Drenthe 778 LR
Portion 1 of the farm Elandsfontein LR
Hamburg 737 LR
Portion 2 (a portion of portion 1) of Dorstland 768 LR
Portion 3 (a portion of portion 1) of Dorstland 768 LR
Remaining Extent of the Farm Witrivier 77 LR
Noord Holland 775 LR
Portion 1 of the Farm Witrivier 77 LR
Mineral Area 1, excluding Mineral Area 2, on the
Remaining Extent of Dorstland 768 LR
12. Remaining Extent of Portion 1 of Dorstland 768 LR
New order prospecting rights in properties 1 to 5
have been granted and are in the process of being
notarially executed. Conversion for the old order
prospecting rights to new order prospecting rights
in properties 6 to 12 has already been lodged and
approval is still pending. Legal opinion has
confirmed that Plateau Resources, together with
its joint venture partners, are competent
applicants for conversion since they held old
order prospecting rights to these properties.
Platreef Project – Rietfontein Block:
1.
The Farm Rietfontein 2 KS
New order prospecting right in this property has
been granted and is in the process of being
notarially executed.
Ga-Phasha Project:
1.
2.
3.
4.
Klipfontein 465 KS
Paschaskraal 466 KS
De Kamp 507 KS
Avoca 472
Micawber 277 holds old order mining rights to all
four properties. In terms of the MPRDA, these old
order mining rights are valid until 30 April 2009,
after which they will expire and revert to the
South African State if not converted into
applicable new order mining rights. Micawber 277
intends to apply for new order mining rights
before expiry.
105
Annexure 8
ANOORAQ’S CORPORATE GOVERNANCE PRACTICES
1.
GENERAL
The Board believes that good corporate governance improves corporate performance and benefits all shareholders.
The Canadian Securities Administrators (the “CSA”) have adopted National Policy 58-201 Corporate Governance
Guidelines, which provides non-prescriptive guidelines on corporate governance practices for reporting issuers such
as the Company. In addition, the CSA have implemented National Instrument 58-101 Disclosure of Corporate
Governance Practices (NI 58-101), which prescribes certain disclosure by the Company of its corporate governance
practices. This annexure sets out the Company’s approach to corporate governance and addresses the Company’s
compliance with NI 58-101.
2.
BOARD
Directors are considered to be independent if they have no direct or indirect material relationship with the
Company. A “material relationship” is a relationship which could, in the view of the Board, be reasonably expected
to interfere with the exercise of a director’s independent judgment.
The Board facilitates its independent supervision over management in several ways including by holding regular board
meetings and committee meetings, and by retaining independent consultants where it deems necessary.
The independent members of the Board are David Elliott, Wayne Kirk, Popo Molefe and Sipho Nkosi.
The non-independent directors are Scott Cousens, Robert Dickinson, Phumzile Langeni, Harold Motaung, Tumelo
Motsisi, Ronald Thiessen and Rizelle Sampson.
The CEO (Ronald Thiessen and Tumelo Motsisi) does not hold the position of chairman of the Board (Popo Molefe
and Robert Dickinson).
3.
ORIENTATION AND CONTINUING EDUCATION
Board meetings typically include presentations by the Company’s management and employees to give the
directors additional insight into the Company’s business.
4.
ETHICAL BUSINESS CONDUCT
The Board has adopted a formal ethics policy which is available for download from the Company’s website,
www.anooraqresources.com. The Board also believes that the fiduciary duties placed on individual directors by the
Company’s governing corporate legislation and the common law, and the restrictions placed by applicable
corporate legislation on an individual directors’ participation in decisions of the Board in which the director has an
interest, have been sufficient to ensure that the Board operates independently of management and in the best
interests of the Company.
5.
NOMINATION OF DIRECTORS
The Board considers its size each year when it considers the directors to recommend to the shareholders for
election at the annual meeting of shareholders, taking into account the number required to carry out the Board’s
duties effectively and to maintain a diversity of views and experience.
The Board has a Nominating and Governance Committee, although the Committee has not had occasion to
consider new nominees to the Board.
According to the Committee’s Charter, the purpose of the Nominating and Governance Charter is to provide
support for the stewardship and governance role of the Board by carrying out responsibilities delegated to it by the
Board from time to time, including identifying individuals qualified to become Board members, consistent with
criteria approved by the Board, and monitoring and recommending to the Board corporate governance principles
and policies that should that should be applicable to the Company.
106
The Committee approves all significant non-audit engagements with independent auditors.
The Committee meets as often as it deems necessary in order to perform its responsibilities, but not less frequently
than quarterly, and has met six times in the preceding financial year.
The Committee has three members and these are currently David Elliott, Wayne Kirk and Popo Molefe.
6.
COMPENSATION
The Compensation Committee determines compensation for the directors and executive officers of the Company,
including the CEO, CFO and other senior officers.
The Committee reviews and establishes compensation of directors, executive officers and senior officers of the
Company at least annually and from time to time as deemed appropriate. The Committee has a Charter which sets
out the manner in which it operates.
The Committee meets as often as it deems necessary in order to perform its responsibilities and has met three
times in the preceding financial year.
The Committee has two members, namely Tumelo Motsisi and Ronald Thiessen.
7.
OTHER BOARD COMMITTEES
The Board has no other committees other than the Audit Committee, Nominating and Governance Committee,
and the Compensation Committee.
The Company has drawn up a Charter which governs the activities of the Audit Committee of the Board, when and
to the extent the Audit Committee is carrying out its audit and financial review functions.
The primary purpose of this Committee is to assist the Board in fulfilling its responsibilities to oversee
management’s financial, accounting and reporting processes, the Company’s system of internal accounting and
financial controls, and the Company’s compliance with related legal and regulatory requirements. The Committee
has a Charter which sets out the manner in which it operates.
The Committee meets as often as it deems necessary in order to perform its responsibilities and has met three
times in the preceding financial year.
The Committee is comprised of three members, namely David Elliott, Wayne Kirk and Popo Molefe.
8.
ASSESSMENTS
The Board monitors the adequacy of information given to directors, communication between the Board and
management and the strategic direction and processes of the Board and committees. The Board and its committees
are in the process of implementing procedures for self-assessment. The Board is satisfied with the overall project
and corporate achievements of the Company and believes this reflects well on the Board and its practices.
107
Annexure 9
DETAILS OF ANOORAQ’S INTER-COMPANY BALANCES
INTER-COMPANY BALANCES
C$
Anooraq
Anooraq to N1C Resources
N1C Resources
N1C Resources advances from Anooraq
N1C Resources
N1C Resources advances to N2C Resources
N2C Resources
N2C Resources advances from N1C Resources
(25 361 999)
N2C Resources
N2C Resources advances to Plateau Resources
29 162 135
Plateau Resources
Plateau Resources advances from N2C Resources
Anooraq
Due to/from Anooraq Mexico
Anooraq-MEX
Due to/from Anooraq
Anooraq
Due from Great Basin Gold Incorporated
175 539
Anooraq
Due from HDI
416 476
Plateau Resources
Investment in Micawber 277
Micawber 277
Due to Plateau Resources re: Micawber 277 acquisition
Micawber 277
Due to RPM
All inter-company loans are non-secured, non-interest bearing and have no repayment terms.
108
24 710 446
(24 710 446)
25 361 999
(29 162 135)
2 150 905
(2 150 905)
3 055 425
(3 055 425)
(709 103)
Annexure 10
TRADING HISTORY OF ANOORAQ COMMON SHARES ON THE TSXV
The high, low and closing price of Anooraq common shares on the TSXV and the aggregated quarterly value and
volumes traded for the quarter ended March 2004 to the quarter ended September 2006 were as follows:
High
(C$ per share)
Low
(C$ per share)
Close
(C$ per share)
Aggregate
value
(C$’m)
Aggregate
volume
(’m)
2004
March
June
September
December
4.18
3.50
2.15
2.00
2.18
1.55
1.55
1.25
3.45
2.25
1.90
1.57
53.85
27.66
11.13
21.60
15.68
12.43
6.03
13.84
2005
March
June
September
December
1.57
1.33
1.20
0.97
1.21
0.84
0.85
0.74
1.29
0.94
0.95
0.82
18.97
6.88
5.78
5.04
14.85
7.25
6.27
6.04
2006
March
June
September
1.46
1.46
0.94
0.83
0.81
0.62
1.35
0.93
0.70
17.02
9.53
1.47
12.66
10.23
2.16
Period
The high, low and closing price of Anooraq common shares on the TSXV and the aggregated monthly value and volumes
traded since November 2005 were as follows:
High
(C$ per share)
Low
(C$ per share)
Close
(C$ per share)
Aggregate
value
(C$’m)
Aggregate
volume
(’m)
2005
November
December
0.92
0.86
0.80
0.74
0.82
0.82
1.67
2.20
2.07
2.64
2006
January
February
March
April
May
June
July
August
September
October
November
1.21
1.20
1.46
1.46
1.34
1.01
0.94
0.91
0.90
0.85
1.39
0.83
0.89
1.05
1.17
0.94
0.81
0.78
0.80
0.62
0.58
0.77
1.21
1.06
1.35
1.33
1.00
0.93
0.85
0.82
0.70
0.76
1.30
4.36
3.77
7.13
7.34
3.29
1.03
0.54
0.60
0.54
0.61
3.28
3.99
3.46
5.30
5.70
3.43
1.11
0.64
0.73
0.79
0.80
2.65
Period
109
The high, low and closing price of Anooraq common shares on the TSXV for each trading day commencing on
20 October 2006 to 30 November 2006, and the daily trading volumes and value are as follows:
High
(C$ per share)
Low
(C$ per share)
Close
(C$ per share)
Aggregate
value
(C$’m)
Aggregate
volume
(’m)
2006
October
20
23
24
25
26
27
30
31
0.75
0.76
0.76
0.80
0.85
0.74
0.84
0.78
0.70
0.74
0.71
0.73
0.74
0.73
0.75
0.76
0.74
0.74
0.76
0.80
0.77
0.74
0.76
0.76
0.02
0.04
0.04
0.02
0.02
0.00
0.06
0.02
0.02
0.05
0.05
0.02
0.02
0.00
0.08
0.03
November
1
2
3
6
7
8
9
10
13
14
15
16
17
20
21
22
23
24
27
28
29
30*
0.80
0.84
0.89
0.90
0.87
0.87
0.90
0.90
0.92
0.89
0.97
0.95
1.01
1.08
1.17
1.13
1.16
1.20
1.36
1.39
1.36
1.31
0.77
0.78
0.84
0.86
0.83
0.84
0.88
0.85
0.83
0.85
0.85
0.90
0.95
0.95
1.06
1.02
1.05
1.10
1.13
1.29
1.20
1.18
0.80
0.84
0.87
0.87
0.85
0.87
0.90
0.90
0.86
0.85
0.92
0.95
0.98
1.06
1.14
1.13
1.15
1.14
1.28
1.31
1.28
1.30
0.01
0.05
0.04
0.07
0.03
0.06
0.01
0.01
0.04
0.04
0.14
0.05
0.06
0.08
0.15
0.09
0.08
0.13
0.54
0.55
0.34
0.48
0.01
0.06
0.05
0.08
0.04
0.07
0.01
0.02
0.04
0.05
0.15
0.05
0.06
0.08
0.14
0.08
0.07
0.11
0.42
0.41
0.26
0.39
Period
* Last practicable date.
110
Annexure 11
DIRECTORS’ REMUNERATION
1.
EXECUTIVE COMPENSATION
In this section “Named Executive Officer” or “NEO” means the CEO, the CFO and each of the three most highly
compensated executive officers, other than the CEO and CFO, who were serving as executive officers at the end
of the most recently completed fiscal year and whose total salary and bonus exceeds C$150 000 as well as any
additional individuals for whom disclosure would have been provided except that the individual was not serving
as an officer of the Company at the end of the most recently completed financial year end.
During Anooraq’s financial year ended 31 December 2005, the aggregate cash compensation paid or payable by
Anooraq or its consolidated subsidiaries to its directors and senior officers, was C$1 162 298.
The following table provides a summary of compensation earned by Named Executive Officers during each of the
last three financial years:
Long-term compensation
Annual compensation
Awards
Payouts
Other
(C$)
Options/
SARs
granted
(#)
Nil
Nil
Nil
Nil
5 400
Nil
120 000
Nil
216 000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
235 000
81 520
Nil
80 000
10 486
Nil
Nil
1 200
Nil
525 000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2005
2004
2003
61 840
46 848
51 258
Nil
Nil
Nil
Nil
2 800
Nil
120 000
Nil
216 000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Harold Motaung
COO
2005
2004
2003
225 000
81 520
Nil
35 000
10 486
Nil
Nil
1 200
Nil
525 000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Phumzile Langeni
VP Investor Relations
2005
2004
2003
195 000
17 245
Nil
25 000
Nil
Nil
Nil
1 200
Nil
250 000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Joel Kesler
VP Legal
2005
2004
2003
205 000
Nil
Nil
25 000
Nil
Nil
Nil
Nil
Nil
525 000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
NEO name and
principal position
Year(1)
Salary
(C$)
Ronald Thiessen(2)
President and CEO
2005
2004
2003
98 473
62 095
62 336
Tumelo Motsisi
Deputy CEO and MD
2005
2004
2003
Jeffrey Mason
Secretary and CFO
Bonus
(C$)
Subject
to resale
restrictions
(C$)
LTIP
payouts
(C$)
Other
(C$)
Notes:
1. The fiscal years presented are as follows: 12 months ended 31 December 2005, 14 months ended 31 December 2004, and 12 months ended
31 October 2003.
2. Paid by HDI and reimbursed by Anooraq as part of HDI’s management fees.
There were no other material benefits received (including pension scheme benefits, expense allowances and
commissions) by these directors and officers of the Company.
The remuneration receivable by all directors of Anooraq will not be varied as a result of this listing.
2.
LONG-TERM INCENTIVE PLAN AWARDS
A long-term incentive plan (“LTIP”) is “a plan providing compensation intended to motivate performance over
a period greater than one financial year” and does not include option or stock appreciation rights (‘SARs’) plans
or plans for compensation through shares or units that are subject to restrictions on resale. The Company did not
award any LTIPs to any Named Executive Officer during the most recently completed financial year.
111
3.
OPTIONS AND SARs
A stock appreciation right (“SAR”) is a right to receive a payment of cash or an issue or transfer of shares based
wholly or in part on changes in the trading price of the Company’s common shares.
No SARs were granted to, or exercised by, any NEO or any directors during the most recently completed
financial year.
The share options exercised by the NEOs during the financial year ended 31 December 2005 and the values of such
options at the end of such year were as follows:
Aggregate Option/SAR exercised during the most recently completed financial year and financial year-end
Option/SAR values:
Named Executive Officers
Securities
acquired
on exercise
(#)
Ronald Thiessen
Tumelo Motsisi
Harold Motaung
Jeffrey Mason
Phumzile Langeni
Joel Kesler
Nil
Nil
Nil
Nil
Nil
Nil
Aggregate
value realized
(C$)
Nil
Nil
Nil
Nil
Nil
Nil
Value of
unexercised
in-the-money
options/SARs at
FY-end
exercisable/
unexercisable
(C$)
Unexercised
options/
SARs at
FY-end
exercisable/
unexercisable
(#)
120 000/0
525 000/0
525 000/0
120 000/0
250 000/0
525 000/0
0/0
0/0
0/0
0/0
0/0
0/0
No share options were repriced on behalf of the Named Executive Officers during the financial year ended
31 December 2005.
Below is a table of share options awarded to directors and officers of the Company since 2002:
112
Name
Original
number
granted
Fiscal
year
Grant
date
Expiry
date
Exercise
price
C$
Market
value
on date
of grant
C$
Copeland D
Cousens S
Dickinson R
Jennings D
Mason J
Thiessen R
Gamble G
Hildebrand R
Copeland D
Cousens S
Dickinson R
Jennings D
Mason J
Thiessen R
Copeland D
Cousens S
Dickinson R
Jennings D
Mason J
Thiessen R
Segsworth W
250 000
250 000
250 000
250 000
250 000
250 000
50 000
50 000
96 000
96 000
96 000
96 000
96 000
96 000
120 000
120 000
120 000
120 000
120 000
120 000
200 000
2002
2002
2002
2002
2002
2002
2002
2002
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2004
Jul.31.02
Jul.31.02
Jul.31.02
Jul.31.02
Jul.31.02
Jul.31.02
Jul.31.02
Jul.31.02
Dec.11.02
Dec.11.02
Dec.11.02
Dec.11.02
Dec.11.02
Dec.11.02
Oct.29.03
Oct.29.03
Oct.29.03
Oct.29.03
Oct.29.03
Oct.29.03
Jul.27.04
Oct.29.04
Oct.29.04
Oct.29.04
Oct.29.04
Oct.29.04
Oct.29.04
Oct.29.04
Oct.29.04
Dec.20.04
Dec.20.04
Dec.20.04
Dec.20.04
Dec.20.04
Dec.20.04
Oct.21.05
Oct.21.05
Oct.21.05
Oct.21.05
Oct.21.05
Oct.21.05
Oct.26.06
0.84
0.84
0.84
0.84
0.84
0.84
0.84
0.84
0.48
0.48
0.48
0.48
0.48
0.48
2.00
2.00
2.00
2.00
2.00
2.00
1.64
0.84
0.84
0.84
0.84
0.84
0.84
0.84
0.84
0.48
0.48
0.48
0.48
0.48
0.48
2.00
2.00
2.00
2.00
2.00
2.00
1.64
Name
Original
number
granted
Fiscal
year
Grant
date
Expiry
date
Exercise
price
C$
Market
value
on date
of grant
C$
Cousens S
Elliott D
Dickinson R
Langeni P
Molefe P
Motaung H
Motsisi T
Nkosi S
Sampson R
Thiessen R
120 000
120 000
120 000
250 000
200 000
525 000
525 000
100 000
100 000
120 000
2005
2005
2005
2005
2005
2005
2005
2005
2005
2005
May.02.05
May.02.05
May.02.05
May.02.05
May.02.05
May.02.05
May.02.05
May.02.05
May.02.05
May.02.05
Dec.17.10
Dec.17.10
Dec.17.10
Dec.17.10
Dec.17.10
Dec.17.10
Dec.17.10
Dec.17.10
Dec.17.10
Dec.17.10
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
The above options are American in nature and no consideration was received for these options.
4.
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
The Company does not have a pension plan under which benefits are determined primarily by final compensation
(or average final compensation) and years of service.
5.
TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS
There is no written employment contract between the Company and any Named Executive Officer.
There are no compensatory plan(s) or arrangement(s), with respect to the Named Executive Officer resulting from
the resignation, retirement or any other termination of employment of the officer’s employment or from a change
of the Named Executive Officer’s Responsibilities following a change in control.
6.
COMPENSATION COMMITTEE DISCLOSURE
The Company has a Compensation Committee of which the current members are Messrs. Thiessen, and Motsisi.
Accordingly, each member of this Committee is not independent. The function of this committee is to assist the
Board in fulfilling its responsibilities relating to the compensation practices of the executive officers of the
Company. Specifically, this Committee has been empowered to evaluate the performance of the President of the
Company and to recommend to the Board the compensation level of the President; to review the compensation
levels of the executive officers of the Company and to report thereon to the Board; to conduct such surveys and
studies as the Committee deems appropriate to determine competitive salary levels; to review the strategic
objectives of the stock option and other stock-based compensation plans of the Company; to review
management’s administration of these plans and to consider any other matters which, in the Committee’s
judgment, should be taken into account in reaching the recommendation to the Board concerning the
compensation levels of the Company’s executive officers.
7.
REPORT ON EXECUTIVE COMPENSATION
This report on executive compensation has been authorized by the Compensation Committee. The Board assumes
responsibility for reviewing and monitoring the long-range compensation strategy for the senior management of
the Company although the Compensation Committee guides it in this role. As part of its mandate, the Board
determines the type and amount of compensation for the President and CEO. The Board also determines the
compensation of the CFO. In addition, the Board reviews the methodology utilized by the Company for setting
salaries of employees throughout the organization.
The Company’s Compensation Committee receives independent competitive market information on compensation
levels for executives.
Mr. Mason, the CFO, does not serve the Company solely on a full-time basis, and his compensation from the
Company is allocated based on the estimated amount of time spent on the work of the Company.
113
8.
PHILOSOPHY AND OBJECTIVES
The compensation program for the senior management of the Company is designed to ensure that the level and
form of compensation achieves certain objectives, including:
• attracting and retaining talented, qualified and effective executives;
• motivating the short and long-term performance of these executives; and
• better aligning their interests with those of the Company’s shareholders.
In compensating its senior management, the Company has employed a combination of base salary, bonus
compensation and equity participation through its stock option plan.
9.
BASE SALARY
In the Board’s view, paying base salaries which are competitive in the markets in which the Company operates
is a first step to attracting and retaining talented, qualified and effective executives. Competitive salary
information on comparable companies within the industry is compiled from a variety of sources, including surveys
conducted by independent consultants and national and international publications.
10. BONUS COMPENSATION
The Company’s primary objective is to achieve certain strategic objectives and milestones. The Board considers
executive bonus compensation dependent upon the Company meeting those strategic objectives and milestones.
11. EQUITY PARTICIPATION
The Company believes that encouraging its executives and employees to become shareholders is the best way
of aligning their interests with those of its shareholders. Equity participation is accomplished through the
Company’s stock option plan. Stock options are granted to senior executives taking into account a number of
factors, including the amount and term of options previously granted, base salary and bonuses and competitive
factors. Options generally granted to senior executives vest on terms established by the Board.
Given the evolving nature of the Company’s business, the Board continues to review and redesign the overall
compensation plan for senior management so as to continue to address the objectives identified above.
12. COMPENSATION OF THE CEO
The compensation of the CEO is approved annually by the Board. Base salary and bonus levels are determined
taking into account independent market survey data.
At least annually, the Compensation Committee is to review the grants of stock options to management
and employees. Options have been granted to the CEO taking into account competitive compensation factors and
the belief that options help align the CEO with the interests of shareholders.
13. COMPENSATION OF DIRECTORS
Each director of the Company who is an independent director (namely Messrs. Kirk, Elliott, Molefe and Nkosi)
is paid an annual director’s fee of C$35 000 plus an additional fee of C$5 000 for the Audit Committee Chairperson
and C$3 000 for other Committee Chairperson. Executive officers do not receive additional compensation for
serving as directors.
114
The following table contains remuneration of directors in the preceding financial year, other than for directors and
officers mentioned in paragraph 1 of this annexure:
Director
fees
C$
Management
fees
C$
Bonus
C$
Other
expenses
C$
Total
remuneration
C$
Popo Molefe
Co-chairman
47 308
–
–
–
47 308
Sipho Nkosi
Non-executive director
35 000
–
–
–
35 000
Wayne Kirk
19 000
–
–
–
19 000
David Elliott
23 333
–
–
–
23 333
57 789
–
–
–
57 789
Robert Dickinson
57 793
–
–
–
57 793
Rizelle Sampson
–
–
–
–
–
61 840
–
–
–
61 840
Name
(1)
Scott Cousens
(1)
(1)
Jeffrey Mason
CFO
Note:
1. Paid by HDI and reimbursed by Anooraq as part of HDI’s management fees.
There were no other material benefits received (including pension scheme benefits, expense allowances and
commissions) by these directors and officers of the Company.
The remuneration receivable by all directors of Anooraq will not be varied as a result of this listing.
The following directors received options under the Company’s share option plan during the financial year ended
31 December 2005:
Option grants during the most recently completed financial year
Name of director
David Elliott
Harold Motaung
Phumzile Langeni
Popo S. Molefe
Rizelle Sampson
Robert Dickinson
Ron Thiessen
Scott Cousens
Sipho Nkosi
Tumelo Motsisi
Securities
under options
granted
(#)
120 000
525 000
250 000
200 000
100 000
120 000
120 000
120 000
100 000
525 000
Exercise or
base price
(C$/Security)
Market value
of securities
underlying
options
on the date
of grant
(C$/Security)
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
1.40
Expiration
date
17-Dec-10
17-Dec-10
17-Dec-10
17-Dec-10
17-Dec-10
17-Dec-10
17-Dec-10
17-Dec-10
17-Dec-10
17-Dec-10
14. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The only equity compensation plan which the Company has in place is the share option plan, the Stock Option
Plan, which is fully described in Annexure 6 to this Pre-Listing Statement.
115
The following table sets out equity compensation plan information as at the end of the financial year ended
31 December 2005:
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
116
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(C$)
(b)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
Plan Category
Equity compensation plans
approved by security holders
– the Stock Option Plan
Equity compensation plans
not approved by security
holders
(c)
4 778 200
1.47
8 675 000
–
–
–
Total
4 778 200
1.47
8 675 000
Annexure 12
TECHNICAL REPORT ON THE PLATREEF PROJECT
TECHNICAL REPORT ON THE 2005 PROGRAM
PLATREEF PROJECT
NORTHERN LIMB, BUSHVELD COMPLEX
LIMPOPO PROVINCE
REPUBLIC OF SOUTH AFRICA
Latitude 24° South
Longitude 29° East
K. Roberts MSc., Ph.D., P.Geo.
March 31, 2006
117
CONTENTS
Page
1.
2.
EXECUTIVE SUMMARY
121
1.1
Location
121
1.2
Property Description
121
1.3
Access and Infrastructure
121
1.4
History
121
1.5
Geology and Mineralization
122
1.6
Recommendations
122
INTRODUCTION AND TERMS OF REFERENCE
123
2.1
Introduction
123
2.2
Terms of Reference
123
2.3
Field Involvement
123
3.
DISCLAIMER
123
4.
PROPERTY LOCATION AND DESCRIPTION
123
4.1
Location
123
4.2
Current South African Minerals Legislation
124
4.2.1
125
5.
Conversion of “Old Order Prospecting Rights” to “New Order Prospecting Rights”
4.3
Mineral Rights
125
4.4
Option Agreements
127
4.5
Prospecting Permits
129
4.6
Surface Rights
129
4.7
Mineral Deposits and Claim Boundaries
129
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
130
5.1
Access
130
5.2
Climate
131
5.3
Local Resources and Infrastructure
131
5.4
Physiography
131
6.
EXPLORATION HISTORY
131
7.
REGIONAL GEOLOGICAL SETTING
131
8.
NORTH BLOCK, CENTRAL BLOCK, BOIKGANTSHO JV GEOLOGY
131
8.1
Overview
131
8.2
Hanging Wall
132
8.3
Platreef
133
8.4
Footwall
134
8.5
Structure
134
8.6
Mineralization
137
118
Page
9.
EXPLORATION TECHNIQUES
10. DRILLING
139
140
10.1 Introduction
140
10.2 Surveying
141
10.3 Collar Co-ordinates
141
11. SAMPLING METHOD AND APPROACH
141
11.1 Overview
141
11.2 Sample Preparation
143
11.3 Sample Analysis
143
11.3.1 Platinum, Palladium, Rhodium and Gold Analysis
144
11.3.2 Multi-Element (ICP) Analysis
144
11.3.3 Conversion Factors
144
11.4 Quality Assurance and Quality Control
144
11.4.1 Standards
145
11.4.2 Summary
146
11.5 Data Verification
147
12. ADJACENT PROPERTIES
12.1 Sandsloot
147
147
13. MINERAL RESOURCE ESTIMATES
147
14. MINERAL PROCESSING AND METALLURGICAL TESTING
148
15. OTHER RELEVANT INFORMATION
148
16. INTERPRETATION AND CONCLUSIONS
148
17. RECOMMENDATIONS
149
18. REFERENCES
149
19. DATE
151
20. CERTIFICATE OF QUALIFICATIONS
151
119
LIST OF FIGURES
Page
Figure 1: Location
124
Figure 2: Mineral Tenure
127
Figure 3: Mineral Deposits and Claim Boundaries
130
Figure 4: Geology and Drill Holes
137
Figure 5: Section 2645600N through North Drenthe
140
Figure 6: Analytical Flow Chart
142
LIST OF TABLES
Page
Table 1:
Mineral Tenure
126
Table 2:
PGM (>0.5 g/t PGM+Au)1 vs. Base Metals Correlation Matrix
138
Table 3:
Summary of the QAQC and sampling program for 2004
145
120
1.
EXECUTIVE SUMMARY
This report on the Platreef platinum group metals (“PGM”) Project (“Platreef Project”) is compiled in accordance
with the guidelines set forth under National Instrument 43-101 for the submission of technical reports on mining
properties. It is submitted as a technical report for Anooraq Resources Corporation (“Anooraq”) for the Company’s
Annual Information Form for the 2005 fiscal year.
1.1
Location
The Platreef Project is located on the Northern Limb of the Bushveld Mafic Intrusive Complex near the town
of Mokopane (formerly Potgietersrust) in the Republic of South Africa, approximately 275 km northeast of
Johannesburg. The Bushveld Complex is both the world’s largest layered mafic intrusive complex and host
to the world’s greatest resources of platinum group metals (PGM). There is a large PGM surface mining
operation and several extensively explored PGM deposits on the Northern Limb.
1.2
The property holdings comprise all or parts of 20 mineral properties, called farms in South Africa, totalling
37,492 hectares. Agreements concerning the various farms are discussed in Section 4.4. In earlier reports, the
properties were divided into four geographical areas: the North Block, the Central Block, the Rietfontein Block
and the South Block. While these divisions are retained, two farms within the Central Block, i.e. Drenthe and
Witrivier, along with the northern part of Overysel farm which lies immediately to the south, now form
a separate entity, referred to as the Boikgantsho Joint Venture. This agreement, between Anooraq and a
subsidiary of Anglo Platinum Limited (“Anglo Platinum”) was the focus of exploration activities in 2005.
In addition, the North and South Block properties now comprise the Kwanda Joint Venture.
1.3
The area is well serviced by the cities of Mokopane and Polokwane, which together provide the infrastructure
for the substantial platinum-group metal mining industry in the district. Highways and railways service the
region from Johannesburg.
1.4
History
Dr. Hans Merensky first discovered PGM on the Bushveld’s Northern Limb in 1924. The region saw limited
PGM production until 1930. Thereafter, interest waned, particularly after the discovery and development of
the more platinum-rich Merensky reef in the Western Limb. In the 1960s, exploration attention was again
focused on the Northern Limb and in 1993, after nearly 30 years of sporadic exploration, large scale PGM
production began at the Sandsloot open pit mine. A subsidiary of Anglo Platinum currently produces an
average of 430,000 oz of PGM1 annually from Sandsloot and a new pit on another farm called Zwartfontein
South
Exploration on the properties comprising Anooraq’s Platreef Project has been sporadic, even though a number
of historic drill holes intersected PGM mineralization on the farm Drenthe 778LR. Since 2000, Anooraq has
been exploring the Project, completing geological and drilling programs in 2000, 2002, 2004 and 2005.
In 2001, African Minerals Ltd., now called Ivanplats Platinum and Nickel Ltd., drilled 15,852 m in 73 diamond
drill holes on the Rietfontein farm, outlining mineralization over xx metres.
In late 2003, the Boikgantsho Joint venture was established to explore the Drenthe, Witrivier and the
northern part of Overysel farms. In 2004, Anooraq as operator completed 36,478 m of infill and step out
drilling on the three farms, significantly increasing the size of the Drenthe deposit and identifying a second
deposit on the northern part of Overysel farm. Drilling to September 2004 outlined total indicated resources
in the two deposits of 176.6 million tonnes grading 1.35 g/t 3PGM and 0.13% nickel, and additional inferred
resources in the two deposits of 104.1 million tonnes grading 1.23 g/t 3PGM and 0.14% nickel, both
estimated at a $20 gross metal value per tonne (GMV/t) cut-off.
121
A Preliminary Assessment of the Boikgantsho project was completed in March 2005, indicating positive
returns for an open pit mine with a 32 mine life. This generated a provisional ‘pit outline’ for mining the
Drenthe deposit and Resource estimation variography indicated that vertical drill holes on a 50 by 50 metre
grid spacing would be necessary to upgrade the resource within this pit outline to the ‘measured’ category.
To fulfil this requirement, Anooraq drilled 24,418 m of infill and step out holes between January and
June 2005.
In 2002 an airborne magnetic survey and a preliminary geological survey over the North Block, part of the
Kwanda JV, was undertaken. In June 2005, two exploration holes were drilled on the farm Swerwerskraal, for
a total of 535.1 metres. Although Platreef-like rocks were intersected, only sporadic thin intervals of PGM
mineralization were encountered in these drill holes.
1.5
The Platreef property is situated on the Bushveld Complex, which is both the world’s largest mafic-layered
intrusive complex and host to the world’s greatest PGM resources. Extending over 67,000 km2, the complex
consists of four major compartments or limbs. Each compartment underwent similar processes of
crystallisation and stratification so that rock successions are broadly similar throughout the complex.
Rock sequences are classified into a series of zones, of which the Critical Zone is the most significant.
Underground mines developed on two horizons near the top of the Critical Zone, i.e. the UG2 chromitite and
the Merensky Reef, have accounted for the bulk of the PGM production to date.
The main PGM-bearing unit on the Northern limb is the Platreef horizon. The broad stratigraphy of the
layered sequence, including the Platreef horizon, can be correlated with the other limbs of the Bushveld
Complex. From analyses of pyroxenes, and its general stratigraphic position within the Bushveld suite, the
Platreef can be considered the broad equivalent of the Merensky Reef. In other words, the Merensky Reef and
the Platreef were likely derived from the same magma, which was enriched in platinum group metals.
The westerly-dipping Platreef pyroxenitic rock package is variable in thickness along the strike of the
Northern Limb, varying from 70 – 90 metres in the south to 250 – 300 metres further north. PGM
mineralization is associated with pyrrhotite, chalcopyrite and pentlandite and is variably distributed
throughout the Platreef unit. On Overysel and southern Drenthe, higher grade mineralisation is commonly
concentrated in the upper 20 – 30 metres but further north on Drenthe and on Witrivier, this distribution is
less pronounced and higher grade material may occur at several levels throughout the unit.
Anooraq’s 2000 drilling program in the Central Block outlined a mineralized corridor approximately 200 –
300 metres wide at surface and extending from the southern boundary of Drenthe farm, northward for
approximately 2,100 metres onto Witrivier farm. PGM concentrations throughout the corridor were found to
be in the range 0.5 – 2.5 grams per tonne over 10 – 20 metres intervals (true thickness). Subsequent diamond
drilling in 2002, 2003, 2004 and 2005 confirmed that mineralization also persisted to the south of Drenthe,
onto the northern part of the Overysel farm, extending as far as the southern boundary of the expanded
Platreef property. As a result of the substantial drill programs in 2004 and 2005 the earlier identification of
a mineralized corridor has been confirmed but with a significantly improved level of confidence
accompanying the increase in drill hole density. Furthermore, it is now recognised that on northern DrentheWitrivier, at least two or more 10 – 20 metres intervals or a single 40 – 50 metres thick interval are
frequently present. Nevertheless, mineralization still remains open to the north of the Drenthe deposit and
down-dip to the west along much of the strike length of the Platreef on Overysel, Drenthe and Witrivier.
1.6
Recommendations
The main objective of future exploration programs should be to drill the Overysel North deposit using a
phased approach, as at Drenthe. Ultimately, a 50 metre by 50 metre grid spacing, similar to that of the
Drenthe deposit, will likely be required. An initial phase of infill drilling, with two holes drilled on section lines,
equally spaced between the current 100 metre spaced lines is recommended. Approximately 7,500 metes of
drilling at an estimated cost of CDN$ 1.5 million would be needed to complete the initial infill phase and
further test the Overysel North deposit.
Additional, widely spaced step-out drilling is recommended from the Drenthe deposit northwards on to the
Noord-Holland farm. Further, the ~1.8 kilometre strike ‘gap’ in drill holes could be tested by widely spaced
drilling. Approximately 1,500 metres of drilling in 6 holes at 250 metres spacing are recommended to test
this ‘gap’ area, at an estimated cost of CDN$300,000.
122
2.
This purpose of this report is to document the exploration work done and exploration results released in 2005 on
the Platreef project.
2.1
Introduction
During the period 1999 to 2005, Anooraq Resources Corporation assembled and undertook PGM exploration
on portions of 20 farms (“claims”) on the Northern limb of the Bushveld Layered Mafic Intrusive Complex,
situated in the Limpopo Province of the Republic of South Africa.
This report describes the mineral tenure, exploration history, soil geochemistry, geology, mineralization,
drilling program and exploration potential of the Platreef Project. Recommendations and budgets are made
for future exploration.
2.2
Terms of Reference
The author is providing a Technical Report that meets the requirements of Canadian regulatory authorities
under National Instrument 43-101 to be filed in conjunction with an Annual Information Form for Anooraq
Resources Corporation.
2.3
Field Involvement
The author visited the property on August 7 to 11, 1999; January 26 to April 28, August 11 to 31, 2000;
April 28 to July 4, July 10 to July 16, July 26 to September 30, 2002; May 15 to August 10, August 26 to
October 30, November 15 to December 10, 2003; January 14 to March 3, April 14 to May 13, June 14 to
July 22, August 13 to September 21, October 15 to November 9 and November 24 to December 14, 2004;
a total of 634 days, January 16 to February 27, April 13 to May 25, June 22 to July 8, July 23 to August 2,
August 24 to August 31, September 8 to September 15, September 23 to September 26, October 1 to
October 2, 2005, to undertake surface geological investigations, log diamond drill core and participate in
other exploration activities.
3.
DISCLAIMER
In preparing this Technical Report the author relied upon:
• Personal knowledge from working at the property site, and data pertaining to all aspects of the exploration of
the Platreef property during the period 1999 through 2005.
• Reports and studies on a variety of topics, prepared by others during exploration investigations of the Platreef
property. The principal ones are noted in the section called References.
• The information in sections 4 – 6 was acquired from the Company.
The information in sections 15, 16 and 17 was derived from Preliminary Assessment Boikgantsho JV, co-authored
by Dave R. Reeves, MAusIMM, Thomas Tulp, MAusIMM, Hatch Associates of Australia, and D.Stone, P.Eng., of Minefil
Consultants (responsible for the Preliminary Assessment) and G.J. van der Heever, Pr.Sci.Nat. (responsible for the
Resource Estimate).
4.
PROPERTY LOCATION AND DESCRIPTION
4.1
Location
The 37,492 hectare Platreef Project is situated in the Limpopo Province of the Republic of South Africa
(“RSA” or “South Africa”), some 275 kilometres north-northeast of Johannesburg (Figure 1). Located at
latitude 24° South and longitude 29° East, the project comprises all or portions of 20 farms (“claims”).
The Project is divided into four geographical regions: the North Block, the Central Block, the Rietfontein Block
and the South Block. Two farms within the Central Block, i.e. Drenthe and Witrivier and the northern part of
Overysel farm, which lies immediately to the south, now form the basis of the Boikgantsho Joint Venture
between Anooraq and a subsidiary of Anglo American Platinum Limited (“Anglo Platinum”). The North and
South Blocks fall under the Kwanda Joint Venture and the Rietfontein Block falls under an agreement with
Ivanplats.
For further details of the property agreements, see section 4.4, Option Agreements.
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Figure 1: Location.
4.2
Current South African Minerals Legislation
The Mineral and Petroleum Resources Development Act, 2002 was promulgated on May 1, 2004 and is the
Act that currently governs South African Minerals Legislation. The Act replaces the Minerals Act 50 of 1991.
This new Act allows for the transfer of all “unused old order rights” to the State. The current rights optioned
and permitted by the Company do not fall into the category of “unused old order rights”, but are classified
as “old order prospecting rights”. A period of two years will be allowed after promulgation of the Bill, which
occurred on May 01, 2004, to convert these “old order prospecting rights” to “new order” prospecting or
124
mining rights. Security of tenure will thereafter be guaranteed for a period of five years with respect to
prospecting rights, and 30 years with respect to mining rights.
There will be a one-year grace period after the promulgation of the Bill to permit any rights.
4.2.1 Conversion of “Old Order Prospecting Rights” to “New Order Prospecting Rights”
The conversion process has two pre-conditions:
• involvement of a Black Economic Empowerment (BEE) contingent; and
• payment of a prospecting fee to the State, followed by a royalty in the event of mining.
Through a transaction with Pelawan Investments (Proprietary) Limited that was completed in
October 2004, Anooraq has become a Black Economic Empowerment entity, meeting the first
requirement for conversions of prospecting rights.
Current State prospecting fees range from R3/hectare in year 1 to R7/hectare in year 5. Current State
royalties on precious metals are 1% of gross revenue. These amounts will become payable to the
State upon conversion of “old order” rights to “new order” rights, and do not take existing
commitments towards current mineral rights holders into account.
Under the Minerals Act 50 of 1991, in order to conduct exploration work, on private or State land, a
“Prospecting Permit” was required. Under the new legislation a valid prospecting permit over a farm
means that the mineral rights held are classified as “old order prospecting rights”. Prospecting permits
are issued by the State controlled Department of Minerals and Energy (“DME”). Usually, Prospecting
Permits are renewed at the start of each exploration program (not unlike Notice of Work Applications
in British Columbia). In order to apply for a Prospecting Permit the following items must be submitted
to the DME:
• a copy of the Notarial Prospecting Contract and Option Agreement;
• a work proposal;
• an environmental restoration plan and rehabilitation deposit;
• a financial guarantee for rehabilitation purposes;
• proof of financial resources and the ability to mine;
• proof that proper written notice of the application was given to interested and affected parties
concerned, in which it is stated that the particulars of the application are available at the offices
of the Director: Mineral Development for inspection and that they may comment in writing
thereon within a reasonable time as stated in the notice;
• comments on any written objections raised by the interested and affected parties;
• an indication of the period required for prospecting (usually stated in the Notarial Prospecting and
Option Agreement);
• a signed Prospecting Permit Application Form;
• a 20 Rand non-refundable filing fee; and
• maps outlining the area of exploration interest.
4.3
Mineral Rights
The majority of mineral rights, comprising seventy-three percent (27,389 hectares), underlying the Platreef
property is held by four private land owners: C. de Vos Tabakplanters (“Tabakplanters”); Randex Limited
(“Randex”); and Rustenburg Platinum Mines Limited (“Rustenburg”) and Potgietersrust Platinums Ltd.
(“PPRust”) both of which are subsidiaries of Anglo Platinum Corporation. Of the remaining mineral rights:
sixteen percent (5,857 hectares) are held by the Lebowa Minerals Trust (“LMT”), and the Department of
Minerals and Energy of the Republic of South Africa holds the remaining eleven percent. Through its 100%
owned South African subsidiary Plateau Resources (Pty) Ltd (“Plateau”), Anooraq has entered into “Notarial
Prospecting and Option Agreements” with each of the mineral rights owners on the farms. A summary of the
mineral rights ownership for the farms is provided below in Table 1; also refer to Figure 2, Mineral Tenure.
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Table 1: Mineral Tenure
Mineral
rights
owner
Year
acquired
Farm
name
Portion
Area (hectares)
1999
1999
1999
1999
2002
1999
1999
Dorstland 768 LR
Dorstland 768 LR
Dorstland 768 LR
Dorstland 768 LR
Noord Holland 775 LR
Witrivier 777 LR
Witrivier 777 LR
Ptn 3 (a Ptn of Ptn 1)
Ptn 2 (a Ptn of Ptn 1)
Re of 1
Mineral Area 1
All
1
Re
42.83
472.91
430.09
514.87
1228.82
767.42
788.97
DME
Total Area:
4,245.91
LMT
1999
2001
1999
Drenthe 778 LR
Malokongskop 780 LR
Rietfontein 2 KS
All
All
All
Total Area:
1,538.30
1,440.92
2,878.03
5,857.25
PRIVATE
2001
2001
2001
2002
2002
2002
2002
2002
2002
2002
2002
2003
2002
2002
2002
126
Elandsfontein 766 LR
Elandsfontein 766 LR
Hamburg 737 LR
Chlun 735 LR
Cyferkuil 321 KR
Elberfield 731 LR
Gibeon 730 LR
Gilead 729 LR
Haakdoornkuil 323 KR
Ham 699 LR
Naboomfontein 320 KR
Overysel 815 LR
Rondeboschje 295 KR
Swerwerskraal 736 LR
Vaalkop 325 KR
2
1
All
All
All
All
All
All
All
All
All
% of All
All
All
All
747.61
428.27
2,126.40
1,215.06
2,061.78
2,544.74
1,848.89
2,085.08
2,818.50
1,852.71
2,664.73
637.57
1,525.03
2,404.10
2,428.45
Total Area:
27,388.92
Total Land Holdings (hectares) 2004:
37,492.08
Figure 2: Mineral Tenure.
4.4
Option Agreements
The majority of the option to purchase mineral rights agreements held by the Company are standard
agreements. The agreements with the private mineral rights holders are somewhat more complex and thus
require further explanation as detailed below. The following summary of these agreements has been provided
by Anooraq management and has not been independently verified or reviewed by the writer.
In May 2000, an option to acquire the Elandsfontein Portion 1, Elandsfontein Portion 2 and Hamburg farms,
contiguous to previously held ground in the northern part of the Platreef property, was obtained. Under the
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terms of the option agreement, Anooraq must issue to MSA Projects (Pty.) Limited (“MSA”), an aggregate
of 500,000 shares, of which 75,000 shares were issued on issued August 8, 2001; 66,667 shares were issued
on October 23, 2001; 125,000 shares were issued on October 23, 2002; and 145,833 shares were issued
on October 23, 2003 (completing the share required share issuances) and make aggregate cash payments
of US$350,000 subject to MSA securing prospecting permits on the farms. In addition, the option makes
provision that Plateau will be responsible for the exploration and purchasing fees associated with the farms.
At the time of execution these included consideration for exploration rights held by Tabakplanters, which
were in effect for a five year term, on farm Elandsfontein 766 Ptn 2 (747 hectares) of payments of South
African Rand (“ZAR”) 10 per hectare in year one escalating in stages to ZAR 20 per hectare in year five.
In July 2001, consideration for exploration rights held by Randex for the farms Hamburg (2,126 ha)
and Elandsfontein Ptn 1 (428 hectares), were obtained under the MSA option. These rights are in effect for
a five-year term and consist of payments of US$2.00 per hectare in year one escalating in stages to US$4.50
per hectare in year five. To purchase the farms outright, a payment of US$325 per hectare is require if the
option is exercised in year one, US$390 per hectare in year two, US$455 in year three, US$520 per hectare
in year four and US$600 per hectare in year five.
In October 2001, Anooraq completed an option agreement with African Minerals Ltd., now known as
Ivanplats Nickel and Platinum Ltd. (“Ivanplats”), whereby Ivanplats must spend $750,000 per year for the
next two years (or may do so sooner) to obtain the right to form a 50:50 joint venture with Anooraq on the
Rietfontein farm.
On May 16, 2002, the Company completed agreements with Rustenburg (the subsidiary of Anglo Platinum)
for the right to acquire up to an 80% interest in eleven new PGM properties located on the Northern limb
of the Bushveld Complex, South Africa. Under the agreements with Rustenburg, the Company has acquired
an initial 50% interest in the PGM rights to the eleven farms and can maintain this interest by making staged
exploration expenditures totalling ZAR 25 million within five years. The Company is required to spend
ZAR 2.5 million in year one, ZAR 5 million in each of years two, three, and four, and ZAR 7.5 million in year
five. When a mineral resource is identified, the Company can earn an additional 30% interest by bringing the
property into commercial production. Rustenburg will retain a 20% interest in the joint venture. This
agreement is now known as the Kwanda Joint Venture.
On November 30, 2002, the Company amended its prospecting agreement with Tabakplanters on Farm
Elandsfontein 766 Ptn 2 (747 hectares) for a three-year term. Consideration for these exploration rights are
ZAR 18 per hectare for year one, ZAR 20 per hectare in year two and ZAR 22 per hectare in year three.
In November 2003, Anooraq, and its wholly owned South African subsidiary Plateau Resources (Pty) Ltd.
(together “Anooraq”), entered into a Joint Venture Agreement with Potgietersrust Platinums Ltd. (“PPRust”),
a wholly-owned subsidiary of Anglo American Platinum Corporation Limited (together “Anglo Platinum to
explore and develop platinum group metals (“PGM”), gold and nickel mineralization on the Drenthe farm and
the adjacent northern portion of the Overysel farm. Pursuant to the terms of the Joint Venture Agreement,
Anooraq and Anglo Platinum will form an initial 50/50 Joint Venture (“the JV”) to explore Drenthe and the
northern portion of the Overysel farm for a period of up to five years. During the period, Anooraq will operate
exploration programs, and spend up to ZAR12.35 million (about US$1.76 million) on behalf of the JV.
Anooraq will then have the option to proceed on a year-by-year basis and to take the project to a Bankable
Feasibility Study (“BFS”).
Once the BFS has been completed, either or both of the partners in the JV will have the option to proceed
to exploitation. If both partners decide to proceed, then a joint management committee will be established
to oversee development and operations. The ultimate Joint Venture interest allotted to Anooraq and PPRust
will be determined according to the proportion of contained metal within the Drenthe deposit that lies on
the ground contributed by each, as determined by the BFS. PPRust has the option to dilute to a minimum
12.5% non-contributory interest, adjusted depending to the final PGM royalty established under the Mineral
and Petroleum Royalty Bill to a maximum of 15%. During development, the JV will be seeking a Black
Economic Empowerment business partner to participate in the project, with the JV partners dividing the
remaining interest.
Anglo Platinum has undertaken to enter into a PGM Ore or Concentrate Purchase and Disposal Agreement
at the exploitation phase, based on standard commercial terms, whereby PGM produced from the operation
would potentially be treated at Anglo Platinum’s facilities. Anglo Platinum recently completed construction
of a new PGM smelter at Polokwane, located about 80 kilometres east of Drenthe.
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4.5
Prospecting Permits
The Company or its Partners have obtained prospecting permits for the farms comprising the Platreef
property, including the North, Central, Rietfontein and South Blocks. In addition, prospecting permit renewal
applications have been submitted for some of the farms and approval is expected in the near term.
4.6
Surface Rights
No surface rights have been secured on the Anooraq property to date. Once the required area has been
established, it would be necessary to negotiate a purchase agreement with the surface rights owner(s). Prices
are expected to range between ZAR 2 000/hectare and ZAR 5 000/hectare depending on the infrastructure
on the farm.
4.7
Mineral Deposits and Claim Boundaries
Figure 3 illustrates the mineral deposits on the Northern Limb in relationship to the farm boundaries. In
particular, the general outline of the Drenthe and Overysel North deposits are shown on the farms within
the Boikgantsho Joint Venture.
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Figure 3: Mineral Deposits and Claim Boundaries.
Anooraq has an interest in the deposits shown on the Boikgantsho JV Property.
5.
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY.
5.1
Access
The project-area is readily accessible via the main N1 (toll) expressway from Johannesburg to the city of
Mokopane (Potgietersrus), which is approximately 35 kilometres south of the Central Block. Access from
Mokopane to the individual Blocks is via paved Provincial highways. Individual farms, if not directly accessible
from Provincial highways, are well served by a comprehensive network of well-maintained dirt roads and
farm tracks.
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5.2
Climate
The climate is arid with moderate winter temperatures in the 20°C range, typically increasing to 35°C in
summer. The majority of the 35 cm of average annual precipitation occurs in the period November to March,
with little precipitation during the remainder of the year. Ample water from nearby community wells and a
well sunk by Anooraq is available for drilling within the property. Groundwater studies will be required to
source adequate supplies of process water. Work can be undertaken year round.
5.3
Local Resources and Infrastructure
Nearby highways, railways, high capacity electrical transmission lines and the cities of Mokopane
(Potgietersrus) and Polokwane (Pietersburg) provide the essential infrastructure for Anglo Platinum’s 12,000
tonnes per day Sandsloot PGM mine. This mine is located approximately 10 kilometres south of the Platreef
property and the existing infrastructure has the capacity to support additional mine development. Any
additional services and consumable supplies required for mineral exploration and mine development/
operation are available in Johannesburg.
Should the project proceed to the mine development stage it may be necessary to facilitate the relocation
of a small village.
5.4
Physiography
The Platreef property’s characteristic terrain comprises flat to gently undulating topography with broad,
gently sloping valleys. Watercourses are seasonal. In view of the subdued topography and the mean elevation
of 1,100 metres, there are no physical obstacles to inhibit exploration or mine development. Vegetation is
generally sparse consisting mostly of grassland and low acacia thorn scrub.
6.
EXPLORATION HISTORY
For the exploration history of the Platreef Project prior to 2005, see “2004 Technical Report on the Platreef Project,
Northern Limb, Bushveld Complex, Limpopo Province, Republic of South Africa, Anooraq Resources Corporation by
K.Roberts, March 2004, filed on www.sedar.com
In 2005, Anooraq completed 24,418 metres of infill and step out drilling in 136 holes into the Drenthe deposit on
Drenthe and Witrivier farms. Apart from eight inclined holes that were drilled at various azimuths (for geotechnical
purposes), all of these holes were drilled vertically, at 50 metres spacing on section lines 50 metres apart. Based on
variographic data from the 2004 resource modelling, this drill spacing is considered sufficient to be able to define
a ‘measured’ resource within the area drilled.
7.
REGIONAL GEOLOGICAL SETTING
For a description of the regional geological setting of the Platreef Project, see “2004 Technical Report on the
Platreef Project, Northern Limb, Bushveld Complex, Limpopo Province, Republic of South Africa, Anooraq Resources
Corporation by K.Roberts, March 2004, filed on www.sedar.com
8.
NORTH BLOCK, CENTRAL BLOCK, BOIKGANTSHO JV GEOLOGY
8.1
Overview
Owing to the paucity of Bushveld mafic rock outcrops on the contiguous North Block, Central Block and
Boikgantsho JV areas, the bulk of this section is based primarily on observations of drill core from Drenthe,
Witrivier and Overysel farms. This is supplemented by Anooraq’s aeromagnetic survey and field data from
reconnaissance mapping, as well as limited Anooraq drilling on Noord-Holland farm (two drill holes),
Swerwerskraaal farm (two drill holes) and one drill hole on Dorstland farm.
Archean granites, which are poorly exposed along the east side of the North Block, Central Block and
Boikgantsho JV areas, form the floor of the Platreef throughout the area. On Overysel, Drenthe and Witrivier
the overlying Platreef consists of a complex assemblage of pyroxenities, feldspathic pyroxenites, norites,
serpentinites and xenoliths of dolomite, which dip –40° west. This zone typically has a true thickness of –100
to 250 metres, sandwiched between the basal granite and overlying Main Zone Norite. Further north the
succession is often thinner and appears to have been intruded and displaced upwards by the later intrusion
of the Main Zone Norite.
131
Geologically, three broad units have been identified. These have been designated:
1.
Hanging Wall;
2.
Platreef;
3.
Footwall.
Although detailed lithological successions within each of these units may vary from location to location,
particularly within the Platreef, these broad units are usually readily discernible and therefore form useful
subdivisions. The ensuing geological description is largely extracted from a number of previous reports for
Anooraq Resources Corporation by Rebagliati and Titley (1999); Rebagliati (2000); Roberts (2000); Roberts
et al. (2001); Roberts and Rebagliati (2003) and Roberts (2004a).
8.2
Hanging Wall
By definition, the Hanging Wall comprises the succession immediately above the Platreef. On Overysel and
southern Drenthe, Hanging Wall rock types are typically coarse-grained, relatively homogeneous norites
although in places, particularly adjacent to granitic dykelets, a rather ‘dark’ alteration of the feldspar imparts
a more mafic appearance to the rock. Nevertheless lithologies are invariably more leucocratic than the
underlying pyroxenitic Platreef and as a result the Hanging Wall-Platreef contact is relatively distinct.
Typically at the contact, there is a gradational transition over several centimetres with a progressive
downward increase in the modal percentage of pyroxene. This is usually accompanied by the transition of
plagioclase from a cumulus to intercumulus phase. In a number of places, the contact is quite distinct and
resembles that seen on the farm Zwartfontein to the south, where a ‘mottled anorthosite’ directly overlies
the reef. Although somewhat less abundant than noritic lithologies, these are very distinctive rocks in outcrop
and drill core. Occasionally, thin (2 – 3 m) feldspathic pyroxenite layers also occur within the Hanging Wall
but these are typically isolated, usually underlain by substantial thicknesses of uniform norite, and are not
readily confused with those of the Platreef.
Further north on Drenthe and onto Witrivier, there is considerable interlayering of norites and feldspathic
pyroxenites at the Hanging Wall-Platreef boundary and it is less immediately obvious. The junction is further
complicated by zones of PGM mineralization associated with calc silicate xenoliths and serpentinitic
alteration. In fact there frequently appears to be a ‘reaction rim’ of pyroxenitic material developed around
these xenoliths, even if generally enclosed in norite, which further complicates interpretation of the precise
boundary. Given this scenario, during core logging, the Platreef contact was initially placed at the top of the
first visibly mineralized (i.e. sulphide-bearing) pyroxenitic unit encountered down hole. These initial ‘picks’
were sometimes modified in the light of assay data and sectional interpretation.
Microscopically, the Hanging Wall norites, in addition to (50% – 70%) cumulus plagioclase and (20% – 30%)
cumulus orthopyroxene, may also contain appreciable quantities of intercumulus clinopyroxene (typically
25% – 30% of the total pyroxene content). These ‘norites’ grade into 2-pyroxene norite or more
clinopyroxene-rich gabbronorite. However, the less cumbersome term norite is retained for general usage,
not only in view of the difficulty in consistently recognising clinopyroxene macroscopically but also because
it reflects the predominance of orthopyroxene as the main mafic component. Furthermore, the term ‘Main
Zone Norite’, i.e. the Hanging Wall ‘norite’, is entrenched in Bushveld literature.
The ‘mottled anorthosites’ essentially comprise plagioclase-rich (70% – 90%) cumulates with distinctive,
intercumulus single crystal (poikilitic) overgrowths of dark pyroxene. The latter may reach several
centimetres across and it is these overgrowths that bestow the characteristic ‘mottled’ texture. Depending
on the total pyroxene content, these rocks grade into strictly noritic compositions, although darkening
(zoisitic alteration) of the feldspar surrounding the ‘mottles’ frequently imparts a more mafic overall
appearance. Nevertheless, as in the case of the norites above, the name ‘mottled anorthosite’ is retained, as
it is a common textural descriptor in Bushveld Complex literature.
Other Hanging Wall rock types include scattered calc silicate xenoliths and, in places, zones of hybrid ‘norite’
and minor granitic dykelets. In a number of drill holes thin diabase dykes were encountered. However, apart
from the two prominent dykes shown in Figure 7, these are volumetrically insignificant.
The calc silicate xenoliths typically vary in size from several centimetres to several metres, with occasional
xenoliths 10 – 40 metres thick. The rock types are usually pale green to cream, or locally brown and are
texturally and mineralogically complex. In places they appear to retain some remnant sedimentary structures
(e.g. mud-flake conglomerates, sedimentary layering, even stromatolitic lamination), although it is possible
that some of these structures may be entirely metamorphic in origin. Grey-black serpentinitic streaks and
132
patches are also common and the margins of thicker xenoliths are often strongly serpentinised over several
metres. These marginal zones may involve altered igneous material but distinctions between a sedimentary
versus an igneous origin are blurred. Similar rocks are found at the Hanging Wall-Platreef contact and within
the Platreef itself.
Sporadic, hybrid ‘norites’ in the Hanging Wall are usually clearly related to assimilation–contamination, either
by granitic material or calc-silicate xenoliths. Elsewhere, less pervasive, predominantly hydrous
contamination is evidenced by sporadic patches of phlogopite-bearing pegmatitic material. These patchily
developed pegmatitic zones are more common in the underlying Platreef.
A number of thin, graphic-textured granitic dykelets intrude the Hanging Wall. They are typically only several
centimetres in true thickness, however in places they may be up to several metres thick.
8.3
Platreef
In this report the term ‘Platreef’ refers to the heterogeneous package of pyroxenitic through noritic rocks that
underlies the Main Zone norite along much of the Northern Limb3 and which usually carries at least trace
levels of PGM mineralization (i.e. 50 – 100 ppb PGMs). On lithological and stratigraphic grounds it is
considered to be the lateral equivalent of the Critical Zone of the other limbs of the Bushveld Complex. In
the past, the term Platreef has been used to describe a specific ‘economic’ horizon, which may or may not be
confined to a specific lithology, or has been applied to a specific rock type (e.g. a mineralised pegmatitic
layer). These divisions are either subjective (i.e. dependent on a ‘cut-off’ grade) or only locally applicable and
are no longer considered a valid use of the term Platreef. Regardless of precise definitions, the Platreef rock
package is undoubtedly an important PGM-bearing unit and is currently being mined along strike to the
south, at Anglo Platinum’s Sandsloot and Zwartfontein South open pit mines. The latter is situated only 5 km
south of Anooraq’s Boikgantsho joint venture property.
In more detail, the Platreef unit consists of an interlayered sequence of medium to coarse-grained,
feldspathic pyroxenites and lesser amounts of norite. When unaffected by contamination-alteration the
former commonly have a slightly ‘speckled’ texture. With increase in plagioclase content and the appearance
of cumulus plagioclase, the more feldspathic members grade into noritic compositions containing less than
70% pyroxene. Some of these norites closely resemble the Hanging Wall norite and they are interpreted as
later intrusions of Main Zone material into the Platreef sequence. Nevertheless on southern Drenthe, there
is usually a clear distinction between the (Main Zone) Hanging Wall norite and the mineralized,
predominantly pyroxenitic, sequence. Indeed, there is often a calc silicate interval or at least a xenolithic zone
at the contact or there may be a distinctive, mineralized, pegmatitic zone 1-5m thick close to the top of the
Platreef. Further north, there is considerable interlayering of pyroxenite and norite at the contact so that the
distinction is somewhat blurred. However, the top of the Platreef is essentially marked by the occurrence of
‘pyroxenitic’ lithologies accompanied by PGM mineralization. This may be gradational over several metres or
may be quite abrupt.
Microscopically, Platreef rock types are essentially medium to coarse-grained orthopyroxene cumulates
containing between 50% – 85% cumulus orthopyroxene, along with variable amounts of cumulus and or
intercumulus plagioclase and minor (largely intercumulus) clinopyroxene. In a general sense there is an
overall decrease in grain size towards the footwall contact and in places there is a thin (1 – 3 m) ‘chilled’
hybrid zone of relatively fine-grained rocks adjacent to the granite contact. This ‘chilling’ effect may be
further accentuated by an increase in alteration towards the base, often masking primary textures and
imposing a fine-grained appearance on the underlying rock types. On the northern part of Drenthe and on
Witrivier, the basal portion of the Platreef often displays a variably developed, chilled ‘trachytoid’ texture,
with partially aligned acicular orthopyroxenes. Nevertheless, irrespective of this broad trend, typical medium
to coarse-grained rocks can also occur adjacent to the contact, so that the effects of ‘chilling’ appear to be
variable. One explanation for this variability is that the coarser grained marginal rocks actually represent a
later magmatic pulse. In this scenario this would have been intruded along the contact between the original
‘chill’ and a floor preheated by thermal transfer during formation of the initial ‘chill’ phase.
3 With the exception of the South Block and portions of the North Block.
133
An additional characteristic of much of the Platreef succession is the presence of a widespread ‘patchy’
increase in grain size with the ultimate development of pegmatitic texture. In detail, grain sizes often vary
rapidly and insensibly even over several centimetres within these zones. These rapid increases in grain size
are often accompanied by a subtle increase in the modal content of feldspar and the growth of phlogopite
flakes. Microscopically these intervals may also contain minor amounts of interstitial quartz. This ‘patchy’
variation is not a normal igneous layering phenomenon, as contacts between variants are irregular,
commonly diffuse and lack any consistent parallelism. Furthermore, ‘normal’ medium-grained groundmass
minerals appear to have simply enlarged and or ‘grown’ into the pegmatitic zones. These zones are
interpreted primarily as in-situ recrystallization phenomena, reflecting the late-stage effects of
predominantly hydrous contamination or possibly ‘filter press’ processes within the Platreef.
As noted above, xenoliths of calc-silicate may occur at the junction with the Hanging Wall as well as within
the Hanging Wall and Platreef. These typically vary from several centimetres to several metres in thickness,
although occasional rafts 10 – 40 m thick occur on northern Drenthe – Witrivier (typically in the hanging
wall or at the contact). Depending on cross-sectional interpretation and the degree of mineralization,
xenoliths straddling the boundary were assigned either to the Hanging Wall or Platreef, as appropriate.
Although no detailed mineralogical work has been undertaken on these hornfelsed rocks, elsewhere on the
Platreef similar calc silicates contain minerals like grossularite, fassaite (an aluminous clinopyroxene),
forsteritic olivine, monticellite (CaMgSiO4), and carbonates (dolomite, calcite).
Like the Hanging Wall, the Platreef is also sporadically cut by thin granite dykelets, with pronounced graphic
textures. Widths are typically centimetre-scale but they may range up to several metres. In general these
dykes are leucocratic and exhibit sharp contacts at 20° to 40° to the core axis. However elsewhere they have
somewhat diffuse margins and contain significant amounts (10% – 20%) of biotite and or amphibole.
Volumetrically these granitic dykes are estimated to comprise only 1% – 2% of the succession as a whole.
On Northern Drenthe four lenses of coarse grained, homogeneous, equigranular, pink granite that lie subparallel to the general Platreef stratigraphy, have been identified. These are 10 – 30 metres in true thickness
and are interpreted as thin offshoots of Bushveld Granite into the lower parts of the Bushveld sequence.
However, even the thickest sheet has only a limited strike extent (approximately 150 metres) and pinches
out rapidly down-dip, so they are relatively insignificant in terms of volume.
Similarly the diabase dykes, mentioned in the section above, are relatively rare and volumetrically
insignificant. Nevertheless, there are two prominent dykes that approximate 20 – 30 metres in true
thickness. One of these is exposed in the river on central Drenthe and another was encountered during
drilling on Witrivier (Figure 4).
8.4
Footwall
The footwall consists primarily of a coarse grained grey-white to pink (hematite-stained) lithology of granitic
to granodioritic composition. This frequently possesses a gneissic texture and may contain zones of
metasediments and amphibolite. The contact with the Platreef is almost always sharp, although commonly
brecciated in an ‘agmatitic’ fashion, particularly on Overysel. Very locally there may be 1 – 3 metres of
‘gradational’ hybrid zone at the Platreef-footwall boundary. Within the granite footwall, pink, leucocratic,
K-feldspar rich zones of a more syenitic composition also occur. These usually have a gradational relationship
with the surrounding granite and are locally common. These zones often possess graphic textures and are
essentially identical to the ‘granitic’ material comprising the dykelets which cut the Platreef and Hanging
Wall.
8.5
Structure
On the scale of the Northern Limb, the Hanging Wall unconformably overlaps the Platreef northwards over
tens of kilometres. Over strike lengths of one to two kilometres, however, both the layered Platreef and
Hanging Wall sequences are often broadly conformable, e.g. on northern Overysel and southern Drenthe,
where they strike north-south and dip west at –40°. Nevertheless, even here there may be localized downwarping of the Hanging wall, for example in the area immediately south of the Drenthe farm boundary. In
this area, the barren Hanging Wall norite also appears to have intruded the Platreef sequence, displacing it
upwards and leaving only a remnant portion of the pyroxenitic sequence. Further south on Overysel, the
Hanging Wall-Platreef-Footwall contact is offset approximately 2.5 km along the strike of a major northeast
trending fault, which dips 70° to the southeast. South of here, the Hanging Wall again appears to be broadly
conformable with the Platreef, with overall westerly dips, steepening towards the southern boundary of the
property (i.e. 50° – 55°) parallel to those of the floor contact.
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Further north on Drenthe and on Witrivier, the Hanging Wall contact is more undulatory where the large calc
silicate rafts and xenoliths in the Hanging Wall or within the upper Platreef have either depressed the
boundary or displaced it upwards respectively, causing local distortion of the primary igneous layering and
variations in total Platreef thickness. Alteration and textural modifications of the rocks surrounding these
xenoliths effect further local variations in lithological complexity.
Like the Hanging Wall, on a regional scale the Platreef also has a transgressive relationship with the floor
rocks of the Complex, i.e. it rests on progressively older rocks northwards from Mokopane. However, over
strike lengths of one to two kilometres, to all intents and purposes layering in the intrusion is parallel to the
floor contact, albeit with some local exceptions. Thus, towards the southern boundary of the project area on
Overysel, overall dips are steeper and the floor contact is often strongly brecciated becoming a ‘contact zone’
rather than a discrete boundary. There are also a number of interpreted faults in this region.
North of this on the northernmost portion of Overysel and southern Drenthe, the floor contact is basically
conformable and approximately parallel to the Hanging Wall contact, dipping 40° west. Further north, on
central and northern Drenthe and on Witrivier, this overall dip to the Platreef is retained, although again there
are local areas, possibly small embayments in the floor or, possibly, slightly tilted fault blocks, where the floor
contact is 10° shallower than the norm over strike lengths of 100 – 200 metres. In addition there appears to
be some brecciation of the floor as some drill holes extended 10 – 20 metres further to the floor contact
than predicted by surrounding holes only 50 metres away. The most likely explanation for this is that the
deepened hole is essentially drilled into the ‘chilled’ pyroxenitic matrix between (floor) breccia fragments.
This floor brecciation does not appear to be very common however as depths the floor contact were usually
quite predictable during drilling.
Igneous layering within the Hanging Wall is largely represented by intervals of ‘mottled anorthosite-norite
and sparse, thin, feldspathic pyroxenites. Much of the Hanging Wall norite is relatively uniform over
substantial thicknesses, although subtle (modal) variation is seen in places.
Igneous layering within the Platreef is more extensive although individual layers appear to pinch out or
expand in thickness over short intervals. In fact, even over strike extents of 50 – 100 m it is usually only
possible to identify very broad stratigraphic divisions, in contrast to the regularity of the Critical Zone seen
elsewhere in the Bushveld Complex. To a large extent, this reflects the fact that the Platreef is a contact
phenomenon and much of this variation can be ascribed to the combination of several random random
physical and chemical effects. Indeed, it is considered that much of the primary igneous stratigraphy has been
disrupted by the repeated intrusion of magmatic components, perhaps some of which were even in a semiconsolidated state, having begun crystallisation deeper in the intrusion (e.g. in a similar fashion to the
satellite pyroxenite bodies in the floor). This repeated intrusion was accompanied by the random effects of
contamination and partially overprinted by late magmatic processes with localised remobilisation and in-situ
recrystallisation of primary textures by volatiles, resulting in a very heterogeneous final assemblage. On this
basis the major layer boundaries may reflect primary igneous processes or possibly even discrete magmatic
‘packages’, however, individual layers may in fact simply be artefacts of cross sectional interpretation, as they
often ‘pinch out’ down dip or along strike. It is also possible that many heterogeneous zones are not layers
at all but simply disconnected, irregular patches of contamination or recrystallisation within a specific unit.
In places there is clearly later intrusion of ‘hanging-wall’ norite into the Platreef sequence, which further
complicates the succession. In addition to lithological layering, in places there is also a subtle alignment of
the long axes of plagioclase and (less commonly) pyroxene, defining an igneous lamination (or lineation).
Where recognisable, this parallels the general layering and dip of the floor contact.
Despite the above complications the Platreef can essentially be considered as a broadly layered sequence of
(feldspathic) pyroxenites, and (lesser) norites for which a generalised stratigraphy has been established along
the northerly strike of the Platreef.
As noted above, both the Platreef and to a lesser extent the Hanging Wall, are cut by thin granitic dykelets.
Although volumetrically insignificant, they are widespread throughout the sequence. These dykelets vary in
attitude, dipping between 45° and 70°, although the strike and dip direction have yet to be determined as
they are only known from drill core. The younger but thicker sheets of Bushveld Granite, identified in drill
core on northern Drenthe typically also dip at 45° but steepen to 70° locally. Consideration of their
distribution and lensoid shape on the geological map suggests that they may represent large scale ‘tensiongash’ infillings, within a sinistral offset regime. The azimuth of this possible ‘shear’ parallels that of the major
fault on Overysel as well as the other minor faults shown on the geological map, although no major
displacement of the floor contact was identified in this region.
135
The much younger thick diabase dyke that cuts the sequence in hole PR-10 is known from outcrop to strike
southwest-northeast and dip to the southeast at 70°. A similar dyke encountered in drill holes on Witrivier
(e.g. in hole PR-132) also appears to have the same general dip and from its aeromagnetic signature has a
similar southwest-northeast strike. The scattered, thinner diabase dykes, periodically intersected during
drilling (e.g. in hole PR-9), probably parallel this orientation.
In a study of the distribution of mineralization and the geological model, Von Bargen (2000) interpreted
several faults in the southern Drenthe block, based on changes in dip of the Hanging Wall-Platreef contact.
The extensive amount of drilling conducted since then has highlighted several other potential fault zones.
However given the variability of the hanging wall contact, particularly on northern Drenthe-Witrivier, these
are largely based on changes in dip of the Platreef-Footwall contact from one cross section to the next (i.e.
between adjacent cross sections). Nevertheless, apart from the small number of additional faults indicated
on the geological map) it is considered unlikely, given the density of drilling (particularly on Drenthe), that
there are any other major offsets to the Platreef unit.
136
Figure 4: Geology and Drill Holes.
8.6
Mineralization
No visible PGM mineralization was observed during logging of the thousands of metres of drill core, and the
following discussion of PGM mineralization relates either to assay information or relies heavily on the general
correlation between visible sulphide content and measured PGM concentrations. In general, visible sulphide
content serves as a useful proxy for PGM concentration. The rationale for this is discussed in more detail
below (see also Table 3). Also, as noted above, most of the Platreef rock package carries at least some PGM
mineralization (i.e. 50 – 100 ppb) so any description of the distribution of mineralization is dependent on a
chosen cut-off grade, otherwise much of the total rock package could be considered ‘mineralized’. As a result
of this, the following discussion on mineralization and ‘mineralized zones’ refers to zones containing PGM
137
concentrations greater than 500 ppb (i.e. 0.5 g/t), unless otherwise stated. This is partly because, at this level
of concentration, mineralized zones tend to form recognisable bodies’ which are typically ‘layer-like’ in
character (‘reefs’ in South African terminology). These ‘chemically defined’ zones usually lie subparallel to the
general igneous stratigraphy but are not necessarily confined to any specific layer or rock type within the
heterogeneous rock package. Overall, the more mafic (pyroxenitic) rocks tend to carry higher concentrations
of PGMs than noritic variants.
At the regional scale, on the northern part of Overysel and the southern part of Drenthe, Hanging Wall
lithologies are usually devoid of any PGM mineralization, although flecks of sulphide (pyrrhotite and rarely
chalcopyrite) are present in places. The only exception to this is sporadic PGM mineralization in some of the
thin feldspathic pyroxenites and either close to, or within, the calc silicate xenoliths and rafts, where
mineralization often accompanies serpentinization.
Further north on Drenthe and on Witrivier, there is interlayering of typical ‘Hanging Wall’ norites and Platreefstyle feldspathic pyroxenites, resulting from intrusion of ‘main zone’ magma into the Platreef sequence.
Because of this, the distinction between ‘Hanging Wall’ and Platreef in this area is somewhat subjective.
Nevertheless, as a general rule if there was significant PGM mineralization within the rock unit (even if
noritic) it was considered to be part of the Platreef and on this basis the Platreef-Hanging wall contact was
placed at the top of the uppermost mineralized unit. As a further complication, xenolith-related PGM
mineralization also becomes more extensive on north Drenthe and on Witrivier, particularly in the
pyroxenitic ‘reaction rims’ around xenoliths (which may occur even within a norite host), and this tends to
‘blur’ the actual contact. The combined effect of these two competing processes is that although there is a
greater total thickness of mineralized material (due to increased contamination) it tends to be split into two
or more ‘layers’ separated by weakly mineralized or barren selvages of coarse grained norite resulting from
intrusion of main zone norite. In contrast, on Overysel and the south part of Drenthe, a single zone of higher
grade PGM mineralization is normally present immediately under the Hanging wall contact.
On a finer scale, mineralization is characterised by cuspate to blebby, intercumulus sulphide phases of varying
grain size (typically several mm) with pyroxenitic lithologies tending to be better mineralized than the more
noritic variants. The main sulphides in the Platreef are pyrrhotite and chalcopyrite, with pyrrhotite typically
in excess of chalcopyrite (approximately 3:1 overall), along with minor pentlandite and pyrite. In many places
there is often a correlation between degree of contamination, as reflected in rapid grain size variation and
the ‘patchy’ development of pegmatitic zones (often accompanied by the growth of phlogopite) and overall
sulphide content. In these visibly contaminated heterogeneous, pegmatitic zones, large (~1 cm) blebs of
sulphide are often observed. These are assumed to be the direct result of a decrease in sulphide solubility in
more siliceous and or aqueous hybrid compositions.
Table 2: PGM (>0.5 g/t PGM+Au)1 vs. Base Metals Correlation Matrix
* Where PGM+Au = Pt + Pd +Rh + Au and BM3 = Cu + Ni + Co
4 Note that the Rh comparison (based on –35 drill holes) is only added for completeness, as the overall assays for this element in the
year 2000 drill holes were very low (typically in the 10 – 30 ppb range). For this reason, costly Rh assays were discontinued during
subsequent drill programs..
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More rarely, very large (several cm) sized sulphide segregations, particularly of chalcopyrite, are seen in some
of the graphic textured granitic dykelets.
As mentioned above, it became apparent during the early stages of core logging that there was often a
general correlation between the amount of visible pyrrhotite-pentlandite and chalcopyrite, and the PGM
concentrations ultimately returned by assay. More quantitatively, this is expressed in the correlation matrix
presented in Table 3, which is based on approximately 11,000 assays in 260 drill holes (at >0.5 g/t PGM plus
Au).4 Here, the general correlation between total PGMs versus Base Metal content is evident (e.g. total
Pt+Pd+Rh plus Au versus three Base Metals (BM3) has a correlation coefficient of 0.58). On the assumption
that the total Base Metal content is reflected in the visible sulphide concentration, this matrix clearly
supports the perception that visible sulphide is a useful indicator of PGM mineralization. However, equally
important is the fact that there is not a perfect correlation between PGMs and visible sulphide content and
to rely on this as the sole determinant of sample selection would be a serious error. Clearly therefore, the
data justifies the original decision to assay all of the Platreef rock package at approximately 1m intervals,
regardless of whether visibly mineralized (i.e. sulphide-bearing) or not.
9.
EXPLORATION TECHNIQUES
Exploration included a compilation of published geological maps and drill hole data and an aeromagnetic survey,
in order to establish the probable location of the prospective PGM-bearing Platreef rock package. Prospective areas
were targeted for systematic assessment by diamond drilling. In 2000, twenty holes, on a 50 x 100 metre step-out
grid pattern, were drilled on the Drenthe deposit. The object of this was to establish the continuity of the
mineralization encountered by the eight widely and randomly spaced DT holes completed by Plateau Resources in
1998. An additional 15 step-out holes were also drilled in 2000, at approximately 200 metre intervals along the
strike of the Platreef, to the north of the area of grid drilling.
In 2002, Anooraq drilled one hole on Drenthe farm, and in 2003 a further eleven holes were drilled on Drenthe,
continuing to define a substantial area of PGM mineralization.
The 2004 exploration program consisted of several phases of diamond drilling under the Boikgantsho JV and was
designed to advance the project towards a pre-feasibility phase by 2005. As of 31 December 2004, 18,290 metres
in 91 holes had been completed on the Drenthe farm, 12,927 metres in 66 holes had been completed on the
Overysel farm and 5,261 metres in 27 holes had been completed on the Witrivier farm.
Drilling comprised step-out and infill holes on the Drenthe and Witrivier farms and step-out holes on the northern
portion of the Overysel farm, which lies immediately to the south of the Drenthe farm. At a maximum, drill holes
were spaced at 100 metre intervals along lines 100 metres apart. However, large areas underlain by the Platreef on
Drenthe farm were drilled at 50 metre spacing along lines 100 metres apart.
In 2005, Anooraq completed 24,418 metres of infill and step out drilling in 136 holes into the Drenthe deposit.
Of these, 20,486 metres were completed on Drenthe farm and 3,932 metres were completed on Witrivier farm.
Apart from eight geotechnical holes, all were drilled vertically, and at a 50 metre spacing on section lines 50 metres
apart. The geotechnical holes were oriented core holes, drilled at inclinations of 65° or 70° and various azimuths,
which allowed for fracture orientations to be measured. This information was recorded in addition to the usual
recovery, RQD, hardness and other data that was collected for all holes.
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Figure 5: Section 2645600N through North Drenthe.
10. DRILLING
10.1 Introduction
It has been reported that diamond drilling was done prior to 1998, but there is little documentation of this
early work. Since the acquisition of the Platreef property by Plateau Resources, and subsequently by Anooraq,
drilling is well documented.
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In 1998, eight holes BQ (36.5mm) diameter core were drilled by Plateau (DT-series). All Anooraq holes
(2000 and later) comprise HQ (63 mm) diameter core drilled down to 20-30 metres below surface, with
NQ (47.6 mm) diameter core drilled below that level. All drill hole collar locations are surveyed and tied into
farm boundaries.
10.2 Surveying
Down hole surveys were taken on all angled holes. In 2000 through 2003, a single shot compass
(a photograph reading instrument, similar to a ‘Sperry Sun’) was used. As a rule, surveys were taken at the
bottom, in the middle and just below the casing. When holes exceeded 220 metres in length, a fourth reading
was taken; usually the two middle readings were divided so that the hole was surveyed in four equal lengths.
In 2004, every drill hole from PR-151 onwards was surveyed, using a more sophisticated “Flexit” tool, which
gave downhole readings every 6 metres. In 2005, all drill holes were surveyed using the “Flexit” tool.
10.3 Collar Co-ordinates
Drill sites were surveyed before moving the rig onto the site and each drill collar was surveyed when the hole
was completed. In 2000 – 2003, Eugene Pretorius Surveying (Pty) Limited provided the surveying using
a Trimble GPS station. A 4.5 kilometre long surveyed base line with stations every 50 metres, was established
in the area of drilling. All historic survey data, in particular the farm boundaries, was used by the contractor.
In 2004 and 2005, drill sites were initially laid out using a hand held Magellan GPS instrument (accuracy
~ 1 metre). After the hole was completed, the collar position was surveyed accurately by Louis Nel,
Professional Land Surveyor, Mokopane.
11.1 Overview
This outline summarizes the sampling and analytical procedures used by Anooraq in the Platreef exploration
core drilling programs. As of December 2005 Anooraq had completed 372 diamond drill holes in the ‘PR’
series. These included 35 holes (PR-01 to PR-35) in 2000, 3 holes in 2002 (PR-36 to PR-38) 12 holes (PR-39
to PR-50) in 2003 184 holes (PR-51 to 234) in 2004 and 138 (PR-235 to 372) in 2005. On the Drenthe farm,
eight “DT” series core holes were completed by Plateau Resources in 1998, and were examined during an
Anooraq due diligence level investigation in 1999. The platinum and palladium results reported by Plateau
Resources (Pty) Ltd. were substantiated (Rebagliati and Titley, 1999) during this review. Information on
previous Platreef drill holes have been compiled from sources believed to be reliable; however, the sampling
and analytical methods are generally not known.
The original Anooraq sampling and analytical protocols are set out in a core-logging manual (Titley, 2000).
This manual also has suggested protocols for geotechnical and geological logging, specific gravity
measurements, core photography, data compilation and verification. Some minor modifications were made
to the original guidelines as the program progressed in order to improve operational efficiency. The flow chart
in Figure 6 illustrates the general sampling and analytical protocol for the PR series of cored drill holes.
141
Figure 6: Analytical Flow Chart.
The boxed core was picked up at the drill rig and transported to a secure core logging facility near Mokopane
for core photography, geotechnical logging, geological logging, sample selection, quality control designation
and sampling by Anooraq personnel. The average recovery for all drill run intervals cored by Anooraq is 92.7%
(year 2000 drill holes) and 98.2% (2002 – 2003 drill holes) and 92.3% (2004 drill holes). Within the
mineralized intervals, (>1000 ppb PGM), the average core recovery is 95.0% (year 2000 drill holes) and
98.2% (2002 – 2003 drill holes), 96.3% (2004 drill holes) and 96.9% (2005 drill holes). Specific Gravity
(“SG”; Bulk Density) measurements of core were taken from every second mineralized sample interval.
The average SG for the mineralized intervals is 3.01 (year 2000 drill holes) and 3.06 (year 2002 drill holes),
3.00 (2004 drill holes) and 3.04 (2005 drill holes).
The whole of the Platreef sequence was sampled, with the vast majority of samples being 1.0 metre in length.
Samples did not straddle lithological boundaries, as defined in the geological log. In highly mineralized or
lithologically complex zones, some samples of less than 1.0 metre in length were taken. Conversely, only very
142
rarely did sample intervals exceed 1.0 metre. This might have occurred where ‘breaking’ the sample at
1.0 metre would have left only a small interval e.g. ~20 cm of core at the bottom (downhole) end of a
lithological unit. As this would not provide sufficient sample for analysis, then it would be included in the
previous sample interval. Where this ‘process’ resulted in longer sample remnants, e.g. 30 cm or more, then
the remaining interval would be broken into two approximately equal lengths, i.e. a 1.30 metre interval at
the bottom end of a lithological unit would be split into two samples of 65 cm length. Normally sampling
was extended several metres into the granitic footwall as well. In 2005, sampling was also extended to the
Hanging Wall Norite, which was sampled in its entirety. Although any obvious sulphide mineralization in the
Hanging Wall was always sampled in previous years, the norite sequence is largely devoid of visible
mineralization and was not usually sampled prior to 2005. Nevertheless, this norite would form a substantial
proportion of any waste rock pile, so data was collected to provide some indication of potential ARD
behaviour, should a mining operation prove feasible. Samples in the Hanging Wall were typically 2m in length.
Samples were taken by sawing the core in half lengthwise with a diamond blade. The average length-wise
half-split sample provided approximately 2.0 kg of material. In 2000, the samples were transported to
Set Point Laboratories (“SPL”), which incorporates the former Bergstrom & Bakker, Goldlabs and Rocklabs, at
46 Chadwick Avenue, Wynberg, South Africa. The remaining half core was returned to the boxes and stored
at the secure Anooraq storage facility. In 2002, 2003 and 2004, the samples were delivered to SPL’s laboratory
at Mokopane for sample preparation. In 2002 and 2003, the prepared samples were shipped to SPL’s
analytical laboratory, which moved to Isando in 2003. In 2004 and 2005, the prepared pulps were shipped by
air freight to Acme Analytical Laboratories in Vancouver, Canada, for analysis.
11.2 Sample Preparation
Sample preparation work completed at SPL included: drying, crushing (to 90% < 1.7 mm) and pulverization
(to 90% < 75 μm) of regular mainstream samples, insertion of Anooraq’s standard reference material
samples, and splitting out of duplicate samples for in-line analysis at the primary assay laboratory and check
analysis at a second laboratory. In 2000, 2002 and 2003, the duplicate samples were analysed at the SGS
Springs laboratory and SGS Lakefield (in South Africa). In 2004 and 2005, the duplicate samples were
analysed by SPL.
11.3 Sample Analysis
The following outline describes the analytical protocol used. Six analytical laboratories were used by Anooraq
for the 2000 – 2005 drill programs:
1.
SPL – Set Point Laboratories, 46 Chadwick Avenue, Wynberg, South Africa. The “primary lab” did all
regular mainstream and in-line duplicate analysis in 2000, 2002 and 2003. SPL did all the interlaboratory duplicate analysis in 2004 and 2005.
2.
SGS – SGS South Africa (Pty) Limited, Springs, South Africa. Performed inter-laboratory duplicate
analyses for holes PR-001 through PR-024.
3.
LK – SGS Lakefield Research Africa (Pty) Limited, 58 Melville Street, Booysens, Johannesburg, South
Africa. Performed inter-laboratory duplicate analysis for holes PR-025 through PR-035.
4.
PL – Performance Laboratories (Pty) Limited, Deep Shaft Road, Krugersdorp, South Africa. Did standard
reference material preparation, homogenization and splitting (Analytical portion of their work subcontracted to SGS).
5.
BC – Bondar Clegg Canada Limited, 130 Pemberton Avenue, North Vancouver, Canada. Round robin
analysis of standard reference samples.
6.
Acme – Acme Analytical Laboratories, 852 East Hastings St., Vancouver, Canada, was the “primary lab”
for all regular mainstream samples in 2004 and 2005 and performed round robin analysis of standard
reference samples.
7.
ALS Chemex laboratory, 212 Brooksbank Ave., North Vancouver, Canada. Round robin analysis of
standard reference samples and some selected duplicates in 2004 and 2005.
All regular, in-line duplicate and inserted Anooraq standard precious metal analyses for drill holes PR-001
through PR-050 were performed by SPL. All regular, in-line duplicate and inserted Anooraq standard precious
metals analyses for drill holes PR-051 through PR-372 were performed by Acme.
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11.3.1 Platinum, Palladium, Rhodium and Gold Analysis
In 2000, all core samples from Anooraq drill holes were analyzed for gold, platinum, palladium and
rhodium. Platinum, palladium and gold were determined by 50 g lead collection fire assay (“FA”)
fusion with an inductively coupled plasma (“ICP”) atomic emission spectroscopy (“AES”) finish.
An additional 50 g FA-ICP analysis was performed to determine the rhodium result. All precious metal
values were reported in parts per billion (ppb).
In 2002 – 2003 platinum, palladium and gold were similarly determined by 50 g FA-ICP, however, the
extra fire assay for rhodium was discontinued after the 2000 drill program, as the low Rhodium results
obtained in that year (typically 10 – 30 ppb) did not warrant the extra expense involved.
The method used to determine platinum, palladium and gold in 2004 and 2005 was also
a 50 g FA ICP. Samples were also not analysed for rhodium in 2004 and 2005.
11.3.2 Multi-Element (ICP) Analysis
Samples from drill holes PR-001 through PR-010 and hole PR-013 were analyzed for copper, nickel,
cobalt, arsenic, lead and zinc by Aqua Regia digestion Inductively-Coupled Plasma Atomic Emission
Spectroscopy (“ICP-AES”) at SPL.
For drill holes PR-011, PR-012 and PR-014 through PR-024, SPL performed ICP-AES analysis for
copper, nickel and cobalt only. These results are reported in parts per million (ppm).
For drill holes PR-025 through PR-035, the samples were analyzed for copper, nickel and cobalt by
x-ray fluorescence spectroscopy (“XRF”) by SPL. In addition, samples from these 10 holes were
assayed for 30 elements (including copper, nickel and cobalt) by ICP-AES by SGS.
For drill holes PR-036 through PR-050, SPL performed an Aqua Regia digestion ICP-AES analysis for
copper and nickel only. These results are reported in parts per million (ppm).
For the 2004 and 2005 drill holes PR-051 through PR-372, Acme digested the samples with Aqua
Regia and performed Inductively Coupled Plasma Mass Spectroscopy (“ICP-MS”) multi-element
analysis to determine the three main base metals elements, Ni, Cu and Co, and the following
additional 32 elements: Al, As, Au, B, Ba, Bi, Ca, Cd, Cr, Fe, Ga, Hg, K, La, Mg, Mn, Mo, Na, P, Pb, S, Sb, Sc,
Se, Sr, Th, Ti, Tl, U, V, W and Zn.
11.3.3 Conversion Factors
The precious metal information in the Anooraq drill hole database is presented in ppb. Information
from some sources may have been converted from results reported in gram/tonne (g/t), parts per
million (ppm) or troy ounce per ton of 2000 pounds avoirdupois (oz/Ton). The following conversion
factors were used:
1 oz/Ton = 34.2857 g/t.
1 g/t = 1 ppm.
1 g/t = 1 000 ppb.
11.4 Quality Assurance and Quality Control
Anooraq monitored the sampling and analytical procedures of the project with a detailed quality
assurance/quality control (“QAQC”) program. Typically, the additional analytical work involved in the QAQC
program was greater than 10% of the basic analytical requirement for a project. The QAQC program was
separate from the internal procedures used by the analytical laboratories. Four main samples types were
initially used in this program:
MS – Regular or mainstream samples which are submitted for preparation and analysis at the primary lab.
ST – Mineralized standard reference material sample pulps, of known precious metal concentration, were
prepared from mineralized material in the project area. Standard reference materials were submitted for
analysis at the primary laboratory as consecutively numbered pulps within each batch of mainstream
pulps.
DP – Duplicate samples, of which there are two basic sub-types:
(a) In-Line – A second split is taken and given the next consecutive sample number, for further
preparation, (if necessary), and analysis with the MS samples at the primary lab immediately
following the duplicated sample.
(b) Selected – A second split taken, usually based on grade, after the initial analytical results are
received. These samples may or may not be re-numbered, and may be assayed at the primary,
secondary, or other laboratory. The regular sample is usually not marked “DP” in this case.
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SD – Duplicates of standard reference samples submitted for analysis with in-line and selected duplicates.
BL – Blanks, inserted as a coarse sample, basically a standard with no appreciable grade used to test for
contamination.
The core samples were logged and identified in the field with consecutively numbered sample tags, on which
the QAQC designations were pre-marked.
For 2000-2003 (drill holes PR-001 through PR-50), the frequency of QAQC samples designated by prenumbered sample tags in the field at the Anooraq Platreef Project was as follows:
MS – about 90% of total number of results.
ST – about 1 in 20, or 4.7% of total.
DP – about 1 in 20, or 4.7% of total (in-line, type “a” above).
SD – about 1 in 13 of DP samples, or 0.4% of the total.
BL – about 1 in 20, or 4.3% of the total (used in 2004 and 2005).
In 2004, (drill holes PR-51 through PR-234) an additional QC sample (a blank) was introduced to the sample
stream and this practice was continued in 2005 (drill holes PR-235 through PR-372). The blank was prepared
from material obtained from a granite quarry close to Mokopane and analysed for PGMs and Base Metals at
SPL, to ensure it was a viable ‘blank’ for the elements of interest. The sampling protocol was altered slightly
to accommodate this but the original requirement for every 10th sample to be a QC sample was maintained,
with ‘blind’ QC samples inserted in the order blank-std-duplicate. Thus every specific QC sample (e.g. a
standard) was repeated every 30 samples. In addition, every drill hole sample log commenced with an
additional, essentially random, ‘blank’, irrespective of the pre-determined QC sample in the sample book.
A summary of the QAQC and sampling program for 2004 and 2005 is given in Table 3 below:
Table 3: Summary of the QAQC and sampling program for 2004
Acme assays
SPL assays
Both
labs
ARQ
samples
Internal lab
control
samples
ARQ
samples
Internal lab
control
samples
Total
52,930
0
0
0
52,930
Blank
2,272
0
3
0
2,275
Standard
1,933
1,958
95
1,289
5,275
Duplicate
2,031
1,908
2,805
103
6,847
ALL QC
6,236
3,866
2,900
1,392
14,394
59,166
3,866
2,900
1,392
67,324
Sample type
Mainstream
ALL SAMPLES
11.4.1 Standards
Certified reference materials (CRM’s) and standards were inserted within the regular sample stream
during sampling. These ‘blind’ pulps were numbered as part of the normal sequence of mainstream
samples, so as to form an anonymous sample within any given set of regular samples. In this way
these reference samples provide a good indication of the overall accuracy of each batch of analytical
results. In practice, when an ST tag was turned up in the sample book, the sample was designated as
a standard, and a standard pulp was inserted into the sample stream at that point. The geologist made
a note of the specific standard to be inserted by the sampler, based on the anticipated grade of the
surrounding rock samples.
Standard performance was monitored, by charting the results by analytical sequence over time on the
x-axis, against elemental concentration on the y-axis. The results were compared with the certified
concentration and limits, in the case of the CRM, or the expected concentration and range (as
determined from the round-robin averages for each of the precious metals, including the combined
(4PGM) factor Pt + Pd + Rh + Au), in the case of the project standards.
Eight reference samples were used.
145
1. Certified Reference Material SARM7
SARM7 was inserted with the regular analytical sample stream, starting with drill hole PR-001 and
continuing until hole PR-005. The platinum-rich Bushveld-based SARM7 was obtained from the South
African Bureau of Standards (SABS). Although its suitability as a CRM is unquestioned, SARM7 is
mineralogically slightly different to the Platreef rocks, and available in only a single grade (5,820 ppb
4PGM). Anooraq, therefore, manufactured five new project-based standards to replace SARM7. The
five new standards were made from Platreef rocks with the same mineralogical composition as the
drill core being analyzed, and covered a broader range of platinum group metals grades than SARM7.
2 – 4. Project-Based Standards HSB, MSA and LG6
The materials used to create the two higher-grade project-based standards HSB (6,495 ppb 4PGM)
and MSA (4,834 ppb 4PGM), were obtained from stock piled Platreef material. Standard LG6
(1,158 ppb 4PGM) was manufactured by blending existing pulps obtained from Plateau’s DT series of
diamond drill holes. These materials were dried, crushed, pulverised, blended and packaged in 125 g
portions at Performance Laboratories (Pty) Limited at Krugersdorp, South Africa, under the
supervision of L. Bester. Round robin analysis of these standards for Pd, Pt, Rh and Au took place at
Performance, SPL, SGS and Lakefield of South Africa, and Acme Analytical Laboratories and Bondar
Clegg Canada Limited of Vancouver, Canada. Acme and Bondar Clegg also analysed for Cu, Ni and Co.
5 – 6. Project Standards MZ8 and LZ7
Standards MZ8 (3,246 ppb 4PGM) and LZ7 (1,792 ppb 4PGM) were also created from pulp rejects
derived from mineralised Platreef intersections in drill holes PR-001 through PR-023. The original
sample preparation, including crushing and total pulverisation took place at SPL. Selected samples
were retrieved from storage and shipped to Lakefield where the standards were re-milled (pulverised)
to 100% passing 75 microns and homogenised. The homogenised standards were split into 150 g
aliquots and sealed. Round robin analysis for Pd, Pt, Rh and Au took place at Lakefield, SPL, Acme,
Bondar Clegg and ALS Chemex Labs Ltd. Analysis for Cu, Ni and Co took place at Acme, Bondar Clegg
and Chemex.
7. Project Standard QL3
Standard QL3 (1,454 ppb 4PGM) was created in early 2002 as standards MZ8 and LZ7 were rapidly
being consumed by the drill programs. QL3 is also derived from 2000 drill core rejects, and was
created in the same manner by Lakefield. Round robin analysis for Pt, Pd, Rh, Au, Ni, Cu and Co was
performed by SGS Lakefield, SGS Toronto, SPL, Acme, ALS Chemex, and Genalysis in Perth, Australia.
8. Certified Reference Material SARM73
As standard QL3 became depleted towards the end of the 2005 drill program a commercially
available standard (SARM73) obtained from the South African Bureau of Standards (SABS) was also
used (drill holes PR-355-PR-372). This was inserted in an alternating fashion with the remaining QL3
in order to extend the life of QL3 and thus provide some continuity with previous analytical results.
In addition, although the platinum-rich Bushveld-based SARM73 (like SARM7) is a certified reference
material, it is mineralogically slightly different to the Platreef rocks. Also it has a much higher overall
concentration of PGM than the typical Platreef sequence in the project area, being available in only
a single grade (4,4600 ppb 4PGM). Thus alternation of the two standards maintained some degree of
analytical continuity as well as some degree of cross checking between the two standards.
11.4.2 Summary
A reasonable level of confidence can be attributed to the accuracy and reliability of the platinum
group element and gold assay results provided by the main independent analytical laboratory used
on the Drenthe drill programs by Anooraq. This statement is based on the results of the sample
preparation and analytical quality assurance/quality control (QAQC) program. A complete set of
platinum, palladium, rhodium and gold analyses for the diamond drill holes PR-001 through PR-050
was provided by Set Point Laboratories (SPL), formerly of Wynberg, and now located in Isando, near
Johannesburg, South Africa. For holes PR-36 through PR-50, analyses for rhodium were not requested.
SPL was selected as the lead analyst for the program in order to provide analytical continuity with
the 1998 drill program of Plateau Resources, and the 1999 due diligence program of Anooraq.
146
Analytical results received from SPL were examined and assessed in detail; this included the regular
results, blind standards inserted by Anooraq, intra-laboratory duplicates and internal laboratory
QAQC samples. Inter-laboratory check analyses were also compared as part of the assessment.
In 2004, Acme became the lead analytical laboratory for the program and completed all assays for
drill holes PR-051 to PR-234 and PR-235 to PR-372 in 2005. In 2004, Consultant ICES was engaged
to monitor the precious metals results of the QAQC program on a timely basis and to ensure the
standards, duplicates and blanks passed the rigorous criteria set forth. QAQC procedures identified an
inconsistency in the nickel results for 63 holes in the range of PR-051 to PR-114, and PR-151 to
PR-154, related to a calibration error at Acme. Correcting this error resulted in a proportional increase
of the original Ni assays (in the range of 0.1 to 0.5% Ni) by approximately 11%.
The September 13, 2005 Final report on Anooraq’s 2005 Platreef Project QA/QC Program by
Analytical Laboratory Consultants Ltd (ALC) gives the detailed results of the analytical quality control
program. ALC toured the laboratories while samples from the project were being prepared and
analysed. “Visits were made to both of Setpoint’s operations”. “All of the labs visited were of
acceptable quality and any could be utilized to process Anooraq’s samples. The arrangement in place
at the time of the visits was continued throughout the program”
The report by ALC had the following conclusion: “The data collected from the 2005 exploration
program was subject to strict quality control measures. These measures have successfully pointed out
and corrected deficiencies in the quality of the data that Anooraq was receiving. Although there is
room for improvement in the QC program, it is sufficient to ensure that the 2005 data can be relied
upon to advance the project.”
Overall, the SPL and Acme results are good, lending a satisfactory level of confidence to the analytical
results. They are acceptable for use in geological and resource modeling..
11.5 Data Verification
The first phase of data validation, verification and error correction was carried out as drilling progressed.
Validation tests included checks on overlapping intervals, sampling interval gaps, and the results of standard
reference samples and duplicates, etc.
Verification also included manual checking of information from the drill hole database assay table printouts
against the original logs and assay certificates.
12.1 Sandsloot
In 1993, after nearly 30 years of sporadic and indecisive exploration, RPM resurrected PPL and re-commenced
mining of the Platreef from an open pit operation on Sandsloot farm. In 2003 production was supplemented
by the opening of a second pit (Zwartfontein South) on the immediately adjacent farm to the north. Current
mining rates are approximately 12,000 tpd at a (built up) head grade of 4.12 g/t PGM. In 2004 the mines
produced a total of 430,000 oz of PGM, together with 5,100 tons of Nickel and 2,900 tons of copper.
Including Sandsloot and Zwartfontein South, Anglo Platinum has delineated six deposits on its ground, with
strike extents of 0.5 to 2 km, separated from each other by lower-grade mineralized Platreef. Anglo Platinum’s
2004 Annual Report provides the following total reserves and resources for Platreef-hosted deposits:
Proved reserves
246.8 million tonnes grading 3.34 g/t 4PGM
Proved stockpiles
Probable reserves
Measured resources
Indicated resources
Based on drilling to September 2004, total indicated resources in the Drenthe and Overysel deposits are
176.6 million tonnes grading 1.35 g/t 3PGM and 0.13% nickel, and 0.08% copper and total inferred resources are
147
104.1 million tonnes grading 1.23 g/t 3PGM and 0.14% nickel and 0.09% copper at a $20 gross metal value (GMV)
per tonne cut-off. G.J. van der Heever, B.Sc., Pr.Sci.Nat., of GeoLogix, an independent qualified person as defined by
National Instrument 43-101, is responsible for the resource estimate. Further details of the resource estimate
parameters are included in a December 2004 technical report on the resource estimate, and also in the March 2005
Preliminary Assessment, filed on www.sedar.com.
Preliminary metallurgical studies were carried out using material from core samples of the Drenthe and Overysel
deposits by MINTEK, a specialist mineral and metallurgical technology company. The work was supervised by
metallurgists from Dowding Reynard & Associates, an engineering company that specializes in management and
process plant design. Both companies are based in South Africa.
Mineralogical investigations show the PGM grains to be quite coarse (45 microns average) with 80 percent of the
PGM grains occurring as discrete grains separate from the base metal sulphides, and less than 10 percent
associated with gangue. Initial rougher flotation tests show high recoveries (89% for Pd, 84% for Pt and 83% for
Ni), at a relatively coarse grind of 60 percent finer than 75 microns. On-going metallurgical test work will assess
grind versus recovery and the enhancement of concentrate grade.
15. OTHER RELEVANT INFORMATION
A Preliminary Assessment of the potential economics of open pit mining the Drenthe and Overysel deposits was
completed in March 2005. Details of the study are described in a technical report by Dave R. Reeves, MAusIMM,
Thomas Tulp, MAusIMM, D. Stone, P.Eng., and G.J. van der Heever, Pr.Sci.Nat., dated March 21, 2005, filed on
www.sedar.com.
The study used US dollars (US$) and South African Rand (ZAR) currencies and a ZAR:US$ exchange ratio of 7:1.
Long-term metal prices of US$650/oz for platinum, US$250/oz for palladium, US$375/oz for gold, US$4.00/lb for
nickel and US$1.00/lb for copper were used for the base case.
The Preliminary Assessment is based on indicated and inferred mineral resources outlined to mid September 2004
in the Drenthe and Overysel North deposits. Mineral resources for these deposits were announced in November at
a US$20GMV/t cut-off; however, the preliminary assessment indicates favourable financial results using a cut-off
grade of approximately US$10.50/t. Total resources in two main pit areas at this cut-off grade are 256 million
tonnes grading 1.03 g/t 3PGM (0.43 g/t Pt, 0.52 g/t Pd, 0.08 g/t Au), 0.11% Ni and 0.07% Cu.
As the Preliminary Assessment is based, in part, on inferred resources that are geologically speculative, therefore;
there is no certainty that the economic considerations or results will be realized.
The project scenario is a conventional open pit mining and milling operation. The mine life was capped at 32 years
for the study, and as a result, 160 million tonnes grading 1.05 g/t 3PGM (0.44 g/t Pt, 0.53 g/t Pd, 0.08 g/t Au), 0.12%
Ni and 0.08% Cu was mined.
The mill feed rate is 5 million tonnes per year. The average head grade ranges from 1.1 to 1.4 g/t 3PGM in the first
five years of mining and 0.8 to 1.0 g/t in the last five years. Metallurgical studies on core samples show good results
for a conventional mill circuit, comprising crushing, grinding and two-stage flotation. The following head grade
driven concentrator recoveries were used in the study: platinum 75%, palladium 75%, gold 75%, copper 80% and
nickel 75%.
Mining costs are based on budget estimates provided by South African mining contractors and processing costs are
derived from studies by Dowding Reynard & Associates, the Company’s metallurgical consultants in South Africa.
Administrative and environmental costs are based on estimates from contract submissions.
The estimated capital cost is US$152.8 million with a payback of 3 ? years. The total operating cost is US$9.52 per
tonne milled. The pre-tax and pre-royalty economic model forecasts the net present value (“NPV”) of the project
at a 5% discount rate of US$300.5 million and at 10% discount is US$138.8 million with an internal rate of return
(“IRR”) of 25%.
The 2005 program met its objectives by increasing the confidence level of the mineral resource data for the
Drenthe deposit within the provisional pit outlined in October 2004. Specifically, drill density in this portion of the
deposit is now sufficient to allow reclassification of the resource from the ‘indicated’ to the ‘measured’ category.
148
As a result, the application of appropriate technical and economic parameters, in order to support production
planning and evaluate the economic viability of the deposit, is warranted.
Selective diamond drilling is recommended to achieve a similar density of drill holes within other portions of the
resource outlined on the Boikgantsho JV property, in particular, on the Overysel farm where the Overysel North
deposit was outlined in 2004. Mineralization in this area can be traced as far as the southern boundary of the JV
property and it remains open down dip. In contrast to Drenthe, this portion of the property has only been tested
by two or three holes spaced 50 metres apart on lines at a 100 metre spacing. Assay results from this drilling
indicate that this area also has the potential to host a viable PGM resource.
On a larger scale, surface mapping and geology interpreted from scattered diamond drill holes indicate that the
sequence of pyroxenitic that host the Platreef horizon extends 15 km to the north, across the Drenthe, Witrivier,
Noord-Holland, Dorstland, and on to Elandsfontein farms. This information is supplemented by two drill holes
located further north along regional strike, on the farm Swerwerskraal. The Swerwerskraal holes intersected
Platreef-like pyroxenitic-noritic rocks; however, geochemical signatures suggest they are probably related to
stratigraphically higher zones of the Bushveld Complex rather than the Platreef. Generally, they carry only trace
levels of PGM. Anooraq’s scattered drilling along this trend suggests that the tenor of mineralization diminishes
north of Witrivier, even though much of the 15 km long trend remains under-explored by drilling. Therefore, it is
recommended that exploration drilling north of the Drenthe deposit should be conducted in a systematic ‘stepout’ fashion, consisting of inclined holes at 200 metre line spacing. In particular, there is a ~1.8 km ‘gap’ between
the northernmost hole (PR-35) on Witrivier and the holes PR-37 and PR-39 on Noord-Holland. The Platreef is
characterised by sections of higher grade, separated by zones of weakly mineralized material. So although the
previous step-out holes encountered only weak, patchy PGM mineralization, there may still be some discovery
potential in this area although it is of lower priority relative to the proposed drilling on Overysel.
17. RECOMMENDATIONS
The main objective of future exploration programs should be to drill the Overysel North deposit using a phased
approach, as at Drenthe. Ultimately, a 50 metre by 50 metre grid spacing, similar to that of the Drenthe deposit,
will likely be required. However, an initial phase of infill drilling, with two holes drilled on section lines equally
spaced between the current 100 metre spaced lines is recommended. This work should also provide a clearer
picture of the geological structure, as there are several interpreted fault offsets in this area and the footwall contact
appears to be more irregular than on Drenthe. This, in turn would increase the reliability of future mineral resource
estimates. Approximately 7,500 metres of drilling at an estimated cost of CDN$ 1.5 million would be needed to
complete the initial infill phase and further test the Overysel North deposit.
Additional widely spaced step-out drilling is recommended from the Drenthe deposit northwards on to the NoordHolland farm. Further, the –1.8 kilometre strike ‘gap’ in drill holes could be tested by widely spaced drilling.
Approximately 1,500 metres of drilling in 6 holes at 250 metres spacing are recommended to test this ‘gap’ area,
at an estimated cost of CDN$300,000. No further work is recommended on the Kwanda JV (North and South
Blocks) at this time.
18. REFERENCES
Anglo American Platinum Corporation, 2004 Annual Report (report is also available online at http://
www.angloplatinum.com/).
Buchanan, D.L., Nolan, J., Suddaby, P., Rouse, J.E., Viljoen, M.J., and Davenport, J.W.J., 1981. The genesis of sulphide
mineralization in a portion of the Potgietersrus limb of the Bushveld Complex: Econ. Geol., v.76, pp. 568 – 579.
Buick, I.S., Maas, R. and Gibson, R., 2001. Precise U-Pb titanite age constraints on the emplacement of the Bushveld
Complex, South Africa: Journal of the Geol. Soc. London, v158, pp 3 – 6.
Cawthorn, R.G., Barton, Jr., J.M., and Viljoen, M.J., 1985. Interaction of floor rocks with Platreef on Overysel,
Potgietersrus, Northern Transvaal: Econ. Geol., v 80, pp 988 – 1006.
Cousins, C.A., 1959. The structure of the mafic portion of the Bushveld Igneous Complex Geol. Soc. South Africa
Trans., v.62, pp 179 – 189.
Davenport, J.W.J., 1999. Exploration Summary and Business Proposal on the farms Drenthe 778LR, Rietfontein 2KS,
Witrivier 777LR and portions of Dorstland 768LR, situated on the Platreef of the Bushveld Complex, Republic of
South Africa, private Plateau Resources (Pty) Ltd. report.
149
Gain, S.B. and Mostert, A.B., 1982. The geological setting of the platinoid and base metal sulphide mineralization
in the Platreef of the Bushveld Complex in Drenthe, north of Potgietersrus: Econ. Geol., v.77, pp. 1395 – 1404.
Hulbert, L. J. and Von Gruenewaldt, G., 1982. Nickel, Copper, and Platinum Mineralization in the Lower Zone of the
Bushveld Complex, South of Potgietersrus: Econ. Geol., Vol. 77, pp. 1296 – 1306.
Hulbert, L. J. and Von Gruenewaldt, G., 1986. The Structure and Petrology of the Upper and Lower Chromitite Layers
on the Farms Grasvally and Zoetveld, South of Potgietersrus: Mineral Deposits of South Africa, Geological
Association of South Africa, pp 1237 – 1249.
Mbendi information service, http://www.mbendi.co.za/proj/p0n4.htm
Merensky, H., 1925. The platinum occurrence on the properties of Potgietersrust Platinums Limited, for the
information of shareholders issued by order of the Board of Directors.
Merwe van der, M.J., 1976. The Layered Sequence of the Potgietersrus Limb of the Bushveld Complex: Econ. Geol.,
vol 71, pp 1337 – 1351.
Pan Palladium Ltd. 2002. Press release of ASX dated 24th January (release is available online at:
http://www.panpalladium.com/announce/24_01_2002.html)
Rebagliati, C.M., Titley, E., 1999. Anooraq Resources Corporation, Due diligence program on the Drenthe Platreef
property, Potgietersrus, South Africa. Internal company report.
Rebagliati, C.M., 2000. Anooraq Resources Corporation, Summary Report Platreef PGM Project. Iinternal company
report.
Rebagliati, C. M., Roberts, K., 2003. Anooraq Resources Corporation, Compilation Report on the Platreef Project,
Northern Limb, Bushveld Complex, Limpopo Province, Republic of South Africa. Internal company report.
Rebagliati, C. M., Roberts, K., 2003. Technical Report on the Platreef Project, Northern Limb, Bushveld Complex,
Limpopo Province, Republic of South Africa, Anooraq Resources Corporation, filed on www.SEDAR.com
Reeves, D., Tulp, T. and v.d. Heever, G.J. 2005. Preliminary Assessment, Boikgantsho Joint Venture, Northern Limb,
Bushveld Igneous Complex, Northern Province, Republic of South Africa, filed on www.SEDAR.com
Roberts, K., 2000. Anooraq Resources Corporation, Interim Geological Report – Platreef PGM Project, Potgietersrus
Region, Northern Province, South Africa. Internal company report.
Roberts, K., Rebagliati, M., Prefontaine, M., 2001. Anooraq Resources Corporation, Progress Report, 2000 Diamond
Drill Program, Platreef Project, Potgietersrus Limb, Bushveld Complex, Northern Province, Republic of South Africa.
Internal company report.
Roberts, K., 2004a. Anooraq Resources Corporation, Compilation Report on the Platreef Project, Northern Limb,
Bushveld Complex, Limpopo Province, Republic of South Africa. Internal company report.
Roberts, K., 2004b. Technical Report on the Platreef Project, Northern Limb, Bushveld Complex, Limpopo Province,
Republic of South Africa, Anooraq Resources Corporation, filed on www.SEDAR.com
Roberts, K., 2005. Anooraq Resources Corporation, Report on Diamond Drilling on the Farm Swerwerskraal 736 LR
(Kwanda JV), Northern Limb, Bushveld Complex, Limpopo Province, Republic of South Africa. Internal company
report.
South African Council for Geoscience, 1: 250 000 series Geological Maps, numbers 2428 (Nylstroom) and
2328 (Pietersburg).
Titley, E.D., 2000. Anooraq Resources Corporation, Draft Internal Report, “Manual for Core Logging and Data
Compilation on a Diamond Drilling Project”, dated 11 January.
Vermaak, C.F., Von Gruenewaldt, G., 1986. Introduction to the Bushveld Complex: XVth CMMI Congress
Johannesburg, SAIMM, v3, Anhaeusser, C.R., and Maske, S. (Eds.), Mineral Deposits of Southern Africa, Geol. Soc.
South Africa, Johannesburg, V. I & II, pp 1021 – 1029.
Vermaakt, D. T., 2003. Anooraq Resources Corporation, Technical Report on the Platreef PGM Project, Northern
Limb, Bushveld Complex, Limpopo Province, Republic of South Africa, GeoActiv (Pty) Ltd, Johannesburg.
van der Heever, G.J. 2003. Report on the Mineral Resources, Drenthe Deposit, Platreef PGM Project, Northern Limb,
Bushveld Complex, Limpopo Province, Republic of South Africa, GeoLogix (Pty) Ltd, Johannesburg. Internal report
for Anooraq Resources Corporation.
150
Von Bargen, N., 2000. Geological Model of the Platreef, UEB-Uranerzbergbau-GMBH Interim Report on Site Visit.
Von Bargen N., 2000. Documentation for the Structure and Mineral Resource Models, UEB-Uranerzbergbau-GMBH
report.
White, J.A., 1994. The Potgietersrus prospect-geology and exploration history: XVth CMMI Congress Johannesburg,
SAIMM, v 3, pp. 173 – 181.
19. DATE
The effective date of this report is March 31, 2006.
20. CERTIFICATE OF QUALIFICATIONS
K. Roberts
4649A Cruickshank Avenue
Courtenay, B.C. V9N 7W6
Ph: 250 898 8466
Certificate of Author
I, Keith Roberts, P.Geo., do hereby certify that:
1. I am currently employed as a geologist by Hunter-Dickinson Inc. located at Suite 1020, 800 West Pender
Street, Vancouver, B.C., V6C 2V6.
2. I graduated with; a BSc. Honours degree in Geology from the University College of Wales, Wales, U.K. in 1975;
a MSc. in Geology from the University of Regina, Saskatchewan, Canada in 1980; a PhD. in Geology from the
University of Pretoria, Pretoria, South Africa, in 1992. In addition I have a Certificate in Basic XRF Spectrometry
from the Witwatersrand Technikon, Johannesburg, South Africa (1986).
3. I am a member of the Association of Professional Engineers and Geoscientists of British Columbia, registration
number 26059. Additionally, I am a member of the Society of Economic Geologists.
4. I have worked continuously as a geologist for a total of 31 years since my graduation from university in 1975.
5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and
certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101)
and past relevant work experience, I fulfil the requirements to be a “qualified person” for the purposes of
NI 43-101.
6. I am responsible for the preparation of the technical report titled, Technical Report on the Platreef Project,
Northern Limb, Bushveld Complex, Limpopo Province, Republic of South Africa and dated March 31th 2006
(the “technical report”) relating to the Platreef Property, except sections 11.0, 13, 14 and 15, the content in
which was derived from work by other qualified persons.
The author visited the property on August 7 to 11, 1999; January 26 to April 28, August 11 to 31, 2000;
April 28 to July 4, July 10 to July 16, July 26 to September 30, 2002; May 15 to August 10, August 26 to October
30, November 15 to December 10, 2003; January 14 to March 3, April 14 to May 13, June 14 to July 22,
August 13 to September 21, October 15 to November 9 and November 24 to December 14, 2004; a total
of 634 days, January 16 to February 27, April 13 to May 25, June 22 to July 8, July 23 to August 2, August 24
to August 31 September 8 to September 15, September 23 to September 26, October 1 to October 2 2005,
to undertake surface geological investigations, log diamond drill core and participate in other exploration
activities.
7. I have had prior involvement with the property that is the subject of the Technical Report as an employee of
Hunter Dickinson Inc. The nature of my prior involvement was:
a. assisting with exploration diamond drilling activities including core logging and geotechnical data
acquisition, geological data handling and interpretation, deposit modeling and resource estimating;
b. assisting with regional geological investigations;
c.
assisting with exploration methods and assessment.
151
8. I am not aware of any material fact or material change with respect to the subject matter of the Technical
Report that is not reflected in the Technical Report, the omission to disclose which make the Technical Report
misleading.
9. I am not independent of the issuer applying all of the tests in section 1.5 of National Instrument 43-101
because I am an employee of Hunter Dickinson Inc., which provides geological, engineering, financing and
administrative services to Anooraq Resources Corporation.
10. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in
compliance with that instrument and form.
11. I consent to the filing of the Technical report with any stock exchange and other regulatory authority and any
publication by them, including electronic publication in the public company files on their websites accessible
by the public, of the Technical Report.
Dated this 31st day of March 2006.
/s/ K. Roberts
_____________________________________________
K. Roberts
152
1.
In this report PGM or 3PGM refers to the sum of the contained concentrations of Platinum + Palladium + Gold
unless otherwise defined. The mines also currently produce significant amounts of nickel (5,100 tons) and
copper (2,900 tons) as by-products of PGM production.
2.
Estimated in November 2004 by independent qualified person, G J van der Heever, Pr.Sci.Nat.
3.
With the exception of the South Block and portions of the North Block.
4.
Note that the Rh comparison (based on –35 drill holes) is only added for completeness, as the overall assays
for this element in the year 2000 drill holes were very low (typically in the 10 – 30 ppb range). For this reason,
costly Rh assays were discontinued during subsequent drill programs.
Annexure 13
AUDITOR’S REPORT ON THE 31 OCTOBER 2003 FINANCIAL STATEMENTS
153
Annexure 14
COMFORT LETTER FROM THE INDEPENDENT REPORTING ACCOUNTANTS
AND AUDITORS
154
155
Annexure 15
TECHNICAL REPORT ON THE GA-PHASHA PROJECT
ANOORAQ RESOURCES CORPORATION
Revised TECHNICAL REPORT
ON THE GA-PHASHA PLATINUM GROUP METALS PROJECT
EASTERN LIMB, BUSHVELD COMPLEX
LIMPOPO PROVINCE
REPUBLIC OF SOUTH AFRICA
Latitude 24° 20’ South
Longitude 30° 00’ East
Eugene H Siepker, M. Sc., Pr.Sci.Nat.
August 20, 2004
156
CONTENTS
Page
1. EXECUTIVE SUMMARY
162
1.1
Location
162
1.2
162
1.3
162
1.4
History
162
1.5
163
1.6
Resource Estimation
163
1.7
Metallurgical Testing
164
1.8
Prior Economic Assessments
164
1.9
Recommendations
165
2. INTRODUCTION AND TERMS OF REFERENCE
165
3. DISCLAIMER
166
4. PROPERTY DESCRIPTION AND LOCATION
166
4.1
General
166
4.2
Ownership
167
4.3
Surface Rights
168
4.4
Anooraq – Pelawan Agreement
168
4.5
Ga-Phasha Joint Venture
169
4.5.1
Objectives
169
4.5.2
Management
169
4.5.3
Relationship to Micawber
169
4.5.4
Community Issues
169
4.5.5
Production Decision
170
4.5.6
Off-Take
170
5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
170
5.1
Access
170
5.2
Climate
170
5.3
Local Resources
170
5.4
Infrastructure
170
5.5
Environment
171
6. HISTORY
171
157
Page
7. GEOLOGICAL SETTING
171
7.1
Stratigraphy
171
7.2
Structural Discontinuities
7.2.1
Potholes
7.2.2
Faults
7.2.3
Dykes
7.2.4
Shear Zones
7.2.5
Replacement Pegmatites
172
172
173
173
174
174
7.3
Depth of Oxidation and Overburden
174
7.4
Geological Losses – Summary
175
7.5
Preliminary Structural Modelling for Both Reefs
175
8. DEPOSIT TYPE
176
9. MINERALISATION
176
9.1
Mineralization Styles and Distribution
10. EXPLORATION
176
177
10.1 Remote Sensing
10.1.1 Land Satellite Images
10.1.2 Aerial Photography
177
177
177
10.2 Geophysics
10.2.1 Magnetic Surveys – AeroMagnetics and Ground Magnetics
10.2.2 Seismic Surveys
10.2.3 Geothermal Gradients
178
178
178
179
10.3 Mapping/Trenching/Adits
179
11. DRILLING
179
180
13. SAMPLE PREPARATION, ANALYSIS AND SECURITY
180
13.1 ARC Procedures
13.1.1
13.1.2
13.1.3
Sample Preparation
Fire Assay – 4E (Pb collector)
Fire Assay ICP – 3E (Ag collector) and Fire Assay ICP Rh (Pd collector)
13.2 AARL Procedures
13.2.1
13.2.2
13.2.3
13.2.4
13.2.5
158
Sample Preparation
Atomic Absorption Spectrometry AAORE
X-Ray Fluorescence XRF – ARC
Fire Assay ICP 3E
Fire Assay ICP Rh
180
181
181
181
181
181
181
181
182
182
13.3 Specific Density
182
13.4 Sample Security
182
Page
14. DATA VERIFICATION
182
14.1 Reporting of Results
182
14.2 Quality Control
182
183
15.1 Twickenham – Hackney
183
15.2 Impala Platinum
184
15.3 Modikwa Platinum
184
15.4 Lebowa Platinum
184
184
185
17.1 Background Summary
185
17.2 Data
186
17.3 Data Point Spacing
186
17.4 Descriptive Statistics
187
17.5 Methodology
189
17.6 Variography
192
17.7 Grade Estimation
194
17.8 Geological Domains
200
17.9 Resource Classification
201
17.10 Resource Figures
203
18. OTHER RELEVANT DATA AND INFORMATION
18.1 Anglo Platinum Pre-feasibility Study
205
205
206
20. RECOMMENDATIONS
207
21. REFERENCES
207
22. DATE
208
23. CERTIFICATE
208
159
Page
LIST OF FIGURES
Figure 4.1.1:
Illustration of the Eastern, Western and Northern Limb of the Bushveld Complex
167
Figure 4.2.1:
Mineral rights holdings in the north-eastern Bushveld
168
Figure 7.1.1:
Idealized stratigraphic column for Paschaskraal–Klipfontein area
172
Figure 7.2.1
(a) and (b):
Pothole distribution across Klipfontein–Paschaskraal
173
Figure 7.2.2:
Identified faults and dyke trench/outcrop coverage
173
Figure 7.2.3:
Aeromagnetic image highlighting areas interpreted to be affected by iron displacement
174
Figure 7.5.1:
3D Datamine model of the UG2 Chromitite Layer in the Paschaskraal–Klipfontein Project area
175
Figure 7.5.2:
3D Datamine model of the Merensky Reef in the Paschaskraal–Klipfontein Project area
176
Figure 9.1.1:
Qualitative grade distribution within the UG2 Chromitite Layer
176
Figure 9.1.2:
Base metal sulphide (BMS) mineralization around the upper chromitite stringer of the
Merensky Reef
177
Figure 10.1.1: Landsat image of the Paschaskraal–Klipfontein area
177
Figure 10.1.2: Black and white aerial photograph of the project area
178
Figure 10.2.1: Aeromagnetic Survey for the project area
178
Figure 10.3.1: Typical UG2 chromitite layer outcrop on the farm Klipfontein
179
Figure 11:
179
Existing drill holes
Figure 17.4.1: Histogram and Probability Plots – Merensky Reef
188
Figure 17.4.2: Descriptive Statistics – UG2
188
Figure 17.4.3: Histogram and Normal Probability plots – UG2
189
Figure 17.5.1: Surface digital terrain model
189
Figure 17.5.2: 3D view of the Merensky and UG2 reefs
190
Figure 17.5.3: Merensky Reef profile and vertical platinum grade distribution
190
Figure 17.5.4: UG2 Reef profile and vertical platinum grade distribution
191
Figure 17.5.5: Borehole positions for the Merensky Reef used in the resource estimation
191
Figure 17.5.6: Borehole positions for the UG2 Reef used in the resource estimation
192
Figure 17.6.2: UG2 Reef Plot of variogram parameter
193
Figure 17.6.3: Merensky Reef – Variogram PGE (mg/t)
193
Figure 17.6.4: UG2 – Variogram PGE (mg/t)
194
Figure 17.7.1: Merensky Reef – Reef Thickness (cm)
195
Figure 17.7.2: Merensky Reef – PGE (mg/t)
196
Figure 17.7.3: Merensky Reef – PGE (g/t)
197
Figure 17.7.4: UG2 Reef – Reef Thickness (cm)
198
Figure 17.7.5: UG2 Reef – PGE (mg/t)
199
Figure 17.7.6: UG2 Reef – PGE (g/t)
200
Figure 17.8.1: Merensky Reef – Geo-domains
201
Figure 17.8.2: UG2 Reef – Geo-domains
201
Figure 17.9.1: Merensky Reef – Resource categories
202
Figure 17.9.2: UG2 Reef – Resource categories
202
160
Page
LIST OF TABLES
Table 1.1:
Summary of Mineral Resources for the Ga-Phasha Project
164
Table 4.1:
Mineral Rights Details
168
Table 4.2:
Surface Rights Details
168
Table 15.1:
Anglo Platinum’s Resource Statement for Twickenham–Paschaskraal
184
Table 16.1:
PGE Flotation Test Results
184
Table 16.2:
Base Metal Flotation Test Results
185
Table 16.3:
Bulk Modal Analysis Results from UG2 Boreholes
185
Table 17.1:
Drilling Campaign and Hole Summary
186
Table 17.2:
Euclidean Spacing of Composite Samples
186
Table 17.3:
Descriptive Statistics – Merensky Reef
187
Table 17.10a
(top):
In-situ resources on the farms Paschaskraal and Klipfontein for the UG2 and 203
Merensky Reefs at different cut-off grades
203
Table 17.10.2:
In-situ resources for the UG2 and Merensky Reefs on the farms Avoca and De Kamp
204
Table 18.1:
Operating Cost Summary
206
Table 18.2:
Capital Cost Summary
206
Table 18.3:
Unit Revenue Contributions
206
Table 20.1:
Proposed Budget
207
Appendix 1:
Average Grade Intervals
210
Appendix 2:
Simple Cross-Section and Location Plan
215
Appendix 3:
Anglo Platinum Certification
216
APPENDICES
161
1.
EXECUTIVE SUMMARY
This is a revised report on the Ga-Phasha Platinum Group Metals Project (“Ga-Phasha Project”) is compiled in
accordance with the guidelines set forth under National Instrument 43-101 for the submission of technical reports
on mining properties. Mineral resource classifications contained herein follow the standards of CIMM 2000. It is
submitted as the supporting technical report for a transaction between Anooraq Resources Corporation
(“Anooraq”) and Investments (Proprietary) Limited (“Pelawan”) on the Ga-Phasha Project announced in news
releases of January 21 and 23, 2004.
Anooraq and Pelawan have agreed to merge their respective Platinum Group Metals (“PGM”) assets, comprising
Anooraq’s Northern Limb PGM projects and Pelawan’s 50% participation interest in the Ga-Phasha Project
(formerly named the Paschaskraal Project) on the Eastern Limb of the Bushveld Complex in South Africa.
1.1
Location
The Ga-Phasha Project is located on the Eastern Limb of the Bushveld Igneous Complex, some 45 km northnorthwest of the Limpopo Province town of Steelpoort, and approximately 250 km northeast of
Johannesburg in the Republic of South Africa.
1.2
The project area consists of four farms Paschaskraal, Klipfontein, De Kamp, and Avoca, which cover an area
of 9,700 ha.
1.3
The Ga-Phasha Project site is located in a region of sparse development with little infrastructure. Access to
the site is gained via gravel roads from Steelpoort or Burgersfort to the southeast, and from Pietersburg some
70 km to the northwest.
Recent development at the neighbouring Twickenham-Hackney farms by Anglo American Platinum
Corporation Limited (“Anglo Platinum”) has improved the local infrastructure considerably. The Anglo
Platinum development includes paved roads, power lines, and water, although Anglo Platinum has temporary
suspended further development work.
1.4
History
Platinum was first discovered in the Eastern Limb of the Bushveld Complex during 1924 and traced to the
now famous dunite pipes at Maandagshoek. This led, to the discovery of the platiniferous horizon,
subsequently named the Merensky Reef, on the farm Maandagshoek 254KT, some 20 km south-east of
Paschaskraal. From 1925 to 1927, Northern Platinum Limited undertook an extensive exploration
programme on both the platiniferous dunite pipes and the Merensky Reef in the Dwars and Olifants River
areas; some 700,000 tonnes of platinum-bearing ore were mined during early operations in these areas.
During 1969 the ATOK Platinum Mine (Pty) Limited was developed and commissioned by Anglo Transvaal
Consolidated Mines Limited (“Anglovaal”) and sold to Rustenberg Platinum Mines Limited (“RPM”) in 1977.
Although commercial mining activities by RPM were limited to the ATOK mine over the past 25 years, RPM
managed to secure the mineral rights over a large number of farms in the Eastern Bushveld area. Throughout
this later period various exploration and metallurgical test programmes were completed, focused mainly on
determining the extent and general characteristics of the mineralization. Renewed interest in this area was
sparked by the increased demand for platinum group metals in 1999/2000, and by Anglo Platinum’s strategy
to increase platinum output to 3.5 million refined ounces by 2006. To meet this additional demand, a number
of new mining projects are currently under investigation or in different stages of development and
construction.
There has been a considerable amount of exploration on the Klipfontein and Paschaskraal farms by past
operators such as JCI, Anglovaal, and Anglo Platinum. A total of 327 drill holes have been completed to date,
of which 108 intersected the Merensky Reef, and 176 intersected the UG2 Reef.
162
1.5
The Ga-Phasha Project area is situated on the Eastern Limb of the Bushveld Igneous Complex and is underlain
by rocks of the Upper Critical and Main Zones. The Main Zone is comprised of gabbros and ferro gabbros,
which occupy most of the central and south-eastern parts of the Lulu mountain range.
The two platinum-bearing horizons are the UG2 chromitite and the Merensky Reef, both of which occur
within the Upper Critical Zone. This zone comprises successions of anorthosites, norites and pyroxenites.
These rocks form the range of hills along the north-eastern boundary of the project area, through which the
undulating outcrop of the UG2 Reef can be traced. The Merensky Reef sub-outcrops beneath a thick layer of
overburden on the flat-lying valley floor at the center of the project area.
The sequence strikes northwest-southeast and dips in a westerly direction towards the center of the
Bushveld. The dip decreases on a regional scale from north to south, ranging from approximately 30 degrees
near the Olifants River in the north, to approximately 10 degrees near the Steelpoort Fault to the south. The
project area is located some 45 km north of the Steelpoort Fault and 25 km south of the Olifant River Fault.
The Schwerin Fault lies approximately 10 km to the east but does not appear to have had any influence on
the local Bushveld stratigraphy.
The two most important stratigraphic successions within the Upper Critical Zone are the Upper Group
chromitite successions and the Merensky Reef. In general, the Merensky Reef is separated from the UG2 Reef
by a package of norites and anorthosites, averaging some 390 m in thickness. The UG2–UG3 separation is
approximately 26 m with the UG3A being 11 m into the hangingwall of UG3.
Locally, the UG2 chromitite layer averages 61 cm in width and is underlain by a feldspathic pegmatoidal
pyroxenite, which is in turn underlain by pyroxenite/norite and a marker horizon poikilitic anorthosite, which
is referred to as the FW3 Marker. The UG2 is overlain by medium grained feldspathic pyroxenite. Chromititestringers of variable thickness occur in the immediate hangingwall of the reef horizon and are commonly
referred to as the Leader seams of the UG2.
The Merensky Pyroxenite unit is mainly composed of poikilitic pyroxenite and is generally more than 5 m in
thickness. The upper portion of the lowermost, usually barren pyroxenite is often demarcated by a coarse to
pegmatoidal pyroxenite (sometimes together with a chromitite stringer), which contains visible sulphides.
This pegmatoidal pyroxenite occurs at the base of the Merensky Reef “value zone” and varies between 20 cm
and 1 m in thickness. The Merensky Reef (above the pegmatoidal pyroxenite) is composed of a poikilitic
pyroxenite up to 1 m in thickness. Visible sulphides occur in variable amounts. A top chromitite seam usually
marks the top of the Merensky Reef and is less than 1 cm thick. The occurrence of this chromitite stringer
associated with the main “value zone” of the Merensky reef is highly variable, and in some cases, the
chromitite stringers may be completely absent. The poikilitic pyroxenite continues above the top chromitite
for between 40 and 70 cm before grading into a norite. This norite grades into a poikilitic anorthosite.
A second pyroxenite unit occurs above this anorthosite. This forms the Bastard Pyroxenite, which is
sometimes confused with the Merensky Reef. Above the Bastard Pyroxenite a norite occurs that grades into
a poikilitic anorthosite, which is up to 60 m in thickness. This is referred to as the Giant Poikilitic Anorthosite
and is generally accepted as the demarcation of the top of the Critical Zone.
1.6
Resource Estimation
The geological review and resource estimate, tabulated below, was completed in January 2004 in conjunction
with a planned merger between Anooraq and Pelawan.
163
Table 1.1 Summary of Mineral Resources for the Ga-Phasha Project
In-situ resources at base case cut-off grades for the UG2 and Merensky Reefs, 40% geological loss:
Category
tonnes
UG2 (4.0 g/t COG)
Grade
4PGM
Pt
Pd
Au
Rh
g/t
g/t
g/t
g/t
g/t
Contained oz
PGM
Measured
10,193,981
6.56
2.89
3.08
0.17
0.41
2,150,000
Indicated
55,498,048
7.05
3.10
3.31
0.18
0.44
12,579,000
Sub-total
65,692,029
6.97
3.07
3.28
0.18
0.44
14,729,000
Inferred
33,866,132
7.20
3.17
3.38
0.19
0.45
7,839,000
Merensky (2.0 g/t COG)
Measured
10,397,739
4.44
1.95
2.09
0.12
0.28
1,484,000
Indicated
32,891,327
4.37
1.92
2.05
0.11
0.28
4,621,000
Sub-total
43,289,065
4.39
1.93
2.06
0.11
0.28
6,105,000
Inferred
39,807,187
4.28
1.88
2.01
0.11
0.27
5,478,000
108,981,094
5.95
2.62
2.79
0.15
0.37
20,834,000
Total
Measured and
Indicated
The initial resource estimation was completed by Charles Muller B Sc (Hons), a Datamine expert, who is a
director with Global Geo Services (Pty) Limited (“GGS”). The mineral resource estimate report was
completed by Eugene Siepker, M. Sc., Pr. Sci. Nat., who is also a director with GGS and is the independent
qualified person. The resource estimates have been developed with reference to Anglo Platinum’s database
and a digital Datamine 3D project modeling exercise.
In the Anooraq January 23, 2004 news release, the measured and indicated resources reported are very
comparable to the measured and indicated resources at the 4.0 g/t (UG2) and 2.0 g/t (Merensky) cut-offs
tabulated above. The inferred resources in the news release, however, were the total for all four farms that
comprise the Ga-Pasha Project, whereas the numbers given above are for the Paschaskraal and Klipfontein
farms only. In this report, the inferred resources for the Avoca and De Kamp farms are presented separately
in Section 17.10.
The results of this mineral resource estimate prior to geological losses, also compare favourably to a recent
estimate of the undiluted mineral resources by Khulani GeoEnviro Consultants (Pty) Limited 2003, Oct).
1.7
Metallurgical Testing
Initial testwork indicates a very good flotation response with negligible effects from dilution and with
platinum group element recoveries ranging from 92.7% to 96.5%. The good flotation response was attributed
to the predominant association of platinum-group metals (PGM) with base metal sulphides, which are
coarser than those present in UG2 in the western Bushveld. Nickel, copper and sulphur recoveries were good
for UG2 type ore, namely: 14% – 24% nickel, 77% – 86% copper and 83% – 90% sulphur.
1.8
Prior Economic Assessments
Anglo Platinum prepared a detailed study on the former Paschaskraal Project in late 2002 based on mineral
resources in the UG2 Reef, including measured resources of 7.6 million tonnes grading 5.99 g/t 4PGM,
indicated resources of 33.1 million tonnes grading 5.8 g/t 4PGM and inferred resources of 178.1 million
tonnes grading 5.93 g/t 4PGM (Fourie, 2002). The mineral resources were estimated using the South African
Code for Reporting Mineral Resources and Mineral Reserves. The estimate integrates a 40% factor for
geological losses for resources on the Paschaskraal and Klipfontein farms and 25% geological losses for
resources on Avoca and DeKamp farms, a mining width of 0.9 m and a combination of grade and width for
cut-off. Since the study is based on measured, indicated and inferred resources, it would be called a
Preliminary Assessment under NI 43-101. As the Preliminary Assessment is based, in part, on Inferred
Resources that are considered geologically speculative, there is no certainty that the economic
considerations or results will be realized.
164
This study envisioned an underground mine very similar to that being developed on the neighboring
Twickenham farm, namely down dip semi-mechanized reef mining and access by twin shaft declines. Each
decline shaft comprises three barrels: a decline ramp for equipment, a conveyor decline, and a chairlift decline
for moving men. Ore was to be treated at the Twickenham concentrator.
Based on twin declines producing 100,000 tonnes per month from the UG2 Reef only, the key findings of this
study were:
– Total capital costs were estimated to be in the order of R2.5 billion.
– Average all-in operating costs were estimated in the order of R210 per tonne milled.
– The project yielded an internal rate of return (IRR) of 17 percent at a net present value (NPV) at a 12%
discount rate of R860 million.
– A ramp-up period of 50 months would be required for mine and infrastructure development.
Based on the above findings, Anglo Platinum concluded the project was an attractive investment.
1.9
Recommendations
Based on the due dilligence work and the current resource assessment, the following exploration is
recommended in conjunction with feasibility work for the Ga-Phasha Project:
– The resource model should be updated, integrating the additional drilling that has been carried out in
2003/2004.
– Additional drilling should be carried out in those areas that are currently outlined as inferred, and to
upgrade the indicated resources to measured.
– Additional exploration to better define the geological losses so that the current 40% estimate can be
refined and/or reduced.
The estimated budget for the program is $2.65 million.
2.
The Ga-Phasha Project, previously named the Paschaskraal Platinum Mine Project, is situated on the north-eastern
limb of the Bushveld Complex in the Limpopo Province of The Republic of South Africa. The project has been
explored and evaluated by several companies over the past 36 years and the work confirmed the presence of two
main platinum bearing horizons, the UG2 Chromite and Merensky Reef. These underlie four farms covering an area
of 9,700 square hectares. Recently Anglo Platinum prepared a pre-feasibility study to define the viability of the
project and encouraged Black Economic Empowerment (“BEE”) group participation.
Anooraq Resources Corporation (“Anooraq”) and Pelawan Investments (Proprietary) Limited (“Pelawan”) have
agreed to merge their respective Platinum Group Metals (“PGM”) assets, comprising Anooraq’s Northern Limb PGM
projects and Pelawan’s 50% participation interest in the Ga-Phasha Platinum Group Metals Project (“Ga-Phasha
Project”) on the Eastern Limb of the Bushveld Complex in South Africa.
The objective of this report is to comply with the reporting requirements for the announcement of the major
corporate change agreements announced in news releases on January 21 and 23, 2004. It is also to document the
mineral resources estimated under the standards of CIM 2000.
Eugene H Siepker, M Sc., Pr.Sci.Nat. is the independent Qualified Person for this report and has been retained by
Anooraq to estimate the mineral resources in accordance with CIM 2000, as required under National Instrument
43-101, and to complete the technical report that is compliant with the TSX Venture Exchange and National
Instrument 43-101 requirements.
Eugene Siepker is a director of Global Geo Services (Pty) Limited, a company providing a broad spectrum of
geological services to the South African mineral industry. Eugene has completed resource estimations for other
PGM properties such as Anglo Platinums’ Bafokeng Rasimone Platinum Mine. Eugene visited the Ga-Phasha
property on 11 February 2004 to review the drilling, logging, sampling procedures and subsequently completed the
resource estimation and technical report. The initial resource estimation was completed by Charles Muller, B.Sc
(Hons), a Datamine expert and who is also adirector with Global Geo Services (Pty) Limited. The resource estimates
have been developed with reference to Anglo Platinum’s database and a digital Datamine 3D project modeling
exercise.
165
The basis for results of this report are:
• Site-specific information available for the Ga-Phasha Project area.
• Information obtained from surrounding mining and exploration projects, such as Anglo Platinum’s Twickenham,
Modikwa, Lebowa and Impala Platinum’s Murula projects.
• The technical information and data used in this report was largely based on work done by Anglo Platinum’s
exploration staff as reported by Gernot Langwieder, Manager Geology in a progress report entitled “Project
Geological Report. Paschaskraal – Klipfontein Project Draft Version 4” (Langwieder, G., 2004, Feb).
• Geological information and interpretation conducted by Anglo Platinum.
• Drill hole analytical and survey data compiled by Anglo Platinum.
3.
DISCLAIMER
In preparing this resource report the author relied upon:
• Ga-Phasha land title information provided by Pelawan and their 50% joint venture partner Anglo Platinum.
• Geological information and interpretation conducted by Anglo Platinum.
• Drill hole analytical and survey data compiled by Anglo Platinum.
In accordance with Johannesburg Securities Exchange Limited requirements (JSE), Anglo Platinum is fully compliant
with the South African Code (SAMREC) for the estimation and reporting of mineral resources and reserves, which
includes appropriate data checking and verification of the drill hole analytical and survey data. The Anglo Platinum
competent person (QP) responsible for Ga Phasha is Dietmar Nowak, M.Sc. (Geology), Pr.Sci.Nat (registration
number 400107/03). The Anglo Platinum resource estimation and data QA/QC procedures are published quarterly
on the Anglo Platinum website and in their annual reports.
All analytical testwork for Ga- Phasha has been conducted at the Anglo Analytical Research Laboratories (AARL).
AARL is ISO 17025 certified and operates in accordance with internationally accepted protocols.
The authors have not conducted an independent verification of the Anglo Platinum supplied drill hole analytical
and survey data.
4.
PROPERTY DESCRIPTION AND LOCATION
4.1
General
The Ga-Phasha Platinum Project is located on the north-eastern limb of the Bushveld Complex, some 45 km
north-northwest of the Limpopo Province town of Steelpoort (Figure 4.1).
The project area consists of four farms Paschaskraal 466 sq km, Klipfontein 465 sq km, De Kamp 507 sq km
and Avoca 472 sq km, which cover an area of 9,700 ha.
166
Figure 4.1.1: Illustration of the Eastern, Western and Northern Limb of the Bushveld Complex. Location
of Ga-Phasha Project. Inset shows location of Bushveld in South Africa.
4.2
Ownership
Mineral rights for the Platinum Group Metals (“PGM”) within the UG2 and Merensky Reefs on the farms
Klipfontein 465KS and a portion of Paschaskraal 466KS are held by Rustenberg Platinum Mines, a whollyowned subsidiary of Anglo Platinum.
In addition, Anglo Platinum has a lease over the PGM mineral rights for the remainder of Paschaskraal 466KS,
which are held by the state as detailed in Table 4.1 and illustrated in Figure 4.2.
There are nominal annual fees to maintain the farms. It is not known if the boundaries of the farms have
been legally surveyed.
167
Figure 4.2.1: Mineral rights holdings in the north-eastern Bushveld. Ga-Phasha Project area is highlighted
in red.
Table 4.1: Mineral Rights Details
4.3
PROPERTY
PORTION
OWNER
TITLE
Klipfontein 465KS
Farm
Lebowa Minerals Trust
– mineral lease in favour
of RPM, Protocol 17/2000
K1626/2000RM
Paschaskraal 466KS
Portion 1
Lebowa Minerals Trust
– mineral lease in favour
of RPM, Protocol 17/2000
T15169/59
Paschaskraal 466KS
RE
RPM
K503/70RM
De Kamp 507KS
Farm
State
T4486/1989
Avoca 472KS
Farm
State
T44482/1989
Surface Rights
Surface rights for the farms Klipfontein, Paschaskraal, De Kamp and Avoca are held by the state in trust for
local tribal authorities as shown in Table 4.2.
Table 4.2: Surface Rights Details
PROPERTY
4.4
PORTION
EXTENT
(ha)
SURFACE
OWNER
TITLE
Klipfontein 465KS
Farm
2841.8803
State
T44863/1989
Paschaskraal 466KS
Portion 1
2156.8861
State
T15169/1959
Paschaskraal 466KS
RE
745.6399
State
T13098/1964
De Kamp 507KS
Farm
1830.6887
State
T44486/1986
Avoca 472KS
Farm
1093.3571
State
T44482/1989
Anooraq–Pelawan Agreement
The agreement between Anooraq Resources Corporation (“Anooraq”) and Pelawan Investments (Proprietary)
Limited (“Pelawan”) will combine the companies’ respective PGM assets, comprising Anooraq’s northern limb
PGM projects and Pelawan’s 50% participation interest in the Ga-Phasha PGM Project. The Ga-Phasha Project
168
is a Black Economic Empowerment joint venture to be concluded under an existing agreement in principal
between Anglo Platinum and BEE partners in South Africa. Pelawan and Anglo Platinum are in the process of
finalizing their joint venture agreement which on implementation, will result in Pelawan receiving a
participation interest equal to 50% of the Ga-Phasha Project. Anglo Platinum will retain the other 50% of
the project.
4.5
Ga-Phasha Joint Venture
4.5.1 Objectives
The objectives of the joint venture participants are, initially, to further define those preparatory
mining operations already performed by Micawber and to produce a bankable feasibility study for the
financing and development of the mine. The participants will either jointly or separately raise the
financing required to establish mining operations and subsequently proceed with construction of the
mine. The participants will develop a mining work program which will seek to optimise the utilization
of the infrastructure across both the joint venture area and the adjacent Twickenham/Hackney farms.
The joint venture will have the right to acquire an interest in the Twickenham/ Hackney infrastructure
at market-related consideration. The joint venture may include the processing and partial
beneficiation of PGMs. The joint venture will operate and maintain the mine for the duration of the
life of mine, until the closure of the mine if and when appropriate.
4.5.2 Management
The affairs of the joint venture shall be administered and governed by a Management Committee. The
Management Committee shall be comprised of eight representatives, four appointed by RPM and four
appointed by Plateau. The Chairman of the Management Committee shall be appointed by Anglo
Platinum for the first year and thereafter the Chairmanship shall be rotated annually. The Chairman
shall not have a casting vote. The Management Committee shall ensure the proper and efficient
operation of the joint venture. Day to day management and conduct of the joint venture shall be
carried out by the Mine Manager whom shall be subject to the control and direction of the
Management Committee. All decisions of the Management Committee shall bind the participants,
except for the following matters:
– diversification investment;
– the change of the business of the joint venture;
– closure and/or mothballing of the mine;
– the level of profit-sharing to be declared in respect of each financial year of the joint venture;
– approval of the annual strategic plan and annual budget of the joint venture;
– approval of the annual financial statements of the joint venture; and
– the disposal of assets.
4.5.3 Relationship to Micawber
Micawber is the current holder of the old order mining rights in respect of the Ga-Phasha Project. It
will need to obtain new order mining rights in accordance with the Minerals Development Act in order
to guarantee ongoing security of tenure (see “Business of Anooraq After Closing – Business Overview
– Mining and Exploration in South Africa Generally” above). Once such new order mining rights are
obtained Micawber will apply to the DME for consent to lease such mining rights to Anglo Platinum
and Plateau (as the joint venture participants) to conduct mining operations.
4.5.4 Community Issues
Anglo Platinum and Pelawan has established a Joint Co-ordinating Committee which main purpose
and objective is to establish a joint communication, policy information and co-ordination forum
between them in order to promote community interests, having regard to all communities situated
within the surrounding area. Anglo Platinum and Pelawan recognise and acknowledge that
harmonious community relations will have an impact on and be of benefit to both Anglo Platinum
and Pelawan in respect of both of their business endeavours within the surrounding area.
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4.5.5 Production Decision
The participants shall convene a meeting within one month of the completion of the bankable
feasibility study at which meeting the participants shall resolve finally whether or not to continue
with mining in and on the joint venture area. In the event that the bankable feasibility study financial
model supports the decision to mine and demonstrates that the agreed project hurdle rate has been
reached and any participant votes not to proceed with mining, the other participant shall be entitled
to start mining and dilution shall apply.
In the event that both participants vote not to proceed with mining at the meeting, the participants
shall reconvene within a period of 90 days to reconsider the decision to mine and such a meeting
shall be reconvened meeting within 90-day intervals until such stage as one or both of the
participants decide to commence mining.
4.5.6 Off-Take
As part of the bankable feasibility study the participants will determine whether the joint venture will
produce ore or concentrate. Should the participants decide to produce concentrate. Plateau will have
a period of 12 months to raise the funding required to participate in the establishment of a
concentrator or to acquire an interest in the concentrator complex to be erected on the
Twickenham/Hackney Farms by Anglo Platinum. If Plateau is unable to raise required funding the joint
venture will only produce ore and the participants will take delivery of their share of the ore before
it is concentrated.
Anglo Platinum shall have the right to purchase Plateau’s share of the production, being either ore or
concentrate on market related arm’s length terms no less favourable than the best terms that Plateau
has been able to obtain in the market. The off take arrangement will have an initial term of 10 years
and Plateau will have the option to renew the off-take arrangement for five-year periods thereafter.
5.
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY
5.1
Access
The access to the site is by means of a gravel road extending between the Lebowa Platinum Mine (ATOK) and
Maandagshoek (Modikwa Project). Although there is no direct access to the main paved road between
Polokwane (Pietersburg) and Burgersfort, there is railroad connection at Burgersfort (50 km), Steelpoort
(45 km) and Polokwane (80 km).
The general topography of the area is defined by a relatively flat valley flanked by pronounced north-west to
south-east trending mountain ranges located on the northeastern and south-western sections of the
property. Extensive settlements has developed at the foot of both these mountain ranges. The area between
the villages where the land is flatter has been broken up into small farming units or plots for cultivating crops.
5.2
Climate
The climatic conditions of the Project area are typical of the Limpopo Province. Summer day temperatures
are warm to hot, averaging 26°C to 30°C, and the winter months are moderate to cool.
The area is considered semi-arid, with annual rainfall of 529 mm, which is below the average of the rest of
South Africa. The rainy season extends over the summer months of October through April, with the highest
rainfall occurring during December and January. The highest rainfall ever recorded in the Project area was
151.5 mm over a 24-hour period on February 8, 1985.
Wind conditions are relatively calm. The prevailing wind directions are east-south-east and north-northwest, and wind speeds average 2.5 m/s.
5.3
Local Resources
Local resources are very limited at the project site. The area has historically been one of the most
disadvantaged regions in South Africa, characterized by rural poverty and high unemployment. Local labour
is available but unskilled. Most workers are employed by local government and in public service, in retail, as
seasonal farm labour and as temporary labour for construction projects.
The adjacent Twickenham-Hackney Project includes a mine-training centre, aimed at teaching mining skills
to the local people. It is anticipated that the Ga-Phasha Project will benefit from the training centre.
5.4
Infrastructure
With the partial completion of the adjacent Twickenham platinum project by Anglo Platinum, infrastructure
at the site has improved considerably. The Anglo Platinum predevelopment work includes powerlines,
telecommunications, water and sewer projects, establishment of pavedroads and a partially completed mill
complex. Within the immediate Ga-Phasha Project area, however, the infrastructure remains very basic with
only gravel roads, limited power, and shared community water supply and telecommunication resources.
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5.5
Environment
The writer is not aware of any environmental issues associated with the Ga-Phasha Project.
6.
HISTORY
Platinum was first discovered in the Eastern Limb of the Bushveld Complex during 1924 and traced to the now
famous dunite pipes at Maandagshoek. Shortly afterwards, the platiniferous horizon, subsequently named the
Merensky Reef, was discovered on the farm Maandagshoek 254KT, some 20 km south-east of Paschaskraal.
From 1925 to 1927, Northern Platinum Limited undertook an extensive exploration programme on both the
platniferous dunite pipes and the Merensky Reef in the Dwars and Olifants River areas. Some 700,000 tonnes of
platinum-bearing ore were mined from early operations in this area.
During 1969, the ATOK Platinum Mine (Pty) Limited was developed and commissioned by Anglo Transvaal
Consolidated Mines Limited (“Anglovaal”). It was sold to Rustenberg Platinum Mines Limited (“RPM”) in 1977.
Although commercial mining activities over the past 25 years were limited to the ATOK mine, RPM managed to
secure the mineral rights over a large number of farms in the Eastern Bushveld area. Throughout this later period,
various exploration and metallurgical test programmes were completed. Exploration mainly focused on
determining the extent and general characteristics of the mineralization in the area. In 1999-2000, renewed
interest in this area was sparked by the increased demand for platinum group metals and by Anglo Platinum’s
strategy to increase platinum output to 3.5 million refined ounces by 2006. To meet this additional demand, a
number of new mining projects are currently under investigation or in different stages of development and
construction.
There has been a considerable amount of bore-hole work on the Klipfontein and Pashaskraal farms over several
years. Before RPM acquired the rights, Anglovaal drilled 31 holes to intersect the Merensky Reef. Throughout 1981,
JCI drilled an additional six drill holes to intersect the UG2 Reef. Another eight holes, each with one deflection, were
drilled in 1988. Of these eight drill holes, three intersected the UG2 Reef and the remaining five intersected the
Merensky Reef. Exploration continued in 1999, during which five additional holes were drilled. All of these
intersected the UG2 Reef – but at a shallow depth. In 2000, an additional seven holes were drilled on the property,
totalling 6000 m; all of these intersected the UG2 Reef horizon. Five deflections were drilled from each mother
hole, providing three deflections on the UG2 horizon and two deflections on the Merensky horizon.
7.
GEOLOGICAL SETTING
The Ga-Phasha Platinum Project is situated on the north-east limb of the Bushveld Complex and is underlain by
mostly gabbros and ferro-gabbros. There are two potentially economically viable platinum-bearing horizons in this
area, namely the UG2 chromite and the Merensky Reef that occurs within a porphyritic pyroxenite. The undulating
outcrop of the UG2 can be traced in the range of hills along the north-eastern boundary of the project area.
The Merensky Reef sub-outcrops underneath a relatively thick layer of black turf overburden on the flatter central
portion of the property and is typically exposed in deeply eroded gullies. The entire sequence strikes northwest to
southwest and dips westerly toward the centre of the Bushveld Complex. Regionally, the dip decreases from 30º in
the north to about 10º towards the south.
7.1
Stratigraphy
The UG2 chromitite layer averages 61 cm in width and is underlain by a feldspathic pegmatoidal pyroxenite,
which is in turn underlain by pyroxenite/norite and a poikilitic anorthosite marker horizon, referred to as the
FW3 Marker. The UG2 is overlain by medium grained feldspathic pyroxenite. Chromite-stringers of variable
thickness occur in the immediate hangingwall of the reef horizon and are commonly referred to as the Leader
seams of the UG2 Reef.
The Merensky Pyroxenite unit is mainly poikilitic, and generally more than 5 m in thickness. The upper part
of the bottom portion, usually barren pyroxenite, is often demarcated by a coarse to pegmatoidal pyroxenite
(sometimes with a chromitite stringer) containing visible sulphides. This pegmatoidal pyroxenite occurs at
the base of the Merensky Reef ‘value zone’ and varies between 20 cm and 1 m in thickness. The Merensky
Reef (above the pegmatoidal pyroxenite) is composed of a poikilitic pyroxenite of up to 1 m in thickness.
Visible sulphides occur in variable amounts. A top chromitite seam usually marks the top of the Merensky
Reef and is less than 1 cm thick. The occurrence of this chromitite stringer associated with the main ‘value
zone’ of the Merensky Reef is highly variable, and in some cases the chromitite stringers may be completely
171
absent. The poikilitic pyroxenite continues above the top chromitite for between 40 and 70 cm before
grading into a norite. This norite grades into a poikilitic anorthosite. A second pyroxenite unit occurs above
the anorthosite, andforms the Bastard Pyroxenite, which is sometimes confused with the Merensky Reef.
Above the Bastard Pyroxenite, there is a norite that grades into a poikilitic anorthosite up to 60 m in
thickness. This is referred to as the Giant Poikilitic Anorthosite and is generally regarded as the demarcation
of the top of the Critical Zone. Figure 7.1.1 shows an idealized geological column depicting the main
stratigraphic units.
Figure 7.1.1: Idealized stratigraphic column for the Paschaskraal–Klipfontein area.
As can be seen in the schematic geological column, the UG2 sequence is underlain by the UG1 sequence.
A thin anorthositic layer, ranging from 0.5 to 1.0 m in thickness marks, the top of the UG1. This is followed
by a pyroxenitic sequence, which demonstrates the beginning of the UG2 sequence. The main UG2 chromite
layer averages 65 cm in thickness and may thin to 10 cm in areas where the unit is disrupted. Above the main
UG2, a 3 to 5 m thick layer of pyroxenite occurs. This pyroxenite layer typically contains thin chromitite
stringers or leader seams 0.1 to 2.0 cm thick. The separation between the main UG2 chromitite unit and the
lowest leader is approximately 30 cm and the stringers may occur up to 2 m into the hangingwall.
The Merensky Reef is situated approximately 390 m above the UG2 sequence. The Merensky unit comprises
of porphyritic pyroxinite and pegmatoidal pyroxinite. The top of Merensky Reef is marked by a chromitite
seam, which is not developed in places.
7.2
Structural Discontinuities
7.2.1 Potholes
Definition, type, size, distribution, zoning of potholes is continuously re-viewed but might prove
difficult for the Merensky Reef due to the non-existence of stratigraphic marker horizons in the
footwall of the Merensky Reef package and insufficient knowledge of facies variations across the
properties. Figures 7.2.1(a) and (b) illustrates the current interpretation of pothole frequency across
both farms.
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Figure 7.2.1: (a) and (b): Pothole distribution across Klipfontein (left) and Paschaskraal (right).
Purple shows potholes on Merensky Reef and light green shows the
potholes on UG2 horizon.
7.2.2 Faults
Faulting is more severe and common on the Paschaskraal and Klipfontein farms than on the
neighbouring farms Brakfontein and Twickenham. Indications therefore were obtained from trenches
on the UG2 suboutcrop as well as from mapping.
Quantification of geological losses around the various linear structural features is in progress and will
be refined in due course.
7.2.3 Dykes
A swarm of dolerite dykes crosscuts the project area in a north-northeast to southsouthwest
direction, dipping predominantly to the southeast (and in places to the northwest). The dips vary
between 70° and 90°. The width of the dykes varies from as little as several centimetres up to 29 m
(as ascertained from trenching information). Outcrop mapping of the dykes completed the
knowledge on these characteristics and, specifically, the expected geological losses around the dykes.
Available datasets, such as aerial photography, Landsat imagery and interpretation of aeromagnetic
(“AeroMag”) survey results assisted greatly in developing the current structural evaluation. Some of
the dolerite dykes seem to “carry” movement along their planes as indicated in the dark pink colour
in the previous and following figures. Most identified and some of the interpreted movements
indicate a dextral strike slip movement, with minor or no vertical component. This was also found to
be the case at the neighbouring Twickenham Project.
Figure 7.2.2: Illustration of the identified faults (dark pink) as well as the dyke trench/outcrop
coverage (light blue dots) on the coloured aerial photography backdrop.
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7.2.4 Shear Zones
A distinctive structural feature occurs within the Footwall 3 (FW3) unit of the UG2 Poikilitic
Anorthosite (this anorthosite can be used as a stratigraphic marker horizon) and is often associated
with chromite-stringers within that unit. It is regarded as a layer that is parallel to subparallel to an
undulating shear zone/low-angle thrust fault (10 – 30 cm wide affected zone) that sometimes
transgresses into the Footwall 2 Feldspathic Pyroxenite. This shear zone is very often (but not always)
present, resulting in brecciated and sometimes mylonitic, altered material. The existence of this shear
zone should be emphasised in future training of mine personnel, as it will be present in the
hangingwall of haulage development and be intersected with development leading up to the reef
plane. FW3 occurs, on average, approximately 10 m below the bottom contact of the UG2 Chromitite
Layer and, under normal conditions, doesn’t exceed 2 – 4 m in total thickness. Its occurrence is
expected to be similar to on the adjacent Twickenham Project.
Figure 7.2.3: Aeromagnetic image highlighting areas interpreted to be affected by iron
displacement – within the project area only (yellow arrows).
7.2.5 Replacement Pegmatites
Replacement pegmatites do occur and could qualitatively be identified by the AeroMag Survey, but
don’t seem to be extensive and are expected to be small in terms of contributing to geological losses
in both areas. However, more work needs to be carried out.
7.3
Depth of Oxidation and Overburden
UG2 outcrop occurs at several locations along strike. The suboutcrop extends approximately 10 km along
strike. In the southern portion of Paschaskraal, UG2 suboutcrop has been exposed by means of trenching.
Normal UG2 was encountered in most instances with dips being slightly steeper that expected. Although
oxidation is a progressive weathering process, it is singled out for geological purposes in order to describe the
oxidized rock as an early stage of weathering, involving the action of oxygen (from air and water) and results
in a slight alteration of the rock, typically in the near surface environment. Rock that shows this state of
alteration occurs is relatively intactbut has suffered some mineral alteration as a result of these oxidants. It
is commonly seen as discolourations of the rock, and commonly marked by alteration and discolouration of
the base metal sulphides, where they are present. Depending on the degree, the oxidation is sometimes
visually difficult to distinguish (Brown & Chunnett, 2002).
At the Ga-Phasha Project, the depth of weathering varies from less than 7 m to over 40 m, particularly in the
valley areas. The depth of oxidation can be estimated at depth of weathering plus 20 m. The depth of
oxidation will be highly variable. On the more hilly areas, the depth of weathering is reduced. As an average,
40 m of oxidation is postulated for the project area.
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7.4
Geological Losses – Summary
A 40% geological loss was applied for both farms by Anglo Platinum in 2003. These anticipated losses may
be revised once the structural evaluation is complete and the geology better defined. The following
tabulation per geological feature represents the latest loss estimation for the Merensky Reef and the
UG2 Chromitite Layer:
– Faulting
10%
– Potholes
15%
– Dykes
10%
– Iron replacement
5%
Total:
40%
7.5
Preliminary Structural Modelling for Both Reefs
The following procedures were applied during the preliminary structural modeling in Datamine by Anglo
Platinum:
– All borehole core logging was checked for any signs of potholing, iron rich ultramafic pegmatite (IRUP),
dykes and faulting within or around the UG2 reef intersections.
– Selected boreholes were visually double checked for the above.
– All remaining available UG2 and Merensky Reef top contact information was extracted from the SABLE
database and reef elevations calculated for all reef intersections.
– Boreholes completed up until 28 November 2003 were incorporated into the structural database.
– This information was imported into Datamine and a Digital Terrain Model (DTM) of the relevant top reef
contact created.
– Boreholes from neighboring farms (namely Brakfontein and Twickenham) were included in the modeling
in order to create a complete picture to the South and the North of the area of focus.
– Potholed elevations were then removed from the dataset before the generation of the reef elevation
contours.
– Preliminary contours were then generated (multiple wireframe slicing), scrutinized and annotated
(Figures 7.5.1 and 7.5.2).
Figure 7.5.1: 3D Datamine model of the UG2 Chromitite Layer in the Paschaskraal–Klipfontein Project
area (orange: topography).
– Linear structures as interpreted from various datasets and some confirmed through field observations,
were imported into Datamine as line features, projected onto the topography and projected onto the reef
plane.
– All major features (features with anticipated geological losses more than 10 m in total) or with a proven
throw component will be projected down to the (final) created DTM of the UG2 Chromitite Reef or
Merensky Reef.
– The projection will be done at the observed or interpreted dip (from AeroMag, borehole core or field
observations including dyke trenching) for these major features only.
– Should major fault blocks be established, these will have to be structurally modelled separate from each
other in due course.
– A geological section through topography and both orebodies illustrate the relatively gentle dip and
middling relationships between the reefs (Figure 7.5.2).
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Figure 7.5.2: 3D Datamine model of the Merensky Reef in the Paschaskraal–Klipfontein Project area
(orange: topography).
8.
DEPOSIT TYPE
The project area forms part of the Eastern Limb of the Bushveld Complex . PGM mineralization at these areas is
hosted within the UG2 Chromitite and the Merensky Reef located within the Upper Critical zone of the Rustenburg
layered suite of the Bushveld Complex. The property is located between ATOK section and the Twickenham Project.
Both potentially economic reefs, the UG2 and Merensky, outcrop (but predominantly suboutcrop) on the
properties for approximately 10 km along strike, striking roughly north-northeast to south-southwest on
Ga-Phasha, and extending towards the Twickenham Project. The strike changes slightly towards the Klipfontein
farm to a northeast-southwest direction. The layers are separated by approximately 400 m of mafic cumulate rocks
and dip approximately at an average dip of 16º to the westsouthwest (southwest). It is noteworthy that the dip
steepens towards the north. The broad tectonic setting is characterized by north-northeast and east-west trending
dykes and faults/fractures.
9.
MINERALIZATION
9.1
Mineralization Styles and Distribution
PGM mineralization in the areas under investigation is hosted within the UG2 Chromite Layer and the
Merensky Reef Pyroxenite.
The mineralization within the UG2 Chromite Layer occurs throughout the main seam (on average 61 cm wide),
generally with higher grade PGE values at the top and the bottom of the chromitite unit. Minor mineralization
often “carries through” into the footwall in the form of disseminated chromite and lenses within a feldspathic
pegmatoidal pyroxenite (Fig 9.1.1). The first leader seam within the hangingwall pyroxenite contains limited
PGM mineralization as well; the hangingwall pyroxenite, however, is considered barren.
Figure 9.1.1: Qualitative grade distribution within the UG2 Chromitite Layer.
The mineralization within the Merensky Reef (the economic “cut” is on average 117 cm wide within the
Merensky pyroxenite) occurs in the form of visible sulphides and chromitite layers, which tend not to exceed
the mm-cm scale. The base metal sulphides occur as discreet particles, sharing interstitial space with
plagioclase feldspar, within a silicate framework of orthopyroxene. In most instances, the highest grades are
associated with the upper chromitite stringer (Figure 9.1.2).
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Figure 9.1.2: Base metal sulphide (BMS) mineralization around the upper chromitite stringer of the
Merensky Reef (hand specimen cut and polished).
Several old adits exist on Paschaskraal. Three adits were established on the Merensky Reef, of which one was
excavated along the strike of the reef. One adit has also been identified on the UG2 horizon.
All adits were mapped and sampled. Assay results are pending completion and are likely to be available by
end of March 2004.
10. EXPLORATION
10.1 Remote Sensing
10.1.1 Land Satellite Images
Landsat images have been completed (Figure 10.1.1) for both farms and have been used, in
combination with other tools, to develop the structural evaluation for the farms.
Figure 10.1.1: Landsat image of the Paschaskraal–Klipfontein area (dark blue boundary outline).
Merensky outcrop in red, UG2 outcrop in bright green. Dark green and blue NNESSW trending dykes, purple and orange lines represent fractures/possible faults
whereas dark pink lines are confirmed/known faults. Paschaskraal shaft layout in
yellow (southern portion of Paschaskraal).
10.1.2 Aerial Photography
Colour and black and white aerial photography exist and were used in combination with other tools
for the structural evaluation. Figure 10.1.2.1 shows a black and white aerial photograph of the project
area, also illustrating drilled and planned borehole coverage across the project area. The red dots
represent Merensky Reef intersections, green dots represent UG2 intersections, red dot within green
large dot indicate that both reefs were intersected, and yellow stars represent planned borehole sites.
The dark blue and dark green lines represent dykes (confirmed by AeroMag), the light blue and orange
lines represent fractures, and the thick green line represent the UG2 outcrop/suboutcrop, the thick
red line represents Merensky Reef outcrop/suboutcrop. Finally, the dark pink dashed lines represent
confirmed/known faults (note the offsets on the outcrop).
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Figure 10.1.2: Black and white aerial photograph of the project area (yellow outline).
10.2 Geophysics
10.2.1 Magnetic Surveys – AeroMagnetics and Ground Magnetics
An aeromagnetic survey was flown over a large portion of the northeastern Bushveld. The data was
interpreted by GAP Geophysics in 2002, and was subsequently reinterpreted by SRK and Anglo
Platinum in the framework of a structural evaluation. Figure 10.2.1 illustrates the primary structural
trend for linear features such as dykes, which show up as purple, red and blue linear magnetic
anomalies. Confirmation of the interpretation will continue by field work (ground truthing).
A ground magnetic survey and its interpretation was done by Anglo Platinum (J. Krynauw) in May
2002 for the Paschaskraal shaft area. This included a report on dyke-UG2 hangingwall relationships
on the farm Klipfontein.
Figure 10.2.1: Aeromagnetic Survey for the project area (Paschaskraal shaft layout in orange).
10.2.2 Seismic Surveys
No seismic work has been carried out in the past for any of the project farms in question.
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10.2.3 Geothermal Gradients
The 40°C isotherm was modelled in Datamine.
10.3 Mapping/Trenching/Adits
Anglo Platinum conducted outcrop mapping of UG1 and UG2 on Paschaskraal. Remapping of the lithological
units between the UG3 and UG1 Chromitite Layers was undertaken in 2003. Additional focus was the
mapping of structurally related features such as dykes and pegmatite veins as well as the measurements of
joint systems on both farms. The report is pending finalisation in the UK. A typical UG2 outcrop occurring on
the farm Klipfontein is shown in Figure 10.3.1.
Figure 10.3.1: Typical UG2 chromitite layer outcrop on the farm Klipfontein.
Trenching on UG2 suboutcrop was conducted in the southern portion of Paschaskraal and all of Klipfontein.
11. DRILLING
A total of 327 diamond drill holes have been drilled to date on the farms Paschaskraal and Klipfontein (Figure 11.1),
for which a mining authorisation currently exists:
• 108 drill holes intersected the Merensky Reef;
• 176 drill holes intersected the UG2 Chromitite Layer; and
• 83 drill holes were drilled for geotechnical purposes mainly in connection with the originally planned shaft in the
southern farm portion of Paschaskraal.
Figure 11: Existing drill holes (Merensky Reef intersections in red and UG2 intersection in green) – with
planned holes (2004) indicated as yellow stars.
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All drill holes used for the resource estimation are vertical and most boreholes are drilled BQ core size (36.40 mm
diameter), as well as deflections if drilled. In some instances, where ground conditions were poor or core recoveries
in the reef zones are not representative, a NQ core size (47.6 mm diameter) hole was drilled nearby. A 2004 drilling
programme has commenced. It consists of 46 boreholes in total, targeting mainly shallow UG2 5 year planned
resource areas as well as the 20-year resource areas of the Merensky Reef, and also includes continuity drilling for
the deeper resources of both reefs. Core sizes are BQ, deflections will be done in TBW core size (45.19 mm
diameter). All boreholes are surveyed for its collar positions and for boreholes deeper than 200 m, a multi-shot
down-the-hole survey is acquired.
Core logging is undertaken by qualified geologists on site at the Driekop Exploration Base, where all boreholes and
their deflections are accurately logged in terms of lithology, mineralization, alteration and structure. Logging details
are entered directly into laptop computers, making use of the proprietary Sable software package designed for this
purpose. Specialised geotechnical and structural logging is also carried out by rock engineering and structural
geologists. During the logging process the sampling interval through the reef succession is determined, and
individual samples measured off, marked and numbered according to standard. Sampling is continuous through the
sample section. The marked core is then submitted to the technical staff, which firstly cut the core in half
longitudinally through the complete sampling interval. One half of this core is then cleanly broken with a sharp
chisel at individual sample boundary markings, and each in turn then immediately labelled, bagged and sealed
(diamond saw cutting is not used to split individual samples because of the loss of material associated with it).
Precautions are taken to avoid any cross contamination between samples. The remaining half of the core remains
in the core trays with the flat cut side facing upwards. The sample intervals and numbers are replicated onto this
surface for reference, and future re-sampling if necessary. The sampling process is fully documented on site, and
records of all sampling maintained.
Generally the recovered borehole core (reef intersections of Merensky Reef and UG2) is assayed for 3PGE+Au as
well as Cu and Ni contents. Individual Pt, Pd, Rh and Au contents of each sample were determined.
The standard adopted for sampling was as follows:
• Measurements and marking of sample widths at an internal Anglo Platinum standard.
• Within the reef area a maximum of 20 cm sample length was taken, but generally sampling widths are less
than 15 cm.
• In the hanging wall and footwall lithologies sample lengths of 15 cm were applied.
• The top and the bottom contact samples were taken in such a manner that 2 cm of footwall and 2 cm of
hangingwall were included into these samples.
• This was to ensure that high grade material at the top and the bottom of the UG2 were included as well as
disseminated chromite occurrences or chromite lenses close to the footwall contact, which were likely to
contain PGE’S and form part of a practical mining cut.
• Consequently this was to ensure a more accurate modelling in terms of mining cut problematics.
• Once the sample (marking off) procedure was completed, splitting of borehole core at Driekop core yard took
place by means of a dedicated diamond blade saw.
• Individual samples were then separated in the more representative split half of the core by means of chisel and
hammer and subsequent to that individually bagged.
• The sampled half of the core was sent off for assay purposes, the other half kept for reference in the coreshed
storage area.
• In some cases an additional deflection or borehole was sent off for mineralogical/ metallurgical investigations.
13. SAMPLE PREPARATION, ANALYSIS, AND SECURITY
After the bagging of samples on site at the Driekop core yard, the samples were transported to Anglo Platinum
Research Centre (“ARC”) in Germiston near Johannesburg by 3-ton Dyna or pickup truck. The pre-2000 samples
were then processed by ARC, and the post-2000 samples were processed by Anglo American Research Laboratory
(“AARL”). Where transported to AARL, the samples were delivered by ARC staff and vehicles.
13.1 ARC Procedures
All samples are duplicated and run on an A and B stream at different times. Internal Quality control occurs
with every batch. ARC does not use blanks, and integrates an internal Quality Control sampling once a week.
Comparative results from A and B streams are available.
180
13.1.1 Sample Preparation
All samples are pulverized to 80% ±5%<75 micron.
13.1.2 Fire Assay – 4E (Pb collector)
The prepared sample is added to a suitable fluxing powder and blended. This mixture is transferred
into an aluminium fire clay crucible and fused for 60–90 minutes in an electric furnace at
1,100ºC–1,200ºC. With fusion, two phases form, a glassy slag and metallic lead phase. The lead
collects the precious metals contained in the fused mass. The melt is poured into an iron mould and
allowed to cool, whereafter the lead collector is separated from the slag and hammered into a cube
in order to remove the majority of the remaining slag. The lead button then undergoes a low
temperature cupellation between 1,000ºC and 1,100ºC, the lead is oxidised and absorbed by the
cupel, the remaining metal prill is transferred to a block cupel and heated for a further 60–90 minutes
at 1,300ºC to remove volatile impurities in the prill. Finally the prill is flattened to remove any
remaining cupel residue and weighed. The precious metal concentration is reported as the sum of Pt,
Pd, Rh, and Au (4E PGE). Due to the high temperature cupellation step there is loss of PGM associated
with this method. These results then often require a correction factor to be applied.
In the borehole database, samples assayed using Pb collector fire assay methods have not been
corrected.
13.1.3 Fire Assay ICP – 3E (Ag collector) and Fire Assay ICP Rh (Pd collector)
At ARC, Silver is used to collect Pd, Pt, and Au, and Pd is used to collect Rh. The process is essentially
the same as for fire assay using a Pb collector, however the high temperature cupellation step is
removed, and the prills are analyzed by dissolution and either ICP or AA, these two prill methods need
to be run in tandem, in order to obtain a quantitative analysis of the Pt, Pd, Rh and Au. Using the Ag/Pd
collectors reduces random losses of the PGM during high temperature cuppelation and a more precise
analysis is achieved as well as a lower detection limit of tail samples.
13.2 AARL Procedures
13.2.1 Sample Preparation
Samples are crushed in a jaw crusher to 2 mm. The entire sample is then milled to 85 per cent –
75 microns or finer. An 8 minute milling time is required.
13.2.2 Atomic Absorption Spectrometry AAORE
Pulped samples are digested with a triple acid attack with perchloric, nitric and hydrofluoric acids.
The solutions are simmered to incipient dryness to convert the base metals of interest to soluble
perchlorates. The acid attack is performed three times after which the solutions are transferred to
100 ml flasks and read on the Atomic Absorption Spectrometry for Cu and Ni. Four per cent of the
samples are replicated. Two blanks and three reference standards are included in every batch
(max 100):
– Mass taken 0.500 g.
– Final dilution 200 times.
13.2.3 X-Ray Fluorescence XRF – ARC
Pulped samples are mixed with a styrene – wax binder (SASMU) and milled to mix in the binder and
further reduce particle sizes. The samples are pressed into briquettes. The briquettes are read on the
AARL PW 1404 X-Ray Fluorescope for Cu and Ni. Corrections are made for mass absorption
coefficient, background and tube spectral interferences (copper only). Mineralogical effects are
evident in the briquettes – hence separate ‘type’ calibrations are critical for UG2 and Merensky type
samples. Approximately 5 per cent on the samples are replicated. Two reference materials are
analysed with every batch (max 100):
– Mass taken 27 g.
– Binder 3 g.
181
13.2.4 Fire Assay ICP 3E
All assays are done in duplicate and the average of acceptable replicate pairs is reported. Samples are
weighed out and mixed with an appropriate flux for the material type. Silver is used as a co-collector.
The samples are fire assayed and the prills dissolved in aqua regia and read on the inductively coupled
plasma (“ICP”) spectrometer for 3E. One blank and two reference materials are analysed with every
worksheet (max 35):
– Mass taken 50.0 g for Merensky.
– Mass taken 30.0 g for UG2.
13.2.5 Fire Assay ICP Rh
All assays are done in duplicate and the average of acceptable replicate pairs is reported. Samples axe
weighed out and mixed with an appropriate flux for the material type. Palladium is used as a cocollector. The samples are fire assayed and the prills dissolved in aqua regia and read on the ICP for
Rh. One blank an two reference materials are analysed with every worksheet (max 35):
– Mass taken 50.0 g for Merensky.
– Mass taken 30.0 g for UG2.
13.3 Specific Density
Pulped samples are analysed on the Grabner instrument. Four percent replication is performed. Acid washed
quartz is analysed with every batch of samples:
– Mass taken 5.00 g.
13.4 Sample Security
Anglo Platinum provided no information on sample security protocols or procedures.
14. DATA VERIFICATION
14.1 Reporting of Results
Results are transmitted electronically to ARC in Excel format.
ARC pastes results and updates progress information onto a shared folder on the Anglo Platinum (AMPLATS)
results drive.
14.2 Quality Control
AARL has a comprehensive assay quality control system that includes blanks, certified reference materials,
in-house reference materials, and twin streaming/replicate analyses. AARL is an ISO 17025 registered
company and operates according to international quality standards.
Care is taken during the handling of samples to avoid potential cross-contamination or misplacement of
samples. High and low grade materials are processed in completely separate areas throughout the laboratory,
using dedicated and clearly labelled equipment.
Samples are weighed and checked upon receipt at the AARL. Quarry quartz is crushed and milled between
individual batches to avoid any possible carry-over. This quartz is analysed with the batch and these data
reported to the ARC during progress meetings.
For each tray (worksheet) of 3E and Rh analysis, reagent blanks, standard reference material and duplicate
samples will be included for control purposes. Internationally certified standards as well as internal standards
of matched matrices are used.
Fire assay pots are used only once to avoid the possibility of cross-contamination of samples.
A full calibration of the ICP and AAS is performed prior to sample analysis, and a synthetic check solution is
included after every 15 samples. Where the check solution data falls outside the acceptable control limits,
the instrument is recalibrated.
Worksheets will be accepted or rejected based on the quality control data of the standards replicates and
blanks.
182
A complete audit trail is maintained in the laboratory to ensure trace-ability, transparency and
ISO compliance.
Quartz blanks are designed to monitor the entire process from sample preparation to instrumentation.
These blanks are treated as normal samples, ie they are prepared with the normal samples. Quartz blanks
consist of Eggo quarry quartz, from a quartzite quarry near Pretoria. As this represents a natural geological
material, small amounts of trace elements, e.g. Cu and Ni, are expected to be present. Any contamination
introduced during sample preparation and subsequent processes will be reflected in the quartz blank (i.e. it
becomes a known amount).
Reagent blanks are introduced during secondary preparation. These are essentially reagents without the
sample introduced. For example in fire assay the reagents would be assayed. A button made, the prill
dissolved, and the solution read. Reagent blanks reflect contamination introduced during the analysis phase
but not the primary preparation phase. Specific density and XRF data don’t have reagent blanks, but do have
quartz blanks.
With each method certified (CRM) and in-house (IHRM) reference materials are run. These are usually type
specified to the method. For example, in Merensky Reef fire assays for 3E and Rh (also simply known as 4E)
SARM7 (CRM) and MER001 (IHRM) are run. For XRF analyses IHRM are run, and for Specific density
calibration blocks, acid washed quartz, and quartz are run.
For each analysis for each standard the precision is calculated, and spread about the certified value. When
standard values exceed the stated precision from the certified values, the data are rejected and the
worksheet re-analyzed. This may involve a total re-analysis, or merely an instrument reading adjustment
depending on the problem.
For each method samples are replicated, if not twin streamed. The 3E and Rh are twin streamed, ie a 100%
replication. For XRF and Specific density analyses 10% replicates are run. Concentration-precision curves are
calculated according to the Thompson Howarth algorithm using replicate pairs. This is the stated precision to
which AARL works, and monitors, for each method and for each analyte. Replicates are essentially used for
measuring the precision of the analyses, and appropriate action is taken if such results are not considered
satisfactory.
ARC chemistry laboratory management attends progress meetings every 2 weeks where the quality and
production of AARL is monitored (Mandi Visser, pers com, Jan 2003).
A comprehensive quality control system ensures that the data reported is within the quality control criteria
and all ISO standards are met.
The Ga-Phasha property is located adjacent, and in close proximity to a number of platinum operations owned
by Anglo Platinum and others.
15.1 Twickenham–Hackney
The Ga-Phasha property was originally targeted for development by Anglo Platinum as part of their
Twickenham–Hackney–Paschaskraal venture. Following Anglo Platinum’s decision to separate out the
Paschaskraal and Klipfontein farms for joint venture, they undertook to develop the Twickenham-Hackney
farms themselves. To date, Anglo Platinum has invested over R1 billion in pre-mining development of the
Twickenham-Hackney project including construction of an a number of on-reef ramps and declines,
underground ore conveyances, initial stope development, and site preparation for the flotation concentrator.
Late in 2003, Anglo Platinum suspended development of the Twickenham-Hackney project due to low
Rand/US dollar exchange rates.
At full production, the Twickenham–Hackney project was scheduled to mine 150,000 tonnes per month per
decline, and produce 60,000 ounces of PGM’s per month.
Anglo Platinum reports a measured resource of 35.4 million tonnes of UG2 Reef for Twickenham–Hackney
(2003). The latest detailed resource statement was prepared by Anglo Platinum in December 2002 and shows
the following resources for the combined Twickenham–Paschaskraal project (Table 15.1). Anglo Platinum
geologists report that the geology and PGM occurrences on Twickenham–Hackney are very similar to that
found on the Ga-Phasha farms.
183
Table 15.1: Anglo Platinum’s Resource Statement for Twickenham–Paschaskraal
Category
Merensky Reef
UG2 Reef
Tonnes (x1 000)
Grade 4E(g/t)
Tonnes (x1 000)
Grade (g/t)
Measured
3 360
4.40
35 380
5.38
Indicated
141 860
4.64
226 490
5.75
15.2 Impala Platinum
Impala Platinum is currently developing the Murala Platinum mine immediately south of Twickenham.
The mill was commissioned in September 2003 and full mine production is expected in 2005.
Implats reports a Probable UG2 reserve of 50.7 million tonnes at 3.55 g/t (5 PGE + Au), and an Inferred
resource of 27.6 million tonnes at 7.77 g/t. An additional resource of 49.4 million tonnes at 5.55 g/t is
reported for the Merensky Reef.
Mining is planned to start initially on the UG2 reef. Future plans include expanding the project on the UG2
and exploiting the Merensky reef. The optimum mining plan is based on a trackless, mechanised bord and
pillar mining method, with a mining height of 1.6 m. The orebody will be accessed by way of two decline
shafts – Clapham shaft and Driekop shaft – situated approximately 1 300 m apart. Load haul dumpers (LHDs)
will load broken ore onto strike conveyors, which will feed a dip conveyor to surface.
At full production the mine will produce 200 000 tonnes run-of-mine ore per month, equating to 100 000
ounces of PGM’s a year. A second phase will expand production to 200 000 ounces of PGM’s per year.
15.3 Modikwa Platinum
Anglo Platinum operates the Modikwa platinum mine to the south of Implats in a 50:50 joint venture with
African Rainbow Minerals. In 2002, the last year for which Anglo Platinum reports figures, the mine produced
53 700 ounces of PGM’s from 460 000 tonnes of ore. Anglo Platinum reports a Proven and Probable Reserve
of 6.6 million tonnes grading 4.6 g/t 4E from the UG2 reef.
15.4 Lebowa Platinum
Anglo Platinum also operates the Lebowa platinum mine immediately to the north of Ga- Phasha. This mine
produced 192 600 ounces of PGM’s in 2002 from 1.9 million tonnes of ore. Anglo Platinum reports a 2002
proven and probable reserve of 135 million tonnes grading 4.91 g/t on the Merensky reef and 342 million
tonnes grading 5.0 g/t on the UG2.
The Anglo Platinum Research Center in Johannesburg undertook platenoid mineralogy and metallurgical testing on
core samples of UG2 Reef material from the Paschaskraal farm in May 1999.
The testwork (Table 16.1) indicated a very good flotation response with negligible effects from dilution and
platinum group element recoveries ranging from 92.7% to 96.5%. The good flotation response was attributed
to the predominant association of platinum group metals with base metal sulphides which are coarser than those
present in UG2 in the western Bushveld. Nickel, copper and sulphur recoveries were good for UG2 type ore, namely:
14% – 24% nickel, 77% – 86% copper and 83% – 90% sulphur (Table 16.2).
Table 16.1: PGE Flotation Test Results
184
Borehole
Dilution
(%)
Shear
zone
Recovery
(%)
Concentrate
grade
Head
grade
Pt:Pd
PK46
38
N
95.0
178.3
4.72
1.22
PK47
28
N
96.5
192.4
6.05
0.96
PK48
32
N
96.0
177.1
6.43
0.93
PK49
22
Y
89.8
92.7
8.04
0.67
Table 16.2: Base Metal Flotation Test Results
Borehole
Sulphur
Nickel
Copper
Rec
(%)
Con
grade
Rec
(%)
Con
grade
Rec
(%)
Con
grade
PK46
87.1
2.35
16.5
1.11
86.2
0.70
PK47
83.4
0.96
13.9
0.75
80.8
0.35
PK48
89.6
1.43
20.1
0.97
81.7
0.53
PK49
83.2
0.47
23.4
0.47
77.2
0.20
Cores from two boreholes were examined mineralogically (Table 16.3). The samples were subdivided into top,
middle and bottom reef intersections since previous work has indicated distinct zoning within the reef package.
The samples were then crushed to minus 3 mm and polished sections prepared. At this size fraction, the samples
are coarse enough to see the textural and association data, but fine enough to give an idea of liberation potential
of the base metal sulphides and PGM.
Both boreholes represented UG2 reef intersections consisting of chromite grains in a silica matrix (predominantly
feldspar) with base metal sulphides (mainly pentlandite, chalcopyrite, and millerite) interspersed in the silicates as
well as on chromite grain boundaries. The PGM were similar in size to those present elsewhere in the western
Bushveld (d50 = 10 _m).
Table 16.3: Bulk Model Analysis Results from UG2 Boreholes
Mineral phase
PK47
PK49
T
M
B
T
M
B
chromite
89.5
87.4
79.4
75.3
83.1
68.7
magnetite
0.9
0.8
0.5
1.1
1.0
0.9
feldspar
5.4
6.7
12.4
6.5
6.9
17.7
pyroxene
0.3
0.4
0.8
3.5
1.3
3.6
Altered silicates
1.8
2.1
4.0
6.1
4.3
4.1
mica
0.9
1.3
2.2
4.6
2.5
4.1
sulphides
0.13
0.03
0.02
0.43
0.04
0.08
other
1.1
1.3
0.7
2.5
0.9
0.9
100
100
100
100
100
100
oxides
silicates
Total
T = top, M = middle, B = bottom.
PGM assemblages were found to range from predominantly platinum group element (PGE) sulphides to PGE
arsenides. Trace amounts of PGE-alloys and tellurides were also present. The abundance of laurite, which is
uneconomic, is much lower in comparison to the Bushveld Complex average (16% at Paschaskraal versus 30% for
the Bushveld Complex). The presence of rhodium enhances the value of the reef package.
17.1 Background Summary
The January 2004 resource estimate (as reported in the news releases) for the Ga-Phasha Project was
completed by Charles Muller, utilizing drill hole information made available by Anglo Platinum from 299 drill
holes drilled between 1966 and 2002. Of these 299 drill holes, 41 and 42 holes were used to classify
measured and indicated resources respectively within the UG2 horizon. Of the 299 holes, 40 and 21 holes
were used to classify measured and indicated resources, respectively, within the Merensky horizon. This
resource estimation procedure is followed by all the major mining and exploration companies in South Africa,
including Anglo Platinum, Impala, Gold Fields Limited, Harmony Gold Mining Company and others.
185
17.2 Data
The data was provided in comma-separated format and was saved in several files. They included a borehole
collar file, assays for the Paschaskraal farm (PK), surveys (PK), lithological units (PK) and a prill file (PK). It also
included assays for the Klipfontein farm (KF), surveys (KF), lithological units (KF) and a prill file as well (KF).
These files were exported into ASCII and then imported into Datamine.
Previous estimates made by Anglo Platinum, were made available. Two CD’s were supplied with drillhole files,
wireframes for both the Merensky and UG2 reefs, outcrop position of the Merensky and UG2 reefs, a
topography digital terrain model (DTM) and farm boundaries. Table 17.2.1 provides a chronological summary
of the drilling campaigns and the drill holes completed, sampled, assayed and entered into Datamine for the
estimation of the resources in the Klipfontein and Paschaskraal farms.
Table 17.1: Drilling Campaign and Hole Summary
Phase
Boreholes
Phase
Boreholes
Phase I
(1966 – 1983)
PK 1 – 37
Phase I
(1964 – 1971)
KF 1 – 15
Phase II
(1988 – 1989)
PK 38 – 45
Phase II
(1977 – 1979)
Phase III
(1996 – 1999)
PK 45 – 50
Phase III
(1981 – 1984)
KF 16 – 24
Phase IV
(1999 – 2000)
PK 50 – 57
Phase IV
(1986 – 1989
KF 25 – 31
Phase V
(2000 – 2001)
PK 58 – 68
Phase V
(1991 – 1992)
Phase VI
(2001 – current)
PK 72 – 104
Phase VI
(1997 – 2002)
–
–
KF 26 – 62
The assay files had a field marked PGE, which is specified in the literature as representing Pt, Pd, Rh and
Au values. There were no entries for each separate metal.
Each drill hole entry within the assay files also contained a separate entry denoting deflection type. Up to
six deflections per drill hole exist in the PK database, and up to five deflections per drill hole within the
KF database. Investigating the deflections further, it was apparent that the survey files did not contain
separate survey values for these specific deflections – survey values were merely the original hole alone. The
exact position of these non-directional deflections is not important since values used were the average for
each mother hole and its deflections.
Any drill hole not containing survey information was assumed vertical.
The old drill holes (pre March 2000) have no prill results and were done by fire assay. These assay values need
to be corrected. For this exercise the values have not been corrected.
17.3 Data Point Spacing
The Euclidean spacing between composites was examined on a per farm basis. Calculations reveal that the
shortest distances are for PK drill holes while the largest maximum distances rests with the KF drill holes.
Overall, the distances typically range from 275 m to 335 m. The figures quoted are the medians of the
respective drill hole groups. Table 17.2 shows the spacing between samples in three-dimensional space for
each drill hole type for the composited drill holes.
Table 17.2: Euclidean Spacing of Composite Samples
186
Drillhole
Average
metres
Minimum
metres
Maximum
metres
Lower
quart.
metres
Median
metres
Upper
quart.
metres
PK
KF
311.12
395.37
9.75
70.53
721.86
911.78
199.46
296.45
275.69
335.17
432.18
460.73
From the table above one can clearly see that the median spacing for the composites is roughly 300 m. Given
this fact, an appropriate block size for estimation purposes would be to allow for a maximum of three
unsupported blocks between two supported blocks on either side. This represents an ideal case where the
unsupported blocks are flanked on either side by ones represented by vertical drill holes. Simple arithmetic
calculations reveal that blocks 100 m x 100 m would be appropriate under these conditions. Thus, these block
dimensions were chosen for the kriging estimation runs.
17.4 Descriptive Statistics
Before any meaningful analysis or estimation can be performed on specific variables (that is, samples from a
specific population), an understanding of the statistical characteristics and distribution relationships are
required. Descriptive statistics in the form of histograms (frequency distributions) and probability plots are
thus used to develop an understanding of such statistical relationships.
The descriptive statistics for composited samples of the Merensky and UG2 reefs are shown in Table 17.3 and
Table 17.4.2. The average vertical thickness for the Merensky Reef is 1.17 m (1.13m dip corrected) with an
average PGE grade of 4.41 g/t. The average vertical thickness for the UG2 Reef is 0.82 m (0.79 m dip
corrected) with an average PGE grade of 7.11 g/t. The variances for both grade and thickness are low
indicating low variation in grades.
The histogram plots for the Merensky Reef (Figure 17.4.1) show slightly positively skewed distributions. The
normal probability plots (Figure 17.4.1) show no real anomalies or outliers for the Merensky Reef.
The histogram plots for the UG2 Reef show a few thick intersections and the grade histogram is a normal
distribution. The probability plot for vertical thickness (Figure 17.4.3) shows one anomalous value. This thick
unit is found in borehole PK113 and seams to be just a thick normal intersection. Other intersections in the
vicinity show also thicker intersections than the average for the area. This value was therefore not corrected
and used. Subsequently this intersection is interpreted as a pothole type reef.
The descriptive statistics for both reefs show the expected statistical relationships for this type of deposit
and no special or complicated methods or manipulations would be required for the geostatistical analysis.
Table 17.3: Descriptive Statistics – Merensky Reef
Variable Valid N
Mean
Minimum
Maximum
Variance
Std. dev.
Skewness
Kurtosis
VT
62 1.168700
0.264981
2.50500
0.27183
0.521371
0.455622
–0.154406
PGE
62 4.405575
1.406196
10.48305
3.63242
1.905890
1.223792
1.509074
MGT
62 5.175883
0.703136
16.02615 11.80315
3.435571
1.535160
2.514452
187
Figure 17.4.1: Histogram and Probability Plots – Merensky Reef.
Descriptive Statistics (SUMUG2)
Variable
Valid N
Mean
Minimum
Maximum
Variance
Std.Dev.
Skewness
Kurtosis
VT
82
0.828439
0.479980
2.43000
0.076265
0.276162
2.904567
13.60969
PGE
82
7.106293
0.476860
13.89000
3.631533
1.905658
0.298711
2.62357
MGT
82
5.620454
1.158770
13.21708
2.732571
1.653049
1.152029
5.00808
Figure 17.4.2: Descriptive Statistics – UG2.
188
Figure 17.4.3: Histogram and Normal Probability plots – UG2.
17.5 Methodology
The collar, assay, geological and survey files were combined to produce a three dimensional (3D) borehole
data set (Figures 17.5.1 and 17.5.2).
Figure 17.5.1: Surface digital terrain model.
189
Figure 17.5.2: 3D view of the Merensky and UG2 reefs.
The Merensky Reef consists, in most cases, of two thin chromitite stringers separated by
pyroxenites/pegmatoids and is on average 1.17 m thick. Mineralization is also found in the immediate
hangingwall and footwall units. The Merensky mineralized zone was flagged including significant
mineralization of the footwall and hangingwall units (Figure 17.5.3).
Figure 17.5.3: Merensky Reef (MR) profile and vertical platinum grade distribution (CR is upper and
lower chromitite stringers in hagingwall and footwall of reef zone).
The UG2 Reef consists of a chromitite layer with an average thickness of 83 cm in the project area. The
mineralization is mainly within the chromitite layer, but is also found in the immediate footwall and
hangingwall units. The UG2 mineralized zone was flagged including significant grades (greater than 1g/t) of
the footwall and hangingwall units (Figure 17.5.4).
190
Figure 17.5.4: UG2 Reef profile and vertical platinum grade distribution (Cr is chromitite stringer).
The flagged mineralized units for the UG2 and Merensky reefs were composited over the full width to
produce one composited sample for each intersection. The original borehole and deflections were
then averaged into one value for each borehole. The values used for each borehole is listed in Appendix 1.
Figures 17.5.5 and 17.5.6 show the borehole distribution of the Merensky and UG2 reefs.
Figure 17.5.5: Borehole positions for the Merensky Reef used in the resource estimation.
191
Figure 17.5.6: Borehole positions for the UG2 Reef used in the resource estimation.
Basic statistics (descriptive statistics, histograms and probability plots) were performed on the composited
values. The statistics were used for data verification and to identify any anomalies.
In the Ga-Phasha project area both the UG2 and Merensky Reef mineralized zones dip at 15° to the
southwest. No major faults or folding were inferred for the resource modeling exercise, which might have
divided the mineralized zones into different structural zones. Wireframes were created for the top of the UG2
and Merensky reefs to correlate the units in 3D and to establish if any major structures exist. The grade
interpolation was done in a 2D block model.
Experimental variograms for grade thickness values in PGE mg/t were calculated for the two mineralized
zones and modelled.
The vertical thickness (VT) and PGE mg/t values were interpolated into a 2D block model. The PGE g/t was
calculated from the PGE mg/t and VT values.
17.6 Variography
Variograms were used tool to investigate the spatial relationships of composite samples. Experimental
normal variograms were calculated for PGE mg/t values and modelled. Where necessary the lognormal
variograms were used to assist with the value or position of the nugget and ranges.
Experimental variograms were calculated for PGE (mg/t) in the horizontal plane in increments of 30°.
Two plots were produced of the variogram parameters to assist in finding the direction of best continuity
(Figure 17.6.2).
192
Figure 17.6.2: UG 2 Reef Plot of variogram parameter.
Figure 17.6.3: Merensky Reef – Variogram PGE (mg/t).
193
Figure 17.6.4: UG2 – Variogram PGE (mg/t).
As shown in Figures 17.6.3 and 17.6.4, the nugget values for both the Merensky and UG2 reefs are about 10%
of the sill or population variance. The small nugget values suggest that the grades are uniform with little
variance. Both reefs showed anisotropic (grade continuity longer in a specific direction) relationships. The
Merensky Reef showed best continuity of 394 m in a 150° direction and a short range of 200 m in a 60°
direction.
The UG2 Reef showed best continuity of 470 m in a 135° direction and a short range of 175 m in a 45°
direction.
17.7 Grade Estimation
Ordinary kriging was selected as the estimation method of interpolating PGE grades (mg/t) into a twodimensional block model. Inverse distance squared method was used to interpolate thickness. The PGE grade
(g/t) value was calculated from the interpolated PGE (mg/t) and thickness values.
The block size chosen was 100 m x 100 m (Northing x Easting). A minimum of two and a maximum of
20 samples were utilized for an estimate. Block kriging was performed with a discretisation of 5 x 5 x 1
(x, y, z). The search radii used approximately equaled the variogram ranges in the plane of the deposit.
Figures 17.7.1 to 17.7.6 show the grades, interpolated grades and thickness values for the Merensky
and UG2 reefs.
194
Figure 17.7.1: Merensky Reef – Reef Thickness (cm).
195
Figure 17.7.2: Merensky Reef – PGE (mgt).
196
Figure 17.7.3: Merensky Reef – PGE (g/t).
197
Figure 17.7.4: UG2 Reef – Reef Thickness (cm).
198
Figure 17.7.5: UG2 Reef – PGE (mg/t).
199
Figure 17.7.6: UG2 Reef – PGE (g/t).
17.8 Geological Domains
Both the Merensky and UG2 reefs consist of areas underlain by variable reef thickness and associated high
and lower PGE grades. Geological domains have been delineated (Figures 17.8.1 and 17.8.2) representing
areas with thick reef and high grade, thick reef and low grade, thin reef and high grade and thin reef and low
grade. The metal content should also be considered as can be seen in the UG2 domains. The thick reef with
relatively lower grade still yields a high metal content.
200
Figure 17.8.1: Merensky Reef – Geo-domains.
Figure 17.8.2: UG 2 Reef – Geo-domains.
17.9 Resource Classification
The resources estimated at the Ga-Phasha Platinum Project were classified into measured, indicated and
inferred categories (Figures 17.91 and 17.9.2). The criteria utilized was as follows: block estimates estimated
within the variogram range and a minimum of four drill holes used for the estimate, were classified as being
within the measured category. Block estimates estimated within the variogram range and less than four drill
holes use in the estimate were classified as indicated. Any block estimates estimated within the peripheral
double range ellipsoid were classified as inferred resources.
201
Figure 17.9.1: Merensky Reef – Resource categories.
Figure 17.9.2: UG 2 Reef – Resource categories.
202
17.10 Resource Figures
In-situ resource figures for Paschaskraal and Klipfontein for the UG2 and Merensky Reefs are summarised
in Table 17.10.1a and 17.10.1b. The resource estimation excludes the first 40 m below surface, which is
considered as an oxidised zone. The Specific Gravity utilized for the Merensky Reef was 3.1 and for the
UG2 Reef was 4.25. The measured and indicated resources at the 4.0 g/t and 2.0 g/t cut-offs reported below
are very comparable to measured and indicated resources reported in the Anooraq January 23, 2004 news
release. The inferred resources reported in the January news release were the totals for all four farms in the
Ga-Phasha Project. Here, the estimates of the inferred resources for the Paschaskraal and Klipfontein farms
are presented separately from the estimate of the inferred resources for the Avoca and De Kamp farms
(shown in Table 17.10.2).
Table 17.10a (top): In-situ resources on the farms Paschaskraal and Klipfontein for the UG2 and
Merensky Reefs at different cut-off grades. 17.10.1b (bottom): Summary of in-situ
resources at base case cut-off grades for the UG2 and Merensky Reefs, all elements,
40% geological loss.
In-situ Resources – Paschaskraal and Klipfontein – undiluted
Resource
category
Measured
Indicated
Inferred
Measured
Indicated
Inferred
Tonnage
after
geological
loss
Cut-off
grade
In-situ
tons
Vertical
thicknes
4PGM
Geological
loss
Corrected
thickness
g/t
t
m
g/t
%
4
16 989 969
0.89
6.56
40
10 193 981
86.36
5
16 330 749
0.89
6.64
40
9 798 449
86.15
6
13 431 943
0.87
6.98
40
8 059 166
83.87
7
7 665 538
0.85
7.45
40
4 599 323
82.24
4
92 496 746
0.77
7.05
40
55 498 048
74.55
5
92 496 746
0.77
7.05
40
55 498 048
74.55
6
81 243 896
0.76
7.25
40
48 746 338
73.61
7
49 933 385
0.73
7.71
40
29 960 031
70.60
4
56 443 554
0.74
7.20
40
33 866 132
71.71
5
56 443 554
0.74
7.20
40
33 866 132
71.71
6
51 045 829
0.73
7.36
40
30 627 497
70.36
7
41 129 674
0.71
7.57
40
24 677 804
68.29
2
17 370 436
1.17
4.44
40
10 397 739
113.09
3
16 475 043
1.17
4.53
40
9 861 767
113.03
4
12 077 525
1.21
4.91
40
7 229 464
116.49
5
4 161 252
1.39
5.55
40
2 490 876
134.02
2
54 948 167
1.23
4.37
40
32 891 327
119.03
3
53 830 652
1.23
4.40
40
32 222 395
118.67
4
30 480 439
1.18
4.88
40
18 245 232
113.78
5
8 906 759
1.14
5.69
40
5 331 481
109.66
2
66 501 786
1.17
4.28
40
39 807 187
112.71
3
65 859 194
1.17
4.30
40
39 422 539
113.23
4
42 770 526
1.15
4.59
40
25 601 934
110.86
5
3 365 317
1.12
5.49
40
2 014 439
108.39
cm
203
Category
tonnes
Grade
4PGM
Pt
Pd
Au
Rh
g/t
g/t
g/t
g/t
g/t
Contained
oz
PGM
UG2 (4.0 g/t COG)
Measured
10 193 981
6.56
2.89
3.08
0.17
0.41
2 150 000
Indicated
55 498 048
7.05
3.10
3.31
0.18
0.44
12 579 000
Sub-total
65 692 029
6.97
3.07
3.28
0.18
0.44
14 729 000
Inferred
33 866 132
7.20
3.17
3.38
0.19
0.45
7 839 000
Measured
10 397 739
4.44
1.95
2.09
0.12
0.28
1 484 000
Indicated
32 891 327
4.37
1.92
2.05
0.11
0.28
4 621 000
Sub-total
43 289 065
4.39
1.93
2.06
0.11
0.28
6 105 000
Inferred
39 807 187
4.28
1.88
2.01
0.11
0.27
5 478 000
Total Measured and
Indicated
108 981 094
5.95
2.62
2.79
0.15
0.37
20 834 000
Merensky (2.0 g/t COG)
In October 2003, Khulani GeoEnvironmental Consultants Pty Limited of Randburg, South Africa completed
a resource evaluation for the Ga-Phasha Project. For the UG2 Reef, the in-situ (undiluted at a 4 g/t cut-off)
measured and indicated resources were estimated at 109 million tonnes grading 6.97 g/t 4PGE’s for
23 million contained ounces of PGE’s. In the Merensky Reef the measured and indicated resource (undiluted
at a 3 g/t cut-off) was estimated at 70 million tonnes grading 4.43 g/t 4PGE for 9.4 million contained
ounces of PGE’s. Additional resources were outlined in the inferred category for both reef horizons.
The 2004 estimates of the measured and indicated resources prior to the application of 40% geological
losses (UG2 – totalling 109.5 million tonnes at 6.97 g/t 4PGM; Merensky – totalling 70.3 million tonnes at
4.43 g/t 4PGM) compare well with the undiluted estimates by Khulani.
No boreholes have been drilled on the adjoining farms Avoca and De Kamp on the down dip side of
Paschaskraal/Klipfontein, but it could be assumed that the reefs developed on Paschaskraal and Klipfontein
would be developed on Avoca and De Kamp. An Inferred Resource has been estimated on Avoca and
De Kamp (Table 17.10.2) based on similar grades and thickness as those for Paschaskraal/Klipfontein.
Table 17.10.2: In-situ resources for the UG2 and Merensky Reefs on the farms Avoca and De Kamp
In-situ Resources – Avoca and De Kamp – undiluted
Resource
category
Cut-off
grade
In-situ
tons
Vertical
thicknes
4PGM
Geological
loss
Tonnage
after
geological
loss
g/t
Mt
m
g/t
%
MT
40
77.6
4.25
40
97.6
3.40
Specific
gravity
UG2 Reef
Inferred
4
129.4
0.75
7.05
Merensky Reef
Inferred
2
162.7
1.17
* Reef area estimated at 39.5 ha (does not include oxide zone).
* Reef dip estimated at 15 degrees.
204
4.34
18. OTHER RELEVANT DATA AND INFORMATION
18.1 Anglo Platinum Pre-feasibility Study
Anglo Platinum prepared a detailed study on the former Paschaskraal Project in late 2002, based on mineral
resources in the UG2 Reef, including measured resources of 7.6 million tonnes grading 5.99 g/t 4PGM,
indicated resources of 33.1 million tonnes grading 5.8 g/t 4PGM and inferred resources of 178.1 million
tonnes grading 5.93 g/t 4PGM (Fourie, 2002). The mineral resources were estimated using the South African
Code for Reporting Mineral Resources and Mineral Reserves. The estimate integrates a 40% factor for
geological losses for resources on the Paschaskraal and Klipfontein farms and 25% geological losses for
resources on Avoca and De Kamp farms, a mining width of 0.9 m and a combination of grade and width for
cut-off. Since the study is based on measured, indicated and inferred resources, it would be called a
Preliminary Assessment under NI 43-101. As the Preliminary Assessment is based, in part, on Inferred
Resources that are considered geologically speculative, there is no certainty that the economic
considerations or results will be realized.
This study envisioned an underground mine very similar to that being developed on the neighbouring
Twickenham farm, namely down dip semi-mechanized reef mining and access by twin shaft declines. Each
decline shaft comprises three barrels: namely, a decline ramp for equipment, a conveyor decline, and a
chairlift decline for moving men.
Ore from Paschaskraal was to be treated at the neighbouring Twickenham concentrator.
The scope of the Anglo Platinum study included:
– the mineable reserve estimate;
– selection of the mining method;
– pre-mine development including shafts and stope development;
– ground support;
– ventilation;
– mine planning and ore production scheduling;
– metallurgical testwork;
– process plant design;
– water supply and water management;
– support facilities and services;
– security;
– warehousing, stores and procurement;
– environmental management;
– health and safety;
– project implementation and management;
– manpower;
– capital cost estimate;
– operating cost estimate; and
– financial evaluation.
Based on twin declines producing 100,000 tonnes per month from the UG2 reef only, the key findings of this
study were:
– total capital costs were estimated to be in the order of R2.5 billion;
– average all-in operating costs were estimated in the order of R210 per tonne milled;
– the project yielded an IRR of 17 percent an NPV (12% discount) of R860 million; and
– a ramp-up period of 50 months was projected for mine and infrastructure development.
205
The operating cost estimate was broken down as follows:
Table 18.1: Operating Cost Summary
Area
Rand/tonne milled
Mining
144.23
Processing
31.14
Indirect costs
30.88
Total
206.26
The capital costs were estimated as follows:
Table 18.2: Capital Cost Summary
Area
Capital Rand millions
Mining
1,018.40
Surface Infrastructure
390.57
Process Plant
580.00
Other Owner Costs
484.00
Total
2,472.97
The above estimates include some cost sharing with the adjacent Twickenham project on shared and
common services. The capital estimate is to ± 25 percent.
Unit revenue contributions estimated by Anglo Platinum are shown in Table 18.3:
Table 18.3: Unit Revenue Contributions
R/t milled
ZAR/oz Pt
$/oz Pt
Percentage
contribution
Pt
241
3 669
325
47.5
Pd
199
3 020
267
39.1
Rh
46
705
62
9.1
Au
6
87
8
1.1
Ir
0
0
0
0.0
Ni
13
190
17
2.5
Cu
3
51
5
0.7
508
7 723
684
100.0
Metal
Total
On the basis of the results of this 2002 pre-feasibility study, Anglo Platinum concluded the project contained
sufficient reserves at an economically mineable grade to warrant a decision to proceed to production.
The Paschaskraal/Klipfontein/Avoca/De Kamp properties, now known as the Ga-Phasha Platinum Project, are
situated in one of the most prospective platinum mineral provinces presently being developed in the world – the
Eastern Limb of the Bushveld Complex in South Africa. Anglo Platinum, the largest platinum producer in the world,
has developed the Project to its present status with 327 boreholes drilled to date. A total of 108 Merensky Reef
and 176 UG2 Reef intersections were sampled and assayed.
Based on a cut-off grade of 4 g/t and a 40% geological loss, a measured resource, of 10.2 Mt at a grade of 6.56 g/t
4PGM and an indicated resource of 55.5 Mt at a grade of 7.05 g/t 4PGM have been estimated for the UG2 Reef
during this exercise. The measured resource for the Merensky Reef, based on a cut-off grade of 2 g/t and a 40%
geological loss is 10.4 Mt at 4.44 g/t 4PGM and the indicated resource 32.9 Mt at 4.37 g/t 4PGM. Inferred resources
for Avoca and De Kamp could be assumed to be similar to that on Paschaskraal/Klipfontein, and using Merensky
cut-off of 2 g/t and UG2 of 4 g/t with a 40% geological loss – are 97.6 Mt at a grade of 4.34 g/t 4PGM for the
206
Merensky Reef and 77.6 Mt at a grade of 7.05 g/t 4PGM for the UG2 Reef. No boreholes were drilled on these farms
and therefore grade and reef thickness were inferred from Paschaskraal and Klipfontein, since Avoca/De Kamp
adjoins Paschaskraal and Klipfontein on the down dip side, a would be situated at depth.
The measured and indicated resources on Paschaskraal and Klipfontein are very conservative, even with the present
borehole spacing. In the opinion of the author, a significant amount of the mineral resources could be moved to a
higher category further drilling.
A 40% geological loss has been applied to the resource estimate figures, which includes 10% for faulting, 15% for
potholes, 10% for intrusions and 5% for iron replacement bodies. Even though dykes swarms effect the area more
than the adjoining properties, the figure is regarded very conservative even by Anglo Platinum’s geological
personnel, since the industry average is around 20% – 30%.
In future, mineral resources should preferably be based on a mineralized mining cut rather than on a strict
geological entity/horizon as is presently done, since PGE values do occur in the footwall and hangingwall of the
reef horizons. Practical mining considerations such as hangingwall conditions should be taken into consideration as
well in defining the economic/mining cut.
Exploration work is ongoing pending the outcome of the Pelawan/Anooraq/Anglo Platinum business negotiations.
Exploration will concentrate on increasing the measured and indicated resources on Paschaskraal and Klipfontein
farms. Structural investigations will also continue and will play a major role in the success of the mining venture.
2D seismic surveys, and possibly 3D seismic surveys at a later stage, could be useful in this regard. Further
mineralogical and metallurgical work will be done using every fifth hole on Paschaskraal and every second hole on
Klipfontein. Geo-technical logging needs to be done on the borehole core to identify possible geo-technical
features, which might effect mining operations and mining cut assessments.
The mineral resource models will be reviewed and updated on an ongoing basis.
20. RECOMMENDATIONS
Based on the due dilligence work and the current resource assessment, the following exploration work is
recommended for the Ga-Phasha Project in conjunction with feasibility work:
1. Updating the resource model integrating the additional drilling that has been carried out in 2003/2004.
This is currently underway.
2. Additional drilling in those areas that are currently outlined as inferred, and to upgrade the indicated resources
to a measured category.
3. Additional exploration and analysis to better define the geological losses so that the current 40% estimate can
be refined and/or reduced.
4. Data compilation, metallurgical and geo-technical testing, and environmental planning, to prepare for
feasibility studies.
Table 20.1: Proposed Budget
Proposed Budget – Exploration and Pre-feasibility Studies:
Diamond drilling – including all assays (20 000 m)
Supervisory, technical and support staff
Engineering – mine, metallurgy, geo-technical
Environment
$2 005 000
300 000
380 000
60 000
Total budget
$2 645 000
21. REFERENCES
Amplats Management Services (Pty) Limited. (1999, May) The Platenoid Mineralogy and Metallurgy of the UG-2
Reef on the farm Paschaskraal (Eastern Bushveld), with Specific Reference to Boreholes PK47 and PK49.
Confidential Research Report.
G A Fourie (2002, Oct): Paschaskraal Joint Venture Platinum Mine Pre-Feasibility Study. Internal Report by
G A Fourie and Associates – Mining Consultants for Anglo Platinum.
Khulani GeoEnviro Consultants (Pty) Limited. (2003, Oct). Ga-Phasha Platinum Project Resource Evaluation.
Khulani GeoEnviro Consultants (Pty) Limited. (2004, Feb). Addendum Report – Pelawan (Pty) Limited and Anglo
Platinum Limited – Agreement on Mineral Resource Figures for the Ga-Phasha (Paschaskraal) Platinum Project.
Langwieder, G (2004, Feb). Project Geological Report. Paschaskraal – Klipfontein Project. Draft Version 4. Internal
Anglo Platinum Report.
207
22. DATE
This revised report is dated August 20, 2004.
23. CERTIFICATE
208
209
Appendix I
AVERAGED GRADE INTERVALS
USED FROM EACH BOREHOLE FOR RESOURCE ESTIMATES FOR UG2 AND MERENSKY REEFS
BHID
X
Y
Z
Vertical
thickness
(m)
PGE
PGE
(g/t)
(mg/t)
Merensky Reef
KF11
–106336
–2692737
889
1.39
3.53
4.90
KF12
–104755
–2694894
910
1.21
3.15
3.81
KF13
–105377
–2 694297
908
2.40
6.68
16.03
KF14
–106331
–2 693029
880
0.45
6.54
2.94
KF15
–106837
–2 692704
876
0.71
1.41
1.00
KF2
–104466
–2694421
920
0.26
2.65
0.70
KF27
–106959
–2692119
873.4
1.27
7.60
9.61
KF28
–106019
–2693030
890.8
1.88
4.14
7.80
KF29
–104991
–2694552
909.5
1.30
3.17
4.12
KF3
–104715
–2694151
920
1.51
2.65
3.99
KF32
–108198
–2694368
900.3
1.38
3.92
5.42
KF34
–107516
–2694731
916.4
1.08
3.62
3.92
KF37
–105588
–2694916
917.1
0.87
2.84
2.47
KF38
–104767
–2695370
926.2
2.13
3.20
6.82
KF39
–105176
–2695273
923
0.69
2.81
1.94
KF4
–106631
–2692371
882
1.83
4.51
8.25
KF45
–106810
–2693839
909.1
0.81
4.16
3.35
KF46
–105298
–2694925
917
0.65
5.28
3.43
KF5
–105286
–2693616
905
0.49
3.10
1.51
KF51
–107146
–2692366
870.6
0.93
10.26
9.54
KF52
–104648
–2694573
913.8
1.08
3.90
4.21
KF57
–107755
–2693144
891.5
1.09
3.82
4.17
KF59
–107513
–2692805
890.2
1.50
4.27
6.40
KF6
–105088
–2693999
910
1.19
2.64
3.14
KF60
–107476
–2692388
880.8
1.27
2.89
3.68
KF7
–104337
–2694758
921
1.05
5.81
6.07
PK13
–102422
–2697919
867.2
0.43
4.03
1.75
PK14
–104150
–2695159
912.8
0.58
6.09
3.53
PK17
–102852
–2696713
886.1
0.45
5.22
2.35
PK18
–102697
–2697142
877.2
0.67
3.37
2.27
210
BHID
X
Y
Z
Vertical
thickness
(m)
PGE
PGE
(g/t)
(mg/t)
Merensky Reef
PK20
–102635
–2697548
871
0.79
3.84
3.02
PK21
–102530
–2697988
869.9
1.35
2.24
3.02
PK22
–102369
–2698351
866.6
0.39
4.76
1.87
PK24
–101923
–2699066
854.4
0.73
3.07
2.24
PK26
–103320
–2696412
889.3
1.22
5.47
6.67
PK27
–103409
–2696416
890.6
0.42
3.02
1.25
PK28
–104597
–2695319
926
0.37
7.10
2.62
PK29
–103175
–2697311
883.6
2.50
3.15
7.88
PK3
–102497
–2696898
887.9
1.01
7.21
7.31
PK30
–103008
–2698024
878.5
1.26
4.01
5.04
PK31
–103534
–2696746
898
1.08
4.61
5.00
PK39
–104032
–2695680
912.7
0.99
4.92
4.85
PK40
–104171
–2696406
917.3
1.06
6.58
6.94
PK41
–103341
–2697521
887.6
2.04
6.57
13.40
PK42
–102862
–2697542
879.4
1.29
5.39
6.96
PK45
–102365
–2698732
869.7
1.36
3.05
4.15
PK51
–104417
–2696728
923.8
1.00
2.91
2.92
PK52
–103410
–2697182
884.6
1.61
3.49
5.60
PK54
–104276
–2697857
909.8
0.78
5.96
4.63
PK55
–102662
–2698652
871.4
1.92
3.31
6.34
PK56
–103803
–2699347
922.3
1.61
4.49
7.24
PK57
–103447
–2699866
910.8
1.82
3.10
5.64
PK59
–102550
–2698418
873.5
1.59
3.85
6.12
PK60
–102596
–2699298
871.1
1.34
2.58
3.46
PK61
–102730
–2698136
876.6
2.01
7.67
15.42
PK62
–103417
–2698024
888.1
1.35
4.80
6.47
PK63
–102927
–2697691
880.5
0.96
10.48
10.10
PK64
–102625
–2698868
869.9
1.24
1.55
1.93
PK65
–103619
–2697725
894.8
1.22
2.76
3.36
PK67
–103811
–2696438
903.9
1.94
7.87
15.27
PK68
–104368
–2695201
918.1
1.06
3.05
3.24
PK9
–102028
–2698641
853.9
0.59
3.04
1.79
UG2 Reef
KF16
–106545
–2691102
916.3
0.64
8.62
5.52
KF17
–105780
–2692213
913.3
0.98
4.89
4.79
KF18
–104734
–2692359
954
0.65
7.79
5.06
211
BHID
X
Y
Z
Vertical
thickness
(m)
PGE
PGE
(g/t)
(mg/t)
UG2 Reef
KF19
–103801
–2692801
959.2
1.16
5.85
6.78
KF20
–103351
–2693509
959.7
0.77
6.70
5.16
KF21
–103513
–2693240
950
0.56
6.37
3.57
KF22
–104332
–2692498
953.8
0.92
6.79
6.25
KF23
–105292
–2692480
927.7
0.68
4.36
2.97
KF24
–106495
–2692010
889
0.84
7.00
5.88
KF25
–103861
–2693525
942.3
0.67
5.58
3.74
KF30
–106894
–2691431
891.3
0.94
6.59
6.20
KF31
–104514
–2692746
936.6
0.73
5.54
4.04
KF35
–107053
–2694102
902.9
0.56
5.75
3.22
KF37
–105588
–2694916
917.1
0.98
6.09
5.95
KF38
–104767
–2695370
926.2
0.87
6.21
5.39
KF39
–105176
–2695273
923
0.77
7.96
6.11
KF43
–104294
–2693994
949
0.95
7.81
7.44
KF44
–106047
–2693308
887.2
0.76
10.88
8.30
KF45
–106810
–2693839
909.1
0.52
9.28
4.86
KF56
–105013
–2693151
928.5
0.72
6.97
5.06
KF57
–107755
–2693144
891.5
0.61
10.50
6.44
KF58
–105869
–2692461
903.7
0.54
8.00
4.35
KF59
–107513
–2692805
890.2
0.48
8.78
4.22
KF60
–107476
–2692388
880.8
0.64
8.83
5.62
KF61
–105651
–2692262
923.5
1.32
6.34
8.34
KF62
–106675
–2691823
898.8
0.95
8.48
8.03
PK100
–102082
–2696460
908
0.88
6.06
5.31
PK103
–101746
–2696146
922
0.93
6.80
6.32
PK104
–101553
–2695939
940.6
0.86
6.58
5.66
PK106
–101401
–2696117
953.1
0.80
8.40
6.72
PK107
–102523
–2696205
927.7
0.90
6.82
6.10
PK109
–102570
–2696023
954.6
0.81
6.71
5.44
PK110
–101748
–2697426
888.1
0.86
7.14
6.14
PK111
–101700
–2696319
919.4
1.29
5.96
7.71
PK112
–101682
–2696528
913.8
0.85
8.21
6.98
PK113
–101942
–2696082
928.2
1.53
8.67
13.22
PK114
–101639
–2697796
878.6
0.89
9.14
8.09
PK116
–102389
–2695819
987.5
0.85
7.94
6.75
PK121
–101042
–2696567
948.5
0.55
7.85
4.32
212
BHID
X
Y
Z
Vertical
thickness
(m)
PGE
PGE
(g/t)
(mg/t)
UG2 Reef
PK124
–101041
–2696576
947.9
0.57
7.75
4.42
PK125
–101052
–2696567
948.5
0.68
8.53
5.80
PK128
–101078
–2696556
948.8
0.55
7.35
4.04
PK129
–101096
–2696547
948.6
0.51
6.93
3.53
PK141
–102175
–2695990
1010.6
0.61
10.78
6.58
PK32
–103020
–2694418
967.5
0.76
4.91
3.73
PK33
–103133
–2695559
931.1
0.67
6.05
4.06
PK34
–101828
–2696113
923.4
0.83
5.32
4.42
PK35
–101415
–2696760
912.3
0.85
4.80
4.08
PK36
–100837
–2697648
916.6
0.81
3.69
2.99
PK37
–101010
–2698059
893.9
1.51
4.55
6.87
PK38
–103652
–2694480
939.4
0.84
5.62
4.72
PK43
–101865
–2696460
911.7
0.97
4.80
4.64
PK44
–101792
–2697128
896.8
0.71
5.89
4.15
PK51
–104417
–2696728
923.8
0.92
6.50
5.98
PK52
–103410
–2697182
884.6
0.66
5.43
3.61
PK53
–103897
–2698058
897.3
0.89
5.76
5.10
PK54
–104276
–2697857
909.8
0.97
5.34
5.21
PK55
–102662
–2698652
871.4
0.58
7.95
4.61
PK59
–102550
–2698418
873.5
0.95
6.57
6.27
PK60
–102596
–2699298
871.1
0.68
8.97
6.07
PK61
–102730
–2698136
876.6
0.66
8.15
5.41
PK62
–103417
–2698024
888.1
0.69
8.57
5.88
PK63
–102927
–2697691
880.5
0.64
6.61
4.25
PK64
–102625
–2698868
869.9
0.81
7.97
6.43
PK66
–103286
–2697033
891
0.64
9.10
5.82
PK67
–103811
–2696438
903.9
0.80
8.25
6.60
PK69
–100401
–2697500
949.9
2.43
0.48
1.16
PK76
–99966.4
–2697790
1088.9
0.91
6.65
6.05
PK80
–99922.9
–2697701
1098
0.60
13.89
8.33
PK81
–100344
–2697957
980.2
0.56
11.89
6.66
PK83
–100596
–2697855
919.2
0.81
6.05
4.93
PK85
–101228
–2696616
941.1
0.84
7.34
6.13
PK87
–100287
–2698137
978.2
0.81
6.88
5.58
PK88
–101229
–2696421
962.6
0.91
5.66
5.15
213
BHID
X
Y
Z
Vertical
thickness
(m)
PGE
PGE
(g/t)
(mg/t)
UG2 Reef
PK91
–102487
–2696339
909.5
0.70
8.77
6.16
PK93
–102256
–2696640
902.4
0.65
8.99
5.84
PK94
–101916
–2696363
913.4
1.31
4.47
5.83
PK95
–101587
–2696569
915.1
0.76
7.84
5.95
PK96
–101637
–2696932
910.8
0.77
5.66
4.37
PK97
–101539
–2696338
926.8
0.92
6.58
6.03
PK97A
–101543
–2696338
926.5
1.21
8.11
9.77
PK98
–101860
–2696686
901.2
0.80
7.05
5.64
214
Appendix 2
SIMPLE CROSS-SECTION AND LOCATION PLAN
215
Appendix 3
ANGLO PLATINUM CERTIFICATION
216
PRINTED BY INCE (PTY) LTD
REF W2CF2054

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