Final prospectus 2008

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Final prospectus 2008
VOLUNTARY OFFER DOCUMENT AND PROSPECTUS
Voluntary Offer for all issued and outstanding shares in
Made by
Voluntary Offer:
One (1) share in IGE Nordic AB (Publ.) to be exchanged into four (4) shares in International Gold
Exploration IGE AB (Publ.)
Offer Period:
From and including 1 December 2008 to and including 15 December 2008 at 17.30 (CET)
Prospectus for Shares in International Gold Exploration IGE AB (Publ.) offered
under the Voluntary Offer
Financial Adviser and Manager:
28 NOVEMBER 2008
I. SUMMARY
INTERNATIONAL GOLD EXPLORATION IGE AB (PUBL.)
28 NOVEMBER 2008
TABLE OF CONTENTS
1
EXECUTIVE SUMMARY ...................................................................................................4
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
Description of the Company.......................................................................................... 4
Selected consolidated financial information ................................................................. 6
Capitalisation and indebtedness .................................................................................... 7
Significant changes........................................................................................................ 7
Share capital .................................................................................................................. 8
Summary of the Voluntary Offer .................................................................................. 8
Major shareholders ...................................................................................................... 10
Related party transactions............................................................................................ 10
Research and development, patents and licences ........................................................ 11
Trends.......................................................................................................................... 11
Summary of Risk Factors ............................................................................................ 11
Articles of association ................................................................................................. 12
Document on display................................................................................................... 12
1
Important Notice
This Summary (which in combination with the Registration Document and Securities Note is referred to as the
“Prospectus”) has been prepared according to Section 7-3 of the Securities Trading Act in connection with the offer and
listing of new Shares in International Gold Exploration IGE AB (“International Gold Exploration” or the “Company”),
as defined and described herein. The New Shares are issued pursuant to the resolution by the General Meeting on 26
November 2008.
The Prospectus has been approved by Oslo Børs pursuant to Section 7-7 of the Securities Trading Act. The information
contained herein is as of the date hereof and is subject to change, completion and amendment without notice. There may
have been changes in matters affecting the Company subsequent to the date of this Prospectus. Any new factor or
significant error or inaccuracy in the Prospectus capable of affecting an assessment of the New Shares arising after the
publication of this Prospectus and before the New Shares are listed on Oslo Stock Exchange will be published as a
supplement to this Prospectus in accordance with applicable regulations in Norway. The delivery of this Prospectus
shall under no circumstances create any implication that the information contained herein is complete or correct as of
any time subsequent to the date hereof.
All inquiries relating to this Prospectus or the matters addressed herein should be directed to the Company or the
Manager. No persons other than those described in this Prospectus have been authorized to disclose or disseminate
information about this Prospectus or about the matters addressed in this Prospectus. If given, such information may not
be relied upon as having been authorized by the Company. Norwegian law shall govern this Prospectus, and any
disputes relating to this Prospectus or the listing of New Shares are subject to the sole jurisdiction of Norwegian courts,
with Oslo District Court as legal venue.
Selling Restrictions
This document constitutes a Prospectus for the purpose of article 3 of the directive 2003/71/EC (“Prospectus directive”)
and has been prepared in accordance with section 7-3 of the Norwegian Securities Trading Act as amended and the
rules promulgated there under. This Prospectus has been reviewed and approved by the Oslo Stock Exchange pursuant
to the Norwegian Securities Trading Act Section 7-7.
The distribution of the Prospectus may be restricted by law in certain jurisdictions.
The Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any of the securities offered
hereby, by or on behalf of International Gold Exploration, the Manager, any of their respective affiliates or any other
person in any jurisdiction in which it is unlawful for any person to make such an offer or solicitation. Except for the
approval by Oslo Stock Exchange as described above, no action has been taken to permit the distribution of this
Prospectus in any jurisdiction where action would be required for such purposes. Accordingly, the Prospectus may not
be used for the purpose of an offer of or solicitation for any securities in any jurisdiction or in any circumstances in
which such offer or solicitation is not lawful, or authorized. Delivery of this Prospectus to any person or any
reproduction of the Prospectus, in whole or in part, without the Company’s consent is prohibited.
Persons into whose possession this Prospectus may come are required by the Company and the Manager to inform
themselves about, and to observe, all applicable restrictions regarding exercise of rights and subscription of shares.
United States: The New Shares have not been and will not be registered under the U.S. Securities Act of 1933, as
amended, or any state Securities Laws, and may therefore not be offered or sold to U.S. persons as defined in
regulations under the U.S. Securities Act.
Canada: None of the New Shares has been or will be qualified for sale under the Securities Laws of any province or
territory of Canada. The New Shares are not being offered and may not be offered or sold, directly or indirectly, in
Canada or to or for the account of any resident of Canada in contravention of the Securities Laws of any province or
territory thereof.
2
Special Cautionary Notice Regarding Forward-looking Statements
The Prospectus contains certain statements that are neither reported financial results nor other historical information.
Forward-looking statements are statements related to expectations, beliefs, projections, future plans and strategies,
anticipated events or trends and similar expressions concerning matters that are not historical facts. These forwardlooking statements reflect current views about future events and are subject to risks, uncertainties, assumptions and
changes in circumstances that may cause actual results to differ materially from those expressed in any forward-looking
statement. Certain factors that could cause actual results to differ materially from expected results include, among other
things, delays in completing the transactions discussed herein, difficulties in achieving benefits for the group through
economies of scale and joint future efforts, and changes in global economic, business, competitive market and
regulatory factors, as well as other matters not known to IGE. IGE does not intend and disclaims any duty or obligation
to update or revise any industry information or forward-looking statements set forth in the Prospectus to reflect new
information, future events or otherwise.
3
1
EXECUTIVE SUMMARY
This executive summary should be read as an introduction to the Prospectus and any decision to invest in International
Gold Exploration IGE AB should be based on consideration of the Prospectus as a whole by the investor, including the
documents incorporated as reference and the risks of investing in the International Gold Exploration Share set out in
“Risk Factors”. Where a claim relating to the information contained in this Prospectus is brought before a court, the
plaintiff might under the applicable legislation have to bear the costs of translating the Prospectus before the legal
proceedings are initiated. Civil liability attaches to the Board of Directors of IGE who has tabled this summary
including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or
inconsistent when read together with the other parts of the Prospectus.
1.1
Description of the Company
The legal entity of IGE was founded in Sweden 1983. The current activities of the Company have been
carried out since 1988. The Company changed its name to International Gold Exploration IGE AB during
1989.The Company operations consisted of small scale exploration during the initial years. The shares were
listed on the Oslo Stock Exchange in 1997 under the symbol “IGE”. The listing in Norway was a natural
choice given the location of its activities. Norway has solid and long lasting history in the exploration and
mining business. As the interest and profitability in global exploration and mining increased, so did the
interest from the Swedish venture capital market. In the spring of 2005, International Gold Exploration IGE
AB listed its shares on the NGM Stockholm Stock Exchange in Sweden under the symbol “IGE”.
International Gold Exploration IGE AB is a Swedish public limited liability company registered with the
Swedish Companies Registration Office under the registration number 556227-8043. The Company is
regulated by the Swedish Limited Companies Act. The articles of association are included in Appendix 1 to
this Prospectus. International Gold Exploration has its head office at Kungsgatan 44, SE-111 35 Stockholm,
Sweden, with telephone +46 (0)8 20 46 09 and facsimile +46 (0)8 611 57 63.
The Company has projects and properties within Angola, Kenya, Burundi, Sweden and Norway. The group
structure consists of a parent company with subsidiaries responsible for the exploration and development
activities within each geographical line of business.
4
The minerals and metal operations of IGE are in continuous development, and currently comprise a portfolio
of diamond, gold and base metal resources:
Projects
IGE Ownership (%)
Resources
Historical resources
IGE Diamonds
Luxinge (Di)
Alluvial/Kimberlite
31.5% / 30.75%
n/a
Alluvials; Indicated resources:
249,151 carats /Inferred: 759,000
carats
Lacage (Di)
40% / 43%
n/a
Luanguinga (Di)
35% / 43%
n/a
Cariango (Di)
40% / 43%
n/a
IGE Africa
Mukanda (V)
100%
n/a
17M tonnes @ 0.64% V (currently
being re-confirmed under NI43101), cut off 0.2% V
Butara (Au)
100%
n/a
Numerous alluv. Deps
Kilimapesa (Au)
50% (Goldplat Plc 50%)
n/a
51,648 tonnes @ 2.52 g/t Au
SW Kenya
100%
n/a
NW Kenya
100%
n/a
IGE Nordic
Rönnbäcken (Ni)
100%
Nickel
Bidjovagge (Au-Cu)
90% (Geologiske Tjenester A/S
10%)
Gold-Copper
Mjölkfjället (Ni)
100%
n/a
5M tonnes @ 1% Ni
1.16 Mt grading 1.09% copper
and 3.72 g/t gold
The Board of Directors is comprised of Carl Ameln (chairman), Ole Jørgen Fredriksen, Ulrik Jansson, Lars
Olof Nilsson and Uta Stoltenberg.
The management team of IGE is comprised of Tomas Fellbom (CEO) and Thomas Carlsson (CFO).
As at the date of this Summary, the Group has a total of 105 employees.
The Shares are identical in every respect and carry the right to one vote at general meetings. None of the
major shareholders have different voting rights. There are neither restrictions on the transferability of the
Shares nor any restrictions on foreign ownership of the Company’s Shares.
336,335,064 of the Shares of International Gold Exploration are listed on the Oslo Stock Exchange with the
ticker IGE with a traded share price of NOK 0.46 and a market capitalisation of approximately NOK 172.5
million as per 29 October 2008. The remaining 38,664,936 Shares are admitted to trading on the NGM
Equity exchange in Sweden with the ticker IGE. The Consideration Shares according to the Offer will be
listed on the Oslo Stock Exchange.
As far as the Company is aware of, there is no natural or legal person which directly or indirectly has a
shareholding in the Company above 10 %.
The Company’s share register is operated through the VPS in Norway and through the VPC in Sweden.. The
Company’s registrar is DnB NOR Bank ASA. The securities number (ISIN number) for the Company’s
Shares is SE 000378119.
The Company’s statutory auditor is Ernst & Young AB with the auditor Jaan Kubja as head auditor.
5
1.2
Selected consolidated financial information
The selected financial information set forth in this Prospectus should be read in conjunction with the
financial statements and the notes to those statements available at www.ige.se and section 20 of the
Registration Document dated 1 December 2008.
As a mining company IGE will be developed with integrated activities within exploration, production and
sales of high-end industrial minerals and metals. Business development with the purpose to expand
operations and develop new activity has prioritized attention. The Company evaluates structural options as
well as organic growth for its current projects. The goal is to increase operational activity and develop a
balanced portfolio of activities that can provide an operational cash flow as early as possible.
The following tables show consolidated financial information for IGE as for the annual years 2007, 2006 and
2005 as well as financial information for the first nine months and the third quarter of 2008 with comparable
numbers for the same period of 2007.
Consolidated Income Statement
(SEK '000)
Sales
Q3
Q3
Q1-Q3
2008
2007
2008
IFRS
IFRS
IFRS
Unaudited Unaudited Unaudited
Full Year Full Year Full Year
2007
2006
2005
IFRS
IFRS
IFRS
Audited
Audited Audited
-
23,731
-
-
-
293
-5,924
-5,318
-125
1
-9,773
-7,131
-10,684
-21,144
-19,635
-3,854
-3,152
-21,798
-15,461
-11,016
-31,824
-22,887
-11,312
-60
-19,043
-9,009
-1,281
-39
-7,739
-3,803
-4,137
-1,299
-11,367
-27,587
-47,785
-48,275
-66,023
-29,393
-17,017
2,417
-27,587
-24,054
-48,275
-66,023
-29,393
-16,724
-1,975
-326
-1,783
3,240
3,494
-7,011
-6,483
Earnings before tax
442
-27,913
-25,837
-45,035
-62,529
-36,404
-23,207
Tax
-
Net profit / (loss)
442
Change in stock
Other external expenses
Personnel expenses
Other operating expenses
Depreciations and write downs
Total operating expenses
EBIT
Net financials
Profit to Equity holders of the Parent Company
Minority interest
Profit for the period
Earnings per share attributable to Equity holders
of the Parent company before and after dilution
13,784
Q1-Q3
2007
IFRS
Unaudited
-
-
-
-
-
-
-27,913
-25,837
-45,035
-62,529
-36,404
-23,207
1,490
-
-24,918
-
-61,715
-36,404
-
-1,048
-814
442
-27,913
-23,207
0.001
-0.082
-0.087
6
-919
-25,837
-45,035
-62,529
-36,404
-0.074
-0.132
-0.181
-0.116
Consolidated Balance Sheet
(SEK '000)
Assets
Intangible fixed assets
Mineral interests
Tangible fixed assets
Plant and machinery
Long-term financial assets
Shares in associated companies
Receivables on associated companies
Long-term receivables
Total non-current assets
Inventory
Accounts receivables
Other receivables
Prepaid expenses and accrued income
Short term investments
Cash and cash equivalents
Total current assets
Total assets
Q1-Q3
2008
IFRS
Unaudited
Q1-Q3
2007
IFRS
Unaudited
Full Year
2007
IFRS
Audited
Full Year
2006
IFRS
Audited
Full Year
2005
IFRS
Audited
109,091
78,261
85,624
65,328
46,473
44,823
3,161
6,274
2,009
1,162
26,192
1,730
38,001
219,837
106
81,528
27,000
118,898
103
67,440
101
47,736
23
3,403
5,669
5,401
70,294
84,790
16
327
1,461
24,663
10,717
60,561
97,745
16
871
3,967
2,313
9,807
127,827
144,801
16
218
1,594
12,502
5,006
136,674
156,010
75
435
2,875
1,222
23,625
54,807
83,039
304,627
179,273
263,699
223,450
130,775
18,750
323,283
1,223
-100,602
32,313
274,967
17,050
268,102
2,882
-114,197
173,837
17,050
268,102
2,548
-75,685
32,884
244,899
17,050
268,102
2,118
-69,162
218,108
15,550
137,642
427
-32,760
120,859
(SEK '000)
Equity and liabilities
Equity attributable to equity holders of the parent company
Share capital
Other capital-contribution
Reserves
Retained earnings and profit for the period
Minority interest
Total equity
Interest bearing long-term debt
Total long-term liabilities
16,891
16,891
-
-
-
-
Account payables
Accrued expenses and prepaid income
Other liabilities
Total short term liabilities
Total liabilities
7,017
4,822
930
12,769
29,660
1,016
2,781
1,639
5,436
5,436
10,772
5,880
2,148
18,800
18,800
1,785
2,012
1,545
5,342
5,342
5612
935
3,369
9,916
9,916
Total equity and liabilities
1.3
304,627
179,273
263,699
223,450
130,775
Capitalisation and indebtedness
As of 30 September 2008 IGE had SEK 70.3 million in cash and no interest bearing debt including first
year’s amortization of long-term debt. A more extensive description of the capitalisation and indebtedness
can be found in chapter 11 in the Registration Document.
1.4
Significant changes
There have been no significant changes in the financial or trading position of the group which has occurred
since 30 September 2008, other than the Voluntary Offer for all issued and outstanding shares in IGE Nordic
described in the Securities Note and the convertible loan completed 5 November 2008 (described in the press
release dated 5 November 2008 and the Q3 2008 report). Reference is further made to other notifications
published by the Company on Oslo Stock Exchange. To the best of International Gold Exploration’s
knowledge, there have been no other events subsequent to 30 September 2008 that would significantly
change the financial or trading position presented in this Summary.
7
1.5
Share capital
The Company’s Share Capital prior to the Voluntary Offer and the issue of the Consideration Shares is SEK
18,750,000 divided into 375,000,000 Shares, each with a par value of SEK 0.05.
The number of Shares in International Gold Exploration following the completion of the Voluntary Offer,
and therefore the issued share capital of International Gold Exploration, will depend on the number of IGE
Nordic shareholders accepting the Voluntary Offer. Provided that all shareholders of IGE Nordic tender all
their shares under the Voluntary Offer, the issued share capital of International Gold Exploration will be
increased by SEK 1,363,208 by issuance of 27,264,168 new Shares, each Share with a par value of SEK 0.05
resulting in an aggregate share capital of SEK 20,113,208.40.
All Shares of the Company are of the same class of shares and equal in all respects Each Share carries the
right to one vote in the general meetings. The Company’s Articles of Association does not provide for
limitations on the transferability or ownership of Shares.
The Company’s share register is operated through the Swedish Central Securities Depositary (the “VPC”). In
order for the Shares to be listed on the Oslo Stock Exchange the Company has opened a Norwegian Branch
Register in the Norwegian Securities Depositary (the “VPS”) through a Registrar Agreement with DnB NOR
Bank ASA. The Company’s Branch Registrar is DnB NOR Bank ASA. For further information on the
Registrar Agreement, Branch Register and the impact this arrangement may have for the shareholders, please
refer to section 5 in the Securities Note. The international securities number (ISIN number) for the
Company’s Shares is SE 000378119.
1.6
Summary of the Voluntary Offer
The terms of the Offer and issue of the Consideration Shares can be summarised as follows:
Publication of the Voluntary Offer
28 November 2008
Offeror
International Gold Exploration IGE AB (publ.)
Target company
IGE Nordic AB (publ.)
Offer Price
NOK 1.84 per IGE Nordic share to be settled in kind
by way of exchanging one (1) share in IGE Nordic
with four (4) Shares in International Gold Exploration
each with a par value of SEK 0.05.
Offer Period
1 December 2008 to 15 December 2008 at 17.30
(CET)
Acceptance Forms to be delivered
Handelsbanken Capital Markets
Rådhusgaten 27
0101 Oslo, Norway
Fax +47 22 94 07 68
Expected registration of the share capital increase in
the Swedish Companies Register
On or about 23 December 2008
Expected delivery of Consideration Shares to the VPS
accounts of the subscribers
On or about 2 January 2009
Expected admission to trading of the Consideration
Shares on Oslo Stock Exchange
On or about 3 January 2009
Number of Shares before the Offer and the issue of the
Consideration Shares
375,000,000 Shares, each with a nominal value of SEK
0.05
8
Number of Shares after the Offer and the issue of the
Consideration Shares
Up to 402,264,168 Shares each with a nominal value
of SEK 0.05
Dilution
The dilutive effect in connection with the Offer and the
issue of the Consideration Shares will be
approximately 6.8 percent, provided that all
shareholders of IGE Nordic tender all their shares
under the Voluntary Offer.
Expenses of the Offer
Approximately NOK 1.74 million
Conditions for the Offer
(i)
that the Offeror receives valid acceptances
from IGE Nordic shareholders for a number
of IGE Nordic shares, which together with the
IGE Nordic shares already hold by the Offeror
aggregate to more than 90 % of the share
capital and votes in IGE Nordic (on a fully
diluted basis); and
(ii)
that prior to completion of the Offer, there are
no changes, events, violations, circumstances
or effects that were not known to the Offeror
at the time of the Offer and are, or with the
lapse of time, reasonably expected to become,
materially adverse to the financial conditions
or results or operations of IGE Nordic; and
(iii)
that legislation and other regulations, court
and
authority
decisions
or
similar
circumstances, which are beyond the
Offeror’s control and which the Offeror could
not reasonably have foreseen at the time of
the Offer, must not make the completion of
the Offer or the acquirement of IGE Nordic
completely or partly impossible or make such
completion significantly difficult.
Manager
Handelsbanken Capital Markets
9
1.7
Major shareholders
A summary of the Company’s largest shareholders as of 20 November 2008 is set out below.
The 20 largest shareholders on the Oslo Stock Exchange:
Shareholder
SKANDINAVISKA ENSKILDA BANKEN
SIS SEGAINTERSETTLE AG 25PCT
ARCTIC SECURITIES ASA MEGLERKONTO
NORDNET SECURITIES BANK AB
SILVERCOIN INDUSTRIES AS
DRESDNER BANK AG LONDON BRANCH
HOLEN GUNNAR
NORDISK INDUSTRIUTVIKLING AS
DANSKE BANK A/S
FLATÅS KARL MARTIN
SÆTER HAAKON MORTEN
DRAGE INDUSTRIES AS V/ARNE STEEN
SAMSARA MANAGEMENT AS
OA HELGE MARTIN
AG INVEST AS
PHAM HUNG QUAN
MACE INVEST AS
SVENSKA HANDELSBANKEN STOCKHOLM
CITIBANK, N.A
OTIUM FINANS AS
Country
SWE
CHE
NOR
SWE
NOR
DEU
NOR
NOR
DNK
NOR
NOR
NOR
NOR
NOR
NOR
NOR
NOR
SWE
GBJ
NOR
Total 20 largest shareholders
Others
Total number of shares
%
3.56%
2.81%
1.87%
1.24%
1.18%
1.17%
1.15%
1.11%
0.98%
0.92%
0.76%
0.69%
0.67%
0.67%
0.63%
0.59%
0.59%
0.58%
0.57%
0.53%
No. of shares
13,351,658
10,530,289
7,000,000
4,638,014
4,429,000
4,380,000
4,300,000
4,148,000
3,662,503
3,440,000
2,840,000
2,598,000
2,510,000
2,500,000
2,380,000
2,215,000
2,200,000
2,161,377
2,121,500
2,000,000
22.2%
83,405,341
77.8 %
291,594,659
100.0 %
375,000,000
The 5 largest shareholders on NGM Stockholm Stock Exchange:
Shareholder
USB INVESTMENTS
SEB SECURITIES
SVENSKA HANDELSBANKEN AB
NORDNET SECURITIES
SWEDBANK AB
Total 5 largest shareholders
Others
Total number of shares
1.8
Country
SWE
SWE
SWE
SWE
SWE
%
3.56%
1.94%
0.66%
0.63%
0.54%
7.3%
92.7 %
100.0 %
No. of shares
13,365,500
7,290,805
2,483,881
2,369,041
2,039,020
27,548,247
347,451,753
375,000,000
Related party transactions
As at the date of this Prospectus, the Company is a party to the following agreements with related parties:
The Company is renting a storeroom of PA Resources AB and during periods, office services and rent of
office space. PA Resources is a related party due to its Managing Director Ulrik Jansson, who is a member of
the board in the Company. During 2007 PA has invoiced the Company an amount of SEK 72,000, During
2006 IGE paid PA Resources an amount of SEK 255,000 and for 2005 SEK 835,708 for the above
mentioned services.
In 2006 former member of the Board of Directors, Bill Sundberg invoiced the Company an amount for SEK
47,000 for work related to the preparation of the Annual report 2006. During 2005 the Company paid about
SEK 51,000 for this service to Bill Sundberg.
A member of the Company’s former Advisory Board, Göran Pettersson, invoiced the Company an amount of
SEK 559,000 during 2005 for services related to geology and exploration.
10
The above mentioned transactions were based on the principle of “arms length” pricing.
There were no other related party transactions for the period of 2005 to 2007.
1.9
Research and development, patents and licences
The main investments in IGE relate to the exploration and development of the licences owned by the
Company, as well as acquisition of new licences. These investments have been significant, and they have
been related to the costs of external consultants etc mainly connected to the Lacage and Luxinge diamondprojects in Angola and the projects; Rönnbäcken, Bidjovagge and Stekenjokk in Scandinavia.
Patents and licenses
The Company is not dependent on any patents or technical licenses, industrial or financial contracts or new
manufacturing processes. The Company is, however, dependent on various mining rights such as exploration
licenses in order to conduct exploration and obtain exploitation concessions and subsequent environmental
permits in order to extract mineral resources from the assets of the Group. The conditions of the license
agreements vary to some extent depending on in which country it is located. In Angola, for instance, the
license will automatically be transformed into a mining licence if the operator of the contract fulfils the
requirements according to the exploration licence. In the Nordic regions the operator has to apply for
exploitation concessions, which are conditioned by, amongst others, that various environmental permits have
been received.
The Company has paid investment guarantees for four licenses by the end of the second Quarter 2008:
Lacage, Luanguinga, Cariango and Luxinge.
1.10 Trends
The Company has not experienced any significant changes or trends outside the ordinary course of business
that are significant to the Company after 31 December 2007 or for the financial year 2008 as at the date of
this Prospectus, other than those described in this Prospectus.
1.11 Summary of Risk Factors
Any investment in shares involves risk. The Company’s financial development and the value of the
Company’s shares may be affected by a number of risk factors, including, but not limited to, market risks,
financial risk and operational risk in relation to the exploration and development of minerals/metals and gold
resources and geo-science technological developments. Readers of this Prospectus should carefully consider
all of the information contained herein and in particular the following factors, which may affect some or all
of the Company’s activities and which may impact the risk of investing in the Company’s Shares. This list is
not exhaustive. The actual results of the Company could differ materially from those anticipated as a
consequence of many factors, including the summary of risk factors described below and risks described
elsewhere in this Prospectus:
•
•
•
Mineral exploration involves a high degree of risk, and few properties that are explored, are
ultimately developed into producing mines. The long-term profitability of the Company will in part
depend on the cost and success of its exploration programs.
The Company has no control over mineral or metal prices, which can be affected by numerous
factors like international economic and political development etc.
The current and future operation of the Company will, from time to time, require permits and
licences from governmental authorities, as well as political approval. There is no assurance that
International Gold Exploration will be successful in obtaining such permits, licenses and approvals.
11
•
•
The development of IGE’s properties will depend upon the Company’s ability to obtain financing
through equity financing, debt financing, project financing or other means. There is no assurance
that IGE will be successful in obtaining the required financing.
The Company’s operations are subject to the environmental regulation in jurisdictions where it
operates.
The follow risk factors are described further in section 1 in the Registration Document:
• General risks
• Risks connected to exploration and development of minerals and metals
• Risks connected to technological developments
• Regulatory and political risks
• Risks related to the Shares
1.12 Articles of association
The articles of association of International Gold Exploration IGE AB are included in Appendix 1 to this
Registration Document.
According to its Articles of Association section 3, the purpose of the company is, directly or through
subsidiaries or joint ventures, to carry on mining activities and exploration of minerals, and to own and
manage movable and real property, and activities connected with such.
The Company has one class of shares only. According to the Articles of Association section 6 the Board of
Directors shall have at least 3 and maximum 6 members.
The Articles of Association of the Company contain no provisions restricting foreign ownership of Shares.
There are no limitations under Swedish law on the rights of non-residents or foreign owners to hold or vote
the Shares.
1.13 Document on display
The documents listed below will be available for inspection for the life of the Prospectus on the Internet at
www.ige.se, or at the addresses below:
(a) the memorandum and articles of association of the issuer;
(b) all reports, letters, and other documents, historical financial information, valuations and
statements prepared by any expert at the issuer's request any part of which is included or referred to
in the registration document;
(c) the historical financial information of the issuer or, in the case of a group, the historical financial
information for the issuer and its subsidiary undertakings for each of the two financial years
preceding the publication of the registration document.
The Company's office: International Gold Exploration IGE AB
Kungsgatan 44
SE-111 35 Stockholm, Sweden
The Manager's offices: Handelsbanken Capital Markets
Rådhusgaten 27
N-0101 Oslo, Norway
12
I. SAMMANFATTNING
INTERNATIONAL GOLD EXPLORATION IGE AB (PUBL)
28 NOVEMBER 2008
INNEHÅLLSFÖRTECKNING
1
SAMMANFATTNING .............................................................................................................4
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
Beskrivning av Bolaget....................................................................................................... 4
Utvald finansiell information.............................................................................................. 6
Eget kapital och skuldsättning ............................................................................................ 7
Väsentliga förändringar ...................................................................................................... 7
Aktiekapital......................................................................................................................... 8
Sammanfattning av Erbjudandet......................................................................................... 8
Större aktieägare ............................................................................................................... 10
Transaktioner med närstående .......................................................................................... 10
Forskning och utveckling, patent och licenser.................................................................. 11
Utvecklingstendenser........................................................................................................ 11
Sammanfattning av riskfaktorer........................................................................................ 11
Bolagsordning................................................................................................................... 13
Tillgängliga dokument...................................................................................................... 13
1
Viktigt
Denna Sammanfattning (vilken gemensamt med Registreringsdokument och Värdepappersdokument nedan kallas
”Prospektet”) har upprättats i enlighet med § 7-3 i den norska lagen om värdepappershandel i samband med
Erbjudandet och noteringen av Nya Aktier i International Gold Exploration IGE AB (“IGE” eller “Bolaget”), enligt
definition och beskrivning i Prospektet. De Nya Aktierna emitterades efter beslut vid extra bolagsstämma den 26
november 2008.
Prospektet har godkänts av Oslo Börs enligt § 7-7 i lagen om värdepappershandel. Informationen i Prospektet är
aktuell på dagen för offentliggörandet och kan ändras eller kompletteras utan föregående meddelande. Det kan ha
inträffat förändringar i faktorer som påverkar Bolaget efter Prospektets offentliggörande. Eventuella nya faktorer
eller väsentliga fel eller oriktigheter i Prospektet som kan påverka värderingen av de Nya Aktierna och som
uppkommer efter offentliggörandet av Prospektet, men innan de Nya Aktierna noterats på Oslo Börs, kommer att
publiceras i form av ett tillägg till Prospektet, i enlighet tillämpliga norska regelverk. Offentliggörandet av
Prospektet ska inte under några omständigheter tolkas som att informationen i Prospektet är fullständig eller
komplett vid någon tidpunkt efter dagen för offentliggörandet.
Förfrågningar rörande Prospektet eller de frågor som behandlas i Prospektet hänvisas till Bolaget eller Managern.
Ingen person utöver de i Prospektet angivna har rätt att utlämna eller sprida information om Prospektet eller om de
frågor som behandlas i Prospektet. Om så sker kan mottagaren inte förlita sig på att informationen har godkänts av
Bolaget. Norsk lag ska gälla för Prospektet och tvist angående Prospektet eller noteringen av de Nya Aktierna ska
avgöras av Oslo tingsrätt.
Försäljningsrestriktioner
Detta dokument utgör ett Prospekt i den mening som avses i artikel 3 i direktivet 2003/71/EG (”Prospektdirektivet”)
och har upprättats i enlighet med § 7-3 i den norska lagen om värdepappershandel i dess aktuella lydelse och
därunder promulgerade regler. Prospektet har granskats och godkänts av Oslo Börs i enlighet med § 7-7 i lagen om
värdepappershandel.
Distribution av Prospektet kan i vissa rättsordningar vara förbjuden enligt lag.
Prospektet innebär inte ett erbjudande att sälja, eller en inbjudan att köpa, något av de värdepapper som erbjuds
enligt Prospektet, från IGE, Managern, någon av deras respektive närstående eller annan, eller för någon av dessas
räkning, i någon rättsordning där det strider mot lag att utställa ett sådant erbjudande eller inbjudan. Med undantag
för den ansökan om godkännande av Oslo Börs som anges ovan har inga åtgärder vidtagits som skulle tillåta
distribution av Prospektet i någon rättsordning där sådana åtgärder krävs. Således får Prospektet inte användas i
syfte att utställa erbjudande eller inbjudan avseende något värdepapper, i någon rättsordning eller under några
omständigheter, där sådant erbjudande eller inbjudan strider mot lag eller kräver ett godkännande. Det är förbjudet
att, helt eller delvis, mångfaldiga eller distribuera Prospektet utan Bolagets medgivande.
Bolaget och Managern uppmanar var och en som kan komma att få tillgång till Prospektet att själv informera sig om
och respektera alla tillämpliga begränsningar rörande utövande av rättigheter och tecknande av aktier.
Förenta Staterna: De Nya Aktierna har inte och kommer inte att registreras enligt U.S. Securities Act 1933 i dess
aktuella lydelse, eller någon delstatlig värdepapperslag, och får därför inte erbjudas eller säljas till ”U.S. persons”
såsom dessa definieras enligt U.S. Securities Act.
Kanada: Inga av de Nya Aktierna uppfyller eller kommer att uppfylla kraven för att få säljas enligt
värdepapperslagstiftningen i någon av Kanadas provinser eller något av dess territorier. De Nya Aktierna erbjuds
inte och får inte, direkt eller indirekt, erbjudas eller säljas till person med hemvist i Kanada, eller för dennes räkning,
i strid mot värdepapperslagstiftningen i någon provins eller något territorium i Kanada.
2
Särskild varning angående framtidsinriktade uttalanden
Prospektet innehåller uttalanden som varken är rapporterade finansiella resultat eller annan historisk information.
Framtidsinriktade uttalanden är uttalanden om förväntningar, framtidsplaner och strategier, förväntade händelser
eller trender och åsikter om liknande saker som inte utgör historiska fakta. Dessa framtidsinriktade uttalanden
återspeglar nutida åsikter om framtida händelser och omfattas av risker, osäkerheter, antaganden och ändrade
omständigheter som kan medföra att det verkliga utfallet väsentligen avviker från vad som framförts i dessa
framtidsinriktade uttalanden. Faktorer som kan medföra att faktiskt utfall väsentligen avviker från förväntat utfall
inkluderar bland annat förseningar med genomförandet av de transaktioner som diskuteras i Prospektet, svårigheter
att genom skalfördelar och samriskprojekt uppnå resultat för koncernen, förändringar i den globala ekonomin,
affärsläget, konkurrensen på marknaden, regulatoriska faktorer samt andra faktorer som är okända för IGE. IGE
friskriver sig från allt ansvar för att uppdatera eller revidera branschinformation eller framtidsinriktade uttalanden
som gjorts i Prospektet för att återspegla ny information, framtida händelser eller i övrigt.
3
1
SAMMANFATTNING
Denna sammanfattning ska läsas som en inledning till Prospektet och varje beslut att investera i International Gold
Exploration IGE AB måste baseras på att investeraren överväger Prospektet i sin helhet, inklusive de handlingar
som intagits genom hänvisning, och de risker med att investera i aktier i International Gold Exploration som anges
under “Riskfaktorer”. Om talan väcks vid domstol rörande den information som lämnas i Prospektet kan käranden
enligt den tillämpliga lagstiftningen vara skyldig att bära kostnaderna för översättning av Prospektet innan det
rättsliga förfarandet inleds. Civilrättsligt ansvarar IGE:s styrelse, som har framlagt och offentliggjort denna
sammanfattning, inklusive eventuell översättning, dock endast om sammanfattningen eller översättningen av denna
är vilseledande, felaktig eller oförenlig med de övriga delarna av Prospektet.
1.1
Beskrivning av Bolaget
Den juridiska personen IGE bildades i Sverige 1983. Bolagets nuvarande verksamhet har bedrivits sedan
1988. Bolaget ändrade under 1989 namn till International Gold Exploration IGE AB. Under de första åren
bedrev Bolaget prospektering i mindre skala. Aktierna noterades 1997 på Oslo Börs under kortnamnet
”IGE”. Noteringen i Norge var ett naturligt val med hänsyn till verksamhetens lokalisering. Norge har en
lång och gedigen erfarenhet av prospektering och gruvdrift. När intresset och lönsamheten ökade för
global prospektering och gruvdrift, ökade även intresset från den svenska riskkapitalmarknaden. Våren
2005 noterades International Gold Exploration IGE AB:s aktier på NGM-börsen i Stockholm under
kortnamnet ”IGE”.
International Gold Exploration IGE AB är ett svenskt aktiebolag som är registrerat hos Bolagsverket
under organisationsnummer 556227-8043. Bolaget lyder under den svenska Aktiebolagslagen.
Bolagsordningen ingår i Bilaga 1 till Prospektet. International Gold Exploration AB har sitt huvudkontor
på Kungsgatan 44, SE-111 35 Stockholm, Sverige, telefon +46 (0)8 20 46 09 och fax +46 (0)8 611 57 63.
Bolaget har projekt och marktillgångar i Angola, Kenya, Burundi, Sverige och Norge. Koncernstrukturen
består av ett moderbolag med dotterbolag som ansvarar för prospektering och utvecklingsverksamhet
inom varje geografiskt affärsområde.
4
Mineral- och metallverksamheten inom IGE utvecklas kontinuerligt och består för närvarande av en
portfölj som innehåller diamant-, guld- och basmetalltillgångar:
Projekt
IGEs ägarandel (%)
Resurser
Historiska resurser
IGE Diamanter
Luxinge (Di)
Alluvium/Kimberlite
31.5% / 30.75%
-
Alluvialt; Indikerade resurser:
249.151 karat /sannolika resurser:
759.000 karat
Lacage (Di)
40% / 43%
-
Luanguinga (Di)
35% / 43%
-
Cariango (Di)
40% / 43%
-
IGE Afrika
Mukanda (V)
100%
-
17M ton @ 0,64% V (uppdatering
pågår för att uppfylla kraven i
enlighet med NI 43-101),
brytpunkt 0,2% V
Butara (Au)
100%
-
Div alluviala fyndigheter
Kilimapesa (Au)
50% (Goldplat Plc 50%)
-
51,648 ton @ 2,52 g/t Au
SW Kenya
100%
-
NW Kenya
100%
-
IGE Norden
Rönnbäcken (Ni)
100%
Nickel
Bidjovagge (Au-Cu)
90% (Geologiske Tjenester A/S
10%)
Guld-Koppar
Mjölkfjället (Ni)
100%
inte angiven
5M ton med 1% Ni
1,16 Mt innehållande 1,09 %
koppar och 3,72 g/t guld
Styrelsen består av Carl Ameln (ordförande), Ole Jørgen Fredriksen, Ulrik Jansson, Lars Olof Nilsson och
Uta Stoltenberg.
IGE:s ledningsgrupp består av Tomas Fellbom (CEO) and Thomas Carlsson (CFO).
Vid tidpunkten för offentliggörandet av denna sammanfattning har koncernen totalt 105 anställda.
Aktierna medför i alla avseenden samma rätt och har vardera en röst på bolagsstämma. Ingen av de större
aktieägarna har olika rösträtt. Det föreligger inga restriktioner för överlåtelse av Aktierna eller för
utländskt ägande av Bolagets Aktier.
336.335.064 av aktierna i International Gold Exploration är noterade på Oslo Börs under kortnamnet IGE.
Den 29 oktober 2008 uppgick aktiekursen till NOK 0,46 och börsvärdet till cirka 172,5 MNOK.
Återstående 38.664.936 aktier handlas på NGM-börsen i Sverige under kortnamnet IGE. Utbytesaktierna
enligt Erbjudandet kommer att noteras på Oslo Börs.
Såvitt Bolaget känner till har ingen fysisk eller juridisk person ett direkt eller indirekt ägande i Bolaget
som överstiger 10%.
Bolagets aktiebok förs av VPS i Norge och av VPC i Sverige, Bolagets kontoförande institut är DnB
NOR Bank ASA. Värdepapperskoden (ISIN-kod) för Bolagets aktier är SE 000378119.
Bolagets revisorer är Ernst & Young AB och huvudrevisor är Jaan Kubja.
5
1.2
Utvald finansiell information
Den utvalda finansiella information som anges i Prospektet ska läsas i förening med de årsredovisningar
och noter till dessa som finns tillgängliga på www.ige.se, samt punkt 20 i Registreringsdokumentet av den
1 december 2008.
Som gruvbolag kommer IGE att utvecklas genom att integrera aktiviteter inom prospektering, produktion
och försäljning av högvärdiga industriella mineraler och metaller. Affärsutveckling för att expandera
verksamheten och utveckla nya aktiviteter har högsta prioritet. Bolaget utvärderar olika strukturella
alternativ och organisk tillväxt för sina nuvarande projekt. Målet är att öka aktiviteten i verksamheten och
utveckla en balanserad portfölj med aktiviteter som på ett tidigt stadium genererar ett kassaflöde från
rörelsen.
Följande tabeller visar IGE:s koncernmässiga finansiella ställning för räkenskapsåren 2007, 2006 och
2005, samt finansiell information för det första nio månaderna 2008, med jämförelsetal för motsvarande
period 2007.
Koncernresultaträkning
(SEK '000)
Omsättning
Q3
2008
IFRS
Oreviderad
Q1-Q3
2008
IFRS
Oreviderad
Q1-Q3
Hela året
Hela året
Hela året
2007
2007
2006
2005
IFRS
IFRS
IFRS
IFRS
Oreviderad Reviderad Reviderad Reviderad
-
23,731
-
-
-
293
-5,924
-5,318
0
-125
1
-9,773
-7,131
-10,684
-21,144
-19,635
-3,854
-3,152
-21,798
-15,461
-11,016
-31,824
-22,887
-11,312
-60
-19,043
-9,009
-1,281
-39
-7,739
-3,803
-4,137
-1,299
-11,367
-27,587
-47,785
-48,275
-66,023
-29,393
-17,017
2,417
-27,587
-24,054
-48,275
-66,023
-29,393
-16,724
-1,975
(326)
-1,783
3,240
3,494
-7,011
-6,483
Resultat före skatt
442
-27,913
-25,837
-45,035
-62,529
-36,404
-23,207
Skatt
-
Årets resultat / (förlust)
442
Ändring i varulager
Övriga externa kostnader
Personalkostnader
Övriga rörelsekostnader
Avskrivningar och nedskrivningar
Summa rörelsekostnader
EBIT
Finansiellt netto
13,784
Q3
2007
IFRS
Oreviderad
-
-
-
-
-
-
-27,913
-25,837
-45,035
-62,529
-36,404
-23,207
-24,918
-
-61,715
-36,404
-
-814
-23,207
-0.087
1,490
-
Minoritetsintresse
-1,048
Periodens resultat
442
-27,913
0.001
-0.082
Resultat hänförligt till moderbolagets aktieägare
Resultat hänförligt till moderbolagets aktieägare
före och efter utspädning
6
-919
-25,837
-45,035
-62,529
-36,404
-0.074
-0.132
-0.181
-0.116
Koncernbalansräkning
Q3
2008
IFRS
Oreviderad
(SEK '000)
Tillgångar
Immateriella anläggningstillgångar
Mineralintressen
Materiella anläggningstillgångar
Maskiner och inventarier
Långfristiga finansiella tillgångar
Aktier i koncernbolag
Fordringar på koncernbolag
Långfristiga fordringar
Summa anläggningstillgångar
Lager och pågående arbeten
Kundfordringar
Övriga fordringar
Förutbetalda kostnader och upplupna intäkter
Kortfristiga placeringar
Likvida medel
Summa omsättningstillgångar
Summa tillgångar
Q3
Hela året
Hela året
Hela året
2007
2007
2006
2005
IFRS
IFRS
IFRS
IFRS
Oreviderad Reviderad Reviderad Reviderad
109,091
78,261
85,624
65,328
46,473
44,823
3,161
6,274
2,009
1,162
26,192
1,730
38,001
219,837
106
81,528
27,000
118,898
103
67,440
101
47,736
23
3,403
5,669
5,401
70,294
84,790
16
327
1,461
24,663
10,717
60,561
97,745
16
871
3,967
2,313
9,807
127,827
144,801
16
218
1,594
12,502
5,006
136,674
156,010
75
435
2,875
1,222
23,625
54,807
83,039
304,627
179,273
263,699
223,450
130,775
18,750
323,283
1,223
-100,602
32,313
274,967
17,050
268,102
2,882
-114,197
173,837
17,050
268,102
2,548
-75,685
32,884
244,899
17,050
268,102
2,118
-69,162
218,108
15,550
137,642
427
-32,760
120,859
(SEK '000)
Eget kapital och skulder
Eget kapital hänförligt till moderbolagets aktieägare
Aktiekapital
Övrigt tillskjutet kapital
Reserver
Balanserat resultat inklusive periodens resultat
Minoritetsintresse
Summa eget kapital
Räntebärande långfristiga skulder
Summa långfristiga skulder
16,891
16,891
-
-
-
-
Leverantörsskulder
Upplupna kostnader och förutbetalda intäkter
Övriga skulder
Summa kortfristiga skulder
Summa skulder
7,017
4,822
930
12,769
29,660
1,016
2,781
1,639
5,436
5,436
10,772
5,880
2,148
18,800
18,800
1,785
2,012
1,545
5,342
5,342
5612
935
3,369
9,916
9,916
Summa eget kapital och skulder
1.3
304,627
179,273
263,699
223,450
130,775
Eget kapital och skuldsättning
Per den 30 september 2008 hade IGE 70,3 MSEK i likvida medel och inga räntebärande skulder,
inklusive första årets amortering på långfristiga skulder. En utförligare beskrivning av finansiering och
skuldsättning återfinns i kapitel 11 i Registreringsdokumentet.
1.4
Väsentliga förändringar
Det har inte inträffat några väsentliga förändringar i bolagets finansiella eller affärsmässiga ställning efter
den 30 september 2008, utöver det bud på samtliga utestående aktier i IGE Nordic som beskrivs i
Värdepappersdokumentet och det konvertibla lån som upptogs den 5 november 2008 (se pressrelease
daterad den 5 november 2008 och delårsrapporten för tredje kvartalet 2008). Vi hänvisar även till den
övriga information som Bolaget offentliggjort på Oslo Börs. Enligt IGE:s kännedom har det inte efter den
30 september 2008 inträffat några andra händelser som väsentligt skulle påverka den finansiella och
affärsmässiga ställning som presenterats i denna sammanfattning.
7
1.5
Aktiekapital
Bolagets aktiekapital uppgår före Erbjudandet och emissionen av Utbytesaktierna till SEK 18.750.000,
fördelat på 375.000.000 aktier å vardera med ett kvotvärde om SEK 0,05.
Antalet Aktier i International Gold Exploration efter det att Erbjudandet fullföljts och därmed det
emitterade aktiekapitalet i International Gold Exploration, är beroende av hur många av IGE Nordics
aktieägare som accepterar Erbjudandet. Om samtliga aktieägare i IGE Nordic skulle utbyta alla sina
aktier enligt Erbjudandet, kommer det emitterade aktiekapitalet i International Gold Exploration att öka
med SEK 1.363.208 genom emission av 27.264.168 nya aktier å vardera med ett kvotvärde om SEK 0,05,
vilket skulle resultera i ett totalt aktiekapital på SEK 20.113.208:40.
Samtliga Aktier i Bolaget är av samma aktieslag och i alla avseenden likaberättigade. Varje Aktie medför
rätt till en röst på bolagsstämma. Bolagets bolagsordning innehåller inte några begränsningar av rätten att
överlåta eller äga Aktierna.
Bolagets aktiebok förs av den centrala svenska värdepappersförvararen (VPC). För att Aktierna ska kunna
noteras på Oslo Börs har Bolaget öppnat ett norskt filialregister hos den norska värdepappersförvararen
(”VPS”) genom ett kontoföraravtal med DnB NOR Bank ASA. Bolagets kontoförare är DnB NOR Bank
ASA. För ytterligare information om kontoföraravtalet och dess betydelse för aktieägarna hänvisas till
punkt 5 i Värdepappersdokumentet. Den internationella värdepapperskoden (ISIN-kod) för Bolagets
aktier är SE 000378119.
1.6
Sammanfattning av Erbjudandet
Villkoren för Erbjudandet och för emissionen av Utbytesaktierna kan sammanfattas enligt nedan:
Offentliggörande av Erbjudandet
28 november 2008
Budgivare
International Gold Exploration IGE AB (publ)
Målbolag
IGE Nordic AB (publ)
Pris per aktie
NOK 1,84 för varje aktie i IGE Nordic att erläggas
såsom tillskott/apport genom utbyte av en (1) aktie i
IGE Nordic mot fyra (4) aktier i International Gold
Exploration med kvotvärde SEK 0,05 vardera.
Acceptperiod
1 december 2008 till 15 december 2008 kl. 17.30
(CET)
Anmälningssedel ska sändas till
Handelsbanken Capital Markets
Rådhusgaten 27
0101 Oslo, Norge
Fax +47 22 94 07 68
Förväntad registrering av aktiekapitalsökningen hos
Bolagsverket
Beräknad redovisning av
aktietecknarnas VPS-konton.
Utbytesaktierna
Omkring den 23 december 2008
på
Omkring den 2 januari 2009
Beräknat upptagande av Utbytesaktierna till handel på
Oslo Börs
Omkring den 3 januari 2009
Antal aktier före Erbjudandet och emissionen av
Utbytesaktierna
375.000.000 aktier med kvotvärde om SEK 0,05
vardera.
8
Antal aktier efter Erbjudandet och emissionen av
Utbytesaktierna
Upp till 402.264.168 aktier med kvotvärde om SEK
0,05 vardera.
Utspädning
Utspädningseffekten i samband med Erbjudandet och
emissionen av Utbytesaktierna kommer att uppgå till
cirka 6,8 procent, under förutsättning att samtliga
aktieägare i IGE Nordic överlåter samtliga sina aktier i
enlighet med Erbjudandet.
Kostnader för Erbjudandet
Cirka 1,74 MNOK
Villkor för Erbjudandet
(i)
Att Erbjudandet accepteras i sådan
utsträckning att Budgivaren, tillsammans med
de aktier i IGE Nordic som redan innehas av
Budgivaren, blir ägare till sammanlagt mer än
90% av aktiekapitalet och rösterna i IGE
Nordic (baserat på full utspädning); och
(ii)
att innan Erbjudandets fullgörande inga
förändringar, händelser, överträdelser eller
andra omständigheter inträffar, som IGE ej
haft kännedom om vid tidpunkten för
Erbjudandet, och som har eller kan skäligen
bedömas ha väsentlig negativ påverkan på
IGE Nordics finansiella ställning, resultat
och/eller verksamhet i övrigt samt
(iii)
att varken Erbjudandet eller förvärvet av IGE
Nordic helt eller delvis omöjliggörs eller
väsentligen försvåras av lagstiftning eller
annan reglering, domstolsavgörande,
myndighetsbeslut eller motsvarande
omständighet, som föreligger eller skäligen
kan förväntas, som ligger utanför IGE:s
kontroll och som IGE skäligen inte kunnat
förutse vid tidpunkten för offentliggörande av
Erbjudandet
Manager
Handelsbanken Capital Markets
9
1.7
Större aktieägare
En sammanställning av Bolagets största aktieägare per den 20 november 2008 framgår nedan.
De 20 största aktieägarna på Oslo Börs:
Land
CHE
NOR
DNK
NOR
SWE
SWE
NOR
NOR
GBJ
NOR
NOR
NOR
NOR
NOR
DNK
SWE
NOR
NOR
NOR
NOR
Aktieägare
SIS SEGAINTERSETTLE AG 25PCT
ARCTIC SECURITIES ASA
DANSKE BANK A/S
FLATÅS
SKANDINAVISKA ENSKILDA BANKEN
NORDNET SECURITIES BANK AB
PHAM
SVENSKA HANDELSBANKEN STOCKHOLM
CITIBANK, N.A
SAFETY BEACH AS
OTIUM FINANS AS
PETROLEUM INVEST
AABY
EIENDOMS OG
SYDBANK
JANSSON
SØLAND EIENDOM AS
NORDISK INDUSTRIUTVIKLING AS
LEERE
BAKKEN
Totalt 20 största aktieägarna
Övriga
Totalt antal aktier
%
2.85%
1.87%
1.24%
0.97%
0.92%
0.78%
0.59%
0.58%
0.57%
0.53%
0.53%
0.53%
0.48%
0.44%
0.41%
0.40%
0.39%
0.39%
0.37%
0.37%
Antal aktier
10,680,289
7,000,000
4,645,403
3,640,000
3,451,658
2,913,604
2,215,000
2,175,377
2,121,500
2,005,000
2,000,000
2,000,000
1,800,000
1,655,000
1,525,174
1,500,000
1,460,000
1,448,000
1,400,000
1,400,000
15.2%
57,036,005
84.8 %
317,963,995
100.0 %
375,000,000
%
3.56%
1.97%
0.81%
0.64%
0.61%
7.6%
Antal aktier
13,365,500
7,369,405
3,050,157
2,399,000
2,271,410
28,455,472
De fem (5) största aktieägarna på NGM-börsen i Stockholm:
Aktieägare
USB INVESTMENT B.V.
SEB
SVENSKA HANDELSBANKEN AB (PUBL)
SAETER, HAAKON MORTEN
SWEDBANK AB
Totalt 5 största aktieägarna
1.8
Land
SVERIGE
SVERIGE
SVERIGE
NORGE
SVERIGE
Transaktioner med närstående
Per dagen för offentliggörandet av detta Prospekt är Bolaget part i följande avtal med närstående:
Bolaget hyr ett lager och hyr eller köper periodvis kontorstjänster och kontorslokaler av PA Resources
AB. PA Resources är närstående genom sin verkställande direktör, Ulrik Jansson, som är medlem av
Bolagets styrelse. Under 2007 har PA Resources fakturerat Bolaget ett belopp på SEK 72.000. Under
2005 och 2006 erhöll PA Resources SEK 835.708 respektive SEK 255.000 för ovan angivna tjänster.
Under 2006 fakturerade en tidigare styrelsemedlem, Bill Sundberg, Bolaget ett belopp på SEK 47.000 för
utfört arbete i samband med upprättande av årsredovisningen för 2006. Under 2005 betalade Bolaget SEK
51.000 till Bill Sundberg för motsvarande tjänster.
10
En tidigare medlem av Bolagets rådgivande kommitté, Göran Pettersson, fakturerade under 2005 SEK
559.000 till Bolaget för utförda tjänster hänförliga till geologi och prospektering.
Vid ovan angivna transaktioner baserades prissättningen på principen om ”armlängds avstånd”.
Det förelåg inga ytterligare närståendetransaktioner under perioden 2005 till 2007.
1.9
Forskning och utveckling, patent och licenser
De huvudsakliga investeringarna i IGE sammanhänger med prospektering och utveckling av de licenser
som ägs av Bolaget och med förvärv av nya licenser. Investeringarna har varit betydande och utgörs
huvudsakligen av externa konsultkostnader för diamantprojekten Lacage och Luxinge i Angola och
projekten Rönnbäcken, Bidjovagge och Stekenjokk i Skandinavien.
Patent och licenser
Bolaget är inte beroende av några patent, tekniska licenser, industriella eller finansiella avtal eller nya
tillverkningsprocesser. Bolaget är dock beroende av olika gruvrättigheter som till exempel
prospekteringslicenser för att genomföra prospektering och förvärva gruvkoncessioner och därmed
sammanhängande miljörättsliga tillstånd för utvinning av mineraler ur Bolagets marktillgångar. Villkoren
för dessa licensavtal varierar i viss mån beroende på i vilket land de är belägna. I Angola, till exempel,
omvandlas licensen automatiskt till en gruvkoncession om prospektören uppfyller kraven i
prospekteringslicensen. I Norden måste prospektören ansöka om gruvkoncession, vilket bland annat
villkoras av att olika miljörättsliga tillstånd erhållits.
Bolaget har vid utgången av det andra kvartalet 2008 betalat investeringsgarantier för fyra licenser:
Lacage, Luanguinga, Cariango och Luxinge.
1.10 Utvecklingstendenser
Bolaget har vid tidpunkten för Prospektet inte utsatts för någon förändring eller händelse utanför den
normala verksamheten som har väsentlig betydelse för Bolaget efter den 31 december 2007 eller under
räkenskapsåret 2008, utöver vad som angivits i Prospektet.
1.11 Sammanfattning av riskfaktorer
Varje investering i aktier innebär en risk. Bolagets finansiella utveckling och värdet av Bolagets aktier
kan påverkas av ett antal riskfaktorer, till exempel marknadsrisker, finansiella risker och operationella
risker i samband med prospektering och utveckling av mineral/metall- och guldtillgångar och
geovetenskaplig teknologisk utveckling. Läsaren bör noga överväga all information som lämnas i
Prospektet och särskilt beakta nedanstående faktorer, som kan påverka hela eller delar av verksamheten i
Bolaget och risken av att investera i Bolagets Aktier. Uppräkningen är inte uttömmande. Bolagets
verkliga resultat kan komma att väsentligt avvika från förväntat resultat till följd av ett antal faktorer,
bland annat de riskfaktorer som sammanfattas nedan och de risker som beskrivs på annan plats i
Prospektet.
•
•
Mineralprospektering innebär en hög grad av risk och få prospekterade markområden utvecklas i
slutändan till producerande gruvor. Bolagets långsiktiga lönsamhet beror delvis på kostnaderna
och framgången hos Bolagets prospekteringsprogram.
Bolaget har ingen kontroll över mineral- och metallpriserna. Dessa kan påverkas av ett antal
faktorer, som till exempel den internationella ekonomiska och politiska utvecklingen.
11
•
•
•
Bolagets nuvarande och framtida verksamhet kommer, från tid till annan, att kräva tillstånd och
licenser från statliga myndigheter och politiska beslut. Det finns inga garantier för att
International Gold Exploration lyckas erhålla dessa tillstånd, koncessioner eller beslut.
Utvecklingen av IGE:s marktillgångar kommer att vara avhängig av Bolagets förmåga att
genom ägarfinansiering, lånefinansiering, projektfinansiering eller på annat sätt anskaffa kapital.
Det finns inga garantier för att IGE klarar den nödvändiga kapitalanskaffningen.
Verksamheten omfattas av miljöskyddslagstiftningen i de rättsordningar där Bolaget har
verksamhet.
12
Följande riskfaktorer beskrivs utförligare i avsnitt 1 i Registreringsdokumentet:
• Allmänna risker
• Risker förknippade med prospektering och utvinning av mineraler och metaller
• Risker förknippade med den tekniska utvecklingen
• Regulatoriska och politiska risker
• Risker relaterade till Aktierna.
1.12 Bolagsordning
Bolagsordningen för International Gold Exploration IGE AB ingår i Bilaga 1 till detta
Registreringsdokument.
Enligt punkt 3 i bolagsordningen är föremålet för bolagets verksamhet att självt, genom dotterbolag eller
genom samarbete med annan bedriva gruv- och mineralprospekteringsverksamhet samt äga och förvalta
lös och fast egendom ävensom bedriva därmed förenlig verksamhet.
Bolaget har endast ett aktieslag. Enligt punkt 6 i bolagsordningen ska styrelsen bestå av 3 till 6 ledamöter.
Bolagsordningen innehåller inte någon bestämmelse som begränsar utländskt ägande av Aktierna. Enligt
svensk lag finns inga begränsningar för utlänningar eller personer utan hemvist i Sverige att inneha Aktier
eller utöva rösträtt.
1.13 Tillgängliga dokument
Nedan angivna dokument kommer under Acceptperioden att hållas tillgängliga på www.ige.se eller på
nedan angivna adresser:
(a) emittentens bolagsordning;
(b) alla rapporter, brev och övriga dokument, historisk finansiell information, värderingar och
expertutlåtanden som upprättats på uppdrag av emittenten av vilka någon del ingår i eller
hänvisas till i Registreringsdokument;
(c) historisk finansiell information om emittenten eller, för koncern, historisk finansiell
information om emittenten och dennes dotterbolag, avseende de två senaste räkenskapsåren före
offentliggörandet av Registreringsdokumentet.
Bolaget:
International Gold Exploration IGE AB
Kungsgatan 44
SE-111 35 Stockholm, Sweden
Manager:
Handelsbanken Capital Markets
Rådhusgaten 27
N-0101 Oslo, Norway
13
II. REGISTRATION DOCUMENT
INTERNATIONAL GOLD EXPLORATION IGE AB (PUBL.)
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO BUY, SUBSCRIBE
OR SELL THE SECURITIES HEREIN
28 NOVEMBER 2008
TABLE OF CONTENTS
1
RISK FACTORS ......................................................................................................................... 4
1.1
1.2
1.3
1.4
1.5
General risks.............................................................................................................................4
Risks connected to exploration and development of minerals and metals ...............................4
Risks connected to technological developments ......................................................................7
Regulatory and political risks...................................................................................................7
Risks related to the Shares........................................................................................................8
2
PERSONS RESPONSIBLE ........................................................................................................... 9
3
STATUTORY AUDITORS ......................................................................................................... 10
4
SELECTED FINANCIAL INFORMATION .................................................................................. 11
5
INFORMATION ABOUT THE ISSUER ....................................................................................... 13
5.1
5.2
6
BUSINESS OVERVIEW ............................................................................................................ 15
6.1
6.2
6.3
6.4
6.5
7
History and development........................................................................................................13
Investments.............................................................................................................................14
Strategy...................................................................................................................................15
Resources in IGE....................................................................................................................16
Business units .........................................................................................................................17
Additional information for mineral companies ......................................................................21
Corporate social responsibility ...............................................................................................23
MARKET OVERVIEW .............................................................................................................. 24
7.1
7.2
7.3
7.4
7.5
7.6
7.7
Recent trends in the mining industry......................................................................................24
Description of industrial minerals and metals ........................................................................24
Outlook for the global industrial minerals and metals industries ...........................................25
IGE’s principal markets..........................................................................................................25
Gold ........................................................................................................................................26
Diamond .................................................................................................................................27
Nickel .....................................................................................................................................29
8
ORGANISATIONAL STRUCTURE ............................................................................................. 30
9
PROPERTY, PLANTS AND EQUIPMENT .................................................................................. 32
10
OPERATING AND FINANCIAL REVIEW ................................................................................... 33
10.1
Financial condition .................................................................................................................33
11
CAPITAL RESOURCES ............................................................................................................ 35
12
RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES ................................................... 38
12.1
13
Patents and licenses ................................................................................................................38
PROFIT FORECASTS OR ESTIMATES ..................................................................................... 40
1
14
ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND SENIOR
MANAGEMENT ....................................................................................................................... 41
14.1
14.2
14.3
14.4
15
REMUNERATION AND BENEFITS ............................................................................................ 45
15.1
15.2
15.3
15.4
15.5
16
Compensation for termination................................................................................................50
Committees.............................................................................................................................50
Corporate governance.............................................................................................................50
EMPLOYEES ........................................................................................................................... 52
17.1
17.2
18
Board of directors...................................................................................................................45
Executive management...........................................................................................................45
Shareholdings and warrants of Management and Board of Directors....................................45
Warrants and incentive programmes ......................................................................................46
Pension obligations.................................................................................................................49
BOARD PRACTICES ................................................................................................................ 50
16.1
16.2
16.3
17
Board of Directors ..................................................................................................................41
Management ...........................................................................................................................42
Conflicts of interest, etc..........................................................................................................43
Fraudulent offence, bankruptcy, incrimination and disqualification......................................44
Employees ..............................................................................................................................52
Hired consultants....................................................................................................................52
MAJOR SHAREHOLDERS........................................................................................................ 53
18.1
Shareholder structure..............................................................................................................53
19
RELATED PARTY TRANSACTIONS ......................................................................................... 54
20
FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES,
FINANCIAL POSITION AND PROFIT AND LOSSES .................................................................. 55
20.1
20.2
20.3
20.4
20.5
20.6
20.7
20.8
20.9
21
Historical consolidated financial information ........................................................................55
Interim financial information .................................................................................................64
Dividend policy ......................................................................................................................65
Legal and arbitration proceedings ..........................................................................................65
Significant changes.................................................................................................................65
Segment information ..............................................................................................................65
Trends.....................................................................................................................................65
Information on holdings .........................................................................................................65
Funding and treasury policies and objectives.........................................................................65
ADDITIONAL INFORMATION ................................................................................................... 66
21.1
21.2
21.3
21.4
21.5
21.6
21.7
21.8
21.9
21.10
21.11
General ...................................................................................................................................66
Shares and Share Capital ........................................................................................................66
Development in share capital .................................................................................................66
Share options, convertible securities, etc ...............................................................................67
Authorisation to increase the share capital .............................................................................67
Own shares .............................................................................................................................67
Memorandum and Articles of Association.............................................................................67
Shareholder rights...................................................................................................................67
General meetings of shareholders ..........................................................................................68
Corporate matters ...................................................................................................................69
Legal and arbitration proceedings ..........................................................................................69
2
22
MATERIAL CONTRACTS ........................................................................................................ 70
23
THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATIONS
OF ANY INTEREST .................................................................................................................. 71
23.1
23.2
24
Statements by experts.............................................................................................................71
Third party information ..........................................................................................................71
NORWEGIAN TAX .................................................................................................................. 72
24.1
25
Norwegian shareholders .........................................................................................................72
SWEDISH TAX ......................................................................................................................... 74
25.1
25.2
25.3
25.4
Swedish shareholders .............................................................................................................74
Non-resident shareholders ......................................................................................................75
Duties on the transfer of Shares..............................................................................................76
Inheritance tax ........................................................................................................................76
26
DEFINITIONS & GLOSSARY TERMS ....................................................................................... 77
27
APPENDICES AND DOCUMENTS ON DISPLAY ......................................................................... 79
27.1
27.2
27.3
•
•
Appendices .............................................................................................................................79
Documents on Display ...........................................................................................................79
Cross Reference List ..............................................................................................................79
Appendix 1: Articles of Association of International Gold Exploration AB
Appendix 2: Acceptance Form
3
1
RISK FACTORS
Investing in International Gold Exploration IGE AB (publ) registration number 556227-8043 (“the Company” or
“IGE”), like all other equity investments, is associated with risk. Prospective investors should carefully consider each
of the following risk factors and the other information contained in this Prospectus before making an investment
decision. The trading price of the Company’s Shares could decline due to any of these risks and investors could lose all
or part of their investment. The description of risks is not necessarily exhaustive and factors not mentioned here might
nevertheless have a significant bearing on the value of the Shares in the Company. There may be additional risks that
are currently not considered to be material or of which the Company is not presently aware. If any of the following
risks were to materialise, the business, financial condition and results of operations could be adversely affected.
1.1
General risks
The Company’s risk profile will be dependent on developments in the main areas of activity in which it is
involved. The Company’s main interests are in:
•
•
Exploration, extraction and processing of minerals and metals
Technological developments of geophysical exploration methods
The risks discussed below are divided into the areas in which the Company will operate.
1.1.1
Share price volatility
The price of the Company’s Shares may be highly volatile. In addition, the stock markets have from time to
time experienced significant price and volume fluctuations that have affected the market prices for the
securities, which may be unrelated to company specific operating performance or prospects. Furthermore,
the Company’s operating results and prospects may from time to time be below the expectations of market
analysts and investors. Any of these events could result in a material decline in the price of the Shares.
The market price of the Shares could also decline due to sales of a large number of Shares in the Company in
the market or the perception that such sales could occur. Such sales could also make it more difficult for the
Company to offer equity securities in the future at a price that is deemed appropriate.
1.1.2
Macro economic fluctuations
The Company is exposed to the economic cycle, and changes in the general economic situation could affect
demand for the IGE’s products and services.
Market conditions may affect the Shares regardless of IGE’s operating performance or the overall
performance of the mineral exploration and development sector. Accordingly, the market price of the Shares
may not reflect the underlying value of the Company’s net assets, and the price at which investors may
dispose of their Shares at any point in time may be influenced by a number of factors, only some of which
may pertain to IGE while others of which may be outside IGE’s control.
1.2
1.2.1
Risks connected to exploration and development of minerals and metals
General
The Company’s prospects, which are in the exploration stage, will only be developed if the exploration is
successful. Mineral exploration involves a high degree of risk and few properties that are explored are
ultimately developed into producing mines. The long-term profitability of the Company will in part depend
on the cost and success of its exploration programs.
Substantial expenditures are required to establish mineral reserves through exploration in order to eventually
develop the resources and later extract the established resource. Although substantial benefits may be derived
4
from the discovery of a major mineral resource, no assurance can be given that the resources discovered will
be of sufficient size, have a beneficial location, and be amenable to processing in order for the deposit to
justify commercial and profitable operations.
1.2.2
Market risks
Minerals and metal prices
The Company has no control over mineral or metal prices, which can be affected by numerous factors
including international economic and political trends, inflation, currency exchange fluctuations, interest
rates, global or regional consumption patterns, speculative activities and increased or decreased production
due to changes in extraction and production methods. The effect of these factors on the price of precious and
base minerals and metals, and therefore the future economic viability of any of the Company's exploration
projects, cannot be accurately predicted.
Government regulations
The future operations of the Company will, from time to time, require permits from governmental authorities
and will be governed by laws and regulations regarding prospecting, development, mining, taxation,
employment standards, occupational health, waste disposal, land use, environmental protection, mine safety
and other matters. The Company may in the future need to apply for permits from different authorities.
Companies engaged in the exploration and development of resource properties can experience increased
costs as a result of the need to comply with applicable laws, regulations and permits as they change in the
future, see also section 1.4 and 1.5.
Political risk
The operation of the Company is subject to local laws governing prospecting, development, production,
taxes, national ownership restrictions, land use, land claims of local people and other matters. Although the
Company believes that its exploration and development activities are currently carried out in accordance
with all applicable laws, no assurance can be given that new rules and regulations will not be enacted or that
existing rules and regulations will not be applied in a manner which could limit or curtail development.
Political risk is relevant for the operations in Angola, Kenya, Burundi, Sweden and Norway. In respect of the
latter, several of the regulatory approvals, planning regulations, licences etc outlined in section 1.4 below
may be rejected, in full or in part based on political grounds.
Environmental factors
All phases of the Company's operations are subject to environmental regulations in the jurisdictions in which
it operates. Environmental legislation may evolve in a manner, which in the future may require stricter
regulations, increased fines and penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and their officers, directors, and
employees. There are no assurances that future changes in environmental regulations, if any, will not
adversely affect the Company’s operations. Compliance with respect to environmental regulations, closure
and other matters may involve significant costs and/or other liabilities. Non Governmental Organizations
generally being against mining may also from time to time criticize the Company's operations and
development plans. In particular, but not limited to, environmental groups may mobilize against exploitation
of thorium.
5
1.2.3
Operational risks
Exploration risks
The Company’s existing activities are primarily directed towards exploration for and development of mineral
and metal deposits. Mining operations generally involve a high degree of risk.
The Company’s operations are subject to all the hazards and risks normally encountered in the exploration,
development and production of mineral deposits. These include, rock bursts, cave-ins, adverse weather
conditions, flooding and other conditions involved in the drilling and removal of material, any of which
could result in damage to, or destruction of, mines and other producing facilities, damage to life or property,
environmental damage and possible legal liability. Although adequate precautions to minimize risk are and
will be taken, operations are subject to risks which may result in environmental pollution and consequent
liability.
The exploration for and development of mineral and metal deposits, involve significant risks which even a
combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an
ore body may result in substantial rewards, few properties which are explored are ultimately developed into
producing mines. Major expenses may be required to locate and establish mineral reserves, to develop
metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible
to ensure that the exploration or development programs planned by the Company will result in a profitable
commercial mining operation.
Whether a mineral or a metal deposit will be commercially viable depends on a number of factors, some of
which are, the particular attributes of the deposit, such as size, grade and proximity to infrastructure,
commodity prices which are highly cyclical, government regulations, including regulations relating to prices,
taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection.
The exact effect of these factors cannot be accurately predicted, but the combination of these factors may
result in the Company not receiving an adequate return on invested capital. The Company’s projects are in
the early stages. Expenditures made by the Company or initial drilling results are no guarantee for further
developments or discoveries of profitable commercial mining operations. Lack of availability of drilling rigs
could cause increased project expenditures and /or project delays.
Permits and licenses
The Company holds Pre-claims, Claims and mining rights in Angola, Kenya, Burundi, Sweden and Norway.
Some of these licenses are subject to certain conditions. The Company has no reason to expect that the
conditions will not be fulfilled or that these permits will not be granted, however, the Company has no
guarantee that such conditions will remain to be fulfilled and that all necessary permits will be granted for
specific projects.
Risk for inaccurate estimates
There are considerable uncertainty factors in estimating the size and value of mineral/metal reserves. The
reservoir technique is a subjective and inexact process where the estimation of the accumulation of
mineral/metals reserves in the property cannot be accurately measured. In order to evaluate the recoverable
reserves, a number of geological, geophysical, technical and production data must be evaluated. The
evaluation may later prove to be inaccurate, and estimated reserves may therefore be adjusted downward or
upward.
Competition
The minerals and metals industries are highly competitive in all phases and the Company will be competing
with many established companies, which may have more advantageous financial and technical resources.
The Company has no guarantee that this competition will not have an adverse effect either now, or at some
time in the future, on the Company's ability to acquire, explore, and develop its mineral and metals resource
deposits.
6
The mining and metal industry is a global business with producers in several different countries. There is
strong competition for the discovery and acquisition of properties considered to have commercial potential.
The Company competes with other mining companies, many of which have greater financial resources than
IGE, for the acquisition of properties, leases and other interests as well as for the recruitment and retention of
skilled personnel. Such factors may influence the Company’s ability to secure new exploration areas or
recruit and retain staff.
Dependence on key personnel
The Company’s development and prospects are dependent upon the continued services and performance of
its senior management and other key personnel and consultants. Financial difficulties or other factors could
adversely affect the Company’s ability to retain key employees.
Uninsured losses
The Company’s business is subject to a number of risks and hazards generally, including adverse
environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground or slope
failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather
conditions, floods, snow falls and avalanches. Such occurrences could have a material adverse effect on the
Company’s business, operating result or financial condition. Although the Company intend to obtain some
insurance to protect against certain risks in such amounts as it considers reasonable, its insurance will not
cover all the potential risks associated with a mining company’s operations.
1.2.4
Financial risk
Requirement for new capital
The development of the Company’s properties, licenses, Claims and Pre-claims will depend upon the
Company’s ability to obtain financing through equity financing, debt financing, project financing or other
means. There is no assurance that the Company will be successful in obtaining the required financing. Any
additional equity financing may be dilutive to existing Shareholders and debt financing, if available, may
involve restrictions on financing operating activities. If the Company is unable to obtain additional financing
as needed, it may be required to reduce the scope of its operations or anticipated expansion, or delay or
indefinite postpone exploration, development or production on any or all of the Company’s projects.
Currency risk
Currency fluctuations will affect the cash flow that the Company will realize from its operations.
1.3
Risks connected to technological developments
The Company’s ability to compete is highly dependent upon, among other things, its ability to utilize georelated services and data of a competitive quality. Because of the significant technological changes that have
already taken place, for instance with respect to 3D and 4D seismic data acquisition and processing and those
that may occur in the future, the Company is generally dependent on its ability to keep pace with changes
and improvements in data acquisition and processing technologies.
1.4
Regulatory and political risks
The Company has licences, exploration and / or development projects in Angola, Kenya, Burundi, Sweden
and Norway. Therefore the Company’s activities are exposed to varying degrees of political and economic
risk and other risks and uncertainties. These risks and uncertainties vary from country to country and include,
but are not limited to: Terrorist activities; extreme fluctuations in currency exchange rates; hyperinflation;
labour unrest; risk of war or civil unrest; expropriation and nationalization; renegotiation or nullification of
existing concessions, licenses, permits and contracts; illegal mining; changes in taxation policies; restrictions
on foreign exchange and repatriation; and changing political conditions, currency controls and governmental
regulations that favour or require the awarding of contracts to local contractors or require foreign contractors
7
to employ citizens of, or purchase supplies from, a particular jurisdiction.
The exploration, development and operating activities of the Company are generally subject to various laws
governing exploration, development, mining, processing, taxes, labour standards and occupational health and
safety, toxic substances, use of motorised machinery, land use, water use, and land claims of local people
and protection of the environment and cultural monuments and other matters. Although the Company
believes that its activities are currently being carried out in accordance with all applicable laws, no assurance
can be given that new rules and regulations will not be enacted or that existing rules and regulations will not
be applied in a manner which could limit or curtail production or development. Amendments to current laws
and regulations governing exploration, development and operating activities or more stringent
implementation thereof could have a substantial adverse impact on the Company.
Changes in exploration, mining or investment policies or shifts in political attitude could materially
adversely impact the Company’s financial results. The Company’s operations may be affected in varying
degrees by government regulations with respect to, for example, restrictions on exploration, development,
processing, production, price controls, export controls, currency remittance, income taxes, expropriation of
property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local
people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local
practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation of
entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or
other interests.
1.5
Risks related to the Shares
Volatility of the share price
The trading price of the Shares could fluctuate significantly in response to quarterly variations in operating
results, general economic outlook, adverse business developments, interest rate changes, changes in financial
estimates by securities analysts, matters announced in respect of commodity prices or competitors or changes
to the regulatory environment in which the Company operates.
Market conditions may affect the Shares regardless of the Company’s operating performance or the overall
performance of the mineral exploration and development sector. Accordingly, the market price of the Shares
may not reflect the underlying value of the Company’s net assets, and the price at which investors may
dispose of their Shares at any point in time may be influenced by a number of factors, only some of which
may pertain to the Company while others of which may be outside the Company’s control.
The market price of the Shares could decline due to sales of a large number of Shares in the Company in the
market or the perception that such sales could occur. Such sales could also make it more difficult for the
Company to offer equity securities in the future at a time and at a price that are deemed appropriate.
Shareholders may be diluted if they are unable to participate in future offerings
The development of the Company’s properties, licenses, Claims and Pre-claims will, inter alia, depend upon
the Company’s ability to obtain financing through equity financing. Shareholders may be unable to
participate in future offerings, due to misapplication of shareholders pre-emptive rights in order to raise
equity on short notice in the investor market, or for reasons relating to foreign securities laws or other
factors.
8
2
PERSONS RESPONSIBLE
Board of Directors of International Gold Exploration IGE AB (publ)
The Board of Directors of International Gold Exploration IGE AB (publ) accepts responsibility for the information
given in this Registration Document. The Board of Directors hereby declares that, to the best of our knowledge, having
taken all reasonable care to ensure that such is the case; the information contained in this Registration Document is in
accordance with the facts and contains no omission likely to affect its import
Stockholm, 28 November 2008
The Board of Directors of International Gold Exploration IGE AB (publ)
Carl Ameln
(Chairman)
Ole Jørgen Fredriksen
Ulrik Jansson
Lars Olof Nilsson
9
Uta Stoltenberg
3
STATUTORY AUDITORS
Ernst & Young AB with the authorized auditor Jaan Kubja as head auditor is the independent auditor for
International Gold Exploration IGE AB (publ), and has been their auditor since 2004. Ernst & Young AB has
its registered address at Jakobsbergsgatan 24, SE-103 99 Stockholm, Sweden. All partners in Ernst & Young
AB are members of the Swedish Institute of Public Accountants (Föreningen Auktoriserade Revisorer).
10
4
SELECTED FINANCIAL INFORMATION
The selected financial information set forth in this Prospectus should be read in conjunction with the
financial statements and the notes to those statements available at www.ige.se and section 20 of the
Registration Document dated 1 December 2008.
As a mining company IGE will be developed with integrated activities within exploration, production and
sales of high-end industrial metals and diamonds. Business development with the purpose to expand
operations and develop new activity has prioritized attention. The Company evaluates structural options as
well as organic growth for its current projects. The goal is to increase operational activity and develop a
balanced portfolio of activities that can provide an operational cash flow as early as possible.
The following tables show consolidated financial information for IGE as for the annual years 2007, 2006 and
2005 as well as financial information for the nine months of 2008 with comparable numbers for the same
period of 2007.
Consolidated Income Statement
(SEK '000)
Sales
Q3
Q3
Q1-Q3
2008
2007
2008
IFRS
IFRS
IFRS
Unaudited Unaudited Unaudited
Full Year Full Year Full Year
2007
2006
2005
IFRS
IFRS
IFRS
Audited
Audited Audited
-
23,731
-
-
-
293
-5,924
-5,318
-125
1
-9,773
-7,131
-10,684
-21,144
-19,635
-3,854
-3,152
-21,798
-15,461
-11,016
-31,824
-22,887
-11,312
-60
-19,043
-9,009
-1,281
-39
-7,739
-3,803
-4,137
-1,299
-11,367
-27,587
-47,785
-48,275
-66,023
-29,393
-17,017
2,417
-27,587
-24,054
-48,275
-66,023
-29,393
-16,724
-1,975
-326
-1,783
3,240
3,494
-7,011
-6,483
Earnings before tax
442
-27,913
-25,837
-45,035
-62,529
-36,404
-23,207
Tax
-
Net profit / (loss)
442
Change in stock
Other external expenses
Personnel expenses
Other operating expenses
Depreciations and write downs
Total operating expenses
EBIT
Net financials
Profit to Equity holders of the Parent Company
Minority interest
Profit for the period
Earnings per share attributable to Equity holders
of the Parent company before and after dilution
13,784
Q1-Q3
2007
IFRS
Unaudited
-
-
-
-
-
-
-27,913
-25,837
-45,035
-62,529
-36,404
-23,207
-
-24,918
-
-61,715
-36,404
-
-814
-23,207
-0.087
1,490
-1,048
442
-27,913
0.001
-0.082
11
-919
-25,837
-45,035
-62,529
-36,404
-0.074
-0.132
-0.181
-0.116
Consolidated Balance Sheet
(SEK '000)
Assets
Intangible fixed assets
Mineral interests
Tangible fixed assets
Plant and machinery
Long-term financial assets
Shares in associated companies
Receivables on associated companies
Long-term receivables
Total non-current assets
Inventory
Accounts receivables
Other receivables
Prepaid expenses and accrued income
Short term investments
Cash and cash equivalents
Total current assets
Total assets
Q1-Q3
2008
IFRS
Unaudited
Q1-Q3
2007
IFRS
Unaudited
Full Year
2007
IFRS
Audited
Full Year
2006
IFRS
Audited
Full Year
2005
IFRS
Audited
109,091
78,261
85,624
65,328
46,473
44,823
3,161
6,274
2,009
1,162
26,192
1,730
38,001
219,837
106
81,528
27,000
118,898
103
67,440
101
47,736
23
3,403
5,669
5,401
70,294
84,790
16
327
1,461
24,663
10,717
60,561
97,745
16
871
3,967
2,313
9,807
127,827
144,801
16
218
1,594
12,502
5,006
136,674
156,010
75
435
2,875
1,222
23,625
54,807
83,039
304,627
179,273
263,699
223,450
130,775
18,750
323,283
1,223
-100,602
32,313
274,967
17,050
268,102
2,882
-114,197
173,837
17,050
268,102
2,548
-75,685
32,884
244,899
17,050
268,102
2,118
-69,162
218,108
15,550
137,642
427
-32,760
120,859
(SEK '000)
Equity and liabilities
Equity attributable to equity holders of the parent company
Share capital
Other capital-contribution
Reserves
Retained earnings and profit for the period
Minority interest
Total equity
Interest bearing long-term debt
Total long-term liabilities
16,891
16,891
-
-
-
-
Account payables
Accrued expenses and prepaid income
Other liabilities
Total short term liabilities
Total liabilities
7,017
4,822
930
12,769
29,660
1,016
2,781
1,639
5,436
5,436
10,772
5,880
2,148
18,800
18,800
1,785
2,012
1,545
5,342
5,342
5612
935
3,369
9,916
9,916
Total equity and liabilities
304,627
12
179,273
263,699
223,450
130,775
5
INFORMATION ABOUT THE ISSUER
5.1
History and development
The legal entity of IGE was founded in Sweden 1983. The current activities of the Company have been
carried out since 1988. The Company changed its name to International Gold Exploration IGE AB during
1989.The Company operations consisted of small scale exploration during the initial years. The shares were
listed on the Oslo Stock Exchange in 1997 under the symbol “IGE”. The listing in Norway was a natural
choice given the location of its activities. Norway has solid and long lasting history in the exploration and
mining business. As the interest and profitability in global exploration and mining increased, so did the
interest from the Swedish venture capital market. In the spring of 2005, International Gold Exploration IGE
AB listed its shares on the NGM Stockholm Stock Exchange in Sweden under the symbol “IGE”.
International Gold Exploration IGE AB is a Swedish public limited liability company registered with the
Swedish Companies Registration Office under the registration number 556227-8043. The Company is
regulated by the Swedish Limited Companies Act. The articles of association are included in Appendix 1 to
this Prospectus. International Gold Exploration has its head office at Kungsgatan 44, SE-111 35 Stockholm,
Sweden, with telephone +46 (0)8 20 46 09 and facsimile +46 (0)8 611 57 63.
Below follows a summary of important events in the history of the Company:
• 1983; the legal entity, which later became IGE, was founded
• 1989; the entity changed its name and became International Gold Exploration IGE AB
• 1997; the company was listed on Oslo Stock Exchange
• 1999; IGE entered into a Joint Venture with North Atlantic Natural Resources including the
development of the advanced Norrliden project
• 2001; 50% of Björkdalsgruvan was acquired by IGE. IGE restarted the production of Gold in the mine
• 2002; IGE started to produce gold in Lolgorien, Kenya
• 2003; IGE Issued an option which gave the holder, Minmet Plc, the right to acquire IGE’s share of
Björkdalgruvan. Strike price was 18 million shares in MinMet Plc
• 2003; MinMet exercised the option and bought the Björkdal mine from IGE
• 2004; IGE decided to do a dividend of its remaining holding in MinMet and Lappland Goldminers AB
to its shareholders.
• 2005; IGE was listed on the Nordic Growth Market in Stockholm
• 2006; IGE entered in to negotiations with the state owned diamond company in Angola, Endiama,
regarding a potential Joint Venture for exploration of diamonds in Lacage, Angola
• 2007; IGE was granted two licenses in Burundi comprehending gold and vanadium
• 2007; IGE was granted its first diamond license in Angola
• 2007; IGE transferred its mineral licenses in Sweden and Norway to its wholly owned subsidiary, IGE
Nordic. IGE sold 25.4% of the company and listed it on Oslo Axess in connection to the transaction. A
management was recruited to IGE Nordic in order to manage the Group’s activities in Scandinavia
13
• 2007; IGE entered in a Joint Venture with the South African mining company, Goldplat Plc,
comprising the development of 7 targets in South Western Kenya with potential of containing high
grades of gold
• 2008; the preparatory work in order to start diamond production in Luxinge, Angola during autumn
2008 started
5.2
Investments
The table below sets forth the Company’s principle investments (cash considerations) for the period from
2005 to 31 December 2007. For more information about investments see the consolidated financial
statements, which can be inspected on www.ige.se.
SEK ('000)
Investing activities; Mineral Interest
Investing activities; Equipment
Total
2007
2006
2005
58,251
19,645
13,220
4,519
56
2,436
62,770
19,701
15,656
During the previous three years the Company’s main investments are made within the following:
•
•
By the end of 2007 the Company has invested about SEK 47 million in Angola in development and
application processes of its Lacage, Luanguinga, Cariango and Luxinge diamond projects.
Main investments in Scandinavia has historically constituted of the development of the Stekenjokk,
Lindbastmora, Olserum and Bidjovagge projects. During 2007 the Company invested about SEK 13
million mainly in those projects, 2006, about SEK 16.1 million and during 2005 about SEK 15.5
million. By the end of 2007 investments within the Scandinavian activities are focused on the
Rönnbäcken Nickel project and Bidjovagge Gold project.
Investments during the period January to June 2008 amounts to about SEK 54 million. Around SEK 30
million is referable to purchase of equipment to the start-up of the Luxinge diamond mine in Angola. Main
investments comprises the following: A diamond DMS Final recovery plant amounting to around SEK 11
million, machines from Volvo, cars, field camp facilities etc amounting to around SEK 5 million. The Group
has also invested in associated companies through its subsidiary, IGE Nordic which, during the period, has
established two new joint ventures; Norrsken Energy Ltd and Nordic Iron Ore AB.
Investments within the Company mainly consist of capitalized exploration and development expenditures.
As long as each project or license is considered to be of economic interest for future development,
exploration costs associated with the project are capitalized as an intangible asset (Mineral interest). Drilling
is a considerable part of the capitalized expenditures. The main part of all investing activities is related to
development of mineral interests. As the Company has advanced two of its projects in a production start-up
phase - Luxinge diamond project in Angola and the Kilimapesa gold project in Kenya - it has invested in
equipment, plant and machines for diamond and gold production.
14
6
BUSINESS OVERVIEW
IGE is a Swedish exploration and mining company with a focus on diamonds, nickel and gold. The shares
trade on the Oslo Stock Exchange and the Swedish NGM list under the symbol “IGE”. There are 375 million
shares outstanding.
International Gold Exploration is the IGE Group’s holding company whose primary focus is to be the
shareholder for all group companies as well as being the main funding entity for the Company. International
Gold Exploration’s headquarter has 4 employees. The other employees of the Group are employed by each
subsidiary respectively.
The Company has projects and properties within Angola, Kenya, Burundi, Sweden and Norway. The group
structure consists of a parent company with subsidiaries responsible for the exploration and development
activities within each geographical line of business. The detailed organisation structure is shown in section 8.
6.1
Strategy
IGE has a large and diversified portfolio of exploration properties. Its main focus is diamonds, nickel and
gold. Its approach is conservative. The plan is to start a small production and gradually ramp up a mine to its
economic potential. This enables a short start up period, early generation of cash flow to reinvest in future
development and it minimizes technical and financial risk. Such a plan enables management to build
competence as the mine grows and it gets the local stakeholders involved in the project at an earlier stage,
thereby promoting sustainable development of the project.
For commodities that are not priorities, or to enable the strengthening of the resource base by starting earlier,
the Company is developing strategic partnerships.
The Company has through careful, serious and long-lasting work managed to recruit a competent and
experienced team of specialists within the area of prospecting and exploration which creates good conditions
for the Company to make progress and advance its projects in the best possible way. Along with its
employees the Company works together with different consultants with high edge competencies within each
part of the prospecting and mining process.
The Company's activities have, historically, mainly been concentrated to the Nordic region. As the Company
has expanded its operations in Africa a need of a separation of the Group into different business units has
been identified. This has been carried out in order to clarify the structure of the Group and to secure that each
line of business is allotted with the necessary resources in terms of human resources and funding. The
Company also considers that the value of each separated business unit into a subsidiary will result in a more
transparent Group and thereby create better conditions for a fairly valuation by the market.
15
6.2
Resources in IGE
The minerals and metal operations of IGE are in continuous development, and currently comprise a portfolio
of diamond, gold and base metal resources:
Projects
IGE Ownership (%)
Resources
Historical resources
IGE Diamonds
Luxinge (Di)
Alluvial/Kimberlite
31.5% / 30.75%
n/a
Alluvials; Indicated resources:
249,151 carats /Inferred: 759,000
carats
Lacage (Di)
40% / 43%
n/a
Luanguinga (Di)
35% / 43%
n/a
Cariango (Di)
40% / 43%
n/a
IGE Africa
Mukanda (V)
100%
n/a
17M tonnes @ 0.64% V (currently
being re-confirmed under NI43101), cut off 0.2% V
Butara (Au)
100%
n/a
Numerous alluv. Deps
Kilimapesa (Au)
50% (Goldplat Plc 50%)
n/a
51,648 tonnes @ 2.52 g/t Au
SW Kenya
100%
n/a
NW Kenya
100%
n/a
IGE Nordic
Rönnbäcken (Ni)
100%
Nickel
Bidjovagge (Au-Cu)
90% (Geologiske Tjenester A/S
10%)
Gold-Copper
Mjölkfjället (Ni)
100%
n/a
5M tonnes @ 1% Ni
1.16 Mt grading 1.09% copper
and 3.72 g/t gold
The activities of IGE are predominantly equity financed. The Group has one loan of USD 2.5 million
amortizing over three years. IGE will need additional external financing even though some of the projects
have now been advanced to production. The financing of IGE is a continuously ongoing work in order to
secure the proper financing of the most potential projects. IGE currently considers it to have several projects
with high potential works intensively to attract enough venture capital in order to advance its most promising
projects to a stage where the Group is able to finance itself.
The development of the Company’s properties, licenses, Claims and Pre-claims will depend upon the
Company’s ability to obtain financing mainly through equity financing. Debt financing might be a financing
alternative for the Company in the future. The management will evaluate such an alternative if it is
considered to be favourable to the Company’s shareholders and if it can be obtained on favourable
conditions.
The prioritized projects within IGE today are projects with relatively short history within the Group. The
main part of the details of the reserves, estimations etc are based on historical data. IGE is about to
commence drilling programmes in Angola (Lacage) and Kenya (Lolgorien) in order to verify historical data
and estimations presented by different external consultants/companies throughout history. Currently IGE
Nordic is drilling on the Nickel project in Rönnbäcken, Sweden and on the Bidjovagge Gold Project in
Norway. The first results from the drillings were presented during the third quarter of 2008. Additional
results will be presented continuously, as soon as they are presentable, during the fourth quarter of 2008.
IGE will start production of Diamonds in Angola and Gold in Kenya during December 2008. The initial
production will be small scale mining. In Angola IGE is about to commence alluvial diamond mining,
consisting of mining near surface in sedimentary earth layers. In Kenya it is initially a matter of mining
through exploration. The cash flow received from the operations will be reinvested in the development of the
other projects within the Group, projects with a large scale potential. The kimberlite project in Lacage,
16
Angola is an example. If the further results from the analyses and drillings within this concession confirm the
already favourable results and expectations, it could be the next big kimberlite mine in Angola.
6.3
Business units
6.3.1
IGE Diamond AB
IGE Diamond AB is incorporated and organized under the laws of Sweden. The principal place of business
is Angola. Its registered office is Kungsgatan 44, SE-111 35 Stockholm, Sweden, telephone: +46 (0)8 20 46
09, facsimile: +46 (0)8 611 57 63.
IGE’s strategy in diamonds is to start with easy accessible alluvial production which will generate cash flow
and support exploration and development activities of the larger and more profitable kimberlite pipes.
IGE Diamond AB has the third largest licence holding in Angola, one of the world’s largest and most rapidly
developing diamond producers. According to Angolan law, ownership is shared between IGE Diamond AB,
Endiama and local partners for each project. IGE Diamond AB is the operator for all projects. All the
diamonds produced will be sold through Sodiam, a state-owned company and the only officially allowed
diamond trading company operating in Angola.
IGE Diamond AB has been active in Angola since 2005. Today, it employs about 40 people. From early on,
IGE Diamond AB started a training program with Endiama (the state-owned diamond company) for Angolan
nationals in geology and geo-physics (in Sweden, Finland and Angola) and today some of the nationals are
working for IGE Diamond on the projects.
IGE Diamond AB has four concessions - Luxinge, Lacage, Luanguinga and Cariango. Two of the
concessions are strategically located within the Lucapa Graben corridor of Angola, the country’s most
diamondiferous region. The figures in parenthesis below describes IGE’s ownership percentage in the
respective Project.
•
Luxinge (Alluvial 31.5%/Kimberlite 30.75% with a partner Mac Diamond holding and additional
~10.5%)
The total alluvial (historical measure) diamond resource stands at 750,000 carats with an average
estimated grade in the tributaries of 0.21 carats per cubic metre and in the Chiumbe River bed of 0.15
carats per cubic metre. Estimated average realized price per carat to USD 250. The project is expected
to start production during the fourth quarter of 2008, less than one-year after obtaining the exploration
permit.
The capital cost to bring the Luxinge alluvial diamond into production was USD 6 million. Most of the
capital was spent on process plant, the earth moving equipment, and a camp for 50 persons, both
management and staff which was installed during July and August 2008. Production from alluvial
diamond bulk sampling is expected to generate revenues in the fourth quarter of 2008.
The estimated life of the alluvial mine is 5 years.
An airborne survey within the concession area for kimberlites was carried out in August to September
2008.
•
Lacage (Alluvial 40%/Kimberlite 43%)
At Lacage, airborne geo-surveys in summer of 2007 discovered over 100 possible kimberlitic structures
larger than 7 hectares, and of which 13 are larger than 50 hectares. The survey also discovered a giant
possible kimberlite structure of 300 hectares. This would make it one of the largest-known kimberlites
in the world.
17
•
Luanguinga (Alluvial 35%/Kimberlite 43%)
At Luanguinga, airborne geo-surveys have discovered 9 possible kimberlitic structures larger than 7
hectares of which one is larger than 50 hectares.
For both Lacage and Luanguinga, a risk assessment has been completed by the Norwegian People Aid
because of the potential presence of land mines after the civil war. None of the kimberlite targets of the
Lacage project are suspected to hold land mines. Nevertheless, safety measures will be taken as work on
the area starts. The mobilization of equipment for the drilling program for Lacage will commence
during second quarter of 2009. At Luanguinga, some targets will need to be de-mined before any
exploration activity starts.
•
Cariango (Alluvial 40%/Kimberlite 43%)
The Cariango concession area is located in the Cuanza Zul region in mid-western Angola. The area is
strongly indicated to hold gravel beds for diamonds as well as probably hosting kimberlites. An airborne
geophysical survey is planned for initiating geological investigations during second quarter of 2009.
6.3.2
IGE Africa
IGE Africa is currently not a registered entity of itself. IGE has chosen to structure all operations in Kenya
and Burndi in a separate business unit within the Group named IGE Africa. The organisation is continuously
evaluated and if and when the management considers it to be necessary it will found a separate holding
company responsible for the Group’s activities in Africa (except for Angola). At the moment IGE considers
the current organisational structure to be sufficient.
IGE Burundi SA (85%)
IGE was one of the first companies to establish exploration activities and to be granted permits in Burundi
after the civil war. IGE is active through its 85% subsidiary, IGE Burundi SA. IGE Burundi SA has
developed strong relations with the government. Today IGE Burundi SA employs about 30 people. The
registered office address of IGE Burundi SA is 6 Avenue du Belvedere, Kiriri BP 935, Bujumbura, Burundi.
IGE Burundi SA holds three concessions –Mukanda (vanadium), Butara (gold) and Musigati (uranium).
•
Mukanda (100%)
At Mukanda, IGE Burundi SA is evaluating the potential of a vanadium-bearing magnetite body. The
deposit has an historical resource of 17 million tonnes at 0.64% V, with a cut off grade of 0.2% V.
There is significant potential for additional mineral resources within the permit area.
In 2008, the exploration program will proceed in order to complete a combination of trenching,
geophysical and drilling work on some targets. The topography is favourable to initial open-pit mining
of the deposit.
•
Butara (100%)
At Butara, IGE Burundi SA has initiated a grass root exploration program aimed at identifying large
bulk mineable gold deposits. The Butara area has extensive alluvial gold deposits, demonstrating the
potential of the licence. Primary gold deposits are known immediately north of the permit.
18
•
Musigati (100%)
At Musigati in North-Western Burundi, IGE Burundi SA is investigating the possible presence of viable
uranium deposits. Several airborne radiometric anomalies were identified in the permit area in the
1970’s and the geology of the area shows potential for uranium deposits. Ground follow-up during the
1980’s led to the discovery of torbernite and autunite occurrences. Limited surface trenching yielded
one intersect 40 cm at 45 ppm U and one intersect of 20 cm at 320 ppm U (historical data).
•
Tanganickel SA (54%)
IGE Burundi SA recently concluded a joint venture agreement with Mitchell River Group (MRG) from
Australia in order to pursue nickel exploration and development projects in the country.
IGE Kenya Ltd (100%)
IGE Kenya Ltd. has four licences split in seven areas, all of which are prospective for gold. IGE Kenya Ltd.
has a head office in Lavington, Nariobi and several field camps. IGE Kenya Ltd. employs approximately 30
people. The registered office address of IGE Kenya Ltd is P O Box 25492-00603 Lavington, Kenya.
Geophysical and geochemical exploration has identified a number of anomalies that will be drilled in
Q4 2008. The program entails 36,000 metres of drilling and a budget of USD 1.6 million.
•
South-western Kenya (100%)
In south-western Kenya, IGE Kenya Ltd. holds three licenses for gold exploration in highly prospective
ground. The project areas are located in the immediate vicinity of other major gold and copper deposits.
The Lolgorien and Akala sites are both located at the end of the Migori Greenstone Belt which also
hosts the Macalder Mine deposit that produced 950 kg of gold between 1935 and 1966. The Macalder
mine has an historical resource of over one million ounces. The Atieli and Rongo areas cover the sites
of the former gold mines Sakwa, Wayland and Lloyd.
•
North-western Kenya (100%)
Licences host gold bearing formations of the Mozambique Belt. Historical data estimates the area holds
5 million tonnes grading 1% Ni. Scoping study regarding the Sekerr nickel deposit is expected shortly.
The Turkana license has a significant potential for epithermal gold deposits.
Kilimapesa Gold (Pty) Ltd. (50%)
At Kilimapesa in the Lolgorien region of south west Kenya, IGE is running since July 2007, a gold project in
a joint venture together with AIM-listed Goldplat Plc. The Company's interest in the project is 50%.
Numerous high-grade gold quartz veins have been identified in the Lolgorien area. The registered office
address of Kilimpesa Gold Ltd is P. O. Box 8660-00200 Nairobi, Kenya.
In 2007, an extensive exploration sampling, IP programs and shallow drilling was undertaken. From January
2008, a six month underground development program (tunnelling, blasting and bulk sampling) was
completed. Production is expected to start in 2008 with an annual production of 10,000 ounces at an
estimated cost of USD 300 per ounce. The capital cost to bring this mine into production was approximately
USD 1 million of which IGE paid USD 250,000. The capital cost was low because the Company has owned
this property for many years and had a camp and processing facility on site. Most of the CAPEX went
toward refurbishing the plant. Approximately 30 people are employed at Kilimapesa Gold Ltd. The focus is
to rapidly develop this deposit. Cash flow will be used to define the ore body and potentially to expand the
processing facility.
19
6.3.3
IGE Nordic AB (publ)
IGE Nordic AB (publ) (“IGE Nordic”) is a Swedish public limited liability company with company
registration number 556493-3199, incorporated and organized under the laws of Sweden. IGE Nordic’s
principal place of business is Stockholm, Sweden. Its registered office is Kungsgatan 44, SE-111 35
Stockholm, Sweden, telephone: +46 (0)8 402 28 00, facsimile: +46 (0)8 402 28 01. IGE Nordic is listed on
Oslo Axess Stock Exchange under the symbol “IGENOR”. There are 26,816,042 shares outstanding.
International Gold Exploration IGE AB holds 74.6% of IGE Nordic.
IGE Nordic is an exploration and development company focused on gold, nickel, copper and zinc. Its longterm objective is to become a leading exploration and mining company in the Nordic Countries delivering
value to its shareholders and the communities where it operates.
Norway and Sweden are thought to have well-established economic and political systems and a welldeveloped legal framework. IGE Nordic has a large portfolio of exploration licences in these countries.
The priority projects include:
•
Rönnbäcken Nickel Project (100%)
At Rönnbäcken, IGE Nordic is evaluating the possibility of a large tonnage, low stripping ratio, open pit
nickel sulphide mine that could potentially produce a high grade nickel concentrate. Previous
metallurgical large scale pilot tests by Boliden in the mid 1970’s showed that a 25-35% nickel in
concentrate can be produced. Bench scale beneficiation tests carried out in November 2007 at Minpro,
Sweden confirmed the ability to produce a high grade concentrate grading 26% nickel and 1.1% cobalt.
An extensive drilling program of 16,000 metres began in 2008 with the aim of establishing a mineral
resource. Early results from this program has led IGE Nordic to increase its exploration target to 180 –
220 million tonnes grading 0.10 to 0.15% nickel in sulphide, from the previous target of 130 -170
million tonnes.
These are preliminary numbers and further work is being carried out. IGE Nordic has engaged the
mining engineering consultant Scott Wilson RPA. (www.scottwilson.com) to provide a mineral
resource estimate and prepare a Scoping Study that will meet the requirements of a Preliminary
Assessment under NI 43-101 regulations and include a preliminary open pit design, and economic
analysis on the Rönnbäcken Nickel Project. The scoping study is expected to be completed by the
second quarter of 2009.
•
Bidjovagge Gold-Copper Project (90%)
The Bidjovagge project is owned by IGE Nordic (90%) and 10% Geologiske Tjenester a.s. The purpose
of the 2008 drilling program of 5,000 metres was to increase the understanding of the geological
structure of the gold-copper mineralization and check for the possible extension of gold-copper
mineralization identified in previous drilling.
More promising results were encountered in drill holes B08-01 and B08-11. Drill hole B08-01
intersected a possible extension of mineralization a further 45m east of that previously announced in
B07-04. B08-01 intersected 24 m grading 2.69 g/t Au and 0.32% Cu at a depth of approximately 320 m
below surface. The intersection included 4.0 m grading 4.22 g/t Au and 0.83% Cu. Drill hole B08-11
intersected 5m grading 3.52 g/t Au and 0.43% Cu. Further exploration work has been deferred in order
to focus on Rönnbäcken.
•
Norra Norrliden Zinc-Copper Project (10%)
In May 2008, Gold-Ore Resources Limited (“Gold Ore”) bought Lundin Mining’s 90% share of the
Norra-Norrliden project. The model for developing Norrliden relies on transporting the ore to a nearby
processing plant, thus negating the need for building a plant at the site and reducing the potential capital
costs.
Gold-Ore engineers are reviewing a previous work plan developed by Lundin Mining. There is a
measured and indicated resource of 1.48 million tonnes grading 0.63 g/t gold, 50.8 g/t silver, 0.74%
20
copper and 3.54% zinc and inferred resources of 0.87 million tonnes grading 0.40 g/t gold, 30.9 g/t
silver, 0.72% copper and 1.87% zinc. A test mining permit has been granted for extraction of 63,000
tonnes of ore. There are excellent infrastructure including roads and hydropower available.
•
Solvik Gold Project (50%)
The Solvik project is owned by IGE Nordic 50% and Archelon Mineral AB 50%. The 2008 drilling
program confirmed a continuation of the gold zone to the south-east, and that it is open along strike and
at depth. In addition, two new gold structures were identified from boulders
•
Gladhammar Gold Project (50%)
IGE Nordic and Wiking Mineral AB completed a 965 m drill programme at Gladhammar in the summer
of 2008. The highlight included one hole which intersected 34.25 m with 1.94 g/t gold including 2.00 m
with 6.58 g/t gold. Wiking Mineral is the operator.
•
Jointly-owned companies
For non-core metals, IGE Nordic has created new jointly-owned entities with other partners. The
objective is to maximize the development potential of the combined assets (IGE Nordic’s and the
partner’s), and to provide the best opportunity for discovery.
Uranium
Norrsken Energy Limited (49%)
Norrsken Energy Limited is owned by IGE Nordic 49% and Energy Ventures Limited (“EVE”) 51%.
EVE is the manager and has committed SEK 5 million to fund the initial exploration programs. The
new entity comprises 16 exploration permits covering about 1,200 km2 in Sweden.
During the third quarter of 2008, EVE advanced exploration with preliminary field visits to most of the
northern project areas. Radon cup surveys were planned for two projects. Work programs have been
submitted to the Swedish Mining Inspectorate and work will commence once these programs are
approved. Exploration was also progressed on five other projects; primarily at a desk-top compilation
and planning stage.
Iron Ore
Nordic Iron Ore AB (31.6%)
IGE Nordic AB, Archelon Mineral AB and Kopparberg Mineral AB formed an iron ore exploration
company that will focus on twelve exploration licence areas. Kopparberg Mineral AB is the manager.
6.3.4
Strategic business approach
As IGE Nordic has decided to focus on development of a selection of its most promising exploration
licenses, the level of early stage exploration activities has decreased. IGE Nordic still considers it important
to have a balanced portfolio of assets, distributed among the different phases of the exploration and mining
process. It is a question of balance between the fact that it is essential for IGE Nordic not to risk everything
on one or two projects and the need to focus and prioritize among the projects in order to advance them and
show results.
6.4
Additional information for mineral companies
Controlling interests
International Gold Exploration has controlling interests in all its subsidiaries, Pre-claims, Claims, licences
and permits.
21
Cash flow
The main elements in IGE Group’s cash flow budget are described in the following:
Income:
a) Sales: Currently the Group has got no sales or production of minerals to be sold. The time schedules
for exploration activities are relatively long. From identification of a mineral deposit that is
economically viable to mine, to start of production it is not unusual that it takes 5-10 years IGE
Group forecasts that small scale production will commence during autumn 2008. This production
will increase during the coming years. Revenues from sales of small scale production will be used
for additional exploration and drilling activities in order to advance the most prioritized projects to
production.
b) Equity issue: In the two year period from the date of this Prospectus, the Company expects that
cash flow from operations will not be sufficient to cover the costs for exploration and further
business development. Consequently, a possible equity issue will be used in connection with the
Company’s business development.
c) Debt financing: Possible new acquisitions or development of large projects will be financed
separately with loans, equity, or a combination of this, depending on availability and market
conditions.
Exploration and business development costs:
Costs related to exploration and development may increase during the coming years. The Company has
prioritized among its large portfolio of licenses and chosen to focus on the projects with the best
potential in respect to time to production, profitability, political stability etc.
In order to maximize the value of an exploration licence the Company has to verify mineral reserves,
this is done mainly by way of drilling and analysing the results from drillings. Drilling is the most
capital intense part of the exploration process and by far the most value adding activity. Once the
Company has verified reserves that are economically viable to mine, the value of the exploration licence
will increase significantly.
Investments:
Investments within the IGE Group during the coming 2 - 5 years will mainly consist of capitalized
exploration and development expenditures. Expenditures referable to the project are capitalized as an
intangible asset (Mineral interest) as long as each project/license is considered to be of economic interest
for future development. Drilling is a considerable part of the capitalized expenditures. The main part of
all investing activities is currently related to development of mineral interests. As the Group has
advanced two projects; Luxinge diamond project in Angola and the Kilimapesa gold project in Kenya, it
has started the preparation for production of Diamonds and Gold. This has resulted in that the IGE Group
has increased its investments in equipment, plant and machines. This development may continue even if
exploration still will constitute the main part of the Group’s investments during the coming 3-5 years
The rate of investments within the IGE Group is, to a large extent, dependent on the outcome of the
exploration activities carried out by the Group. If the results from the drilling activities in, for instance
the Lacage project in Angola or Rönnbäcken project in Sweden, are positive the Group investments will
increase significantly assuming availability of financing at acceptable conditions. Consequently if the
initial results from drilling show negative results, the further activities will be interrupted and future
investments within that project will decrease.
22
6.5
Corporate social responsibility
IGE’s commitment to corporate social responsibility (CSR) is based on a number of principles, including the
upholding of high ethical standards; good corporate governance; to work safely and responsibly; to
minimizing our environmental footprint; to facilitating the free and open sharing of opinions, skills and
knowledge; and to deliver benefits to the stakeholders of the Company and to the society at large.
This commitment has been part of the company ethos from the outset, and a variety of initiatives have been
undertaken that illustrate our approach. As the Company is active in both the Nordic countries and in Sub
Saharan Africa, IGE’s CSR related work has become quite varied, in response to the prioritized needs
identified in the countries and/or areas where the Company is working.
In the Nordic countries, the Company operates in societies with advanced and enforced legislation within the
Environment, Health and Safety area, and with long traditions of multi stakeholder participation in dealing
with environmental issues. The Company is able to build its operations from this platform while, at the same
time, seeking improvements in the management of CSR related issues whenever feasible. The issues that
have attracted most attention thus far are those related to socio-economic and cultural issues in areas where
reindeer husbandry is taking place, and to the reporting on exploration results. Thus, the Company is
participating in ongoing discussions with stakeholders, including Saami reindeer herders, on possibilities to
utilize the Environmental Impact Assessment process to better address socio-economic and cultural
considerations related to mining projects. Moreover, as the reporting of mineral resources and ore reserves in
the Nordic countries has not yet reached the same high level of accountability as in some other advances
mining nations (e.g. Canada, Australia, South Africa). This initiative is providing a strong guarantee for
investor confidence.
In Africa, the Company is active in Kenya, Angola and Burundi. In these countries, most of the Company’s
CSR related work has focused on issues related to ensuring safe working practices; to addressing the
aspirations of informal and/or artisanal miners; and to providing overall community assistance and
development. Thus, in Angola IGE have developed guidelines which will safeguard the health and safety of
our staff, workers and neighbours at the diamond mine at Luxinge. In Burundi, IGE is assisting communities
by improving road infrastructure in the project areas; by providing assistance for the regeneration of
agriculture in areas that were hit hard during the Civil War, and in a more philanthropic venture, the
Company is assisting in the construction of a stadium in the town of Ngozi. In the Kenyan project
(Lolgorien), the Company has provided building materials and logistical help to local schools. Further, the
Company has signed an agreement with local artisan miners to purchase their high-grade tailings, and thus
allowing them to generate additional income from their activities. The Company has further, together with
the Kenya Chamber of Mines, participated in the development of projects to assist artisanal miners with
safety and health education.
Work is currently underway which will ensure that the commitment and activities described above be made
part of a formal IGE-CSR strategy, including an overall Code of Conduct as well as specific guidelines for
the various operations within the group. The subsequent implementation, continuous improvement and
follow-up of this work will form a prioritized company activity in the years to come.
23
7
7.1
MARKET OVERVIEW
Recent trends in the mining industry
The mining industry is fragmented with thousands of companies producing a wide spectre of resources,
ranging from diamonds and precious metals to base and industrial minerals. For many of the resources that
are produced, there are established exchanges for trading, whereas for other resources, less transparent local
markets seem to dominate. The industry consists of a large number of junior players, some intermediate
players and a few majors.
According to Raw Materials Group about 41% of exploration is on gold, 36% base metals and 10% for
diamonds. High commodity prices resulted in increased exploration and development activity in the mining
industry. However, the latest drop in commodity prices has reversed some of this increase. Raw Materials
Group estimate that global exploration costs amounts to USD 12bn.The initial increase in worldwide
exploration started in 2003 and can be attributed to a combination of increased spending by the majors as
they recognized the scarcity of new projects moving up the pipeline and increased spending by the junior
sector on the back of higher gold prices and rising investor interest. Average production cost is up for
aluminium, copper, nickel and zinc since 2000, i.e. positive cost inflation in the sector.
In 2008 we have experienced a sudden and dramatic collapse in aluminium, copper, nickel and zinc prices.
Aluminium, copper and zinc are back to 2005 levels while nickel is back to 2003 level. In broad sense
aluminium is down about 50% from recent peak, copper down 60%, while nickel and zinc are down 80%.
The result has been that mining projects have been put on hold, financing has stalled, operations have been
shut down or scaled back and market value of mining companies have dropped significantly through 2008.
Companies are now carefully monitoring its cash position and CAPEX budgets as there is little prospect of
raising debt or equity funding.
7.2
Description of industrial minerals and metals
Industrial minerals are geological materials, which are mined for their commercial value and are used in their
natural state or after beneficiation either as raw materials or as additives in a wide range of applications.
Industrial minerals are non-fossil fuel rocks, minerals, and sediments that have an industrial use, and consist
of two broad groups; bulk rocks and ore minerals. Bulk rocks are used as aggregates, or for the production of
lime, ceramics, cement, or as a product used in coal-fired electricity-generating plants for the removal of
sulphur. The ore minerals are mineral concentrations found in veins or in uncommon sedimentary rocks.
In some cases, even organic materials industrial products or by-products (cement, slag, and silica fume) are
categorized under industrial minerals, as well as metallic compounds mainly utilized in non-metallic form.
24
Examples of industrial minerals
Aggregates
Barite
Bitumins
Carbonatites
Ball clays
Diamond
Fluorspar
Gold
Iodine
Marble
Phosphate
Salt
Soda ash
Staurolite
Vermiculite
Alunite
Bauxite
Borates
Chlorine
Kaolin
Dimension stone
Fuller's earth
Granite
Kaolin
Mica
Potash –Potassium minerals
Selenium
Sodium bicarbonate
Strontium - Celestite
Wollastonite
Asbestos
Bentonite
Brines
Chromite
Coal
Diatomite
Garnet
Graphite
Kyanite / Sillimanite / Andalusite
Olivine
Pumice
Slate
Sodium minerals
Sulfur
Zeolites
Asphalt, Natural
Cadmium sulfide
Cadmium telluride
Clays
Corundum
Feldspar and Nepheline - Syenite
Gem minerals
Gypsum
Limestone / Dolomite
Perlite
Quartz
Silica sand / Tripoli
Sodium sulfate
Talc
Source: http://en.wikipedia.org/wiki/Industrial_minerals
A metal is an element that readily forms ions and has metallic bonds. Some well-known metals are
aluminium, copper, gold, iron, lead, silver, titanium, uranium and zinc. They have certain physical
properties; they are usually shiny, have a high density, are ductile and malleable, usually have a high melting
point, are usually hard, and conduct electricity and heat well.
In chemistry, the term base metal is used informally to refer to a metal that oxidizes or corrodes quite easily.
Examples include iron, nickel, lead and zinc. Copper is considered a base metal as it oxidizes easily. In
alchemy, a base metal was a common and inexpensive metal, as opposed to precious metals, mainly gold and
silver.
7.3
Outlook for the global industrial minerals and metals industries
Minerals, metals and mining industries have enjoyed a period of increasing demand with a downward trend
the last months. This is primarily driven by the economic activity in China as well as from Japan, EU and
South East Asia and the recent financial conditions. Metals demand has slowed sharply in Q4 2008 and in all
regions including China where construction activity is down. This has resulted in increasing stocks of
copper, zinc and nickel on LME lately. Economic development in China is important as the country’s share
of world demand for aluminium, copper, zinc, nickel and steel is dominant and significantly higher in 2000 –
2007 compared to 1995 – 2000.
The main reason for increased commodity prices from about 2000 and recent sharp price decline is the
change in market metals surplus. Small demand changes in a market already with supply surplus have
resulted in dramatic negative price development. Although metal prices may be prone to experience volatility
and have adjusted downwards from recent highs, the continued low inventories and moderate new
production in the pipeline, could indicate that base metal prices can stabilize in 2009. The 2009 development
depends on global economic development which economists currently fear may go into recession, thus world
GDP growth forecast has come down since April 2008.
7.4
IGE’s principal markets
Final products will be sold through regulated commodity exchanges if such market places for the different
commodities exist. With respect to the most common base and precious metals, like for instance gold, cupper
and nickel, there exist regulated marketplaces. The situation for diamonds is a little bit different. The current
situation in Angola, where the Company has got all of its diamond exploration licenses, requires that all
diamonds extracted within Angola are sold to Sodiam, the Angolan state owned diamond trading company.
IGE will, to the greatest possible extent, evaluate and analyse the markets in order to secure that it is not
selling its products below current market price.
25
7.5
Gold
Gold is a precious metal that can easily be processed and which has good qualities, including the high
thermal / electrical conductivity and its perfect resistance to corrosion. Further, gold is a popular material for
the making of jewellery, decorations and other items. Gold also act as security and backing asset for central
banks and claimants.
Gold is traded in several markets but the two most important gold markets are London and New York. The
figure below illustrates gold price from January 2000 to November 2008
Historic gold price chart
$1,100
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Source: Bloomberg
The sharp rise and unusually high volatility in the gold price, which briefly touched record levels above USD
1,000 per oz in mid-March 2008, was a key determinant of movements in gold demand in Q1 2008. It
resulted in total identifiable demand falling by 17% in tonnage terms from year-earlier levels to 689 tonnes
(the lowest for five years) but rising 18% in value terms to USD 20.5 billion, more than double the level of
four years earlier. Jewellery demand declined 21% year-on-year to 444 tonnes, the lowest quarterly level on
record since 1993.
In Q3 2008 total identifiable demand increased 18% in volume and increased 51% in USD value compared
to Q3 2007, while jewellery demand increased 8%. This quarter represented a strong rebound after several
quarters of weak demand development. The recovery was triggered by lower gold price, which coincided
with sharply escalated levels of economic and financial uncertainty. Gold supply was down, where the
biggest contributor being a significant reduction in official sector sales.
26
Gold supply and demand table 2006-Q3 2008
Source: World Gold Council November 2008, http://www.research.gold.org/supply_demand/
The demand outlook for the current quarter is uncertain where the mid-October Diwali festival in india is
expected to affect demand positively while jewellery demand outlook in Europe and the US is weak.
The gold industry is a global industry with a large number of smaller gold companies and a limited number
of very large players. In recent years, there has however been a strong trend towards consolidation of the
industry as the large players have struggled with their reserves replacement rate. The value chain is often
divided into three parts; exploration, development and production activity.
Altogether, above ground reserves are increasing each year. The growth in reserves has for a period been
diminishing due to a less than 100% production replacement rate. To a large extent exploration for gold
seems to fluctuate with the gold price and Latin America was the dominating region for discoveries in the
period from 1991 to 2004.
7.6
Diamond
Diamonds are formed as pure crystals of carbon deep within the earth, starting up to 3.3 billion years ago,
under conditions of extreme heat and pressure. Some are then brought to the surface in a rising magma which
solidifies into igneous rock which forms the primary deposits of diamonds. Today there are over 6,000
known kimberlites in the world of which 850 contain diamonds, but only 50 of them are economic in terms
of diamond mining. Africa is considered to be favourable and thereby very interesting in terms of providing
diamondiferous kimberlites, and South Africa and Botswana currently hosts several of the largest deposits.
Angola, which is still relatively unexplored due to its long history of civil war, is the host of the fourth
largest diamond mine in the world.
Market overview
Diamond prices have not followed the bull market for commodities with the recent correction which is being
driven by industrial demand from rapidly expanding economies such as China and India and the recent
financial conditions. It remains that diamond prices are still largely determined by consumer supply and
demand fundamentals and do not grow at rates comparable to other commodities. Global diamond supply is
decreasing, and the fade-out of five major mines within the next five years is expected to increase diamond
supply shortage further.
27
Consumer demand for diamond jewellery has seen a steady increase of 3.4% from 2001 onwards with rough
diamond prices having increased in line 2.5%. In 2007, diamond prices rose sharply by 20%, and are
expected to continue rising on average across diamond categories by 2012. The US will continue to remain
the main driver of diamond jewellery demand in overall terms, but the developing economies of China, India
and the Middle East are collectively expected to contribute significantly to future demand. Diamond demand
growth rates in these markets are expected to exceed the growth rates in the USA and Europe, and industry
marketing activities are expected to stimulate demand for diamonds across the market as a whole. Therefore,
it is anticipated that the supply and demand situation will support and enhance diamond prices in the medium
term.
Apart from industry consumer marketing activities, a key determinant of rough diamond demand is the
macroeconomic climate, as growth in diamond jewellery demand is closely correlated to factors such as
GDP, consumer disposable income and the strength or weakness of local currencies as diamonds are priced
in USD.
Global diamond production value in 2007 was about USD 13 billion, mainly produced in seven countries:
Botswana, Russia, RSA, Angola, Canada, DRC and Namibia. The industry is dominated by mining giants De
Beers, Alrosa, Rio Tinto and BHP Billiton. The size of the global market for diamond jewellery in 2007 was
estimated at USD 71 billion in retail value and USD 19 billion in polished diamond value, with North
America representing about half of this total value.
PolishedPrices.com publishes up-to-date Wholesale Diamond Prices and Diamond Indices based on actual
transactions offering a transparent reality of price movements in the global diamond market. PolishedPrices
Diamond Prices and Indices are also published on Bloomberg and Reuters. The figure below illustrates index
development since October 2007 with forecast given in January 2008. As shown in the figure, current price
level is below the lower confidence limit for the forecast given in January.
Source: http://www.polishedprices.com/Content/NewsCategoryList.aspx?typeId=2
28
7.7
Nickel
Nickel is mainly used in alloys for producing highly resistant steel. Applications include process industries,
power generation, oil & gas industries and construction. Russia is the world’s leading nickel producer,
accounting for around 20% of global nickel production. Other major nickel producers are Canada, Australia
and Indonesia. Some of the industry’s most well known producers are BHP Biliton, Jinchuan, Norilsk,
Xstrata, Eramet, Anglo American, Vale Inco and Posco.
The figure below illustrates nickel price from January 2000 to November 2008
Historic nickel price chart
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Jan-00
Jan-01
Jan-02
Feb-03
Feb-04
Feb-05
Feb-06
Feb-07
Jan-08
Source: Bloomberg
Recently, we have seen a rapid increase in production of low grade nickel ores, coming mainly from the
Philippines, Indonesia and New Caledonia. Market analysts like Macquire production growth from 2009 to
2012, and with current demand expectations demand will exceed supply first in 2012. For 2008 global
production is expected to decrease from 2007, but the market will still be in surplus. Vale Inco is expected to
produce 8 – 9% less refined nickel in 2008 than previously planned. Market balance is largely dependent on
stainless steel production.
Nickel demand is highly dependent on a single first-use market – stainless steel. Production of stainless steel
accounts for approximately 66% of global nickel demand. The presently weak nickel market is mainly driven
by distributor de-stocking rather than weak end-user demand, which will continue to be strong. The
development of the Chinese stainless steel industry, and local high-cost nickel pig iron production, will be an
important contributor to global nickel market balance.
Market Outlook
2009 may be a period of stagnation or continious declining nickel prices due to a potential over supply.
However, market deficit is expected to appear after 2011, with rising nickel prices as a result. Forecast nickel
price for the next ten-year period at present money value is USD 17,000-17,500 per tonne, or USD 18,700
per tonne in money-of-the-day value. Further details are available in the Market Outlook for Gold, Nickel,
Copper and Zinc by Brook Hunt in the IGE Nordic Listing Prospectus 2007 which can be inspected on
www.ige.se.
29
8
ORGANISATIONAL STRUCTURE
30
The IGE Group encompasses:
•
International Gold Exploration IGE AB (Parent company, incorporated in Sweden)
Subsidiaries (wholly-owned)
•
IGE Kenya Ltd (incorporated in Kenya)
•
IGE Diamond AB (incorporated in Sweden)
Subsidiaries (partly-owned)
•
IGE Nordic AB (publ) (74.6%) (incorporated in Sweden)
•
Kilimapesa Gold Ltd (50%), incorporated in Kenya
•
IGE Burundi SA (85%), incorporated in Burundi
Please refer to the 2007 annual report, which can be inspected on www.ige.se, for further details.
International Gold Exploration IGE AB is the Group’s holding company whose primary focus is to be the
shareholder for all group companies as well as being the main funding entity for the group. International
Gold Exploration has 6 employees. The other employees of the group are employed by the subsidiaries.
The Company does not hold a proportion of the capital likely to have a significant effect on assessment of its
own assets and liabilities, financial position or profits and losses in any other company except for the
incorporated subsidiaries.
There is no difference in the proportion of capital and voting power in neither of the subsidiaries or invested
companies.
31
9
PROPERTY, PLANTS AND EQUIPMENT
The Company rents administrative office space located in the city centre of Stockholm, Sweden. The
facilities serve as the general corporate and operational headquarters.
As of today the Company’s main tangible fixed assets relates to the ownership of equipment and furnishings
valued at SEK 44.8 million per 30 September 2008 (excluding ownership of mineral interests valued at SEK
109.1 million, see section 6.2 for more details).
The Company is not aware of any environmental issues that may affect the Company’s utilisation of its
assets, other than the general environmental issues pertaining to companies operating within the mining
industry as further described in section 1.2.
32
10 OPERATING AND FINANCIAL REVIEW
10.1 Financial condition
10.1.1 Third quarter of 2008
The Company generated sales income of SEK 13.8 million during the third quarter of 2008.
Consolidated operating profit for the third quarter of 2008 is SEK 2.4 million compared with a loss of SEK
24.1 million in 2007. Consolidated net profit during the third quarter was SEK 0.4 million against SEK 27.9
million loss in 2007.
Total assets per 30 September 2008 are SEK 304.6 million. The equity ratio is 90% as per the end of 30
September 2008.
IGE’s report for the third quarter of 2008 can be inspected on www.ige.se.
To the best of the Company’s knowledge, there have been no events subsequent to the end of Q3 2008 that
would influence the financial statements presented in this Registration Document, other than those described
in this Prospectus and in the report for Q3 2008.
10.1.2 First nine months of 2008
The Company generated sales income of SEK 23.7 million during the first nine months of 2008.
Consolidated operating loss for the first nine months of 2008 is SEK 24.1 million compared with a loss of
SEK 48.3 million in 2007. Consolidated net loss during the first nine months was SEK 25.8 million against
SEK 45.0 million (loss) in 2007.
Total assets per 30 September 2008 are SEK 304.6 million. The equity ratio is 90% as per the end of 30
September 2008.
IGE’s report for the third quarter of 2008 can be inspected on www.ige.se.
To the best of the Company’s knowledge, there have been no events subsequent to the end of Q3 2008 that
would influence the financial statements presented in this Registration Document, other than those described
in this Prospectus and in the report for Q3 2008.
10.1.3 Financial year 2007
The Company did not generate any sales income during 2007.
Consolidated operating loss for 2007 is SEK 66 million compared with a loss of SEK 29.4 million in 2006.
Consolidated net loss in 2007 was SEK 62.5 million against SEK 36.4 million (loss) in 2006.
Total assets per 31 December 2007 are SEK 263.7 million which is an increase of SEK 40.2 million from 31
December 2006.
33
The Company has no long term liabilities as per the end of financial year 2007. The Group is to a large
extent equity financed with an equity ratio of almost 93% as per the end of 2007. Short term liabilities
amounted to SEK 18.8 million, mainly constituting of accounts payables referable to a new share issue
transaction executed in one of the subsidiaries within the Group, IGE Nordic in December 2007.
IGE’s annual report for 2007 can be inspected on www.ige.se.
10.1.4 Financial year 2006
The Company did not generate any sales income in 2006.
Consolidated operating loss for 2006 is SEK 29.4 million compared with a loss of SEK 16.7 million in 2005.
Consolidated net loss in 2006 was SEK 36.4 million against SEK 23.2 million (loss) in 2005.
Total assets per 31 December 2006 are SEK 223.5 million which is an increase of SEK 92.7 million from 31
December 2005.
IGE’s annual report for 2006 can be inspected on www.ige.se.
10.1.5 Financial year 2005
The Company did not generate any sales income in 2005.
Consolidated operating loss for 2005 is SEK 17 million. Consolidated net loss in 2005 was SEK 23.2
million.
Total assets per 31 December 2005 are SEK 130.75 million which is an increase of SEK 26.4 million from
31 December 2004.
IGE’s annual report for 2005 can be inspected on www.ige.se.
34
11 CAPITAL RESOURCES
Capitalization and indebtedness
At 30 September 2008 the Company had the following capitalization and indebtedness:
(SEK '000)
Total Current Debt
Unaudited
Unaudited
30/09/2008
31/12/2007
12,769
18,800
-
Guaranteed
-
-
-
Secured
-
-
-
Unguaranteed / Unsecured
12,769
18,800
Total Non-Current Debt
-
-
-
Guaranteed
-
-
-
Secured
-
-
-
Unguaranteed / Unsecured
-
-
274,967
244,899
18,750
17,050
Shareholder’s Equity
a) Share Capital
b) Own shares
-
-
223,904
194,965
d) Minority interests
32,313
32,884
A. Cash
70,294
127,827
c) Other Reserves
B. Cash equivalent
C. Trading securities
D. Liquidity (A)+(B)+(C)
E. Current Financial Receivables
F. Current Bank Debt
-
-
5,401
9,807
75,695
137,634
3,403
3,967
16,891
-
G. Current portion of non-current debt
-
-
H. Other current financial debt
-
-
16,891
0
-62,207
-141,601
K. Non-current bank loans
0
0
L.
0
0
M. Other non-current loans
0
0
N. Non-current Financial Indebtedness (K)+(L)+(M)
0
0
-62,207
-141,601
I.
Current Financial Debt (F)+(G)+(H)
J.
Net Current Financial Indebtedness (I)-(E)-(D)
Bonds issued
O. Net Financial Indebtedness (J)+(N)
The table above should be read together with the Company’s consolidated financial statements and the
related notes thereto. To the best of the Company’s knowledge, the capitalization and indebtedness as per 30
September 2008 provide a fair and valid documentation of the Company’s financial condition.
IGE has completed an issue of a convertible loan that provided totally SEK 14 million in 5 November 2008.
Details regarding the convertible loan are described in the press release dated 5 November 2008 and the Q3
2008 report which can be inspected on www.ige.se. Nordisk Industriutvikling which Uta Stoltenberg
represents in the Board of IGE and Varukungen AB which is controlled by the Board member Ulrik Jansson
has subscribed for the convertibles. There have been no other events subsequent to the end of Q3 2008 that
35
would in a material way influence the capitalization and indebtedness presented in this Registration
Document.
The Company’s equity to asset ratio is 90%.
As of 30 September 2008 IGE had SEK 70.3 million in cash and SEK 16.9 million in interest bearing debt.
IGE has no long term obligations or commitments to fulfil in terms of payments etc other than a credit given
by the Swedish Export Credits Guarantee Board of USD 2.5 million over 3 years, salaries and rent of
premises. If IGE decides to reduce its rate of expenditures this could be done relatively quick. Moreover,
such a decision may entail operational delays that could potentially be damaging to the Company. In general
it would result in delay of revenue generation from the projects.
IGE considers itself to have access to a large number of different sources of venture capital to competitive
prices. If the Company decides to increase the rate of its operations and thereby also its cash burn rate, this
decision shall be based upon a documented success within IGE’s activities which implies that the supply of
venture capital available, on probable grounds, will be enough.
There are currently no effective restrictions on the ability of the subsidiaries within IGE to transfer funds to
the Company in the form of cash dividends, loans or advances.
Capital resources
IGE raised approximately SEK 50.3 million (gross proceeds) through a share issue 16 April 2008. The share
premium resulting from the share issues less the direct expenses has been transferred to the Company’s share
premium fund. The proceeds of SEK 14 million from the convertible loan completed 5 November 2008 is
considered as a bridge financing and will first and foremost be used by IGE for working capital purposes.
In the two year period from the date of this Prospectus, the Company expects that cash flow from operations
will not be sufficient to cover the costs for exploration and further business development. Consequently,
issue of equity instruments is likely to be used in connection with the Company’s business development.
Possible new acquisitions or development of large projects will be financed separately with loans, equity, or
a combination of this, depending on availability and market conditions. On a general basis, IGE will also
evaluate options with partner(s) who might be interested to acquire a part of a project for payment in cash or
money invested in the project, in a so called earn-in agreement. It is also an alternative to sell out specific
projects if this is considered to be beneficial to IGE and its shareholders.
Working capital statement
The Group does not have sufficient working capital to cover its present requirements for the upcoming 12
months period (i.e. the whole year 2009). However, it is expected that the working capital of the Group will
be sufficient to support its ongoing and planned activities at least until May 2009. Thereafter IGE considers
that the working capital requirement for the Group for the remaining part of 2009 amounts to approximately
SEK 15-20 million.
IGE is presently evaluating different alternatives for working capital financing including project sales, farmins and joint ventures, as well as a review for down-sizing the Group’s capital expenditures for the next 12
months. IGE is also evaluating different alternatives of capital infusion, which can be done by the issue of
shares and/or a combination of debt and issue of equity instruments (convertible loans and/or warrants) based
on the authorization given by the general meeting held on November 26, 2008 encompassing as share capital
increase of up to SEK 2,500,000 divided into 50,000,000 shares.
IGE is confident that the different financing alternatives described in the section above will be successful and
that the required working capital will be secured during Q1 2009.
However, the working capital required for the coming 12 months period is highly dependent on the level of
activities decided by the Group. IGE may change its budgeted rate of investments related to its prioritized
projects if the market conditions allow. Such a decision will be based on careful reviewing of the possibility
36
to finance such an increase of the Group activities and no increase of the investments will be done unless
they are fully financed. The operations of the Group are therefore currently adapted to the development of
the conditions in the capital market.
Should IGE fail to meet its working capital requirements for the coming 12 months period, some or all of the
ongoing and planned activities of the Group are likely to be delayed or postponed and may, eventually, also
come to a full stop. IGE may then fail to achieve projected cash flows and not be able to meet its obligations
when they fall due.
Description of cash flows
The Company’s consolidated cash flows for the first nine months of 2008 compared to the same period in
2007, and years 2007, 2006 and 2005 are summarised below:
Consolidated Cash flow statement
(SEK '000)
Cash Flow from Operations
Income after financial items
Q3
Q3
2008
2007
IFRS
IFRS
Unaudited Unaudited
Q1-Q3
2008
IFRS
Unaudited
Q1-Q3
2007
IFRS
Unaudited
Full Year Full Year Full Year
2007
2006
2005
IFRS
IFRS
IFRS
Audited
Audited Audited
427
-27,913
-25,852
-45,035
-62,529
-36,404
-23,207
Adjustments for items not included in cash flow
Change in inventories
Change in trade receivables
Change in trade payables
Income tax paid
Net cash flow from operations
-9,544
-1,099
-3,208
-13,424
12,224
1
-2,773
-416
-18,877
-16,375
15
-1,291
-6,919
-50,422
8,955
-12,123
3,293
-44,910
11,617
-8,182
15,677
-43,417
8,769
59
1,320
-2,608
-28,864
11,711
39
1,973
6,248
-3,240
Cash Flow from investment activities
Acquisition of tangible assets
Acquisition of intagible assets
-20,532
-17,322
-10,052
-324
-33,937
-36,171
-24,188
-1,703
-31,677
-5,276
-1,366
-19,813
-13,202
Acquisition of shares in associated companies
Acquisition of financial assets
Sale of financial assets
Net cash flow from investment activities
1,031
-36,823
-10,376
-442
-13,749
5,011
-79,288
-5,100
-30,991
-18,151
-55,104
-21,179
-13,202
Cash Flow from financing activities
New share issue
Raised credits
Net Cash Flow from financing activities
14,399
14,399
-
56,880
15,300
72,180
-
89,764
89,764
89,764
131,960
131,960
131,960
66308
66308
66,308
Net change in cash and cash equivalents
-35,848
-29,253
-57,530
-75,901
-8,757
81,917
49,866
Cash and cash equivalents as at 1 January
Currency exchange difference
127,827
176
136,674
-198
127,827
-4
136,674
-212
136,674
-90
54,807
-50
4,889
52
70,293
60,561
70,293
60,561
127,827
136,674
54,807
Cash and cash equivalents as at end of period
Consolidated operating cash flow in 2007, 2006 and 2005 reflects the fact that IGE’s current focus to a large
extent has been and still is on exploration and development activities. The Company had no revenues from
sales in 2007.
Further details regarding the consolidated cash flows are informed in the Annual report for 2007 (which can
be inspected on www.ige.se).
37
12 RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
The main investments in IGE relate to the exploration and development of the licences owned by the
Company, as well as acquisition of new licences. These investments have been significant, and they have
been related to the costs of external consultants etc mainly connected to the Lacage and Luxinge diamondprojects in Angola and the projects; Rönnbäcken, Bidjovagge and Stekenjokk in Scandinavia.
A total of approximately SEK 31.7 million was capitalised exploration and development expenditures related
to exploration activities in 2007 (2006: SEK 21.2 million, 2005: SEK 13.2 million).
Currently IGE exclusively carry out exploration and development of its projects. IGE has no production at
the moment which results in that main part of its investments is related to the development and improvement
of the prioritized projects within the Group. Historically IGE has been very conservative regarding which
expenditures to capitalize in the balance sheet respectively written off in profit and loss statement.
IGE has currently initiated the work of composing a policy that will serve as a guideline regarding the
capitalization of expenditures related to research and development of mineral assets. In brief the new policy
will result in that a bigger part of the exploration related expenditures will be capitalized as an intangible
asset in the balance sheet. As long as IGE considers the project to have potential of being profitable and the
license is in force, expenditures related to the project will be capitalized. If IGE stops its continued work due
to lack of interest, lack of potential in the project or if the license has expired, the capitalized amount related
to that project will be written off in the profit and loss statement. This is a result of discussions with other
companies and auditors with tradition and experience of auditing and analysing exploration companies. In
order to be comparative within the exploration line of business with for instance companies in Canada, South
Africa and Australia IGE therefore considers an adaptation of its accounting principles related to
capitalization of expenditures to the mining and exploration industry in general to be necessary.
Historically IGE has, for instance, not capitalized expenditures related to field personnel, geologists, cost for
transport and logistics. Expenditures related to human resources are a large part of the negative cash flow
within exploration activities. IGE has previously mainly capitalized direct expenditures, for instance drilling,
flight surveys, geology field consultants etc. From an accounting perspective, this might give a misleading
picture of the activities carried out by the Group. The main part of all expenditures within the Group is
related to the development and refinement of the projects and it adds value to the intangible assets of the
Group. According to this new policy which is in progress IGE historically has been reporting a larger deficit
in their profit and loss and smaller intangible assets than comparative companies.
12.1 Patents and licenses
The Company is not dependent on any patents or technical licenses, industrial or financial contracts or new
manufacturing processes. The Company is, however, dependent on various mining rights such as exploration
licenses in order to conduct exploration and obtain exploitation concessions and subsequent environmental
permits in order to extract mineral resources from the assets of the Group. The conditions of the license
agreements vary to some extent depending on in which country it is located. In Angola, for instance, the
license will automatically be transformed into a mining licence if the operator of the contract fulfils the
requirements according to the exploration licence. In the Nordic regions the operator has to apply for
exploitation concessions, which are conditioned by, amongst others, that various environmental permits have
been received.
In order to be granted licenses in Angola the operator has to deposit an investment guarantee paid to the
Angolan state diamond company, Endiama. Each granted diamond license in Angola is conditioned by a
payment of USD 1.4 million as a long term deposit. The concessions consists of two parts each; alluvial and
kimberlite. The required guarantee attributable to the alluvial part amounts to USD 400,000, respectively
USD 1 million for the kimberlitic. The money is deposited at the Angolan state (Endiama) until the investing
partner has accomplished the minimum framework and the plan of investments in accordance with the
“Contract of the Association in Participation”. When the investing partner has fulfilled its obligations
38
according to the contract, the guarantee will be released and its value will be considered as investment
expenses of the project in compliance with the presented plan of needs.
The Company has paid investment guarantees for four licenses by the end of Q3 2008: Lacage, Luanguinga,
Cariango and Luxinge.
The following list provides a simplified overview of IGE’s key exploration projects, which have the status of
an exploration license.
•
•
•
•
•
•
•
Luxinge Diamond project (Angola)
Kilimapesa Gold Project (Kenya)
The Rönnbäcken Nickel Project (Sweden)
Lacage Diamond Project (Angola)
Cariango Diamond Project (Angola)
Luanguinga Diamond Project (Angola)
The Bidjovagge Gold-Copper Project (Norway)
39
13 PROFIT FORECASTS OR ESTIMATES
The Registration Document does not include any profit forecasts. It contains consolidated financial
statements up to 30 September 2008.
40
14 ADMINISTRATIVE, MANAGEMENT
MANAGEMENT
AND
SUPERVISORY BODIES
AND
SENIOR
14.1 Board of Directors
In accordance with Swedish law, the Board of Directors is responsible for conducting the Company’s affairs
and for ensuring that the Company’s operations are organized and controlled in a satisfactory manner.
The Board of Directors of IGE has 5 members; they were all elected by the ordinary general meeting 6 May
2008. The current term of office expires at the annual general meeting in 2009 for all the board members.
The table below sets forth the Company’s board of directors at the date of this Prospectus:
Name
Position
Business address
Carl Ameln
Chairman
International Gold Exploration IGE AB, Kungsgatan 44, 111 35 Stockholm
Ulrik Jansson
Director
PA Resources AB, Kungsgatan 44, 3 tr, SE-111 35 Stockholm
Ole Jørgen Fredriksen
Director
International Gold Exploration IGE AB, Kungsgatan 44, 111 35 Stockholm
Lars Olof Nilsson
Director
International Gold Exploration IGE AB, Kungsgatan 44, 111 35 Stockholm
Uta Stoltenberg
Director
Nordisk Industriutvikling AS, Postboks 1441 Vika, 0115 Oslo
Carl Ameln (61), chairman (100,000 shares and 1,000,000 warrants)
Carl Ameln has extensive international experience in the mining industry. He held numerous senior positions
at the Swedish iron ore company LKAB during the 1975 to 2001 period. He was President and Chief
Executive Officer of LKAB from 1991 to 2001. Mr. Ameln was also Executive Vice President Marketing
LKAB from 1989 to 1991 and General Manager LKAB Far East Pt Ltd (Singapore) and General Manager
LKAB SA (Brussels) from 1982 to 1989. He started his career as a mining engineer at the world’s largest
underground mine in Kiruna for the Liberian LAMCO iron ore project in 1974. Mr. Ameln served as
Director of Boliden Ltd 1997-2000. He holds a Master of Science from the Royal School of Mines in
Stockholm. Mr. Ameln has served in the office since 2006.
Ole Jørgen Fredriksen (58), board member (300,000 shares held by controlled companies and 1,000,000
warrants)
Mr. Fredriksen has more than 25 years' experience in the computer hardware and software industry. He was
one of the co-founders, President and CEO of ASK, subsequently Proxima and InFocus, the leading global
projector company. Mr. Fredriksen has wide international business experience and currently serves as
Chairman of the Board of Q-Free ASA, and holds several other board memberships, among these in Datum
AS. Mr. Fredriksen has served in the office since 2008.
Ulrik Jansson (54), board member (14,865,000 shares held by controlled companies and 0 warrants)
Mr. Jansson President and CEO of PA Resources AB (publ) since 1996 and he is also director of the board of
PA Resources AB since 1997. He holds a Bachelor of Laws from Uppsala University. Previous experience:
Corporate lawyer in AGA AB 1985-1996 and Uddeholms AB 1982-1985, Board member of IGE Diamond
AB. Other directorships: Chairman of the board of the PA Group's subsidiaries Microdrill AB, PA Resources
Norway AS, Osbourne Resources Ltd, PA Resources Overseas Ltd, Hydrocarbures Tunisie Corp and
Hydrocarbures Tunisie El Bibane Ltd. Mr. Jansson has served in the office since 1989.
Lars Olof Nilsson (46), board member (0 shares and 1,750,000 warrants)
Mr. Nilsson holds a Bachelor of Science in Business Administration from Umeå University. Mr. Nilsson has
extensive international experience from business development and financial issues. He currently serves as
Director on the Board of BE Group AB (publ), IGE Nordic AB (Publ), Morphic Technologies AB (Publ) and
PA Resources AB (publ). He is also advisor to Nordic Capital, a group of private equity funds. He was
Group treasurer from 1992 until 2004. In 1997, he became Senior Vice President in the Trelleborg Group. In
41
2002 he assumed the responsibility for the group staff Business development. He served as Director on the
Board of Boliden Ltd 1997-2000. Mr. Nilsson has served in the office since 2007.
Uta Stoltenberg (34), board member (0 shares and 0 warrants)
Mrs. Stoltenberg is investment director in Nordisk Industriutvikling, having board positions in Skagerak
Venture Capital and Norsk Kraft. She has 6 years experience from various positions in Statoil, amongst other
as investment manager in Statoil Innovation. In addition, she worked 3 years as oil & gas analyst for First
Securities. Mrs. Stoltenberg has a MBA from Technical University of Berlin and was an exchange student in
MSc-program Finance at the Norwegian School of Management (Sandvika). Mrs. Stoltenberg has served in
the office since 2008. (Nordisk Industriutvikling AS holds 1,000,000 warrants in the Company in addition to
the registered shares)
Independency
The board is independent of any sectional interests. The board satisfies the requirement of having two board
members independent of shareholders owning more than 10% of the Company’s share capital and half of the
members independent of the executive management of the Company and the Company’s material business
contacts. All board members, except Ulrik Jansson and Uta Stoltenberg, are considered to be independent of
the Company’s major shareholders, executive management and material business contacts. Ulrik Jansson is
not considered independent as he is one of the biggest owners in the Company. Uta Stoltenberg represents
the two major owners Nordisk Industriutvikling AS and Network Systems AS.
Consequently, the composition of the Board of Directors complies with the Norwegian and the Swedish
Code of Practice for Corporate Governance.
14.2 Management
The management is described in this section. Their ownership in International Gold Exploration and warrants
over International Gold Exploration shares are as of the date of this Prospectus.
The table below sets forth the members of the Group management at the date of this Prospectus:
Nam e
Tomas Fellbom
Position
CEO
Thomas Carlsson
CFO
Business address
International Gold Exploration AB, Kungsgatan 44, SE-111
35 Stockholm, Sw eden
International Gold Exploration AB, Kungsgatan 44, SE-111
35 Stockholm, Sw eden
Tomas Fellbom (45), CEO (200,000 shares and 5,800,000 warrants)
Mr. Fellbom has a Master degree of Business Administration from the Stockholm School of Economics.
Tomas is currently the CEO of IGE. Before he started at IGE, in September 2007, he worked at the Swedish
Trade Council within which he has served as the Vice President and head of the regions Southern Europe,
Africa and the Middle East. In addition to the Trade Council, Tomas has among other things former work
experience as the founder and the CEO of Spray Networks in France. Mr. Fellbom holds a dual citizenship of
Sweden and France and lives in Stockholm and Paris.
Thomas Carlsson (34), CFO (0 shares and 1,000,000 warrants)
Mr. Carlsson has a Master's degree in Finance from Stockholm University. He has been employed by the
Company since 2006 and has experience from working with corporate financing (public offerings as well as
private placements), listings, controlling auditing and financial reports for listed companies. His former
professional experience includes the positions as manager within ISS Facility Services, Fischer Partners FK
AB (Corporate Finance) and Nordea. Carlsson is Swedish and resides in Stockholm, Sweden.
42
14.3 Conflicts of interest, etc
The board members Ulrik Jansson and Uta Stoltenberg may at times be in a position where there is a conflict
of interest between their positions as owners or representatives of owners and the interests of the Company.
IGE has taken reasonable steps to avoid potential conflicts of interests arising from all related parties’ private
interests and other duties to the extent possible, and if such occurs, to mitigate any conflict of interest. It is
the view of the Company that the scope of potential conflicts of interests between the director’s duties to the
Company and their private interests and / or other duties is very limited. The directors do not participate in
the discussion or decision making of subjects that might be in conflict of their different interests.
To the Company’s knowledge there are currently no other potential conflicts of interests between any duties
to the Company or its subsidiaries, of the Board of Directors or the senior management, and their private
interests or other duties. There are no family relations between any of the Company’s board members or
management.
There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant
to which any member of the administrative, management, supervisory bodies or executive management has
been selected as a member of the administrative, management or supervisory bodies or member of senior
management.
The following table includes the names of all companies and partnerships of which members of the board
and senior management has been or presently is a member of the administrative, management or supervisory
bodies or partner (apart from the directorship in IGE) at any time over the five years preceding the date of
this Prospectus:
Directorships previous 5 years
Gexco AB
Name
Carl Ameln
Other Current Directorships
None
Ulrik Jansson
Planet Mineral AB
IGE Diamond, International Gold Exploration Ltd,
Microdrill AB, PA Resources AB, PA Resources Norway
AS, Osbourne Resources Ltd, PA Resources Overseas
Ltd, Hydrocarbures Tunisie Corp, Hydrocarbures Tunisie
El Bibane Ltd
Ole Jörgen Fredriksen
EDB Business Partner ASA, Catch
Adicate As, Attention SA/NV, Cyviz AS, Datum AS,
Communication ASA, Superoffice ASA,
Impact Europe Group AB, Impact Marcom Ltd, Mielno
Apartments AS, Mielno Holding AS, Nordre Kirkøy Vann Ignis ASA, Ignis Display AS
AS, Out Of Africa, Q-Free ASA, Spinoza AS, Varmepipa
AS
Lars Olof Nilsson
IGE Nordic AB, PA Resources AB, Kaptensbacken AB,
BE Group AB
Ahlsell AB, Ahlsell Holding AB, Bröderna
Edstrand Holding AB, Morphic Technologies
AB, Skoogs AB, Skoogs Elektriska AB,
Skoogs Elektrogrosshandel Gmbh,
Trellefast AB
Uta Stoltenberg
Skagerak Venture Capital, Norsk Kraft
Proanalysis AS, Trac ID Systems AS,
Nordisk Industriutvikling AS
Tomas Fellbom
IGE Nordic AB, IGE Diamond AB, IGE Ltd, IGE Kenya
Ltd, Tanganickel SA
Thomas Carlsson
IGE Ltd
Tricent AB, RosInvest Sec Ltd
43
14.4 Fraudulent offence, bankruptcy, incrimination and disqualification
None of the Company’s board members, or members of the executive management, have within the last five
years preceding the date of this Prospectus been;
•
Convicted in relation to a fraudulent offence
•
Involved in any bankruptcies, receiverships or liquidations as member of the board, management,
supervisory body, as partner with unlimited liability, founder or as senior manager
•
Subject to any official public incrimination and/or sanctions as such person by statutory or regulatory
authorities (including designated professional bodies) or been disqualified by a court from acting as a
member of the administrative, management or supervisory bodies of a issuer or from acting in the
management or conduct of the affairs of any issuer
44
15 REMUNERATION AND BENEFITS
15.1 Board of directors
The Company has not granted any loans, guarantees or other similar commitments to any member of the
board of directors and there are no agreements regarding extraordinary bonuses to any member of the board
of directors. There are no agreements with any members of the board which provide for compensation
payable upon termination of the directorship.
The members of the board received remuneration for 2007 as set out in the table below:
Board member
Carl Ameln
Claes Levin
Bill Sundberg
Ulrik Jansson
Lars Olof Nilsson
Total
Remuneration (SEK)
300,000
200,000
200,000
0
200,000
900,000
The remuneration to the members of the board for 2008 was determined at the ordinary General Meeting
held in Stockholm on 6 May 2008. The new remuneration level was resolved by the Annual General Meeting
according to the following for 2008:
Board member
Remuneration (SEK)
Carl Ameln
400,000
Ole Jørgen Fredriksen
250,000
Ulrik Jansson
250,000
Lars Olof Nilsson
250,000
250,000
1,400,000
Uta Stoltenberg
Total
15.2 Executive management
Remuneration to the Company’s executive management, as described in section 14.2 is described below.
Total costs including salary, social cost, pension cost and additional benefits in 2007 for Tomas Fellbom
(CEO) and Thomas Carlsson (CFO) where SEK 2,044,000 and SEK 1,250,000 respectively.
There are no agreements with any member of management which provide for compensation payable upon
termination of the employment.
15.3 Shareholdings and warrants of Management and Board of Directors
The following table sets forth the number of warrants and Shares held by board members (privately or trough
controlled companies) of the Company as at the date of this Prospectus:
Board of Directors
Carl Ameln
Ulrik Jansson
Ole Jørgen Fredriksen
Shares
100,000
Warrants
1,000,000
14,865,000
0
300,000
1,000,000
Lars Olof Nilsson
0
1,750,000
Uta Stoltenberg
0
0
15,265,000
3,750,000
Total
45
The following table sets forth the number of warrants and Shares held by the Company’s executive
management as at the date of this Prospectus.
Shares
200,000
Executive Management
Tomas Fellbom
Thomas Carlsson
Total
Warrants
5,800,000
0
1,000,000
200,000
6,800,000
15.4 Warrants and incentive programmes
15.4.1 Outstanding warrants
At the Extraordinary General Meeting (EGM) on 28 May 2008 an incentive programme with the following
main terms was approved:
Number of warrants:
12,000,000
Exercise price:
SEK 2.68
Consideration:
SEK 0.20 for all subscribers except for Norwegian subscribers which paid no
consideration. The consideration paid by the Swedish subscribers has been
determined by the use of Black & Scholes Model
Exercise period:
See below
The warrants issued were directed as follows:
1. 4,000,000 warrants were directed to the Board of Directors (except Ulrik Jansson) or to them affiliated
companies
2. 8,000,000 warrants were directed to the Management and key personnel
Warrants issued to Board of Directors are conditioned to be exercised according to the following:
•
2,000,000 could be exercised for subscription of new shares in International Gold Exploration during the
periods: 5 May – 20 May 2009, 5 May – 20 May 2010 respectively 5 May – 31 May 2011
•
2,000,000 could be exercised for subscription of new shares in International Gold Exploration during the
periods: 5 May – 31 May 2010 respectively 5 May – 31 May 2011
Warrants issued to the Management and key personnel are conditioned to be exercised according to the
following:
•
2,500,000 warrants can be exercised for subscription of new shares in International Gold Exploration
during the period 5 May – 20 May 2010 respectively 5 May – 31 May 2011.
•
5,500,000 warrants are conditioned to be exercised for subscription of new shares in International Gold
Exploration during the period 5 May – 31 May 2011.
Below follows a description of previously issued warrants in International Gold Exploration:
A new incentive program was resolved by the extraordinary general meeting (EGM) of 13 June 2007. The
incentive program included 6,000,000 warrants for the subscription of shares in International Gold
Exploration. The exercise price of the warrant is SEK 6.40 per share. 2,750,000 of these 6,000,000 warrants
have so far been allocated and the remaining 3,250,000 not allocated warrants was cancelled at the EGM
46
held on 28 May 2008. The holders of the warrants have, according to the resolution, the right to exercise the
warrants during the period 1 July 2009 – 31 December 2009. Accordingly 2,750,000 of these warrants are
still outstanding.
Duration: 31 December 2009, strike price 6.40 SEK
Holder
Number
Type
Issued by
1,300,000
Warrants
IGE
Fredric Bratt
500,000
Warrants
IGE
Lars Olof Nilsson
750,000
Warrants
IGE
Benny Mattsson
200,000
Warrants
IGE
Tomas Fellbom
Total
2,750,000
An additional incentive program was resolved by the extraordinary general meeting (EGM) of 28 May 2008
as described above. The EGM decided to cancel 840,000 warrants held by Carl Ameln that were issued
according to a resolution at the extraordinary general meeting on 17 October 2005. The EGM also resolved
to cancel 3,250,000 not allocated warrants that were issued according to a resolution at the extraordinary
general meeting on 13 June 2007.
47
The EGM resolved to launch a new incentive program comprising in total 12,000,000 new shares with the
terms described above. The warrants resolved by the EGM on 28 May 2008 are up to present assigned
according to the table below:
Holder
Num ber
Type
Issued by
Tomas Fellbom
4,500,000
Warrants
IGE
Thomas Carlsson
1,000,000
Warrants
IGE
Lars Olof Nilsson
1,000,000
Warrants
IGE
Carl Ameln
1,000,000
Warrants
IGE
Industriutvikling AS
1,000,000
Warrants
IGE
Ole Jörgen Fredriksen
1,000,000
Warrants
IGE
Total
9,500,000
If exercised, all the above warrants will result in a dilution of the existing shareholders. If the warrants are in
the money at the expiration date of the warrant contract, the Company are obliged to issue a number of new
shares that corresponds to the number of warrants bought in contracts between each holder of the warrants
and IGE.
The holders of the share warrants have paid a price adjusted to the market according to the Black & Scholes
option pricing formula. The market value of the warrants has been calculated based on the following
assumptions;
Exercise price (SEK)
Estimated volatility (%)
Estimated duration (years)
Risk free years (%)
2005
2007
2008
8.50
6.40
2.68
30
30
30
2-3
2.5
3
3
4
4
15.4.2 Options IGE Nordic AB
At the EGM held on 28 May 2008, a resolution was passed to approve the issuance of totally 575,000 call
options of the Company’s shareholding in IGE Nordic AB to the Board of Directors and the management of
IGE Nordic AB. The Company holds presently 20,000,000 shares (74.6%) in IGE Nordic AB. Each call
option gives the holder the right to buy existing shares in IGE Nordic AB from the Company at price of SEK
11.36 per share. The holder of the call options has the right to exercise the option during the period between
1 October 2011 and 31 December 2011. If the options are exercised the maximum dilution of the Company’s
shareholding in IGE Nordic AB, would be approximately 2.8%.
Holder
Fredric Bratt
Num ber
Type
Issued by
100,000
Call option
IGE
Benny Mattsson
25,000
Call option
IGE
Tomas Fellbom
100,000
Call option
IGE
Curt Järnfeldt
100,000
Call option
IGE
Lars Olof Nilsson
100,000
Call option
IGE
Erling Stensholt
100,000
Call option
IGE
Total
525,000
48
15.5 Pension obligations
The executive management of IGE (Mr. Fellbom and Mr. Carlsson) was employed by International Gold
Exploration 1 September 2007 and 1 September 2006 respectively. IGE has arranged a pension scheme for
its employees. The pension scheme meets the requirements of the Norwegian law on required occupational
pension ("Lov om Obligatorisk Tjenestepensjon") and it is described in relevant detail in the annual report
for 2007, which can be inspected on www.ige.se.
International Gold Exploration had pension related expenses of SEK 1.2 million in 2007 and fulfils the
requirements according to Swedish applicable law on required pension. See below table for specification of
the pension related expenditures for the executive management.
Executive Managem ent (SEK)
Tomas Fellbom
2007
83,874
Thomas Carlsson
126,744
Total
210,618
49
16 BOARD PRACTICES
16.1 Compensation for termination
No members of the administrative, management or supervisory bodies have service contracts with the
Company or any of its subsidiaries providing for benefits upon termination of employment.
The Company has not granted any loans, guarantees or other commitments to any member of the Board and
there are no unusual agreements regarding extraordinary bonuses to any member of the Board.
16.2 Committees
Nominating committee
IGE does not currently have a nominating committee. The general meeting of the Company resolved on 6
May 2008 resolved to establish a Nomination Committee for the next Annual General Meeting. The three
largest shareholders in the company will appoint one representative each, who together with the Chairman of
the Board shall comprise the Nomination Committee. The composition of the Nomination Committee shall
be communicated six months at the latest before the Annual General Meeting in 2009.
The Company has not established an audit committee or a separate remuneration committee. The nomination
committee is responsible for proposing to the General Meeting the remuneration to the Board of Directors.
16.3 Corporate governance
16.3.1 Corporate governance principles
The corporate governance principles of the Company comprise the framework of guidelines and
management principles regulating the division of roles between the owners, board of directors and executive
management of a company.
IGE is of the opinion that sound corporate governance contributes to increase shareholder value through
improved growth and higher profits, as well as lower capital expenditures. Corporate governance in the
Company is based on openness and equal treatment. Investor confidence is maintained and developed
through open and accountable investor information. The board of directors and the management are
committed to ensuring transparency within the business, fair treatment of all shareholders and accountability
in all forms of communication.
The Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance
Board on 4 December 2007 (the “Code of Practice”) applies to the Company. The Company aims at
complying with the Corporate Governance Code, but will to some extent deviate from certain of the
recommendations of the Code due to the different practice and principles under which Swedish public
limited companies operate.
The Code of Practice is a “comply or explain” guideline and the Board will state and explain any deviation
by the Company from the recommended guidelines in its annual reports. The Company will post its
corporate governance principles on its website.
50
The Company follows the Code of Practice, maintain high standards of corporate governance and is
committed to ensure that all shareholders of the Company are treated equally. As per the date of this
Prospectus, the Company complies with the Norwegian Code of Practice except in relation to the following;
ƒ
The board members Carl Ameln, Lars Olof Nilsson and Ole Jørgen Fredriksen have, directly or
through fully owned companies been granted warrants to subscribe for shares in the Company, see
section 15.3.
The Company believes such an option scheme to be an adequate means of motivating board members to
optimise the value of the Shares through its management of the Company. The Company does not believe
such an option program will impair the relevant board members' independency of the Company's
management.
In addition, the Company complies with the Swedish Code of Practise for Corporate Governance issued by
the Swedish Corporate Governance Board (Kollegiet för Svensk Bolagsstyrning) in May 2008 and that is
applicable as from 1 July 2008.
51
17 EMPLOYEES
17.1 Employees
The average number of employees during 2007 amounted to 42. The same number for 2005 and 2006 was 14
and 23 respectively.
Today the IGE Group has 196 employees, see table below.
Employees as of 30 September 2008
Parent company
Subsidiaries
IGE Group
4
192
196
Geographic location
Sweden
Angola
Burundi
Kenya
Total
13
88
13
78
192
Notice that only 50% of the employees in Kenya are paid by IGE.
17.2 Hired consultants
IGE is on a continuous basis hiring external consultants with expertise within business segments which the
Company operates. Such consultants include, inter alia, GTK, for flight survey operations, SGU for
educating Angolans within geology and geophysics, Swedish Geological for help concerning the
establishment of guidelines and policies related to Corporate Social Responsibility.
52
18 MAJOR SHAREHOLDERS
18.1 Shareholder structure
As of 26 November 2008, the Company has about 1,000 shareholders Registered in VPC and about 5,500
Norwegian shareholders that are registered in VPS. A summary of the Company’s largest shareholders as of
26 November 2008 is set out below.
The 20 largest shareholders on the Oslo Stock Exchange:
Shareholder
SKANDINAVISKA ENSKILDA BANKEN
SIS SEGAINTERSETTLE AG 25PCT
ARCTIC SECURITIES ASA MEGLERKONTO
NORDNET SECURITIES BANK AB
SILVERCOIN INDUSTRIES AS
DRESDNER BANK AG LONDON BRANCH
HOLEN GUNNAR
NORDISK INDUSTRIUTVIKLING AS
DANSKE BANK A/S
FLATÅS KARL MARTIN
SÆTER HAAKON MORTEN
DRAGE INDUSTRIES AS V/ARNE STEEN
SAMSARA MANAGEMENT AS
OA HELGE MARTIN
AG INVEST AS
PHAM HUNG QUAN
MACE INVEST AS
SVENSKA HANDELSBANKEN STOCKHOLM
CITIBANK, N.A
OTIUM FINANS AS
Country
SWE
CHE
NOR
SWE
NOR
DEU
NOR
NOR
DNK
NOR
NOR
NOR
NOR
NOR
NOR
NOR
NOR
SWE
GBJ
NOR
Total 20 largest shareholders
Others
Total number of shares
%
3.56%
2.81%
1.87%
1.24%
1.18%
1.17%
1.15%
1.11%
0.98%
0.92%
0.76%
0.69%
0.67%
0.67%
0.63%
0.59%
0.59%
0.58%
0.57%
0.53%
No. of shares
13,351,658
10,530,289
7,000,000
4,638,014
4,429,000
4,380,000
4,300,000
4,148,000
3,662,503
3,440,000
2,840,000
2,598,000
2,510,000
2,500,000
2,380,000
2,215,000
2,200,000
2,161,377
2,121,500
2,000,000
22.2%
83,405,341
77.8 %
291,594,659
100.0 %
375,000,000
The 5 largest shareholders on NGM Stockholm Stock Exchange:
Shareholder
USB INVESTMENTS
SEB SECURITIES
SVENSKA HANDELSBANKEN AB
NORDNET SECURITIES
SWEDBANK AB
Total 5 largest shareholders
Others
Total number of shares
Country
SWE
SWE
SWE
SWE
SWE
%
3.56%
1.94%
0.66%
0.63%
0.54%
7.3%
92.7 %
100.0 %
No. of shares
13,365,500
7,290,805
2,483,881
2,369,041
2,039,020
27,548,247
347,451,753
375,000,000
As far as the Company is aware of, there is no natural or legal person which directly or indirectly has a
shareholding in the Company above 10%. All shareholders with a shareholding of 5% or more are subject to
disclosure regulations (notification of large shareholdings).
All Shares and shareholders have equal rights, including voting rights. Major shareholders do not have
different voting rights. To the knowledge of the board of directors, there are no arrangements which may at a
subsequent date result in a change of control of the Company.
To the knowledge of the Company, the Company is not directly or indirectly owned or controlled by a single
shareholder or a group of shareholders acting in concert. The Company has not implemented any specific
measures to prevent abuse of control form a major shareholder. However, certain provisions of the Swedish
Limited Companies Act and other legislation relevant to the Company aim to prevent abuse.
53
19 RELATED PARTY TRANSACTIONS
As at the date of this Prospectus, the Company is a party to the following agreements with related parties:
The Company is renting a storeroom of PA Resources AB (publ) and during periods, office services and rent
of office space. PA Resources AB is a related party due to its Managing Director Ulrik Jansson, who is a
member of the Company’s board. During 2007 PA Resources AB has invoiced The Company an amount of
SEK 72,000. During 2006 the Company paid PA Resources AB an amount of SEK 255,000 and for 2005
SEK 835,708 for the above mentioned services.
In 2006 former member of the Board of Directors, Bill Sundberg invoiced the Company an amount for SEK
47,000 for work related to the preparation of the Annual report 2006. During 2005 the Company paid about
SEK 51,000 for this service to Bill Sundberg.
As member of the Company’s former Advisory Board, Göran Pettersson, invoiced the Company an amount
of SEK 559,000 during 2005 for services related to geology and exploration.
The above mentioned transactions were based on the principle of “arms length” pricing.
54
20 FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES,
FINANCIAL POSITION AND PROFIT AND LOSSES
International Gold Exploration IGE AB’s annual report for 2007, 2006 and 2005 including explanatory notes and the
Q3 2008 report can be inspected on www.ige.se. The annual report has been audited by Ernst & Young AB,
International Gold Exploration’s statutory auditor; see Section 3 for more information. However, Ernst & Young AB
does not vouch for forward looking statements made in this Prospectus.
20.1 Historical consolidated financial information
The following table shows consolidated financial information for IGE as for the annual year 2007, 2006,
2005 and the first nine months of 2008 with comparable numbers for the same period of 2007.
20.1.1 Consolidated income statement
Consolidated Income Statement
(SEK '000)
Sales
Q3
Q3
2008
2007
IFRS
IFRS
Unaudited Unaudited
Q1-Q3
2007
IFRS
Unaudited
Full Year Full Year Full Year
2007
2006
2005
IFRS
IFRS
IFRS
Audited
Audited Audited
-
23,731
-
-
-
293
-5,924
-5,318
-125
1
-9,773
-7,131
-10,684
-21,144
-19,635
-3,854
-3,152
-21,798
-15,461
-11,016
-31,824
-22,887
-11,312
-60
-19,043
-9,009
-1,281
-39
-7,739
-3,803
-4,137
-1,299
-11,367
-27,587
-47,785
-48,275
-66,023
-29,393
-17,017
2,417
-27,587
-24,054
-48,275
-66,023
-29,393
-16,724
-1,975
-326
-1,783
3,240
3,494
-7,011
-6,483
Earnings before tax
442
-27,913
-25,837
-45,035
-62,529
-36,404
-23,207
Tax
-
Net profit / (loss)
442
Change in stock
Other external expenses
Personnel expenses
Other operating expenses
Depreciations and write downs
Total operating expenses
EBIT
Net financials
Profit to Equity holders of the Parent Company
Minority interest
Profit for the period
Earnings per share attributable to Equity holders
of the Parent company before and after dilution
13,784
Q1-Q3
2008
IFRS
Unaudited
-
-
-
-
-
-
-27,913
-25,837
-45,035
-62,529
-36,404
-23,207
1,490
-
-24,918
-
-61,715
-36,404
-
-1,048
-814
442
-27,913
-23,207
0.001
-0.082
-0.087
-919
-25,837
-45,035
-62,529
-36,404
-0.074
-0.132
-0.181
-0.116
The consolidated operating profit during the third quarter of 2008 amounted to SEK 2.4 million. The
consolidated operating loss during the first nine months of 2008 amounted to SEK 24.1 million. For the full
year of 2007 it was SEK 66 million (2006: - SEK 29.4 million, 2005: - SEK 16.7 million).
The third quarter of 2008 generated a consolidated net profit of SEK 0.4 million. The first nine months of
2008 generated a consolidated net loss of SEK 25.8 million. Consolidated net loss for 2007 was SEK 62.5
million (2006: - SEK 36.4 million, 2005: - SEK 23.2 million) including ordinary financial expenses.
Other revenues consist of revenues attributable to the subsidiary IGE Nordic AB’s sale of exploration
permits and currency gain related to inter company balances. The currency gain occurs as a result of the
difference between the receivables in the parent company and the debt accounted for in different currencies
in the subsidiaries. The sale of exploration permit in IGE Nordic had a non-cash book profit of SEK 16.25
million and is included in Other Revenue
55
The increase in the negative operating results of the Group reflects the increased rate of activities. The
personnel expense has more than doubled between 2006 and 2007, which is a consequence of the
establishment of subsidiaries and activities in both Angola and Burundi during 2007. The Group has also
increased its use of geology, geochemistry etc consultants which are reflected in the increase of item “other
external expenses”.
The significant financial losses during 2005 and 2006 are mainly results of write downs of a short term
investment in Minmet Plc, an AIM-listed mining and exploration company. The holding in Minmet Plc is a
result of a transaction during 2003, by which IGE sold the Björkdalgruvan to Minmet Plc and was paid with
shares in Minmet Plc.
The Company has intensified its work in Angola, Kenya and Burundi during the previous two years. This is
reflected in the income statement of the Company, IGE’s rate of investment has increased significantly
during 2007. The Group is now employing about 100 persons which to a large extent have increased the
losses during the previous two years. Currently IGE is in a mobilization phase in the Luxinge project in
Angola and in the Kilimapesa gold project in Kenya. The rate of investments and expenditures has increased
as a result of this. IGE forecasts small scale production to commence in December 2008. Future revenues
from initial production will be reinvested in the Group’s exploration activities in order to advance the
projects in the most efficient and profitable way. Exploration and start up of mining projects are capital
intensive, IGE considers it to be relatively dependent of the market for external capital during the coming
three to five years in order to advance its projects according to plan.
56
20.1.2 Consolidated balance sheet
The following table shows IGE’s consolidated balance sheet as at the end of the nine months half of 2008,
with comparable figures for the corresponding period in 2007 and as at 31 December for the years 2007,
2006 and 2005.
Consolidated Balance Sheet
(SEK '000)
Assets
Intangible fixed assets
Mineral interests
Tangible fixed assets
Plant and machinery
Long-term financial assets
Shares in associated companies
Receivables on associated companies
Long-term receivables
Total non-current assets
Inventory
Accounts receivables
Other receivables
Prepaid expenses and accrued income
Short term investments
Cash and cash equivalents
Total current assets
Total assets
Q1-Q3
2008
IFRS
Unaudited
Q1-Q3
2007
IFRS
Unaudited
Full Year
2007
IFRS
Audited
Full Year
2006
IFRS
Audited
Full Year
2005
IFRS
Audited
109,091
78,261
85,624
65,328
46,473
44,823
3,161
6,274
2,009
1,162
26,192
1,730
38,001
219,837
106
81,528
27,000
118,898
103
67,440
101
47,736
23
3,403
5,669
5,401
70,294
84,790
16
327
1,461
24,663
10,717
60,561
97,745
16
871
3,967
2,313
9,807
127,827
144,801
16
218
1,594
12,502
5,006
136,674
156,010
75
435
2,875
1,222
23,625
54,807
83,039
304,627
179,273
263,699
223,450
130,775
18,750
323,283
1,223
-100,602
32,313
274,967
17,050
268,102
2,882
-114,197
173,837
17,050
268,102
2,548
-75,685
32,884
244,899
17,050
268,102
2,118
-69,162
218,108
15,550
137,642
427
-32,760
120,859
(SEK '000)
Equity and liabilities
Equity attributable to equity holders of the parent company
Share capital
Other capital-contribution
Reserves
Retained earnings and profit for the period
Minority interest
Total equity
Interest bearing long-term debt
Total long-term liabilities
16,891
16,891
-
-
-
-
Account payables
Accrued expenses and prepaid income
Other liabilities
Total short term liabilities
Total liabilities
7,017
4,822
930
12,769
29,660
1,016
2,781
1,639
5,436
5,436
10,772
5,880
2,148
18,800
18,800
1,785
2,012
1,545
5,342
5,342
5612
935
3,369
9,916
9,916
Total equity and liabilities
304,627
179,273
263,699
223,450
130,775
The IGE Groups’s total assets as of 31 December 2007 was SEK 263.7 million (2006: SEK 223.5 million).
Total investments amounted to SEK 62.8 million (2006: SEK 19.7 million). Cash in bank as per 31
December 2007 was SEK 127.8 million (2006: SEK 136.7 million).
The IGE Groups’s total assets as of 30 September 2008 was SEK 304.6 million (2007: SEK 179.3 million).
Cash in bank as per 30 September 2008 was SEK 70.3 million (2007: SEK 60.6 million).
The Group has no long term debt, it is fully financed by equity. External direct expenditures related to
Exploration and evaluation costs, including the costs of acquiring licenses, are capitalized as exploration and
evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if the
57
rights of the area of interest are in force. As IGE is advancing its projects the Group will continue to acquire
assets in terms of mineral interests, equipment and machines. As long as IGE has no positive cash flow, the
Group considers it to be better to finance the operations by equity due to the fact that it is difficult for the
Group to be able to receive debt financing with reasonable terms and conditions in the current market
situation.
20.1.3 Reconciliation of equity
The table below shows the audited reconciliation of equity as of 30 September 2008 and 2007 and the
closing balance at 31 December 2007, and illustrates the effect of share-based payments.
Changes in shareholders' equity
(SEK '000)
Balance at 1 January 2007
Equity related to shareholders of the parent company
Share
Capital
17,050
Other capital
contribution
268,102
Exchange
differences
2,118
Retained
earnings and
profit for the
year
-69,162
Total
Minority
interest
Total
equity
218,108
218,108
764
Exchange differences
764
764
Total income and expenses recognised directly in equity
764
764
764
-45,035
-45,035
Net result for the period
-45,035
Total income and expences for the period
Closing balance at 30 Sept 2007
17,050
268,102
764
-45,035
-44,271
-44,271
2,882
-114,197
173,837
173,837
Acquisition
700
Exchange differences
-334
Total income and expenses recognised directly in equity
-334
700
-334
-334
700
366
-16,680
-16,680
-814
-17,494
-334
-61,715
-61,285
-114
-61,399
Net result October to December 2007
Total income and expenses for the financial year 2007
-334
Transactions with shareholders
New share issue in subsidiary
55,192
55,192
32,998
88,190
Closing balance at 31 December 2007
17,050
268,102
2,548
-75,685
212,015
32,884
244,899
Balance at 1 January 2008
Disposal of subsidiary
Exchange differences
17,050
268,102
2,548
-75,685
212,015
32,884
348
244,899
-1,325
-1,325
-1,325
Issued call options
390
Total income and expenses recognised directly in equity
390
-1,325
-24,917
-24,917
-919
-25,836
390
-1,325
-24,917
-25,852
-571
-26,423
1,223
-100,602
242,654
32,313
274,967
Net result for the period
Total income and expenses for the period
Transactions with shareholders
New share issue
Closing balance at 30 Sept 2008
1,700
54,791
18,750
323,283
390
390
-935
-935
56,491
IGE’s equity per 31 December 2007 was SEK 244.9 million (2006: 218.1 million). The equity ratio per 31
December 2007 was 93% (2006: 97%).
IGE’s equity per 30 September 2008 was SEK 275.0 million (2007: 173.8 million). The equity ratio per 31
September 2008 was 90% (2007: 97%).
58
20.1.4 Consolidated cash flow statement
The following table shows IGE’s consolidated cash flow statement as at the end of the first nine months
2008 compared to the first nine months 2007 and at 31 December for the years 2007, 2006 and 2005.
Consolidated Cash flow statement
(SEK '000)
Cash Flow from Operations
Income after financial items
Q3
Q3
2008
2007
IFRS
IFRS
Unaudited Unaudited
Q1-Q3
2008
IFRS
Unaudited
Q1-Q3
2007
IFRS
Unaudited
Full Year Full Year Full Year
2007
2006
2005
IFRS
IFRS
IFRS
Audited
Audited Audited
427
-27,913
-25,852
-45,035
-62,529
-36,404
-23,207
Adjustments for items not included in cash flow
Change in inventories
Change in trade receivables
Change in trade payables
Income tax paid
Net cash flow from operations
-9,544
-1,099
-3,208
-13,424
12,224
1
-2,773
-416
-18,877
-16,375
15
-1,291
-6,919
-50,422
8,955
-12,123
3,293
-44,910
11,617
-8,182
15,677
-43,417
8,769
59
1,320
-2,608
-28,864
11,711
39
1,973
6,248
-3,240
Cash Flow from investment activities
Acquisition of tangible assets
Acquisition of intagible assets
-20,532
-17,322
-10,052
-324
-33,937
-36,171
-24,188
-1,703
-31,677
-5,276
-1,366
-19,813
-13,202
Acquisition of shares in associated companies
Acquisition of financial assets
Sale of financial assets
Net cash flow from investment activities
1,031
-36,823
-10,376
-442
-13,749
5,011
-79,288
-5,100
-30,991
-18,151
-55,104
-21,179
-13,202
Cash Flow from financing activities
New share issue
Raised credits
Net Cash Flow from financing activities
14,399
14,399
-
56,880
15,300
72,180
-
89,764
89,764
89,764
131,960
131,960
131,960
66308
66308
66,308
Net change in cash and cash equivalents
-35,848
-29,253
-57,530
-75,901
-8,757
81,917
49,866
Cash and cash equivalents as at 1 January
Currency exchange difference
127,827
176
136,674
-198
127,827
-4
136,674
-212
136,674
-90
54,807
-50
4,889
52
70,293
60,561
70,293
60,561
127,827
136,674
54,807
Cash and cash equivalents as at end of period
Net cash flow from operating activities was negative in 2007 with SEK 43.4 million (2006: - SEK 28.9
million).
Net cash flow from investments was negative in 2007 with SEK 55.1 million (2006: - SEK 21.2 million).
Net cash flow from financing was positive in 2007 with SEK 89.8 million (2006: SEK 132.0 million).
As per 31 December, cash and cash equivalents amounted to SEK 127.8 million (2006: SEK 136.7 million).
As per 30 September, cash and cash equivalents amounted to SEK 70.3 million (2007: SEK 60.6 million).
The rate of expenditures has increased during the previous years due to the large increase in activities within
the Group. The start-up of diamond production in Angola requires big investments and each granted
diamond licence in Angola is followed by a deposit to be paid by IGE of USD 1.4 million. This affects the
cash flow of the Group negatively. Investments in machinery, equipment and plant are other explanations to
the increase in the negative cash flow.
59
20.1.5 Summary of significant accounting principles
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied unless otherwise stated.
Basis of establishment for accountancy
The consolidated accounts are based on historical acquisition costs except for financial instruments which
are accounted for at fair value. All amounts are in Swedish crowns if nothing else is notified.
Differences in accounting between the Group and the Parent Company
The Parent Company has made its annual report according to “Årsredovisningslagen (1995:1554)” and the
”Redovisningsrådets” recommendation RR 32:06, Redovisning för juridiska personer. RR 32:06 implies that
the Parent Company shall apply all, by EU approved IFRS statements as far as possible within the
framework for the “Årsredovisningslagen” and with consideration to the connection between accounting and
the taxation. The recommendation states, which exception and additional conditions that shall be done in
accordance with the IFRS. There are no existing differences between accounting of the Parent Company and
the rest of the Group.
Changes in the accounting principles
The Company has from 2007 applied IFRS 7 ”Financial Instrument”. The application of this
principle has not resulted in any changes of the accountings. The principle puts higher demand on
the level of information added by the Company in the financial report. This holds also for the
change over from RR 30:5 to 30:6, which also puts higher requirements on the information enclosed
in the Group accountings.
As from the annual accounts 2006 “Financial items” includes the change from revaluation of a share holding
in MinMet Plc. This holding has in former reports been accounted for as a part of the operations (under
“Items affecting comparability”) and has by that reason affected the operation profit. In connection with this
change of the accounting principle the change in value of the MinMet Plc holding is accounted for under
“financial items” (SEK -8.901 million for 2006, SEK –6.521 million for 2005). Adjustments of the
comparable figures of earlier reports have been carried out in order to correspond with the accounting of 31
December 2006.
During 2006 IGE has also reclassified mineral interests from tangible assets to intangible assets. This has not
resulted in any adjustments of the comparative figures, only reclassifications and changes of headings.
Standards and principles that has not yet come in to force
The following new standards, complements and interpretations, which have not yet been approved by EU,
might affect the future financial reporting of the IGE Group:
IFRS 8 ”Operating segments” (comes in to force for financial years beginning 1 January 2009 or later).
The standard replaces the IAS 14 “Segment reporting” and requires that a company report additional
financial and describing information related to its operative reporting segments.
A reporting segment is an operative branch or consolidation of operative branches which fulfils certain
specific criteria’s. The operative segments shall be presented according to the principles that the management
of the company has established in order to manage the company’s other operations.
IGE intends to apply these reporting standards from 1 January 2009.
Consolidation principles
Group accounting was carried out according to the acquisition method. Acquired subsidiaries are accounted
60
for from the date the decisive influence over the subsidiary takes place (time of acquisition). The balance
sheets of the subsidiaries located outside Sweden is calculated with the current exchange rates at the last day
of the report period. The currency rate that is used in the income statements is the average rate during the
whole period 2007. All group transactions and group unsettled matters and profit and losses for transactions
between group companies that are put into effect, will be eliminated at the consolidation.
Conversion of foreign currency
The reports are presented in SEK, which is IGE’s functional currency as well as the presentation currency.
Transactions in foreign currency are accounted in the functional currency at a rate that is current on the
transaction date. Monetary assets and liabilities are converted per the balance sheet date at the day’s current
rate, currency differences that arise during conversion is accounted for in the income statement. Non
monetary assets and liabilities that are accounted for to its historical acquisition value are converted using the
currency rate at the time of the transaction. Non monetary assets and liabilities that are accounted for at real
value (including costs) converts to the functional currency, using the current rate at the time of the evaluation
to a real value. The group’s subsidiaries are independent and its assets and liabilities are valued at the closing
currency rates at the end of the reporting period. The income statements are converted to the average
currency rates during the whole reporting period. Exchange differences that may occur on behalf of this does
not affect the Group’s result, they are accounted for within the Group’s equity.
Inventory
The inventory consists mainly of raw materials and necessities and is valued to the lowest of purchase prices
and net sales value. The purchase price is calculated using the FIFO and includes costs that arise during the
purchase of the stock and their transportation to its present place and state.
Tangible assets
Tangible assets consist of machines and furnishings. Machines and furnishings are recorded in the balance
sheet using the acquisition price reduced by the accumulated write-down according to the plan. Depreciation
of tangible assets is done linear over the assets estimated duration of use, which is individually estimated to
be between 3 to 10 years.
Mine properties and development
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of
interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested
for impairment and then reclassified from exploration and evaluation expenditure (intangible) to mine
property and development assets (tangible). As per year end, 2007, the Group has not capitalized any Mine
properties and development expenditures in the balance sheet.
The carrying amounts of mine properties and development (including initial and any subsequent capital
expenditure) are depreciated to their estimated residual value over the estimated useful lives of the specific
assets concerned, or the estimated life of the associated mine or mineral lease, if shorter.
Intangible assets
Mineral interests (Exploration and evaluation expenditure)
External direct expenditures related to Exploration and evaluation costs, including the costs of acquiring
licenses, are capitalized as exploration and evaluation assets on an area of interest basis. Exploration and
evaluation assets are only recognised if the rights of the area of interest are current and either:
-
The expenditures are expected to be recouped through successful development and exploitation or
sale of the area of interest; or
Activities in the area of interest have not at the reporting date, reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves and active
and significant operations in. or in relation to. The area of interest is continuing.
61
-
If the granting process has been initiated but not yet completed due to the duration of administrative
processes. In Angola, for instance, the capitalization of expenditures starts when all concerned
parties has signed the letter of intent related to the specific concession followed by IGE’s payment of
the Investment Guarantee to Endiama.
All capitalized exploration and evaluation expenditure for all pending projects is monitored for indications of
impairment on a cash-generating unit basis. The cash generating unit shall not be larger than the area of
interest. If sufficient data exists to determine technical feasibility and commercial viability, and facts and
circumstances suggest that the carrying amount exceeds the recoverable amount, the capitalized expenditure
which is not expected to be recovered is charged to the income statement.
Long term financial assets
Long-term receivables
Long term receivables are attributable to investment guarantees paid to the Angolan state diamond
company, Endiama. Each granted diamond license in Angola is conditioned by a payment of USD 1.4
million as a long term deposit. Each concession consists of two parts; alluvial and kimberlite. The required
guarantee attributable to the alluvial part amounts to USD 400,000 respectively USD 1 million for the
kimberlitic. The money is deposited at the Angolan state (Endiama) until the investing partner has
accomplished the minimum framework and the plan of investments in accordance with the “Contract of
the Association in Participation”. When the investing partner has fulfilled its obligations according to the
contract, the guarantee will be liberated and its value will immediately be considered as investment
expenses of the project in compliance with the presented plan of needs.
IGE has paid investment guarantees for three licenses by the end of the reporting period; Lacage,
Luanguinga and Cariango.
Income accounting
The Group’s income is accounted for when the essential risks and benefits that is related to the owning of the
inventory has been transferred to the buyer. When the right of owning is transferred to the customer in the
extent that it is probable that the economical benefits will descend to the group and when the income can be
calculated in a reliable way. No income is accounted for based on the current operations of the Group.
Income related to interests is allocated to the period I which they occur and is referred to the group’s bank
accounts. Dividends are taken up as income based on when the decision regarding the availability of the
dividend funds is made.
Taxes
In the Group’s Annual Report, the current and the deferred taxes are accounted for. Current taxes are the
taxes that shall be paid or received regarding the current year, using the tax rate that was decided or in reality
was decided per the balance sheet date applied on the taxable income and with adjustment of current tax
referring to earlier periods. Deferred taxes are calculated according to the balance sheet method with basis in
temporary differences between accounted and taxable values of assets and liabilities. Deferred tax claims
regarding deduction approved temporary differences and deficit deductions accounted only in case that those
possibly will be used. Deferred tax claims have not been accounted for as deductions of loss because they are
estimated to be hardly realizable.
Important estimates and assumptions referable accounting
The Board and management of IGE have identified the issues listed below, which can affect the appraisal of
the Group’s income statement and financial balance. The development within these areas is continuously
followed up by the management and the Board.
62
Recuperation of capitalized expenditures in the balance sheet
The Group has invested considerable amounts in refinement of exploration permits. The financial statements
include mainly permits for which the Company has carried out advanced operations as geology, geophysics,
drillings, airborne measurements etc. Capitalized expenditures referable to the above stated activities have
been capitalized as mineral interests, which amounts to SEK 109.1 million by 30 September 2008.
Depreciation of capitalized expenditures referable to mineral interests is done in accordance with the
paragraph “intangible assets” above.
Deferred tax
The tax deductions referable to deficits of the Group’s activities abroad are not valued.
Segment reporting
Within IGE the primary segment division is based on the geographical regions that are subject to risks and
possibilities that are different from each other. Presently secondary segmentation is not considered.
Classification of assets and liabilities
Current assets and current liabilities are composed of values that can be regained respectively paid within
twelve months counted from the balance sheet date. The other assets and liabilities are accounted as tangible
fixed assets and long-term liabilities respectively.
Acquisition of subsidiaries and accounting for minority interest
International Gold Exploration IGE AB registered the company IGE Burundi SA 1 February 2007 with an
equity amounting to SEK 7 million of which IGE has paid SEK 5.95 million. IGE owns 85% of the
company. Remaining 15% are owned by a local partner. The founding of the company was followed by
negotiations regarding obtaining licenses. IGE Burundi SA is responsible for the Group’s activities in
Burundi. The company owns and manages the Group’s assets and employs IGE’s personnel in Burundi.
During the previous year of operations, 2006, IGE acquired three wholly owned subsidiaries with a total
equity amounting to SEK 2,000. The subsidiaries were registered during 2006 and hold no assets, liabilities
or contingent liabilities at the end of the reporting period. The acquired companies have been consolidated
into the group’s accountings after the time of the acquirement.
IGE bought, in connection to the new share issue in IGE Nordic AB, IGE Diamond AB from IGE Nordic
AB. The company had by the time of the acquisition no operations, it is currently 100% owned by IGE
and has a book value of SEK 100,000. After the concluded acquisition, IGE Diamond bought IGE Ltd,
which is the holding company for all operations related to Angola within the IGE Group, from the parent
company.
In connection with the new share issue in IGE Nordic a minority interest occurred. 25.4% of the company
is not owned by the parent company, International Gold Exploration. The preparations of IGE Nordic AB
in order to carry out the IPO were done by the sell-out of all assets from International Gold Exploration
All liabilities and costs related to the activities in the Nordic region within the IGE Group was transferred
to the International Gold Exploration. The Initial Public Offer in IGE Nordic AB provided the Company
with about SEK 88 million (after deduction of costs related to the transaction) in cash. SEK 33 million of
the contributed equity is referable to minority interest
The Group’s result for 2007 includes a loss amounting to SEK 814,000 recorded in the subsidiaries IGE
Nordic AB and IGE Burundi SA which is referable to the minority owners.
Financial assets, liabilities and other financial instruments
Financial instruments reported as assets in the balance sheet includes: Liquid funds, accounts receivables and
63
short-term investments. The liabilities consist of account payables. Financial instruments are accounted for to
its real value. A financial asset or financial liability is accounted for in the balance sheet when the company
becomes a part of an agreement regarding the asset or liability. Short-term investments refer to holdings in
MinMet Plc and an investment in guaranteed bonds. The short-term investments are valued to its real value
in the income statement. IGE has no derivative instruments and no hedge accounting is applied.
Cash and cash equivalents
Cash and cash equivalents refers to cash at bank.
Retirement plans
Within the Group there are only fixed-fee retirement plans. Commitments regarding fees to the fixed-fee
retirement plans are reported as costs when they occur.
Contingent liability
A contingent liability, on behalf of IGE, could be for example, damage to the environmental that the
company’s operations have caused within a concession area. IGE is obligated to restore the environment to
its initial conditions before returning the permit. This may result in costs that IGE is charged for. Examples
of damages are; wheel track in the terrain, lumbered trees etc. The company considers these contingent
liabilities to be negligible which results in that the balance sheet item regarding the contingent liabilities is
amounting to 0.
Leasing
Leasing is classified in the Group accounting either as financial or operational. Financial leasing exists when
the economic risks and the benefits that are associated with ownership in all essential points are transferred
to the leasing user, all other leasing is classified as operational leasing. Within the Group there exists no
financial leasing. Leasing fees related to operational leasing are cost accounted linearly over the duration
starting from the time of utilization.
Key figures definitions
•
•
•
•
Profit margin is calculated as the profit after financial items in percentage of the income.
Solidity is calculated as equity in percentage of the total of the balance sheet
Average number of shares is calculated as the number of shares in the opening balance and new
shares that have been issued during the reporting period. adjusted for the actual number of days they
have existed
The average number of shares is adjusted for new share issues issued at a discount i.e. issued at a
price that is lower than the current market price. A factor of adjustment is calculated which is used in
a new calculation of the average number of shares in order to adapt the figures for comparison with
prior periods.
Changes in the accounting principles
The Company has from 2007 applied IFRS 7 ”Financial Instrument”. The application of this
principle has not resulted in any changes of the accountings. The principle puts higher demand on
the level of information added by Company in the financial report. This holds also for the change
over from RR 30:5 to 30:6, which also puts higher requirements on the information enclosed in the
Group accountings.
20.2 Interim financial information
The quarterly financial report for IGE for Q3 2008 can be inspected on www.ige.se, this report has not been
audited.
64
20.3 Dividend policy
The Company intends to follow a dividend policy favourable to the shareholders. The amount of any
dividends to be distributed will be dependent on the Company’s investment requirements and rate of growth
as well as the general development and financing requirements of the Company.
IGE has not paid any divided since its incorporation.
20.4 Legal and arbitration proceedings
The Company is not involved in any governmental, legal or arbitration proceedings (including any such
proceedings which are pending or threatened of which the Company is aware) which may have, or have had
in the recent past significant effects on the Company’s or the group’s financial position or profitability, nor
has the Company been involved in any such proceedings during the previous 12 months.
20.5 Significant changes
There have been no significant changes in the financial or trading position of the group which has occurred
since 30 September 2008, other than the intention to make a Voluntary Offer for all issued and outstanding
shares in IGE Nordic described in the Securities Note and the convertible loan completed 5 November 2008
(described in the press release dated 5 November 2008 and the Q3 2008 report). Reference is further made to
other notifications published by the Company on Oslo Stock Exchange.
20.6 Segment information
The business of IGE has not since its incorporation generated revenues, and a breakdown of total revenues
by category of activity and geographic market for the financial periods covered by the historical financial
information is not available.
20.7 Trends
The Company has not experienced any significant changes or trends outside the ordinary course of business
that are significant to the Company after 31 December 2007 or for the financial year 2008 as at the date of
this Prospectus, other than those described in this Prospectus.
20.8 Information on holdings
Except for the ownership in the companies set out in section 8, the Company does not have any ownership
interests or investments which are likely to have a significant effect on the assessment of the Company’s own
assets and liabilities, financial position or profit and losses.
20.9 Funding and treasury policies and objectives
The Board of Directors together with the Chief Financial Officer shall ensure that the Company has
adequate, though not excessive cash resources, and when applicable borrowing arrangements and overdraft
or standby facilities, to enable it at all times to have the level of funds available which is required to achieve
its business/service objectives.
The Company has established accounting and internal control systems to ensure that the cash resources, or
when applicable loan facility funds, are appropriated according to the budget and allowed use set by the
Board of Directors, in accordance with laws, regulations and auditing standard and practices generally
accepted in Norway.
65
21
ADDITIONAL INFORMATION
The following description includes certain information concerning the Company’s share capital, a brief description of
certain provisions contained in the Company’s Articles of Association as they are in effect at the date of this Prospectus
and a brief description of certain applicable law, hereunder the Swedish Companies Act and the Norwegian Securities
Trading Act. The summary does not purport to be complete and is qualified in its entirety by the Company’s Articles of
Association and laws pertaining to the Company. Any change in the Articles of Association is subject to approval by a
general meeting of the Company’s shareholders.
21.1 General
Under Swedish law, limited liability companies are divided into two categories, private and public
companies. Only the shares of public companies may be traded on a stock exchange or other regulated
market places. The Company is a Swedish public limited liability company (in Swedish: publikt aktiebolag),
subject to provisions of above all the Swedish Companies Act.
21.2 Shares and Share Capital
The Company’s Share Capital prior to the issue of the Consideration Shares is SEK 18,750,000 divided into
375,000,000 Shares, each with a par value of SEK 0.05.
The Company has one class of Shares which are fully paid.
21.3 Development in share capital
As per the date of this Prospectus the number of Shares outstanding was 375,000,000. The Company has
undertaken the following share issues since the foundation in 1983:
Date
18/04/83
20/09/83
22/09/89
10/10/89
22/11/89
01/01/97
18/11/97
18/07/00
19/11/01
02/10/02
12/05/04
16/03/05
24/05/05
05/07/05
19/10/05
12/12/05
07/12/06
16/04/08
Transaction
Foundation
Split 50:1
New share issue
New share issue
New share issue
Split 40:1
New share issue
New share issue
New share issue
New share issue
New share issue
Exercised w arrant
New share issue
New share issue
New share issue
New share issue
New share issue
New share issue
Change in
Change in no No of Shares
Share
of shares
after change
Par Value (SEK) Capital (SEK) Share Capital
0
500
100
0
50,000
24,500
25,000
2
0
50,000
5,000
30,000
2
10,000
60,000
200,000
230,000
2
400,000
460,000
560,000
790,000
2
1,120,000
1,580,000
30,810,000
31,600,000
0.05
0
1,580,000
25,000,000
56,600,000
0.05
1,250,000
2,830,000
21,120,000
77,720,000
0.05
1,056,000
3,886,000
77,560,000
155,280,000
0.05
3,878,000
7,764,000
37,920,000
193,200,000
0.05
1,896,000
9,660,000
5,000,000
198,200,000
0.05
250,000
9,910,000
50,000,000
248,200,000
0.05
2,500,000
12,410,000
19,000,000
267,200,000
0.05
950,000
13,360,000
25,000,000
292,200,000
0.05
1,250,000
14,610,000
18,000,000
310,200,000
0.05
900,000
15,510,000
800,000
311,000,000
0.05
40,000
15,550,000
30,000,000
341,000,000
0.05
1,500,000
17,050,000
34,000,000
375,000,000
0.05
1,700,000
18,750,000
66
21.4 Share options, convertible securities, etc
There are no options established to the Share Capital of the Company, other than the warrants granted to the
members of the Board of Directors and the key employees, according to the option plan resolved by the
Board of Directors, in accordance with an authorization from the General Meeting (see section 15).
The Company has not issued any convertible securities, exchangeable securities, warrants or other securities
exchange into Shares other than the incentive programme for executive officers and key personnel described
in this section.
21.5 Authorisation to increase the share capital
On 6 May 2008, the Annual General Meeting of the Company resolved to grant the Board of Directors with
an authorisation to resolve the issue up to 34,100,000 new Shares in the Company. The authorization has the
following wording (English translation):
“The general meeting resolved to authorize the board, to decide on increase of the Company’s share capital, on one or
several occasions until the next annual general meeting, through the issuance of shares, convertibles or warrants,
encompassing a share capital increase with up to SEK 1,705,000 corresponding to a maximum of 34,100,000 shares
The authorization is valid until the next annual general meeting. The preferential right of the existing shareholders may
be derogated from. Payments for subscribed shares, convertible loans or warrants may be settled by way of cash
contribution, contribution in kind or set-off of debt. The authorization may be used for the purpose of raising capital
and/or acquisitions where the consideration in whole or in part shall be made in shares.”
21.6 Own shares
The Company does not hold any own Shares. The Board of Directors holds no authorization to resolve that
the Company shall acquire any own Shares.
21.7 Memorandum and Articles of Association
The Articles of Association of International Gold Exploration IGE AB are included in Appendix 1 to this
Registration Document.
According to its Articles of Association section 3, the purpose of the company is, directly or through
subsidiaries or joint ventures, to carry on mining activities and exploration of minerals, and to own and
manage movable and real property, and activities connected with such.
The Company has one class of shares only. According to the Articles of Association section 6 the Board of
Directors shall have at least 3 and maximum 6 members.
The Articles of Association of the Company contain no provisions restricting foreign ownership of Shares.
There are no limitations under Swedish law on the rights of non-residents or foreign owners to hold or vote
the Shares.
21.8 Shareholder rights
The Shares are identical in every respect and carry the right to one vote at general meetings. None of the
major shareholders have different voting rights.
All dividends of the Company shall be declared, apportioned and paid to the shareholders pro rata to the
number of Shares held at the relevant date. Shareholders have pre-emption rights in new issues of securities
by the Company unless such pre-emption rights is waived by a shareholders’ resolution which requires
67
support by two-thirds of the votes cast as well as two-thirds of the aggregate share capital represented at the
general meeting of the Company.
Any amendment of the shareholders rights to vote at general meetings must be done by amending the articles
of association. According to the Swedish Companies Act amendments of the company’s Articles of
Association requires in general the affirmative vote of two-thirds of the votes cast as well as two-thirds of the
aggregate share capital represented at the general meeting. Further, the Swedish Companies Act requires that
decisions that only have the effect of altering the rights and preferences of certain share or shares, receive the
approval of all the holders of such share or shares present at the meeting and who together represent not less
than nine-tenth of all shares whose rights are affected, as well as the majority required for amendments to the
Company's Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of
dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares,
require to be supported by all of the shareholders present at the meeting who together represent not less than
90% of the share capital in the Company. Decisions that means restrictions in the number of shares which
shareholders may vote for at general meeting require to be supported by two-thirds of the vote casts and
nine-tenth of the shares represented at the general meeting.
All Shares carry an equal right to any surplus in the event of a liquidation of the Company.
There are neither restrictions on the transferability of the Shares nor any restrictions on foreign ownership of
the Company’s Shares. Existing shareholders do not have any pre-emptive rights upon the transfer of Shares
in the Company.
21.9 General meetings of shareholders
Through the general meeting, the Company’s shareholders exercise the supreme authority in the Company,
subject to the limitations provided by Swedish law.
All shareholders in the Company are entitled to attend and vote at general meetings, either in person or by
proxy. n general, in order to be entitled to vote, a shareholder must be registered as the owner of Shares in
the share register kept by the VPC. Beneficial owners of Shares that are registered in the name of a nominee
are generally not entitled to vote under Swedish law, nor are any persons who are designated in the register
as holding such Shares as nominees. Shareholders registered as such in the VPS will only be entitled to vote
at general meetings of the Company if he has arranged for registration of entitlement to vote (in Swedish:
Rösträttregistrering) in the VPC through the Registrar at the latest 5 business days (including Saturdays)
prior to the general meeting and has noticed the Company of his participation at the general meeting in
accordance with the notice to the meeting.
General meetings are conveyed by the Company’s Board of Directors. In accordance with the Company’s
Articles of Association, a notice of a general meeting shall be announced in Official Gazette (in Swedish:
Post och Inrikes Tidningar) and in Dagens Industri at the latest two or four weeks before the date of the
meeting depending on the type of meeting and matters to be addressed at the meeting, and shall include a
proposal for an agenda for the meeting. A shareholder is entitled to submit proposals to be discussed at
general meetings provided such proposals are submitted in writing to the Board of Directors in such good
time that it can be entered on the agenda of the meeting.
The annual general meeting shall be called by the Board of Directors such that it can be held within six
months from the end of each financial year. The annual general meeting shall deal with and decide on the
adoption of the annual financial statement and annual report, the question of declaring dividend and such
other matters as may be set out in the notice of the annual general meeting.
Extraordinary general meetings can be called by the Board of Directors, and if applicable the corporate
assembly or the chairman of the corporate assembly. In addition, the Board of Directors shall call an
extraordinary general meeting whenever so demanded in writing by the auditor or shareholders representing
at least 10% of the share capital, in order to deal with a specific subject.
68
The following matters shall always be resolved by the general meeting:
•
•
•
Approval of the annual report and the auditors’ report as well as, where appropriate, the consolidated
accounts and auditors’ report on the consolidated accounts.
Adoption of the profit and loss account and balance sheet and, where appropriate, the consolidated
profit and loss account and consolidated balance sheet; allocation of the company’s profits or losses
as set forth in the adopted balance sheet; discharge from liability of the members of the Board and
the managing director; Determination of the remuneration to the Board and the auditors.
Election of the Board members and, where appropriate, auditors and alternate auditors.
21.10 Corporate matters
International Gold Exploration IGE AB (publ) is registered with the Swedish Companies Registration Office
under the registration number: 556227-8043, subject to Swedish regulations. The articles of association are
included in Appendix 1. International Gold Exploration has its head office at Kungsgatan 44, SE-111 35
Stockholm, Sweden.
336,335,064 of the Shares of International Gold Exploration are admitted to trading on the Oslo Stock
Exchange with the ticker IGE with a traded share price of NOK 1.07 and a market capitalisation of
approximately NOK 401 million as per 14 July 2008. The remaining 38,664,936 Shares are admitted to
trading on the NGM Equity exchange in Sweden with the ticker IGE.
The Company’s share register is operated through the VPS in Norway and through the VPC in Sweden. The
Company’s registrar is DnB NOR Bank ASA. The securities number (ISIN number) for the Company’s
Shares is SE 000378119.
21.11 Legal and arbitration proceedings
As of the date of this Prospectus and for the preceding 12 months, the Company is not and has not been
involved in any governmental, legal or arbitration proceedings, including any such proceedings which are
pending or threatened of which the Company is aware of, which are likely to have, or have had in the recent
past, significant effects on the Company’s financial position.
69
22 MATERIAL CONTRACTS
IGE has entered into the following contracts considered to be of material importance for the business of the
Company:
•
IGE’s subsidiary in Burundi, IGE Burundi SA, has entered in to a joint venture agreement with
MRG Nickel Investments Ltd. IGE, owns 54% and MRG Nickel Investments Ltd, a company within
the Mitchell River Group, own 46%. The new company, Tanganickel SA, will pursue nickel
exploration and development projects in Burundi.
Mitchell River Group (MRG) is a private investment partnership specializing in the natural resources
industries. MRG provides seed funding and management for early stage resource projects with a
primary focus on base metals, particularly nickel and uranium.
The Company consider the agreement to be of high interest for the Group due to MRG’s experience,
track record and competence within the work of resource evaluation, metallurgy, permitting,
feasibility studies and project management for these projects.
•
The Company entered a Joint Venture agreement in July 2007 with the South African Company
Goldplat Plc. The purpose of the Joint Venture is to start small scale gold production at Kilimapesa
in the Lolgorien region of south west Kenya, The joint venture is registered in Kenya as Kilimapesa
Gold (Pty) Ltd. IGE's interest in the project is 50%.
70
23 THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATIONS
OF ANY INTEREST
23.1 Statements by experts
The Prospectus contains no statements by experts regarding the company or market conditions.
23.2 Third party information
The information in this Prospectus that has been sourced from third parties has been accurately reproduced
and as far as the Company is aware and able to ascertain from information published by that third party, no
facts have been omitted which would render the reproduced information inaccurate or misleading. The
source of third party information is identified where used.
71
24 NORWEGIAN TAX
The following is a summary of certain Norwegian tax considerations relevant to the acquisition,
ownership and disposition of shares by holders that are residents of Norway for purposes of Norwegian
taxation.
The summary is based on applicable Norwegian laws, rules and regulations as they exist as of the date
of this Prospectus. Such laws, rules and regulations are subject to change, possibly on a retroactive
basis. The summary does not purport to be a comprehensive description of all the tax considerations
that may be relevant to the shareholders and does not address foreign tax laws.
Each shareholder should consult his or her own tax advisor to determine the particular tax
consequences for him or her and the applicability and effect of any Norwegian or foreign tax laws and
possible changes in such laws.
24.1 Norwegian shareholders
24.1.1
Taxation of dividends
Corporate shareholders
Dividends distributed from the Company to Norwegian corporate shareholders (i.e. limited liability
companies and similar entities) are currently exempt from taxation according to the tax exemption
method.
Personal shareholders
Dividends distributed to personal Norwegian shareholders exceeding a calculated tax free allowance,
will be taxed as ordinary income for the shareholder. Ordinary income is taxed at a flat rate of 28%.
The tax-free allowance is calculated as the acquisition cost of the share multiplied by a determined
(risk-free) interest rate after tax. The tax-free allowance will be calculated on each individual share,
not on a portfolio basis. Unused allowance may be carried forward and set off against future dividends
or against gains upon realisation of the same share.
The tax free allowance is allocated to the personal shareholders holding shares at the end of each
calendar year. Personal shareholders who transfer shares will not be entitled to deduct any calculated
allowance related to the year of transfer.
24.1.2
Taxation upon realisation of Shares
Corporate shareholders
For Norwegian corporate shareholders, gains from sale or other disposition of shares in the Company
are currently exempt from taxation according to the tax exemption method, and losses suffered from
such realisation are not tax deductible. Costs incurred in connection with the purchase and sale of
shares are not tax deductible.
However, pursuant to a proposed amendment, 3% of any capital gains realised and any dividends declared
after 7 October 2008 shall be recognised as taxable income. If the proposal is adopted by the Norwegian
Parliament this implies that any capital gain derived from the exchange of shares in International Gold
Exploration will effectively be subject to 0.84% income tax (28% tax rate x 3% of the capital gain /
dividend). If the realisation of shares in International Gold Exploration leads to a capital loss, no part of such
loss will be deductible for a corporate shareholder for tax purposes.
Personal shareholders
72
For Norwegian personal shareholders gains from sale or other disposition of shares are taxable as
ordinary income at a rate of 28% and losses are deductible against ordinary income.
Gain or loss is calculated per share, as the difference is the sales price minus the acquisition cost of the
share. A taxable gain on a share may be reduced by unused calculated allowance connected to the
same share (see section 24.1.1 “Personal shareholders” on Taxation of Dividends) but may not lead to
or increase a deductible loss. Further, unused allowance may not be set off against gains from
realisation of the other shares. The tax free allowance is allocated to the personal shareholders holding shares
at the end of each calendar year. Personal shareholders who transfer shares will not be entitled to deduct any
calculated allowance related to the year of transfer.
If a shareholder disposes of shares acquired at different times, the shares that were first acquired will
be deemed as first sold (the FIFO-principle) upon calculating taxable gain or loss. Costs incurred in
connection with the purchase and sale of shares may be deducted in the year of sale.
A Norwegian personal shareholder who moves abroad and ceases to be tax resident in Norway or is
regarded as tax resident in another jurisdiction according to an applicable tax treaty, will be deemed
taxable in Norway for any potential gain related to the shares held at the time the tax residency ceased
or the time when the shareholder was regarded as tax resident in another jurisdiction according to an
applicable tax treaty, as if the shares were realised at this time (exit taxation). Currently, gains of NOK
500,000 or less are not taxable. If the shareholder moves to a jurisdiction within the EEA, potential
losses related to shares held at the time tax residency ceases will be tax deductible. Taxation (loss
deduction) will occur at the time the shares are actually sold or otherwise disposed of. The tax liability
calculated according to these provisions will be annulled i.e. if the shares are not realised within five
years after the shareholder ceased to be resident in Norway for tax purposes or was regarded as tax
resident in another jurisdiction according to an applicable tax treaty.
24.1.3
Net wealth tax
Norwegian limited liability companies or similar entities are exempted from net wealth tax. For other
resident shareholders, the shares will form part of the capital and be subject to net wealth tax. The
maximum wealth tax rate is 1.1%.
Listed shares are valued at the quoted value at January 1 in the assessment year.
24.1.4
Inheritance tax
When shares are transferred either through inheritance or as a gift, such transfer may give rise to
inheritance or gift tax in Norway if the deceased, at the time of death, or the donor, at the time of the
gift, is a resident or citizen of Norway. However, in the case of inheritance tax, if the deceased was a
citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax, or
a similar tax, is levied by the deceased's country of residence. Irrespective of residence or citizenship,
Norwegian inheritance tax may be levied if the shares are effectively connected with certain business
activities carried out by the shareholder in Norway.
73
25 SWEDISH TAX
The statements herein regarding taxation are unless otherwise stated based on the laws in force in Sweden as of the
date of this Prospectus, and are subject to any changes in law occurring after such date. Such changes could be made
on a retrospective basis.
The following summary does not purport to be a comprehensive description of all the tax considerations that may be
relevant to a decision to acquire, own or dispose of the shares. Furthermore, the summary only focuses on the
shareholder categories explicitly mentioned below (individual shareholders and limited liability companies).
Shareholders are advised to consult their own tax advisors concerning the overall tax consequences of their ownership
of Shares. In particular, this document does not include any information with respect to U.S. taxation or taxation in any
other jurisdiction than Sweden. Prospective investors who may be subject to tax in the United States or any other
jurisdiction are urged to consult their tax adviser regarding federal, state, local and other tax consequence of owning
and disposing of Shares.
25.1 Swedish shareholders
Taxation of dividends - Individual shareholders
Dividends paid to a Swedish tax resident individual are taxed in Sweden as capital income at a flat rate of
30%. The VPC or – if the shares are nominee registered – the Nominee withholds the tax as a preliminary
tax.
Taxation of dividends - Corporate shareholders (Limited liability companies)
Dividends paid to a Swedish corporate shareholder are normally taxed as ordinary business income at a flat
rate of 28%. Dividends attributable to so-called business related shares are tax-exempt. Publicly traded
shares are considered as being business related if the transferor holds at least 10% of the voting rights in the
sold company or if the holding otherwise is necessary for the business conducted by the holder or any of its
affiliates and that the transferor has held the transferred shares for an uninterrupted period of at least 12
months prior to the transfer date and that the transferor during this 12-month period has held a participation
of at least 10% in the voting rights of the transferred company.
Taxation on realisation of Shares - general
The capital gain or, where applicable, the capital loss, is calculated as the difference between the sales
proceeds less sales expenditure and the acquisition cost (costs related to acquisition and potential
improvements) for the Shares sold. The acquisition cost is calculated according to the so-called average
method, implying that the tax acquisition cost is calculated as the average acquisition cost for all the Shares
of the same type and class.
Since the Shares in the Company are publicly traded, the acquisition cost related to these shares may be
determined as 20% of the sales price after deduction of expenses related to the sale; the so-called standard
rule
Taxation on realisation of Shares - Individual shareholders
A capital gain realized by Swedish tax resident individuals is taxed as capital income at a flat rate of 30%. A
capital loss is normally deductible with 70% against other capital incomes. However, capital losses on
publicly traded shares (such as the Company’s Shares) are fully deductible against capital gains on shares
(publicly traded and not-publicly traded) and on publicly traded securities taxed as shares (except for parts in
interest funds) and which have been realized the same year. Capital losses may not be carried forward to the
following income year.
If a net capital income loss should arise, 30% of this loss may be credited against earned income tax and
74
against real estate tax. However, if the loss exceeds SEK 100,000 only 21% of the excess portion allows for
a tax credit
Taxation on realization of Shares - Corporate shareholders
A capital gain realized by a corporate shareholder is normally taxed as ordinary business income at a flat rate
of 28%; please see below as regards corporate shareholders holding so-called business related shares. Capital
losses may only be deducted against capital gains on other securities taxed as shares. In certain cases capital
losses may be offset against capital gains realized by group companies if group contributions can be
exchanged between the companies. Capital losses that are not offset against capital gains may be carried
forward to the following income year.
Capital gains and capital losses attributable to so-called business related shares held by corporate
shareholders are not taxable/tax deductible. Special rules apply when a share cease to be business related.
Net wealth tax
There is no wealth tax in Sweden.
25.2 Non-resident shareholders
This section summarizes Swedish tax rules relevant to shareholders who are not resident in Sweden for tax
purposes (“Non-resident shareholders”). Non-resident shareholders’ tax liabilities in their home country or
other countries will depend on applicable tax rules in the relevant country.
Taxation of dividends
Dividends distributed to shareholders who are individuals not resident in Sweden for tax purposes (“Nonresident personal shareholders”), are as a general rule subject to withholding tax at a rate of 30%. The
withholding tax rate of 30% is normally reduced through tax treaties between Sweden and the country in
which the shareholder is resident. The withholding obligation lies with the company distributing the
dividends.
The above generally applies also to shareholders who are limited liability companies not resident in Sweden
for tax purposes (“Non-resident corporate shareholders”). However, dividends distributed to Non-resident
corporate shareholders are exempt from withholding tax if the Non-resident corporate shareholder shares in
the company are business related shares in the dividend paying company.
Non-resident personal shareholders are subject to ordinary withholding tax.
Nominee registered Shares will be subject to withholding tax at a rate of 30% unless the nominee shows to
the Tax Agency that the dividend shall to be subject to a lower withholding tax rate. The nominee must file a
summary with the Tax Agency including all beneficial owners that are subject to lower withholding tax.
If a Non-resident shareholder is carrying on business activities in Sweden, and the Shares are effectively
connected with such activities, the shareholder will be subject to the same taxation as Swedish shareholders,
as described above.
Taxation on realization of Shares
Gains from the sale or other disposal of Shares by a Non-resident shareholder are normally not taxed in
Sweden.
Moreover, a Non-resident personal shareholder may be subject to Swedish income tax on gain on shares, if
this person at any time during the calendar year of the disposal or the previous ten calendar years has been
domiciled or permanently resident in Sweden. However this right may be limited by applicable tax treaties
for the avoidance of double taxation.
75
25.3 Duties on the transfer of Shares
No stamp or similar duties are currently imposed in Sweden on the transfer of Shares whether on acquisition
or disposal.
25.4 Inheritance tax
There is no inheritance tax in Sweden.
76
26 DEFINITIONS & GLOSSARY TERMS
The following definitions and glossary apply in this Prospectus unless dictated otherwise by the context,
including the foregoing pages of this Prospectus. Definitions in plural also apply for words in singular, and
vice versa.
Articles of Association
The articles of Association of International Gold Exploration IGE AB
as the date of the prospectus
Board
The Board of Directors of International Gold Exploration IGE AB
Business Day
a day (not being a Saturday) on which banks are open for business in
Oslo
CESR
The Committee of European Securities Regulators
CET
Central European time
Claim or utmål
Right to explore, produce and mine within certain limits as defined in
the Norwegian Mining Act of 1972. Such right may be applied for if the
production from the mine is or, within reasonable time, most probably
will be profitable
Company
International Gold Exploration IGE AB
Code of practice
The Norwegian Code of Practice for Corporate Governance of 4
December 2007
EBIT
Earnings Before Interest and Tax
EBITDA
Earnings Before Interest, Tax, Depreciation and Amortisation
EGM
Extraordinary General Meeting
Handelsbanken Capital Markets
A division of Svenska Handelsbanken AB (publ), registered in
Stockholm Sweden.
IFRS
International Financial Reporting Standards
IGE
International Gold Exploration IGE AB and its subsidiaries
Management
The management of International Gold Exploration IGE AB
Manager
Handelsbanken Capital Markets
Muting or Pre-claim
Norwegian initial exploration licence as defined in the Norwegian
Mining Act of 1972. A Claim is a 250x250 meter permit from
Bergmesteren to initiate initial exploration for minerals with specific
density above 5
NGU
The geological Survey of Norway
NOK
The currency in the Kingdom of Norway (Norwegian krone)
International Gold Exploration
International Gold Exploration IGE AB without subsidiaries
IGE Group or the Group
International Gold Exploration IGE AB and its subsidiaries
77
Ore
Mineral of proven economic value
Ore reserve
A mineral deposit of proven economic value
Oslo Børs
Oslo Børs ASA
Prospectus
The Prospectus issued by the Company in relation to the Offering,
comprising of this Registration Document, the Security Note and the
Summary prepared, published and approved by and filed with Oslo
Børs in accordance with the Prospectus Rules
Prospectus Rules
The Prospectus rules in the Securities Trading Act and the Securities
Trading Regulation, which implements the Prospective Directive
(EC/2003/71), including the Commission Regulation EC/809/2004, in
Norwegian law
Swedish Limited Companies Act
The Swedish Limited Companies Act of 2005:551 (as amended)
Registration Document
The Registration Document, dated 1 December 2008, produced under
the Prospectus Rules, which together with this document and the
Summary, constitutes the Prospectus
Securities Note
The Securities Note produced under the Prospectus Rules, which,
together with this document and the Summary, constitutes the
Prospectus
Securities Trading Act
The Securities Trading Act of 26 June 2007 No. 75 (as amended)
Securities Trading Regulation
The Securities Trading Regulation of 29 June 2007 No. 876 (as
amended)
Shares
All shares issued by the Company
Stock Exchange Regulations
The Stock Exchange Regulations of 29 June 2007 No. 74 (as amended)
Summary
The Summary produced under the Prospectus Rules, which, together
with this document and the Registration Document, constitutes the
Prospectus
VPS
The Norwegian Central Securities Depository
VPS account
An account held with VPS to register ownership of securities
VPC
The Swedish Central Securities Depository
VPC account
An account held with VPC to register ownership of securities
78
27 APPENDICES AND DOCUMENTS ON DISPLAY
27.1 Appendices
The following appendices are included in this Prospectus:
•
•
Appendix 1: Articles of Association of International Gold Exploration IGE AB
Appendix 2: Acceptance form
27.2 Documents on Display
The documents listed below will be available for inspection for the life of the Prospectus on the Internet at
www.ige.se, or at the addresses below:
(a) the memorandum and articles of association of the issuer;
(b) all reports, letters, and other documents, historical financial information, valuations and
statements prepared by any expert at the issuer's request any part of which is included or referred to
in the registration document;
(c) the historical financial information of the issuer or, in the case of a group, the historical financial
information for the issuer and its subsidiary undertakings for each of the two financial years
preceding the publication of the registration document.
The Company's office: International Gold Exploration IGE AB
Kungsgatan 44
SE-111 35 Stockholm, Sweden
The Manager's offices: Handelsbanken Capital Markets
Rådhusgaten 27
N-0101 Oslo, Norway
27.3 Cross Reference List
Name of document
Q3 2008 quarterly
report
2007 annual report
2006 annual report
2005 annual report
IGE Nordic AB Listing
Prospectus 2007,
Appendix 10 Brook
Hunt Report
Prospectus reference
Chapter 4, 5.2,
10.1.1, 11, 20.1,
20.2 & 20.5
Chapter 4, 5.2, 8,
10.1.2, 11, 15.5 &
20.1
Chapter 4, 5.2,
10.1.3, 11 & 20.1
Chapter 4, 5.2,
10.1.4, 11 & 20.1
Chapter 7.7
Available from:
http://www.ige.se/?file=press/pressreleases/index.xml
http://www.ige.se/?file=press/pressreleases/index.xml
http://www.ige.se/?file=press/pressreleases/index.xml
http://www.ige.se/?file=press/pressreleases/index.xml
http://www.igenordic.se/pdf/Prospectus_IGE_Nordic.pdf
79
III. VOLUNTARY OFFER DOCUMENT AND
SHARE SECURITIES NOTE
Voluntary Offer for all issued and outstanding shares in
Made by
Voluntary Offer:
One (1) share in IGE Nordic AB (Publ.) to be exchanged into four (4) shares in International Gold
Exploration IGE AB (Publ.)
Offer Period:
From and including 1 December 2008 to and including 15 December 2008 at 17:30 (CET)
Share Securities Note for Shares in International Gold Exploration IGE AB
(Publ.) offered under the Voluntary Offer
Financial Adviser and Manager:
28 NOVEMBER 2008
TABLE OF CONTENTS
1
RISK FACTORS RELATING TO INTERNATIONAL GOLD EXPLORATION ................................. 6
1.1
1.2
1.3
1.4
1.5
General risks ............................................................................................................................. 6
Risks connected to exploration and development of minerals and metals ............................... 6
Risks connected to technological developments ...................................................................... 9
Regulatory and political risks ................................................................................................... 9
Risks related to the Shares...................................................................................................... 10
2
STATEMENTS OF RESPONSIBILITY ........................................................................................ 11
3
THE VOLUNTARY OFFER ...................................................................................................... 12
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
3.14
3.15
3.16
3.17
3.18
3.19
3.20
3.21
3.22
3.23
3.24
3.25
3.26
4
Voluntary Offer to exchange Shares in IGE Nordic with Shares in International
Gold Exploration .................................................................................................................... 12
The Offeror ............................................................................................................................. 12
The Target company ............................................................................................................... 12
Reasons for the Offer and Plans for the Future Business ....................................................... 12
Contact between the Parties Prior to the Offer ....................................................................... 12
Impact on the Company’s Employees .................................................................................... 13
Offer Price .............................................................................................................................. 13
The Offer Period ..................................................................................................................... 13
Acceptance of the Offer ......................................................................................................... 14
Conditions to the Offer ........................................................................................................... 14
Amendments to the Offer ....................................................................................................... 15
Announcements ...................................................................................................................... 15
Completion of the Offer and Issuance of the Consideration Shares ....................................... 15
Legislation .............................................................................................................................. 17
Statement from the Board of IGE Nordic............................................................................... 17
Pre-acceptances of the Voluntary Offer ................................................................................. 18
Interest of natural or legal persons involved in the Voluntary Offer ...................................... 18
Transaction Costs ................................................................................................................... 18
Tax ......................................................................................................................................... 19
Purchase of shares in IGE Nordic outside the Offer .............................................................. 19
Compulsory Acquisition......................................................................................................... 19
Delisting from Oslo Axess ..................................................................................................... 19
Financial Advisor and Manager ............................................................................................. 19
Miscellaneous ......................................................................................................................... 19
Choice of Law and Legal Venue ............................................................................................ 20
Offer Restrictions ................................................................................................................... 20
INFORMATION ABOUT IGE NORDIC ...................................................................................... 22
4.1
4.2
4.3
General ................................................................................................................................... 22
Selected Financial Information............................................................................................... 22
Share Capital and Shareholders .............................................................................................. 26
5
INFORMATION ABOUT IGE ................................................................................................... 27
6
LEGAL IMPLICATIONS OF THE OFFER ................................................................................. 28
7
STATUTORY AUDITORS ......................................................................................................... 29
1
8
KEY INFORMATION ............................................................................................................... 30
9
SHARE CAPITAL AND SHAREHOLDER MATTERS ................................................................. 33
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
10
TAXATION .............................................................................................................................. 41
10.1
10.2
10.3
11
Shareholders who are resident in Norway .............................................................................. 41
Shareholders who are resident in Sweden .............................................................................. 43
Shareholders who are resident in other jurisdictions .............................................................. 45
ADDITIONAL INFORMATION .................................................................................................. 46
11.1
11.2
12
The Company’s share capital before the issue of Consideration Shares ................................ 33
Authority to issue Shares ........................................................................................................ 33
The Company’s share capital after the issue of Consideration Shares ................................... 33
Dilution................................................................................................................................... 34
Share registrar and securities number..................................................................................... 34
Shareholder rights................................................................................................................... 34
International Gold Exploration’s share register in VPC ......................................................... 35
Other shareholder matters ...................................................................................................... 35
Statements by experts ............................................................................................................. 46
Third party information .......................................................................................................... 46
DEFINITIONS & GLOSSARY TERMS ....................................................................................... 47
APPENDICES 49
Appendix 1: Articles of Association of International Gold Exploration (office translation
into English) ................................................................................................................. 49
Appendix 2: Acceptance Form .......................................................................................................... 51
2
IMPORTANT NOTICE
This Document has been prepared in connection with the Offer submitted by International Gold Exploration
pursuant to section 6-19 of the Norwegian Securities Trading Act and the issue of the Consideration Shares
under the Offer.
The Offer and this Document has been approved by Oslo Børs in accordance with section 6-14 of the
Norwegian Securities Trading Act. Shareholders of IGE Nordic must rely upon their own examination of the
Offer and should study this Document and the Registration Document carefully and, if necessary, seek
independent advice concerning the Offer, this Document and the Prospectus.
The issue and distribution of this Document and the Prospectus does not imply in any way that the
information included herein continues to be correct and complete at any date subsequent to the date of this
Document and the Prospectus.
With the exception of International Gold Exploration, no person is entitled or authorised to provide any
information or make any representations in connection with the Offer other than the information included in
this Document and in the Prospectus. If such information or representation is provided or made by any other
party than International Gold Exploration, such information or representation, as the case may be, should not
be relied upon as having been provided or made by or on behalf of International Gold Exploration.
The Offer and the issue of the Consideration Shares are only directed towards IGE Nordic shareholders who
may legally receive the Prospectus (including this Document) and accept the Offer.
Copies of this Offer Document will be distributed to the shareholders of IGE Nordic registered in the
shareholders register in the VPS as at 26 November 2008, except for IGE Nordic shareholders in
jurisdictions where this Document may not be lawfully distributed, and are available free of charge at the
office of Handelsbanken Capital Markets:
Handelsbanken Capital Markets
Rådhusgaten 27
P.O. Box 332 Sentrum
N - 0101 Oslo
Norway
Tel: +47 22 94 07 00
Fax: +47 22 94 07 68
Handelsbanken Capital Markets is acting as the Receiving Agent for the Offer and Financial Adviser to
International Gold Exploration. In its capacity as Receiving Agent and Financial Adviser, Handelsbanken
Capital Markets is acting for no other party in connection with the Offer and will not be responsible to any
person other than International Gold Exploration, nor for providing advice in relation to the Offer.
This Document has been prepared in the English language only. In addition, a summary in Swedish has been
prepared.
3
Restrictions
The distribution of this Prospectus and the making of the Offer may, in certain jurisdictions (including, but
not limited to, Canada, Australia, Japan, the United States and the United Kingdom), be restricted by law.
Therefore, persons obtaining this Document or into whose possession this Document otherwise comes, are
required to, and should inform themselves of and observe all such restrictions. IGE and the Receiving Agent
do not accept or assume any responsibility or liability for any violation by any person whomsoever of any
such restriction.
The Offer is not directed to persons whose participation in the Offer requires that further offer documents are
issued or that registration or other measures are taken, other than those required under Norwegian law. No
document or materials relating to the Offer may be distributed in or into any jurisdiction where such
distribution or offering requires any of the aforementioned measures to be taken or would be in conflict with
any law or regulation of such a jurisdiction. In the event of such distribution or offering still being made, an
Acceptance Form sent from such a country may be disregarded.
The Offering is not open to persons in jurisdictions in which it is unlawful for such person to receive or
accept the Offer. Without limitation, the Offering is inter alia subject to such restrictions as set out in section
3.26 (“Offer Restrictions”). No action has been taken to permit the distribution of the Offer in any
jurisdiction where action would be required for such purposes (except Norway and Sweden).
4
Special Cautionary Notice Regarding Forward-looking Statements
The Prospectus contains certain statements that are neither reported financial results nor other historical
information. Forward-looking statements are statements related to expectations, beliefs, projections, future
plans and strategies, anticipated events or trends and similar expressions concerning matters that are not
historical facts. These forward-looking statements reflect current views about future events and are subject to
risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ
materially from those expressed in any forward-looking statement. Certain factors that could cause actual
results to differ materially from expected results include, among other things, delays in completing the
transactions discussed herein, difficulties in achieving benefits for the group through economies of scale and
joint future efforts, and changes in global economic, business, competitive market and regulatory factors, as
well as other matters not known to International Gold Exploration. International Gold Exploration does not
intend and disclaims any duty or obligation to update or revise any industry information or forward-looking
statements set forth in the Prospectus to reflect new information, future events or otherwise.
5
1
RISK FACTORS RELATING TO INTERNATIONAL GOLD EXPLORATION
Investing in International Gold Exploration, like all other equity investments, is associated with risk.
Prospective investors should carefully consider each of the following risk factors and the other information
contained in this Prospectus before making an investment decision. The trading price of the Company’s
Shares could decline due to any of these risks and investors could lose all or part of their investment. The
description of risks is not necessarily exhaustive and factors not mentioned here might nevertheless have a
significant bearing on the value of the Shares in the Company. There may be additional risks that are
currently not considered to be material or of which the Company is not presently aware. If any of the
following risks were to materialise, the business, financial condition and results of operations could be
adversely affected.
1.1
General risks
The Company’s risk profile will be dependent on developments in the main areas of activity in which it is
involved. The Company’s main interests are in:


Exploration, extraction and processing of minerals and metals.
Technological developments of geophysical exploration methods.
The risks discussed below are divided into the areas in which the Company will operate.
1.1.1
Share price volatility
The price of the Company’s Shares may be highly volatile. In addition, the stock markets have from time to
time experienced significant price and volume fluctuations that have affected the market prices for the
securities, which may be unrelated to company specific operating performance or prospects. Furthermore,
the Company’s operating results and prospects may from time to time be below the expectations of market
analysts and investors. Any of these events could result in a material decline in the price of the Shares.
The market price of the Shares could also decline due to sales of a large number of Shares in the Company in
the market or the perception that such sales could occur. Such sales could also make it more difficult for the
Company to offer equity securities in the future at a price that is deemed appropriate.
1.1.2
Macro economic fluctuations
International Gold Exploration is exposed to the economic cycle, and changes in the general economic
situation could affect demand for the Company’s products and services.
Market conditions may affect the Shares regardless of International Gold Exploration’s operating
performance or the overall performance of the mineral exploration and development sector. Accordingly, the
market price of the Shares may not reflect the underlying value of the International Gold Exploration’s net
assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by
a number of factors, only some of which may pertain to International Gold Exploration while others of which
may be outside International Gold Exploration’s control.
1.2
1.2.1
Risks connected to exploration and development of minerals and metals
General
The Company’s prospects, which are in the exploration stage, will only be developed if the exploration is
successful. Mineral exploration involves a high degree of risk and few properties that are explored are
ultimately developed into producing mines. The long-term profitability of the Company will in part depend
on the cost and success of its exploration programs.
6
Substantial expenditures are required to establish mineral reserves through exploration in order to eventually
develop the resources and later extract the established resource. Although substantial benefits may be derived
from the discovery of a major mineral resource, no assurance can be given that the resources discovered will
be of sufficient size, have a beneficial location, and be amenable to processing in order for the deposit to
justify commercial and profitable operations.
1.2.2
Market risks
Minerals and metal prices
The Company has no control over mineral or metal prices, which can be affected by numerous factors
including international economic and political trends, inflation, currency exchange fluctuations, interest
rates, global or regional consumption patterns, speculative activities and increased or decreased production
due to changes in extraction and production methods. The effect of these factors on the price of precious and
base minerals and metals, and therefore the future economic viability of any of the Company's exploration
projects, cannot be accurately predicted.
Government regulations
The future operations of the Company will, from time to time, require permits from governmental authorities
and will be governed by laws and regulations regarding prospecting, development, mining, taxation,
employment standards, occupational health, waste disposal, land use, environmental protection, mine safety
and other matters. The Company may in the future need to apply for permits from different authorities.
Companies engaged in the exploration and development of resource properties can experience increased
costs as a result of the need to comply with applicable laws, regulations and permits as they change in the
future, see also section 1.4 and 1.5.
Political risk
The operation of the Company is subject to local laws governing prospecting, development, production,
taxes, national ownership restrictions, land use, land claims of local people and other matters. Although the
Company believes that its exploration and development activities are currently carried out in accordance
with all applicable laws, no assurance can be given that new rules and regulations will not be enacted or that
existing rules and regulations will not be applied in a manner which could limit or curtail development.
Political risk is relevant for the operations in Angola, Kenya, Burundi, Sweden and Norway. In respect of the
latter, several of the regulatory approvals, planning regulations, licences etc outlined in section 1.4 below
may be rejected, in full or in part based on political grounds.
Environmental factors
All phases of the Company's operations are subject to environmental regulations in the jurisdictions in which
it operates. Environmental legislation may evolve in a manner, which in the future may require stricter
regulations, increased fines and penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and their officers, directors, and
employees. There are no assurances that future changes in environmental regulations, if any, will not
adversely affect the Company’s operations. Compliance with respect to environmental regulations, closure
and other matters may involve significant costs and/or other liabilities. Non Governmental Organizations
generally being against mining may also from time to time criticize the Company's operations and
development plans. In particular, but not limited to, environmental groups may mobilize against exploitation
of thorium.
7
1.2.3
Operational risks
Exploration risks
The Company’s existing activities are primarily directed towards exploration for and development of mineral
and metal deposits. Mining operations generally involve a high degree of risk.
The Company’s operations are subject to all the hazards and risks normally encountered in the exploration,
development and production of mineral deposits. These include, rock bursts, cave-ins, adverse weather
conditions, flooding and other conditions involved in the drilling and removal of material, any of which
could result in damage to, or destruction of, mines and other producing facilities, damage to life or property,
environmental damage and possible legal liability. Although adequate precautions to minimize risk are and
will be taken, operations are subject to risks which may result in environmental pollution and consequent
liability.
The exploration for and development of mineral and metal deposits, involve significant risks which even a
combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an
ore body may result in substantial rewards, few properties which are explored are ultimately developed into
producing mines. Major expenses may be required to locate and establish mineral reserves, to develop
metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible
to ensure that the exploration or development programs planned by the Company will result in a profitable
commercial mining operation.
Whether a mineral or a metal deposit will be commercially viable depends on a number of factors, some of
which are, the particular attributes of the deposit, such as size, grade and proximity to infrastructure,
commodity prices which are highly cyclical, government regulations, including regulations relating to prices,
taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection.
The exact effect of these factors cannot be accurately predicted, but the combination of these factors may
result in the Company not receiving an adequate return on invested capital. The Company’s projects are in
the early stages. Expenditures made by the Company or initial drilling results are no guarantee for further
developments or discoveries of profitable commercial mining operations. Lack of availability of drilling rigs
could cause increased project expenditures and /or project delays.
Permits and licenses
The Company holds Pre-claims, Claims and mining rights in Angola, Kenya, Burundi, Sweden and Norway.
Some of these licenses are subject to certain conditions. The Company has no reason to expect that the
conditions will not be fulfilled or that these permits will not be granted, however, the Company has no
guarantee that such conditions will remain to be fulfilled and that all necessary permits will be granted for
specific projects.
Risk for inaccurate estimates
There are considerable uncertainty factors in estimating the size and value of mineral/metal reserves. The
reservoir technique is a subjective and inexact process where the estimation of the accumulation of
mineral/metals reserves in the property cannot be accurately measured. In order to evaluate the recoverable
reserves, a number of geological, geophysical, technical and production data must be evaluated. The
evaluation may later prove to be inaccurate, and estimated reserves may therefore be adjusted downward or
upward.
Competition
The minerals and metals industries are highly competitive in all phases and the Company will be competing
with many established companies, which may have more advantageous financial and technical resources.
The Company has no guarantee that this competition will not have an adverse effect either now, or at some
time in the future, on the Company's ability to acquire, explore, and develop its mineral and metals resource
deposits.
8
The mining and metal industry is a global business with producers in several different countries. There is
strong competition for the discovery and acquisition of properties considered to have commercial potential.
International Gold Exploration competes with other mining companies, many of which have greater financial
resources than International Gold Exploration, for the acquisition of properties, leases and other interests as
well as for the recruitment and retention of skilled personnel. Such factors may influence International Gold
Exploration’s ability to secure new exploration areas or recruit and retain staff.
Dependence on key personnel
International Gold Exploration’s development and prospects are dependent upon the continued services and
performance of its senior management and other key personnel and consultants. Financial difficulties or
other factors could adversely affect the Company’s ability to retain key employees.
Uninsured losses
International Gold Exploration’s business is subject to a number of risks and hazards generally, including
adverse environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground
or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement
weather conditions, floods, snow falls and avalanches. Such occurrences could have a material adverse effect
on the Company’s business, operating result or financial condition. Although the Company intend to obtain
some insurance to protect against certain risks in such amounts as it considers reasonable, its insurance will
not cover all the potential risks associated with a mining company’s operations.
1.2.4
Financial risk
Requirement for new capital
The development of the Company’s properties, licenses, Claims and Pre-claims will depend upon the
Company’s ability to obtain financing through equity financing, debt financing, project financing or other
means. There is no assurance that the Company will be successful in obtaining the required financing. Any
additional equity financing may be dilutive to existing Shareholders and debt financing, if available, may
involve restrictions on financing operating activities. If the Company is unable to obtain additional financing
as needed, it may be required to reduce the scope of its operations or anticipated expansion, or delay or
indefinite postpone exploration, development or production on any or all of the Company’s projects.
Currency risk
Currency fluctuations will affect the cash flow that the Company will realize from its operations.
1.3
Risks connected to technological developments
The Company’s ability to compete is highly dependent upon, among other things, its ability to utilize georelated services and data of a competitive quality. Because of the significant technological changes that have
already taken place, for instance with respect to 3D and 4D seismic data acquisition and processing and those
that may occur in the future, the Company is generally dependent on its ability to keep pace with changes
and improvements in data acquisition and processing technologies.
1.4
Regulatory and political risks
The Company has licences, exploration and / or development projects in Angola, Kenya, Burundi, Sweden
and Norway. Therefore the Company’s activities are exposed to varying degrees of political and economic
risk and other risks and uncertainties. These risks and uncertainties vary from country to country and include,
but are not limited to: Terrorist activities; extreme fluctuations in currency exchange rates; hyperinflation;
labour unrest; risk of war or civil unrest; expropriation and nationalization; renegotiation or nullification of
existing concessions, licenses, permits and contracts; illegal mining; changes in taxation policies; restrictions
on foreign exchange and repatriation; and changing political conditions, currency controls and governmental
regulations that favour or require the awarding of contracts to local contractors or require foreign contractors
9
to employ citizens of, or purchase supplies from, a particular jurisdiction.
The exploration, development and operating activities of the Company are generally subject to various laws
governing exploration, development, mining, processing, taxes, labour standards and occupational health and
safety, toxic substances, use of motorised machinery, land use, water use, land claims of local people and
protection of the environment and cultural monuments and other matters. Although the Company believes
that its activities are currently being carried out in accordance with all applicable laws, no assurance can be
given that new rules and regulations will not be enacted or that existing rules and regulations will not be
applied in a manner which could limit or curtail production or development. Amendments to current laws
and regulations governing exploration, development and operating activities or more stringent
implementation thereof could have a substantial adverse impact on the Company.
Changes in exploration, mining or investment policies or shifts in political attitude could materially
adversely impact the Company’s financial results. The Company’s operations may be affected in varying
degrees by government regulations with respect to, for example, restrictions on exploration, development,
processing, production, price controls, export controls, currency remittance, income taxes, expropriation of
property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local
people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local
practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation of
entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or
other interests.
1.5
Risks related to the Shares
Volatility of the share price
The trading price of the Shares could fluctuate significantly in response to quarterly variations in operating
results, general economic outlook, adverse business developments, interest rate changes, changes in financial
estimates by securities analysts, matters announced in respect of commodity prices or competitors or changes
to the regulatory environment in which International Gold Exploration operates.
Market conditions may affect the Shares regardless of International Gold Exploration’s operating
performance or the overall performance of the mineral exploration and development sector. Accordingly, the
market price of the Shares may not reflect the underlying value of the International Gold Exploration’s net
assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by
a number of factors, only some of which may pertain to International Gold Exploration while others of which
may be outside International Gold Exploration’s control.
The market price of the Shares could decline due to sales of a large number of Shares in the Company in the
market or the perception that such sales could occur. Such sales could also make it more difficult for the
Company to offer equity securities in the future at a time and at a price that are deemed appropriate.
Shareholders may be diluted if they are unable to participate in future offerings
The development of the Company’s properties, licenses, Claims and Pre-claims will, inter alia, depend upon
the Company’s ability to obtain financing through equity financing. Shareholders may be unable to
participate in future offerings, due to misapplication of shareholders pre-emptive rights in order to raise
equity on short notice in the investor market, or for reasons relating to foreign securities laws or other
factors.
10
2
STATEMENTS OF RESPONSIBILITY
This Document has been prepared by International Gold Exploration to provide information to shareholders
of IGE Nordic in connection with the Offer and the issue of the Consideration Shares in International Gold
Exploration.
The Board of Directors of International Gold Exploration accepts responsibility for the information given in
this Document. The Board of Directors hereby declares that, to the best of our knowledge, having taken all
reasonable care to ensure that such is the case; the information contained in this Document is in accordance
with the facts and contains no omission likely to affect its import.
The information about IGE Nordic included in this Document is based exclusively on IGE Nordic’s public
accounts and other material in the public domain. International Gold Exploration has not verified
independently the information regarding IGE Nordic which is included in this Document. International Gold
Exploration cannot assume any responsibility for the correctness or accuracy of the information included in
this Document regarding IGE Nordic.
Stockholm, 28 November 2008
The Board of Directors of International Gold Exploration IGE AB (publ.)
Carl Ameln
(Chairman)
Ole Jørgen Fredriksen
11
Ulrik Jansson
Uta Stoltenberg
3
3.1
THE VOLUNTARY OFFER
Voluntary Offer to exchange Shares in IGE Nordic with Shares in International
Gold Exploration
The International Gold Exploration hereby offers to acquire all outstanding IGE Nordic shares in exchange
for Shares in International Gold Exploration, all in accordance with the Securities Trading Act section 6-19,
and as described in this Document. The Offer set out in this Document applies only to the shares in IGE
Nordic and does not extend to any options or rights to acquire shares in IGE Nordic. The Offer is made to all
IGE Nordic shareholders who may lawfully receive this Document and the Prospectus. This Document has
been prepared in accordance with the provisions for voluntary offers as set out in section 6-19 of the
Securities Trading Act.
3.2
The Offeror
This Offer is made by International Gold Exploration IGE AB (publ.), a public limited liability company
incorporated and existing under the laws of Sweden with company registration number 556227-8043, and
with its registered address at Kungsgatan 44, SE-111 35 Stockholm, Sweden.
The Shares of International Gold Exploration are registered with the VPC under ISIN SE000378119 and are
listed on Oslo Børs and on Nordic Growth Market. Please see section 9 for further information in this regard.
As per the date of this Document, International Gold Exploration holds 20,000,000 shares in IGE Nordic,
representing approximately 74.6% of the current issued and outstanding share capital of IGE Nordic.
3.3
The Target company
IGE Nordic AB (publ.) is the target company for the Offer. IGE Nordic is a public limited liability company
incorporated and existing under the laws of Sweden with company registration number 556493-3199, and
with its registered address at Kungsgatan 44, SE-111 35 Stockholm, Sweden.
The IGE Nordic shares are registered with the VPC under ISIN SE0002214528. The IGE Nordic shares have
been listed on Oslo Axess since 21 December 2007, with the ticker code “IGENOR”. IGE Nordic’s share
capital as of the date of this Document is SEK 2,681,604.20 divided into 26,816,042 shares with a par value
of SEK 0.10.
3.4
Reasons for the Offer and Plans for the Future Business
The initial arguments for the listing of IGE Nordic have changed since December 2007. Base metal
companies are less attractive investment objects than companies focusing on precious metals like diamonds
and gold. Furthermore, IGE Nordic’s core nickel project is difficult to finance in today’s market. Adding to
this the nickel price development has recently been weak.
Low trading liquidity and low market capitalization also makes IGE Nordic a less attractive investment
alternative. Adding to this, the Offeror is closer to positive cash flow from operations than IGE Nordic.
Combining the two companies will enable synergies and cost reductions which the Offeror believes are
necessary in today’s market conditions.
3.5
Contact between the Parties Prior to the Offer
IGE Nordic has a close relationship with International Gold Exploration as it is 75 % owned by International
12
Gold Exploration. The board and management of IGE Nordic were informed about International Gold
Exploration’s intention to make an offer less than one week before the decision to make the Offer was made
by International Gold Exploration and announced in public. The launch of the Offer and the terms of the
Offer have not been discussed with IGE Nordic's board or management before the launch of the Offer.
The Chairman of the board of IGE Nordic, Tomas Fellbom, is also the CEO of the Offeror. Fellbom has not
acted and will not act on behalf of IGE Nordic in connection with the Offer.
Furthermore, Lars Olof Nilsson is a director of both the Offeror and IGE Nordic. Nilsson has not acted and
will not act on behalf of IGE Nordic or International Gold Exploration in connection with the Offer.
3.6
Impact on the Company’s Employees
In Offeror’s view, the completion of the Offer will not have any legal, economic, commercial or workrelated consequences for the employees in IGE Nordic. No members of the Board of Directors or the
executive management in IGE Nordic will receive special favourable terms or advantages (or prospects of
such) in connection with the Offer.
3.7
Offer Price
The Offer Price is NOK 1.84 for each IGE Nordic share. The Offer Price will be settled by way of
exchanging one (1) share in IGE Nordic with a par value of SEK 0.10 for four (4) shares in International
Gold Exploration with a par value of SEK 0.05. In total, up to 27,264,168 new Shares in International Gold
Exploration may be issued under the Offer.
The Offer Price represents a premium of 23% compared to the closing share price on 29 October 2008, the
last trading day prior to the International Gold Exploration’s public announcement of its intention to make
the Offer. Furthermore, the Offer Price represents a premium of 27% compared to the volume weighted
average market price in the four week period ending on 29 October 2008.
The Offer Price corresponds to a market capitalization of IGE Nordic of approximately NOK 49.34 million
(based on the number of shares outstanding as of the date of this Offer Document).
The Subscription Price for each Consideration Share is NOK 0.46, in aggregate NOK 12,541,517.28 for all
the Consideration Shares. This corresponds to the last reported sale price for International Gold
Exploration’s shares on Oslo Børs on 29 October 2008, which was the last day of trading before the
Subscription Price was set by the Board after market close.
The implicit exchange rate (relative split of market value) between International Gold Exploration and IGE
Nordic in terms of equity market capitalization has moved in favor of International Gold Exploration the last
few months, averaging 74% in the period from 1 June 2008 to 29 October 2008.
3.8
The Offer Period
The Offer Period commences on 1 December 2008 and expires on 15 December 2008 at 17:30 (CET).
The International Gold Exploration may extend the Offer Period one or more times, however, no longer than
to 9 January 2009 at 17:30 (CET). Any such extension will be part of the Offer Period. Any extensions of the
Offer Period shall be announced no later than the Business Day following the expiration of the previously
announced Offer Period in accordance with section 3.12 (Announcements).
13
3.9
Acceptance of the Offer
Acceptance of the Offer is made by completing and signing the Acceptance Form attached as Appendix 2
hereto, and returning it to the Manager as set out below. Shareholders with IGE Nordic shares in several VPS
accounts will be required to submit one Acceptance Form for each account.
Acceptance of the Offer is irrevocable and may not be withdrawn, in whole or in part, either before or after
the expiration of the Offer Period, including any extension thereof, after the Acceptance Form has been
received by the Manager. The acceptance shall be deemed to include all IGE Nordic shares on the VPS
account identified in the Acceptance Form. The acceptance also includes any shares which are acquired and
credited to the VPS account identified in the Acceptance Form before the shares are debited from such VPS
account and transferred to an escrow account in the name of the Manager.
ANY SHAREHOLDER WHOSE IGE NORDIC SHARES ARE REGISTERED IN THE NAME OF A
BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST
CONTACT SUCH PERSON IF THE SHAREHOLDER DESIRES TO EXCHANGE SUCH IGE NORDIC
SHARES INTO SHARES IN INTERNATIONAL GOLD EXPLORATION IN ACCORDANCE WITH
THIS OFFER.
From the date of receipt of the Acceptance Form by the Manager, the shareholder will be prevented from
selling or otherwise disposing of, charging or transferring to another VPS or VPC account, the shares in IGE
Nordic which are covered by the acceptance. The shares covered by the Acceptance Form may also be
blocked in favour of the Manager. Otherwise, IGE Nordic shareholders who accept the Offer will maintain,
to the extent permitted under applicable law, their rights as a shareholder, including voting rights, until all
conditions under the Offer have been satisfied or waived.
International Gold Exploration reserves the right to reject any or all acceptances of the Offer that, in
International Gold Exploration’s opinion, are not in the proper form, or which may be unlawful. International
Gold Exploration also reserves the right to treat an acceptance as valid, in whole or in part, even though it is
not entirely in order or not accompanied by required document(s) or which is not received at the place stated
below. Neither International Gold Exploration nor the Manager nor any other person will be under any duty
to give notification of any defects or irregularities in acceptance or incur any liability for failure to give any
such information.
The Acceptance Form, duly completed and signed, must be sent by mail, fax or by hand to the Manager at
the following address:
Handelsbanken Capital Markets
Rådhusgaten 27
P.O. Box 332 Sentrum
0101 OSLO
Norway
Tel: +47 22 94 08 38
Fax: +47 22 94 07 68
The Acceptance Form must be received by the Manager prior to the expiration of the Offer Period.
3.10
Conditions to the Offer
The completion of the Offer is subject to the following conditions, each of which may be waived (wholly or
in part) by International Gold Exploration:
(i)
that the Offeror receives valid acceptances from IGE Nordic shareholders for a number of IGE
Nordic shares, which together with the IGE Nordic shares already hold by the Offeror aggregate to
more than 90% of the share capital and votes in IGE Nordic (on a fully diluted basis); and
14
(ii)
that prior to completion of the Offer, there are no changes, events, violations, circumstances or
effects that were not known to the Offeror at the time of the Offer and are, or with the lapse of time,
reasonably expected to become, materially adverse to the financial conditions or results or operations
of IGE Nordic; and
(iii)
that legislation and other regulations, court and authority decisions or similar circumstances, which
are beyond the Offeror’s control and which the Offeror could not reasonably have foreseen at the
time of the Offer, must not make the completion of the Offer or the acquirement of IGE Nordic
completely or partly impossible or make such completion significantly difficult.
If International Gold Exploration has not publicly announced that the above conditions are satisfied or
waived by the International Gold Exploration prior to 12 January 2009 at 09:00 hours (CET), then the Offer
will lapse. Any waiver or satisfaction of the conditions to the Offer will be announced in accordance with
section 3.12 (Announcements).
The result of the Offer will be announced in accordance with section 3.12 (Announcements) on the first
Business Day after the end of the Offer Period (after extension, if any).
3.11
Amendments to the Offer
Any amendment to the Offer, which, on the date such amendment is announced, represents an improvement
(or no diminution) in value (an “Amended Offer”), is binding on International Gold Exploration from the
time it is made public by Oslo Børs. IGE Nordic shareholders who have accepted the Offer will
automatically be given the benefit of such an Amended Offer without further action or other notice required
to be given to the Manager. Such shareholders will in case of an Amended Offer continue to be bound by
their prior acceptance. In case of an Amended Offer, the Offer Period will be extended, if necessary, so that
at least two weeks remain to expiry of such Amended Offer. Any Amended Offer will be announced in
accordance with section 3.12 (Announcements).
3.12
Announcements
Any revision or amendment of the Offer will be followed by public announcement thereof as promptly as
practicable and no later than 09:00 (CET) on the Business Day following the day of such revision or
amendment (or such later time and/or date as permitted by Norwegian law). International Gold Exploration
will publish all announcements by way of stock exchange releases through Oslo Børs’ electronic information
system and NGM Equity in accordance with applicable rules.
3.13
Completion of the Offer and Issuance of the Consideration Shares
On 26 November 2008, the extraordinary shareholders meeting of the Offeror adopted the following
resolutions for the approval of the Offer and the issuance of the Consideration Shares (office translation into
English):
“(a)
Resolution to approve the Offer
The general meeting resolved to approve the Board of Director’s decision made on October 30, 2008 to make a public
Offer to the shareholders of IGE Nordic AB (publ) (IGE Nordic) to acquire all outstanding shares in IGE Nordic (in
aggregate 6,816,042 shares) on the terms set forth below. The consideration for each IGE Nordic share is four (4)
shares in International Gold Exploration which will be issued in accordance with b) below. The Offer is subject to the
following conditions:
(i)
that the Company receives valid acceptances from IGE Nordic shareholders for a number of IGE Nordic
shares, which together with the IGE Nordic shares already hold by the Company aggregate to more than 90%
of the share capital and votes in IGE Nordic (on a fully diluted basis); and
15
(ii)
that prior to completion of the Offer, there are no changes, events, violations, circumstances or effects that
were not known to International Gold Exploration at the time of the Offer and are, or with the lapse of time,
reasonably expected to become, materially adverse to the financial conditions or results or operations of IGE
Nordic; and
(iii)
that legislation and other regulations, court and authority decisions or similar circumstances, which are
beyond International Gold Exploration’s control and which the Company could not reasonably have foreseen
at the time of the Offer, must not make the completion of the Offer or the acquirement of IGE Nordic
completely or partly impossible or make such completion significantly difficult.
International Gold Exploration may in whole or partly waive any or all of the above conditions. The Board of Directors
shall be authorized to decide on the necessary adjustments of the Offer that are necessary for the completion of the
Offer.
(b)
Resolution to conduct an issue in kind
The general meeting resolved in accordance with the Board’s proposal to conduct an issue in kind on the following
terms:
- The Company’s share capital, now amounting to SEK 18,750,000 divided into 375,000,000 shares shall be increased
with up to SEK 1,363,208.40 by the issue of up to 27,264,168 shares.
- The new shares shall with deviation from the shareholders’ preferential right only be subscribed by the owners of
6,816,042 shares in IGE Nordic (i.e. all shareholders of IGE Nordic except for the Company).
- As consideration for four (4) subscribed IGE shares one (1) IGE Nordic share shall be contributed in kind.
- The subscription price for the issued IGE shares is NOK 0.46 per share (corresponding to SEK 0.53) based on the last
paid price for the IGE share at Oslo börs on October 29, 2008 and the exchange rate that day (i.e the day before the
announcement of the Offer), which at full acceptance gives an aggregate value of NOK 12,541,517.28 for the IGE
Nordic shares (corresponding to SEK 14,422,744.87 based on the exchange rate on October 29, 2008).
- The new IGE shares shall be subscribed during the period as from December 1, 2008 and up until December 15,
2008. The Company has drafted an offer document which currently is under approval by Oslo Börs and which will be
made public before the subscription/offer period starts. The Board may decide to prolong the subscription/offer period.
The IGE Nordic shares (capital contributed in kind) shall be contributed to IGE within five (5) days from subscription
at the latest.
- The new shares shall entitle to dividends decided as from the financial year 2009.
- The new share issue is further subject to the same conditions as the Offer described under (a) above and therefore the
Company reserves the right not to conduct the issue in kind if any of the above conditions is not fulfilled (unless not
waived by the Company).”
Following the satisfaction or waiver of the conditions in section 3.10 (i), (ii) and (iii) the Consideration
Shares will be subscribed by Handelsbanken Capital Markets on behalf and for the account of the Acceptants
pursuant to the power of attorney given by each Acceptant in the Acceptance Form.
The registration of the share capital increase in the Swedish Companies Register is expected to take place on
or about 23 December 2008. Delivery of the Consideration Shares to the IGE Nordic shareholders’ VPS
accounts is expected to take place on or about 2 January 2009. The Consideration Shares will be transferred
to the VPS account specified by the IGE Nordic shareholder in the Acceptance Form. It is expected that the
Consideration Shares will be listed on Oslo Stock Exchange on or about 3 January 2009.
In case the Offer Period is extended pursuant to section 3.8, the dates set out in the preceding paragraph will
be changed correspondingly. Delivery of the Consideration Shares to the IGE Nordic shareholders’ VPS
accounts is, in any event, going to take place on 23 January 2009 at the latest.
An IGE Nordic shareholder who accepts the Offer will not under any circumstances be entitled to sell or
transfer its Consideration Shares until these shares have been paid in full by such IGE Nordic shareholder.
Furthermore, any IGE Nordic shareholder (having paid for its shares) that sell or transfer its Consideration
16
Shares before delivery of the Consideration Shares on the said IGE Nordic shareholder’s VPS or VPC
account, runs the risk that full payment by all IGE Nordic shareholders does not take place. In such case, the
completion of the Offer and thereby the delivery of the Consideration Shares to the IGE Nordic shareholders
may be delayed. The IGE Nordic shareholder will then run the risk that the IGE Nordic shareholder is unable
to settle the sale or transfer its Consideration Shares in time.
3.14
Legislation
The Consideration Shares will be created according to the provisions of the Swedish Companies Act.
3.15
Statement from the Board of IGE Nordic
Pursuant to section 6-19 cf section 6-16 of the Securities Trading Act, the board of directors of IGE Nordic
shall make public a statement setting out its opinion of the Offer and the reasons on which it is based,
including its views on the effects of implementation of the bid on IGE Nordic’s interests, and on the
Offeror’s strategic plans for IGE Nordic and their likely repercussions on employment and the locations of
IGE Nordic’s places of business. Should the board of IGE Nordic consider itself unable to make a
recommendation to the shareholders on whether they should or should not accept the Offer, it shall explain
why this is so. Information shall also be given about the views, if any, of the board members and the
manager effectively in charge in their capacity as shareholders of the company. If the board receives in good
time a separate opinion from the employees on the effects of the bid on employment, that opinion shall be
appended to the statement. Where a bid has been made by someone who is a member of the board of the
offeree company, or the bid has been made in concert with the board of the offeree company, Oslo Børs shall
decide who shall issue the statement mentioned above on behalf of the offeree company. Under section 6-16
of the Securities Trading Act, the statement must be given at least one week before the Offer Period expires.
17
3.16
Pre-acceptances of the Voluntary Offer
In connection with the Offer, the following shareholders, representing in aggregate approximately 8.7 % of
the outstanding shares in the Company, have undertaken to accept the Offer in respect of the number and
percentage of shares indicated:
The pre-acceptances will also apply to any additional shares that these shareholders may acquire before the
end of the Offer Period.
3.17
Interest of natural or legal persons involved in the Voluntary Offer
International Gold Exploration is not aware of any interest, including conflicting ones, which is material to
the Offer.
3.18
Transaction Costs
International Gold Exploration will pay commissions and VPS / VPC transaction costs directly attributable
to the Offer. Thus, shareholders who accept the Offer will not be debited with brokers’ fees or other such
costs in connection with the Offer. In addition, International Gold Exploration will pay advisory fees to the
Manager and fees to legal counsel. The aggregate transaction costs are expected to be approximately NOK
1,740,000 of which the advisory fee to the Manager is NOK 1,400,000 and legal fees to Rasmusson &
Partners Advokat AB and Advokatfirma DLA Piper Norway DA are approximately SEK 165,000 and NOK
175,000 respectively.
All other expenses incurred by the individual IGE Nordic shareholders for advisory services and other
transaction expenses will not be covered by the International Gold Exploration.
18
3.19
Tax
A summary of certain Norwegian and Swedish tax rules relevant to the acceptance of the Offer is given in
section 10 (Taxation). However, IGE Nordic shareholders accepting the Offer are themselves responsible for
any tax liability arising from the sale of shares. They are also themselves responsible for any costs arising
from obtaining any advice on this matter.
3.20
Purchase of shares in IGE Nordic outside the Offer
International Gold Exploration reserves the right to acquire IGE Nordic shares outside the Offer during the
Offer Period.
3.21
Compulsory Acquisition
The International Gold Exploration intends to make a compulsory acquisition of the remaining shares in IGE
Nordic upon obtaining more than 90% of the number of all outstanding IGE Nordic shares, pursuant to the
section 22 of the Swedish Companies Act. Please see section 9.8 (Other Shareholder Matters) for details on
applicable law.
3.22
Delisting from Oslo Axess
International Gold Exploration intends to propose a resolution to the shareholder’s meeting of IGE Nordic
that an application is made to delist the IGE Nordic shares from Oslo Axess, unless Oslo Axess itself decides
to de-list the IGE Nordic shares before the application for de-listing has been submitted. An application for
de-listing will not be made before completion of a compulsory acquisition.
3.23
Financial Advisor and Manager
The manager for the Offer and the issue of the Consideration Shares is Handelsbanken Capital Markets,
Rådhusgaten 27, P.O. Box 332 Sentrum, 0101 Oslo, Norway.
3.24
Miscellaneous
The Prospectus (including this Document) is being sent to all IGE Nordic shareholders of record as of 26
November 2008, to the address recorded on each shareholder’s VPS account.
No confirmation of receipt of acceptances or other documents will be given by, from or on behalf of the
International Gold Exploration.
Additional copies of this Document and the Prospectus will be available on request from the Manager during
normal business hours at:
Handelsbanken Capital Markets
Rådhusgaten 27
P.O. Box 332 Sentrum
0101 OSLO
Norway
Tel: +47 22 94 08 38
Fax: +47 22 94 07 68
19
3.25
Choice of Law and Legal Venue
Except as stated below in this section 3.25, the Offer and all acceptances thereof and this Document shall be
governed by and construed in accordance with Norwegian law, save for the issuance of the Consideration
Shares which shall be governed by Swedish law.
Any disputes that arise in conjunction with the Offer and/or the acceptance thereof and/or the issue of
Consideration Shares which cannot be amicably resolved are subject to the exclusive jurisdiction of
Norwegian courts with the agreed legal venue in Oslo.
As IGE Nordic’s registered office is in Sweden, and the shares of IGE Nordic is admitted to trading on a
regulated market in Norway, partly Swedish and partly Norwegian offer rules will apply to the Offer, cf.
section 6-23 of the Securities Trading Act and sections 6-13 (3) No. 1 (a) and 6-14 (2) of the Securities
Trading Regulations. Oslo Børs will be the authority competent to supervise the Offer. Matters relating to the
consideration offered in the Offer, in particular the price, and matters relating to the bid procedure, in
particular the information on International Gold Exploration’s decision to make the Offer, the contents of the
Offer Document and the disclosure of the Offer, shall be dealt with in accordance with the rules set out in the
Securities Trading Act. In matters relating to the information to be provided to the employees of IGE Nordic
and in matters relating to company law, in particular the percentage of voting rights which confers control
and any derogation from the obligation to launch a mandatory offer, as well as the conditions under which
the board IGE Nordic may undertake any action which might result in the frustration of the Offer, Swedish
law will apply.
3.26
Offer Restrictions
The distribution of this Document and the offering of the Offered Shares may in certain jurisdictions be
restricted by law. Persons in possession of this Document are required to inform themselves about and to
observe any such restrictions. This Document does not constitute an offer of, or a solicitation of an offer to
purchase, any of the Offered Shares in any jurisdiction or in any circumstances in which such offer or
solicitation would be unlawful.
No actions have been taken to register or qualify the Consideration Shares to be offered as consideration in
the Offer or otherwise to permit a public offering of such securities in any jurisdiction outside of Norway and
Sweden. Accordingly, if you reside in any country other than Norway or Sweden, you may not be permitted
to subscribe for any Consideration Shares. The Company and the Manager require persons into whose
possession this Document comes to inform themselves of, and observe, all such restrictions. Any failure to
comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction.
Neither the Company nor the Manager accept any legal responsibility for any violation by any person of any
such restrictions.
IGE Nordic shareholders should consult their professional advisors as to whether they require any
governmental or other consent or need to observe any formalities to enable them to subscribe for the
Consideration Shares.
United States
The Offer is not being and will not be made, directly or indirectly, in or into, or by use of mails or any means
or instrumentality (including, without limitation, facsimile transmission, telephone and internet) of interstate
or foreign commerce of, or any facilities of a national securities exchange of, the United States of America,
its territories and possessions, any State of the United States of America and the District of Columbia
(collectively, the “United States”) and the Offer will not be capable of acceptance by any such use, means,
instrumentality or facilities or from within the United States.
20
The Consideration Shares have not been and will not be registered under the U.S. Securities Act of 1933, as
amended (the “Securities Act”), nor under any laws of any state of the United States. Such securities may not
be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration
under the Securities Act or an exemption from registration.
United Kingdom
Neither this Document nor any other offering material has been submitted to the clearance procedures of the
Financial Services Authority in the United Kingdom. The Consideration Shares have not been offered or sold
and, prior to the expiry of a period of six months from the sale of the shares, will not be offered or sold to
persons in the United Kingdom except to "qualified investors" as defined in section 86 of the Financial
Services and Markets Act 2000.
Canada, Japan and Australia
The Consideration Shares may not be offered, sold, resold transferred or delivered, directly or indirectly, into
Canada, Japan or Australia.
21
4
INFORMATION ABOUT IGE NORDIC
The information in this section 4 is retrieved from publicly available information regarding IGE Nordic,
such as annual reports, interim reports, investor information, stock exchange announcements published by
IGE Nordic and information available through www.igenordic.se.
4.1
General
IGE Nordic is presently an exploration company currently operating in Sweden and Norway. IGE Nordic has
a large and well diversified exploration portfolio in combination with an experienced team of geologists and
field technicians with core competences and a unique expertise in evaluating opportunities in the geological
conditions specific to Sweden and Norway.
4.2
4.2.1
Selected Financial Information
General
The tables below include IGE Nordic’s selected consolidated financial information as of and for each of the
years ended 31 December 2007, 2006 and 2005 and for the nine month periods ended 30 September 2008
and 2007. The financial information has been prepared in accordance with IFRS (International Financial
Reporting Standards) and has been derived from IGE Nordic’s audited annual report for 2007 and the
unaudited quarterly report for the second quarter of 2008. The information is only a summary and should be
read in conjunction with and is qualified in its entirety by reference to IGE Nordic’s reported financial
statements and the related notes to the financial statements included in IGE Nordic’s reports, available from
IGE Nordic and at www.igenordic.se.
22
4.2.2
Profit and Loss account
The tables below show a summary of IGE Nordic’s consolidated income statement for the years ended 31
December 2007, 2006 and 2005 as well as for the nine month periods ended 30 September 2008 and 2007
and third quarter 2008 and 2007.
Consolidated Income Statement
(SEK '000)
Sales
Q3
2008
IFRS
Unaudited
Q3
2007
IFRS
Unaudited
-
-
Other external expenses
Personnel expenses
Other operating expenses
Depreciations and write downs
-1,725
-2,427
-76
-60
-1,185
-40
Total operating expenses
-4,228
EBIT
Net financials
Earnings before tax
Tax
Q1-Q3
2008
IFRS
Unaudited
-
-
-
-6,234
-7,417
-3,854
-2,471
-97
-1,185
-40
-1,665
-4,055
-99
-
-1,285
-19,976
-1,322
-4,228
-1,285
-3,726
-1,322
583
414
2,079
414
1,357
-3,645
-871
-1,647
-908
-4,462
-
-
16,250
Q1-Q3 Full Year Full Year Full Year
2007
2007
2006
2005
IFRS
IFRS
IFRS
IFRS
Unaudited
Audited
Audited
Audited
-
-
-1
-37
-
-5,819
-1
-37
-5,819
-1
-37
-
401
1
400
-
-36
-
Net profit / (loss)
-3,645
-871
-1,647
-908
-4,462
400
-36
Profit to Equity holders of the Parent Company
-3,645
-871
-1,647
-908
-4,462
400
-36
Minority interest
-3,645
-871
-1,647
-908
-4,462
400
-0.140
-0.250
-0.060
-0.260
-0.570
0.020
Profit for the period
Earnings per share attributable to Equity holders
of the Parent company before and after dilution
23
-36
-0.002
4.2.3
Balance sheet
The tables below show a summary of IGE Nordic’s consolidated balance sheet as of 31 December 2007, 31
December 2006, 31 December 2005, 30 September 2008 and 30 September 2007.
Consolidated Balance Sheet
(SEK '000)
Assets
Q3
2008
IFRS
Unaudited
Q3
2007
IFRS
Unaudited
Full Year
2007
IFRS
Audited
Full Year
2006
IFRS
Audited
Full Year
2005
IFRS
Audited
41,940
10,394
10,372
-
-
Intagible fixed assets
Exploration and Evaluation Expenditure
Tangible fixed assets
Tangible fixed assets
Long-term financial assets
Shares in subsidiary / affiliated companies
Deposits with suppliers
Total non-current assets
941
873
815
26,381
197
71,871
104
41,010
106
42,861
10,394
10,372
Other receivables
Other receivables parent company
Prepaid expenses and accrued income
Cash and cash equivalents
Total current assets
1,729
2,776
59,588
64,093
1,649
166
1,773
94,270
97,858
1
549
550
905
149
1,054
Total assets
44,352
40,033
885
1,238
2,104
4,227
135,964
45,237
140,719
10,944
11,426
2,682
6,110
87,432
30,901
127,125
350
1,650
6,110
36,103
44,213
2,682
6,110
87,432
32,548
128,772
350
6,110
413
6,873
350
6,110
12
6,472
-
-
(SEK '000)
Equity and liabilities
Equity attributable to equity holders of the parent company
Share capital
Non registered share capital
Statutory reserve
Other capital-contribution
Retained earnings and profit for the period
Total equity
Liabilities to parent company
Total long term liabilities
-
Account payables
Liabilities to parent company
Other liabilities
Accrued expenses and prepaid income
Total short term liabilities
Total liabilities
Total equity and liabilities
0
6,526
244
2,069
8,839
8,839
135,964
24
0
434
78
512
1,024
1,024
45,237
0
0
0
3,772
5,321
435
2,419
11,947
11,947
4,061
10
4,071
4,071
4,944
10
4,954
4,954
140,719
10,944
11,426
4.2.4
Consolidated Cash Flow statement
The tables below show a summary of IGE Nordic’s consolidated cash flow statement for the years ended 31
December 2007, 2006 and 2005 as well as for the nine month periods ended 30 September 2008 and 2007.
Consolidated Cash flow statement
Q3
2008
IFRS
Unaudited
Q3
2007
IFRS
Unaudited
Q1-Q3
2008
IFRS
Unaudited
-3,645
-852
-1,647
-908
-4,462
400
-36
76
106
3,924
461
6
-1,960
1,015
-1,503
-3,294
-9,903
-1,083
166
2,213
-5,321
-15,575
40
-2,123
1,015
-450
-2,426
99
-3,422
-166
6,616
4,871
3,536
903
-882
421
-848
4,551
3,667
-12,751
-67
-56
-12,874
-39,738
7,300
-873
-33,311
-18,584
-100
-91
-332
-19,107
-40,039
6,850
-104
-873
-34,166
-41,946
6,850
-106
-874
-36,076
-22
-22
-3,521
-3,521
-
0
36,587
1,650
38,237
36,587
89,764
126,351
-
0
36,587
1,500
38,087
Net change in cash and cash equivalents
-12,413
1,482
-34,682
1,645
93,811
Cash and cash equivalents as at 1 January
Currency exchange difference
94,270
-
459
-
94,270
-
459
-
459
-
Cash and cash equivalents as at end of period
59,588
2,104
59,588
2,104
94,270
(SEK '000)
Cash Flow from Operations
Result after financial items
Adjustments for items not included in cash flow
Income tax paid
Change in receivables
Change in receivables parent company
Change in liabilities
Change in payables to parent company
Net cash flow from operations
Cash Flow from investment activities
Acquisition of intangible fixed assets
Cash acquisition of shares
Cash deposits
Acquisition of tangible fixed assets
Net cash flow from investment activities
Cash Flow from financing activities
Shareholders contribution
New shares under registration
New issue of shares
Net Cash Flow from financing activities
25
Q1-Q3 Full Year Full Year Full Year
2007
2007
2006
2005
IFRS
IFRS
IFRS
IFRS
Unaudited
Audited
Audited
Audited
0
0
399
146
149
548
3
149
4.3
Share Capital and Shareholders
IGE Nordic has a registered share capital of SEK 2,681,104 (fully paid-up), divided into 26,811,042 shares,
each with a par value of SEK 0.10 and of equal rights. IGE Nordic is registered in the Swedish Companies
Register with registration number 556493-3199. The IGE Nordic shares are registered in the VPC and VPS
under ISIN number SE0002214528.
The shares of IGE Nordic are listed on Oslo Axess under the ticker “IGENOR”.
The table below sets out the 20 largest shareholders of IGE Nordic as of 17 November 2008.
Country
SWE
CHE
SWE
NOR
NOR
NOR
NOR
NOR
NOR
SWE
NOR
NOR
SWE
NOR
NOR
NOR
NOR
NOR
NOR
SWE
%
74.60%
5.33%
2.86%
2.08%
1.19%
0.75%
0.60%
0.59%
0.56%
0.50%
0.38%
0.37%
0.37%
0.30%
0.30%
0.30%
0.30%
0.30%
0.30%
0.29%
No. of shares
20,000,000
1,430,000
766,062
556,934
320,000
200,000
160,000
159,000
150,000
134,000
101,000
100,000
99,500
81,000
80,000
80,000
80,000
80,000
80,000
76,958
Total 20 largest shareholders
92.3%
24,734,454
Others
7.7 %
2,076,588
100.0 %
26,811,042
Shareholder
INTERNATIONAL GOLD EXPLORATION AB
SIS SEGAINTERSETTLE AG 25PCT
SKANDINAVISKA ENSKILDA BANKEN
CAR ASA KONKURSBO
HOLEN GUNNAR
JAG INVEST AS
INDEPENDENT OIL & RESOURCES ASA
AG INVEST AS
MP PENSJON
ÖDNER BENGT GEORG
SÆTER HAAKON MORTEN
SÆVIK INVEST AS
NORDNET SECURITIES BANK AB
SILVERCOIN INDUSTRIES AS
BORG VEKST AS
EIENDOMSCOMPAGNIET AS
GARPESTAD SVERRE
HARWICK HOLDING AS
JFRM AS
SVENSKA HANDELSBANKEN STOCKHOLM
Total number of shares
26
5
INFORMATION ABOUT IGE
As a mining company, IGE will be developed with integrated activities within exploration, production and
sales of high-end industrial metals and diamonds. Business development with the purpose to expand
operations and develop new activity has prioritized attention. IGE evaluates structural options as well as
organic growth for its current projects. The goal is to increase operational activity and develop a balanced
portfolio of activities that can provide an operational cash flow as early as possible.
The legal entity of International Gold Exploration was founded in Sweden 1983. The current activities of
IGE have been carried out since 1988. The Company changed its name to International Gold Exploration
IGE AB during 1989.
Further information about IGE can be found in the Registration Document and on www.ige.se.
27
6
LEGAL IMPLICATIONS OF THE OFFER
The Offer may result in International Gold Exploration becoming the owner of all the IGE Nordic shares
validly tendered under the Offer and that International Gold Exploration becomes subject to the legislation
on compulsory acquisitions described in section 9.8 (Other Shareholder Matters) below.
Other than this, the International Gold Exploration is not aware of any legal consequences of the Offer.
28
7
STATUTORY AUDITORS
Ernst & Young AB with the authorized auditor Jaan Kubja as head auditor is the independent auditor for
International Gold Exploration, and has been their auditor since 2004. Ernst & Young AB has its registered
address at Jakobsbergsgatan 24, SE-103 99 Stockholm, Sweden. All partners in Ernst & Young AB are
members of the Swedish Institute of Public Accountants (Föreningen Auktoriserade Revisorer).
29
8
KEY INFORMATION
Capitalization and indebtedness
At 30 September 2008 the Company had the following capitalization and indebtedness:
(SEK '000)
Total Current Debt
Unaudited
Unaudited
30/09/2008
31/12/2007
12,769
18,800
-
Guaranteed
-
-
-
Secured
-
-
-
Unguaranteed / Unsecured
12,769
18,800
Total Non-Current Debt
-
-
-
Guaranteed
-
-
-
Secured
-
-
-
Unguaranteed / Unsecured
-
-
274,967
244,899
18,750
17,050
Shareholder’s Equity
a) Share Capital
b) Own shares
-
-
223,904
194,965
d) Minority interests
32,313
32,884
A. Cash
70,294
127,827
c) Other Reserves
B. Cash equivalent
C. Trading securities
D. Liquidity (A)+(B)+(C)
E. Current Financial Receivables
F. Current Bank Debt
-
-
5,401
9,807
75,695
137,634
3,403
3,967
16,891
-
G. Current portion of non-current debt
-
-
H. Other current financial debt
-
-
16,891
0
-62,207
-141,601
K. Non-current bank loans
0
0
L.
0
0
M. Other non-current loans
0
0
N. Non-current Financial Indebtedness (K)+(L)+(M)
0
0
-62,207
-141,601
I.
Current Financial Debt (F)+(G)+(H)
J.
Net Current Financial Indebtedness (I)-(E)-(D)
Bonds issued
O. Net Financial Indebtedness (J)+(N)
The table above should be read together with the Company’s consolidated financial statements and the
related notes thereto. To the best of the Company’s knowledge, the capitalization and indebtedness as per 30
September 2008 provide a fair and valid documentation of the Company’s financial condition.
30
International Gold Exploration has completed an issue of a convertible loan that provided totally SEK 14
million in 5 November 2008. Details regarding the convertible loan are described in the press release dated 5
November 2008 and the Q3 report which can be inspected on www.ige.se. Nordisk Industriutvikling which
Uta Stoltenberg represents in the Board of IGE and Varukungen AB which is controlled by the Board
member Ulrik Jansson has subscribed for the convertibles. There have been no other events subsequent to the
end of Q2 2008 that would in a material way influence the capitalization and indebtedness presented in this
Registration Document.
The Company’s equity to asset ratio is 90%.
As of 30 September 2008 IGE had SEK 70.3 million in cash and SEK 16.9 million in interest bearing debt.
Capital resources
International Gold Exploration raised approximately SEK 50.3 million (gross proceeds) through a share issue
16 April 2008. The share premium resulting from the share issues less the direct expenses has been
transferred to the Company’s share premium fund. The proceeds of SEK 14 million from the convertible
loan completed 5 November 2008 is considered as a bridge financing and will first and foremost be used by
IGE for working capital purposes.
In the two year period from the date of this Prospectus, the Company expects that cash flow from operations
will not be sufficient to cover the costs for exploration and further business development. Consequently,
issue of equity instruments is likely to be used in connection with the Company’s business development.
Possible new acquisitions or development of large projects will be financed separately with loans, equity, or
a combination of this, depending on availability and market conditions. On a general basis, International
Gold Exploration will also evaluate options with partner(s) who might be interested to acquire a part of a
project for payment in cash or money invested in the project, in a so called earn-in agreement.
Working capital statement
The Group does not have sufficient working capital to cover its present requirements for the upcoming 12
months period (i.e. the whole year 2009). However, it is expected that the working capital of the Group will
be sufficient to support its ongoing and planned activities at least until May 2009. Thereafter IGE considers
that the working capital requirement for the Group for the remaining part of 2009 amounts to approximately
SEK 15-20 million.
IGE is presently evaluating different alternatives for working capital financing including project sales, farmins and joint ventures, as well as a review for down-sizing the Group’s capital expenditures for the next 12
months. IGE is also evaluating different alternatives of capital infusion, which can be done by the issue of
shares and/or a combination of debt and issue of equity instruments (convertible loans and/or warrants) based
on the authorization given by the general meeting held on November 26, 2008 encompassing as share capital
increase of up to SEK 2,500,000 divided into 50,000,000 shares.
IGE is confident that the different financing alternatives described in the section above will be successful and
that the required working capital will be secured during Q1 2009.
However, the working capital required for the coming 12 months period is highly dependent on the level of
activities decided by the Group. IGE may change its budgeted rate of investments related to its prioritized
projects if the market conditions allow. Such a decision will be based on careful reviewing of the possibility
to finance such an increase of the Group activities and no increase of the investments will be done unless
they are fully financed. The operations of the Group are therefore currently adapted to the development of
the conditions in the capital market.
Should IGE fail to meet its working capital requirements for the coming 12 months period, some or all of the
ongoing and planned activities of the Group are likely to be delayed or postponed and may, eventually, also
come to a full stop. IGE may then fail to achieve projected cash flows and not be able to meet its obligations
when they fall due.
31
Description of cash flows
The Company’s consolidated cash flows for the first nine months of 2008 compared to the same period in
2007, and years 2007, 2006 and 2005 are summarised below:
Consolidated Cash flow statement
(SEK '000)
Cash Flow from Operations
Income after financial items
Q3
Q3
Q1-Q3
2008
2007
2008
IFRS
IFRS
IFRS
Unaudited Unaudited Unaudited
Q1-Q3
2007
IFRS
Unaudited
Full Year Full Year Full Year
2007
2006
2005
IFRS
IFRS
IFRS
Audited
Audited Audited
427
-27,913
-25,852
-45,035
-62,529
-36,404
-23,207
Adjustments for items not included in cash flow
Change in inventories
Change in trade receivables
Change in trade payables
Income tax paid
Net cash flow from operations
-9,544
-1,099
-3,208
-13,424
12,224
1
-2,773
-416
-18,877
-16,375
15
-1,291
-6,919
-50,422
8,955
-12,123
3,293
-44,910
11,617
-8,182
15,677
-43,417
8,769
59
1,320
-2,608
-28,864
11,711
39
1,973
6,248
-3,240
Cash Flow from investment activities
Acquisition of tangible assets
Acquisition of intagible assets
-20,532
-17,322
-10,052
-324
-33,937
-36,171
-24,188
-1,703
-31,677
-5,276
-1,366
-19,813
-13,202
Acquisition of shares in associated companies
Acquisition of financial assets
Sale of financial assets
Net cash flow from investment activities
1,031
-36,823
-10,376
-442
-13,749
5,011
-79,288
-5,100
-30,991
-18,151
-55,104
-21,179
-13,202
Cash Flow from financing activities
New share issue
Raised credits
Net Cash Flow from financing activities
14,399
14,399
-
56,880
15,300
72,180
-
89,764
89,764
89,764
131,960
131,960
131,960
66308
66308
66,308
Net change in cash and cash equivalents
-35,848
-29,253
-57,530
-75,901
-8,757
81,917
49,866
Cash and cash equivalents as at 1 January
Currency exchange difference
127,827
176
136,674
-198
127,827
-4
136,674
-212
136,674
-90
54,807
-50
4,889
52
70,293
60,561
70,293
60,561
127,827
136,674
54,807
Cash and cash equivalents as at end of period
Consolidated operating cash flow in 2007, 2006 and 2005 reflects the fact that IGE’s current focus to a large
extent has been and still is on exploration and development activities. The Company had no revenues from
sales in 2007.
Further details regarding the consolidated cash flows are informed in the Annual report for 2007 (which can
be inspected on www.ige.se).
32
9
SHARE CAPITAL AND SHAREHOLDER MATTERS
This section contains further information regarding the share capital and shareholder matters of
International Gold Exploration.
9.1
The Company’s share capital before the issue of Consideration Shares
International Gold Exploration’s share capital prior to the issue of any Consideration Shares is SEK
18,750,000 divided into 375,000,000 Shares, each with a par value of SEK 0.05. 336,335,064 of the Shares
of International Gold Exploration are admitted to trading on the Oslo Stock Exchange with the ticker IGE.
The remaining 38,664,936 Shares are admitted to trading on the NGM Equity exchange in Sweden with the
ticker IGE.
9.2
Authority to issue Shares
On 6 May 2008, the Annual General Meeting of the Company resolved to grant the Board of Directors an
authorization to resolve share issues as follows (office translation into English):
“The general meeting resolved to authorize the board, to decide on increase of the Company’s share capital, on one or
several occasions until the next annual general meeting, through the issuance of shares, convertibles or warrants,
encompassing a share capital increase with up to SEK 1,705,000 corresponding to up to 34,100,000 shares. The
preferential right of the existing shareholders may be derogated from. Payments for subscribed shares, convertible
loans or warrants may be settled by way of cash contribution, contribution in kind or set-off of debt. The authorization
may be used for the purpose of raising capital and/or acquisitions where the consideration in whole or in part shall be
made in shares.”
The authorization was registered with the Swedish Companies Register on 27 May 2008.
The authorisation from the annual general meeting has been used by the Board in connection with the
resolution to issue a convertible loan of SEK 14,000,000 on November 5 2008 as further described in section
9.1. The remaining authorization for the Board of Directors encompasses share capital increases with up to
SEK 38,333.35 corresponding to up to 766,667 new shares.
On 26 November 2008, the General Meeting of the Company resolved to grant the Board of Directors with a
new authorisation to resolve on issues with up to 50,000,000 new Shares in the Company. The authorization
has the following wording (office translation into English):
“The general meeting resolved to authorize the board, to decide on increase of the Company’s share capital, on one or
several occasions until the next annual general meeting, through the issuance of shares, convertibles or warrants,
encompassing a share capital increase with up to SEK 2,500,000 corresponding to up to 50,000,000 shares. The
preferential right of the existing shareholders may be derogated from. Payments for subscribed shares or convertible
loans may be settled by way of cash contribution, contribution in kind or set-off of debt. The authorization may be used
for the purpose of raising capital and/or acquisitions where the consideration in whole or in part shall be made in
shares, convertibles and/or warrants.”
9.3
The Company’s share capital after the issue of Consideration Shares
The number of Shares in International Gold Exploration following the completion of the Voluntary Offer,
and therefore the issued share capital of International Gold Exploration, will depend on the number of IGE
Nordic shareholders accepting the Voluntary Offer. Provided that all shareholders of IGE Nordic tender all
their shares under the Voluntary Offer, the issued share capital of International Gold Exploration will be
increased by SEK 1,363,208.40 by issuance of 27,264,168 new Shares, each Share with a par value of SEK
0.05 resulting in an aggregate share capital of SEK 20,113,208.40.
33
It is expected that the Consideration Shares will be listed on Oslo Stock Exchange on or about 3 January
2009.
The Consideration Shares will be created under the Swedish Companies Act. The Consideration Shares is
entitled to receive dividend decided as from the financial year 2009 and other shareholder rights from
registration of the Share Issue in the Swedish Register of Business Enterprises and in the VPC/VPS system,
i.e. from on or about 23 December 2008 (cf. also section 9.8).
9.4
Dilution
The dilutive effect in connection with the issue of the Consideration Shares will be approximately 6.8%,
provided that all shareholders of IGE Nordic tender all their shares under the Voluntary Offer.
No of shares each with a
nominal value of NOK 0.05
% dilution
9.5
Prior to the Voluntary Offer
375,000,000
Subsequent to the Voluntary Offer
402,264,168
100.0%
6.8%
Share registrar and securities number
International Gold Exploration’s Shares are registered in book entry form in the VPS (in Norway) and VPC
(in Sweden). The securities number of the Shares is ISIN SE 000378119.
The registrar is DnB NOR Bank ASA, Verdipapirservice, P.O. Box 1171 Sentrum, N-0107 OSLO, Norway.
9.6
Shareholder rights
The Shares are identical in every respect and carry the right to one vote at general meetings. None of the
major shareholders have different voting rights.
All dividends of the Company shall be declared, apportioned and paid to the shareholders pro rata to the
number of Shares held at the relevant date. Shareholders have pre-emption rights in new issues of securities
by the Company. Such pre-emption rights may be waived by two-thirds of the votes cast as well as twothirds of the aggregate share capital represented at the general meeting of the Company.
Any amendment of the shareholders’ rights to vote at general meetings, must be done by amending the
articles of association. According to the Swedish Companies Act amendments of the company’s Articles of
Association requires in general the affirmative vote of two-thirds of the votes cast as well as two-thirds of the
aggregate share capital represented at the general meeting. Further, the Swedish Companies Act requires that
decisions that only have the effect of altering the rights and preferences of certain share or shares, receive the
approval of all the holders of such share or shares present at the meeting and who together represent not less
than nine-tenth of all shares whose rights are affected, as well as the majority required for amendments to the
Company's Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of
dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares,
require to be supported by all of the shareholders present at the meeting who together represent not less than
90% of the share capital in the Company. Decisions that means restrictions in the number of shares which
shareholders may vote for at general meeting require to be supported by two-thirds of the vote casts and
nine-tenth of the shares represented at the general meeting.
All Shares carry an equal right to any surplus in the event of a liquidation of the Company.
There are neither restrictions on the transferability of the Shares nor any restrictions on foreign ownership of
the Company’s Shares. Existing shareholders do not have any pre-emptive rights upon the transfer of Shares
in the Company.
34
9.7
International Gold Exploration’s share register in VPC
As the Company is a Swedish registered company, a statutory register of shareholders is maintained by the
Swedish Central Securities Depositary VPC AB (the “VPC”) in accordance with the Swedish Financial
Instruments Accounts Act (1998:1479) and the Affiliation Agreement/Issuer Agreement entered into with
VPC. In order to facilitate the listing on Oslo Børs, the Company has entered into a Registrar Agreement
with DnB NOR Bank ASA (“DnB NOR”). In accordance with the Registrar Agreement, 336,335,064 of the
Company’s Shares are for the time being registered in the Norwegian Central Securities Depository (the
“VPS”), and with DnB NOR acting as Registrar for the Company. In accordance with market practice in
Norway and system requirements of the VPS and Oslo Børs, the investors in the Company will be registered
in the VPS as owners of the Shares of the Company and the instruments listed and traded on Oslo Børs will
be referred to as the “Shares”.
For the purpose of Swedish law, the owner of the Shares registered in the VPS and investors registered as
owners of the shares in the VPS will have to exercise, indirectly through the Registrar as their nominee, all
rights of ownership relating to the Shares. The investors registered as owners in the VPS must look solely to
the Registrar for the exercise of all rights attached to the Shares, and in particular, shareholders registered as
such in the VPS will only be entitled to vote at general meetings of the Company if he has arranged for
registration of entitlement to vote (in Swedish: Rösträttregistrering) in the VPC through the Registrar at the
latest 5 business days (including Saturdays) prior to the general meeting and has noticed the company of his
participation at the general meeting in accordance with the notice to the meeting.
Under the Registrar Agreement, DnB NOR undertakes to maintain a register in the VPS of the beneficial
shareholders of the Company. DnB NOR also undertakes to distribute all dividends and other cash amounts
declared and paid by the Company in accordance with the VPC/VPS system for payment of dividends. A
shareholder may at any time require (at the shareholders own cost) the Registrar to register such shareholders
ownership in the Shares in the VPC. After the registration of the ownership in the VPC, the relevant shares
will cease to be registered with the VPS.
The Registrar may terminate the Registrar Agreement by three months prior written notice. Furthermore, the
Registrar may terminate the Registrar Agreement with immediate effect if the Company does not perform its
payment obligations to the Registrar or commits any other material breach of the Registrar Agreement. In the
event that the Registrar Agreement is terminated, the Company will use its reasonable best efforts to enter
into a replacement agreement for purposes of permitting the uninterrupted listing of its Shares. There can be
no assurance, however, that it would be possible to enter into such an agreement on substantially the same
terms or at all. A termination of the Registrar Agreement could, therefore, adversely affect the Company and
the shareholders.
The Registrar Agreement limits the Registrar’s liability for any loss suffered by the Company. The Registrar
Agreement provides that the Registrar is not liable for any loss attributable to circumstances beyond the
Registrar’s control, including, but not limited to, errors committed by others or any power and
telecommunications network failure or changes in applicable legislation, and is not liable for any indirect
damage or loss. Thus, the Company may not be able to recover its entire loss if the Registrar does not
perform its obligations under the Registrar Agreement.
9.8
Other shareholder matters
Transfer of Shares
According to the Company’s Articles of Association, there are no general limitations on transfer of the
Company’s Shares.
Disclosure requirements
According to Chapter 4 of the Swedish Securities Trading Act, a person, entity or group acting in concert
that acquires shares, options for shares or other rights to shares resulting in its beneficial ownership, directly
35
or indirectly, in the aggregate meeting or exceeding the respective thresholds of 5, 10, 15, 20, 25, 30, 50, 66
2/3 and 90% of the share capital or the voting rights in the Company has an obligation to notify the Company
and the Swedish Financial Supervisory Authority (sw: Finansinspektionen). The same applies to disposal of
shares resulting in a beneficial ownership, directly or indirectly, falling below said thresholds.
Further, under Norwegian law, an acquisition disposal or any other circumstance, that causes the
shareholder’s proportion of shares and/or rights to shares to reach, exceed or fall below 5%, 10%, 15%, 20%,
25%, 1/3, 50%, 2/3 or 90% of the share capital or an equivalent proportion of the voting rights in a company
whose shares are quoted on Oslo Stock Exchange, the acquirer shall immediately notify such acquisition to
the stock exchange.
Mandatory offer requirement
According to the Swedish Act on Public Takeover Bids on the Stock Market (in Swedish: Lagen om
offentliga uppköpserbjudanden på aktiemarknaden) any person that acquires more than 3/10 of the voting
rights of a listed company (including a Swedish company listed at Oslo Børs) is required to make an
unconditional public offer for the purchase of the remaining shares in the company. Further, the shares of
related parties, such as close relatives of the shareholder and companies controlled by such persons,
companies in the same group of companies as the shareholder, and persons with which the shareholder is
bindingly acting in concert and companies controlled by such persons, are considered equal to the
shareholder’s own shares. The unconditional public offer must be made within four weeks after the threshold
was passed and the person shall immediately announce his holding of shares in the company.
Compulsory acquisition
According to the Swedish Companies Act, a shareholder that holds more than nine-tenth of the shares in the
Company (majority shareholder) shall be entitled to buy-out the remaining shares of the other shareholders
(minority shareholders) of the Company. Furthermore, a minority shareholder whose shares may be bought
out in accordance with the aforementioned is entitled to compel the majority shareholder to purchase his
shares. The purchase price shall be determined to market price and for listed shares the purchase price shall
correspondence to the listed value, unless specific circumstances otherwise dictates. A dispute regarding the
existence of any buy-out right or obligation or the purchase price shall be determined by three arbitrators in
accordance with the Swedish Arbitration Act.
Voting rights
Each share in the Company carries one vote. Each share held by a major shareholder carries the same voting
right as each share held by any other shareholder.
As a general rule, resolutions that shareholders are entitled to make pursuant to Swedish law or the
Company's Articles of Association require a simple majority of the votes cast. In the case of election of
directors to the Board of Directors, the persons who obtain the most votes cast are deemed elected to fill the
positions up for election. However, as required under Swedish law, certain decisions, including resolutions to
waive preferential rights in connection with any share issue, to approve a merger or de-merger, to amend the
Company's Articles of Association or to authorise the Board to resolve on share capital increases with
deviation from the shareholders’ preferential rights or to resolve on reduction of the share capital, must
receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds
of the share capital represented at a shareholders' meeting. Swedish law further requires that certain
decisions, which have the effect of altering the rights and preferences of certain share or shares, receive the
approval of all the holders of such share or shares present at the meeting and who together represent not less
than nine-tenth of all shares whose rights are affected, as well as the majority required for amendments to the
Company's Articles of Association. If such alterations only have effect on the rights of an entire class of
shares, the decision requires the approval of one half of all the holders of shares of such class and nine-tenth
of such class represented at the meeting, as well as the majority required for amendments to the Company's
Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of dividend
payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares, require
to be supported by all of the shareholders present at the meeting who together represent not less than 90% of
the share capital in the Company. Decisions that means restrictions in the number of shares which
36
shareholders may vote for at general meeting require to be supported by two-thirds of the vote casts and
nine-tenth of the shares represented at the general meeting.
In general, in order to be entitled to vote, a shareholder must be registered as the owner of Shares in the share
register kept by the VPC. Beneficial owners of Shares that are registered in the name of a nominee are
generally not entitled to vote under Swedish law, nor are any persons who are designated in the register as
holding such Shares as nominees. Shareholders registered as such in the VPS will only be entitled to vote at
general meetings of the Company if he has arranged for registration of entitlement to vote (in Swedish:
Rösträttregistrering) in the VPC through the Registrar at the latest 5 business days (including Saturdays)
prior to the general meeting and has noticed the Company of his participation at the general meeting in
accordance with the notice to the meeting. For further information see section 5.10 above.
General meetings of shareholders
Through the general meeting, the Company’s shareholders exercise the supreme authority in the Company,
subject to the limitations provided by Swedish law.
All shareholders in the Company are entitled to attend and vote at general meetings, either in person or by
proxy. See “Voting rights” above with regard to certain restrictions on voting right applying for nomineeand VPS registered.
General meetings are conveyed by the Company’s Board of Directors. In accordance with the Company´s
Articles of Association, a notice of a general meeting shall be announced in Official Gazette (Sw Post och
Inrikes Tidningar) and in Dagens Industri at the latest two or four weeks before the date of the meeting
depending on the type of meeting and matters to be addressed at the meeting, and shall include a proposal for
an agenda for the meeting. A shareholder is entitled to submit proposals to be discussed at general meetings
provided such proposals are submitted in writing to the Board of Directors in such good time that it can be
entered on the agenda of the meeting.
The annual general meeting shall be called by the Board of Directors such that it can be held within six
months from the end of each financial year. The annual general meeting shall deal with and decide on the
adoption of the annual financial statement and annual report, the question of declaring dividend and such
other matters as may be set out in the notice of the annual general meeting.
Extraordinary general meetings can be called by the Board of Directors. In addition, the Board of Directors
shall call an extraordinary general meeting whenever so demanded in writing by the auditor or shareholders
representing at least 10% of the share capital, in order to deal with a specific subject.
The following matters shall always be resolved by the annual general meeting:




Approval of the annual report and the auditors’ report as well as, where appropriate, the consolidated
accounts and auditors’ report on the consolidated accounts.
adoption of the profit and loss account and balance sheet and, where appropriate, the consolidated
profit and loss account and consolidated balance sheet; allocation of the company’s profits or losses
as set forth in the adopted balance sheet; discharge from liability of the members of the Board and
the managing director;
Determination of the remuneration to the Board and the auditors.
Election of the Board members and, where appropriate, auditors and alternate auditors.
Additional share issuances and preferential rights
Under the Swedish Companies Act, the Company's shareholders have a preferential right to subscribe for
issues of new shares by the Company. New share issues with preferential rights for the Company’s
shareholders that do not require an amendment to the Articles of Associations, require a resolution by the
general meeting with simple majority (more than 50% of the votes present at the meeting). The shareholders’
preferential rights to subscribe for shares in an issue may be waived by a resolution at a general meeting
supported by two third of the votes and shares present at the general meeting.
37
Under the Swedish Companies Act, bonus issues may be distributed, subject to resolution of the general
meeting, by transfer from the Company's free equity or from its statutory reserve or revaluation reserve. Such
bonus issues may be effected either by issuing new shares or by increasing the quota value of the outstanding
shares.
There are no conditions imposed by the memorandum or Articles of Association of the Company which set
out more stringent conditions for changes in the capital than what is required by statutory law.
Dividends
Under Swedish law, no interim dividends may be paid in respect of a financial period as to which audited
financial statements have not been approved by the annual general meeting of shareholders, and any proposal
to pay a dividend must be recommended or accepted by the Board and approved by the shareholders at a
general meeting. The shareholders may vote to reduce (but not to increase) the dividends proposed by the
Board. However, the annual general meeting may vote to increase the dividends if such obligation is set forth
in the articles of association or such dividend is approved due to the right of minority shareholders to receive
the minimum dividend set forth by Swedish law.
Dividends may only be paid, if after the payment the restricted equity of the Company is fully intact and
presupposing that the payment is possible under the rule of prudence, e.g. the Company’s need for
consolidation.
Under Swedish foreign exchange controls currently in effect, transfers of capital to and from Sweden are not
subject to prior government approval except for the physical transfer of payments in currency, which is
restricted to licensed banks. Consequently, a non-Swedish resident may receive dividend payments without
Swedish exchange control consent if such payment is made only through a licensed bank.
All shareholders that are registered as shareholders in the VPC/VPS system at the registration date (Sw:
avstämningsdag) resolved by the general meeting when making the dividend resolution, are entitled to
dividend, unless otherwise decided in connection with the share issue, and dividends are paid out to the
shareholders on the day decided by the general meeting. There are no restrictions on dividends or special
procedures for shareholders who reside outside Sweden.
The Company’s Board will consider the amount of dividend (if any) to recommend for approval by the
Company’s shareholders, on an annual basis, based upon the earnings of the Company for the years just
ended and the financial situation of the Company at the relevant point in time. Hence, the shareholders do
not have a right to share in the Company’s profits by way of dividends (other than under the circumstances
above stated).
Change of the rights of holders of Shares
The Company’s Articles of Association do not contain any special regulations for changing the rights of
holders of the Company’s Shares. Subject to specific requirements set out in the Swedish Companies Act,
the general meeting may adopt a resolution to change rights attached on the Company’s Shares. Such
resolution requires an amendment to the Articles of Association, which requires the same vote as other
amendments to the Articles of Association. In addition, stricter majority requirements may apply depending
on the manner in which the change of rights to be carried out.
Redemption and conversion rights
There are no redemption rights or conversion rights attached to the Company’s Shares.
Rights on liquidation
Under Swedish law, the Company may be liquidated by a resolution (simple majority) in a general meeting
of the Company. The Shares rank pari passu in the event of return of capital by the Company upon a
liquidation or otherwise.
38
Reports to shareholders
The Company publishes annual and interim reports that include financial statements. The consolidated
financial statements are published in accordance with the International Financial Reporting Standards, IFRS,
as issued by the International Accounting Standards Board.
Notification and publication requirements
The Company will provide its shareholders, Oslo Stock Exchange, NGM Equity and the market as a whole
with timely and accurate information. Notices will be published through Oslo Stock Exchange’s and NGM
Equity’s respective information system and on the Company’s Internet site.
Mandatory filing requirements under the Norwegian Competition Act
The Norwegian Competition Act of 5 March 2004 No. 12 (the “Competition Act”) stipulates a mandatory
filing requirement for certain mergers and transactions involving acquisition of control of another
undertaking. The Competition Act applies to concentrations as defined in art. 3 of EC Council Regulation
139/2004 (2004 ECMR), i.e. to mergers between two or more previously independent undertakings, and to
acquisitions of direct or indirect control on a lasting basis of the whole or parts of another undertaking. The
EC Commission’s and the EC Court’s interpretation of the notion of concentration under the said regulation
is relevant when determining which mergers are comprised by the Competition Act.
All mergers and transactions involving acquisition of control must be notified to the Norwegian Competition
Authority (the “NCA”) if the undertakings involved in the transaction have a combined annual turnover in
Norway of NOK 50 million or more. However, if only one of the undertakings involved in the transaction
has an annual turnover in Norway exceeding NOK 20 million, the transaction need not be notified.
Notwithstanding the above, the filing requirements under the Competition Act do not apply to concentrations
that are within the turnover thresholds of the EC Merger Regulation or equivalent thresholds in the EEA
Agreement. Accordingly, the principle of one-stop-merger control applies.
Transactions must be notified to the NCA no later than when a final agreement between the parties is
reached or if control over another undertaking in fact is acquired prior to a final agreement. The Competition
Act allows for voluntary filing at an earlier stage. The obligation to notify the transaction is imposed on the
parties to the merger or on the acquirer(s) of an undertaking.
The mandatory filing requirement under the Competition Act imposes an obligation to submit a so-called
simplified notification. If the NCA finds reason to consider the transaction more closely, the NCA may
require that the parties to the merger/the acquirer(s) submit(s) a so-called complete notification. The NCA
must make such a requirement within 15 working days after they have received the simplified notification. If
this is not done, the NCA cannot intervene against the transaction after this deadline has expired. The parties
may also voluntarily submit a complete notification without having received instructions from the NCA.
Where the NCA has imposed an obligation to submit a complete notification, the implementation of the
transaction must be suspended. The same applies if a complete notification is submitted voluntarily. For
mergers or acquisitions of control, the stand-still obligation comes into effect as soon as the party/parties
have received the order to submit a complete notification. For voluntary filings, the stand-still comes into
effect from the time of submission of a complete notification. The suspension period lasts for 25 working
days calculated from the time the NCA has received the complete notification. It is within this time limit that
the NCA must decide whether to investigate the transaction further and warn the parties that they may
interfere with the transaction. The NCA may also order a prolonged prohibition on implementation of a
transaction, provided that there is reason to believe that the concentration may create or strengthen a
significant restriction on competition and that a temporary prohibition is necessary in order to ensure that a
potential decision from the NCA can be carried out.
If the NCA decides to investigate the transaction further, i.e. beyond the above mentioned 25 working days
period, the NCA must provide a reasoned draft decision of intervention no later than 70 working days as
39
from the receipt of the complete notification. The parties will then have 15 working days to submit their
comments to the draft decision. The NCA must reach a final decision no later than 15 working days after the
receipt of such comments. If the parties have submitted a proposal for commitments, they can request that an
additional 25 working days are added to NCA's deadline to reach a final decision.
40
10 TAXATION
This section contains a summary over important Norwegian and Swedish tax rules relevant to the realization
of shares in IGE Nordic and shareholders in International Gold Exploration. Please note that only the
potential tax liability to Norway and Sweden is described below and that any potential tax liability to other
countries due to the shareholders connections to such countries are not described.
The summary is not a complete review of all tax considerations that may be relevant to the IGE Nordic
and/or International Gold Exploration shareholders. The summary is based on applicable Norwegian and
Swedish law and practice at the date of this Document. Such laws may be amended, also with retroactive
effect.
The summary is only intended to provide a general guideline. The taxation of each IGE Nordic or
International Gold Exploration shareholder depends on the specific shareholder’s situation. Each
shareholder should therefore consult its own tax advisor in order to establish the full tax consequences of
accepting the offer including the implications of any Norwegian, Swedish and/or other foreign tax laws.
For the purpose of the summary below, any reference to a “Norwegian shareholder”, “Swedish
Shareholder” or a “foreign shareholder” refers to the tax residency and not the nationality of such
shareholder.
10.1
Shareholders who are resident in Norway
10.1.1 Taxation of capital gain or losses from realization of shares in IGE Nordic
Corporate shareholders
The exchange of shares in IGE Nordic for shares in International Gold Exploration will be deemed a
realization of shares in IGE Nordic under Norwegian tax legislation. Norwegian corporate shareholders are
not taxable in Norway on capital gains derived from realization of Shares in IGE Nordic. Any losses related
to such realization are not tax deductible.
However, pursuant to a proposed amendment, 3% of any capital gains realised and any dividends declared
after 7 October 2008 shall be recognised as taxable income. If the proposal is adopted by the Norwegian
Parliament this implies that any capital gain derived from the exchange of shares in IGE Nordic will
effectively be subject to 0.84% income tax (28% tax rate x 3% of the capital gain).
If the exchange of shares in IGE Nordic leads to a capital loss, no part of such loss will be deductible for a
corporate shareholder for tax purposes.
Individual shareholders
The exchange of shares in IGE Nordic for shares in International Gold Exploration will be deemed a
realization of shares in IGE Nordic under Norwegian tax legislation. A capital gain generated by a
Norwegian individual shareholder through the exchange of shares is taxable in Norway and any loss tax
deductible. Such capital gain or loss is included in or deducted from the basis for computation of ordinary
income in the year of disposal. Ordinary income is taxable at a rate of 28%. This is applicable irrespective of
the duration of the ownership and the number of shares owned and/or disposed of.
The capital gain (loss) is equal to the consideration received (the value of the received International Gold
Exploration shares) less the cost price of the share and transactions costs. From the basic calculation of the
capital gain Norwegian individual shareholders are entitled to deduct a calculated tax-free allowance when
calculating their taxable income (No. “skjermingsfradrag”). The tax-free allowance is calculated annually on
a share to share basis, and the annual allowance for each share will be equal to the cost price of that share
41
multiplied by a risk free interest rate (No. “skjermingsrente”). Any part of the calculated annual allowance
exceeding the dividend distributed on the share in one year will be added to the cost price of the share and
included in the basis for calculating the allowance the following year. The allowance for each share is
accordingly equal to the total of (annual) allowance amounts calculated for this share for previous years, less
dividends distributed on this share. The calculated allowance may only be deducted in order to reduce a
taxable gain calculated upon the realization of the share, and may not be deducted in order to produce or
increase a loss for tax purposes.
10.1.2 Taxation connected to Shares in International Gold Exploration
Corporate shareholders
International Gold Exploration shareholders will not be taxed by the IGE Nordic shareholders’ exchange of
shares for International Gold Exploration shares.
In the future, pursuant to current tax law, Norwegian corporate shareholders are not taxable in Norway on
dividends received from or on capital gains derived from realization of shares in companies situated in the
EEA area such as International Gold Exploration. Any losses related to realization of shares are not tax
deductible.
However, pursuant to a proposed amendment, 3% of any capital gains realised and any dividends declared
after 7 October 2008 shall be recognised as taxable income. If the proposal is adopted by the Norwegian
Parliament this implies that any capital gain derived from the exchange of shares in International Gold
Exploration will effectively be subject to 0.84% income tax (28% tax rate x 3% of the capital gain /
dividend). If the realisation of shares in International Gold Exploration leads to a capital loss, no part of such
loss will be deductible for a corporate shareholder for tax purposes.
Individual shareholders
The International Gold Exploration shareholders will not be influenced by the IGE Nordic shareholder’s
exchange of shares for International Gold Exploration shares.
On future realisation, pursuant to current tax law, a capital gain generated by a Norwegian individual
shareholder through a sale of Shares is taxable in Norway and any loss tax deductible. Such capital gain or
loss is included in or deducted from the basis for computation of ordinary income in the year of disposal.
Ordinary income is taxable at a rate of 28%. This is applicable irrespective of the duration of the ownership
and the number of Shares owned and/or disposed of.
The capital gain (loss) is equal to the consideration received less the cost price of the Share and transactions
costs. From the basic calculation of the capital gain Norwegian individual shareholders are entitled to deduct
a calculated tax-free allowance when calculating their taxable income (“skjermingsfradrag”). The tax-free
allowance is calculated annually on a share to share basis, and the annual allowance for each share will be
equal to the cost price of that share multiplied by a risk free interest rate (“skjermingsrente”). Any part of the
calculated annual allowance exceeding the dividend distributed on the share in one year will be added to the
cost price of the share and included in the basis for calculating the allowance the following year. The
allowance for each Share is accordingly equal to the total of (annual) allowance amounts calculated for this
Share for previous years, less dividends distributed on this Share. The calculated allowance may only be
deducted in order to reduce a taxable gain calculated upon the realization of the Share, and may not be
deducted in order to produce or increase a loss for tax purposes.
Dividends are taxed at 28%. An amount of the dividends similar to the allowance as described above is
exempt from tax.
42
10.2
Shareholders who are resident in Sweden
10.2.1 Taxation connected to capital gain or losses from realization of shares in IGE Nordic and
International Gold Exploration and dividends
Taxation on realisation of shares - general
The capital gain or, where applicable, the capital loss, is calculated as the difference between the sales
proceeds less sales expenditure and the acquisition cost (costs related to acquisition and potential
improvements) for the shares sold. The acquisition cost is calculated according to the so-called average
method, implying that the tax acquisition cost is calculated as the average acquisition cost for all the Shares
of the same type and class.
For publicly traded shares, the acquisition cost may be determined as 20% of the sales proceeds after
deduction of expenses related to the sale; the so-called standard rule.
Taxation on realisation of shares in IGE Nordic - Individual shareholders
For individuals that are Swedish tax resident and who accepts the Offer and therefore realize their shares in
IGE Nordic against the Consideration Shares, the rules for mandatory deferred taxation (Sw. framskjuten
beskattning) should be applicable. The transaction should therefore not result in any taxable gain or
deductible loss. The Consideration Shares will in such case be deemed to be acquired at a price
corresponding to the acquisition price that existed for the shares in IGE Nordic.
A future sale of the Consideration Shares will normally trigger capital gain taxation (see below) provided the
rules for mandatory deferred taxation are not applicable also for that sale. According to the tax legislation, a
capital gain or loss which arises when shares in IGE Nordic are realized against the Consideration Shares
will be subject to taxation before the Consideration Shares are sold if and when the shareholder ceases to be
resident in Sweden or to permanently live in Sweden. However, according to court practice such exit
taxation is not allowed when the individual moves to another country within the EU. In that situation it is
currently uncertain to what extent Sweden may tax the capital gain from the share exchange when a sale of
the Consideration Shares otherwise is not taxable in Sweden due to internal rules or application of double tax
treaty.
Taxation on realisation of shares in International Gold Exploration- Individual shareholders
A capital gain realized on publicly traded shares by Swedish tax resident individuals is taxed as capital
income at a flat rate of 30%. A capital loss is normally deductible with 70% against other capital incomes.
However, capital losses on publicly traded shares (such as the Company’s Shares) are fully deductible
against capital gains on shares (publicly traded and not-publicly traded) and on publicly traded securities
taxed as shares (except for parts in interest funds) and which have been realized the same year. Capital losses
may not be carried forward to the following income year. If the shares in International Gold Exploration are
sold against shares in an acquiring company, the rules regarding deferred taxation might be applicable also
on that sale.
If a net capital income loss should arise, 30% of this loss may be credited against earned income tax, real
estate tax or local real estate fee. However, if the loss exceeds SEK 100,000 only 21% of the excess portion
allows for a tax credit.
Taxation on realization of shares in IGE Nordic - Corporate shareholders
For corporate shareholders that are Swedish tax resident and who accepts the Offer and therefore realize their
shares in IGE Nordic against the Consideration Shares, the share exchange will, according to the main rule,
result in a taxable capital gain or deductible capital loss provided the special rules for business related shares
are not applicable (see below). A capital gain realized by a corporate shareholder is normally taxed as
ordinary business income at a flat rate of 28%. Capital losses may only be deducted against capital gains on
43
other securities taxed as shares. In certain cases capital losses may be offset against capital gains realized by
group companies if group contributions can be exchanged between the companies. Capital losses that are not
offset against capital gains may be carried forward to the following income year.
It should be possible to claim deferred taxation of a capital gain that arises when shares in IGE Nordic are
realized against the Consideration Shares. The capital gain must in such case anyway be reported to the tax
authority in the income tax return together with a claim for deferred taxation. The deferred taxable gain shall
then be allocated equally to the Consideration Shares received in exchange. If deferred taxation is accepted,
the capital gain shall be taxed at the latest when the Consideration Shares are transferred or cease to exist.
This will however not apply if the Consideration Shares are transferred in a subsequent share exchange
which meets the requirements for a further deferral of the taxation. A capital gain which is subject to
deferred taxation may also be taxed if that is requested by the taxpayer.
The shares in IGE Nordic would be deemed business related if the shareholding equals at least 10% of the
voting rights in the company or the shareholding is related to the business conducted by the holder or any of
its affiliates. At sale of publicly traded business related shares, a capital gain is not taxable and a capital loss
is not deductible, provided the shares have been business related in the hands of the shareholder for a
continuous period of at least one year before the sale.
Taxation on realization of shares in International Gold Exploration - Corporate shareholders
When a corporate shareholder sells shares in International Gold Exploration which have been received in
consideration for the shares in IGE Nordic, a capital gain will be taxable and a loss will be deductible in
accordance with what has been described above as regard realization of shares in IGE Nordic. The
Consideration Shares are deemed to have an acquisition price equal to their fair market value at the time of
the share exchange. If a capital gain at realization of the shares in IGE Nordic is subject to deferred taxation,
such gain will also be taxed at sale of the Consideration Shares.
A special order of priority is applicable for a company which accept the Offer and which already holds
shares in International Gold Exploration at the time of the share exchange or acquire such shares after the
share exchange when the shares are sold. The shares are deemed to be sold in the following order:
1. Shares acquired before the share exchange.
2. Shares received in the share exchange.
3. Shares acquired after the share exchange.
As regard business related shares the same apply as described above for realization of shares in IGE Nordic.
Taxation of dividends - Individual shareholders
Dividends paid to a Swedish tax resident individual are taxed in Sweden as capital income at a flat rate of
30%. The VPC or – if the shares are nominee registered – the Nominee withholds the tax as a preliminary
tax.
Taxation of dividends - Corporate shareholders (limited liability companies)
Dividends paid to a Swedish corporate shareholder are normally taxed as ordinary business income at a flat
rate of 28%. Dividends attributable to so-called business related shares are tax-exempt provided the shares
are business related and held by the shareholder more than one year from the time when the shares became
business related for the shareholder. Publicly traded shares are considered as being business related if the
shareholder holds at least 10% of the voting rights in the company or if the holding otherwise is related to the
business conducted by the holder or any of its affiliates.
44
10.3
Shareholders who are resident in other jurisdictions
Realization of shares
Shareholders who are tax resident outside Sweden are normally not taxed in Sweden at sale of shares. Such
shareholders may however be subject to tax at sale of shares in their country of residence.
An individual who is tax resident outside Sweden may however be subject to tax in Sweden on sale of
shares, if the individual at any occasion during the year in which the sale take place or during any of the
preceding ten calendar years has been resident or permanently stayed in Sweden. The right for Sweden to tax
a sale of shares in these situation may however be limited by a tax treaty between Sweden and the country of
the shareholder’s residency.
Companies which are tax resident outside Sweden may be taxed in Sweden due to a sale of shares if the
company has a permanent establishment in Sweden and the shares can be allocated to the permanent
establishment.
Dividend
Dividend paid out from a Swedish limited liability company to shareholders with tax residency outside
Sweden is normally subject to withholding tax in Sweden. The same applies to certain payments to
shareholders in connection with a reduction of the share capital, liquidation or a repurchase of shares. The
statutory withholding tax rate is 30%, but if a tax treaty is applicable between Sweden and the country of the
shareholder’s residency the rate is normally reduced according to the treaty. The VPC or – if the shares are
nominee registered – the Nominee normally withholds the withholding tax.
Swedish withholding tax is not levied on dividend paid to foreign companies on shares which would be
deemed business related if they were held by a Swedish company and provided the foreign company is
deemed to be similar to such a Swedish company which are tax exempted for dividend on business related
shares. Another requirement for the exemption from withholding tax in this case is however that the shares
have been held for at least one year at the time of the dividend is paid out.
45
11 ADDITIONAL INFORMATION
11.1
Statements by experts
This Document contains no statements by experts regarding International Gold Exploration or market
conditions.
11.2
Third party information
The information in this Document that has been sourced from third parties has been accurately reproduced
and as far as International Gold Exploration is aware and able to ascertain from information published by
that third party, no facts have been omitted which would render the reproduced information inaccurate or
misleading. The source of third party information is identified where used.
46
12 DEFINITIONS & GLOSSARY TERMS
The following definitions and glossary apply in this Document unless dictated otherwise by the context,
including the foregoing pages of this Document. Definitions in plural also apply for words in singular, and
vice versa.
Acceptance
Acceptance of the Offer by a IGE Nordic shareholder
Private Placement
The issue of the Consideration Shares to IGE Nordic shareholders who
accept the Offer
Acceptance Form
The form of acceptance to be used by IGE Nordic shareholders when
accepting the Offer, enclosed with this Document as Appendix 2
Acceptant
IGE Nordic shareholder who accepts the Offer
Appendices
Appendix 1 and Appendix 2 to this Document
Articles of Association
The aarticles of Aassociation of International Gold Exploration as at
the date of the prospectus
Board or Board of Directors
The Board of Directors of International Gold Exploration
CESR
The Committee of European Securities Regulators
CET
Central European Ttime
Company
International Gold Exploration IGE AB (publ.) (registration number
556227-8043), a Swedish public limited company with registered
address at Kungsgatan 44, SE-111 35 Stockholm, Sweden
Consideration Shares
Shares in International Gold Exploration which are issued to IGE
Nordic shareholders in exchange for shares in IGE Nordic under the
Offer
Document
This voluntary offer document and share securities note with
appendices prepared in connection with the Offer and the private
issueplacement of the Consideration Shares
Financial Advisor
Handelsbanken Capital Markets
Group
International Gold Exploration IGE AB and its subsidiaries
IFRS
International Financial Reporting Standards, issued by the IASB
IGE
International Gold Exploration IGE AB and its subsidiaries
IGE Nordic
IGE Nordic AB (publ.) (company registration number 556493-3199), a
Swedish public limited company with registered address at Kungsgatan
44, SE-111 35 Stockholm, Sweden
International Gold Exploration
International Gold Exploration IGE AB (publ.) (registration number
556227-8043), a Swedish public limited company with registered
address at Kungsgatan 44, SE-111 35 Stockholm, Sweden
NOK
The currency in the Kingdom of Norway (Norwegian krone)
Offer
The voluntary offer by International Gold Exploration to exchange IGE
Nordic shares not already owned by International Gold Exploration
IGE with shares in International Gold Exploration on the terms set out
in this Document
47
Offer Period
The period when IGE Nordic shareholders may accept the Voluntary
Offer, running from and including 1 December 2008 to and including
17:30 (Norwegian time) 15 December 2008, subject to extension as set
out in this Document
Offeror
International Gold Exploration
Oslo Børs
Oslo Børs ASA
Prospectus
The Prospectus issued by the Company in relation to the Issue,
comprising of this Document, the Registration Document and the
Summary prepared, published and approved by and filed with Oslo
Børs in accordance with the Prospectus Rules
Prospectus Rules
The Prospectus rules in the Securities Trading Act and the Securities
Trading Regulation, which implements the Prospective Directive
(EC/2003/71), including the Commission Regulation EC/809/2004, in
Norwegian law
Receiving Agent
Handelsbanken Capital Markets
Registration Document
The Registration Document, produced under the Prospectus Rules,
which together with this document and the Summary, constitutes the
Prospectus
Securities Trading Act
The Norwegian Securities Trading Act of 29 June 2007 No. 75 (in
Norwegian: “Verdipapirhandelloven”)
Securities Trading Regulation
The Securities Trading Regulation of 29 June 2007 No. 876 (as
amended)
SEK
The currency in the Kingdom of Sweden (Swedish krone)
Shares
Shares issued by International Gold Exploration
Summary
The Summary produced under the Prospectus Rules, which, together
with this document and the Registration Document, constitutes the
Prospectus
Swedish Companies Act
The Swedish Companies Act of 2005:551 (as amended)
Swedish Companies Register
The Swedish Companies Register
Voluntary Offer
An offer as defined in the Norwegian Securities Trading Act of 29 June
2007 No. 75 section 6-19
VPC
The Swedish Central Securities Depository
VPC account
An account held with VPC to register ownership of securities
VPS
The Norwegian Central Securities Depository
VPS account
An account held with VPS to register ownership of securities
48
APPENDICES
Appendix 1: Articles of Association of International Gold Exploration (office translation into
English)
ARTICLES OF ASSOCIATION
of
International Gold Exploration IGE AB (publ)
reg.no. 556227-8043
1.
Company name
The name of the company is International Gold Exploration IGE AB (publ).
2.
Registered office
The registered office of the company is in the county and borough of Stockholm.
3.
Company business
The company shall solely, through subsidiaries or through cooperation with others, engage in mining and mineral
prospecting business as well as own and administrate real and personal property, as well as conduct other activities
compatible therewith.
4.
Share capital
The share capital shall amount to a minimum of SEK 15,000,000 and a maximum of SEK 60,000,000.
5.
Number of shares
The number of shares shall be a minimum of 300,000,000 and a maximum of 1,200,000,000.
6.
The board of directors
The board of directors shall consist of three (3) to six (6) directors with no more than six (6) deputy directors.
7.
Auditors
For the review of the company's annual report and accounting records as well as the management pursued by the board of
directors and the managing director, the company shall elect an auditing company or one (1) or two (2) auditors with one
(1) deputy auditor.
8.
Notice of shareholders’ meetings
Notice of shareholders’ meetings shall be announced in Post och Inrikes Tidningar and in Dagens Industri.
9.
Prior notice of participation
In order to participate at shareholders’ meeting, shareholders must both be registered in a print-out of the shareholders’
register made five days before the meeting, and must also notify the company at 1600 hours at the latest on the date
specified in the notice of the shareholders’ meeting. Such date must not be a Sunday, other public holiday, Saturday,
Midsummer’s Eve, Christmas Eve, or New Year’s Eve and must not occur earlier than the fifth weekday prior to the
shareholders’ meeting.
Each shareholder has the right to be accompanied at shareholders’ meeting by one (1) or two (2) advisors, provided that the
shareholder has notified the company of the advisors in the manner specified above.
49
10.
Presence by outsiders
The board may rule that a non-shareholder in the company, under conditions decided by the board, may be present or
otherwise follow the proceedings at the shareholders’ meeting.
11.
Record date provision
The company's shares are to be registered in a VPC register pursuant to the Financial Instruments Accounts Act
(1998:1479).
12.
Annual general meeting
Annual general meeting of the shareholders shall be held within six (6) months of the expiry of the financial year.
The following matters shall be addressed at the annual general shareholders’ meeting:
a)
Election of the chairman of the meeting.
b)
Preparation and approval of the voting list.
c)
Approval of the agenda.
d)
Appointment of one or two persons to attest the minutes.
e)
Determination as to whether the meeting has been duly convened.
f)
Presentation of the annual report and the auditors’ report as well as, where appropriate, the consolidated accounts
and auditors’ report on the consolidated accounts.
g)
Resolution regarding the:
(i) adoption of the profit and loss account and balance sheet and, where appropriate, the consolidated profit and
loss account and consolidated balance sheet;
(ii)
allocation of the company’s profits or losses as set forth in the adopted balance sheet;
(iii) discharge from liability of the directors of the board and the managing director;
13.
h)
Resolution on the number of directors and deputy directors of the board and, where appropriate, the number of
auditors and alternate auditors.
i)
Determination of the remuneration to the board of directors and the auditors.
j)
Election of directors and deputy directors of the board and, where appropriate, auditors and alternate auditors.
k)
Other matters to be dealt with at the meeting according to the Swedish Companies Act (2005:551) or the articles
of association.
Financial year
The fiscal year of the company shall be calendar year.
____________________
50
Appendix 2: Acceptance Form
OFFER TO EXCHANGE ONE (1) SHARE IN IGE NORDIC AB (PUBL)
WITH FOUR (4) SHARES IN INTERNATIONAL GOLD EXPLORATION
IGE AB (PUBL)
This Acceptance Form shall be used to accept the Voluntary Offer (the “Offer”) by International
Gold Exploration IGE AB (publ) (“International Gold Exploration”) to exchange Shares in IGE
Nordic AB (publ) (“IGE Nordic”) into Shares in International Gold Exploration. The Offer
Period is from and including 1 December 2008 up to and including 15 December 2008 at 17:30
hours (CET). A completed and signed Acceptance Form must be received by the Manager
prior to the expiration of the Offer Period. International Gold Exploration reserves the right to
reject any or all acceptances of the Offer that are received after the expiration of the Offer Period
or, which in International Gold Exploration’s opinion, are not in the proper form, or which may
be unlawful. International Gold Exploration also reserves the right to treat an acceptance as valid,
in whole or in part, even though it is not entirely in order or not accompanied by required
document(s) or which is not received at the place stated below. Neither International Gold
Exploration nor the Manager nor any other person will be under any duty to give notification of
any defects or irregularities in acceptance or incur any liability for failure to give any such
information. Shareholders with IGE Nordic shares in several VPS accounts will be required to
submit one Acceptance Form for each account. The Acceptance Form, duly completed and
signed, must be sent by post, fax or be delivered by hand to the Manager at the following address:
Handelsbanken Capital Markets
Rådhusgaten 27
P.O. Box 332 Sentrum
0101 OSLO
Norway
Fax: +47 22 94 07 68
GUIDANCE TO IGE NORDIC SHAREHOLDERS
Further information on the Offer can be found in the combined voluntary offer document and prospectus dated 28 November 2008 (the “Prospectus”). Capitalised words not defined herein shall have the same
meaning as set forth in the Prospectus. The Offer Price is NOK 1.84 for each IGE Nordic share. The Offer Price will be settled by way of exchanging one (1) share in IGE Nordic with a par value of SEK 0.10 for
four (4) shares in International Gold Exploration with a par value of SEK 0.05.
Completion of the Offer is subject to the following conditions being satisfied, each of which may be waived (wholly or in part) by International Gold Exploration:
(i)
(ii)
(iii)
that the International Gold Exploration receives valid acceptances from IGE Nordic shareholders for a number of IGE Nordic shares, which together with the IGE Nordic shares already hold by
International Gold Exploration aggregate to more than 90 % of the share capital and votes in IGE Nordic (on a fully diluted basis); and
that prior to completion of the Offer, there are no changes, events, violations, circumstances or effects that were not known to International Gold Exploration at the time of the Offer and are, or with
the lapse of time, reasonably expected to become, materially adverse to the financial conditions or results or operations of IGE Nordic; and
that legislation and other regulations, court and authority decisions or similar circumstances, which are beyond International Gold Exploration’s control and which International Gold Exploration
could not reasonably have foreseen at the time of the Offer, must not make the completion of the Offer or the acquirement of IGE Nordic completely or partly impossible or make such completion
significantly difficult.
If International Gold Exploration has not publicly announced that the above conditions are satisfied or waived by the International Gold Exploration prior to 12 January 2009 at 09.00 hours (CET), then the Offer
will lapse. International Gold Exploration reserves the right to extend the Offer Period one or more times, however, no longer than to 9 January 2009 at 17:30 (CET) and/or to amend the Offer in favour of the IGE
Nordic shareholders. Any amendments to the Offer are binding on International Gold Exploration from the time it is made public by Oslo Børs. Any acceptance received by the Manager is binding even if the Offer
Period is extended. Shareholders who have already accepted the Offer when amendments are made will be considered entitled to any benefits arising from such amendments.
ACCEPTANCE OF OFFER
To International Gold Exploration and Handelsbanken Capital Markets:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
I/We, being a shareholder of IGE Nordic, have received and reviewed the Prospectus, and hereby irrevocably accept the Offer set out therein to exchange all my/our shares in IGE Nordic registered on the
VPS/ account stated below with shares in International Gold Exploration in accordance with the terms and conditions set out in the Prospectus and this Acceptance Form.
I/We accept the Offer Price of NOK 1.84 for each IGE Nordic share and that the Offer Price will be settled by way of exchanging one (1) share in IGE Nordic with a par value of SEK 0.10 for four (4)
shares in International Gold Exploration with a par value of SEK 0.05.
I/We acknowledge that, with effect from receipt of this Acceptance Form by the Manager, I/we will be prevented from selling or otherwise disposing of, charging or transferring to another VPS account, the
shares in IGE Nordic which are covered by the acceptance.
I/We accept that the acceptance of this Acceptance Form also includes any shares, in addition to the shares specified in the Acceptance Form, which are acquired and credited to the VPS account identified
in the Acceptance Form before the shares are debited from such VPS account and transferred to an escrow account in the name of the Manager.
I/We give the Manager, with effect from receipt of this Acceptance Form by the Manager, irrevocable authority to transfer the IGE Nordic shares covered by this acceptance from my/our VPS account to a
special VPS account opened in my/our name and blocked in favour of the Manager on behalf of International Gold Exploration.
I/We give the Manager an irrevocable power of attorney to subscribe the Consideration Shares to be issued as consideration for the shares comprised by this Acceptance Form on my/our behalf and for
my/our account.
I/We give the Manager irrevocable authority to transfer the IGE Nordic shares covered by this acceptance from my/our blocked VPS account to a VPS account in the name of International Gold Exploration
upon the Offer becoming effective. I/We accept that delivery of the Consideration Shares to the IGE Nordic shareholders’ VPS accounts is expected to take place within 5 business days following the
registration in the Swedish Companies Register of the share capital increase in International Gold Exploration relating to the Offer.
My/Our shares in IGE Nordic will be transferred to International Gold Exploration free of any encumbrances or other third-party rights whatsoever. I/We recognise that this acceptance will be valid only if
any holders of rights to the shares registered on my/our VPS account have given their consent on this Acceptance Form for my acceptance and subsequent transfer of shares free of any encumbrances or
other-third party rights whatsoever.
International Gold Exploration will pay commissions and VPS transaction costs directly attributable to my/our acceptance of the Offer.
I/We accept that if the Offer is withdrawn, the shares covered by this acceptance will promptly be returned to me/us by transfer to the VPS account specified on this Acceptance Form.
I/We confirm that my/our acceptance of the Offer is not restricted according to the laws of the jurisdiction applicable to me/us.
I/We accept that the Offer and all acceptances thereof shall be governed by and construed in accordance with Norwegian law, save for the issuance of the Consideration Shares which shall be governed by
Swedish law. Any disputes that arise in conjunction with the Offer and/or the acceptance thereof and/or the issue of Consideration Shares which cannot be amicably resolved are subject to the exclusive
jurisdiction of Norwegian courts with the agreed legal venue in Oslo.
Specification of VPS account
VPS-account number
Number of shares:
Rights holder registered per:
I/we have bought shares in IGE Nordic later than four days before
signing this acceptance form (Tick with an “X” in the box to the right if
correct):
Accepting Shareholder:
Name of shareholder
Place
Date
Binding signature*
Holder of rights:
As holder of rights, I/we consent to the transfer of the shares to International Gold Exploration free of any encumbrances or other third party rights.
Place
Date
Holders of rights’ signature*
* If signed pursuant to proxy, a proxy form or company certificate confirming the authorised signature must be attached.
Handelsbanken Capital Markets
Rådhusgaten 27
P.O.Box 332 Sentrum
NO-0101 Oslo, Norway
Phone: +47 22 94 08 78
Fax: +47 22 94 08 46
www.handelsbanken.com/capitalmarkets
281473 – signatur.no

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