Letter to shareholders
Wednesday, 5th September 2007
Dear shareholder
You will undoubtedly be aware of perplexing and frustrating
developments in Africo�s various and strenuous efforts to
affirm its ownership of the Kalukundi Property (Kalukundi)
in the Democratic Republic of the Congo (DRC).
These efforts have been both legal and diplomatic in nature,
and generally complex to say the least.
Our Board, which consists of Chris Theodoropoulos, David
Adamson, Tinus Maree and John Dixon, and I have thus taken
the view that it is the right time to provide you, and the
media, with a clear summary of the facts that we intend to
publicize as widely as possible in order both to improve
understanding of and support for Africo�s position.
Allow me, therefore, to provide this background information
and update on the situation as follows:
- Until April of this year, Africo Resources Ltd.
(Africo) had no reason whatsoever to believe that it
did not hold a 75% controlling interest in Kalukundi in
the DRC through a subsidiary H&J Swanepoel Family Trust
s.p.r.l., in partnership with State-owned mining
company La Generale des Carrieres et des Mines
(Gecamines), who hold the remaining 25%.
- Africo�s intention was to totally fund and fast-track
the high grade copper/cobalt Kalukundi deposit into
production by 2008/2009, with initial targets of 16 400
tonnes copper and 3 800 tonnes cobalt a year, off an
initial reserve base of 7.8 million tonnes.
- Africo raised C$20 million in a private placement in
December 2006 just prior to its successful listing on
the Toronto Stock Exchange and steps were immediately
taken to raise the balance of the total estimated
capital cost of C$210 million to build the mine.
Anticipated profit margins and near-term cashflow held
out the prospect of payback within four years based on
long-term metal prices of US$1.25/lb copper and
US$12/lb cobalt. It was expected that the new mine
would create more than 500 jobs (more than 80% of these
to be filled by Congolese citizens), with substantial
resources earmarked for infrastructural development and
community investment, notably in the areas of housing,
health and education.
- In April 2007, Africo became aware of a Lubumbashi
court decision accepting a claim by a company called
Akam Mining s.p.r.l. (Akam) that it had acquired a 75%
interest in Swanmines s.p.r.l. (Swanmines), the entity
that owns Kalukundi for US$600 000 at a sale in
execution, of which Africo had received no notice. The
sale in execution followed a Lubumbashi court judgement
obtained against Africo by a former employee, Mr
Alejandro Berardone, for the payment of damages of
US$3,000,400 relating to Africo�s non-renewal of his
employment contract, a judgement Africo was already in
the process of appealing. Africo was given no prior
notice of the hearings and has in its possession a
Termination of Employment Contract dated 19 July 2005,
pursuant to which Mr Beradone agreed to accept certain
payments and other benefits in full and final
settlement of his contract with Africo. A copy of this
contract is available on the Africo website
(www.africoresources.com).
- The negative effect of the Akam decision on Africo�s
capital raising initiatives was felt immediately.
Shortly before the 27 April news release, Africo
announced that it had entered into a C$130 million
financing arrangement with an underwriting syndicate
consisting of Paradigm Capital and GMP Securities. As
a result, it was obliged to announce that the parties
to the financing arrangement had agreed to withdraw.
While Africo had initiated legal action to have the
Berardone judgement set aside at the time, the Akam
decision prompted further legal steps as well as
diplomatic initiatives. The former included the
bringing of a motion of judicial misconduct in respect
of the Berardone judgement and the Akam decision in the
Supreme Court in Kinshasa. The latter included an
appeal to the Government of the DRC, through a range of
diplomatic and ministerial offices, for assurances that
Africo�s concerns would be dealt with in accordance
with applicable laws.
- From May 2007 progress was made in respect of the
motion of judicial misconduct and Africo had some cause
to believe that its efforts to have both the Berardone
judgement and Akam decision set aside would be
successful. The Supreme Court had ruled that there was
a case to answer on 20th June and heard the case on
27th July. The 3 Lubumbashi judges were represented on
27th July, by lawyers Herve Ngoy-Kalumba Banza and
Roger Masamba, the same lawyers who have represented
both Berardone and Akam Mining in the Lubumbashi Court.
- On 24 July, Africo announced that it had agreed to a
financing proposal from the International Finance
Corporation (IFC), the financing arm of the World Bank
in terms of which the IFC would take a US$7.6 million
equity position in Africo and provide debt financing of
approximately US$40 million. In light of our situation,
we are currently renegotiating this financing and the
IFC has agreed to extend the closing for a further 45
days from September 5th.
- On 10 August, the Supreme Court in Kinsasha, on the
matter of the motion of judicial misconduct, determined
that it could not examine the actions of the judges
responsible for the Berardone judgement and the Akam
decision as these had taken the form of �orders� and
not �judgements�. The legality of this outcome needs to
be determined, as our DRC counsel indicated it was not
congruent with the decisions made by the same Court on
20th June and 27th July.
In addition, Africo has appeals pending on the initial
judgment in favour of Mr. Berardone and on the
purported share sale of the shares in Swanmines sprl,
which are scheduled for appearance in late October,
2007. Furthermore, Africo�s counsel in the DRC is
considering other potential legal recourses.
Further, Africo intends to substantially increase the
level of its lobbying for understanding and support of
its position amongst stakeholders both in the DRC and
internationally.
Africo is motivated in pursing these courses of action
by:
- a profound sense of grievance at what is clearly an
attempted theft of its asset by third parties
through the systematic misuse of the judicial
system; and
- a determination to finish what it set out to do �
that is, ensure the development of the Kalukundi
deposit becomes a reality for the benefit of
shareholders, the DRC Government and the people of
the DRC.
I look forward to reporting to you on behalf of the
Board on more positive developments soon, and I thank
you for your continued support.
Yours truly,
Dr Antony Harwood
President and Chief Executive Officer
For further information, please visit our website at
www.africoresources.com, or contact:
Dr Tony Harwood, President and CEO, on tel: 27(11)463 0081
Bill Cavalluzzo (Investor Relations) on tel: 1(416)265-8049
Charmane Russell (Investor Relations) on tel: 27(11)880 3924
Forward-looking statements:
This news release contains certain statements that may be
deemed "forward-looking statements". All statements in this
release, other than statements of historical fact, that
address events or developments that Africo expects to occur,
are forward looking statements.
Forward looking statements are statements that are not
historical facts and are generally, but not always,
identified by the words "expects", "plans", "anticipates",
Sbelieves", "intends", "estimates", "projects", "potential"
and similar expressions, or that events or conditions
"will", "would", "may", "could" or "should" occur. Although
Africo believes the expectations expressed in such forward-
looking statements are based on reasonable assumptions, such
statements are not guarantees of future performance and
actual results may differ materially from those in forward
looking statements. Factors that could cause the actual
results to differ materially from those in forward-looking
statements include market prices, exploitation and
exploration success, continued availability of capital and
financing and general economic, market or business
conditions. Investors are cautioned that any such statements
are not guarantees of future performance and actual results
or developments may differ materially from those projected
in the forward-looking statements. Forward looking
statements are based on the beliefs, estimates and opinions
of Africo�s management on the date the statements are made.
Africo undertakes no obligation to update these forward-
looking statements in the event that management�s beliefs,
estimates or opinions, or other factors, should change.
The Toronto Stock Exchange has not reviewed and does not
accept responsibility for the adequacy or accuracy of this
release.
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Africo Resources
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EXPLORATEUR |
CODE : ARL.TO |
ISIN : CA0082911060 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Africo Res. est une société d’exploration minière de cuivre et de cobalt basée au Canada. Africo Res. détient divers projets d'exploration au Congo. Ses principaux projets en exploration sont MPOROKOSO en Zambie et KALUKUNDI au Congo. Africo Res. est cotée au Canada et aux Etats-Unis D'Amerique. Sa capitalisation boursière aujourd'hui est 74,9 millions CA$ (57,0 millions US$, 51,4 millions €). La valeur de son action a atteint son plus haut niveau récent le 31 décembre 2007 à 4,75 CA$, et son plus bas niveau récent le 31 juillet 2015 à 0,30 CA$. Africo Res. possède 71 313 127 actions en circulation. |