TIDMCAF
RNS Number : 0438T
China Africa Resources PLC
30 December 2016
China Africa Resources PLC
30 December 2016
China Africa Resources plc
("China Africa" or the "Company")
Strategic and Operational Update
China Africa Resources plc (LON:CAF) the London Stock Exchange
AIM listed natural resource exploration and development company is
pleased to announce an initial strategic and operational update
with regard to the Company's overriding corporate strategy and
implementation of operational plans.
Paul Johnson, Chief Executive officer of China Africa Resources
plc, commented: "The China Africa team are committed to delivering
value for shareholders expeditiously. With our focus on the
resource sector, we have to work within a highly cyclical business
environment and that means timing is an important element in the
creation of value.
Opportunities come and go with the resource sector business
cycle and at present the junior companies in the sector are still
struggling with negative sentiment and very much in the doldrums.
This presents a contrarian opportunity for China Africa and we
intend to seize the moment. With cyclical sector downturns a wider
range of opportunities become available and the cost of acquisition
is materially lower than would be the case in more positive market
conditions.
We are highly proactive and working to build the business
quickly and whilst we can benefit from sector conditions. Our model
is to undertake transactions on a fair basis for all parties, and
to engage with those opportunities that offer the best upside
potential for shareholders.
I look forward to updating the market on positive developments
that may arise from the work we are undertaking at present. The
market should be aware that until developments are released by
market regulatory announcement, there can be no certainty that any
particular transaction can be concluded."
Background to China Africa Resources
As previously outlined within the circular dated 21 November
2016 and approved by shareholders at the General Meeting on 14
December 2016, China Africa Resources became a Rule 15 cash shell
with six months to complete a Reverse Takeover transaction.
For readers wishing to learn more about AIM rules relating to
reverse takeovers we would suggest a review of the AIM Rules for
Companies handbook (July 2016) which can be accessed through the
following link:
http://www.lseg.com/sites/default/files/content/documents/aim/AIM_Rules_for_Companies_July16.pdf
In the process of becoming a Rule 15 cash shell the Company
stated an investing policy within the circular of 21 November 2016
and this investing policy is reproduced at the bottom of this
announcement and can be viewed directly on the Company website
through the following link:
http://www.chinaafricares.com/about-us/investing-policy1
Strategic Planning
The Company's Investing Policy reproduced below confirms the
primary initial strategic objective is to complete a Reverse
Takeover within the six month period allowed by the London Stock
Exchange AIM rules.
The six month period is considered sufficient provided the
Company acts expeditiously to commence and complete the Reverse
Takeover process.
The focus of the Company is energy metals and minerals, a subset
of the wider natural resource sector and where the Board considers
there is likely to be a favourable forward supply/demand dynamic,
with positive commodity pricing and building investor interest in
the coming months and years.
The Investing Policy is broad to reflect power generation,
transmission and storage and the commodities utilised in each stage
of the power process.
The Company has a broad pipeline of new opportunities identified
from the management team's network. At present we have a potential
pipeline of twelve opportunities which include African and South
American uranium; North American lithium; European lithium and
cobalt; and African and Australian copper.
The intention of the Company is to become an operating natural
resource business following a Reverse Takeover. It is possible that
the Company will seek to acquire more than one interest to provide
diversification for investors and inherent risk management for the
Company.
As part of the Company's development, working collaborations or
joint venture agreements may be signed to enable the Company to
share project costs and risks with third parties and to expose the
Company to a even wider range of new opportunities.
At present the Company is working on numerous project review and
commercial initiatives and information will be provided to the
market at the earliest opportunity, but generally only when
transactions or agreements are formalised.
Operational Progress
Office:
China Africa has now established a new operational office and as
announced on 29 December 2016 changed its registered office to the
same address. Previously the Company maintained a separate
operational office and registered office. For operational and cost
efficiencies we have brought all office operations under the same
location.
The new office address is confirmed on our website and visitors
are welcome. Should you wish to meet with the Company please email
info@chinaafricares.com.
Staffing and support:
Previously the Company operated with skeletal staff base, due to
the low levels of recent operational activity. This activity level
has now materially changed and in light of this we have secured the
staffing and support to allow a rapid growth in the Company's
business activities.
This includes day-to-day managerial and administrative support
to run an efficient office and the financial accounting support to
complete audited full year accounts to 31 December 2016, a
pre-requisite for us to move ahead with a Reverse Takeover
transaction.
In respect of staffing and support our costs are flexible and
undertaken through consultancy agreements meaning we only incur
costs when there is work to do that can move us toward our
strategic objectives.
Staff and partner options pool:
Recognising the importance of creating a focus around Company
activities and to specifically reward staff and working/advisory
partners who commit to the successful development of the Company,
China Africa has created a pool of 6 million "Staff & Partner"
options.
The options will follow the same terms as the previously
announced director options confirmed at the General Meeting on 14
December 2016 and be priced at 4.34p with a three year longevity
from the date of award.
This provision in particular enables the Company to reward team
members who may not ordinarily have an equity position in the
Company, but whose work is vital to the successful development of
the business. The Board considers equity participation is
ordinarily a significant motivator and it is morally positive to
reward all important staff and partners for value creating
work.
Distribution of the options pool will be agreed and implemented
by the Board of the Company.
Reverse Takeover Transaction Advisory:
Completion of a Reverse Takeover transaction requires the input
of various advisors and it is important that advisors are fully
experienced in the transactional process and able to operate
efficiently and cost effectively.
The Company has formally engaged with lawyers to undertake legal
due diligence with regard to a Reverse Takeover transaction.
Likewise we have engaged with Competent Persons able to undertake
geological, mine engineering and other technical review of any
proposed acquisitions. Working capital modelling & forecasting
and financial accounting systems required as part of the Reverse
Takeover will be handled by an experienced financial accountant who
is, as outlined above, also preparing our full year end
accounts.
The overall Reverse Takeover process will be project managed and
implemented by the Company in conjunction with Nominated Advisor
Spark Advisory Partners.
Media and Marketing:
The primary source of information relating to China Africa can
be found on the Company's website at www.chinaafricares.com which
has been prepared in line with AIM Rule 26 requirements.
The Company is open to enquiries and these should be directed to
info@chinaafricares.com.
China Africa has established a Twitter feed @ChinaAfricaRes
through which regulatory news links will be provided alongside
articles of interest in the energy metals and minerals sector and
generic commentary.
The Company will be undertaking various media interviews, links
to which will be provided from the Company's website. The Company
will also participate in investor seminars, presentations and
exhibitions. China Africa's attendance at each event and the
registration details thereof will be announced by the Company to
enable interested investors to participate if desired.
Please be advised that in all cases media and marketing
activities will only cover information published in regulatory
announcements and thus already in the public domain.
For further information on the Company, visit:
http://www.chinaafricares.com/.
China Africa Resources PLC T: +44 (0) 1707 800774
Paul Johnson, Chief Executive
Officer
SPARK Advisory Partners - T: +44 (0) 2033 683
Nominated Adviser 555
Sean Wyndham-Quin
Neil Baldwin www.sparkadvisorypartners.com
SI Capital Limited - Joint T: +44 (0) 1483 413
Broker 500
Nick Emerson
Andy Thacker
Beaufort Securities Limited T: +44 (0) 207 382
- Joint Broker 8300
Elliot Hance
China Africa Resources Investing Policy:
The Board proposes to invest in and/or acquire companies and/or
projects within the natural resource sector but with a particular
interest in opportunities in the energy metal and minerals sector
and with a key focus on opportunities in respect of uranium,
lithium, cobalt, copper and coal. Each commodity has a specific
relevance to the Energy space in terms of power generation, storage
and distribution.
The Board considers that, as evidenced by the financial support
provided by the new investors for the proposals outlined there is a
strong demand for energy metal and mineral opportunities on
London's AIM.
The Board will not be limited to a specific geographic focus. In
selecting investment opportunities, the Board will focus on
businesses, assets and/or projects that are available at attractive
valuations and hold opportunities to unlock embedded value or
where, through efficient and focused work, there is the prospect of
adding considerable value to each project, for the benefit of
shareholders.
Where appropriate, the new Board may seek to invest in
businesses where it may influence the business at a board level,
add their expertise to the management of the business, and utilise
their industry relationships and access to finance.
The Company's interests in a proposed investment and/or
acquisition may range from a minority position to full ownership
and may comprise one investment or multiple investments. The
proposed investments may be in quoted or unquoted companies; be
made by direct acquisitions or farm-ins; and may be in companies,
partnerships, earn-in joint ventures, debt or other loan
structures, joint ventures or direct or indirect interests in
assets or projects. The new Board may focus on investments where
intrinsic value can be achieved from the restructuring of
investments or merger of complementary businesses.
The Board expects that investments will typically be held for
the medium to long term, although short term disposal of assets
cannot be ruled out if there is an opportunity to generate an
attractive return for Shareholders. The new Board will place no
minimum or maximum limit on the length of time that any investment
may be held.
The Board will conduct initial due diligence appraisals of
potential businesses or projects and, where they believe further
investigation is warranted, intend to appoint appropriately
qualified persons to assist.
The Board believes it has a broad range of contacts through
which it is likely to identify various opportunities which may
prove suitable. The new Board believes its expertise will enable it
to determine quickly which opportunities could be viable and so
progress quickly to formal due diligence.
The Company will not have a separate investment manager. The
Board proposes to carry out a comprehensive and thorough project
review process in which all material aspects of a potential project
or business will be subject to rigorous due diligence, as
appropriate. Due to the nature of the sector in which the Company
is focused the Company expects a focus on capital returns over the
medium to long term. Should opportunities arise for an early cash
return to investors, this will be considered by the Board.
It is emphasised that there is no certainty that the Company
will be able to secure an acquisition or Reverse Takeover as set
out above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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