Aviva closes P28m sale of Mmamantswe

MBONGENI MGUNI
Staff Writer | Thursday July 11, 2013 00:00

On Wednesday, African Energy Resources' officials announced the deal complete saying Tuesday's positive vote 'satisfied the final condition precedent to the Mmamantswe project acquisition'.An Aviva statement released after yesterday's general meeting held in Perth, Western Australia indicates that by show of hands, 56 votes were in favour of the sale, one against and three abstentions. Six votes were by discretionary proxy meaning the proxies or representatives of shareholders were empowered to decide how to vote on the resolution.This week's vote clears the way for Aviva shareholders to finally extract value from a project it had written off in 2010.

'Aviva currently attributes no value to its investment in the Mmamantswe project in its financial accounts, having written off any value associated with the project following the cancellation of the South African power procurement programme in 2010,' an explanatory statement released prior to this week's vote reads.'As such, the company is of the view that the cash consideration payable by AFR is an attractive price for an asset that has been carried at zero value by the company for several years.'

The statement added: 'The company's net asset position will increase by P25 million upon completion of the Mmamantswe transaction, ensuring that the company has a stronger balance sheet and considerable flexibility to pursue future growth opportunities.'The hunt for these 'opportunities' will be spearheaded by two new directors who were voted onto the board yesterday and whose firm has taken up equity in Aviva. According to Aviva officials, Ian Middlemas and Mark Pearce 'have historically been able to identify company making projects in a wide range of commodities such as coal, gold, uranium, iron ore and base metals'. Having already disinvested from Kenya last year, the sale of its flagship Mmamantswe project leaves Aviva with about six months to identify a suitable business before the Australian Securities Exchange possibly suspends its listing.

For African Energy Resources, the deal provides access to Mmamantswe's 1.3 billion tonnes of thermal coal, 895 million tonnes of probable reserves as well as advanced studies for a coal mine, export project and power station.The new assets add onto AFR's own 2.5 billion tonnes of estimated coal resources at its Sese project, located 50 kilometres from Francistown. Pre-feasibility study documentation for the project is due for completion this month.'The addition of Mmamantswe to Sese provides African Energy with a diversity of location and multiple development opportunities for both power generation and coal export projects,' AFR officials said in April when first announcing the deal.'AFR's coal inventory will increase to 3.8 billion tonnes of published measured, indicated and inferred resources providing a portfolio of strategic scale that is more attractive to development partners for large-scale export operations.'