VANCOUVER, Feb. 2, 2012 /PRNewswire/ -
1. |
Introduction |
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The boards of directors
of Anglo American Platinum Corporation ("Amplats") (JSE: AMS), a
79% held subsidiary of Anglo American plc, and Anooraq Resources
Corporation ("Anooraq") (TSXV: ARQ; NYSE Amex: ANO; JSE: ARQ)
(collectively "the Parties") are pleased to announce that they have
agreed the key terms in respect of a transaction to restructure,
recapitalise and refinance Anooraq and the Bokoni group of
companies ("Bokoni group") (the "Transaction"). |
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2. |
Background |
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In July 2009, the Parties
entered into a transaction that resulted in the creation of the
Bokoni group by consolidating Bokoni Platinum Mine (formerly Lebowa
Platinum Mine), as well as the Ga-Phasha, Boikgantsho and Kwanda
Platinum Group Metals ("PGM") projects under one consolidated group
structure. Anooraq acquired 51% of the Bokoni group, which
acquisition involved Anooraq vending in its existing 50% share in
the Ga-Phasha, Boikgantsho and Kwanda joint venture projects, and
acquiring an additional effective 1% controlling interest in them
with Amplats retaining a 49% shareholding in the Bokoni group.
Anooraq acquired its 51% interest in the Bokoni group for a net
cash consideration of ZAR2.6 billion (US$325 million1).
The net cash consideration was settled by way of a cash payment of
ZAR1.5 billion (US$188 million), and through the issue to Amplats
of convertible preference shares ("B preference shares"), which
entitled Amplats to convert its B preference shares into 115.8
million Anooraq common shares, representing 26% of Anooraq's fully
diluted issued share capital, at any time prior to 1 July 2018 (the
"Original Transaction").
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The Original Transaction
sought to transform the South African PGM mining landscape by
Amplats facilitating the transformation of Anooraq into a
significant and sustainable, historically disadvantaged South
African ("HDSA") controlled PGM producer. It comprised a
cornerstone empowerment transaction for Amplats in complying with
the 2014 HDSA ownership requirements, as required by the Mining
Charter for the conversion of its 'old-order' mining rights to
'new-order' mining rights in terms of the Mineral and Petroleum
Resources Development Act. |
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3. |
Transaction
rationale |
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In April 2011 the Parties
initiated a detailed review of the technical assumptions informing
the Original Transaction and its associated financing structure.
The review has resulted in the Parties agreeing to a new strategic
approach and operating plan for the Bokoni group, as well as a
recapitalisation and refinancing plan to facilitate its new growth
plan.
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The new strategic plan
for the Bokoni group results in the disposal of undeveloped PGM
ounces to Amplats, recapitalisation and refinancing of Anooraq and
the Bokoni group, together with accelerated production growth at
Bokoni Platinum Mine.
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Results of
technical review |
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3.1 |
The emphasis for Bokoni Platinum Mine going forward will be its
new Brakfontein Merensky and Middelpunt Hill ("MPH") UG2 expansion
projects currently under development, while the mature Merensky
operations at Vertical and UM2 shafts will terminate within the
next five years. This will allow management to focus on an
accelerated development plan for Bokoni Platinum Mine's lower cost
new shaft operations, which will replace existing production from
mature, high cost operations by 2016. |
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3.2 |
The Parties have agreed that the Bokoni Platinum Mine 2009
development plan to maintain steady state production at 160,000
tonnes per month ("tpm") through to 2020 is not the optimal
extraction strategy for the large resource base at Bokoni.
Accordingly, the Parties have agreed on a new mineral extraction
strategy to accelerate the MPH Delta 80 UG2 expansion plan, which
is expected to increase existing UG2 production at Bokoni Platinum
Mine. The expansion project is expected to bring forward 100,000
PGM ounces per annum of new production at Bokoni Platinum Mine to
2016, which had previously been scheduled until after 2020.
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The total Bokoni Platinum Mine revised development plan will
expand its production to a steady state operation of 245,000tpm by
2016. |
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3.3 |
The Parties have determined to effect a strategic re-alignment
of the Bokoni group's exploration and development mineral assets.
Accordingly, the Parties have agreed to split the Ga-Phasha
development project into an Eastern and Western section. The
Eastern section, comprising the Paschaskraal and De Kamp mineral
properties, will be consolidated into Amplats' adjacent Twickenham
operation, while the Western section, comprising the Klipfontein
and Avoca mineral properties, will be consolidated into the
adjacent Bokoni Platinum Mine operations. The Parties have
identified the potential to access the Western section of Ga-Phasha
through existing shaft infrastructure established at Bokoni's
Brakfontein property.
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In addition, the Parties have determined that the Bokoni
group's Northern Limb Boikgantsho project has a strong strategic
fit with Amplats' flagship Mogalakwena North expansion plans and
that this project should be consolidated into Amplats' adjacent low
cost and open cast Mogalakwena operations.
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In summary, Amplats will, through a series of related
transactions, acquire the whole of the Boikgantsho project and the
Eastern section of the Ga-Phasha project. On implementation of
these transactions, the effective net consideration of ZAR1.7
billion received by Anooraq will be applied to reduce its
approximately ZAR3.0 billion debt owing to Amplats. |
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3.4 |
The acceleration of the MPH Delta 80 UG2 project will require
the establishment of a new UG2 concentrator plant at the Bokoni
Platinum Mine to treat the additional UG2 ore generated at the
operations. The new UG2 concentrator plant is expected to expand
Bokoni Platinum Mine's current UG2 processing capacity from
65,000tpm to 165,000tpm, while total processing capacity is
expected to increase to 265,000tpm by 2016. |
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Revised production,
cost and capital expenditure estimates |
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- Bokoni Platinum Mine will seek to increase production from its
current base to a minimum of 300,000 PGM ounces per annum by 2016.
This growth profile includes the additional production ounces to be
generated from the MPH Delta 80 UG2 expansion project and
completion of the Brakfontein Merensky expansion project.
- Together with a shift from higher cost shaft operations to the
new lower cost shaft operations at Bokoni Platinum Mine, the
increased production volumes at the operations are expected to
result in unit cost reductions.
- The capital cost estimate for the new development plan at
Bokoni Platinum Mine is ZAR2.6 billion (US$325 million). This
estimate includes capital required for the completion of the
Brakfontein Merensky expansion project and construction of the MPH
Delta 80 UG2 expansion project, together with a new UG2
concentrator plant.
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Results of
financial review: |
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Anooraq assumed ZAR1.7
billion (US$213 million) of acquisition debt to finance the
Original Transaction. In addition, Anooraq assumed a ZAR750 million
(US$94 million) cashflow shortfall facility to fund its operating
and capital cashflow requirements at Bokoni Platinum Mine between
2009 and 2012. With effect from 28 April 2011, Amplats assumed all
of Anooraq's outstanding debt facilities. At 31 December 2011,
Anooraq's attributable debt, including capitalised interest, had
increased to approximately ZAR3 billion (US$375 million). This has
resulted in a highly leveraged balance sheet position for Anooraq,
which management considers excessive and undesirable in light of
current global economic conditions and risks related to being
highly leveraged (as described in Anooraq's annual information form
for the year ended 31 December, 2010 available on SEDAR at
www.sedar.com).
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The Parties have agreed
to refinance, deleverage and recapitalise the Anooraq and Bokoni
group balance sheets, with current debt terms to be revised, in
order to ensure that both Anooraq and the Bokoni group are fully
funded on a sustainable basis to finance Bokoni Platinum Mine's
growth plans through to 2020. The Parties have agreed to implement
this financial restructure plan on the basis described in the
Transaction Overview below. |
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4. |
Transaction
Overview |
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The key features of the
Transaction include, inter alia: |
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4.1 |
Amplats will, through a series of related transactions, acquire
the whole of the Boikgantsho project and the Eastern section of the
Ga-Phasha project. On implementation of these transactions, the
effective net consideration of ZAR1.7 billion received by Anooraq
will be applied to reduce its approximately ZAR3.0 billion debt
owing to Amplats. |
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4.2 |
The Parties will enter into an interest standstill agreement
with respect to existing debt owing to Amplats effective 1 July
2011 through to 30 April 2012. This translates into an interest
saving of approximately ZAR300 million (US$37.5 million) for
Anooraq over the standstill period. |
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4.3 |
The net effect of the asset disposal and application of the
proceeds thereof against existing debt, together with the interest
standstill agreement described above is that Anooraq's existing
attributable debt owing to Amplats will reduce by 66% from
approximately ZAR3 billion (US$375 million) to approximately ZAR1
billion (US$125 million). |
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4.4 |
The historical debt balance owing by Anooraq to Amplats
following the asset disposal and interest standstill agreement
(approximately ZAR1 billion (US$125 million)) will be consolidated
under one new debt facility (the "Consolidated Debt
Facility"). |
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4.5 |
Amplats will provide further debt funding to Anooraq under the
Consolidated Debt Facility of an amount of up to ZAR1.3 billion
(US$163 million), with a maximum total facility limit of ZAR2.3
billion (US$288 million). Anooraq will utilise this extended
facility to fund its attributable share of the Brakfontein and MPH
Delta 80 UG2 expansion projects, including the construction of a
new UG2 concentrator plant at Bokoni Platinum Mine. |
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4.6 |
The Consolidated Debt Facility will be available to
Anooraq for 9 years terminating on 31 December 2020 and will
attract a variable interest rate. The variable interest rate will
be determined by adding a fixed margin to 3-month JIBAR. The
Consolidated Debt Facility will attract a reduced interest rate
during the initial term (comprising the capital intensive phase of
the growth operations at Bokoni Platinum Mine through to 2016) and
escalating at an increased rate depending on the amount owing by
Anooraq under the Consolidated Debt Facility over the funding
period. The table below sets out the implied variable interest rate
profile payable by Anooraq over the funding period term.
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Debt balance |
2012
(%) |
2013
(%) |
2014
(%) |
2015
(%) |
2016
(%) |
2017
(%) |
2018
(%) |
2019
(%) |
2020
(%) |
First tranche
(ZAR1 billion) |
0.0 |
0.0 |
0.0 |
2.5 |
5.0 |
7.5 |
10.0 |
15.0 |
15.0 |
Second tranche
(ZAR1 billion) |
5.0 |
5.0 |
10.0 |
10.0 |
12.5 |
15.0 |
15.0 |
20.0 |
20.0 |
Third tranche
(ZAR300 million) |
15.0 |
15.0 |
15.0 |
15.0 |
20.0 |
20.0 |
20.0 |
25.0 |
25.0 |
Estimated
weighted average interest rate (%) |
0.5 |
1.4 |
4.3 |
6.9 |
9.4 |
10.8 |
11.6 |
15.0 |
15.0 |
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The weighted average interest rate is
calculated based on the projected opening balance of the
Consolidated Debt Facility in each forecast year. The weighted
average interest rate under the Consolidated Debt Facility will
escalate from 1% to approximately 12% up to 2018, thereby
substantially reducing Anooraq's current cost of debt
(approximately 16%). |
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4.7 |
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There will be no fixed repayment term
for the Consolidated Debt Facility during the peak funding years
while the Brakfontein and MPH Delta 80 UG2 expansion projects are
still in their ramp-up phase through to 2016. Anooraq will be
required to fully repay the Consolidated Debt Facility to Amplats
by 31 December 2020. There will be no penalty for early repayment.
Anooraq will be required to reduce the Consolidated Debt Facility
owing to Amplats to an outstanding balance (including capitalised
interest) of ZAR1 billion (US$125 million) as at 31 December
2018, and ZAR500 million (US$62.5 million) as at 31 December
2019. |
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4.8 |
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Anooraq will be obliged to utilise
90% of its attributable share of free cash flows generated from
Bokoni Platinum Mine operations to service the Consolidated Debt
Facility and 10% of such free cash flow will be available to
Anooraq. |
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4.9 |
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Anooraq will not be required to
effect any mandatory refinancing of the Consolidated Debt Facility
during the debt term through to 2020. |
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4.10 |
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Bokoni Platinum Mine will extend its
existing concentrate purchase agreement with Amplats on the same
terms and conditions for a period of eight years, terminating on 31
December 2020. |
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4.11 |
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Anooraq will retain its existing
option to acquire an ownership interest in Amplats' Polokwane
smelter complex on terms agreed between the Parties. |
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4.12 |
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Amplats will provide Anooraq with a
working capital facility at JIBAR plus 4% per annum of up to ZAR90
million (US$11 million) (including capitalised interest) to fund
its general and administrative expenses. This will ensure that
Anooraq has sufficient working capital to cover its corporate
overheads through to 2015. The working capital facility is fully
repayable by 31 December 2018. |
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4.13 |
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Anooraq will receive an additional
management incentive fee of up to 2% of the Bokoni group's after
tax profits if certain technical targets above budget plan, as
agreed between the Parties, are met. |
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4.14 |
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Amplats will continue to hold the B
preference shares issued at the time of the Original Transaction
(representing a 26% interest in Anooraq) until 31 December 2018.
Atlatsa Holdings (Proprietary) Limited (formerly Pelawan
Investments (Proprietary) Limited), being the 51% Black Economic
Empowerment majority shareholder in Anooraq, will also extend its
shareholding in Anooraq through to 31 December 2018. |
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4.15 |
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Anooraq will not issue any new equity
in terms of the Transaction and its fully diluted shares in issue
will remain at 445 million shares in issue with major shareholders
as follows: |
Shareholder |
# of common shares |
% of share capital |
Atlatsa Holdings (formerly Pelawan) |
227 million2 |
51% |
Amplats (B preference shares) |
116 million3 |
26% |
Employee & Community Trusts |
14 million |
3% |
Public (including common shares available pursuant
to the incentive stock option plan) |
88 million |
20% |
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5. |
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New management team and operating protocol |
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The Parties have agreed to enhance the Bokoni Platinum Mine
management team and implement a new management operating protocol,
which will increase Amplats' active involvement in areas of the
operations relating to mining, processing and capital projects
execution. The new joint venture operating protocol will see both
Amplats and Anooraq providing management support services at the
Bokoni Platinum Mine operations pursuant to a new management
services agreement.
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The Bokoni Platinum Mine operations will be lead by Mr. Dawid
Stander, in his capacity as Managing Director of Bokoni Platinum
Mine with effect from 1 February 2012. For further details on Mr.
Stander's appointment, please view Anooraq's announcement of 1
February 2012. |
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6. |
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Conditions precedent |
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The implementation of the Transaction will be subject, inter
alia, to the fulfillmentof the following conditions
precedent:
- conclusion of the requisite definitive agreements;
- approval of the definitive agreements by the Amplats Board and
Anooraq special committee of independent directors and board of
directors;
- approval of the Transaction by the relevant regulatory
authorities including the TSX Venture Exchange, Johannesburg Stock
Exchange, NYSE Amex and the South African Department of Mineral
Resources; and
- approval by Anooraq shareholders, where required, in a general
meeting.
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7. |
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Further cautionary announcement |
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Further details relating to the Transaction will be
communicated to shareholders in due course. |
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Further to the cautionary announcements by Anooraq dated 13 May
2011, 28 June 2011, 10 August 2011, 21 September 2011, 2
November 2011 and 15 December 2011, Anooraq shareholders are
advised that the financial effects of the Transaction are still
being determined and may have a material effect on the price of
Anooraq securities. Accordingly, Anooraq shareholders are advised
to continue exercising caution when dealing in Anooraq securities
until a further announcement is made.
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A further announcement will be released on the Securities
Exchange News Service, filed on SEDAR and published in the South
African press as soon as the definitive agreements have been signed
and the financial effects have been finalised. |
Johannesburg
2 February 2012
www.angloamericanplatinum.com
www.anooraqresources.com
1 All financial numbers quoted in US
dollars are converted at a rate of ZAR8:US$1.
2 Includes 111.2 million B preference shares convertible
into Anooraq common stock after 31 December
2018.
3 The B preference shares are convertible into Anooraq
common stock after 31 December
2018.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release. The NYSE Amex has neither approved nor disapproved
the contents of this press release.
Cautionary and forward-looking information
This document contains "forward-looking statements"
that were based on Anooraq's expectations, estimates and
projections as of the dates as of which those statements were made,
including statements relating to the Transaction and anticipated
financial or operational performance. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "may", "will", "outlook",
"anticipate", "project", "target", "believe", "estimate", "expect",
"intend", "should" and similar expressions.
Anooraq believes that such forward-looking
statements are based on material factors and reasonable
assumptions, including the following assumptions: that the
Transaction will receive necessary regulatory approvals and
complete in a timely manner, Bokoni Mine will increase or continue
to achieve production levels similar to previous years; the
Ga-Phasha, Boikgantsho, Kwanda and Platreef Projects exploration
results will continue to be positive; contracted parties provide
goods and/or services on the agreed timeframes; equipment necessary
for construction and development is available as scheduled and does
not incur unforeseen breakdowns; no material labour slowdowns or
strikes are incurred; plant and equipment functions as specified;
geological or financial parameters do not necessitate future mine
plan changes; and no geological or technical problems occur.
Forward-looking statements are subject to known
and unknown risks, uncertainties and other factors that may cause
the Company's actual results, level of activity, performance or
achievements to be materially different from those expressed or
implied by such forward-looking statements. These include but are
not limited to:
- uncertainties related to the completion of the Transaction and
receipt of necessary regulatory approvals;
- uncertainties and costs related to the Company's exploration
and development activities, such as those associated with
determining whether mineral resources or reserves exist on a
property;
- uncertainties related to feasibility studies that provide
estimates of expected or anticipated costs, expenditures and
economic returns from a mining project;
- uncertainties related to expected production rates, timing of
production and the cash and total costs of production and
milling;
- uncertainties related to the ability to obtain necessary
licenses, permits, electricity, surface rights and title for
development projects;
- operating and technical difficulties in connection with mining
development activities;
- uncertainties related to the accuracy of our mineral reserve
and mineral resource estimates and our estimates of future
production and future cash and total costs of production, and the
geotechnical or hydrogeological nature of ore deposits, and
diminishing quantities or grades of mineral reserves;
- uncertainties related to unexpected judicial or regulatory
proceedings;
- changes in, and the effects of, the laws, regulations and
government policies affecting our mining operations, particularly
laws, regulations and policies relating to:
- mine expansions, environmental protection and associated
compliance costs arising from exploration, mine development, mine
operations and mine closures;
- expected effective future tax rates in jurisdictions in which
our operations are located;
- the protection of the health and safety of mine workers;
and
- mineral rights ownership in countries where our mineral
deposits are located, including the effect of the Mineral and
Petroleum Resources Development Act (South Africa);
- changes in general economic conditions, the financial markets
and in the demand and market price for gold, copper and other
minerals and commodities, such as diesel fuel, coal, petroleum
coke, steel, concrete, electricity and other forms of energy,
mining equipment, and fluctuations in exchange rates, particularly
with respect to the value of the U.S. dollar, Canadian dollar and
South African rand;
- unusual or unexpected formation, cave-ins, flooding, pressures,
and precious metals losses (and the risk of inadequate insurance or
inability to obtain insurance to cover these risks);
- changes in accounting policies and methods we use to report our
financial condition, including uncertainties associated with
critical accounting assumptions and estimates; environmental issues
and liabilities associated with mining including processing and
stock piling ore;
- geopolitical uncertainty and political and economic instability
in countries which we operate; and
- labour strikes, work stoppages, or other interruptions to, or
difficulties in, the employment of labour in markets in which we
operate mines, or environmental hazards, industrial accidents or
other events or occurrences, including third party interference
that interrupt the production of minerals in our mines.
For further information on Anooraq, investors
should review the Company's annual Form 40-F filing with the United
States Securities and Exchange Commission www.sec.gov and annual
information form for the year ended December
31, 2010 and other disclosure documents that are available
on SEDAR at www.sedar.com.
SOURCE Anooraq Resources Corporation