aquila to demerge exploration assets

Aquila to Demerge Exploration Assets

Highlights:
• Demerger of Aquila’s exploration assets into a new listed vehicle, Aquila
Exploration Limited
• One new listed Aquila Exploration Limited share for every one existing Aquila
share
• Unlocking shareholder value through the recognition of Aquila’s exploration
assets in a separate listed vehicle
• Allows Aquila to focus on the development of its producing and advanced
development assets
Aquila Resources Limited (ASX:AQA “Aquila” or “the Company”) is pleased to announce its intention
to separate the Company’s exploration business from its production and advanced development
assets.
The separation will be effected by way of a scheme of arrangement, with the result that the exploration
assets will be demerged into a new separately listed entity, in order to unlock the underlying value of
these assets.
It is intended that Aquila’s current exploration assets, which principally comprise the southern African
coal, iron ore and manganese exploration interests, together with the wholly-owned Queensland coal
exploration projects, will be consolidated under a new holding entity, Aquila Exploration Limited
(“AEL”), which will be listed on the Australian Securities Exchange.
Aquila and AEL’s Key Asset Portfolios following the Demerger
AEL’s Key Asset Portfolio Aquila’s Key Asset Portfolio
Asenjo Energy
Coal Project
(Botswana)
Bowen Basin
Coal Projects
(Qld)
Pilbara Other
Minerals
(WA)
Thabazimbi
Iron Ore Project
(South Africa)
Eagle Downs
Coal Project
Northern Cape (Qld)
Manganese Project
(South Africa)
Washpool
Coal Project
(Qld)
∼ AUD20mln
Cash
Belvedere Coal
Project
(Qld)
Isaac Plains Coal
Mine
(Qld)
Northern Cape
Iron Ore Project
(South Africa)
Waterberg Coal
Projects
(South Africa)
∼ AUD200mln
cash and liquid
investments
Red Hill
Coal Project
(Qld)
West Pilbara
Iron Ore Project
(WA)
2
The demerger is proposed to be implemented by way of a court approved scheme of arrangement,
under which each eligible Aquila shareholder will receive one new AEL share for every one Aquila
share they own on the demerger date. It is expected that a scheme booklet will be sent to Aquila
shareholders in August 2008. A shareholder meeting to consider the demerger proposal is scheduled
for September 2008. Subject to shareholder, court, regulatory and other approvals, the demerger
process should be completed by the end of November 2008, with the record date for determining an
entitlement to AEL shares likely to be in the fourth quarter of this calendar year.
Owing to foreign regulatory requirements, certain overseas shareholders will not receive shares in
AEL. The AEL shares they would have been entitled to receive, will be sold under a sale facility and
the proceeds provided to them.
Aquila’s Board believes that the separation of the exploration assets from its production and advanced
development coal and iron ore interests, will create a business with independent strategic, operational
and investment objectives that is capable of responding quickly and effectively to future opportunities
for strategic growth. This will result in a greater focus being brought to the appraisal and development
of the exploration assets, which are arguably ascribed little or no value by the stock market at present.
It will also facilitate the recruitment, retention and incentivisation of the key management personnel
required to realise the full potential of AEL’s exploration business.
AEL Exploration Aquila Production
Initially following the demerger, there will be some commonality of corporate functions under a
management services agreement between AEL and Aquila. As part of the demerger process, AEL will
be provided with cash resources of approximately AUD20m, to enable it to continue its aggressive
exploration and evaluation programmes in Australia and southern Africa.
Aquila’s Executive Chairman Tony Poli stated that “there is a different culture and management
structure required to develop major resources projects than that required to identify, acquire and
appraise them. This is the primary rationale for the demerger, coupled with the ability to unlock hidden
value in the exploration assets for the benefit of all Aquila shareholders.”
Following the demerger, Aquila will continue to be well funded with cash and liquid investments of
approximately AUD200m. This will facilitate the further expansion and development of Aquila’s world
class portfolio of Australian based iron ore and metallurgical coal projects, comprised primarily of its
interests in the Isaac Plains Coal Mine, the Eagle Downs Coal Project (formerly known as Peak
Downs East), the Belvedere Coal Project and the West Pilbara Iron Ore Project.
Tony Poli
Executive Chairman
For further information regarding this announcement, please contact Tony Poli.
Telephone: (08) 9423 0111
Facsimile: (08) 9423 0133
Email address: [email protected]
Visit us at: www.aquilaresources.com.au