Africo Resources Ltd.: Letter to shareholders

    TORONTO, Sept. 5 /CNW/ -

    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

    -   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

    -   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

    -   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

    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", "believes", "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.

    %SEDAR: 00024685E

For further information:

For further information: please visit our website at, or contact: Dr Tony Harwood, President and CEO, on
tel: 27(11)463 0081; Bill Cavalluzzo (Investor Relations) on tel: (416)
265-8049; Charmane Russell (Investor Relations) on tel: 27(11)880 3924

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