Sheba Exploration (UK) plc
LSE : SHE

July 11, 2011 02:01 ET

Recommended Offer from Centamin Egypt Limited

                                                                                                   11 July 2011
                                                                                      GB00B02WHQ80/GBP/PLUS-exn

                                          SHEBA EXPLORATION (UK) PLC
                                          ("Sheba" or the "Company")

                                 Recommended Offer from Centamin Egypt Limited
                                                 ("Centamin")
                                                       
The Directors of Sheba are pleased to announce that Sheba has reached agreement with Centamin on the terms of a
recommended offer (the "Offer") to be made by Centamin for the entire issued and to be issued share capital  of
Sheba  ("Sheba Shares"). The Offer values Sheba at approximately £7.48 million (on a fully diluted  basis),  or
6.15p  per Sheba Share, which represents a premium of approximately 124 per cent. to the closing price of Sheba
Shares on 8 July 2011, being 2.75p.

Information on Centamin

Centamin  is a mineral exploration development and mining company incorporated in Australia and dual listed  on
the Main Market of the London Stock Exchange (LSE:CEY) and the Toronto Stock Exchange (TSX:CEE).

Centamin  is  a rapidly growing gold producer with its flagship project, the Sukari Gold Mine, located  in  the
Eastern  Desert of Egypt some 25km from the Red Sea coast. Gold production at Sukari commenced  in  June  2009,
making Sukari the first modern mine in Egypt.

With  a  resource of over 10 million ounces measured and indicated, and over 3 million ounces inferred, and  an
approximate  9  million  ounce reserve base, Centamin is implementing a rapid expansion programme  to  increase
production  to  circa  500,000  ounces per year over the next few years. As  the  first  and  only  significant
developer  of a modern mine in Egypt, Centamin considers it is well positioned to realise further opportunities
in other areas within its concession and expand into other prospective mineralised zones.

In  the  six month period to the end of December 2010, Centamin had a net profit before tax of USD$32  million,
and at the end of that period held USD$166 million in cash and bullion, and had no debt.
        
As  at  today's  date, the issued share capital of Centamin comprises 1,091,858,750 ordinary shares  ("Centamin
Shares").  On  8  July 2011, being the last practicable date prior to the date of this announcement,  the  mid-
market  closing  price  of a Centamin Share on the London Stock Exchange was 126.10 pence,  giving  Centamin  a
market capitalisation of approximately £1.37 billion.

Terms of the Offer

The  Offer,  which  is subject to the further terms and conditions set out in the Offer Document  and  Form  of
Acceptance in respect of the Offer, is being made on the basis of:

   (a)     a cash payment of 3p per Sheba Share; and
                   
   (b)     the number of ordinary shares in the capital of Centamin equal to the number of Sheba Shares held by
           the Shareholder divided by 40.

As  noted  above,  based  on the closing price of Centamin Shares on 8 July 2011, the  Offer  values  Sheba  at
approximately £7.48 million, or 6.15 pence per Sheba Share, which represents a premium of approximately 124 per
cent. to the closing price of Sheba Shares on 8 July 2011, being 2.75 pence.

No fractional Centamin Shares will be issued.  If any fraction of a Centamin Share would otherwise be issuable,
the  number  of  Centamin  Shares to be issued shall be rounded down to the nearest whole  number  of  Centamin
Shares, without compensation thereafter.

The  Offer  is  being recommended to Sheba shareholders unanimously by the Directors of Sheba,  who  have  each
irrevocably  undertaken to accept or procure the acceptance of the Offer in respect of their entire  beneficial
holdings  of Sheba Shares, including any further Sheba Shares allotted to them before the expiry of  the  Offer
pursuant  to  options to subscribe for Sheba Shares held by them, amounting to, in aggregate, 43,909,124  Sheba
Shares,  which (assuming the exercise of all the options currently held by Directors before the expiry  of  the
Offer) represent in aggregate approximately 36.13 per cent. of Sheba's fully diluted share capital.

Centamin  has  also  received  irrevocable  undertakings to  accept  the  Offer  from  certain  existing  Sheba
shareholders  (including in respect of any additional Sheba Shares to be allotted to one  such  shareholder  in
respect of warrants to subscribe for Sheba Shares following the exercise of those warrants before the expiry of
the  Offer)  in  respect of, in aggregate, 25,000,000 Sheba Shares which, assuming the  exercise  of  all  such
warrants  before  the expiry of the Offer, represent in aggregate approximately 20.56 per cent.  of  the  fully
diluted share capital of the Company.

Accordingly,  Centamin  has  received irrevocable undertakings in respect of, in  aggregate,  68,909,124  Sheba
Shares  (assuming  the  exercise  of all outstanding options and warrants before  the  expiry  of  the  Offer),
representing approximately 56.69 per cent. of the fully diluted share capital of Sheba.

The Offer is open for acceptance until 1.00 p.m. (London time) on 1 August 2011, unless extended by Centamin in
its  sole  discretion, save that the period for acceptance of the Offer shall not be extended beyond 1.00  p.m.
(London time) on 9 September 2011. The Offer is not subject to the City Code on Takeovers and Mergers.

Sheba Shareholders should note that if the Offer is not accepted by Sheba Shareholders holding more than 90 per
cent.  of the issued and to be issued share capital of Sheba, Centamin has the right to withdraw the Offer.   A
Sheba Shareholder who does not accept the Offer may become a minority shareholder in a subsidiary of Centamin.

Background to and reasons for recommending the Offer

Sheba  currently  holds three exploration licences granted by the Ministry of Mines of the  Federal  Democratic
Republic of Ethiopia to explore for gold and base metals in the Shehagne, Una Deriam and the Winibo and Finarwa
areas of Ethiopia.

A  significant amount of exploratory work has been completed by Sheba pursuant to these licences including,  in
September  2009,  the  signing  of  a  letter of intent with Stratex  International  Plc,  an  AIM-quoted  gold
exploration  and  development  company,  to  further develop the Shehagne  exclusive  exploration  licence,  as
previously announced on 1 September 2009.

Although  Sheba has achieved a measure of success in its prospecting, the Directors of Sheba recognise  that  a
significant  increase  in  expenditure is now required in order to fully develop and exploit  the  licences  it
holds.  The Directors of Sheba believe that it would be difficult for a company of Sheba's scale to  raise  the
funds  required  to  achieve  this  and  that Sheba's lack of access to  sufficient  capital  and  its  current
infrastructure prevents it from exploiting its licences for the full benefit of Sheba Shareholders.

The  Directors of Sheba believe that Centamin has the infrastructure and capital required to fully develop  the
areas covered by Sheba's licences. More importantly, the Directors of Sheba also believe that the terms of  the
Offer,  which  offer Sheba Shareholders Centamin Shares as well as cash, give Sheba Shareholders a  significant
return  on their investment and also an opportunity to participate in any potential capital growth in  Centamin
Shares arising from the exploitation of Sheba's licences by Centamin in the future.

Taking  into account these factors, as well as the future trading prospects of Sheba and the high value of  the
Offer  relative to Sheba's historic market capitalisation, the Directors of Sheba believe that the Offer is  in
the  best  interests  of  Sheba Shareholders as a whole and therefore the Directors of  Sheba  are  unanimously
recommending that Sheba Shareholders accept the Offer.

Offer Document

An  Offer  Document  and  Form of Acceptance in respect of the Offer are expected to  be  despatched  to  Sheba
Shareholders  today.  A  copy  of  the Offer Document is available to Sheba  Shareholders  free  of  charge  on
Centamin's website at http://www.centamin.com.au

Commenting on the Offer, Henry Atkinson, Chairman of Sheba, said:

"We believe that Centamin's offer represents a fair valuation of the company. Sheba shareholders will receive a
cash payment and also Centamin shares, which are listed on the Main Market of the London Stock Exchange and  on
the Toronto Stock Exchange.

For these reasons, I and my fellow Directors are recommending acceptance of the offer.

I  believe that Centamin's choice of Ethiopia is a wise one and I hope that its involvement there will be  long
and fruitful".

The Directors of the Company are responsible for the contents of this announcement.

Enquiries:

Sheba Exploration (UK) Plc
Richard Brooker
Tel: 00 353 87699 8401

St Helens Capital Partners LLP
Duncan Vasey/Mark Anwyl
Tel: 020 7368 6959

St  Helens Capital Partners LLP is the PLUS Corporate Adviser to Sheba and has advised Sheba in relation to the
Offer.   St Helens Capital Partners LLP is not acting for any person other than Sheba in relation to the  Offer
and  will  not  be responsible to anyone other than Sheba in relation thereto or for providing the  protections
afforded to its clients or for providing advice in relation to the Offer.


The Conditions of the Offer, as set out in Schedule B of the Offer Document, are as follows:
                                                       
                                                       
                                           "CONDITIONS OF THE OFFER
                                                       
                                                    Part I
                                                       
1       There  shall have been validly tendered by way of acceptances under the Offer and not withdrawn  as  at
        the  Offer  Expiry Time (as it may be extended from time to time by Centamin, in its sole and  absolute
        discretion), that number of Sheba Shares which represents not less than 90% (or such lesser percentage as
        Centamin may decide) of the issued and to be issued Sheba Shares on a fully-diluted basis to which the Offer
        relates as at the Offer Expiry Time (as extended, where applicable).
        
                                                    Part II
                                                       
2       There  not  existing  and not having occurred any Material Adverse Change since the  date  of  the  Bid
        Implementation Agreement.
        
3       No act, action, suit or proceeding having been taken by any Governmental Entity:
        
3.1     to  prohibit  Centamin from purchasing, holding or exercising full rights of ownership of Sheba  Shares
        or properly completing any Compulsory Acquisition; or
        
3.2     that has resulted in, or if the Offer or a Compulsory Acquisition were consummated, would result in, a
        Material Adverse Change.

4       There  not existing any prohibition at Law against Centamin completing the Offer in the terms  set  out
        in the Bid Implementation Agreement or properly completing any Compulsory Acquisition.
        
5       Sheba  having performed in all material respects all covenants to be performed by it pursuant to clause
        4.1 of the Bid Implementation Agreement.
        
6       All Warranties shall be true and correct in all material respects as of the Effective Date as if made
        on and as of such date except (i) to the extent that any such Warranty speaks as of an earlier date, 
        in which case it shall remain true and accurate as of that date and (ii) as affected by transactions 
        contemplated or permitted by the Bid Implementation Agreement. For the purposes of this paragraph 6, 
        "material" shall mean material in the context of the Offer and the Sheba Group as a whole.

7       The  Bid  Implementation  Agreement not having been terminated in accordance  with  clause  7  of  such
        agreement.
        
8       The Sheba Licences (other than the Shehagne Licence) continuing to be valid and subsisting.

9       No  notice  having  been received by Sheba from the Ministry indicating that, or  Sheba  not  otherwise
        becoming aware that, the term of the Shehagne Licence will not be, or is reasonably likely not to be, renewed
        and extended.
        
10      No Consents which are material to the business of the Sheba Group as a whole being required.
        
                                                  Definitions
                                                       
In this Schedule B:
        
"Compulsory Acquisition" means an acquisition by Centamin of Sheba Shares not acquired pursuant to the terms of
the Offer, utilising the procedures set out in Chapter 3 of Part 28 of the Companies Act 2006, as amended;

"Expropriation  Event" means any nationalisation of any assets in Ethiopia or any change or pending  change  in
law  which would result in a restriction on foreign ownership of assets in Ethiopia that does or would  prevent
Centamin  or  the Company from owning the Sheba Licences and any other assets currently owned  by  the  Company
which  are  situated  in  Ethiopia and which are material to the business of the Sheba  Group  or  which  would
restrict  sales of gold in, or export of gold from, Ethiopia, in any case, which would have a material  adverse
effect on the Sheba Group;

"Governmental  Entity"  means any (i) multinational, federal, departmental, provincial,  territorial,  state,
municipal,  local  or  other governmental or public department, central bank, court, commission,  commissioner,
tribunal,  board,  bureau,  agency or instrumentality, whether of the United  Kingdom  or  Ethiopia,  (ii)  any
subdivision  or authority of any of the foregoing, (iii) any quasi-governmental or private body exercising  any
governmental regulatory, expropriation or taxing authority, (iv) any stock exchange, including the London Stock
Exchange  plc or PLUS; or (v) any aforementioned body competent to impose, administer, levy, assess or  collect
Tax in the United Kingdom or Ethiopia;

"Law"  means  all  laws,  by-laws,  statutes,  rules (including stock  exchange  listing  rules),  regulations,
principles  of  law  and equity, orders, rulings, ordinances, judgements, injunctions, determinations,  awards,
decrees or other requirements, in each case, which are binding upon any person and the terms and conditions  of
any grant of approval, permission, authority or license of any Governmental Entity;

"Material Adverse Change" shall mean:

(i) an Expropriation Event;

(ii)  any  event  or  circumstance which constitutes or gives rise to or may (upon the  passage  of  time,  the
fulfilment  of any condition, or the giving of notice or taking or any other action by any Governmental  Entity
or  any  other  person)  give rise to the suspension, revocation, disclaimer, invalidity  or  unenforceability,
variation,  lapse,  cancellation or termination of all or any Sheba Licence in  any  way  which  would  have  a
material adverse effect on the Sheba Group as a whole;

(iii)   the  occurrence of the outbreak of war (including civil war), outbreak of hostilities (whether  war  is
declared  or  not),  mobilisation of armed forces, insurrection, or similar event  in  the  United  Kingdom  or
Ethiopia, in any case, which would have a material adverse effect on the Sheba Group as a whole;

(iv) any event, action, proceeding, circumstance or change in circumstance that results in a material restraint
on  the development, feasibility of developing, operation, profitability or marketability of a Sheba Licence or
project  associated with that licence and which would have a material adverse effect on the Sheba  Group  as  a
whole;

(v)   the incurring of any obligations or liabilities by the Company (contingent or otherwise) outside  of  the
ordinary  course  of  business (and not including the Company's costs incurred in connection  with  the  Offer)
(whether individually or when aggregated with other such events) exceeds £250,000; or

(vi)  notice  being  given to the Company by any Governmental Entity that any of (i),  (ii)  or  (iv)  of  this
definition has occurred or is likely to occur. For the avoidance of doubt, this includes notice that any  Sheba
Licence is to be cancelled or revoked (however described) or that the Company or a Subsidiary of the Company is
in default of any obligation under a Sheba Licence;

provided  always that the continuation of the current status of the Shehagne Licence, whereby  an   application
for  the  extension and renewal of the term of the Shehagne Licence is being considered, shall not, of  itself,
constitute a Material Adverse Change.

"Sheba Group" means the Company and its Subsidiaries;

"Sheba Licences" means the Company's mineral exploration licences in Ethiopia, including:

(i) the Werie Lehe and Saharti Samre licence (MOM/EL/493/2010);

(ii) the Una Deriam licence (1597-1602/2002); and

(iii) the Shehange Licence (0001-0003/99);

"Subsidiary" means a subsidiary as defined in section 1159 of the Companies Act 2006;

"Tax"  means  all  taxes, assessments, charges, dues, contributions, duties, rates, fees  imposts,  levies  and
similar  charges  of  any kind lawfully levied, assessed or imposed by any Governmental Entity,  including  all
income  taxes  (including  any  tax on or based upon net income, gross income,  income  as  specially  defined,
earnings,  profits  or  selected items of income, earnings or profits) and all capital  taxes,  gross  receipts
taxes,  environmental taxes and charges, sales taxes, use taxes, ad valorem taxes, value added  taxes,  subsoil
use  or  extraction taxes and ownership fees, transfer taxes (including, without limitation, taxes relating  to
the  transfer  of interests in real property or entities holding interests therein), franchise  taxes,  licence
taxes,  withholding taxes, health taxes, payroll taxes, employment taxes, excise, severance,  social  security,
social  securities contributions, workers' compensation, employment insurance or compensation taxes,  mandatory
pension  and other social fund taxes or premium, stamp taxes, occupation taxes, premium taxes, property  taxes,
windfall  profits  taxes, alternative or add-on minimum taxes, goods and services tax,  harmonised  sales  tax,
customs  duties  or  other  taxes,  fees, imports, assessments or charges  or  any  kind  whatsoever,  and  any
instalments in respect thereof, together with any interest and any penalties or additional amounts  imposed  by
any  Governmental  Entity  (domestic or foreign) on such entity, and any interest, penalties,  fines,  charges,
costs, additional taxes and additions to tax imposed with respect to the foregoing and whether disputed or not;
and

"Warranties" means the warranties set out in clause 3.1 of the Bid Implementation Agreement."


Contact Information

  • Sheba Exploration (UK) plc