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VOLUNTARY OFFER DOCUMENT AND PROSPECTUS
Voluntary Offer for all issued and outstanding shares in
Made by
Voluntary Offer: One (1) share in IGE Nordic AB (Publ.) to be exchanged into four (4) shares in International Gold
Exploration IGE AB (Publ.)
Offer Period: From and including 1 December 2008 to and including 15 December 2008 at 17.30 (CET)
Prospectus for Shares in International Gold Exploration IGE AB (Publ.) offered under the Voluntary Offer
Financial Adviser and Manager:
28 NOVEMBER 2008
I. SUMMARY
INTERNATIONAL GOLD EXPLORATION IGE AB (PUBL.)
28 NOVEMBER 2008
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TABLE OF CONTENTS
1 EXECUTIVE SUMMARY ...................................................................................................4 1.1 Description of the Company.......................................................................................... 4 1.2 Selected consolidated financial information ................................................................. 6 1.3 Capitalisation and indebtedness .................................................................................... 7 1.4 Significant changes........................................................................................................ 7 1.5 Share capital .................................................................................................................. 8 1.6 Summary of the Voluntary Offer .................................................................................. 8 1.7 Major shareholders ...................................................................................................... 10 1.8 Related party transactions............................................................................................ 10 1.9 Research and development, patents and licences ........................................................ 11 1.10 Trends.......................................................................................................................... 11 1.11 Summary of Risk Factors ............................................................................................ 11 1.12 Articles of association ................................................................................................. 12 1.13 Document on display................................................................................................... 12
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Important Notice
This Summary (which in combination with the Registration Document and Securities Note is referred to as the “Prospectus”) has been prepared according to Section 7-3 of the Securities Trading Act in connection with the offer and listing of new Shares in International Gold Exploration IGE AB (“International Gold Exploration” or the “Company”), as defined and described herein. The New Shares are issued pursuant to the resolution by the General Meeting on 26 November 2008.
The Prospectus has been approved by Oslo Børs pursuant to Section 7-7 of the Securities Trading Act. The information contained herein is as of the date hereof and is subject to change, completion and amendment without notice. There may have been changes in matters affecting the Company subsequent to the date of this Prospectus. Any new factor or significant error or inaccuracy in the Prospectus capable of affecting an assessment of the New Shares arising after the publication of this Prospectus and before the New Shares are listed on Oslo Stock Exchange will be published as a supplement to this Prospectus in accordance with applicable regulations in Norway. The delivery of this Prospectus shall under no circumstances create any implication that the information contained herein is complete or correct as of any time subsequent to the date hereof.
All inquiries relating to this Prospectus or the matters addressed herein should be directed to the Company or the Manager. No persons other than those described in this Prospectus have been authorized to disclose or disseminate information about this Prospectus or about the matters addressed in this Prospectus. If given, such information may not be relied upon as having been authorized by the Company. Norwegian law shall govern this Prospectus, and any disputes relating to this Prospectus or the listing of New Shares are subject to the sole jurisdiction of Norwegian courts, with Oslo District Court as legal venue.
Selling Restrictions
This document constitutes a Prospectus for the purpose of article 3 of the directive 2003/71/EC (“Prospectus directive”) and has been prepared in accordance with section 7-3 of the Norwegian Securities Trading Act as amended and the rules promulgated there under. This Prospectus has been reviewed and approved by the Oslo Stock Exchange pursuant to the Norwegian Securities Trading Act Section 7-7.
The distribution of the Prospectus may be restricted by law in certain jurisdictions.
The Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, any of the securities offered hereby, by or on behalf of International Gold Exploration, the Manager, any of their respective affiliates or any other person in any jurisdiction in which it is unlawful for any person to make such an offer or solicitation. Except for the approval by Oslo Stock Exchange as described above, no action has been taken to permit the distribution of this Prospectus in any jurisdiction where action would be required for such purposes. Accordingly, the Prospectus may not be used for the purpose of an offer of or solicitation for any securities in any jurisdiction or in any circumstances in which such offer or solicitation is not lawful, or authorized. Delivery of this Prospectus to any person or any reproduction of the Prospectus, in whole or in part, without the Company’s consent is prohibited.
Persons into whose possession this Prospectus may come are required by the Company and the Manager to inform themselves about, and to observe, all applicable restrictions regarding exercise of rights and subscription of shares.
United States: The New Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state Securities Laws, and may therefore not be offered or sold to U.S. persons as defined in regulations under the U.S. Securities Act.
Canada: None of the New Shares has been or will be qualified for sale under the Securities Laws of any province or territory of Canada. The New Shares are not being offered and may not be offered or sold, directly or indirectly, in Canada or to or for the account of any resident of Canada in contravention of the Securities Laws of any province or territory thereof.
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Special Cautionary Notice Regarding Forward-looking Statements
The Prospectus contains certain statements that are neither reported financial results nor other historical information. Forward-looking statements are statements related to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements reflect current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ materially from those expressed in any forward-looking statement. Certain factors that could cause actual results to differ materially from expected results include, among other things, delays in completing the transactions discussed herein, difficulties in achieving benefits for the group through economies of scale and joint future efforts, and changes in global economic, business, competitive market and regulatory factors, as well as other matters not known to IGE. IGE does not intend and disclaims any duty or obligation to update or revise any industry information or forward-looking statements set forth in the Prospectus to reflect new information, future events or otherwise.
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1 EXECUTIVE SUMMARY
This executive summary should be read as an introduction to the Prospectus and any decision to invest in International Gold Exploration IGE AB should be based on consideration of the Prospectus as a whole by the investor, including the documents incorporated as reference and the risks of investing in the International Gold Exploration Share set out in “Risk Factors”. Where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff might under the applicable legislation have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches to the Board of Directors of IGE who has tabled this summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus.
1.1 Description of the Company
The legal entity of IGE was founded in Sweden 1983. The current activities of the Company have been carried out since 1988. The Company changed its name to International Gold Exploration IGE AB during 1989.The Company operations consisted of small scale exploration during the initial years. The shares were listed on the Oslo Stock Exchange in 1997 under the symbol “IGE”. The listing in Norway was a natural choice given the location of its activities. Norway has solid and long lasting history in the exploration and mining business. As the interest and profitability in global exploration and mining increased, so did the interest from the Swedish venture capital market. In the spring of 2005, International Gold Exploration IGE AB listed its shares on the NGM Stockholm Stock Exchange in Sweden under the symbol “IGE”.
International Gold Exploration IGE AB is a Swedish public limited liability company registered with the Swedish Companies Registration Office under the registration number 556227-8043. The Company is regulated by the Swedish Limited Companies Act. The articles of association are included in Appendix 1 to this Prospectus. International Gold Exploration has its head office at Kungsgatan 44, SE-111 35 Stockholm, Sweden, with telephone +46 (0)8 20 46 09 and facsimile +46 (0)8 611 57 63.
The Company has projects and properties within Angola, Kenya, Burundi, Sweden and Norway. The group structure consists of a parent company with subsidiaries responsible for the exploration and development activities within each geographical line of business.
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The minerals and metal operations of IGE are in continuous development, and currently comprise a portfolio of diamond, gold and base metal resources:
Projects IGE Ownership (%) Resources Historical resources
IGE Diamonds Alluvial/KimberliteLuxinge (Di) 31.5% / 30.75% n/a Alluvials; Indicated resources:
249,151 carats /Inferred: 759,000 carats
Lacage (Di) 40% / 43% n/a
Luanguinga (Di) 35% / 43% n/a
Cariango (Di) 40% / 43% n/a
IGE AfricaMukanda (V) 100% n/a 17M tonnes @ 0.64% V (currently
being re-confirmed under NI43-101), cut off 0.2% V
Butara (Au) 100% n/a Numerous alluv. Deps
Kilimapesa (Au) 50% (Goldplat Plc 50%) n/a 51,648 tonnes @ 2.52 g/t Au
SW Kenya 100% n/a
NW Kenya 100% n/a 5M tonnes @ 1% Ni
IGE NordicRönnbäcken (Ni) 100% Nickel
Bidjovagge (Au-Cu) 90% (Geologiske Tjenester A/S 10%)
Gold-Copper 1.16 Mt grading 1.09% copper and 3.72 g/t gold
Mjölkfjället (Ni) 100% n/a
The Board of Directors is comprised of Carl Ameln (chairman), Ole Jørgen Fredriksen, Ulrik Jansson, Lars Olof Nilsson and Uta Stoltenberg.
The management team of IGE is comprised of Tomas Fellbom (CEO) and Thomas Carlsson (CFO).
As at the date of this Summary, the Group has a total of 105 employees.
The Shares are identical in every respect and carry the right to one vote at general meetings. None of the major shareholders have different voting rights. There are neither restrictions on the transferability of the Shares nor any restrictions on foreign ownership of the Company’s Shares.
336,335,064 of the Shares of International Gold Exploration are listed on the Oslo Stock Exchange with the ticker IGE with a traded share price of NOK 0.46 and a market capitalisation of approximately NOK 172.5 million as per 29 October 2008. The remaining 38,664,936 Shares are admitted to trading on the NGM Equity exchange in Sweden with the ticker IGE. The Consideration Shares according to the Offer will be listed on the Oslo Stock Exchange.
As far as the Company is aware of, there is no natural or legal person which directly or indirectly has a shareholding in the Company above 10 %.
The Company’s share register is operated through the VPS in Norway and through the VPC in Sweden.. The Company’s registrar is DnB NOR Bank ASA. The securities number (ISIN number) for the Company’s Shares is SE 000378119.
The Company’s statutory auditor is Ernst & Young AB with the auditor Jaan Kubja as head auditor.
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1.2 Selected consolidated financial information
The selected financial information set forth in this Prospectus should be read in conjunction with the financial statements and the notes to those statements available at www.ige.se and section 20 of the Registration Document dated 1 December 2008.
As a mining company IGE will be developed with integrated activities within exploration, production and sales of high-end industrial minerals and metals. Business development with the purpose to expand operations and develop new activity has prioritized attention. The Company evaluates structural options as well as organic growth for its current projects. The goal is to increase operational activity and develop a balanced portfolio of activities that can provide an operational cash flow as early as possible.
The following tables show consolidated financial information for IGE as for the annual years 2007, 2006 and 2005 as well as financial information for the first nine months and the third quarter of 2008 with comparable numbers for the same period of 2007.
Consolidated Income Statement Q3 Q3 Q1-Q3 Q1-Q3 Full Year Full Year Full Year2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Sales 13,784 - 23,731 - - - 293
Change in stock - 1 - - - -60 -39Other external expenses -5,924 - -21,144 - -31,824 -19,043 -7,739Personnel expenses -5,318 -9,773 -19,635 -21,798 -22,887 -9,009 -3,803Other operating expenses - -7,131 -3,854 -15,461 - - -4,137Depreciations and write downs -125 -10,684 -3,152 -11,016 -11,312 -1,281 -1,299
Total operating expenses -11,367 -27,587 -47,785 -48,275 -66,023 -29,393 -17,017
EBIT 2,417 -27,587 -24,054 -48,275 -66,023 -29,393 -16,724
Net financials -1,975 -326 -1,783 3,240 3,494 -7,011 -6,483
Earnings before tax 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Tax - - - - - - -
Net profit / (loss) 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Profit to Equity holders of the Parent Company 1,490 - -24,918 - -61,715 -36,404 - Minority interest -1,048 - -919 - -814 - - Profit for the period 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Earnings per share attributable to Equity holders 0.001 -0.082 -0.074 -0.132 -0.181 -0.116 -0.087of the Parent company before and after dilution
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Consolidated Balance Sheet Q1-Q3 Q1-Q3 Full Year Full Year Full Year2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Audited Audited AuditedAssetsIntangible fixed assetsMineral interests 109,091 78,261 85,624 65,328 46,473Tangible fixed assetsPlant and machinery 44,823 3,161 6,274 2,009 1,162Long-term financial assetsShares in associated companies 26,192 - - - - Receivables on associated companies 1,730 - - - - Long-term receivables 38,001 106 27,000 103 101Total non-current assets 219,837 81,528 118,898 67,440 47,736
Inventory - 16 16 16 75Accounts receivables 23 327 871 218 435Other receivables 3,403 1,461 3,967 1,594 2,875Prepaid expenses and accrued income 5,669 24,663 2,313 12,502 1,222Short term investments 5,401 10,717 9,807 5,006 23,625Cash and cash equivalents 70,294 60,561 127,827 136,674 54,807Total current assets 84,790 97,745 144,801 156,010 83,039
Total assets 304,627 179,273 263,699 223,450 130,775
(SEK '000)Equity and liabilities
Equity attributable to equity holders of the parent companyShare capital 18,750 17,050 17,050 17,050 15,550 Other capital-contribution 323,283 268,102 268,102 268,102 137,642 Reserves 1,223 2,882 2,548 2,118 427 Retained earnings and profit for the period -100,602 -114,197 -75,685 -69,162 -32,760Minority interest 32,313 - 32,884 - - Total equity 274,967 173,837 244,899 218,108 120,859
Interest bearing long-term debt 16,891 - - Total long-term liabilities 16,891 - - - -
Account payables 7,017 1,016 10,772 1,785 5612Accrued expenses and prepaid income 4,822 2,781 5,880 2,012 935 Other liabilities 930 1,639 2,148 1,545 3,369Total short term liabilities 12,769 5,436 18,800 5,342 9,916 Total liabilities 29,660 5,436 18,800 5,342 9,916
Total equity and liabilities 304,627 179,273 263,699 223,450 130,775
1.3 Capitalisation and indebtedness
As of 30 September 2008 IGE had SEK 70.3 million in cash and no interest bearing debt including first year’s amortization of long-term debt. A more extensive description of the capitalisation and indebtedness can be found in chapter 11 in the Registration Document.
1.4 Significant changes
There have been no significant changes in the financial or trading position of the group which has occurred since 30 September 2008, other than the Voluntary Offer for all issued and outstanding shares in IGE Nordic described in the Securities Note and the convertible loan completed 5 November 2008 (described in the press release dated 5 November 2008 and the Q3 2008 report). Reference is further made to other notifications published by the Company on Oslo Stock Exchange. To the best of International Gold Exploration’s knowledge, there have been no other events subsequent to 30 September 2008 that would significantly change the financial or trading position presented in this Summary.
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1.5 Share capital
The Company’s Share Capital prior to the Voluntary Offer and the issue of the Consideration Shares is SEK 18,750,000 divided into 375,000,000 Shares, each with a par value of SEK 0.05.
The number of Shares in International Gold Exploration following the completion of the Voluntary Offer, and therefore the issued share capital of International Gold Exploration, will depend on the number of IGE Nordic shareholders accepting the Voluntary Offer. Provided that all shareholders of IGE Nordic tender all their shares under the Voluntary Offer, the issued share capital of International Gold Exploration will be increased by SEK 1,363,208 by issuance of 27,264,168 new Shares, each Share with a par value of SEK 0.05 resulting in an aggregate share capital of SEK 20,113,208.40.
All Shares of the Company are of the same class of shares and equal in all respects Each Share carries the right to one vote in the general meetings. The Company’s Articles of Association does not provide for limitations on the transferability or ownership of Shares.
The Company’s share register is operated through the Swedish Central Securities Depositary (the “VPC”). In order for the Shares to be listed on the Oslo Stock Exchange the Company has opened a Norwegian Branch Register in the Norwegian Securities Depositary (the “VPS”) through a Registrar Agreement with DnB NOR Bank ASA. The Company’s Branch Registrar is DnB NOR Bank ASA. For further information on the Registrar Agreement, Branch Register and the impact this arrangement may have for the shareholders, please refer to section 5 in the Securities Note. The international securities number (ISIN number) for the Company’s Shares is SE 000378119.
1.6 Summary of the Voluntary Offer
The terms of the Offer and issue of the Consideration Shares can be summarised as follows:
Publication of the Voluntary Offer 28 November 2008
Offeror International Gold Exploration IGE AB (publ.)
Target company IGE Nordic AB (publ.)
Offer Price NOK 1.84 per IGE Nordic share to be settled in kind by way of exchanging one (1) share in IGE Nordic with four (4) Shares in International Gold Exploration each with a par value of SEK 0.05.
Offer Period 1 December 2008 to 15 December 2008 at 17.30 (CET)
Acceptance Forms to be delivered Handelsbanken Capital Markets
Rådhusgaten 27
0101 Oslo, Norway
Fax +47 22 94 07 68
Expected registration of the share capital increase in the Swedish Companies Register
On or about 23 December 2008
Expected delivery of Consideration Shares to the VPS accounts of the subscribers
On or about 2 January 2009
Expected admission to trading of the Consideration Shares on Oslo Stock Exchange
On or about 3 January 2009
Number of Shares before the Offer and the issue of the Consideration Shares
375,000,000 Shares, each with a nominal value of SEK 0.05
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Number of Shares after the Offer and the issue of the Consideration Shares
Up to 402,264,168 Shares each with a nominal value of SEK 0.05
Dilution The dilutive effect in connection with the Offer and the issue of the Consideration Shares will be approximately 6.8 percent, provided that all shareholders of IGE Nordic tender all their shares under the Voluntary Offer.
Expenses of the Offer Approximately NOK 1.74 million
Conditions for the Offer (i) that the Offeror receives valid acceptances from IGE Nordic shareholders for a number of IGE Nordic shares, which together with the IGE Nordic shares already hold by the Offeror aggregate to more than 90 % of the share capital and votes in IGE Nordic (on a fully diluted basis); and
(ii) that prior to completion of the Offer, there are no changes, events, violations, circumstances or effects that were not known to the Offeror at the time of the Offer and are, or with the lapse of time, reasonably expected to become, materially adverse to the financial conditions or results or operations of IGE Nordic; and
(iii) that legislation and other regulations, court and authority decisions or similar circumstances, which are beyond the Offeror’s control and which the Offeror could not reasonably have foreseen at the time of the Offer, must not make the completion of the Offer or the acquirement of IGE Nordic completely or partly impossible or make such completion significantly difficult.
Manager Handelsbanken Capital Markets
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1.7 Major shareholders
A summary of the Company’s largest shareholders as of 20 November 2008 is set out below.
The 20 largest shareholders on the Oslo Stock Exchange:
Shareholder Country % No. of sharesSKANDINAVISKA ENSKILDA BANKEN SWE 3.56% 13,351,658 SIS SEGAINTERSETTLE AG 25PCT CHE 2.81% 10,530,289 ARCTIC SECURITIES ASA MEGLERKONTO NOR 1.87% 7,000,000 NORDNET SECURITIES BANK AB SWE 1.24% 4,638,014 SILVERCOIN INDUSTRIES AS NOR 1.18% 4,429,000 DRESDNER BANK AG LONDON BRANCH DEU 1.17% 4,380,000 HOLEN GUNNAR NOR 1.15% 4,300,000 NORDISK INDUSTRIUTVIKLING AS NOR 1.11% 4,148,000 DANSKE BANK A/S DNK 0.98% 3,662,503 FLATÅS KARL MARTIN NOR 0.92% 3,440,000 SÆTER HAAKON MORTEN NOR 0.76% 2,840,000 DRAGE INDUSTRIES AS V/ARNE STEEN NOR 0.69% 2,598,000 SAMSARA MANAGEMENT AS NOR 0.67% 2,510,000 OA HELGE MARTIN NOR 0.67% 2,500,000 AG INVEST AS NOR 0.63% 2,380,000 PHAM HUNG QUAN NOR 0.59% 2,215,000 MACE INVEST AS NOR 0.59% 2,200,000 SVENSKA HANDELSBANKEN STOCKHOLM SWE 0.58% 2,161,377 CITIBANK, N.A GBJ 0.57% 2,121,500 OTIUM FINANS AS NOR 0.53% 2,000,000
Total 20 largest shareholders 22.2% 83,405,341
Others 77.8 % 291,594,659
Total number of shares 100.0 % 375,000,000
The 5 largest shareholders on NGM Stockholm Stock Exchange:
Shareholder Country % No. of sharesUSB INVESTMENTS SWE 3.56% 13,365,500 SEB SECURITIES SWE 1.94% 7,290,805 SVENSKA HANDELSBANKEN AB SWE 0.66% 2,483,881 NORDNET SECURITIES SWE 0.63% 2,369,041 SWEDBANK AB SWE 0.54% 2,039,020 Total 5 largest shareholders 7.3% 27,548,247Others 92.7 % 347,451,753Total number of shares 100.0 % 375,000,000
1.8 Related party transactions
As at the date of this Prospectus, the Company is a party to the following agreements with related parties:
The Company is renting a storeroom of PA Resources AB and during periods, office services and rent of office space. PA Resources is a related party due to its Managing Director Ulrik Jansson, who is a member of the board in the Company. During 2007 PA has invoiced the Company an amount of SEK 72,000, During 2006 IGE paid PA Resources an amount of SEK 255,000 and for 2005 SEK 835,708 for the above mentioned services.
In 2006 former member of the Board of Directors, Bill Sundberg invoiced the Company an amount for SEK 47,000 for work related to the preparation of the Annual report 2006. During 2005 the Company paid about SEK 51,000 for this service to Bill Sundberg.
A member of the Company’s former Advisory Board, Göran Pettersson, invoiced the Company an amount of SEK 559,000 during 2005 for services related to geology and exploration.
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The above mentioned transactions were based on the principle of “arms length” pricing.
There were no other related party transactions for the period of 2005 to 2007.
1.9 Research and development, patents and licences
The main investments in IGE relate to the exploration and development of the licences owned by the Company, as well as acquisition of new licences. These investments have been significant, and they have been related to the costs of external consultants etc mainly connected to the Lacage and Luxinge diamond-projects in Angola and the projects; Rönnbäcken, Bidjovagge and Stekenjokk in Scandinavia.
Patents and licenses
The Company is not dependent on any patents or technical licenses, industrial or financial contracts or new manufacturing processes. The Company is, however, dependent on various mining rights such as exploration licenses in order to conduct exploration and obtain exploitation concessions and subsequent environmental permits in order to extract mineral resources from the assets of the Group. The conditions of the license agreements vary to some extent depending on in which country it is located. In Angola, for instance, the license will automatically be transformed into a mining licence if the operator of the contract fulfils the requirements according to the exploration licence. In the Nordic regions the operator has to apply for exploitation concessions, which are conditioned by, amongst others, that various environmental permits have been received.
The Company has paid investment guarantees for four licenses by the end of the second Quarter 2008: Lacage, Luanguinga, Cariango and Luxinge.
1.10 Trends
The Company has not experienced any significant changes or trends outside the ordinary course of business that are significant to the Company after 31 December 2007 or for the financial year 2008 as at the date of this Prospectus, other than those described in this Prospectus.
1.11 Summary of Risk Factors
Any investment in shares involves risk. The Company’s financial development and the value of the Company’s shares may be affected by a number of risk factors, including, but not limited to, market risks, financial risk and operational risk in relation to the exploration and development of minerals/metals and gold resources and geo-science technological developments. Readers of this Prospectus should carefully consider all of the information contained herein and in particular the following factors, which may affect some or all of the Company’s activities and which may impact the risk of investing in the Company’s Shares. This list is not exhaustive. The actual results of the Company could differ materially from those anticipated as a consequence of many factors, including the summary of risk factors described below and risks described elsewhere in this Prospectus:
• Mineral exploration involves a high degree of risk, and few properties that are explored, are ultimately developed into producing mines. The long-term profitability of the Company will in part depend on the cost and success of its exploration programs.
• The Company has no control over mineral or metal prices, which can be affected by numerous factors like international economic and political development etc.
• The current and future operation of the Company will, from time to time, require permits and licences from governmental authorities, as well as political approval. There is no assurance that International Gold Exploration will be successful in obtaining such permits, licenses and approvals.
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• The development of IGE’s properties will depend upon the Company’s ability to obtain financing through equity financing, debt financing, project financing or other means. There is no assurance that IGE will be successful in obtaining the required financing.
• The Company’s operations are subject to the environmental regulation in jurisdictions where it operates.
The follow risk factors are described further in section 1 in the Registration Document:
• General risks • Risks connected to exploration and development of minerals and metals • Risks connected to technological developments • Regulatory and political risks • Risks related to the Shares
1.12 Articles of association
The articles of association of International Gold Exploration IGE AB are included in Appendix 1 to this Registration Document.
According to its Articles of Association section 3, the purpose of the company is, directly or through subsidiaries or joint ventures, to carry on mining activities and exploration of minerals, and to own and manage movable and real property, and activities connected with such.
The Company has one class of shares only. According to the Articles of Association section 6 the Board of Directors shall have at least 3 and maximum 6 members.
The Articles of Association of the Company contain no provisions restricting foreign ownership of Shares. There are no limitations under Swedish law on the rights of non-residents or foreign owners to hold or vote the Shares.
1.13 Document on display
The documents listed below will be available for inspection for the life of the Prospectus on the Internet at www.ige.se, or at the addresses below:
(a) the memorandum and articles of association of the issuer; (b) all reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the issuer's request any part of which is included or referred to in the registration document; (c) the historical financial information of the issuer or, in the case of a group, the historical financial information for the issuer and its subsidiary undertakings for each of the two financial years preceding the publication of the registration document.
The Company's office: International Gold Exploration IGE AB
Kungsgatan 44 SE-111 35 Stockholm, Sweden
The Manager's offices: Handelsbanken Capital Markets
Rådhusgaten 27 N-0101 Oslo, Norway
I. SAMMANFATTNING
INTERNATIONAL GOLD EXPLORATION IGE AB (PUBL)
28 NOVEMBER 2008
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INNEHÅLLSFÖRTECKNING
1 SAMMANFATTNING .............................................................................................................4 1.1 Beskrivning av Bolaget....................................................................................................... 4 1.2 Utvald finansiell information.............................................................................................. 6 1.3 Eget kapital och skuldsättning ............................................................................................ 7 1.4 Väsentliga förändringar ...................................................................................................... 7 1.5 Aktiekapital......................................................................................................................... 8 1.6 Sammanfattning av Erbjudandet......................................................................................... 8 1.7 Större aktieägare ............................................................................................................... 10 1.8 Transaktioner med närstående .......................................................................................... 10 1.9 Forskning och utveckling, patent och licenser.................................................................. 11 1.10 Utvecklingstendenser........................................................................................................ 11 1.11 Sammanfattning av riskfaktorer........................................................................................ 11 1.12 Bolagsordning................................................................................................................... 13 1.13 Tillgängliga dokument ...................................................................................................... 13
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Viktigt
Denna Sammanfattning (vilken gemensamt med Registreringsdokument och Värdepappersdokument nedan kallas ”Prospektet”) har upprättats i enlighet med § 7-3 i den norska lagen om värdepappershandel i samband med Erbjudandet och noteringen av Nya Aktier i International Gold Exploration IGE AB (“IGE” eller “Bolaget”), enligt definition och beskrivning i Prospektet. De Nya Aktierna emitterades efter beslut vid extra bolagsstämma den 26 november 2008.
Prospektet har godkänts av Oslo Börs enligt § 7-7 i lagen om värdepappershandel. Informationen i Prospektet är aktuell på dagen för offentliggörandet och kan ändras eller kompletteras utan föregående meddelande. Det kan ha inträffat förändringar i faktorer som påverkar Bolaget efter Prospektets offentliggörande. Eventuella nya faktorer eller väsentliga fel eller oriktigheter i Prospektet som kan påverka värderingen av de Nya Aktierna och som uppkommer efter offentliggörandet av Prospektet, men innan de Nya Aktierna noterats på Oslo Börs, kommer att publiceras i form av ett tillägg till Prospektet, i enlighet tillämpliga norska regelverk. Offentliggörandet av Prospektet ska inte under några omständigheter tolkas som att informationen i Prospektet är fullständig eller komplett vid någon tidpunkt efter dagen för offentliggörandet.
Förfrågningar rörande Prospektet eller de frågor som behandlas i Prospektet hänvisas till Bolaget eller Managern. Ingen person utöver de i Prospektet angivna har rätt att utlämna eller sprida information om Prospektet eller om de frågor som behandlas i Prospektet. Om så sker kan mottagaren inte förlita sig på att informationen har godkänts av Bolaget. Norsk lag ska gälla för Prospektet och tvist angående Prospektet eller noteringen av de Nya Aktierna ska avgöras av Oslo tingsrätt.
Försäljningsrestriktioner
Detta dokument utgör ett Prospekt i den mening som avses i artikel 3 i direktivet 2003/71/EG (”Prospektdirektivet”) och har upprättats i enlighet med § 7-3 i den norska lagen om värdepappershandel i dess aktuella lydelse och därunder promulgerade regler. Prospektet har granskats och godkänts av Oslo Börs i enlighet med § 7-7 i lagen om värdepappershandel.
Distribution av Prospektet kan i vissa rättsordningar vara förbjuden enligt lag.
Prospektet innebär inte ett erbjudande att sälja, eller en inbjudan att köpa, något av de värdepapper som erbjuds enligt Prospektet, från IGE, Managern, någon av deras respektive närstående eller annan, eller för någon av dessas räkning, i någon rättsordning där det strider mot lag att utställa ett sådant erbjudande eller inbjudan. Med undantag för den ansökan om godkännande av Oslo Börs som anges ovan har inga åtgärder vidtagits som skulle tillåta distribution av Prospektet i någon rättsordning där sådana åtgärder krävs. Således får Prospektet inte användas i syfte att utställa erbjudande eller inbjudan avseende något värdepapper, i någon rättsordning eller under några omständigheter, där sådant erbjudande eller inbjudan strider mot lag eller kräver ett godkännande. Det är förbjudet att, helt eller delvis, mångfaldiga eller distribuera Prospektet utan Bolagets medgivande.
Bolaget och Managern uppmanar var och en som kan komma att få tillgång till Prospektet att själv informera sig om och respektera alla tillämpliga begränsningar rörande utövande av rättigheter och tecknande av aktier.
Förenta Staterna: De Nya Aktierna har inte och kommer inte att registreras enligt U.S. Securities Act 1933 i dess aktuella lydelse, eller någon delstatlig värdepapperslag, och får därför inte erbjudas eller säljas till ”U.S. persons” såsom dessa definieras enligt U.S. Securities Act.
Kanada: Inga av de Nya Aktierna uppfyller eller kommer att uppfylla kraven för att få säljas enligt värdepapperslagstiftningen i någon av Kanadas provinser eller något av dess territorier. De Nya Aktierna erbjuds inte och får inte, direkt eller indirekt, erbjudas eller säljas till person med hemvist i Kanada, eller för dennes räkning, i strid mot värdepapperslagstiftningen i någon provins eller något territorium i Kanada.
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Särskild varning angående framtidsinriktade uttalanden
Prospektet innehåller uttalanden som varken är rapporterade finansiella resultat eller annan historisk information. Framtidsinriktade uttalanden är uttalanden om förväntningar, framtidsplaner och strategier, förväntade händelser eller trender och åsikter om liknande saker som inte utgör historiska fakta. Dessa framtidsinriktade uttalanden återspeglar nutida åsikter om framtida händelser och omfattas av risker, osäkerheter, antaganden och ändrade omständigheter som kan medföra att det verkliga utfallet väsentligen avviker från vad som framförts i dessa framtidsinriktade uttalanden. Faktorer som kan medföra att faktiskt utfall väsentligen avviker från förväntat utfall inkluderar bland annat förseningar med genomförandet av de transaktioner som diskuteras i Prospektet, svårigheter att genom skalfördelar och samriskprojekt uppnå resultat för koncernen, förändringar i den globala ekonomin, affärsläget, konkurrensen på marknaden, regulatoriska faktorer samt andra faktorer som är okända för IGE. IGE friskriver sig från allt ansvar för att uppdatera eller revidera branschinformation eller framtidsinriktade uttalanden som gjorts i Prospektet för att återspegla ny information, framtida händelser eller i övrigt.
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1 SAMMANFATTNING
Denna sammanfattning ska läsas som en inledning till Prospektet och varje beslut att investera i International Gold Exploration IGE AB måste baseras på att investeraren överväger Prospektet i sin helhet, inklusive de handlingar som intagits genom hänvisning, och de risker med att investera i aktier i International Gold Exploration som anges under “Riskfaktorer”. Om talan väcks vid domstol rörande den information som lämnas i Prospektet kan käranden enligt den tillämpliga lagstiftningen vara skyldig att bära kostnaderna för översättning av Prospektet innan det rättsliga förfarandet inleds. Civilrättsligt ansvarar IGE:s styrelse, som har framlagt och offentliggjort denna sammanfattning, inklusive eventuell översättning, dock endast om sammanfattningen eller översättningen av denna är vilseledande, felaktig eller oförenlig med de övriga delarna av Prospektet.
1.1 Beskrivning av Bolaget
Den juridiska personen IGE bildades i Sverige 1983. Bolagets nuvarande verksamhet har bedrivits sedan 1988. Bolaget ändrade under 1989 namn till International Gold Exploration IGE AB. Under de första åren bedrev Bolaget prospektering i mindre skala. Aktierna noterades 1997 på Oslo Börs under kortnamnet ”IGE”. Noteringen i Norge var ett naturligt val med hänsyn till verksamhetens lokalisering. Norge har en lång och gedigen erfarenhet av prospektering och gruvdrift. När intresset och lönsamheten ökade för global prospektering och gruvdrift, ökade även intresset från den svenska riskkapitalmarknaden. Våren 2005 noterades International Gold Exploration IGE AB:s aktier på NGM-börsen i Stockholm under kortnamnet ”IGE”.
International Gold Exploration IGE AB är ett svenskt aktiebolag som är registrerat hos Bolagsverket under organisationsnummer 556227-8043. Bolaget lyder under den svenska Aktiebolagslagen. Bolagsordningen ingår i Bilaga 1 till Prospektet. International Gold Exploration AB har sitt huvudkontor på Kungsgatan 44, SE-111 35 Stockholm, Sverige, telefon +46 (0)8 20 46 09 och fax +46 (0)8 611 57 63.
Bolaget har projekt och marktillgångar i Angola, Kenya, Burundi, Sverige och Norge. Koncernstrukturen består av ett moderbolag med dotterbolag som ansvarar för prospektering och utvecklingsverksamhet inom varje geografiskt affärsområde.
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Mineral- och metallverksamheten inom IGE utvecklas kontinuerligt och består för närvarande av en portfölj som innehåller diamant-, guld- och basmetalltillgångar:
Projekt IGEs ägarandel (%) Resurser Historiska resurser
IGE Diamanter Alluvium/KimberliteLuxinge (Di) 31.5% / 30.75% - Alluvialt; Indikerade resurser:
249.151 karat /sannolika resurser: 759.000 karat
Lacage (Di) 40% / 43% -
Luanguinga (Di) 35% / 43% -
Cariango (Di) 40% / 43% -
IGE AfrikaMukanda (V) 100% - 17M ton @ 0,64% V (uppdatering
pågår för att uppfylla kraven i enlighet med NI 43-101), brytpunkt 0,2% V
Butara (Au) 100% - Div alluviala fyndigheter
Kilimapesa (Au) 50% (Goldplat Plc 50%) - 51,648 ton @ 2,52 g/t Au
SW Kenya 100% -
NW Kenya 100% - 5M ton med 1% Ni
IGE NordenRönnbäcken (Ni) 100% Nickel
Bidjovagge (Au-Cu) 90% (Geologiske Tjenester A/S 10%)
Guld-Koppar 1,16 Mt innehållande 1,09 % koppar och 3,72 g/t guld
Mjölkfjället (Ni) 100% inte angiven
Styrelsen består av Carl Ameln (ordförande), Ole Jørgen Fredriksen, Ulrik Jansson, Lars Olof Nilsson och Uta Stoltenberg.
IGE:s ledningsgrupp består av Tomas Fellbom (CEO) and Thomas Carlsson (CFO).
Vid tidpunkten för offentliggörandet av denna sammanfattning har koncernen totalt 105 anställda.
Aktierna medför i alla avseenden samma rätt och har vardera en röst på bolagsstämma. Ingen av de större aktieägarna har olika rösträtt. Det föreligger inga restriktioner för överlåtelse av Aktierna eller för utländskt ägande av Bolagets Aktier.
336.335.064 av aktierna i International Gold Exploration är noterade på Oslo Börs under kortnamnet IGE. Den 29 oktober 2008 uppgick aktiekursen till NOK 0,46 och börsvärdet till cirka 172,5 MNOK. Återstående 38.664.936 aktier handlas på NGM-börsen i Sverige under kortnamnet IGE. Utbytesaktierna enligt Erbjudandet kommer att noteras på Oslo Börs.
Såvitt Bolaget känner till har ingen fysisk eller juridisk person ett direkt eller indirekt ägande i Bolaget som överstiger 10%.
Bolagets aktiebok förs av VPS i Norge och av VPC i Sverige, Bolagets kontoförande institut är DnB NOR Bank ASA. Värdepapperskoden (ISIN-kod) för Bolagets aktier är SE 000378119.
Bolagets revisorer är Ernst & Young AB och huvudrevisor är Jaan Kubja.
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1.2 Utvald finansiell information
Den utvalda finansiella information som anges i Prospektet ska läsas i förening med de årsredovisningar och noter till dessa som finns tillgängliga på www.ige.se, samt punkt 20 i Registreringsdokumentet av den 1 december 2008.
Som gruvbolag kommer IGE att utvecklas genom att integrera aktiviteter inom prospektering, produktion och försäljning av högvärdiga industriella mineraler och metaller. Affärsutveckling för att expandera verksamheten och utveckla nya aktiviteter har högsta prioritet. Bolaget utvärderar olika strukturella alternativ och organisk tillväxt för sina nuvarande projekt. Målet är att öka aktiviteten i verksamheten och utveckla en balanserad portfölj med aktiviteter som på ett tidigt stadium genererar ett kassaflöde från rörelsen.
Följande tabeller visar IGE:s koncernmässiga finansiella ställning för räkenskapsåren 2007, 2006 och 2005, samt finansiell information för det första nio månaderna 2008, med jämförelsetal för motsvarande period 2007.
Koncernresultaträkning Q3 Q3 Q1-Q3 Q1-Q3 Hela året Hela året Hela året2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Oreviderad Oreviderad Oreviderad Oreviderad Reviderad Reviderad Reviderad
Omsättning 13,784 - 23,731 - - - 293
Ändring i varulager - 1 - - - -60 -39Övriga externa kostnader -5,924 - -21,144 - -31,824 -19,043 -7,739Personalkostnader -5,318 -9,773 -19,635 -21,798 -22,887 -9,009 -3,803Övriga rörelsekostnader 0 -7,131 -3,854 -15,461 - - -4,137Avskrivningar och nedskrivningar -125 -10,684 -3,152 -11,016 -11,312 -1,281 -1,299
Summa rörelsekostnader -11,367 -27,587 -47,785 -48,275 -66,023 -29,393 -17,017
EBIT 2,417 -27,587 -24,054 -48,275 -66,023 -29,393 -16,724
Finansiellt netto -1,975 (326) -1,783 3,240 3,494 -7,011 -6,483
Resultat före skatt 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Skatt - - - - - - -
Årets resultat / (förlust) 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Resultat hänförligt till moderbolagets aktieägare 1,490 - -24,918 - -61,715 -36,404 - Minoritetsintresse -1,048 - -919 - -814 - - Periodens resultat 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Resultat hänförligt till moderbolagets aktieägare 0.001 -0.082 -0.074 -0.132 -0.181 -0.116 -0.087före och efter utspädning
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Koncernbalansräkning Q3 Q3 Hela året Hela året Hela året2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS
(SEK '000) Oreviderad Oreviderad Reviderad Reviderad RevideradTillgångarImmateriella anläggningstillgångarMineralintressen 109,091 78,261 85,624 65,328 46,473Materiella anläggningstillgångarMaskiner och inventarier 44,823 3,161 6,274 2,009 1,162Långfristiga finansiella tillgångarAktier i koncernbolag 26,192 - - - - Fordringar på koncernbolag 1,730 - - - - Långfristiga fordringar 38,001 106 27,000 103 101Summa anläggningstillgångar 219,837 81,528 118,898 67,440 47,736
Lager och pågående arbeten - 16 16 16 75Kundfordringar 23 327 871 218 435Övriga fordringar 3,403 1,461 3,967 1,594 2,875Förutbetalda kostnader och upplupna intäkter 5,669 24,663 2,313 12,502 1,222Kortfristiga placeringar 5,401 10,717 9,807 5,006 23,625Likvida medel 70,294 60,561 127,827 136,674 54,807Summa omsättningstillgångar 84,790 97,745 144,801 156,010 83,039
Summa tillgångar 304,627 179,273 263,699 223,450 130,775
(SEK '000)Eget kapital och skulder
Eget kapital hänförligt till moderbolagets aktieägareAktiekapital 18,750 17,050 17,050 17,050 15,550 Övrigt tillskjutet kapital 323,283 268,102 268,102 268,102 137,642 Reserver 1,223 2,882 2,548 2,118 427 Balanserat resultat inklusive periodens resultat -100,602 -114,197 -75,685 -69,162 -32,760Minoritetsintresse 32,313 - 32,884 - - Summa eget kapital 274,967 173,837 244,899 218,108 120,859
Räntebärande långfristiga skulder 16,891 - - Summa långfristiga skulder 16,891 - - - -
Leverantörsskulder 7,017 1,016 10,772 1,785 5612Upplupna kostnader och förutbetalda intäkter 4,822 2,781 5,880 2,012 935 Övriga skulder 930 1,639 2,148 1,545 3,369Summa kortfristiga skulder 12,769 5,436 18,800 5,342 9,916 Summa skulder 29,660 5,436 18,800 5,342 9,916
Summa eget kapital och skulder 304,627 179,273 263,699 223,450 130,775
1.3 Eget kapital och skuldsättning
Per den 30 september 2008 hade IGE 70,3 MSEK i likvida medel och inga räntebärande skulder, inklusive första årets amortering på långfristiga skulder. En utförligare beskrivning av finansiering och skuldsättning återfinns i kapitel 11 i Registreringsdokumentet.
1.4 Väsentliga förändringar
Det har inte inträffat några väsentliga förändringar i bolagets finansiella eller affärsmässiga ställning efter den 30 september 2008, utöver det bud på samtliga utestående aktier i IGE Nordic som beskrivs i Värdepappersdokumentet och det konvertibla lån som upptogs den 5 november 2008 (se pressrelease daterad den 5 november 2008 och delårsrapporten för tredje kvartalet 2008). Vi hänvisar även till den övriga information som Bolaget offentliggjort på Oslo Börs. Enligt IGE:s kännedom har det inte efter den 30 september 2008 inträffat några andra händelser som väsentligt skulle påverka den finansiella och affärsmässiga ställning som presenterats i denna sammanfattning.
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1.5 Aktiekapital
Bolagets aktiekapital uppgår före Erbjudandet och emissionen av Utbytesaktierna till SEK 18.750.000, fördelat på 375.000.000 aktier å vardera med ett kvotvärde om SEK 0,05.
Antalet Aktier i International Gold Exploration efter det att Erbjudandet fullföljts och därmed det emitterade aktiekapitalet i International Gold Exploration, är beroende av hur många av IGE Nordics aktieägare som accepterar Erbjudandet. Om samtliga aktieägare i IGE Nordic skulle utbyta alla sina aktier enligt Erbjudandet, kommer det emitterade aktiekapitalet i International Gold Exploration att öka med SEK 1.363.208 genom emission av 27.264.168 nya aktier å vardera med ett kvotvärde om SEK 0,05, vilket skulle resultera i ett totalt aktiekapital på SEK 20.113.208:40.
Samtliga Aktier i Bolaget är av samma aktieslag och i alla avseenden likaberättigade. Varje Aktie medför rätt till en röst på bolagsstämma. Bolagets bolagsordning innehåller inte några begränsningar av rätten att överlåta eller äga Aktierna.
Bolagets aktiebok förs av den centrala svenska värdepappersförvararen (VPC). För att Aktierna ska kunna noteras på Oslo Börs har Bolaget öppnat ett norskt filialregister hos den norska värdepappersförvararen (”VPS”) genom ett kontoföraravtal med DnB NOR Bank ASA. Bolagets kontoförare är DnB NOR Bank ASA. För ytterligare information om kontoföraravtalet och dess betydelse för aktieägarna hänvisas till punkt 5 i Värdepappersdokumentet. Den internationella värdepapperskoden (ISIN-kod) för Bolagets aktier är SE 000378119.
1.6 Sammanfattning av Erbjudandet
Villkoren för Erbjudandet och för emissionen av Utbytesaktierna kan sammanfattas enligt nedan:
Offentliggörande av Erbjudandet 28 november 2008
Budgivare International Gold Exploration IGE AB (publ)
Målbolag IGE Nordic AB (publ)
Pris per aktie NOK 1,84 för varje aktie i IGE Nordic att erläggas såsom tillskott/apport genom utbyte av en (1) aktie i IGE Nordic mot fyra (4) aktier i International Gold Exploration med kvotvärde SEK 0,05 vardera.
Acceptperiod 1 december 2008 till 15 december 2008 kl. 17.30 (CET)
Anmälningssedel ska sändas till Handelsbanken Capital Markets
Rådhusgaten 27
0101 Oslo, Norge
Fax +47 22 94 07 68
Förväntad registrering av aktiekapitalsökningen hos Bolagsverket
Omkring den 23 december 2008
Beräknad redovisning av Utbytesaktierna på aktietecknarnas VPS-konton.
Omkring den 2 januari 2009
Beräknat upptagande av Utbytesaktierna till handel på Oslo Börs
Omkring den 3 januari 2009
Antal aktier före Erbjudandet och emissionen av Utbytesaktierna
375.000.000 aktier med kvotvärde om SEK 0,05 vardera.
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Antal aktier efter Erbjudandet och emissionen av Utbytesaktierna
Upp till 402.264.168 aktier med kvotvärde om SEK 0,05 vardera.
Utspädning Utspädningseffekten i samband med Erbjudandet och emissionen av Utbytesaktierna kommer att uppgå till cirka 6,8 procent, under förutsättning att samtliga aktieägare i IGE Nordic överlåter samtliga sina aktier i enlighet med Erbjudandet.
Kostnader för Erbjudandet Cirka 1,74 MNOK
Villkor för Erbjudandet (i) Att Erbjudandet accepteras i sådan utsträckning att Budgivaren, tillsammans med de aktier i IGE Nordic som redan innehas av Budgivaren, blir ägare till sammanlagt mer än 90% av aktiekapitalet och rösterna i IGE Nordic (baserat på full utspädning); och
(ii) att innan Erbjudandets fullgörande inga förändringar, händelser, överträdelser eller andra omständigheter inträffar, som IGE ej haft kännedom om vid tidpunkten för Erbjudandet, och som har eller kan skäligen bedömas ha väsentlig negativ påverkan på IGE Nordics finansiella ställning, resultat och/eller verksamhet i övrigt samt
(iii) att varken Erbjudandet eller förvärvet av IGE Nordic helt eller delvis omöjliggörs eller väsentligen försvåras av lagstiftning eller annan reglering, domstolsavgörande, myndighetsbeslut eller motsvarande omständighet, som föreligger eller skäligen kan förväntas, som ligger utanför IGE:s kontroll och som IGE skäligen inte kunnat förutse vid tidpunkten för offentliggörande av Erbjudandet
Manager Handelsbanken Capital Markets
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1.7 Större aktieägare
En sammanställning av Bolagets största aktieägare per den 20 november 2008 framgår nedan.
De 20 största aktieägarna på Oslo Börs:
Aktieägare Land % Antal aktierSIS SEGAINTERSETTLE AG 25PCT CHE 2.85% 10,680,289 ARCTIC SECURITIES ASA NOR 1.87% 7,000,000 DANSKE BANK A/S DNK 1.24% 4,645,403 FLATÅS NOR 0.97% 3,640,000 SKANDINAVISKA ENSKILDA BANKEN SWE 0.92% 3,451,658 NORDNET SECURITIES BANK AB SWE 0.78% 2,913,604 PHAM NOR 0.59% 2,215,000 SVENSKA HANDELSBANKEN STOCKHOLM NOR 0.58% 2,175,377 CITIBANK, N.A GBJ 0.57% 2,121,500 SAFETY BEACH AS NOR 0.53% 2,005,000 OTIUM FINANS AS NOR 0.53% 2,000,000 PETROLEUM INVEST NOR 0.53% 2,000,000 AABY NOR 0.48% 1,800,000 EIENDOMS OG NOR 0.44% 1,655,000 SYDBANK DNK 0.41% 1,525,174 JANSSON SWE 0.40% 1,500,000 SØLAND EIENDOM AS NOR 0.39% 1,460,000 NORDISK INDUSTRIUTVIKLING AS NOR 0.39% 1,448,000 LEERE NOR 0.37% 1,400,000 BAKKEN NOR 0.37% 1,400,000 Totalt 20 största aktieägarna 15.2% 57,036,005Övriga 84.8 % 317,963,995Totalt antal aktier 100.0 % 375,000,000
De fem (5) största aktieägarna på NGM-börsen i Stockholm:
Aktieägare Land % Antal aktierUSB INVESTMENT B.V. SVERIGE 3.56% 13,365,500 SEB SVERIGE 1.97% 7,369,405 SVENSKA HANDELSBANKEN AB (PUBL) SVERIGE 0.81% 3,050,157 SAETER, HAAKON MORTEN NORGE 0.64% 2,399,000 SWEDBANK AB SVERIGE 0.61% 2,271,410 Totalt 5 största aktieägarna 7.6% 28,455,472
1.8 Transaktioner med närstående
Per dagen för offentliggörandet av detta Prospekt är Bolaget part i följande avtal med närstående:
Bolaget hyr ett lager och hyr eller köper periodvis kontorstjänster och kontorslokaler av PA Resources AB. PA Resources är närstående genom sin verkställande direktör, Ulrik Jansson, som är medlem av Bolagets styrelse. Under 2007 har PA Resources fakturerat Bolaget ett belopp på SEK 72.000. Under 2005 och 2006 erhöll PA Resources SEK 835.708 respektive SEK 255.000 för ovan angivna tjänster.
Under 2006 fakturerade en tidigare styrelsemedlem, Bill Sundberg, Bolaget ett belopp på SEK 47.000 för utfört arbete i samband med upprättande av årsredovisningen för 2006. Under 2005 betalade Bolaget SEK 51.000 till Bill Sundberg för motsvarande tjänster.
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En tidigare medlem av Bolagets rådgivande kommitté, Göran Pettersson, fakturerade under 2005 SEK 559.000 till Bolaget för utförda tjänster hänförliga till geologi och prospektering.
Vid ovan angivna transaktioner baserades prissättningen på principen om ”armlängds avstånd”.
Det förelåg inga ytterligare närståendetransaktioner under perioden 2005 till 2007.
1.9 Forskning och utveckling, patent och licenser
De huvudsakliga investeringarna i IGE sammanhänger med prospektering och utveckling av de licenser som ägs av Bolaget och med förvärv av nya licenser. Investeringarna har varit betydande och utgörs huvudsakligen av externa konsultkostnader för diamantprojekten Lacage och Luxinge i Angola och projekten Rönnbäcken, Bidjovagge och Stekenjokk i Skandinavien.
Patent och licenser
Bolaget är inte beroende av några patent, tekniska licenser, industriella eller finansiella avtal eller nya tillverkningsprocesser. Bolaget är dock beroende av olika gruvrättigheter som till exempel prospekteringslicenser för att genomföra prospektering och förvärva gruvkoncessioner och därmed sammanhängande miljörättsliga tillstånd för utvinning av mineraler ur Bolagets marktillgångar. Villkoren för dessa licensavtal varierar i viss mån beroende på i vilket land de är belägna. I Angola, till exempel, omvandlas licensen automatiskt till en gruvkoncession om prospektören uppfyller kraven i prospekteringslicensen. I Norden måste prospektören ansöka om gruvkoncession, vilket bland annat villkoras av att olika miljörättsliga tillstånd erhållits.
Bolaget har vid utgången av det andra kvartalet 2008 betalat investeringsgarantier för fyra licenser: Lacage, Luanguinga, Cariango och Luxinge.
1.10 Utvecklingstendenser
Bolaget har vid tidpunkten för Prospektet inte utsatts för någon förändring eller händelse utanför den normala verksamheten som har väsentlig betydelse för Bolaget efter den 31 december 2007 eller under räkenskapsåret 2008, utöver vad som angivits i Prospektet.
1.11 Sammanfattning av riskfaktorer
Varje investering i aktier innebär en risk. Bolagets finansiella utveckling och värdet av Bolagets aktier kan påverkas av ett antal riskfaktorer, till exempel marknadsrisker, finansiella risker och operationella risker i samband med prospektering och utveckling av mineral/metall- och guldtillgångar och geovetenskaplig teknologisk utveckling. Läsaren bör noga överväga all information som lämnas i Prospektet och särskilt beakta nedanstående faktorer, som kan påverka hela eller delar av verksamheten i Bolaget och risken av att investera i Bolagets Aktier. Uppräkningen är inte uttömmande. Bolagets verkliga resultat kan komma att väsentligt avvika från förväntat resultat till följd av ett antal faktorer, bland annat de riskfaktorer som sammanfattas nedan och de risker som beskrivs på annan plats i Prospektet.
• Mineralprospektering innebär en hög grad av risk och få prospekterade markområden utvecklas i slutändan till producerande gruvor. Bolagets långsiktiga lönsamhet beror delvis på kostnaderna och framgången hos Bolagets prospekteringsprogram.
• Bolaget har ingen kontroll över mineral- och metallpriserna. Dessa kan påverkas av ett antal faktorer, som till exempel den internationella ekonomiska och politiska utvecklingen.
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• Bolagets nuvarande och framtida verksamhet kommer, från tid till annan, att kräva tillstånd och licenser från statliga myndigheter och politiska beslut. Det finns inga garantier för att International Gold Exploration lyckas erhålla dessa tillstånd, koncessioner eller beslut.
• Utvecklingen av IGE:s marktillgångar kommer att vara avhängig av Bolagets förmåga att genom ägarfinansiering, lånefinansiering, projektfinansiering eller på annat sätt anskaffa kapital. Det finns inga garantier för att IGE klarar den nödvändiga kapitalanskaffningen.
• Verksamheten omfattas av miljöskyddslagstiftningen i de rättsordningar där Bolaget har verksamhet.
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Följande riskfaktorer beskrivs utförligare i avsnitt 1 i Registreringsdokumentet: • Allmänna risker • Risker förknippade med prospektering och utvinning av mineraler och metaller • Risker förknippade med den tekniska utvecklingen • Regulatoriska och politiska risker • Risker relaterade till Aktierna.
1.12 Bolagsordning
Bolagsordningen för International Gold Exploration IGE AB ingår i Bilaga 1 till detta Registreringsdokument.
Enligt punkt 3 i bolagsordningen är föremålet för bolagets verksamhet att självt, genom dotterbolag eller genom samarbete med annan bedriva gruv- och mineralprospekteringsverksamhet samt äga och förvalta lös och fast egendom ävensom bedriva därmed förenlig verksamhet.
Bolaget har endast ett aktieslag. Enligt punkt 6 i bolagsordningen ska styrelsen bestå av 3 till 6 ledamöter.
Bolagsordningen innehåller inte någon bestämmelse som begränsar utländskt ägande av Aktierna. Enligt svensk lag finns inga begränsningar för utlänningar eller personer utan hemvist i Sverige att inneha Aktier eller utöva rösträtt.
1.13 Tillgängliga dokument
Nedan angivna dokument kommer under Acceptperioden att hållas tillgängliga på www.ige.se eller på nedan angivna adresser:
(a) emittentens bolagsordning; (b) alla rapporter, brev och övriga dokument, historisk finansiell information, värderingar och expertutlåtanden som upprättats på uppdrag av emittenten av vilka någon del ingår i eller hänvisas till i Registreringsdokument; (c) historisk finansiell information om emittenten eller, för koncern, historisk finansiell information om emittenten och dennes dotterbolag, avseende de två senaste räkenskapsåren före offentliggörandet av Registreringsdokumentet.
Bolaget: International Gold Exploration IGE AB
Kungsgatan 44 SE-111 35 Stockholm, Sweden
Manager: Handelsbanken Capital Markets
Rådhusgaten 27 N-0101 Oslo, Norway
II. REGISTRATION DOCUMENT
INTERNATIONAL GOLD EXPLORATION IGE AB (PUBL.)
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO BUY, SUBSCRIBE
OR SELL THE SECURITIES HEREIN
28 NOVEMBER 2008
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TABLE OF CONTENTS
1 RISK FACTORS......................................................................................................................... 4 1.1 General risks.............................................................................................................................4 1.2 Risks connected to exploration and development of minerals and metals ...............................4 1.3 Risks connected to technological developments ......................................................................7 1.4 Regulatory and political risks...................................................................................................7 1.5 Risks related to the Shares........................................................................................................8
2 PERSONS RESPONSIBLE........................................................................................................... 9
3 STATUTORY AUDITORS ......................................................................................................... 10
4 SELECTED FINANCIAL INFORMATION .................................................................................. 11
5 INFORMATION ABOUT THE ISSUER ....................................................................................... 13 5.1 History and development........................................................................................................13 5.2 Investments.............................................................................................................................14
6 BUSINESS OVERVIEW ............................................................................................................ 15 6.1 Strategy...................................................................................................................................15 6.2 Resources in IGE....................................................................................................................16 6.3 Business units .........................................................................................................................17 6.4 Additional information for mineral companies ......................................................................21 6.5 Corporate social responsibility ...............................................................................................23
7 MARKET OVERVIEW.............................................................................................................. 24 7.1 Recent trends in the mining industry......................................................................................24 7.2 Description of industrial minerals and metals ........................................................................24 7.3 Outlook for the global industrial minerals and metals industries ...........................................25 7.4 IGE’s principal markets..........................................................................................................25 7.5 Gold........................................................................................................................................26 7.6 Diamond .................................................................................................................................27 7.7 Nickel .....................................................................................................................................29
8 ORGANISATIONAL STRUCTURE............................................................................................. 30
9 PROPERTY, PLANTS AND EQUIPMENT .................................................................................. 32
10 OPERATING AND FINANCIAL REVIEW ................................................................................... 33 10.1 Financial condition .................................................................................................................33
11 CAPITAL RESOURCES ............................................................................................................ 35
12 RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES................................................... 38 12.1 Patents and licenses ................................................................................................................38
13 PROFIT FORECASTS OR ESTIMATES ..................................................................................... 40
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14 ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND SENIOR MANAGEMENT....................................................................................................................... 41 14.1 Board of Directors ..................................................................................................................41 14.2 Management ...........................................................................................................................42 14.3 Conflicts of interest, etc..........................................................................................................43 14.4 Fraudulent offence, bankruptcy, incrimination and disqualification......................................44
15 REMUNERATION AND BENEFITS............................................................................................ 45 15.1 Board of directors ...................................................................................................................45 15.2 Executive management...........................................................................................................45 15.3 Shareholdings and warrants of Management and Board of Directors....................................45 15.4 Warrants and incentive programmes ......................................................................................46 15.5 Pension obligations.................................................................................................................49
16 BOARD PRACTICES ................................................................................................................ 50 16.1 Compensation for termination................................................................................................50 16.2 Committees.............................................................................................................................50 16.3 Corporate governance.............................................................................................................50
17 EMPLOYEES ........................................................................................................................... 52 17.1 Employees ..............................................................................................................................52 17.2 Hired consultants....................................................................................................................52
18 MAJOR SHAREHOLDERS........................................................................................................ 53 18.1 Shareholder structure..............................................................................................................53
19 RELATED PARTY TRANSACTIONS ......................................................................................... 54
20 FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFIT AND LOSSES .................................................................. 55 20.1 Historical consolidated financial information ........................................................................55 20.2 Interim financial information .................................................................................................64 20.3 Dividend policy ......................................................................................................................65 20.4 Legal and arbitration proceedings ..........................................................................................65 20.5 Significant changes.................................................................................................................65 20.6 Segment information ..............................................................................................................65 20.7 Trends.....................................................................................................................................65 20.8 Information on holdings .........................................................................................................65 20.9 Funding and treasury policies and objectives.........................................................................65
21 ADDITIONAL INFORMATION................................................................................................... 66 21.1 General ...................................................................................................................................66 21.2 Shares and Share Capital ........................................................................................................66 21.3 Development in share capital .................................................................................................66 21.4 Share options, convertible securities, etc ...............................................................................67 21.5 Authorisation to increase the share capital .............................................................................67 21.6 Own shares .............................................................................................................................67 21.7 Memorandum and Articles of Association.............................................................................67 21.8 Shareholder rights...................................................................................................................67 21.9 General meetings of shareholders ..........................................................................................68 21.10 Corporate matters ...................................................................................................................69 21.11 Legal and arbitration proceedings ..........................................................................................69
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22 MATERIAL CONTRACTS ........................................................................................................ 70
23 THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATIONS OF ANY INTEREST.................................................................................................................. 71 23.1 Statements by experts .............................................................................................................71 23.2 Third party information ..........................................................................................................71
24 NORWEGIAN TAX .................................................................................................................. 72 24.1 Norwegian shareholders .........................................................................................................72
25 SWEDISH TAX......................................................................................................................... 74 25.1 Swedish shareholders .............................................................................................................74 25.2 Non-resident shareholders ......................................................................................................75 25.3 Duties on the transfer of Shares..............................................................................................76 25.4 Inheritance tax ........................................................................................................................76
26 DEFINITIONS & GLOSSARY TERMS ....................................................................................... 77
27 APPENDICES AND DOCUMENTS ON DISPLAY......................................................................... 79 27.1 Appendices .............................................................................................................................79 27.2 Documents on Display ...........................................................................................................79 27.3 Cross Reference List ..............................................................................................................79
• Appendix 1: Articles of Association of International Gold Exploration AB • Appendix 2: Acceptance Form
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1 RISK FACTORS
Investing in International Gold Exploration IGE AB (publ) registration number 556227-8043 (“the Company” or “IGE”), like all other equity investments, is associated with risk. Prospective investors should carefully consider each of the following risk factors and the other information contained in this Prospectus before making an investment decision. The trading price of the Company’s Shares could decline due to any of these risks and investors could lose all or part of their investment. The description of risks is not necessarily exhaustive and factors not mentioned here might nevertheless have a significant bearing on the value of the Shares in the Company. There may be additional risks that are currently not considered to be material or of which the Company is not presently aware. If any of the following risks were to materialise, the business, financial condition and results of operations could be adversely affected.
1.1 General risks
The Company’s risk profile will be dependent on developments in the main areas of activity in which it is involved. The Company’s main interests are in:
• Exploration, extraction and processing of minerals and metals • Technological developments of geophysical exploration methods
The risks discussed below are divided into the areas in which the Company will operate.
1.1.1 Share price volatility
The price of the Company’s Shares may be highly volatile. In addition, the stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the securities, which may be unrelated to company specific operating performance or prospects. Furthermore, the Company’s operating results and prospects may from time to time be below the expectations of market analysts and investors. Any of these events could result in a material decline in the price of the Shares.
The market price of the Shares could also decline due to sales of a large number of Shares in the Company in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a price that is deemed appropriate.
1.1.2 Macro economic fluctuations
The Company is exposed to the economic cycle, and changes in the general economic situation could affect demand for the IGE’s products and services.
Market conditions may affect the Shares regardless of IGE’s operating performance or the overall performance of the mineral exploration and development sector. Accordingly, the market price of the Shares may not reflect the underlying value of the Company’s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to IGE while others of which may be outside IGE’s control.
1.2 Risks connected to exploration and development of minerals and metals
1.2.1 General
The Company’s prospects, which are in the exploration stage, will only be developed if the exploration is successful. Mineral exploration involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. The long-term profitability of the Company will in part depend on the cost and success of its exploration programs.
Substantial expenditures are required to establish mineral reserves through exploration in order to eventually develop the resources and later extract the established resource. Although substantial benefits may be derived
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from the discovery of a major mineral resource, no assurance can be given that the resources discovered will be of sufficient size, have a beneficial location, and be amenable to processing in order for the deposit to justify commercial and profitable operations.
1.2.2 Market risks
Minerals and metal prices
The Company has no control over mineral or metal prices, which can be affected by numerous factors including international economic and political trends, inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increased or decreased production due to changes in extraction and production methods. The effect of these factors on the price of precious and base minerals and metals, and therefore the future economic viability of any of the Company's exploration projects, cannot be accurately predicted.
Government regulations
The future operations of the Company will, from time to time, require permits from governmental authorities and will be governed by laws and regulations regarding prospecting, development, mining, taxation, employment standards, occupational health, waste disposal, land use, environmental protection, mine safety and other matters. The Company may in the future need to apply for permits from different authorities. Companies engaged in the exploration and development of resource properties can experience increased costs as a result of the need to comply with applicable laws, regulations and permits as they change in the future, see also section 1.4 and 1.5.
Political risk
The operation of the Company is subject to local laws governing prospecting, development, production, taxes, national ownership restrictions, land use, land claims of local people and other matters. Although the Company believes that its exploration and development activities are currently carried out in accordance with all applicable laws, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail development. Political risk is relevant for the operations in Angola, Kenya, Burundi, Sweden and Norway. In respect of the latter, several of the regulatory approvals, planning regulations, licences etc outlined in section 1.4 below may be rejected, in full or in part based on political grounds.
Environmental factors
All phases of the Company's operations are subject to environmental regulations in the jurisdictions in which it operates. Environmental legislation may evolve in a manner, which in the future may require stricter regulations, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors, and employees. There are no assurances that future changes in environmental regulations, if any, will not adversely affect the Company’s operations. Compliance with respect to environmental regulations, closure and other matters may involve significant costs and/or other liabilities. Non Governmental Organizations generally being against mining may also from time to time criticize the Company's operations and development plans. In particular, but not limited to, environmental groups may mobilize against exploitation of thorium.
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1.2.3 Operational risks
Exploration risks
The Company’s existing activities are primarily directed towards exploration for and development of mineral and metal deposits. Mining operations generally involve a high degree of risk.
The Company’s operations are subject to all the hazards and risks normally encountered in the exploration, development and production of mineral deposits. These include, rock bursts, cave-ins, adverse weather conditions, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Although adequate precautions to minimize risk are and will be taken, operations are subject to risks which may result in environmental pollution and consequent liability.
The exploration for and development of mineral and metal deposits, involve significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration or development programs planned by the Company will result in a profitable commercial mining operation.
Whether a mineral or a metal deposit will be commercially viable depends on a number of factors, some of which are, the particular attributes of the deposit, such as size, grade and proximity to infrastructure, commodity prices which are highly cyclical, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital. The Company’s projects are in the early stages. Expenditures made by the Company or initial drilling results are no guarantee for further developments or discoveries of profitable commercial mining operations. Lack of availability of drilling rigs could cause increased project expenditures and /or project delays.
Permits and licenses
The Company holds Pre-claims, Claims and mining rights in Angola, Kenya, Burundi, Sweden and Norway. Some of these licenses are subject to certain conditions. The Company has no reason to expect that the conditions will not be fulfilled or that these permits will not be granted, however, the Company has no guarantee that such conditions will remain to be fulfilled and that all necessary permits will be granted for specific projects.
Risk for inaccurate estimates
There are considerable uncertainty factors in estimating the size and value of mineral/metal reserves. The reservoir technique is a subjective and inexact process where the estimation of the accumulation of mineral/metals reserves in the property cannot be accurately measured. In order to evaluate the recoverable reserves, a number of geological, geophysical, technical and production data must be evaluated. The evaluation may later prove to be inaccurate, and estimated reserves may therefore be adjusted downward or upward.
Competition
The minerals and metals industries are highly competitive in all phases and the Company will be competing with many established companies, which may have more advantageous financial and technical resources. The Company has no guarantee that this competition will not have an adverse effect either now, or at some time in the future, on the Company's ability to acquire, explore, and develop its mineral and metals resource deposits.
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The mining and metal industry is a global business with producers in several different countries. There is strong competition for the discovery and acquisition of properties considered to have commercial potential. The Company competes with other mining companies, many of which have greater financial resources than IGE, for the acquisition of properties, leases and other interests as well as for the recruitment and retention of skilled personnel. Such factors may influence the Company’s ability to secure new exploration areas or recruit and retain staff.
Dependence on key personnel
The Company’s development and prospects are dependent upon the continued services and performance of its senior management and other key personnel and consultants. Financial difficulties or other factors could adversely affect the Company’s ability to retain key employees.
Uninsured losses
The Company’s business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, snow falls and avalanches. Such occurrences could have a material adverse effect on the Company’s business, operating result or financial condition. Although the Company intend to obtain some insurance to protect against certain risks in such amounts as it considers reasonable, its insurance will not cover all the potential risks associated with a mining company’s operations.
1.2.4 Financial risk
Requirement for new capital
The development of the Company’s properties, licenses, Claims and Pre-claims will depend upon the Company’s ability to obtain financing through equity financing, debt financing, project financing or other means. There is no assurance that the Company will be successful in obtaining the required financing. Any additional equity financing may be dilutive to existing Shareholders and debt financing, if available, may involve restrictions on financing operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion, or delay or indefinite postpone exploration, development or production on any or all of the Company’s projects.
Currency risk
Currency fluctuations will affect the cash flow that the Company will realize from its operations.
1.3 Risks connected to technological developments
The Company’s ability to compete is highly dependent upon, among other things, its ability to utilize geo-related services and data of a competitive quality. Because of the significant technological changes that have already taken place, for instance with respect to 3D and 4D seismic data acquisition and processing and those that may occur in the future, the Company is generally dependent on its ability to keep pace with changes and improvements in data acquisition and processing technologies.
1.4 Regulatory and political risks
The Company has licences, exploration and / or development projects in Angola, Kenya, Burundi, Sweden and Norway. Therefore the Company’s activities are exposed to varying degrees of political and economic risk and other risks and uncertainties. These risks and uncertainties vary from country to country and include, but are not limited to: Terrorist activities; extreme fluctuations in currency exchange rates; hyperinflation; labour unrest; risk of war or civil unrest; expropriation and nationalization; renegotiation or nullification of existing concessions, licenses, permits and contracts; illegal mining; changes in taxation policies; restrictions on foreign exchange and repatriation; and changing political conditions, currency controls and governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors
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to employ citizens of, or purchase supplies from, a particular jurisdiction.
The exploration, development and operating activities of the Company are generally subject to various laws governing exploration, development, mining, processing, taxes, labour standards and occupational health and safety, toxic substances, use of motorised machinery, land use, water use, and land claims of local people and protection of the environment and cultural monuments and other matters. Although the Company believes that its activities are currently being carried out in accordance with all applicable laws, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing exploration, development and operating activities or more stringent implementation thereof could have a substantial adverse impact on the Company.
Changes in exploration, mining or investment policies or shifts in political attitude could materially adversely impact the Company’s financial results. The Company’s operations may be affected in varying degrees by government regulations with respect to, for example, restrictions on exploration, development, processing, production, price controls, export controls, currency remittance, income taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or other interests.
1.5 Risks related to the Shares
Volatility of the share price
The trading price of the Shares could fluctuate significantly in response to quarterly variations in operating results, general economic outlook, adverse business developments, interest rate changes, changes in financial estimates by securities analysts, matters announced in respect of commodity prices or competitors or changes to the regulatory environment in which the Company operates.
Market conditions may affect the Shares regardless of the Company’s operating performance or the overall performance of the mineral exploration and development sector. Accordingly, the market price of the Shares may not reflect the underlying value of the Company’s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Company while others of which may be outside the Company’s control.
The market price of the Shares could decline due to sales of a large number of Shares in the Company in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a time and at a price that are deemed appropriate.
Shareholders may be diluted if they are unable to participate in future offerings
The development of the Company’s properties, licenses, Claims and Pre-claims will, inter alia, depend upon the Company’s ability to obtain financing through equity financing. Shareholders may be unable to participate in future offerings, due to misapplication of shareholders pre-emptive rights in order to raise equity on short notice in the investor market, or for reasons relating to foreign securities laws or other factors.
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2 PERSONS RESPONSIBLE
Board of Directors of International Gold Exploration IGE AB (publ)
The Board of Directors of International Gold Exploration IGE AB (publ) accepts responsibility for the information given in this Registration Document. The Board of Directors hereby declares that, to the best of our knowledge, having taken all reasonable care to ensure that such is the case; the information contained in this Registration Document is in accordance with the facts and contains no omission likely to affect its import
Stockholm, 28 November 2008
The Board of Directors of International Gold Exploration IGE AB (publ)
Carl Ameln
(Chairman)
Ole Jørgen Fredriksen
Ulrik Jansson
Lars Olof Nilsson
Uta Stoltenberg
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3 STATUTORY AUDITORS
Ernst & Young AB with the authorized auditor Jaan Kubja as head auditor is the independent auditor for International Gold Exploration IGE AB (publ), and has been their auditor since 2004. Ernst & Young AB has its registered address at Jakobsbergsgatan 24, SE-103 99 Stockholm, Sweden. All partners in Ernst & Young AB are members of the Swedish Institute of Public Accountants (Föreningen Auktoriserade Revisorer).
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4 SELECTED FINANCIAL INFORMATION
The selected financial information set forth in this Prospectus should be read in conjunction with the financial statements and the notes to those statements available at www.ige.se and section 20 of the Registration Document dated 1 December 2008.
As a mining company IGE will be developed with integrated activities within exploration, production and sales of high-end industrial metals and diamonds. Business development with the purpose to expand operations and develop new activity has prioritized attention. The Company evaluates structural options as well as organic growth for its current projects. The goal is to increase operational activity and develop a balanced portfolio of activities that can provide an operational cash flow as early as possible.
The following tables show consolidated financial information for IGE as for the annual years 2007, 2006 and 2005 as well as financial information for the nine months of 2008 with comparable numbers for the same period of 2007.
Consolidated Income Statement Q3 Q3 Q1-Q3 Q1-Q3 Full Year Full Year Full Year2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Sales 13,784 - 23,731 - - - 293
Change in stock - 1 - - - -60 -39Other external expenses -5,924 - -21,144 - -31,824 -19,043 -7,739Personnel expenses -5,318 -9,773 -19,635 -21,798 -22,887 -9,009 -3,803Other operating expenses - -7,131 -3,854 -15,461 - - -4,137Depreciations and write downs -125 -10,684 -3,152 -11,016 -11,312 -1,281 -1,299
Total operating expenses -11,367 -27,587 -47,785 -48,275 -66,023 -29,393 -17,017
EBIT 2,417 -27,587 -24,054 -48,275 -66,023 -29,393 -16,724
Net financials -1,975 -326 -1,783 3,240 3,494 -7,011 -6,483
Earnings before tax 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Tax - - - - - - -
Net profit / (loss) 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Profit to Equity holders of the Parent Company 1,490 - -24,918 - -61,715 -36,404 - Minority interest -1,048 - -919 - -814 - - Profit for the period 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Earnings per share attributable to Equity holders 0.001 -0.082 -0.074 -0.132 -0.181 -0.116 -0.087of the Parent company before and after dilution
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Consolidated Balance Sheet Q1-Q3 Q1-Q3 Full Year Full Year Full Year2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Audited Audited AuditedAssetsIntangible fixed assetsMineral interests 109,091 78,261 85,624 65,328 46,473Tangible fixed assetsPlant and machinery 44,823 3,161 6,274 2,009 1,162Long-term financial assetsShares in associated companies 26,192 - - - - Receivables on associated companies 1,730 - - - - Long-term receivables 38,001 106 27,000 103 101Total non-current assets 219,837 81,528 118,898 67,440 47,736
Inventory - 16 16 16 75Accounts receivables 23 327 871 218 435Other receivables 3,403 1,461 3,967 1,594 2,875Prepaid expenses and accrued income 5,669 24,663 2,313 12,502 1,222Short term investments 5,401 10,717 9,807 5,006 23,625Cash and cash equivalents 70,294 60,561 127,827 136,674 54,807Total current assets 84,790 97,745 144,801 156,010 83,039
Total assets 304,627 179,273 263,699 223,450 130,775
(SEK '000)Equity and liabilities
Equity attributable to equity holders of the parent companyShare capital 18,750 17,050 17,050 17,050 15,550 Other capital-contribution 323,283 268,102 268,102 268,102 137,642 Reserves 1,223 2,882 2,548 2,118 427 Retained earnings and profit for the period -100,602 -114,197 -75,685 -69,162 -32,760Minority interest 32,313 - 32,884 - - Total equity 274,967 173,837 244,899 218,108 120,859
Interest bearing long-term debt 16,891 - - Total long-term liabilities 16,891 - - - -
Account payables 7,017 1,016 10,772 1,785 5612Accrued expenses and prepaid income 4,822 2,781 5,880 2,012 935 Other liabilities 930 1,639 2,148 1,545 3,369Total short term liabilities 12,769 5,436 18,800 5,342 9,916 Total liabilities 29,660 5,436 18,800 5,342 9,916
Total equity and liabilities 304,627 179,273 263,699 223,450 130,775
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5 INFORMATION ABOUT THE ISSUER
5.1 History and development
The legal entity of IGE was founded in Sweden 1983. The current activities of the Company have been carried out since 1988. The Company changed its name to International Gold Exploration IGE AB during 1989.The Company operations consisted of small scale exploration during the initial years. The shares were listed on the Oslo Stock Exchange in 1997 under the symbol “IGE”. The listing in Norway was a natural choice given the location of its activities. Norway has solid and long lasting history in the exploration and mining business. As the interest and profitability in global exploration and mining increased, so did the interest from the Swedish venture capital market. In the spring of 2005, International Gold Exploration IGE AB listed its shares on the NGM Stockholm Stock Exchange in Sweden under the symbol “IGE”.
International Gold Exploration IGE AB is a Swedish public limited liability company registered with the Swedish Companies Registration Office under the registration number 556227-8043. The Company is regulated by the Swedish Limited Companies Act. The articles of association are included in Appendix 1 to this Prospectus. International Gold Exploration has its head office at Kungsgatan 44, SE-111 35 Stockholm, Sweden, with telephone +46 (0)8 20 46 09 and facsimile +46 (0)8 611 57 63.
Below follows a summary of important events in the history of the Company:
• 1983; the legal entity, which later became IGE, was founded
• 1989; the entity changed its name and became International Gold Exploration IGE AB
• 1997; the company was listed on Oslo Stock Exchange
• 1999; IGE entered into a Joint Venture with North Atlantic Natural Resources including the development of the advanced Norrliden project
• 2001; 50% of Björkdalsgruvan was acquired by IGE. IGE restarted the production of Gold in the mine
• 2002; IGE started to produce gold in Lolgorien, Kenya
• 2003; IGE Issued an option which gave the holder, Minmet Plc, the right to acquire IGE’s share of Björkdalgruvan. Strike price was 18 million shares in MinMet Plc
• 2003; MinMet exercised the option and bought the Björkdal mine from IGE
• 2004; IGE decided to do a dividend of its remaining holding in MinMet and Lappland Goldminers AB to its shareholders.
• 2005; IGE was listed on the Nordic Growth Market in Stockholm
• 2006; IGE entered in to negotiations with the state owned diamond company in Angola, Endiama, regarding a potential Joint Venture for exploration of diamonds in Lacage, Angola
• 2007; IGE was granted two licenses in Burundi comprehending gold and vanadium
• 2007; IGE was granted its first diamond license in Angola
• 2007; IGE transferred its mineral licenses in Sweden and Norway to its wholly owned subsidiary, IGE Nordic. IGE sold 25.4% of the company and listed it on Oslo Axess in connection to the transaction. A management was recruited to IGE Nordic in order to manage the Group’s activities in Scandinavia
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• 2007; IGE entered in a Joint Venture with the South African mining company, Goldplat Plc, comprising the development of 7 targets in South Western Kenya with potential of containing high grades of gold
• 2008; the preparatory work in order to start diamond production in Luxinge, Angola during autumn 2008 started
5.2 Investments
The table below sets forth the Company’s principle investments (cash considerations) for the period from 2005 to 31 December 2007. For more information about investments see the consolidated financial statements, which can be inspected on www.ige.se.
SEK ('000) 2007 2006 2005Investing activities; Mineral Interest 58,251 19,645 13,220Investing activities; Equipment 4,519 56 2,436Total 62,770 19,701 15,656 During the previous three years the Company’s main investments are made within the following:
• By the end of 2007 the Company has invested about SEK 47 million in Angola in development and application processes of its Lacage, Luanguinga, Cariango and Luxinge diamond projects.
• Main investments in Scandinavia has historically constituted of the development of the Stekenjokk, Lindbastmora, Olserum and Bidjovagge projects. During 2007 the Company invested about SEK 13 million mainly in those projects, 2006, about SEK 16.1 million and during 2005 about SEK 15.5 million. By the end of 2007 investments within the Scandinavian activities are focused on the Rönnbäcken Nickel project and Bidjovagge Gold project.
Investments during the period January to June 2008 amounts to about SEK 54 million. Around SEK 30 million is referable to purchase of equipment to the start-up of the Luxinge diamond mine in Angola. Main investments comprises the following: A diamond DMS Final recovery plant amounting to around SEK 11 million, machines from Volvo, cars, field camp facilities etc amounting to around SEK 5 million. The Group has also invested in associated companies through its subsidiary, IGE Nordic which, during the period, has established two new joint ventures; Norrsken Energy Ltd and Nordic Iron Ore AB.
Investments within the Company mainly consist of capitalized exploration and development expenditures. As long as each project or license is considered to be of economic interest for future development, exploration costs associated with the project are capitalized as an intangible asset (Mineral interest). Drilling is a considerable part of the capitalized expenditures. The main part of all investing activities is related to development of mineral interests. As the Company has advanced two of its projects in a production start-up phase - Luxinge diamond project in Angola and the Kilimapesa gold project in Kenya - it has invested in equipment, plant and machines for diamond and gold production.
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6 BUSINESS OVERVIEW
IGE is a Swedish exploration and mining company with a focus on diamonds, nickel and gold. The shares trade on the Oslo Stock Exchange and the Swedish NGM list under the symbol “IGE”. There are 375 million shares outstanding.
International Gold Exploration is the IGE Group’s holding company whose primary focus is to be the shareholder for all group companies as well as being the main funding entity for the Company. International Gold Exploration’s headquarter has 4 employees. The other employees of the Group are employed by each subsidiary respectively.
The Company has projects and properties within Angola, Kenya, Burundi, Sweden and Norway. The group structure consists of a parent company with subsidiaries responsible for the exploration and development activities within each geographical line of business. The detailed organisation structure is shown in section 8.
6.1 Strategy
IGE has a large and diversified portfolio of exploration properties. Its main focus is diamonds, nickel and gold. Its approach is conservative. The plan is to start a small production and gradually ramp up a mine to its economic potential. This enables a short start up period, early generation of cash flow to reinvest in future development and it minimizes technical and financial risk. Such a plan enables management to build competence as the mine grows and it gets the local stakeholders involved in the project at an earlier stage, thereby promoting sustainable development of the project.
For commodities that are not priorities, or to enable the strengthening of the resource base by starting earlier, the Company is developing strategic partnerships.
The Company has through careful, serious and long-lasting work managed to recruit a competent and experienced team of specialists within the area of prospecting and exploration which creates good conditions for the Company to make progress and advance its projects in the best possible way. Along with its employees the Company works together with different consultants with high edge competencies within each part of the prospecting and mining process.
The Company's activities have, historically, mainly been concentrated to the Nordic region. As the Company has expanded its operations in Africa a need of a separation of the Group into different business units has been identified. This has been carried out in order to clarify the structure of the Group and to secure that each line of business is allotted with the necessary resources in terms of human resources and funding. The Company also considers that the value of each separated business unit into a subsidiary will result in a more transparent Group and thereby create better conditions for a fairly valuation by the market.
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6.2 Resources in IGE
The minerals and metal operations of IGE are in continuous development, and currently comprise a portfolio of diamond, gold and base metal resources:
Projects IGE Ownership (%) Resources Historical resources
IGE Diamonds Alluvial/KimberliteLuxinge (Di) 31.5% / 30.75% n/a Alluvials; Indicated resources:
249,151 carats /Inferred: 759,000 carats
Lacage (Di) 40% / 43% n/a
Luanguinga (Di) 35% / 43% n/a
Cariango (Di) 40% / 43% n/a
IGE AfricaMukanda (V) 100% n/a 17M tonnes @ 0.64% V (currently
being re-confirmed under NI43-101), cut off 0.2% V
Butara (Au) 100% n/a Numerous alluv. Deps
Kilimapesa (Au) 50% (Goldplat Plc 50%) n/a 51,648 tonnes @ 2.52 g/t Au
SW Kenya 100% n/a
NW Kenya 100% n/a 5M tonnes @ 1% Ni
IGE NordicRönnbäcken (Ni) 100% Nickel
Bidjovagge (Au-Cu) 90% (Geologiske Tjenester A/S 10%)
Gold-Copper 1.16 Mt grading 1.09% copper and 3.72 g/t gold
Mjölkfjället (Ni) 100% n/a
The activities of IGE are predominantly equity financed. The Group has one loan of USD 2.5 million amortizing over three years. IGE will need additional external financing even though some of the projects have now been advanced to production. The financing of IGE is a continuously ongoing work in order to secure the proper financing of the most potential projects. IGE currently considers it to have several projects with high potential works intensively to attract enough venture capital in order to advance its most promising projects to a stage where the Group is able to finance itself.
The development of the Company’s properties, licenses, Claims and Pre-claims will depend upon the Company’s ability to obtain financing mainly through equity financing. Debt financing might be a financing alternative for the Company in the future. The management will evaluate such an alternative if it is considered to be favourable to the Company’s shareholders and if it can be obtained on favourable conditions.
The prioritized projects within IGE today are projects with relatively short history within the Group. The main part of the details of the reserves, estimations etc are based on historical data. IGE is about to commence drilling programmes in Angola (Lacage) and Kenya (Lolgorien) in order to verify historical data and estimations presented by different external consultants/companies throughout history. Currently IGE Nordic is drilling on the Nickel project in Rönnbäcken, Sweden and on the Bidjovagge Gold Project in Norway. The first results from the drillings were presented during the third quarter of 2008. Additional results will be presented continuously, as soon as they are presentable, during the fourth quarter of 2008.
IGE will start production of Diamonds in Angola and Gold in Kenya during December 2008. The initial production will be small scale mining. In Angola IGE is about to commence alluvial diamond mining, consisting of mining near surface in sedimentary earth layers. In Kenya it is initially a matter of mining through exploration. The cash flow received from the operations will be reinvested in the development of the other projects within the Group, projects with a large scale potential. The kimberlite project in Lacage,
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Angola is an example. If the further results from the analyses and drillings within this concession confirm the already favourable results and expectations, it could be the next big kimberlite mine in Angola.
6.3 Business units
6.3.1 IGE Diamond AB
IGE Diamond AB is incorporated and organized under the laws of Sweden. The principal place of business is Angola. Its registered office is Kungsgatan 44, SE-111 35 Stockholm, Sweden, telephone: +46 (0)8 20 46 09, facsimile: +46 (0)8 611 57 63.
IGE’s strategy in diamonds is to start with easy accessible alluvial production which will generate cash flow and support exploration and development activities of the larger and more profitable kimberlite pipes.
IGE Diamond AB has the third largest licence holding in Angola, one of the world’s largest and most rapidly developing diamond producers. According to Angolan law, ownership is shared between IGE Diamond AB, Endiama and local partners for each project. IGE Diamond AB is the operator for all projects. All the diamonds produced will be sold through Sodiam, a state-owned company and the only officially allowed diamond trading company operating in Angola.
IGE Diamond AB has been active in Angola since 2005. Today, it employs about 40 people. From early on, IGE Diamond AB started a training program with Endiama (the state-owned diamond company) for Angolan nationals in geology and geo-physics (in Sweden, Finland and Angola) and today some of the nationals are working for IGE Diamond on the projects.
IGE Diamond AB has four concessions - Luxinge, Lacage, Luanguinga and Cariango. Two of the concessions are strategically located within the Lucapa Graben corridor of Angola, the country’s most diamondiferous region. The figures in parenthesis below describes IGE’s ownership percentage in the respective Project.
• Luxinge (Alluvial 31.5%/Kimberlite 30.75% with a partner Mac Diamond holding and additional ~10.5%)
The total alluvial (historical measure) diamond resource stands at 750,000 carats with an average estimated grade in the tributaries of 0.21 carats per cubic metre and in the Chiumbe River bed of 0.15 carats per cubic metre. Estimated average realized price per carat to USD 250. The project is expected to start production during the fourth quarter of 2008, less than one-year after obtaining the exploration permit.
The capital cost to bring the Luxinge alluvial diamond into production was USD 6 million. Most of the capital was spent on process plant, the earth moving equipment, and a camp for 50 persons, both management and staff which was installed during July and August 2008. Production from alluvial diamond bulk sampling is expected to generate revenues in the fourth quarter of 2008.
The estimated life of the alluvial mine is 5 years.
An airborne survey within the concession area for kimberlites was carried out in August to September 2008.
• Lacage (Alluvial 40%/Kimberlite 43%)
At Lacage, airborne geo-surveys in summer of 2007 discovered over 100 possible kimberlitic structures larger than 7 hectares, and of which 13 are larger than 50 hectares. The survey also discovered a giant possible kimberlite structure of 300 hectares. This would make it one of the largest-known kimberlites in the world.
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• Luanguinga (Alluvial 35%/Kimberlite 43%)
At Luanguinga, airborne geo-surveys have discovered 9 possible kimberlitic structures larger than 7 hectares of which one is larger than 50 hectares.
For both Lacage and Luanguinga, a risk assessment has been completed by the Norwegian People Aid because of the potential presence of land mines after the civil war. None of the kimberlite targets of the Lacage project are suspected to hold land mines. Nevertheless, safety measures will be taken as work on the area starts. The mobilization of equipment for the drilling program for Lacage will commence during second quarter of 2009. At Luanguinga, some targets will need to be de-mined before any exploration activity starts.
• Cariango (Alluvial 40%/Kimberlite 43%)
The Cariango concession area is located in the Cuanza Zul region in mid-western Angola. The area is strongly indicated to hold gravel beds for diamonds as well as probably hosting kimberlites. An airborne geophysical survey is planned for initiating geological investigations during second quarter of 2009.
6.3.2 IGE Africa
IGE Africa is currently not a registered entity of itself. IGE has chosen to structure all operations in Kenya and Burndi in a separate business unit within the Group named IGE Africa. The organisation is continuously evaluated and if and when the management considers it to be necessary it will found a separate holding company responsible for the Group’s activities in Africa (except for Angola). At the moment IGE considers the current organisational structure to be sufficient.
IGE Burundi SA (85%)
IGE was one of the first companies to establish exploration activities and to be granted permits in Burundi after the civil war. IGE is active through its 85% subsidiary, IGE Burundi SA. IGE Burundi SA has developed strong relations with the government. Today IGE Burundi SA employs about 30 people. The registered office address of IGE Burundi SA is 6 Avenue du Belvedere, Kiriri BP 935, Bujumbura, Burundi.
IGE Burundi SA holds three concessions –Mukanda (vanadium), Butara (gold) and Musigati (uranium).
• Mukanda (100%)
At Mukanda, IGE Burundi SA is evaluating the potential of a vanadium-bearing magnetite body. The deposit has an historical resource of 17 million tonnes at 0.64% V, with a cut off grade of 0.2% V. There is significant potential for additional mineral resources within the permit area.
In 2008, the exploration program will proceed in order to complete a combination of trenching, geophysical and drilling work on some targets. The topography is favourable to initial open-pit mining of the deposit.
• Butara (100%)
At Butara, IGE Burundi SA has initiated a grass root exploration program aimed at identifying large bulk mineable gold deposits. The Butara area has extensive alluvial gold deposits, demonstrating the potential of the licence. Primary gold deposits are known immediately north of the permit.
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• Musigati (100%)
At Musigati in North-Western Burundi, IGE Burundi SA is investigating the possible presence of viable uranium deposits. Several airborne radiometric anomalies were identified in the permit area in the 1970’s and the geology of the area shows potential for uranium deposits. Ground follow-up during the 1980’s led to the discovery of torbernite and autunite occurrences. Limited surface trenching yielded one intersect 40 cm at 45 ppm U and one intersect of 20 cm at 320 ppm U (historical data).
• Tanganickel SA (54%)
IGE Burundi SA recently concluded a joint venture agreement with Mitchell River Group (MRG) from Australia in order to pursue nickel exploration and development projects in the country.
IGE Kenya Ltd (100%)
IGE Kenya Ltd. has four licences split in seven areas, all of which are prospective for gold. IGE Kenya Ltd. has a head office in Lavington, Nariobi and several field camps. IGE Kenya Ltd. employs approximately 30 people. The registered office address of IGE Kenya Ltd is P O Box 25492-00603 Lavington, Kenya.
Geophysical and geochemical exploration has identified a number of anomalies that will be drilled in Q4 2008. The program entails 36,000 metres of drilling and a budget of USD 1.6 million.
• South-western Kenya (100%)
In south-western Kenya, IGE Kenya Ltd. holds three licenses for gold exploration in highly prospective ground. The project areas are located in the immediate vicinity of other major gold and copper deposits. The Lolgorien and Akala sites are both located at the end of the Migori Greenstone Belt which also hosts the Macalder Mine deposit that produced 950 kg of gold between 1935 and 1966. The Macalder mine has an historical resource of over one million ounces. The Atieli and Rongo areas cover the sites of the former gold mines Sakwa, Wayland and Lloyd.
• North-western Kenya (100%)
Licences host gold bearing formations of the Mozambique Belt. Historical data estimates the area holds 5 million tonnes grading 1% Ni. Scoping study regarding the Sekerr nickel deposit is expected shortly. The Turkana license has a significant potential for epithermal gold deposits.
Kilimapesa Gold (Pty) Ltd. (50%)
At Kilimapesa in the Lolgorien region of south west Kenya, IGE is running since July 2007, a gold project in a joint venture together with AIM-listed Goldplat Plc. The Company's interest in the project is 50%. Numerous high-grade gold quartz veins have been identified in the Lolgorien area. The registered office address of Kilimpesa Gold Ltd is P. O. Box 8660-00200 Nairobi, Kenya.
In 2007, an extensive exploration sampling, IP programs and shallow drilling was undertaken. From January 2008, a six month underground development program (tunnelling, blasting and bulk sampling) was completed. Production is expected to start in 2008 with an annual production of 10,000 ounces at an estimated cost of USD 300 per ounce. The capital cost to bring this mine into production was approximately USD 1 million of which IGE paid USD 250,000. The capital cost was low because the Company has owned this property for many years and had a camp and processing facility on site. Most of the CAPEX went toward refurbishing the plant. Approximately 30 people are employed at Kilimapesa Gold Ltd. The focus is to rapidly develop this deposit. Cash flow will be used to define the ore body and potentially to expand the processing facility.
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6.3.3 IGE Nordic AB (publ)
IGE Nordic AB (publ) (“IGE Nordic”) is a Swedish public limited liability company with company registration number 556493-3199, incorporated and organized under the laws of Sweden. IGE Nordic’s principal place of business is Stockholm, Sweden. Its registered office is Kungsgatan 44, SE-111 35 Stockholm, Sweden, telephone: +46 (0)8 402 28 00, facsimile: +46 (0)8 402 28 01. IGE Nordic is listed on Oslo Axess Stock Exchange under the symbol “IGENOR”. There are 26,816,042 shares outstanding. International Gold Exploration IGE AB holds 74.6% of IGE Nordic.
IGE Nordic is an exploration and development company focused on gold, nickel, copper and zinc. Its long-term objective is to become a leading exploration and mining company in the Nordic Countries delivering value to its shareholders and the communities where it operates.
Norway and Sweden are thought to have well-established economic and political systems and a well-developed legal framework. IGE Nordic has a large portfolio of exploration licences in these countries.
The priority projects include:
• Rönnbäcken Nickel Project (100%)
At Rönnbäcken, IGE Nordic is evaluating the possibility of a large tonnage, low stripping ratio, open pit nickel sulphide mine that could potentially produce a high grade nickel concentrate. Previous metallurgical large scale pilot tests by Boliden in the mid 1970’s showed that a 25-35% nickel in concentrate can be produced. Bench scale beneficiation tests carried out in November 2007 at Minpro, Sweden confirmed the ability to produce a high grade concentrate grading 26% nickel and 1.1% cobalt. An extensive drilling program of 16,000 metres began in 2008 with the aim of establishing a mineral resource. Early results from this program has led IGE Nordic to increase its exploration target to 180 – 220 million tonnes grading 0.10 to 0.15% nickel in sulphide, from the previous target of 130 -170 million tonnes.
These are preliminary numbers and further work is being carried out. IGE Nordic has engaged the mining engineering consultant Scott Wilson RPA. (www.scottwilson.com) to provide a mineral resource estimate and prepare a Scoping Study that will meet the requirements of a Preliminary Assessment under NI 43-101 regulations and include a preliminary open pit design, and economic analysis on the Rönnbäcken Nickel Project. The scoping study is expected to be completed by the second quarter of 2009.
• Bidjovagge Gold-Copper Project (90%)
The Bidjovagge project is owned by IGE Nordic (90%) and 10% Geologiske Tjenester a.s. The purpose of the 2008 drilling program of 5,000 metres was to increase the understanding of the geological structure of the gold-copper mineralization and check for the possible extension of gold-copper mineralization identified in previous drilling.
More promising results were encountered in drill holes B08-01 and B08-11. Drill hole B08-01 intersected a possible extension of mineralization a further 45m east of that previously announced in B07-04. B08-01 intersected 24 m grading 2.69 g/t Au and 0.32% Cu at a depth of approximately 320 m below surface. The intersection included 4.0 m grading 4.22 g/t Au and 0.83% Cu. Drill hole B08-11 intersected 5m grading 3.52 g/t Au and 0.43% Cu. Further exploration work has been deferred in order to focus on Rönnbäcken.
• Norra Norrliden Zinc-Copper Project (10%) In May 2008, Gold-Ore Resources Limited (“Gold Ore”) bought Lundin Mining’s 90% share of the Norra-Norrliden project. The model for developing Norrliden relies on transporting the ore to a nearby processing plant, thus negating the need for building a plant at the site and reducing the potential capital costs.
Gold-Ore engineers are reviewing a previous work plan developed by Lundin Mining. There is a measured and indicated resource of 1.48 million tonnes grading 0.63 g/t gold, 50.8 g/t silver, 0.74%
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copper and 3.54% zinc and inferred resources of 0.87 million tonnes grading 0.40 g/t gold, 30.9 g/t silver, 0.72% copper and 1.87% zinc. A test mining permit has been granted for extraction of 63,000 tonnes of ore. There are excellent infrastructure including roads and hydropower available.
• Solvik Gold Project (50%)
The Solvik project is owned by IGE Nordic 50% and Archelon Mineral AB 50%. The 2008 drilling program confirmed a continuation of the gold zone to the south-east, and that it is open along strike and at depth. In addition, two new gold structures were identified from boulders
• Gladhammar Gold Project (50%)
IGE Nordic and Wiking Mineral AB completed a 965 m drill programme at Gladhammar in the summer of 2008. The highlight included one hole which intersected 34.25 m with 1.94 g/t gold including 2.00 m with 6.58 g/t gold. Wiking Mineral is the operator.
• Jointly-owned companies
For non-core metals, IGE Nordic has created new jointly-owned entities with other partners. The objective is to maximize the development potential of the combined assets (IGE Nordic’s and the partner’s), and to provide the best opportunity for discovery.
Uranium
Norrsken Energy Limited (49%)
Norrsken Energy Limited is owned by IGE Nordic 49% and Energy Ventures Limited (“EVE”) 51%. EVE is the manager and has committed SEK 5 million to fund the initial exploration programs. The new entity comprises 16 exploration permits covering about 1,200 km2 in Sweden.
During the third quarter of 2008, EVE advanced exploration with preliminary field visits to most of the northern project areas. Radon cup surveys were planned for two projects. Work programs have been submitted to the Swedish Mining Inspectorate and work will commence once these programs are approved. Exploration was also progressed on five other projects; primarily at a desk-top compilation and planning stage.
Iron Ore
Nordic Iron Ore AB (31.6%)
IGE Nordic AB, Archelon Mineral AB and Kopparberg Mineral AB formed an iron ore exploration company that will focus on twelve exploration licence areas. Kopparberg Mineral AB is the manager.
6.3.4 Strategic business approach
As IGE Nordic has decided to focus on development of a selection of its most promising exploration licenses, the level of early stage exploration activities has decreased. IGE Nordic still considers it important to have a balanced portfolio of assets, distributed among the different phases of the exploration and mining process. It is a question of balance between the fact that it is essential for IGE Nordic not to risk everything on one or two projects and the need to focus and prioritize among the projects in order to advance them and show results.
6.4 Additional information for mineral companies
Controlling interests
International Gold Exploration has controlling interests in all its subsidiaries, Pre-claims, Claims, licences and permits.
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Cash flow
The main elements in IGE Group’s cash flow budget are described in the following:
Income:
a) Sales: Currently the Group has got no sales or production of minerals to be sold. The time schedules for exploration activities are relatively long. From identification of a mineral deposit that is economically viable to mine, to start of production it is not unusual that it takes 5-10 years IGE Group forecasts that small scale production will commence during autumn 2008. This production will increase during the coming years. Revenues from sales of small scale production will be used for additional exploration and drilling activities in order to advance the most prioritized projects to production.
b) Equity issue: In the two year period from the date of this Prospectus, the Company expects that cash flow from operations will not be sufficient to cover the costs for exploration and further business development. Consequently, a possible equity issue will be used in connection with the Company’s business development.
c) Debt financing: Possible new acquisitions or development of large projects will be financed separately with loans, equity, or a combination of this, depending on availability and market conditions.
Exploration and business development costs:
Costs related to exploration and development may increase during the coming years. The Company has prioritized among its large portfolio of licenses and chosen to focus on the projects with the best potential in respect to time to production, profitability, political stability etc.
In order to maximize the value of an exploration licence the Company has to verify mineral reserves, this is done mainly by way of drilling and analysing the results from drillings. Drilling is the most capital intense part of the exploration process and by far the most value adding activity. Once the Company has verified reserves that are economically viable to mine, the value of the exploration licence will increase significantly.
Investments:
Investments within the IGE Group during the coming 2 - 5 years will mainly consist of capitalized exploration and development expenditures. Expenditures referable to the project are capitalized as an intangible asset (Mineral interest) as long as each project/license is considered to be of economic interest for future development. Drilling is a considerable part of the capitalized expenditures. The main part of all investing activities is currently related to development of mineral interests. As the Group has advanced two projects; Luxinge diamond project in Angola and the Kilimapesa gold project in Kenya, it has started the preparation for production of Diamonds and Gold. This has resulted in that the IGE Group has increased its investments in equipment, plant and machines. This development may continue even if exploration still will constitute the main part of the Group’s investments during the coming 3-5 years
The rate of investments within the IGE Group is, to a large extent, dependent on the outcome of the exploration activities carried out by the Group. If the results from the drilling activities in, for instance the Lacage project in Angola or Rönnbäcken project in Sweden, are positive the Group investments will increase significantly assuming availability of financing at acceptable conditions. Consequently if the initial results from drilling show negative results, the further activities will be interrupted and future investments within that project will decrease.
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6.5 Corporate social responsibility
IGE’s commitment to corporate social responsibility (CSR) is based on a number of principles, including the upholding of high ethical standards; good corporate governance; to work safely and responsibly; to minimizing our environmental footprint; to facilitating the free and open sharing of opinions, skills and knowledge; and to deliver benefits to the stakeholders of the Company and to the society at large.
This commitment has been part of the company ethos from the outset, and a variety of initiatives have been undertaken that illustrate our approach. As the Company is active in both the Nordic countries and in Sub Saharan Africa, IGE’s CSR related work has become quite varied, in response to the prioritized needs identified in the countries and/or areas where the Company is working.
In the Nordic countries, the Company operates in societies with advanced and enforced legislation within the Environment, Health and Safety area, and with long traditions of multi stakeholder participation in dealing with environmental issues. The Company is able to build its operations from this platform while, at the same time, seeking improvements in the management of CSR related issues whenever feasible. The issues that have attracted most attention thus far are those related to socio-economic and cultural issues in areas where reindeer husbandry is taking place, and to the reporting on exploration results. Thus, the Company is participating in ongoing discussions with stakeholders, including Saami reindeer herders, on possibilities to utilize the Environmental Impact Assessment process to better address socio-economic and cultural considerations related to mining projects. Moreover, as the reporting of mineral resources and ore reserves in the Nordic countries has not yet reached the same high level of accountability as in some other advances mining nations (e.g. Canada, Australia, South Africa). This initiative is providing a strong guarantee for investor confidence.
In Africa, the Company is active in Kenya, Angola and Burundi. In these countries, most of the Company’s CSR related work has focused on issues related to ensuring safe working practices; to addressing the aspirations of informal and/or artisanal miners; and to providing overall community assistance and development. Thus, in Angola IGE have developed guidelines which will safeguard the health and safety of our staff, workers and neighbours at the diamond mine at Luxinge. In Burundi, IGE is assisting communities by improving road infrastructure in the project areas; by providing assistance for the regeneration of agriculture in areas that were hit hard during the Civil War, and in a more philanthropic venture, the Company is assisting in the construction of a stadium in the town of Ngozi. In the Kenyan project (Lolgorien), the Company has provided building materials and logistical help to local schools. Further, the Company has signed an agreement with local artisan miners to purchase their high-grade tailings, and thus allowing them to generate additional income from their activities. The Company has further, together with the Kenya Chamber of Mines, participated in the development of projects to assist artisanal miners with safety and health education.
Work is currently underway which will ensure that the commitment and activities described above be made part of a formal IGE-CSR strategy, including an overall Code of Conduct as well as specific guidelines for the various operations within the group. The subsequent implementation, continuous improvement and follow-up of this work will form a prioritized company activity in the years to come.
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7 MARKET OVERVIEW
7.1 Recent trends in the mining industry
The mining industry is fragmented with thousands of companies producing a wide spectre of resources, ranging from diamonds and precious metals to base and industrial minerals. For many of the resources that are produced, there are established exchanges for trading, whereas for other resources, less transparent local markets seem to dominate. The industry consists of a large number of junior players, some intermediate players and a few majors.
According to Raw Materials Group about 41% of exploration is on gold, 36% base metals and 10% for diamonds. High commodity prices resulted in increased exploration and development activity in the mining industry. However, the latest drop in commodity prices has reversed some of this increase. Raw Materials Group estimate that global exploration costs amounts to USD 12bn.The initial increase in worldwide exploration started in 2003 and can be attributed to a combination of increased spending by the majors as they recognized the scarcity of new projects moving up the pipeline and increased spending by the junior sector on the back of higher gold prices and rising investor interest. Average production cost is up for aluminium, copper, nickel and zinc since 2000, i.e. positive cost inflation in the sector.
In 2008 we have experienced a sudden and dramatic collapse in aluminium, copper, nickel and zinc prices. Aluminium, copper and zinc are back to 2005 levels while nickel is back to 2003 level. In broad sense aluminium is down about 50% from recent peak, copper down 60%, while nickel and zinc are down 80%. The result has been that mining projects have been put on hold, financing has stalled, operations have been shut down or scaled back and market value of mining companies have dropped significantly through 2008. Companies are now carefully monitoring its cash position and CAPEX budgets as there is little prospect of raising debt or equity funding.
7.2 Description of industrial minerals and metals
Industrial minerals are geological materials, which are mined for their commercial value and are used in their natural state or after beneficiation either as raw materials or as additives in a wide range of applications.
Industrial minerals are non-fossil fuel rocks, minerals, and sediments that have an industrial use, and consist of two broad groups; bulk rocks and ore minerals. Bulk rocks are used as aggregates, or for the production of lime, ceramics, cement, or as a product used in coal-fired electricity-generating plants for the removal of sulphur. The ore minerals are mineral concentrations found in veins or in uncommon sedimentary rocks.
In some cases, even organic materials industrial products or by-products (cement, slag, and silica fume) are categorized under industrial minerals, as well as metallic compounds mainly utilized in non-metallic form.
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Examples of industrial minerals
Aggregates Alunite Asbestos Asphalt, NaturalBarite Bauxite Bentonite Cadmium sulfideBitumins Borates Brines Cadmium tellurideCarbonatites Chlorine Chromite ClaysBall clays Kaolin Coal CorundumDiamond Dimension stone Diatomite Feldspar and Nepheline - SyeniteFluorspar Fuller's earth Garnet Gem mineralsGold Granite Graphite GypsumIodine Kaolin Kyanite / Sillimanite / Andalusite Limestone / DolomiteMarble Mica Olivine PerlitePhosphate Potash –Potassium minerals Pumice QuartzSalt Selenium Slate Silica sand / TripoliSoda ash Sodium bicarbonate Sodium minerals Sodium sulfateStaurolite Strontium - Celestite Sulfur TalcVermiculite Wollastonite Zeolites
Source: http://en.wikipedia.org/wiki/Industrial_minerals
A metal is an element that readily forms ions and has metallic bonds. Some well-known metals are aluminium, copper, gold, iron, lead, silver, titanium, uranium and zinc. They have certain physical properties; they are usually shiny, have a high density, are ductile and malleable, usually have a high melting point, are usually hard, and conduct electricity and heat well.
In chemistry, the term base metal is used informally to refer to a metal that oxidizes or corrodes quite easily. Examples include iron, nickel, lead and zinc. Copper is considered a base metal as it oxidizes easily. In alchemy, a base metal was a common and inexpensive metal, as opposed to precious metals, mainly gold and silver.
7.3 Outlook for the global industrial minerals and metals industries
Minerals, metals and mining industries have enjoyed a period of increasing demand with a downward trend the last months. This is primarily driven by the economic activity in China as well as from Japan, EU and South East Asia and the recent financial conditions. Metals demand has slowed sharply in Q4 2008 and in all regions including China where construction activity is down. This has resulted in increasing stocks of copper, zinc and nickel on LME lately. Economic development in China is important as the country’s share of world demand for aluminium, copper, zinc, nickel and steel is dominant and significantly higher in 2000 – 2007 compared to 1995 – 2000.
The main reason for increased commodity prices from about 2000 and recent sharp price decline is the change in market metals surplus. Small demand changes in a market already with supply surplus have resulted in dramatic negative price development. Although metal prices may be prone to experience volatility and have adjusted downwards from recent highs, the continued low inventories and moderate new production in the pipeline, could indicate that base metal prices can stabilize in 2009. The 2009 development depends on global economic development which economists currently fear may go into recession, thus world GDP growth forecast has come down since April 2008.
7.4 IGE’s principal markets
Final products will be sold through regulated commodity exchanges if such market places for the different commodities exist. With respect to the most common base and precious metals, like for instance gold, cupper and nickel, there exist regulated marketplaces. The situation for diamonds is a little bit different. The current situation in Angola, where the Company has got all of its diamond exploration licenses, requires that all diamonds extracted within Angola are sold to Sodiam, the Angolan state owned diamond trading company. IGE will, to the greatest possible extent, evaluate and analyse the markets in order to secure that it is not selling its products below current market price.
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7.5 Gold
Gold is a precious metal that can easily be processed and which has good qualities, including the high thermal / electrical conductivity and its perfect resistance to corrosion. Further, gold is a popular material for the making of jewellery, decorations and other items. Gold also act as security and backing asset for central banks and claimants.
Gold is traded in several markets but the two most important gold markets are London and New York. The figure below illustrates gold price from January 2000 to November 2008
Historic gold price chart
$200
$300
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$700
$800
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Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08
Source: Bloomberg
The sharp rise and unusually high volatility in the gold price, which briefly touched record levels above USD 1,000 per oz in mid-March 2008, was a key determinant of movements in gold demand in Q1 2008. It resulted in total identifiable demand falling by 17% in tonnage terms from year-earlier levels to 689 tonnes (the lowest for five years) but rising 18% in value terms to USD 20.5 billion, more than double the level of four years earlier. Jewellery demand declined 21% year-on-year to 444 tonnes, the lowest quarterly level on record since 1993.
In Q3 2008 total identifiable demand increased 18% in volume and increased 51% in USD value compared to Q3 2007, while jewellery demand increased 8%. This quarter represented a strong rebound after several quarters of weak demand development. The recovery was triggered by lower gold price, which coincided with sharply escalated levels of economic and financial uncertainty. Gold supply was down, where the biggest contributor being a significant reduction in official sector sales.
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Gold supply and demand table 2006-Q3 2008
Source: World Gold Council November 2008, http://www.research.gold.org/supply_demand/
The demand outlook for the current quarter is uncertain where the mid-October Diwali festival in india is expected to affect demand positively while jewellery demand outlook in Europe and the US is weak.
The gold industry is a global industry with a large number of smaller gold companies and a limited number of very large players. In recent years, there has however been a strong trend towards consolidation of the industry as the large players have struggled with their reserves replacement rate. The value chain is often divided into three parts; exploration, development and production activity.
Altogether, above ground reserves are increasing each year. The growth in reserves has for a period been diminishing due to a less than 100% production replacement rate. To a large extent exploration for gold seems to fluctuate with the gold price and Latin America was the dominating region for discoveries in the period from 1991 to 2004.
7.6 Diamond
Diamonds are formed as pure crystals of carbon deep within the earth, starting up to 3.3 billion years ago, under conditions of extreme heat and pressure. Some are then brought to the surface in a rising magma which solidifies into igneous rock which forms the primary deposits of diamonds. Today there are over 6,000 known kimberlites in the world of which 850 contain diamonds, but only 50 of them are economic in terms of diamond mining. Africa is considered to be favourable and thereby very interesting in terms of providing diamondiferous kimberlites, and South Africa and Botswana currently hosts several of the largest deposits. Angola, which is still relatively unexplored due to its long history of civil war, is the host of the fourth largest diamond mine in the world.
Market overview
Diamond prices have not followed the bull market for commodities with the recent correction which is being driven by industrial demand from rapidly expanding economies such as China and India and the recent financial conditions. It remains that diamond prices are still largely determined by consumer supply and demand fundamentals and do not grow at rates comparable to other commodities. Global diamond supply is decreasing, and the fade-out of five major mines within the next five years is expected to increase diamond supply shortage further.
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Consumer demand for diamond jewellery has seen a steady increase of 3.4% from 2001 onwards with rough diamond prices having increased in line 2.5%. In 2007, diamond prices rose sharply by 20%, and are expected to continue rising on average across diamond categories by 2012. The US will continue to remain the main driver of diamond jewellery demand in overall terms, but the developing economies of China, India and the Middle East are collectively expected to contribute significantly to future demand. Diamond demand growth rates in these markets are expected to exceed the growth rates in the USA and Europe, and industry marketing activities are expected to stimulate demand for diamonds across the market as a whole. Therefore, it is anticipated that the supply and demand situation will support and enhance diamond prices in the medium term.
Apart from industry consumer marketing activities, a key determinant of rough diamond demand is the macroeconomic climate, as growth in diamond jewellery demand is closely correlated to factors such as GDP, consumer disposable income and the strength or weakness of local currencies as diamonds are priced in USD.
Global diamond production value in 2007 was about USD 13 billion, mainly produced in seven countries: Botswana, Russia, RSA, Angola, Canada, DRC and Namibia. The industry is dominated by mining giants De Beers, Alrosa, Rio Tinto and BHP Billiton. The size of the global market for diamond jewellery in 2007 was estimated at USD 71 billion in retail value and USD 19 billion in polished diamond value, with North America representing about half of this total value.
PolishedPrices.com publishes up-to-date Wholesale Diamond Prices and Diamond Indices based on actual transactions offering a transparent reality of price movements in the global diamond market. PolishedPrices Diamond Prices and Indices are also published on Bloomberg and Reuters. The figure below illustrates index development since October 2007 with forecast given in January 2008. As shown in the figure, current price level is below the lower confidence limit for the forecast given in January.
Source: http://www.polishedprices.com/Content/NewsCategoryList.aspx?typeId=2
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7.7 Nickel
Nickel is mainly used in alloys for producing highly resistant steel. Applications include process industries, power generation, oil & gas industries and construction. Russia is the world’s leading nickel producer, accounting for around 20% of global nickel production. Other major nickel producers are Canada, Australia and Indonesia. Some of the industry’s most well known producers are BHP Biliton, Jinchuan, Norilsk, Xstrata, Eramet, Anglo American, Vale Inco and Posco.
The figure below illustrates nickel price from January 2000 to November 2008
Historic nickel price chart
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$10,000
$20,000
$30,000
$40,000
$50,000
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Jan-00 Jan-01 Jan-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Jan-08
Source: Bloomberg
Recently, we have seen a rapid increase in production of low grade nickel ores, coming mainly from the Philippines, Indonesia and New Caledonia. Market analysts like Macquire production growth from 2009 to 2012, and with current demand expectations demand will exceed supply first in 2012. For 2008 global production is expected to decrease from 2007, but the market will still be in surplus. Vale Inco is expected to produce 8 – 9% less refined nickel in 2008 than previously planned. Market balance is largely dependent on stainless steel production.
Nickel demand is highly dependent on a single first-use market – stainless steel. Production of stainless steel accounts for approximately 66% of global nickel demand. The presently weak nickel market is mainly driven by distributor de-stocking rather than weak end-user demand, which will continue to be strong. The development of the Chinese stainless steel industry, and local high-cost nickel pig iron production, will be an important contributor to global nickel market balance.
Market Outlook
2009 may be a period of stagnation or continious declining nickel prices due to a potential over supply. However, market deficit is expected to appear after 2011, with rising nickel prices as a result. Forecast nickel price for the next ten-year period at present money value is USD 17,000-17,500 per tonne, or USD 18,700 per tonne in money-of-the-day value. Further details are available in the Market Outlook for Gold, Nickel, Copper and Zinc by Brook Hunt in the IGE Nordic Listing Prospectus 2007 which can be inspected on www.ige.se.
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8 ORGANISATIONAL STRUCTURE
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The IGE Group encompasses:
• International Gold Exploration IGE AB (Parent company, incorporated in Sweden)
Subsidiaries (wholly-owned)
• IGE Kenya Ltd (incorporated in Kenya)
• IGE Diamond AB (incorporated in Sweden)
Subsidiaries (partly-owned)
• IGE Nordic AB (publ) (74.6%) (incorporated in Sweden)
• Kilimapesa Gold Ltd (50%), incorporated in Kenya
• IGE Burundi SA (85%), incorporated in Burundi
Please refer to the 2007 annual report, which can be inspected on www.ige.se, for further details.
International Gold Exploration IGE AB is the Group’s holding company whose primary focus is to be the shareholder for all group companies as well as being the main funding entity for the group. International Gold Exploration has 6 employees. The other employees of the group are employed by the subsidiaries.
The Company does not hold a proportion of the capital likely to have a significant effect on assessment of its own assets and liabilities, financial position or profits and losses in any other company except for the incorporated subsidiaries.
There is no difference in the proportion of capital and voting power in neither of the subsidiaries or invested companies.
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9 PROPERTY, PLANTS AND EQUIPMENT
The Company rents administrative office space located in the city centre of Stockholm, Sweden. The facilities serve as the general corporate and operational headquarters.
As of today the Company’s main tangible fixed assets relates to the ownership of equipment and furnishings valued at SEK 44.8 million per 30 September 2008 (excluding ownership of mineral interests valued at SEK 109.1 million, see section 6.2 for more details).
The Company is not aware of any environmental issues that may affect the Company’s utilisation of its assets, other than the general environmental issues pertaining to companies operating within the mining industry as further described in section 1.2.
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10 OPERATING AND FINANCIAL REVIEW
10.1 Financial condition
10.1.1 Third quarter of 2008
The Company generated sales income of SEK 13.8 million during the third quarter of 2008.
Consolidated operating profit for the third quarter of 2008 is SEK 2.4 million compared with a loss of SEK 24.1 million in 2007. Consolidated net profit during the third quarter was SEK 0.4 million against SEK 27.9 million loss in 2007.
Total assets per 30 September 2008 are SEK 304.6 million. The equity ratio is 90% as per the end of 30 September 2008.
IGE’s report for the third quarter of 2008 can be inspected on www.ige.se.
To the best of the Company’s knowledge, there have been no events subsequent to the end of Q3 2008 that would influence the financial statements presented in this Registration Document, other than those described in this Prospectus and in the report for Q3 2008.
10.1.2 First nine months of 2008
The Company generated sales income of SEK 23.7 million during the first nine months of 2008.
Consolidated operating loss for the first nine months of 2008 is SEK 24.1 million compared with a loss of SEK 48.3 million in 2007. Consolidated net loss during the first nine months was SEK 25.8 million against SEK 45.0 million (loss) in 2007.
Total assets per 30 September 2008 are SEK 304.6 million. The equity ratio is 90% as per the end of 30 September 2008.
IGE’s report for the third quarter of 2008 can be inspected on www.ige.se.
To the best of the Company’s knowledge, there have been no events subsequent to the end of Q3 2008 that would influence the financial statements presented in this Registration Document, other than those described in this Prospectus and in the report for Q3 2008.
10.1.3 Financial year 2007
The Company did not generate any sales income during 2007.
Consolidated operating loss for 2007 is SEK 66 million compared with a loss of SEK 29.4 million in 2006. Consolidated net loss in 2007 was SEK 62.5 million against SEK 36.4 million (loss) in 2006.
Total assets per 31 December 2007 are SEK 263.7 million which is an increase of SEK 40.2 million from 31 December 2006.
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The Company has no long term liabilities as per the end of financial year 2007. The Group is to a large extent equity financed with an equity ratio of almost 93% as per the end of 2007. Short term liabilities amounted to SEK 18.8 million, mainly constituting of accounts payables referable to a new share issue transaction executed in one of the subsidiaries within the Group, IGE Nordic in December 2007.
IGE’s annual report for 2007 can be inspected on www.ige.se.
10.1.4 Financial year 2006
The Company did not generate any sales income in 2006.
Consolidated operating loss for 2006 is SEK 29.4 million compared with a loss of SEK 16.7 million in 2005. Consolidated net loss in 2006 was SEK 36.4 million against SEK 23.2 million (loss) in 2005.
Total assets per 31 December 2006 are SEK 223.5 million which is an increase of SEK 92.7 million from 31 December 2005.
IGE’s annual report for 2006 can be inspected on www.ige.se.
10.1.5 Financial year 2005
The Company did not generate any sales income in 2005.
Consolidated operating loss for 2005 is SEK 17 million. Consolidated net loss in 2005 was SEK 23.2 million.
Total assets per 31 December 2005 are SEK 130.75 million which is an increase of SEK 26.4 million from 31 December 2004.
IGE’s annual report for 2005 can be inspected on www.ige.se.
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11 CAPITAL RESOURCES
Capitalization and indebtedness
At 30 September 2008 the Company had the following capitalization and indebtedness:
Unaudited Unaudited(SEK '000) 30/09/2008 31/12/2007
Total Current Debt 12,769 18,800- Guaranteed - -- Secured - -- Unguaranteed / Unsecured 12,769 18,800
Total Non-Current Debt - -- Guaranteed - -- Secured - -- Unguaranteed / Unsecured - -
Shareholder’s Equity 274,967 244,899a) Share Capital 18,750 17,050b) Own shares - -c) Other Reserves 223,904 194,965d) Minority interests 32,313 32,884
A. Cash 70,294 127,827B. Cash equivalent - -C. Trading securities 5,401 9,807D. Liquidity (A)+(B)+(C) 75,695 137,634
E. Current Financial Receivables 3,403 3,967
F. Current Bank Debt 16,891 -G. Current portion of non-current debt - -H. Other current financial debt - -I. Current Financial Debt (F)+(G)+(H) 16,891 0
J. Net Current Financial Indebtedness (I)-(E)-(D) -62,207 -141,601
K. Non-current bank loans 0 0L. Bonds issued 0 0M. Other non-current loans 0 0N. Non-current Financial Indebtedness (K)+(L)+(M) 0 0
O. Net Financial Indebtedness (J)+(N) -62,207 -141,601
The table above should be read together with the Company’s consolidated financial statements and the related notes thereto. To the best of the Company’s knowledge, the capitalization and indebtedness as per 30 September 2008 provide a fair and valid documentation of the Company’s financial condition.
IGE has completed an issue of a convertible loan that provided totally SEK 14 million in 5 November 2008. Details regarding the convertible loan are described in the press release dated 5 November 2008 and the Q3 2008 report which can be inspected on www.ige.se. Nordisk Industriutvikling which Uta Stoltenberg represents in the Board of IGE and Varukungen AB which is controlled by the Board member Ulrik Jansson has subscribed for the convertibles. There have been no other events subsequent to the end of Q3 2008 that
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would in a material way influence the capitalization and indebtedness presented in this Registration Document.
The Company’s equity to asset ratio is 90%.
As of 30 September 2008 IGE had SEK 70.3 million in cash and SEK 16.9 million in interest bearing debt.
IGE has no long term obligations or commitments to fulfil in terms of payments etc other than a credit given by the Swedish Export Credits Guarantee Board of USD 2.5 million over 3 years, salaries and rent of premises. If IGE decides to reduce its rate of expenditures this could be done relatively quick. Moreover, such a decision may entail operational delays that could potentially be damaging to the Company. In general it would result in delay of revenue generation from the projects.
IGE considers itself to have access to a large number of different sources of venture capital to competitive prices. If the Company decides to increase the rate of its operations and thereby also its cash burn rate, this decision shall be based upon a documented success within IGE’s activities which implies that the supply of venture capital available, on probable grounds, will be enough.
There are currently no effective restrictions on the ability of the subsidiaries within IGE to transfer funds to the Company in the form of cash dividends, loans or advances.
Capital resources
IGE raised approximately SEK 50.3 million (gross proceeds) through a share issue 16 April 2008. The share premium resulting from the share issues less the direct expenses has been transferred to the Company’s share premium fund. The proceeds of SEK 14 million from the convertible loan completed 5 November 2008 is considered as a bridge financing and will first and foremost be used by IGE for working capital purposes.
In the two year period from the date of this Prospectus, the Company expects that cash flow from operations will not be sufficient to cover the costs for exploration and further business development. Consequently, issue of equity instruments is likely to be used in connection with the Company’s business development. Possible new acquisitions or development of large projects will be financed separately with loans, equity, or a combination of this, depending on availability and market conditions. On a general basis, IGE will also evaluate options with partner(s) who might be interested to acquire a part of a project for payment in cash or money invested in the project, in a so called earn-in agreement. It is also an alternative to sell out specific projects if this is considered to be beneficial to IGE and its shareholders.
Working capital statement
The Group does not have sufficient working capital to cover its present requirements for the upcoming 12 months period (i.e. the whole year 2009). However, it is expected that the working capital of the Group will be sufficient to support its ongoing and planned activities at least until May 2009. Thereafter IGE considers that the working capital requirement for the Group for the remaining part of 2009 amounts to approximately SEK 15-20 million. IGE is presently evaluating different alternatives for working capital financing including project sales, farm-ins and joint ventures, as well as a review for down-sizing the Group’s capital expenditures for the next 12 months. IGE is also evaluating different alternatives of capital infusion, which can be done by the issue of shares and/or a combination of debt and issue of equity instruments (convertible loans and/or warrants) based on the authorization given by the general meeting held on November 26, 2008 encompassing as share capital increase of up to SEK 2,500,000 divided into 50,000,000 shares.
IGE is confident that the different financing alternatives described in the section above will be successful and that the required working capital will be secured during Q1 2009.
However, the working capital required for the coming 12 months period is highly dependent on the level of activities decided by the Group. IGE may change its budgeted rate of investments related to its prioritized projects if the market conditions allow. Such a decision will be based on careful reviewing of the possibility
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to finance such an increase of the Group activities and no increase of the investments will be done unless they are fully financed. The operations of the Group are therefore currently adapted to the development of the conditions in the capital market. Should IGE fail to meet its working capital requirements for the coming 12 months period, some or all of the ongoing and planned activities of the Group are likely to be delayed or postponed and may, eventually, also come to a full stop. IGE may then fail to achieve projected cash flows and not be able to meet its obligations when they fall due.
Description of cash flows
The Company’s consolidated cash flows for the first nine months of 2008 compared to the same period in 2007, and years 2007, 2006 and 2005 are summarised below:
Consolidated Cash flow statement Q3 Q3 Q1-Q3 Q1-Q3 Full Year Full Year Full Year
2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Cash Flow from OperationsIncome after financial items 427 -27,913 -25,852 -45,035 -62,529 -36,404 -23,207
Adjustments for items not included in cash flow -9,544 12,224 -16,375 8,955 11,617 8,769 11,711Change in inventories - 1 15 - - 59 39Change in trade receivables -1,099 -2,773 -1,291 -12,123 -8,182 1,320 1,973Change in trade payables -3,208 -416 -6,919 3,293 15,677 -2,608 6,248Income tax paid - - - - - - - Net cash flow from operations -13,424 -18,877 -50,422 -44,910 -43,417 -28,864 -3,240
Cash Flow from investment activitiesAcquisition of tangible assets -20,532 -10,052 -33,937 -24,188 -31,677 -1,366 - Acquisition of intagible assets -17,322 -324 -36,171 -1,703 -5,276 -19,813 -13,202
Acquisition of shares in associated companies - - -442 - Acquisition of financial assets 1,031 - -13,749 -5,100 -18,151 - - Sale of financial assets - - 5,011 - - - - Net cash flow from investment activities -36,823 -10,376 -79,288 -30,991 -55,104 -21,179 -13,202
Cash Flow from financing activitiesNew share issue - - 56,880 - 89,764 131,960 66308Raised credits 14,399 - 15,300 - 89,764 131,960 66308Net Cash Flow from financing activities 14,399 - 72,180 - 89,764 131,960 66,308
Net change in cash and cash equivalents -35,848 -29,253 -57,530 -75,901 -8,757 81,917 49,866
Cash and cash equivalents as at 1 January 127,827 136,674 127,827 136,674 136,674 54,807 4,889Currency exchange difference 176 -198 -4 -212 -90 -50 52
Cash and cash equivalents as at end of period 70,293 60,561 70,293 60,561 127,827 136,674 54,807
Consolidated operating cash flow in 2007, 2006 and 2005 reflects the fact that IGE’s current focus to a large extent has been and still is on exploration and development activities. The Company had no revenues from sales in 2007.
Further details regarding the consolidated cash flows are informed in the Annual report for 2007 (which can be inspected on www.ige.se).
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12 RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES
The main investments in IGE relate to the exploration and development of the licences owned by the Company, as well as acquisition of new licences. These investments have been significant, and they have been related to the costs of external consultants etc mainly connected to the Lacage and Luxinge diamond-projects in Angola and the projects; Rönnbäcken, Bidjovagge and Stekenjokk in Scandinavia.
A total of approximately SEK 31.7 million was capitalised exploration and development expenditures related to exploration activities in 2007 (2006: SEK 21.2 million, 2005: SEK 13.2 million).
Currently IGE exclusively carry out exploration and development of its projects. IGE has no production at the moment which results in that main part of its investments is related to the development and improvement of the prioritized projects within the Group. Historically IGE has been very conservative regarding which expenditures to capitalize in the balance sheet respectively written off in profit and loss statement.
IGE has currently initiated the work of composing a policy that will serve as a guideline regarding the capitalization of expenditures related to research and development of mineral assets. In brief the new policy will result in that a bigger part of the exploration related expenditures will be capitalized as an intangible asset in the balance sheet. As long as IGE considers the project to have potential of being profitable and the license is in force, expenditures related to the project will be capitalized. If IGE stops its continued work due to lack of interest, lack of potential in the project or if the license has expired, the capitalized amount related to that project will be written off in the profit and loss statement. This is a result of discussions with other companies and auditors with tradition and experience of auditing and analysing exploration companies. In order to be comparative within the exploration line of business with for instance companies in Canada, South Africa and Australia IGE therefore considers an adaptation of its accounting principles related to capitalization of expenditures to the mining and exploration industry in general to be necessary.
Historically IGE has, for instance, not capitalized expenditures related to field personnel, geologists, cost for transport and logistics. Expenditures related to human resources are a large part of the negative cash flow within exploration activities. IGE has previously mainly capitalized direct expenditures, for instance drilling, flight surveys, geology field consultants etc. From an accounting perspective, this might give a misleading picture of the activities carried out by the Group. The main part of all expenditures within the Group is related to the development and refinement of the projects and it adds value to the intangible assets of the Group. According to this new policy which is in progress IGE historically has been reporting a larger deficit in their profit and loss and smaller intangible assets than comparative companies.
12.1 Patents and licenses
The Company is not dependent on any patents or technical licenses, industrial or financial contracts or new manufacturing processes. The Company is, however, dependent on various mining rights such as exploration licenses in order to conduct exploration and obtain exploitation concessions and subsequent environmental permits in order to extract mineral resources from the assets of the Group. The conditions of the license agreements vary to some extent depending on in which country it is located. In Angola, for instance, the license will automatically be transformed into a mining licence if the operator of the contract fulfils the requirements according to the exploration licence. In the Nordic regions the operator has to apply for exploitation concessions, which are conditioned by, amongst others, that various environmental permits have been received.
In order to be granted licenses in Angola the operator has to deposit an investment guarantee paid to the Angolan state diamond company, Endiama. Each granted diamond license in Angola is conditioned by a payment of USD 1.4 million as a long term deposit. The concessions consists of two parts each; alluvial and kimberlite. The required guarantee attributable to the alluvial part amounts to USD 400,000, respectively USD 1 million for the kimberlitic. The money is deposited at the Angolan state (Endiama) until the investing partner has accomplished the minimum framework and the plan of investments in accordance with the “Contract of the Association in Participation”. When the investing partner has fulfilled its obligations
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according to the contract, the guarantee will be released and its value will be considered as investment expenses of the project in compliance with the presented plan of needs.
The Company has paid investment guarantees for four licenses by the end of Q3 2008: Lacage, Luanguinga, Cariango and Luxinge.
The following list provides a simplified overview of IGE’s key exploration projects, which have the status of an exploration license.
• Luxinge Diamond project (Angola) • Kilimapesa Gold Project (Kenya) • The Rönnbäcken Nickel Project (Sweden) • Lacage Diamond Project (Angola) • Cariango Diamond Project (Angola) • Luanguinga Diamond Project (Angola) • The Bidjovagge Gold-Copper Project (Norway)
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13 PROFIT FORECASTS OR ESTIMATES
The Registration Document does not include any profit forecasts. It contains consolidated financial statements up to 30 September 2008.
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14 ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES AND SENIOR MANAGEMENT
14.1 Board of Directors
In accordance with Swedish law, the Board of Directors is responsible for conducting the Company’s affairs and for ensuring that the Company’s operations are organized and controlled in a satisfactory manner.
The Board of Directors of IGE has 5 members; they were all elected by the ordinary general meeting 6 May 2008. The current term of office expires at the annual general meeting in 2009 for all the board members.
The table below sets forth the Company’s board of directors at the date of this Prospectus:
Name Position Business addressCarl Ameln Chairman International Gold Exploration IGE AB, Kungsgatan 44, 111 35 Stockholm
Ulrik Jansson Director PA Resources AB, Kungsgatan 44, 3 tr, SE-111 35 Stockholm
Ole Jørgen Fredriksen Director International Gold Exploration IGE AB, Kungsgatan 44, 111 35 Stockholm
Lars Olof Nilsson Director International Gold Exploration IGE AB, Kungsgatan 44, 111 35 Stockholm
Uta Stoltenberg Director Nordisk Industriutvikling AS, Postboks 1441 Vika, 0115 Oslo
Carl Ameln (61), chairman (100,000 shares and 1,000,000 warrants)
Carl Ameln has extensive international experience in the mining industry. He held numerous senior positions at the Swedish iron ore company LKAB during the 1975 to 2001 period. He was President and Chief Executive Officer of LKAB from 1991 to 2001. Mr. Ameln was also Executive Vice President Marketing LKAB from 1989 to 1991 and General Manager LKAB Far East Pt Ltd (Singapore) and General Manager LKAB SA (Brussels) from 1982 to 1989. He started his career as a mining engineer at the world’s largest underground mine in Kiruna for the Liberian LAMCO iron ore project in 1974. Mr. Ameln served as Director of Boliden Ltd 1997-2000. He holds a Master of Science from the Royal School of Mines in Stockholm. Mr. Ameln has served in the office since 2006.
Ole Jørgen Fredriksen (58), board member (300,000 shares held by controlled companies and 1,000,000 warrants)
Mr. Fredriksen has more than 25 years' experience in the computer hardware and software industry. He was one of the co-founders, President and CEO of ASK, subsequently Proxima and InFocus, the leading global projector company. Mr. Fredriksen has wide international business experience and currently serves as Chairman of the Board of Q-Free ASA, and holds several other board memberships, among these in Datum AS. Mr. Fredriksen has served in the office since 2008.
Ulrik Jansson (54), board member (14,865,000 shares held by controlled companies and 0 warrants)
Mr. Jansson President and CEO of PA Resources AB (publ) since 1996 and he is also director of the board of PA Resources AB since 1997. He holds a Bachelor of Laws from Uppsala University. Previous experience: Corporate lawyer in AGA AB 1985-1996 and Uddeholms AB 1982-1985, Board member of IGE Diamond AB. Other directorships: Chairman of the board of the PA Group's subsidiaries Microdrill AB, PA Resources Norway AS, Osbourne Resources Ltd, PA Resources Overseas Ltd, Hydrocarbures Tunisie Corp and Hydrocarbures Tunisie El Bibane Ltd. Mr. Jansson has served in the office since 1989.
Lars Olof Nilsson (46), board member (0 shares and 1,750,000 warrants)
Mr. Nilsson holds a Bachelor of Science in Business Administration from Umeå University. Mr. Nilsson has extensive international experience from business development and financial issues. He currently serves as Director on the Board of BE Group AB (publ), IGE Nordic AB (Publ), Morphic Technologies AB (Publ) and PA Resources AB (publ). He is also advisor to Nordic Capital, a group of private equity funds. He was Group treasurer from 1992 until 2004. In 1997, he became Senior Vice President in the Trelleborg Group. In
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2002 he assumed the responsibility for the group staff Business development. He served as Director on the Board of Boliden Ltd 1997-2000. Mr. Nilsson has served in the office since 2007.
Uta Stoltenberg (34), board member (0 shares and 0 warrants)
Mrs. Stoltenberg is investment director in Nordisk Industriutvikling, having board positions in Skagerak Venture Capital and Norsk Kraft. She has 6 years experience from various positions in Statoil, amongst other as investment manager in Statoil Innovation. In addition, she worked 3 years as oil & gas analyst for First Securities. Mrs. Stoltenberg has a MBA from Technical University of Berlin and was an exchange student in MSc-program Finance at the Norwegian School of Management (Sandvika). Mrs. Stoltenberg has served in the office since 2008. (Nordisk Industriutvikling AS holds 1,000,000 warrants in the Company in addition to the registered shares)
Independency
The board is independent of any sectional interests. The board satisfies the requirement of having two board members independent of shareholders owning more than 10% of the Company’s share capital and half of the members independent of the executive management of the Company and the Company’s material business contacts. All board members, except Ulrik Jansson and Uta Stoltenberg, are considered to be independent of the Company’s major shareholders, executive management and material business contacts. Ulrik Jansson is not considered independent as he is one of the biggest owners in the Company. Uta Stoltenberg represents the two major owners Nordisk Industriutvikling AS and Network Systems AS.
Consequently, the composition of the Board of Directors complies with the Norwegian and the Swedish Code of Practice for Corporate Governance.
14.2 Management
The management is described in this section. Their ownership in International Gold Exploration and warrants over International Gold Exploration shares are as of the date of this Prospectus.
The table below sets forth the members of the Group management at the date of this Prospectus:
Name Position Business addressTomas Fellbom CEO International Gold Exploration AB, Kungsgatan 44, SE-111
35 Stockholm, Sw edenThomas Carlsson CFO International Gold Exploration AB, Kungsgatan 44, SE-111
35 Stockholm, Sw eden
Tomas Fellbom (45), CEO (200,000 shares and 5,800,000 warrants)
Mr. Fellbom has a Master degree of Business Administration from the Stockholm School of Economics. Tomas is currently the CEO of IGE. Before he started at IGE, in September 2007, he worked at the Swedish Trade Council within which he has served as the Vice President and head of the regions Southern Europe, Africa and the Middle East. In addition to the Trade Council, Tomas has among other things former work experience as the founder and the CEO of Spray Networks in France. Mr. Fellbom holds a dual citizenship of Sweden and France and lives in Stockholm and Paris.
Thomas Carlsson (34), CFO (0 shares and 1,000,000 warrants)
Mr. Carlsson has a Master's degree in Finance from Stockholm University. He has been employed by the Company since 2006 and has experience from working with corporate financing (public offerings as well as private placements), listings, controlling auditing and financial reports for listed companies. His former professional experience includes the positions as manager within ISS Facility Services, Fischer Partners FK AB (Corporate Finance) and Nordea. Carlsson is Swedish and resides in Stockholm, Sweden.
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14.3 Conflicts of interest, etc
The board members Ulrik Jansson and Uta Stoltenberg may at times be in a position where there is a conflict of interest between their positions as owners or representatives of owners and the interests of the Company. IGE has taken reasonable steps to avoid potential conflicts of interests arising from all related parties’ private interests and other duties to the extent possible, and if such occurs, to mitigate any conflict of interest. It is the view of the Company that the scope of potential conflicts of interests between the director’s duties to the Company and their private interests and / or other duties is very limited. The directors do not participate in the discussion or decision making of subjects that might be in conflict of their different interests.
To the Company’s knowledge there are currently no other potential conflicts of interests between any duties to the Company or its subsidiaries, of the Board of Directors or the senior management, and their private interests or other duties. There are no family relations between any of the Company’s board members or management.
There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any member of the administrative, management, supervisory bodies or executive management has been selected as a member of the administrative, management or supervisory bodies or member of senior management.
The following table includes the names of all companies and partnerships of which members of the board and senior management has been or presently is a member of the administrative, management or supervisory bodies or partner (apart from the directorship in IGE) at any time over the five years preceding the date of this Prospectus:
Name Other Current Directorships Directorships previous 5 yearsCarl Ameln None Gexco AB
Ulrik Jansson IGE Diamond, International Gold Exploration Ltd, Microdrill AB, PA Resources AB, PA Resources Norway AS, Osbourne Resources Ltd, PA Resources Overseas Ltd, Hydrocarbures Tunisie Corp, Hydrocarbures Tunisie El Bibane Ltd
Planet Mineral AB
Ole Jörgen Fredriksen Adicate As, Attention SA/NV, Cyviz AS, Datum AS, Impact Europe Group AB, Impact Marcom Ltd, Mielno Apartments AS, Mielno Holding AS, Nordre Kirkøy Vann AS, Out Of Africa, Q-Free ASA, Spinoza AS, Varmepipa AS
EDB Business Partner ASA, Catch Communication ASA, Superoffice ASA, Ignis ASA, Ignis Display AS
Lars Olof Nilsson IGE Nordic AB, PA Resources AB, Kaptensbacken AB, BE Group AB
Ahlsell AB, Ahlsell Holding AB, Bröderna Edstrand Holding AB, Morphic Technologies AB, Skoogs AB, Skoogs Elektriska AB, Skoogs Elektrogrosshandel Gmbh, Trellefast AB
Uta Stoltenberg Skagerak Venture Capital, Norsk Kraft Proanalysis AS, Trac ID Systems AS, Nordisk Industriutvikling AS
Tomas Fellbom IGE Nordic AB, IGE Diamond AB, IGE Ltd, IGE Kenya Ltd, Tanganickel SA
Thomas Carlsson IGE Ltd Tricent AB, RosInvest Sec Ltd
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14.4 Fraudulent offence, bankruptcy, incrimination and disqualification
None of the Company’s board members, or members of the executive management, have within the last five years preceding the date of this Prospectus been;
• Convicted in relation to a fraudulent offence
• Involved in any bankruptcies, receiverships or liquidations as member of the board, management, supervisory body, as partner with unlimited liability, founder or as senior manager
• Subject to any official public incrimination and/or sanctions as such person by statutory or regulatory authorities (including designated professional bodies) or been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a issuer or from acting in the management or conduct of the affairs of any issuer
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15 REMUNERATION AND BENEFITS
15.1 Board of directors
The Company has not granted any loans, guarantees or other similar commitments to any member of the board of directors and there are no agreements regarding extraordinary bonuses to any member of the board of directors. There are no agreements with any members of the board which provide for compensation payable upon termination of the directorship.
The members of the board received remuneration for 2007 as set out in the table below:
Board member Remuneration (SEK)Carl Ameln 300,000Claes Levin 200,000Bill Sundberg 200,000Ulrik Jansson 0Lars Olof Nilsson 200,000Total 900,000
The remuneration to the members of the board for 2008 was determined at the ordinary General Meeting held in Stockholm on 6 May 2008. The new remuneration level was resolved by the Annual General Meeting according to the following for 2008:
Board member Remuneration (SEK)Carl Ameln 400,000Ole Jørgen Fredriksen 250,000Ulrik Jansson 250,000Lars Olof Nilsson 250,000Uta Stoltenberg 250,000Total 1,400,000
15.2 Executive management
Remuneration to the Company’s executive management, as described in section 14.2 is described below.
Total costs including salary, social cost, pension cost and additional benefits in 2007 for Tomas Fellbom (CEO) and Thomas Carlsson (CFO) where SEK 2,044,000 and SEK 1,250,000 respectively.
There are no agreements with any member of management which provide for compensation payable upon termination of the employment.
15.3 Shareholdings and warrants of Management and Board of Directors
The following table sets forth the number of warrants and Shares held by board members (privately or trough controlled companies) of the Company as at the date of this Prospectus:
Board of Directors Shares WarrantsCarl Ameln 100,000 1,000,000Ulrik Jansson 14,865,000 0Ole Jørgen Fredriksen 300,000 1,000,000Lars Olof Nilsson 0 1,750,000Uta Stoltenberg 0 0Total 15,265,000 3,750,000
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The following table sets forth the number of warrants and Shares held by the Company’s executive management as at the date of this Prospectus.
Executive Management Shares WarrantsTomas Fellbom 200,000 5,800,000Thomas Carlsson 0 1,000,000Total 200,000 6,800,000
15.4 Warrants and incentive programmes
15.4.1 Outstanding warrants
At the Extraordinary General Meeting (EGM) on 28 May 2008 an incentive programme with the following main terms was approved:
Number of warrants: 12,000,000
Exercise price: SEK 2.68
Consideration: SEK 0.20 for all subscribers except for Norwegian subscribers which paid no consideration. The consideration paid by the Swedish subscribers has been determined by the use of Black & Scholes Model
Exercise period: See below
The warrants issued were directed as follows:
1. 4,000,000 warrants were directed to the Board of Directors (except Ulrik Jansson) or to them affiliated companies
2. 8,000,000 warrants were directed to the Management and key personnel
Warrants issued to Board of Directors are conditioned to be exercised according to the following:
• 2,000,000 could be exercised for subscription of new shares in International Gold Exploration during the periods: 5 May – 20 May 2009, 5 May – 20 May 2010 respectively 5 May – 31 May 2011
• 2,000,000 could be exercised for subscription of new shares in International Gold Exploration during the periods: 5 May – 31 May 2010 respectively 5 May – 31 May 2011
Warrants issued to the Management and key personnel are conditioned to be exercised according to the following:
• 2,500,000 warrants can be exercised for subscription of new shares in International Gold Exploration during the period 5 May – 20 May 2010 respectively 5 May – 31 May 2011.
• 5,500,000 warrants are conditioned to be exercised for subscription of new shares in International Gold Exploration during the period 5 May – 31 May 2011.
Below follows a description of previously issued warrants in International Gold Exploration:
A new incentive program was resolved by the extraordinary general meeting (EGM) of 13 June 2007. The incentive program included 6,000,000 warrants for the subscription of shares in International Gold Exploration. The exercise price of the warrant is SEK 6.40 per share. 2,750,000 of these 6,000,000 warrants have so far been allocated and the remaining 3,250,000 not allocated warrants was cancelled at the EGM
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held on 28 May 2008. The holders of the warrants have, according to the resolution, the right to exercise the warrants during the period 1 July 2009 – 31 December 2009. Accordingly 2,750,000 of these warrants are still outstanding.
Duration: 31 December 2009, strike price 6.40 SEK
Holder Number Type Issued byTomas Fellbom 1,300,000 Warrants IGEFredric Bratt 500,000 Warrants IGELars Olof Nilsson 750,000 Warrants IGEBenny Mattsson 200,000 Warrants IGETotal 2,750,000
An additional incentive program was resolved by the extraordinary general meeting (EGM) of 28 May 2008 as described above. The EGM decided to cancel 840,000 warrants held by Carl Ameln that were issued according to a resolution at the extraordinary general meeting on 17 October 2005. The EGM also resolved to cancel 3,250,000 not allocated warrants that were issued according to a resolution at the extraordinary general meeting on 13 June 2007.
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The EGM resolved to launch a new incentive program comprising in total 12,000,000 new shares with the terms described above. The warrants resolved by the EGM on 28 May 2008 are up to present assigned according to the table below:
Holder Number Type Issued byTomas Fellbom 4,500,000 Warrants IGEThomas Carlsson 1,000,000 Warrants IGELars Olof Nilsson 1,000,000 Warrants IGECarl Ameln 1,000,000 Warrants IGEIndustriutvikling AS 1,000,000 Warrants IGEOle Jörgen Fredriksen 1,000,000 Warrants IGETotal 9,500,000
If exercised, all the above warrants will result in a dilution of the existing shareholders. If the warrants are in the money at the expiration date of the warrant contract, the Company are obliged to issue a number of new shares that corresponds to the number of warrants bought in contracts between each holder of the warrants and IGE.
The holders of the share warrants have paid a price adjusted to the market according to the Black & Scholes option pricing formula. The market value of the warrants has been calculated based on the following assumptions;
2005 2007 2008Exercise price (SEK) 8.50 6.40 2.68Estimated volatility (%) 30 30 30Estimated duration (years) 2-3 2.5 3Risk free years (%) 3 4 4
15.4.2 Options IGE Nordic AB
At the EGM held on 28 May 2008, a resolution was passed to approve the issuance of totally 575,000 call options of the Company’s shareholding in IGE Nordic AB to the Board of Directors and the management of IGE Nordic AB. The Company holds presently 20,000,000 shares (74.6%) in IGE Nordic AB. Each call option gives the holder the right to buy existing shares in IGE Nordic AB from the Company at price of SEK 11.36 per share. The holder of the call options has the right to exercise the option during the period between 1 October 2011 and 31 December 2011. If the options are exercised the maximum dilution of the Company’s shareholding in IGE Nordic AB, would be approximately 2.8%.
Holder Number Type Issued byFredric Bratt 100,000 Call option IGEBenny Mattsson 25,000 Call option IGETomas Fellbom 100,000 Call option IGECurt Järnfeldt 100,000 Call option IGELars Olof Nilsson 100,000 Call option IGEErling Stensholt 100,000 Call option IGETotal 525,000
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15.5 Pension obligations
The executive management of IGE (Mr. Fellbom and Mr. Carlsson) was employed by International Gold Exploration 1 September 2007 and 1 September 2006 respectively. IGE has arranged a pension scheme for its employees. The pension scheme meets the requirements of the Norwegian law on required occupational pension ("Lov om Obligatorisk Tjenestepensjon") and it is described in relevant detail in the annual report for 2007, which can be inspected on www.ige.se.
International Gold Exploration had pension related expenses of SEK 1.2 million in 2007 and fulfils the requirements according to Swedish applicable law on required pension. See below table for specification of the pension related expenditures for the executive management.
Executive Management (SEK) 2007Tomas Fellbom 83,874Thomas Carlsson 126,744
Total 210,618
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16 BOARD PRACTICES
16.1 Compensation for termination
No members of the administrative, management or supervisory bodies have service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment.
The Company has not granted any loans, guarantees or other commitments to any member of the Board and there are no unusual agreements regarding extraordinary bonuses to any member of the Board.
16.2 Committees
Nominating committee
IGE does not currently have a nominating committee. The general meeting of the Company resolved on 6 May 2008 resolved to establish a Nomination Committee for the next Annual General Meeting. The three largest shareholders in the company will appoint one representative each, who together with the Chairman of the Board shall comprise the Nomination Committee. The composition of the Nomination Committee shall be communicated six months at the latest before the Annual General Meeting in 2009.
The Company has not established an audit committee or a separate remuneration committee. The nomination committee is responsible for proposing to the General Meeting the remuneration to the Board of Directors.
16.3 Corporate governance
16.3.1 Corporate governance principles
The corporate governance principles of the Company comprise the framework of guidelines and management principles regulating the division of roles between the owners, board of directors and executive management of a company.
IGE is of the opinion that sound corporate governance contributes to increase shareholder value through improved growth and higher profits, as well as lower capital expenditures. Corporate governance in the Company is based on openness and equal treatment. Investor confidence is maintained and developed through open and accountable investor information. The board of directors and the management are committed to ensuring transparency within the business, fair treatment of all shareholders and accountability in all forms of communication.
The Norwegian Code of Practice for Corporate Governance issued by the Norwegian Corporate Governance Board on 4 December 2007 (the “Code of Practice”) applies to the Company. The Company aims at complying with the Corporate Governance Code, but will to some extent deviate from certain of the recommendations of the Code due to the different practice and principles under which Swedish public limited companies operate.
The Code of Practice is a “comply or explain” guideline and the Board will state and explain any deviation by the Company from the recommended guidelines in its annual reports. The Company will post its corporate governance principles on its website.
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The Company follows the Code of Practice, maintain high standards of corporate governance and is committed to ensure that all shareholders of the Company are treated equally. As per the date of this Prospectus, the Company complies with the Norwegian Code of Practice except in relation to the following;
The board members Carl Ameln, Lars Olof Nilsson and Ole Jørgen Fredriksen have, directly or through fully owned companies been granted warrants to subscribe for shares in the Company, see section 15.3.
The Company believes such an option scheme to be an adequate means of motivating board members to optimise the value of the Shares through its management of the Company. The Company does not believe such an option program will impair the relevant board members' independency of the Company's management.
In addition, the Company complies with the Swedish Code of Practise for Corporate Governance issued by the Swedish Corporate Governance Board (Kollegiet för Svensk Bolagsstyrning) in May 2008 and that is applicable as from 1 July 2008.
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17 EMPLOYEES
17.1 Employees
The average number of employees during 2007 amounted to 42. The same number for 2005 and 2006 was 14 and 23 respectively.
Today the IGE Group has 196 employees, see table below.
Employees as of 30 September 2008Parent company 4Subsidiaries 192IGE Group 196
Geographic locationSweden 13Angola 88Burundi 13Kenya 78Total 192
Notice that only 50% of the employees in Kenya are paid by IGE.
17.2 Hired consultants
IGE is on a continuous basis hiring external consultants with expertise within business segments which the Company operates. Such consultants include, inter alia, GTK, for flight survey operations, SGU for educating Angolans within geology and geophysics, Swedish Geological for help concerning the establishment of guidelines and policies related to Corporate Social Responsibility.
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18 MAJOR SHAREHOLDERS
18.1 Shareholder structure
As of 26 November 2008, the Company has about 1,000 shareholders Registered in VPC and about 5,500 Norwegian shareholders that are registered in VPS. A summary of the Company’s largest shareholders as of 26 November 2008 is set out below.
The 20 largest shareholders on the Oslo Stock Exchange:
Shareholder Country % No. of sharesSKANDINAVISKA ENSKILDA BANKEN SWE 3.56% 13,351,658 SIS SEGAINTERSETTLE AG 25PCT CHE 2.81% 10,530,289 ARCTIC SECURITIES ASA MEGLERKONTO NOR 1.87% 7,000,000 NORDNET SECURITIES BANK AB SWE 1.24% 4,638,014 SILVERCOIN INDUSTRIES AS NOR 1.18% 4,429,000 DRESDNER BANK AG LONDON BRANCH DEU 1.17% 4,380,000 HOLEN GUNNAR NOR 1.15% 4,300,000 NORDISK INDUSTRIUTVIKLING AS NOR 1.11% 4,148,000 DANSKE BANK A/S DNK 0.98% 3,662,503 FLATÅS KARL MARTIN NOR 0.92% 3,440,000 SÆTER HAAKON MORTEN NOR 0.76% 2,840,000 DRAGE INDUSTRIES AS V/ARNE STEEN NOR 0.69% 2,598,000 SAMSARA MANAGEMENT AS NOR 0.67% 2,510,000 OA HELGE MARTIN NOR 0.67% 2,500,000 AG INVEST AS NOR 0.63% 2,380,000 PHAM HUNG QUAN NOR 0.59% 2,215,000 MACE INVEST AS NOR 0.59% 2,200,000 SVENSKA HANDELSBANKEN STOCKHOLM SWE 0.58% 2,161,377 CITIBANK, N.A GBJ 0.57% 2,121,500 OTIUM FINANS AS NOR 0.53% 2,000,000
Total 20 largest shareholders 22.2% 83,405,341
Others 77.8 % 291,594,659
Total number of shares 100.0 % 375,000,000
The 5 largest shareholders on NGM Stockholm Stock Exchange:
Shareholder Country % No. of sharesUSB INVESTMENTS SWE 3.56% 13,365,500 SEB SECURITIES SWE 1.94% 7,290,805 SVENSKA HANDELSBANKEN AB SWE 0.66% 2,483,881 NORDNET SECURITIES SWE 0.63% 2,369,041 SWEDBANK AB SWE 0.54% 2,039,020 Total 5 largest shareholders 7.3% 27,548,247Others 92.7 % 347,451,753Total number of shares 100.0 % 375,000,000
As far as the Company is aware of, there is no natural or legal person which directly or indirectly has a shareholding in the Company above 10%. All shareholders with a shareholding of 5% or more are subject to disclosure regulations (notification of large shareholdings).
All Shares and shareholders have equal rights, including voting rights. Major shareholders do not have different voting rights. To the knowledge of the board of directors, there are no arrangements which may at a subsequent date result in a change of control of the Company.
To the knowledge of the Company, the Company is not directly or indirectly owned or controlled by a single shareholder or a group of shareholders acting in concert. The Company has not implemented any specific measures to prevent abuse of control form a major shareholder. However, certain provisions of the Swedish Limited Companies Act and other legislation relevant to the Company aim to prevent abuse.
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19 RELATED PARTY TRANSACTIONS
As at the date of this Prospectus, the Company is a party to the following agreements with related parties:
The Company is renting a storeroom of PA Resources AB (publ) and during periods, office services and rent of office space. PA Resources AB is a related party due to its Managing Director Ulrik Jansson, who is a member of the Company’s board. During 2007 PA Resources AB has invoiced The Company an amount of SEK 72,000. During 2006 the Company paid PA Resources AB an amount of SEK 255,000 and for 2005 SEK 835,708 for the above mentioned services.
In 2006 former member of the Board of Directors, Bill Sundberg invoiced the Company an amount for SEK 47,000 for work related to the preparation of the Annual report 2006. During 2005 the Company paid about SEK 51,000 for this service to Bill Sundberg.
As member of the Company’s former Advisory Board, Göran Pettersson, invoiced the Company an amount of SEK 559,000 during 2005 for services related to geology and exploration.
The above mentioned transactions were based on the principle of “arms length” pricing.
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20 FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFIT AND LOSSES
International Gold Exploration IGE AB’s annual report for 2007, 2006 and 2005 including explanatory notes and the Q3 2008 report can be inspected on www.ige.se. The annual report has been audited by Ernst & Young AB, International Gold Exploration’s statutory auditor; see Section 3 for more information. However, Ernst & Young AB does not vouch for forward looking statements made in this Prospectus.
20.1 Historical consolidated financial information
The following table shows consolidated financial information for IGE as for the annual year 2007, 2006, 2005 and the first nine months of 2008 with comparable numbers for the same period of 2007.
20.1.1 Consolidated income statement
Consolidated Income Statement Q3 Q3 Q1-Q3 Q1-Q3 Full Year Full Year Full Year
2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Sales 13,784 - 23,731 - - - 293
Change in stock - 1 - - - -60 -39Other external expenses -5,924 - -21,144 - -31,824 -19,043 -7,739Personnel expenses -5,318 -9,773 -19,635 -21,798 -22,887 -9,009 -3,803Other operating expenses - -7,131 -3,854 -15,461 - - -4,137Depreciations and write downs -125 -10,684 -3,152 -11,016 -11,312 -1,281 -1,299
Total operating expenses -11,367 -27,587 -47,785 -48,275 -66,023 -29,393 -17,017
EBIT 2,417 -27,587 -24,054 -48,275 -66,023 -29,393 -16,724
Net financials -1,975 -326 -1,783 3,240 3,494 -7,011 -6,483
Earnings before tax 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Tax - - - - - - -
Net profit / (loss) 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Profit to Equity holders of the Parent Company 1,490 - -24,918 - -61,715 -36,404 - Minority interest -1,048 - -919 - -814 - - Profit for the period 442 -27,913 -25,837 -45,035 -62,529 -36,404 -23,207
Earnings per share attributable to Equity holders 0.001 -0.082 -0.074 -0.132 -0.181 -0.116 -0.087of the Parent company before and after dilution
The consolidated operating profit during the third quarter of 2008 amounted to SEK 2.4 million. The consolidated operating loss during the first nine months of 2008 amounted to SEK 24.1 million. For the full year of 2007 it was SEK 66 million (2006: - SEK 29.4 million, 2005: - SEK 16.7 million).
The third quarter of 2008 generated a consolidated net profit of SEK 0.4 million. The first nine months of 2008 generated a consolidated net loss of SEK 25.8 million. Consolidated net loss for 2007 was SEK 62.5 million (2006: - SEK 36.4 million, 2005: - SEK 23.2 million) including ordinary financial expenses.
Other revenues consist of revenues attributable to the subsidiary IGE Nordic AB’s sale of exploration permits and currency gain related to inter company balances. The currency gain occurs as a result of the difference between the receivables in the parent company and the debt accounted for in different currencies in the subsidiaries. The sale of exploration permit in IGE Nordic had a non-cash book profit of SEK 16.25 million and is included in Other Revenue
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The increase in the negative operating results of the Group reflects the increased rate of activities. The personnel expense has more than doubled between 2006 and 2007, which is a consequence of the establishment of subsidiaries and activities in both Angola and Burundi during 2007. The Group has also increased its use of geology, geochemistry etc consultants which are reflected in the increase of item “other external expenses”.
The significant financial losses during 2005 and 2006 are mainly results of write downs of a short term investment in Minmet Plc, an AIM-listed mining and exploration company. The holding in Minmet Plc is a result of a transaction during 2003, by which IGE sold the Björkdalgruvan to Minmet Plc and was paid with shares in Minmet Plc.
The Company has intensified its work in Angola, Kenya and Burundi during the previous two years. This is reflected in the income statement of the Company, IGE’s rate of investment has increased significantly during 2007. The Group is now employing about 100 persons which to a large extent have increased the losses during the previous two years. Currently IGE is in a mobilization phase in the Luxinge project in Angola and in the Kilimapesa gold project in Kenya. The rate of investments and expenditures has increased as a result of this. IGE forecasts small scale production to commence in December 2008. Future revenues from initial production will be reinvested in the Group’s exploration activities in order to advance the projects in the most efficient and profitable way. Exploration and start up of mining projects are capital intensive, IGE considers it to be relatively dependent of the market for external capital during the coming three to five years in order to advance its projects according to plan.
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20.1.2 Consolidated balance sheet
The following table shows IGE’s consolidated balance sheet as at the end of the nine months half of 2008, with comparable figures for the corresponding period in 2007 and as at 31 December for the years 2007, 2006 and 2005.
Consolidated Balance Sheet Q1-Q3 Q1-Q3 Full Year Full Year Full Year2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Audited Audited AuditedAssetsIntangible fixed assetsMineral interests 109,091 78,261 85,624 65,328 46,473Tangible fixed assetsPlant and machinery 44,823 3,161 6,274 2,009 1,162Long-term financial assetsShares in associated companies 26,192 - - - - Receivables on associated companies 1,730 - - - - Long-term receivables 38,001 106 27,000 103 101Total non-current assets 219,837 81,528 118,898 67,440 47,736
Inventory - 16 16 16 75Accounts receivables 23 327 871 218 435Other receivables 3,403 1,461 3,967 1,594 2,875Prepaid expenses and accrued income 5,669 24,663 2,313 12,502 1,222Short term investments 5,401 10,717 9,807 5,006 23,625Cash and cash equivalents 70,294 60,561 127,827 136,674 54,807Total current assets 84,790 97,745 144,801 156,010 83,039
Total assets 304,627 179,273 263,699 223,450 130,775
(SEK '000)Equity and liabilities
Equity attributable to equity holders of the parent companyShare capital 18,750 17,050 17,050 17,050 15,550 Other capital-contribution 323,283 268,102 268,102 268,102 137,642 Reserves 1,223 2,882 2,548 2,118 427 Retained earnings and profit for the period -100,602 -114,197 -75,685 -69,162 -32,760Minority interest 32,313 - 32,884 - - Total equity 274,967 173,837 244,899 218,108 120,859
Interest bearing long-term debt 16,891 - - Total long-term liabilities 16,891 - - - -
Account payables 7,017 1,016 10,772 1,785 5612Accrued expenses and prepaid income 4,822 2,781 5,880 2,012 935 Other liabilities 930 1,639 2,148 1,545 3,369Total short term liabilities 12,769 5,436 18,800 5,342 9,916 Total liabilities 29,660 5,436 18,800 5,342 9,916
Total equity and liabilities 304,627 179,273 263,699 223,450 130,775
The IGE Groups’s total assets as of 31 December 2007 was SEK 263.7 million (2006: SEK 223.5 million). Total investments amounted to SEK 62.8 million (2006: SEK 19.7 million). Cash in bank as per 31 December 2007 was SEK 127.8 million (2006: SEK 136.7 million).
The IGE Groups’s total assets as of 30 September 2008 was SEK 304.6 million (2007: SEK 179.3 million). Cash in bank as per 30 September 2008 was SEK 70.3 million (2007: SEK 60.6 million).
The Group has no long term debt, it is fully financed by equity. External direct expenditures related to Exploration and evaluation costs, including the costs of acquiring licenses, are capitalized as exploration and evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if the
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rights of the area of interest are in force. As IGE is advancing its projects the Group will continue to acquire assets in terms of mineral interests, equipment and machines. As long as IGE has no positive cash flow, the Group considers it to be better to finance the operations by equity due to the fact that it is difficult for the Group to be able to receive debt financing with reasonable terms and conditions in the current market situation.
20.1.3 Reconciliation of equity
The table below shows the audited reconciliation of equity as of 30 September 2008 and 2007 and the closing balance at 31 December 2007, and illustrates the effect of share-based payments.
Changes in shareholders' equity
(SEK '000)Share Capital
Other capital contribution
Exchange differences
Retained earnings and profit for the
year TotalMinority interest
Total equity
Balance at 1 January 2007 17,050 268,102 2,118 -69,162 218,108 218,108
Exchange differences 764 764 764
Total income and expenses recognised directly in equity 764 764 764Net result for the period -45,035 -45,035 -45,035
Total income and expences for the period 764 -45,035 -44,271 -44,271Closing balance at 30 Sept 2007 17,050 268,102 2,882 -114,197 173,837 173,837
Acquisition 700 700Exchange differences -334 -334 -334Total income and expenses recognised directly in equity -334 -334 700 366Net result October to December 2007 -16,680 -16,680 -814 -17,494Total income and expenses for the financial year 2007 -334 -61,715 -61,285 -114 -61,399
Transactions with shareholdersNew share issue in subsidiary 55,192 55,192 32,998 88,190Closing balance at 31 December 2007 17,050 268,102 2,548 -75,685 212,015 32,884 244,899
Balance at 1 January 2008 17,050 268,102 2,548 -75,685 212,015 32,884 244,899Disposal of subsidiary 348Exchange differences -1,325 -1,325 -1,325Issued call options 390 390 390Total income and expenses recognised directly in equity 390 -1,325 -935 -935Net result for the period -24,917 -24,917 -919 -25,836Total income and expenses for the period 390 -1,325 -24,917 -25,852 -571 -26,423Transactions with shareholdersNew share issue 1,700 54,791 56,491Closing balance at 30 Sept 2008 18,750 323,283 1,223 -100,602 242,654 32,313 274,967
Equity related to shareholders of the parent company
IGE’s equity per 31 December 2007 was SEK 244.9 million (2006: 218.1 million). The equity ratio per 31 December 2007 was 93% (2006: 97%).
IGE’s equity per 30 September 2008 was SEK 275.0 million (2007: 173.8 million). The equity ratio per 31 September 2008 was 90% (2007: 97%).
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20.1.4 Consolidated cash flow statement
The following table shows IGE’s consolidated cash flow statement as at the end of the first nine months 2008 compared to the first nine months 2007 and at 31 December for the years 2007, 2006 and 2005.
Consolidated Cash flow statement Q3 Q3 Q1-Q3 Q1-Q3 Full Year Full Year Full Year
2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Cash Flow from OperationsIncome after financial items 427 -27,913 -25,852 -45,035 -62,529 -36,404 -23,207
Adjustments for items not included in cash flow -9,544 12,224 -16,375 8,955 11,617 8,769 11,711Change in inventories - 1 15 - - 59 39Change in trade receivables -1,099 -2,773 -1,291 -12,123 -8,182 1,320 1,973Change in trade payables -3,208 -416 -6,919 3,293 15,677 -2,608 6,248Income tax paid - - - - - - - Net cash flow from operations -13,424 -18,877 -50,422 -44,910 -43,417 -28,864 -3,240
Cash Flow from investment activitiesAcquisition of tangible assets -20,532 -10,052 -33,937 -24,188 -31,677 -1,366 - Acquisition of intagible assets -17,322 -324 -36,171 -1,703 -5,276 -19,813 -13,202
Acquisition of shares in associated companies - - -442 - Acquisition of financial assets 1,031 - -13,749 -5,100 -18,151 - - Sale of financial assets - - 5,011 - - - - Net cash flow from investment activities -36,823 -10,376 -79,288 -30,991 -55,104 -21,179 -13,202
Cash Flow from financing activitiesNew share issue - - 56,880 - 89,764 131,960 66308Raised credits 14,399 - 15,300 - 89,764 131,960 66308Net Cash Flow from financing activities 14,399 - 72,180 - 89,764 131,960 66,308
Net change in cash and cash equivalents -35,848 -29,253 -57,530 -75,901 -8,757 81,917 49,866
Cash and cash equivalents as at 1 January 127,827 136,674 127,827 136,674 136,674 54,807 4,889Currency exchange difference 176 -198 -4 -212 -90 -50 52
Cash and cash equivalents as at end of period 70,293 60,561 70,293 60,561 127,827 136,674 54,807
Net cash flow from operating activities was negative in 2007 with SEK 43.4 million (2006: - SEK 28.9 million).
Net cash flow from investments was negative in 2007 with SEK 55.1 million (2006: - SEK 21.2 million).
Net cash flow from financing was positive in 2007 with SEK 89.8 million (2006: SEK 132.0 million).
As per 31 December, cash and cash equivalents amounted to SEK 127.8 million (2006: SEK 136.7 million).
As per 30 September, cash and cash equivalents amounted to SEK 70.3 million (2007: SEK 60.6 million).
The rate of expenditures has increased during the previous years due to the large increase in activities within the Group. The start-up of diamond production in Angola requires big investments and each granted diamond licence in Angola is followed by a deposit to be paid by IGE of USD 1.4 million. This affects the cash flow of the Group negatively. Investments in machinery, equipment and plant are other explanations to the increase in the negative cash flow.
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20.1.5 Summary of significant accounting principles
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied unless otherwise stated.
Basis of establishment for accountancy
The consolidated accounts are based on historical acquisition costs except for financial instruments which are accounted for at fair value. All amounts are in Swedish crowns if nothing else is notified.
Differences in accounting between the Group and the Parent Company
The Parent Company has made its annual report according to “Årsredovisningslagen (1995:1554)” and the ”Redovisningsrådets” recommendation RR 32:06, Redovisning för juridiska personer. RR 32:06 implies that the Parent Company shall apply all, by EU approved IFRS statements as far as possible within the framework for the “Årsredovisningslagen” and with consideration to the connection between accounting and the taxation. The recommendation states, which exception and additional conditions that shall be done in accordance with the IFRS. There are no existing differences between accounting of the Parent Company and the rest of the Group.
Changes in the accounting principles
The Company has from 2007 applied IFRS 7 ”Financial Instrument”. The application of this principle has not resulted in any changes of the accountings. The principle puts higher demand on the level of information added by the Company in the financial report. This holds also for the change over from RR 30:5 to 30:6, which also puts higher requirements on the information enclosed in the Group accountings.
As from the annual accounts 2006 “Financial items” includes the change from revaluation of a share holding in MinMet Plc. This holding has in former reports been accounted for as a part of the operations (under “Items affecting comparability”) and has by that reason affected the operation profit. In connection with this change of the accounting principle the change in value of the MinMet Plc holding is accounted for under “financial items” (SEK -8.901 million for 2006, SEK –6.521 million for 2005). Adjustments of the comparable figures of earlier reports have been carried out in order to correspond with the accounting of 31 December 2006.
During 2006 IGE has also reclassified mineral interests from tangible assets to intangible assets. This has not resulted in any adjustments of the comparative figures, only reclassifications and changes of headings.
Standards and principles that has not yet come in to force
The following new standards, complements and interpretations, which have not yet been approved by EU, might affect the future financial reporting of the IGE Group:
IFRS 8 ”Operating segments” (comes in to force for financial years beginning 1 January 2009 or later).
The standard replaces the IAS 14 “Segment reporting” and requires that a company report additional financial and describing information related to its operative reporting segments.
A reporting segment is an operative branch or consolidation of operative branches which fulfils certain specific criteria’s. The operative segments shall be presented according to the principles that the management of the company has established in order to manage the company’s other operations.
IGE intends to apply these reporting standards from 1 January 2009.
Consolidation principles
Group accounting was carried out according to the acquisition method. Acquired subsidiaries are accounted
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for from the date the decisive influence over the subsidiary takes place (time of acquisition). The balance sheets of the subsidiaries located outside Sweden is calculated with the current exchange rates at the last day of the report period. The currency rate that is used in the income statements is the average rate during the whole period 2007. All group transactions and group unsettled matters and profit and losses for transactions between group companies that are put into effect, will be eliminated at the consolidation.
Conversion of foreign currency
The reports are presented in SEK, which is IGE’s functional currency as well as the presentation currency. Transactions in foreign currency are accounted in the functional currency at a rate that is current on the transaction date. Monetary assets and liabilities are converted per the balance sheet date at the day’s current rate, currency differences that arise during conversion is accounted for in the income statement. Non monetary assets and liabilities that are accounted for to its historical acquisition value are converted using the currency rate at the time of the transaction. Non monetary assets and liabilities that are accounted for at real value (including costs) converts to the functional currency, using the current rate at the time of the evaluation to a real value. The group’s subsidiaries are independent and its assets and liabilities are valued at the closing currency rates at the end of the reporting period. The income statements are converted to the average currency rates during the whole reporting period. Exchange differences that may occur on behalf of this does not affect the Group’s result, they are accounted for within the Group’s equity.
Inventory
The inventory consists mainly of raw materials and necessities and is valued to the lowest of purchase prices and net sales value. The purchase price is calculated using the FIFO and includes costs that arise during the purchase of the stock and their transportation to its present place and state.
Tangible assets
Tangible assets consist of machines and furnishings. Machines and furnishings are recorded in the balance sheet using the acquisition price reduced by the accumulated write-down according to the plan. Depreciation of tangible assets is done linear over the assets estimated duration of use, which is individually estimated to be between 3 to 10 years.
Mine properties and development
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified from exploration and evaluation expenditure (intangible) to mine property and development assets (tangible). As per year end, 2007, the Group has not capitalized any Mine properties and development expenditures in the balance sheet.
The carrying amounts of mine properties and development (including initial and any subsequent capital expenditure) are depreciated to their estimated residual value over the estimated useful lives of the specific assets concerned, or the estimated life of the associated mine or mineral lease, if shorter.
Intangible assets
Mineral interests (Exploration and evaluation expenditure)
External direct expenditures related to Exploration and evaluation costs, including the costs of acquiring licenses, are capitalized as exploration and evaluation assets on an area of interest basis. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:
- The expenditures are expected to be recouped through successful development and exploitation or sale of the area of interest; or
- Activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in. or in relation to. The area of interest is continuing.
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- If the granting process has been initiated but not yet completed due to the duration of administrative processes. In Angola, for instance, the capitalization of expenditures starts when all concerned parties has signed the letter of intent related to the specific concession followed by IGE’s payment of the Investment Guarantee to Endiama.
All capitalized exploration and evaluation expenditure for all pending projects is monitored for indications of impairment on a cash-generating unit basis. The cash generating unit shall not be larger than the area of interest. If sufficient data exists to determine technical feasibility and commercial viability, and facts and circumstances suggest that the carrying amount exceeds the recoverable amount, the capitalized expenditure which is not expected to be recovered is charged to the income statement.
Long term financial assets
Long-term receivables
Long term receivables are attributable to investment guarantees paid to the Angolan state diamond company, Endiama. Each granted diamond license in Angola is conditioned by a payment of USD 1.4 million as a long term deposit. Each concession consists of two parts; alluvial and kimberlite. The required guarantee attributable to the alluvial part amounts to USD 400,000 respectively USD 1 million for the kimberlitic. The money is deposited at the Angolan state (Endiama) until the investing partner has accomplished the minimum framework and the plan of investments in accordance with the “Contract of the Association in Participation”. When the investing partner has fulfilled its obligations according to the contract, the guarantee will be liberated and its value will immediately be considered as investment expenses of the project in compliance with the presented plan of needs.
IGE has paid investment guarantees for three licenses by the end of the reporting period; Lacage, Luanguinga and Cariango.
Income accounting
The Group’s income is accounted for when the essential risks and benefits that is related to the owning of the inventory has been transferred to the buyer. When the right of owning is transferred to the customer in the extent that it is probable that the economical benefits will descend to the group and when the income can be calculated in a reliable way. No income is accounted for based on the current operations of the Group.
Income related to interests is allocated to the period I which they occur and is referred to the group’s bank accounts. Dividends are taken up as income based on when the decision regarding the availability of the dividend funds is made.
Taxes
In the Group’s Annual Report, the current and the deferred taxes are accounted for. Current taxes are the taxes that shall be paid or received regarding the current year, using the tax rate that was decided or in reality was decided per the balance sheet date applied on the taxable income and with adjustment of current tax referring to earlier periods. Deferred taxes are calculated according to the balance sheet method with basis in temporary differences between accounted and taxable values of assets and liabilities. Deferred tax claims regarding deduction approved temporary differences and deficit deductions accounted only in case that those possibly will be used. Deferred tax claims have not been accounted for as deductions of loss because they are estimated to be hardly realizable.
Important estimates and assumptions referable accounting
The Board and management of IGE have identified the issues listed below, which can affect the appraisal of the Group’s income statement and financial balance. The development within these areas is continuously followed up by the management and the Board.
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Recuperation of capitalized expenditures in the balance sheet
The Group has invested considerable amounts in refinement of exploration permits. The financial statements include mainly permits for which the Company has carried out advanced operations as geology, geophysics, drillings, airborne measurements etc. Capitalized expenditures referable to the above stated activities have been capitalized as mineral interests, which amounts to SEK 109.1 million by 30 September 2008. Depreciation of capitalized expenditures referable to mineral interests is done in accordance with the paragraph “intangible assets” above.
Deferred tax
The tax deductions referable to deficits of the Group’s activities abroad are not valued.
Segment reporting
Within IGE the primary segment division is based on the geographical regions that are subject to risks and possibilities that are different from each other. Presently secondary segmentation is not considered.
Classification of assets and liabilities
Current assets and current liabilities are composed of values that can be regained respectively paid within twelve months counted from the balance sheet date. The other assets and liabilities are accounted as tangible fixed assets and long-term liabilities respectively.
Acquisition of subsidiaries and accounting for minority interest
International Gold Exploration IGE AB registered the company IGE Burundi SA 1 February 2007 with an equity amounting to SEK 7 million of which IGE has paid SEK 5.95 million. IGE owns 85% of the company. Remaining 15% are owned by a local partner. The founding of the company was followed by negotiations regarding obtaining licenses. IGE Burundi SA is responsible for the Group’s activities in Burundi. The company owns and manages the Group’s assets and employs IGE’s personnel in Burundi.
During the previous year of operations, 2006, IGE acquired three wholly owned subsidiaries with a total equity amounting to SEK 2,000. The subsidiaries were registered during 2006 and hold no assets, liabilities or contingent liabilities at the end of the reporting period. The acquired companies have been consolidated into the group’s accountings after the time of the acquirement.
IGE bought, in connection to the new share issue in IGE Nordic AB, IGE Diamond AB from IGE Nordic AB. The company had by the time of the acquisition no operations, it is currently 100% owned by IGE and has a book value of SEK 100,000. After the concluded acquisition, IGE Diamond bought IGE Ltd, which is the holding company for all operations related to Angola within the IGE Group, from the parent company.
In connection with the new share issue in IGE Nordic a minority interest occurred. 25.4% of the company is not owned by the parent company, International Gold Exploration. The preparations of IGE Nordic AB in order to carry out the IPO were done by the sell-out of all assets from International Gold Exploration All liabilities and costs related to the activities in the Nordic region within the IGE Group was transferred to the International Gold Exploration. The Initial Public Offer in IGE Nordic AB provided the Company with about SEK 88 million (after deduction of costs related to the transaction) in cash. SEK 33 million of the contributed equity is referable to minority interest
The Group’s result for 2007 includes a loss amounting to SEK 814,000 recorded in the subsidiaries IGE Nordic AB and IGE Burundi SA which is referable to the minority owners.
Financial assets, liabilities and other financial instruments
Financial instruments reported as assets in the balance sheet includes: Liquid funds, accounts receivables and
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short-term investments. The liabilities consist of account payables. Financial instruments are accounted for to its real value. A financial asset or financial liability is accounted for in the balance sheet when the company becomes a part of an agreement regarding the asset or liability. Short-term investments refer to holdings in MinMet Plc and an investment in guaranteed bonds. The short-term investments are valued to its real value in the income statement. IGE has no derivative instruments and no hedge accounting is applied.
Cash and cash equivalents
Cash and cash equivalents refers to cash at bank.
Retirement plans
Within the Group there are only fixed-fee retirement plans. Commitments regarding fees to the fixed-fee retirement plans are reported as costs when they occur.
Contingent liability
A contingent liability, on behalf of IGE, could be for example, damage to the environmental that the company’s operations have caused within a concession area. IGE is obligated to restore the environment to its initial conditions before returning the permit. This may result in costs that IGE is charged for. Examples of damages are; wheel track in the terrain, lumbered trees etc. The company considers these contingent liabilities to be negligible which results in that the balance sheet item regarding the contingent liabilities is amounting to 0.
Leasing
Leasing is classified in the Group accounting either as financial or operational. Financial leasing exists when the economic risks and the benefits that are associated with ownership in all essential points are transferred to the leasing user, all other leasing is classified as operational leasing. Within the Group there exists no financial leasing. Leasing fees related to operational leasing are cost accounted linearly over the duration starting from the time of utilization.
Key figures definitions
• Profit margin is calculated as the profit after financial items in percentage of the income. • Solidity is calculated as equity in percentage of the total of the balance sheet • Average number of shares is calculated as the number of shares in the opening balance and new
shares that have been issued during the reporting period. adjusted for the actual number of days they have existed
• The average number of shares is adjusted for new share issues issued at a discount i.e. issued at a price that is lower than the current market price. A factor of adjustment is calculated which is used in a new calculation of the average number of shares in order to adapt the figures for comparison with prior periods.
Changes in the accounting principles
The Company has from 2007 applied IFRS 7 ”Financial Instrument”. The application of this principle has not resulted in any changes of the accountings. The principle puts higher demand on the level of information added by Company in the financial report. This holds also for the change over from RR 30:5 to 30:6, which also puts higher requirements on the information enclosed in the Group accountings.
20.2 Interim financial information
The quarterly financial report for IGE for Q3 2008 can be inspected on www.ige.se, this report has not been audited.
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20.3 Dividend policy
The Company intends to follow a dividend policy favourable to the shareholders. The amount of any dividends to be distributed will be dependent on the Company’s investment requirements and rate of growth as well as the general development and financing requirements of the Company.
IGE has not paid any divided since its incorporation.
20.4 Legal and arbitration proceedings The Company is not involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) which may have, or have had in the recent past significant effects on the Company’s or the group’s financial position or profitability, nor has the Company been involved in any such proceedings during the previous 12 months.
20.5 Significant changes
There have been no significant changes in the financial or trading position of the group which has occurred since 30 September 2008, other than the intention to make a Voluntary Offer for all issued and outstanding shares in IGE Nordic described in the Securities Note and the convertible loan completed 5 November 2008 (described in the press release dated 5 November 2008 and the Q3 2008 report). Reference is further made to other notifications published by the Company on Oslo Stock Exchange.
20.6 Segment information The business of IGE has not since its incorporation generated revenues, and a breakdown of total revenues by category of activity and geographic market for the financial periods covered by the historical financial information is not available.
20.7 Trends
The Company has not experienced any significant changes or trends outside the ordinary course of business that are significant to the Company after 31 December 2007 or for the financial year 2008 as at the date of this Prospectus, other than those described in this Prospectus.
20.8 Information on holdings
Except for the ownership in the companies set out in section 8, the Company does not have any ownership interests or investments which are likely to have a significant effect on the assessment of the Company’s own assets and liabilities, financial position or profit and losses.
20.9 Funding and treasury policies and objectives The Board of Directors together with the Chief Financial Officer shall ensure that the Company has adequate, though not excessive cash resources, and when applicable borrowing arrangements and overdraft or standby facilities, to enable it at all times to have the level of funds available which is required to achieve its business/service objectives. The Company has established accounting and internal control systems to ensure that the cash resources, or when applicable loan facility funds, are appropriated according to the budget and allowed use set by the Board of Directors, in accordance with laws, regulations and auditing standard and practices generally accepted in Norway.
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21 ADDITIONAL INFORMATION
The following description includes certain information concerning the Company’s share capital, a brief description of certain provisions contained in the Company’s Articles of Association as they are in effect at the date of this Prospectus and a brief description of certain applicable law, hereunder the Swedish Companies Act and the Norwegian Securities Trading Act. The summary does not purport to be complete and is qualified in its entirety by the Company’s Articles of Association and laws pertaining to the Company. Any change in the Articles of Association is subject to approval by a general meeting of the Company’s shareholders.
21.1 General
Under Swedish law, limited liability companies are divided into two categories, private and public companies. Only the shares of public companies may be traded on a stock exchange or other regulated market places. The Company is a Swedish public limited liability company (in Swedish: publikt aktiebolag), subject to provisions of above all the Swedish Companies Act.
21.2 Shares and Share Capital
The Company’s Share Capital prior to the issue of the Consideration Shares is SEK 18,750,000 divided into 375,000,000 Shares, each with a par value of SEK 0.05.
The Company has one class of Shares which are fully paid.
21.3 Development in share capital
As per the date of this Prospectus the number of Shares outstanding was 375,000,000. The Company has undertaken the following share issues since the foundation in 1983:
Date TransactionChange in no of shares
No of Shares after change Par Value (SEK)
Change in Share Capital (SEK) Share Capital
18/04/83 Foundation 0 500 100 0 50,000 20/09/83 Split 50:1 24,500 25,000 2 0 50,000 22/09/89 New share issue 5,000 30,000 2 10,000 60,000 10/10/89 New share issue 200,000 230,000 2 400,000 460,000 22/11/89 New share issue 560,000 790,000 2 1,120,000 1,580,000 01/01/97 Split 40:1 30,810,000 31,600,000 0.05 0 1,580,000 18/11/97 New share issue 25,000,000 56,600,000 0.05 1,250,000 2,830,000 18/07/00 New share issue 21,120,000 77,720,000 0.05 1,056,000 3,886,000 19/11/01 New share issue 77,560,000 155,280,000 0.05 3,878,000 7,764,000 02/10/02 New share issue 37,920,000 193,200,000 0.05 1,896,000 9,660,000 12/05/04 New share issue 5,000,000 198,200,000 0.05 250,000 9,910,000 16/03/05 Exercised w arrant 50,000,000 248,200,000 0.05 2,500,000 12,410,000 24/05/05 New share issue 19,000,000 267,200,000 0.05 950,000 13,360,000 05/07/05 New share issue 25,000,000 292,200,000 0.05 1,250,000 14,610,000 19/10/05 New share issue 18,000,000 310,200,000 0.05 900,000 15,510,000 12/12/05 New share issue 800,000 311,000,000 0.05 40,000 15,550,000 07/12/06 New share issue 30,000,000 341,000,000 0.05 1,500,000 17,050,000 16/04/08 New share issue 34,000,000 375,000,000 0.05 1,700,000 18,750,000
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21.4 Share options, convertible securities, etc
There are no options established to the Share Capital of the Company, other than the warrants granted to the members of the Board of Directors and the key employees, according to the option plan resolved by the Board of Directors, in accordance with an authorization from the General Meeting (see section 15).
The Company has not issued any convertible securities, exchangeable securities, warrants or other securities exchange into Shares other than the incentive programme for executive officers and key personnel described in this section.
21.5 Authorisation to increase the share capital
On 6 May 2008, the Annual General Meeting of the Company resolved to grant the Board of Directors with an authorisation to resolve the issue up to 34,100,000 new Shares in the Company. The authorization has the following wording (English translation):
“The general meeting resolved to authorize the board, to decide on increase of the Company’s share capital, on one or several occasions until the next annual general meeting, through the issuance of shares, convertibles or warrants, encompassing a share capital increase with up to SEK 1,705,000 corresponding to a maximum of 34,100,000 shares The authorization is valid until the next annual general meeting. The preferential right of the existing shareholders may be derogated from. Payments for subscribed shares, convertible loans or warrants may be settled by way of cash contribution, contribution in kind or set-off of debt. The authorization may be used for the purpose of raising capital and/or acquisitions where the consideration in whole or in part shall be made in shares.”
21.6 Own shares
The Company does not hold any own Shares. The Board of Directors holds no authorization to resolve that the Company shall acquire any own Shares.
21.7 Memorandum and Articles of Association
The Articles of Association of International Gold Exploration IGE AB are included in Appendix 1 to this Registration Document.
According to its Articles of Association section 3, the purpose of the company is, directly or through subsidiaries or joint ventures, to carry on mining activities and exploration of minerals, and to own and manage movable and real property, and activities connected with such.
The Company has one class of shares only. According to the Articles of Association section 6 the Board of Directors shall have at least 3 and maximum 6 members.
The Articles of Association of the Company contain no provisions restricting foreign ownership of Shares. There are no limitations under Swedish law on the rights of non-residents or foreign owners to hold or vote the Shares.
21.8 Shareholder rights
The Shares are identical in every respect and carry the right to one vote at general meetings. None of the major shareholders have different voting rights.
All dividends of the Company shall be declared, apportioned and paid to the shareholders pro rata to the number of Shares held at the relevant date. Shareholders have pre-emption rights in new issues of securities by the Company unless such pre-emption rights is waived by a shareholders’ resolution which requires
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support by two-thirds of the votes cast as well as two-thirds of the aggregate share capital represented at the general meeting of the Company.
Any amendment of the shareholders rights to vote at general meetings must be done by amending the articles of association. According to the Swedish Companies Act amendments of the company’s Articles of Association requires in general the affirmative vote of two-thirds of the votes cast as well as two-thirds of the aggregate share capital represented at the general meeting. Further, the Swedish Companies Act requires that decisions that only have the effect of altering the rights and preferences of certain share or shares, receive the approval of all the holders of such share or shares present at the meeting and who together represent not less than nine-tenth of all shares whose rights are affected, as well as the majority required for amendments to the Company's Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares, require to be supported by all of the shareholders present at the meeting who together represent not less than 90% of the share capital in the Company. Decisions that means restrictions in the number of shares which shareholders may vote for at general meeting require to be supported by two-thirds of the vote casts and nine-tenth of the shares represented at the general meeting.
All Shares carry an equal right to any surplus in the event of a liquidation of the Company.
There are neither restrictions on the transferability of the Shares nor any restrictions on foreign ownership of the Company’s Shares. Existing shareholders do not have any pre-emptive rights upon the transfer of Shares in the Company.
21.9 General meetings of shareholders
Through the general meeting, the Company’s shareholders exercise the supreme authority in the Company, subject to the limitations provided by Swedish law.
All shareholders in the Company are entitled to attend and vote at general meetings, either in person or by proxy. n general, in order to be entitled to vote, a shareholder must be registered as the owner of Shares in the share register kept by the VPC. Beneficial owners of Shares that are registered in the name of a nominee are generally not entitled to vote under Swedish law, nor are any persons who are designated in the register as holding such Shares as nominees. Shareholders registered as such in the VPS will only be entitled to vote at general meetings of the Company if he has arranged for registration of entitlement to vote (in Swedish: Rösträttregistrering) in the VPC through the Registrar at the latest 5 business days (including Saturdays) prior to the general meeting and has noticed the Company of his participation at the general meeting in accordance with the notice to the meeting.
General meetings are conveyed by the Company’s Board of Directors. In accordance with the Company’s Articles of Association, a notice of a general meeting shall be announced in Official Gazette (in Swedish: Post och Inrikes Tidningar) and in Dagens Industri at the latest two or four weeks before the date of the meeting depending on the type of meeting and matters to be addressed at the meeting, and shall include a proposal for an agenda for the meeting. A shareholder is entitled to submit proposals to be discussed at general meetings provided such proposals are submitted in writing to the Board of Directors in such good time that it can be entered on the agenda of the meeting.
The annual general meeting shall be called by the Board of Directors such that it can be held within six months from the end of each financial year. The annual general meeting shall deal with and decide on the adoption of the annual financial statement and annual report, the question of declaring dividend and such other matters as may be set out in the notice of the annual general meeting.
Extraordinary general meetings can be called by the Board of Directors, and if applicable the corporate assembly or the chairman of the corporate assembly. In addition, the Board of Directors shall call an extraordinary general meeting whenever so demanded in writing by the auditor or shareholders representing at least 10% of the share capital, in order to deal with a specific subject.
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The following matters shall always be resolved by the general meeting:
• Approval of the annual report and the auditors’ report as well as, where appropriate, the consolidated accounts and auditors’ report on the consolidated accounts.
• Adoption of the profit and loss account and balance sheet and, where appropriate, the consolidated profit and loss account and consolidated balance sheet; allocation of the company’s profits or losses as set forth in the adopted balance sheet; discharge from liability of the members of the Board and the managing director; Determination of the remuneration to the Board and the auditors.
• Election of the Board members and, where appropriate, auditors and alternate auditors.
21.10 Corporate matters
International Gold Exploration IGE AB (publ) is registered with the Swedish Companies Registration Office under the registration number: 556227-8043, subject to Swedish regulations. The articles of association are included in Appendix 1. International Gold Exploration has its head office at Kungsgatan 44, SE-111 35 Stockholm, Sweden.
336,335,064 of the Shares of International Gold Exploration are admitted to trading on the Oslo Stock Exchange with the ticker IGE with a traded share price of NOK 1.07 and a market capitalisation of approximately NOK 401 million as per 14 July 2008. The remaining 38,664,936 Shares are admitted to trading on the NGM Equity exchange in Sweden with the ticker IGE.
The Company’s share register is operated through the VPS in Norway and through the VPC in Sweden. The Company’s registrar is DnB NOR Bank ASA. The securities number (ISIN number) for the Company’s Shares is SE 000378119.
21.11 Legal and arbitration proceedings
As of the date of this Prospectus and for the preceding 12 months, the Company is not and has not been involved in any governmental, legal or arbitration proceedings, including any such proceedings which are pending or threatened of which the Company is aware of, which are likely to have, or have had in the recent past, significant effects on the Company’s financial position.
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22 MATERIAL CONTRACTS
IGE has entered into the following contracts considered to be of material importance for the business of the Company:
• IGE’s subsidiary in Burundi, IGE Burundi SA, has entered in to a joint venture agreement with MRG Nickel Investments Ltd. IGE, owns 54% and MRG Nickel Investments Ltd, a company within the Mitchell River Group, own 46%. The new company, Tanganickel SA, will pursue nickel exploration and development projects in Burundi.
Mitchell River Group (MRG) is a private investment partnership specializing in the natural resources industries. MRG provides seed funding and management for early stage resource projects with a primary focus on base metals, particularly nickel and uranium.
The Company consider the agreement to be of high interest for the Group due to MRG’s experience, track record and competence within the work of resource evaluation, metallurgy, permitting, feasibility studies and project management for these projects.
• The Company entered a Joint Venture agreement in July 2007 with the South African Company Goldplat Plc. The purpose of the Joint Venture is to start small scale gold production at Kilimapesa in the Lolgorien region of south west Kenya, The joint venture is registered in Kenya as Kilimapesa Gold (Pty) Ltd. IGE's interest in the project is 50%.
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23 THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATIONS OF ANY INTEREST
23.1 Statements by experts
The Prospectus contains no statements by experts regarding the company or market conditions.
23.2 Third party information
The information in this Prospectus that has been sourced from third parties has been accurately reproduced and as far as the Company is aware and able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of third party information is identified where used.
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24 NORWEGIAN TAX
The following is a summary of certain Norwegian tax considerations relevant to the acquisition, ownership and disposition of shares by holders that are residents of Norway for purposes of Norwegian taxation. The summary is based on applicable Norwegian laws, rules and regulations as they exist as of the date of this Prospectus. Such laws, rules and regulations are subject to change, possibly on a retroactive basis. The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to the shareholders and does not address foreign tax laws. Each shareholder should consult his or her own tax advisor to determine the particular tax consequences for him or her and the applicability and effect of any Norwegian or foreign tax laws and possible changes in such laws.
24.1 Norwegian shareholders
24.1.1 Taxation of dividends
Corporate shareholders
Dividends distributed from the Company to Norwegian corporate shareholders (i.e. limited liability companies and similar entities) are currently exempt from taxation according to the tax exemption method.
Personal shareholders
Dividends distributed to personal Norwegian shareholders exceeding a calculated tax free allowance, will be taxed as ordinary income for the shareholder. Ordinary income is taxed at a flat rate of 28%. The tax-free allowance is calculated as the acquisition cost of the share multiplied by a determined (risk-free) interest rate after tax. The tax-free allowance will be calculated on each individual share, not on a portfolio basis. Unused allowance may be carried forward and set off against future dividends or against gains upon realisation of the same share.
The tax free allowance is allocated to the personal shareholders holding shares at the end of each calendar year. Personal shareholders who transfer shares will not be entitled to deduct any calculated allowance related to the year of transfer.
24.1.2 Taxation upon realisation of Shares
Corporate shareholders
For Norwegian corporate shareholders, gains from sale or other disposition of shares in the Company are currently exempt from taxation according to the tax exemption method, and losses suffered from such realisation are not tax deductible. Costs incurred in connection with the purchase and sale of shares are not tax deductible.
However, pursuant to a proposed amendment, 3% of any capital gains realised and any dividends declared after 7 October 2008 shall be recognised as taxable income. If the proposal is adopted by the Norwegian Parliament this implies that any capital gain derived from the exchange of shares in International Gold Exploration will effectively be subject to 0.84% income tax (28% tax rate x 3% of the capital gain / dividend). If the realisation of shares in International Gold Exploration leads to a capital loss, no part of such loss will be deductible for a corporate shareholder for tax purposes.
Personal shareholders
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For Norwegian personal shareholders gains from sale or other disposition of shares are taxable as ordinary income at a rate of 28% and losses are deductible against ordinary income.
Gain or loss is calculated per share, as the difference is the sales price minus the acquisition cost of the share. A taxable gain on a share may be reduced by unused calculated allowance connected to the same share (see section 24.1.1 “Personal shareholders” on Taxation of Dividends) but may not lead to or increase a deductible loss. Further, unused allowance may not be set off against gains from realisation of the other shares. The tax free allowance is allocated to the personal shareholders holding shares at the end of each calendar year. Personal shareholders who transfer shares will not be entitled to deduct any calculated allowance related to the year of transfer.
If a shareholder disposes of shares acquired at different times, the shares that were first acquired will be deemed as first sold (the FIFO-principle) upon calculating taxable gain or loss. Costs incurred in connection with the purchase and sale of shares may be deducted in the year of sale.
A Norwegian personal shareholder who moves abroad and ceases to be tax resident in Norway or is regarded as tax resident in another jurisdiction according to an applicable tax treaty, will be deemed taxable in Norway for any potential gain related to the shares held at the time the tax residency ceased or the time when the shareholder was regarded as tax resident in another jurisdiction according to an applicable tax treaty, as if the shares were realised at this time (exit taxation). Currently, gains of NOK 500,000 or less are not taxable. If the shareholder moves to a jurisdiction within the EEA, potential losses related to shares held at the time tax residency ceases will be tax deductible. Taxation (loss deduction) will occur at the time the shares are actually sold or otherwise disposed of. The tax liability calculated according to these provisions will be annulled i.e. if the shares are not realised within five years after the shareholder ceased to be resident in Norway for tax purposes or was regarded as tax resident in another jurisdiction according to an applicable tax treaty.
24.1.3 Net wealth tax
Norwegian limited liability companies or similar entities are exempted from net wealth tax. For other resident shareholders, the shares will form part of the capital and be subject to net wealth tax. The maximum wealth tax rate is 1.1%.
Listed shares are valued at the quoted value at January 1 in the assessment year.
24.1.4 Inheritance tax
When shares are transferred either through inheritance or as a gift, such transfer may give rise to inheritance or gift tax in Norway if the deceased, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway. However, in the case of inheritance tax, if the deceased was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax, or a similar tax, is levied by the deceased's country of residence. Irrespective of residence or citizenship,
Norwegian inheritance tax may be levied if the shares are effectively connected with certain business activities carried out by the shareholder in Norway.
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25 SWEDISH TAX
The statements herein regarding taxation are unless otherwise stated based on the laws in force in Sweden as of the date of this Prospectus, and are subject to any changes in law occurring after such date. Such changes could be made on a retrospective basis.
The following summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to acquire, own or dispose of the shares. Furthermore, the summary only focuses on the shareholder categories explicitly mentioned below (individual shareholders and limited liability companies).
Shareholders are advised to consult their own tax advisors concerning the overall tax consequences of their ownership of Shares. In particular, this document does not include any information with respect to U.S. taxation or taxation in any other jurisdiction than Sweden. Prospective investors who may be subject to tax in the United States or any other jurisdiction are urged to consult their tax adviser regarding federal, state, local and other tax consequence of owning and disposing of Shares.
25.1 Swedish shareholders
Taxation of dividends - Individual shareholders
Dividends paid to a Swedish tax resident individual are taxed in Sweden as capital income at a flat rate of 30%. The VPC or – if the shares are nominee registered – the Nominee withholds the tax as a preliminary tax.
Taxation of dividends - Corporate shareholders (Limited liability companies)
Dividends paid to a Swedish corporate shareholder are normally taxed as ordinary business income at a flat rate of 28%. Dividends attributable to so-called business related shares are tax-exempt. Publicly traded shares are considered as being business related if the transferor holds at least 10% of the voting rights in the sold company or if the holding otherwise is necessary for the business conducted by the holder or any of its affiliates and that the transferor has held the transferred shares for an uninterrupted period of at least 12 months prior to the transfer date and that the transferor during this 12-month period has held a participation of at least 10% in the voting rights of the transferred company.
Taxation on realisation of Shares - general
The capital gain or, where applicable, the capital loss, is calculated as the difference between the sales proceeds less sales expenditure and the acquisition cost (costs related to acquisition and potential improvements) for the Shares sold. The acquisition cost is calculated according to the so-called average method, implying that the tax acquisition cost is calculated as the average acquisition cost for all the Shares of the same type and class.
Since the Shares in the Company are publicly traded, the acquisition cost related to these shares may be determined as 20% of the sales price after deduction of expenses related to the sale; the so-called standard rule
Taxation on realisation of Shares - Individual shareholders
A capital gain realized by Swedish tax resident individuals is taxed as capital income at a flat rate of 30%. A capital loss is normally deductible with 70% against other capital incomes. However, capital losses on publicly traded shares (such as the Company’s Shares) are fully deductible against capital gains on shares (publicly traded and not-publicly traded) and on publicly traded securities taxed as shares (except for parts in interest funds) and which have been realized the same year. Capital losses may not be carried forward to the following income year.
If a net capital income loss should arise, 30% of this loss may be credited against earned income tax and
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against real estate tax. However, if the loss exceeds SEK 100,000 only 21% of the excess portion allows for a tax credit
Taxation on realization of Shares - Corporate shareholders
A capital gain realized by a corporate shareholder is normally taxed as ordinary business income at a flat rate of 28%; please see below as regards corporate shareholders holding so-called business related shares. Capital losses may only be deducted against capital gains on other securities taxed as shares. In certain cases capital losses may be offset against capital gains realized by group companies if group contributions can be exchanged between the companies. Capital losses that are not offset against capital gains may be carried forward to the following income year.
Capital gains and capital losses attributable to so-called business related shares held by corporate shareholders are not taxable/tax deductible. Special rules apply when a share cease to be business related.
Net wealth tax
There is no wealth tax in Sweden.
25.2 Non-resident shareholders
This section summarizes Swedish tax rules relevant to shareholders who are not resident in Sweden for tax purposes (“Non-resident shareholders”). Non-resident shareholders’ tax liabilities in their home country or other countries will depend on applicable tax rules in the relevant country.
Taxation of dividends
Dividends distributed to shareholders who are individuals not resident in Sweden for tax purposes (“Non-resident personal shareholders”), are as a general rule subject to withholding tax at a rate of 30%. The withholding tax rate of 30% is normally reduced through tax treaties between Sweden and the country in which the shareholder is resident. The withholding obligation lies with the company distributing the dividends.
The above generally applies also to shareholders who are limited liability companies not resident in Sweden for tax purposes (“Non-resident corporate shareholders”). However, dividends distributed to Non-resident corporate shareholders are exempt from withholding tax if the Non-resident corporate shareholder shares in the company are business related shares in the dividend paying company.
Non-resident personal shareholders are subject to ordinary withholding tax.
Nominee registered Shares will be subject to withholding tax at a rate of 30% unless the nominee shows to the Tax Agency that the dividend shall to be subject to a lower withholding tax rate. The nominee must file a summary with the Tax Agency including all beneficial owners that are subject to lower withholding tax.
If a Non-resident shareholder is carrying on business activities in Sweden, and the Shares are effectively connected with such activities, the shareholder will be subject to the same taxation as Swedish shareholders, as described above.
Taxation on realization of Shares
Gains from the sale or other disposal of Shares by a Non-resident shareholder are normally not taxed in Sweden.
Moreover, a Non-resident personal shareholder may be subject to Swedish income tax on gain on shares, if this person at any time during the calendar year of the disposal or the previous ten calendar years has been domiciled or permanently resident in Sweden. However this right may be limited by applicable tax treaties for the avoidance of double taxation.
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25.3 Duties on the transfer of Shares
No stamp or similar duties are currently imposed in Sweden on the transfer of Shares whether on acquisition or disposal.
25.4 Inheritance tax
There is no inheritance tax in Sweden.
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26 DEFINITIONS & GLOSSARY TERMS
The following definitions and glossary apply in this Prospectus unless dictated otherwise by the context, including the foregoing pages of this Prospectus. Definitions in plural also apply for words in singular, and vice versa.
Articles of Association The articles of Association of International Gold Exploration IGE AB as the date of the prospectus
Board The Board of Directors of International Gold Exploration IGE AB
Business Day a day (not being a Saturday) on which banks are open for business in Oslo
CESR The Committee of European Securities Regulators
CET Central European time
Claim or utmål Right to explore, produce and mine within certain limits as defined in the Norwegian Mining Act of 1972. Such right may be applied for if the production from the mine is or, within reasonable time, most probably will be profitable
Company International Gold Exploration IGE AB
Code of practice The Norwegian Code of Practice for Corporate Governance of 4 December 2007
EBIT Earnings Before Interest and Tax
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
EGM Extraordinary General Meeting
Handelsbanken Capital Markets A division of Svenska Handelsbanken AB (publ), registered in Stockholm Sweden.
IFRS International Financial Reporting Standards
IGE International Gold Exploration IGE AB and its subsidiaries
Management The management of International Gold Exploration IGE AB
Manager Handelsbanken Capital Markets
Muting or Pre-claim Norwegian initial exploration licence as defined in the Norwegian Mining Act of 1972. A Claim is a 250x250 meter permit from Bergmesteren to initiate initial exploration for minerals with specific density above 5
NGU The geological Survey of Norway
NOK The currency in the Kingdom of Norway (Norwegian krone)
International Gold Exploration International Gold Exploration IGE AB without subsidiaries
IGE Group or the Group International Gold Exploration IGE AB and its subsidiaries
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Ore Mineral of proven economic value
Ore reserve A mineral deposit of proven economic value
Oslo Børs Oslo Børs ASA
Prospectus The Prospectus issued by the Company in relation to the Offering, comprising of this Registration Document, the Security Note and the Summary prepared, published and approved by and filed with Oslo Børs in accordance with the Prospectus Rules
Prospectus Rules The Prospectus rules in the Securities Trading Act and the Securities Trading Regulation, which implements the Prospective Directive (EC/2003/71), including the Commission Regulation EC/809/2004, in Norwegian law
Swedish Limited Companies Act The Swedish Limited Companies Act of 2005:551 (as amended)
Registration Document The Registration Document, dated 1 December 2008, produced under the Prospectus Rules, which together with this document and the Summary, constitutes the Prospectus
Securities Note The Securities Note produced under the Prospectus Rules, which, together with this document and the Summary, constitutes the Prospectus
Securities Trading Act The Securities Trading Act of 26 June 2007 No. 75 (as amended)
Securities Trading Regulation The Securities Trading Regulation of 29 June 2007 No. 876 (as amended)
Shares All shares issued by the Company
Stock Exchange Regulations The Stock Exchange Regulations of 29 June 2007 No. 74 (as amended)
Summary The Summary produced under the Prospectus Rules, which, together with this document and the Registration Document, constitutes the Prospectus
VPS The Norwegian Central Securities Depository
VPS account An account held with VPS to register ownership of securities
VPC The Swedish Central Securities Depository
VPC account An account held with VPC to register ownership of securities
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27 APPENDICES AND DOCUMENTS ON DISPLAY
27.1 Appendices The following appendices are included in this Prospectus:
• Appendix 1: Articles of Association of International Gold Exploration IGE AB • Appendix 2: Acceptance form
27.2 Documents on Display
The documents listed below will be available for inspection for the life of the Prospectus on the Internet at www.ige.se, or at the addresses below:
(a) the memorandum and articles of association of the issuer; (b) all reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the issuer's request any part of which is included or referred to in the registration document; (c) the historical financial information of the issuer or, in the case of a group, the historical financial information for the issuer and its subsidiary undertakings for each of the two financial years preceding the publication of the registration document.
The Company's office: International Gold Exploration IGE AB Kungsgatan 44 SE-111 35 Stockholm, Sweden
The Manager's offices: Handelsbanken Capital Markets
Rådhusgaten 27 N-0101 Oslo, Norway
27.3 Cross Reference List Name of document Prospectus reference Available from: Q3 2008 quarterly report
Chapter 4, 5.2, 10.1.1, 11, 20.1, 20.2 & 20.5
http://www.ige.se/?file=press/pressreleases/index.xml
2007 annual report Chapter 4, 5.2, 8, 10.1.2, 11, 15.5 & 20.1
http://www.ige.se/?file=press/pressreleases/index.xml
2006 annual report Chapter 4, 5.2, 10.1.3, 11 & 20.1
http://www.ige.se/?file=press/pressreleases/index.xml
2005 annual report Chapter 4, 5.2, 10.1.4, 11 & 20.1
http://www.ige.se/?file=press/pressreleases/index.xml
IGE Nordic AB Listing Prospectus 2007, Appendix 10 Brook Hunt Report
Chapter 7.7 http://www.igenordic.se/pdf/Prospectus_IGE_Nordic.pdf
III. VOLUNTARY OFFER DOCUMENT AND
SHARE SECURITIES NOTE
Voluntary Offer for all issued and outstanding shares in
Made by
Voluntary Offer:
One (1) share in IGE Nordic AB (Publ.) to be exchanged into four (4) shares in International Gold
Exploration IGE AB (Publ.)
Offer Period:
From and including 1 December 2008 to and including 15 December 2008 at 17:30 (CET)
Share Securities Note for Shares in International Gold Exploration IGE AB (Publ.) offered under the Voluntary Offer
Financial Adviser and Manager:
28 NOVEMBER 2008
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TABLE OF CONTENTS
1 RISK FACTORS RELATING TO INTERNATIONAL GOLD EXPLORATION ................................. 6
1.1 General risks ............................................................................................................................. 6 1.2 Risks connected to exploration and development of minerals and metals ............................... 6 1.3 Risks connected to technological developments ...................................................................... 9 1.4 Regulatory and political risks ................................................................................................... 9 1.5 Risks related to the Shares ...................................................................................................... 10
2 STATEMENTS OF RESPONSIBILITY ........................................................................................ 11
3 THE VOLUNTARY OFFER ...................................................................................................... 12
3.1 Voluntary Offer to exchange Shares in IGE Nordic with Shares in International Gold Exploration .................................................................................................................... 12
3.2 The Offeror ............................................................................................................................. 12 3.3 The Target company ............................................................................................................... 12 3.4 Reasons for the Offer and Plans for the Future Business ....................................................... 12 3.5 Contact between the Parties Prior to the Offer ....................................................................... 12 3.6 Impact on the Company’s Employees .................................................................................... 13 3.7 Offer Price .............................................................................................................................. 13 3.8 The Offer Period ..................................................................................................................... 13 3.9 Acceptance of the Offer ......................................................................................................... 14 3.10 Conditions to the Offer ........................................................................................................... 14 3.11 Amendments to the Offer ....................................................................................................... 15 3.12 Announcements ...................................................................................................................... 15 3.13 Completion of the Offer and Issuance of the Consideration Shares ....................................... 15 3.14 Legislation .............................................................................................................................. 17 3.15 Statement from the Board of IGE Nordic ............................................................................... 17 3.16 Pre-acceptances of the Voluntary Offer ................................................................................. 18 3.17 Interest of natural or legal persons involved in the Voluntary Offer ...................................... 18 3.18 Transaction Costs ................................................................................................................... 18 3.19 Tax ......................................................................................................................................... 19 3.20 Purchase of shares in IGE Nordic outside the Offer .............................................................. 19 3.21 Compulsory Acquisition ......................................................................................................... 19 3.22 Delisting from Oslo Axess ..................................................................................................... 19 3.23 Financial Advisor and Manager ............................................................................................. 19 3.24 Miscellaneous ......................................................................................................................... 19 3.25 Choice of Law and Legal Venue ............................................................................................ 20 3.26 Offer Restrictions ................................................................................................................... 20
4 INFORMATION ABOUT IGE NORDIC ...................................................................................... 22
4.1 General ................................................................................................................................... 22 4.2 Selected Financial Information............................................................................................... 22 4.3 Share Capital and Shareholders .............................................................................................. 26
5 INFORMATION ABOUT IGE ................................................................................................... 27
6 LEGAL IMPLICATIONS OF THE OFFER ................................................................................. 28
7 STATUTORY AUDITORS ......................................................................................................... 29
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8 KEY INFORMATION ............................................................................................................... 30
9 SHARE CAPITAL AND SHAREHOLDER MATTERS ................................................................. 33
9.1 The Company’s share capital before the issue of Consideration Shares ................................ 33 9.2 Authority to issue Shares ........................................................................................................ 33 9.3 The Company’s share capital after the issue of Consideration Shares ................................... 33 9.4 Dilution ................................................................................................................................... 34 9.5 Share registrar and securities number ..................................................................................... 34 9.6 Shareholder rights ................................................................................................................... 34 9.7 International Gold Exploration’s share register in VPC ......................................................... 35 9.8 Other shareholder matters ...................................................................................................... 35
10 TAXATION .............................................................................................................................. 41
10.1 Shareholders who are resident in Norway .............................................................................. 41 10.2 Shareholders who are resident in Sweden .............................................................................. 43 10.3 Shareholders who are resident in other jurisdictions .............................................................. 45
11 ADDITIONAL INFORMATION .................................................................................................. 46
11.1 Statements by experts ............................................................................................................. 46 11.2 Third party information .......................................................................................................... 46
12 DEFINITIONS & GLOSSARY TERMS ....................................................................................... 47
APPENDICES 49
Appendix 1: Articles of Association of International Gold Exploration (office translation into English) ................................................................................................................. 49
Appendix 2: Acceptance Form .......................................................................................................... 51
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IMPORTANT NOTICE
This Document has been prepared in connection with the Offer submitted by International Gold Exploration pursuant to section 6-19 of the Norwegian Securities Trading Act and the issue of the Consideration Shares under the Offer.
The Offer and this Document has been approved by Oslo Børs in accordance with section 6-14 of the Norwegian Securities Trading Act. Shareholders of IGE Nordic must rely upon their own examination of the Offer and should study this Document and the Registration Document carefully and, if necessary, seek independent advice concerning the Offer, this Document and the Prospectus.
The issue and distribution of this Document and the Prospectus does not imply in any way that the information included herein continues to be correct and complete at any date subsequent to the date of this Document and the Prospectus.
With the exception of International Gold Exploration, no person is entitled or authorised to provide any information or make any representations in connection with the Offer other than the information included in this Document and in the Prospectus. If such information or representation is provided or made by any other party than International Gold Exploration, such information or representation, as the case may be, should not be relied upon as having been provided or made by or on behalf of International Gold Exploration.
The Offer and the issue of the Consideration Shares are only directed towards IGE Nordic shareholders who may legally receive the Prospectus (including this Document) and accept the Offer.
Copies of this Offer Document will be distributed to the shareholders of IGE Nordic registered in the shareholders register in the VPS as at 26 November 2008, except for IGE Nordic shareholders in jurisdictions where this Document may not be lawfully distributed, and are available free of charge at the office of Handelsbanken Capital Markets:
Handelsbanken Capital Markets Rådhusgaten 27 P.O. Box 332 Sentrum N - 0101 Oslo Norway Tel: +47 22 94 07 00 Fax: +47 22 94 07 68
Handelsbanken Capital Markets is acting as the Receiving Agent for the Offer and Financial Adviser to International Gold Exploration. In its capacity as Receiving Agent and Financial Adviser, Handelsbanken Capital Markets is acting for no other party in connection with the Offer and will not be responsible to any person other than International Gold Exploration, nor for providing advice in relation to the Offer.
This Document has been prepared in the English language only. In addition, a summary in Swedish has been prepared.
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Restrictions
The distribution of this Prospectus and the making of the Offer may, in certain jurisdictions (including, but not limited to, Canada, Australia, Japan, the United States and the United Kingdom), be restricted by law. Therefore, persons obtaining this Document or into whose possession this Document otherwise comes, are required to, and should inform themselves of and observe all such restrictions. IGE and the Receiving Agent do not accept or assume any responsibility or liability for any violation by any person whomsoever of any such restriction.
The Offer is not directed to persons whose participation in the Offer requires that further offer documents are issued or that registration or other measures are taken, other than those required under Norwegian law. No document or materials relating to the Offer may be distributed in or into any jurisdiction where such distribution or offering requires any of the aforementioned measures to be taken or would be in conflict with any law or regulation of such a jurisdiction. In the event of such distribution or offering still being made, an Acceptance Form sent from such a country may be disregarded.
The Offering is not open to persons in jurisdictions in which it is unlawful for such person to receive or accept the Offer. Without limitation, the Offering is inter alia subject to such restrictions as set out in section 3.26 (“Offer Restrictions”). No action has been taken to permit the distribution of the Offer in any jurisdiction where action would be required for such purposes (except Norway and Sweden).
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Special Cautionary Notice Regarding Forward-looking Statements
The Prospectus contains certain statements that are neither reported financial results nor other historical information. Forward-looking statements are statements related to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These forward-looking statements reflect current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ materially from those expressed in any forward-looking statement. Certain factors that could cause actual results to differ materially from expected results include, among other things, delays in completing the transactions discussed herein, difficulties in achieving benefits for the group through economies of scale and joint future efforts, and changes in global economic, business, competitive market and regulatory factors, as well as other matters not known to International Gold Exploration. International Gold Exploration does not intend and disclaims any duty or obligation to update or revise any industry information or forward-looking statements set forth in the Prospectus to reflect new information, future events or otherwise.
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1 RISK FACTORS RELATING TO INTERNATIONAL GOLD EXPLORATION
Investing in International Gold Exploration, like all other equity investments, is associated with risk. Prospective investors should carefully consider each of the following risk factors and the other information contained in this Prospectus before making an investment decision. The trading price of the Company’s Shares could decline due to any of these risks and investors could lose all or part of their investment. The description of risks is not necessarily exhaustive and factors not mentioned here might nevertheless have a significant bearing on the value of the Shares in the Company. There may be additional risks that are currently not considered to be material or of which the Company is not presently aware. If any of the following risks were to materialise, the business, financial condition and results of operations could be adversely affected.
1.1 General risks
The Company’s risk profile will be dependent on developments in the main areas of activity in which it is involved. The Company’s main interests are in:
Exploration, extraction and processing of minerals and metals. Technological developments of geophysical exploration methods.
The risks discussed below are divided into the areas in which the Company will operate.
1.1.1 Share price volatility
The price of the Company’s Shares may be highly volatile. In addition, the stock markets have from time to time experienced significant price and volume fluctuations that have affected the market prices for the securities, which may be unrelated to company specific operating performance or prospects. Furthermore, the Company’s operating results and prospects may from time to time be below the expectations of market analysts and investors. Any of these events could result in a material decline in the price of the Shares.
The market price of the Shares could also decline due to sales of a large number of Shares in the Company in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a price that is deemed appropriate.
1.1.2 Macro economic fluctuations
International Gold Exploration is exposed to the economic cycle, and changes in the general economic situation could affect demand for the Company’s products and services.
Market conditions may affect the Shares regardless of International Gold Exploration’s operating performance or the overall performance of the mineral exploration and development sector. Accordingly, the market price of the Shares may not reflect the underlying value of the International Gold Exploration’s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to International Gold Exploration while others of which may be outside International Gold Exploration’s control.
1.2 Risks connected to exploration and development of minerals and metals
1.2.1 General
The Company’s prospects, which are in the exploration stage, will only be developed if the exploration is successful. Mineral exploration involves a high degree of risk and few properties that are explored are ultimately developed into producing mines. The long-term profitability of the Company will in part depend on the cost and success of its exploration programs.
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Substantial expenditures are required to establish mineral reserves through exploration in order to eventually develop the resources and later extract the established resource. Although substantial benefits may be derived from the discovery of a major mineral resource, no assurance can be given that the resources discovered will be of sufficient size, have a beneficial location, and be amenable to processing in order for the deposit to justify commercial and profitable operations.
1.2.2 Market risks
Minerals and metal prices
The Company has no control over mineral or metal prices, which can be affected by numerous factors including international economic and political trends, inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and increased or decreased production due to changes in extraction and production methods. The effect of these factors on the price of precious and base minerals and metals, and therefore the future economic viability of any of the Company's exploration projects, cannot be accurately predicted.
Government regulations
The future operations of the Company will, from time to time, require permits from governmental authorities and will be governed by laws and regulations regarding prospecting, development, mining, taxation, employment standards, occupational health, waste disposal, land use, environmental protection, mine safety and other matters. The Company may in the future need to apply for permits from different authorities. Companies engaged in the exploration and development of resource properties can experience increased costs as a result of the need to comply with applicable laws, regulations and permits as they change in the future, see also section 1.4 and 1.5.
Political risk
The operation of the Company is subject to local laws governing prospecting, development, production, taxes, national ownership restrictions, land use, land claims of local people and other matters. Although the Company believes that its exploration and development activities are currently carried out in accordance with all applicable laws, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail development. Political risk is relevant for the operations in Angola, Kenya, Burundi, Sweden and Norway. In respect of the latter, several of the regulatory approvals, planning regulations, licences etc outlined in section 1.4 below may be rejected, in full or in part based on political grounds.
Environmental factors
All phases of the Company's operations are subject to environmental regulations in the jurisdictions in which it operates. Environmental legislation may evolve in a manner, which in the future may require stricter regulations, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors, and employees. There are no assurances that future changes in environmental regulations, if any, will not adversely affect the Company’s operations. Compliance with respect to environmental regulations, closure and other matters may involve significant costs and/or other liabilities. Non Governmental Organizations generally being against mining may also from time to time criticize the Company's operations and development plans. In particular, but not limited to, environmental groups may mobilize against exploitation of thorium.
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1.2.3 Operational risks
Exploration risks
The Company’s existing activities are primarily directed towards exploration for and development of mineral and metal deposits. Mining operations generally involve a high degree of risk.
The Company’s operations are subject to all the hazards and risks normally encountered in the exploration, development and production of mineral deposits. These include, rock bursts, cave-ins, adverse weather conditions, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage and possible legal liability. Although adequate precautions to minimize risk are and will be taken, operations are subject to risks which may result in environmental pollution and consequent liability.
The exploration for and development of mineral and metal deposits, involve significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration or development programs planned by the Company will result in a profitable commercial mining operation.
Whether a mineral or a metal deposit will be commercially viable depends on a number of factors, some of which are, the particular attributes of the deposit, such as size, grade and proximity to infrastructure, commodity prices which are highly cyclical, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital. The Company’s projects are in the early stages. Expenditures made by the Company or initial drilling results are no guarantee for further developments or discoveries of profitable commercial mining operations. Lack of availability of drilling rigs could cause increased project expenditures and /or project delays.
Permits and licenses
The Company holds Pre-claims, Claims and mining rights in Angola, Kenya, Burundi, Sweden and Norway. Some of these licenses are subject to certain conditions. The Company has no reason to expect that the conditions will not be fulfilled or that these permits will not be granted, however, the Company has no guarantee that such conditions will remain to be fulfilled and that all necessary permits will be granted for specific projects.
Risk for inaccurate estimates
There are considerable uncertainty factors in estimating the size and value of mineral/metal reserves. The reservoir technique is a subjective and inexact process where the estimation of the accumulation of mineral/metals reserves in the property cannot be accurately measured. In order to evaluate the recoverable reserves, a number of geological, geophysical, technical and production data must be evaluated. The evaluation may later prove to be inaccurate, and estimated reserves may therefore be adjusted downward or upward.
Competition
The minerals and metals industries are highly competitive in all phases and the Company will be competing with many established companies, which may have more advantageous financial and technical resources. The Company has no guarantee that this competition will not have an adverse effect either now, or at some time in the future, on the Company's ability to acquire, explore, and develop its mineral and metals resource deposits.
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The mining and metal industry is a global business with producers in several different countries. There is strong competition for the discovery and acquisition of properties considered to have commercial potential. International Gold Exploration competes with other mining companies, many of which have greater financial resources than International Gold Exploration, for the acquisition of properties, leases and other interests as well as for the recruitment and retention of skilled personnel. Such factors may influence International Gold Exploration’s ability to secure new exploration areas or recruit and retain staff.
Dependence on key personnel
International Gold Exploration’s development and prospects are dependent upon the continued services and performance of its senior management and other key personnel and consultants. Financial difficulties or other factors could adversely affect the Company’s ability to retain key employees.
Uninsured losses
International Gold Exploration’s business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods, snow falls and avalanches. Such occurrences could have a material adverse effect on the Company’s business, operating result or financial condition. Although the Company intend to obtain some insurance to protect against certain risks in such amounts as it considers reasonable, its insurance will not cover all the potential risks associated with a mining company’s operations.
1.2.4 Financial risk
Requirement for new capital
The development of the Company’s properties, licenses, Claims and Pre-claims will depend upon the Company’s ability to obtain financing through equity financing, debt financing, project financing or other means. There is no assurance that the Company will be successful in obtaining the required financing. Any additional equity financing may be dilutive to existing Shareholders and debt financing, if available, may involve restrictions on financing operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion, or delay or indefinite postpone exploration, development or production on any or all of the Company’s projects.
Currency risk
Currency fluctuations will affect the cash flow that the Company will realize from its operations.
1.3 Risks connected to technological developments
The Company’s ability to compete is highly dependent upon, among other things, its ability to utilize geo-related services and data of a competitive quality. Because of the significant technological changes that have already taken place, for instance with respect to 3D and 4D seismic data acquisition and processing and those that may occur in the future, the Company is generally dependent on its ability to keep pace with changes and improvements in data acquisition and processing technologies.
1.4 Regulatory and political risks
The Company has licences, exploration and / or development projects in Angola, Kenya, Burundi, Sweden and Norway. Therefore the Company’s activities are exposed to varying degrees of political and economic risk and other risks and uncertainties. These risks and uncertainties vary from country to country and include, but are not limited to: Terrorist activities; extreme fluctuations in currency exchange rates; hyperinflation; labour unrest; risk of war or civil unrest; expropriation and nationalization; renegotiation or nullification of existing concessions, licenses, permits and contracts; illegal mining; changes in taxation policies; restrictions on foreign exchange and repatriation; and changing political conditions, currency controls and governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors
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to employ citizens of, or purchase supplies from, a particular jurisdiction.
The exploration, development and operating activities of the Company are generally subject to various laws governing exploration, development, mining, processing, taxes, labour standards and occupational health and safety, toxic substances, use of motorised machinery, land use, water use, land claims of local people and protection of the environment and cultural monuments and other matters. Although the Company believes that its activities are currently being carried out in accordance with all applicable laws, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development. Amendments to current laws and regulations governing exploration, development and operating activities or more stringent implementation thereof could have a substantial adverse impact on the Company.
Changes in exploration, mining or investment policies or shifts in political attitude could materially adversely impact the Company’s financial results. The Company’s operations may be affected in varying degrees by government regulations with respect to, for example, restrictions on exploration, development, processing, production, price controls, export controls, currency remittance, income taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or other interests.
1.5 Risks related to the Shares
Volatility of the share price
The trading price of the Shares could fluctuate significantly in response to quarterly variations in operating results, general economic outlook, adverse business developments, interest rate changes, changes in financial estimates by securities analysts, matters announced in respect of commodity prices or competitors or changes to the regulatory environment in which International Gold Exploration operates.
Market conditions may affect the Shares regardless of International Gold Exploration’s operating performance or the overall performance of the mineral exploration and development sector. Accordingly, the market price of the Shares may not reflect the underlying value of the International Gold Exploration’s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to International Gold Exploration while others of which may be outside International Gold Exploration’s control.
The market price of the Shares could decline due to sales of a large number of Shares in the Company in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a time and at a price that are deemed appropriate.
Shareholders may be diluted if they are unable to participate in future offerings
The development of the Company’s properties, licenses, Claims and Pre-claims will, inter alia, depend upon the Company’s ability to obtain financing through equity financing. Shareholders may be unable to participate in future offerings, due to misapplication of shareholders pre-emptive rights in order to raise equity on short notice in the investor market, or for reasons relating to foreign securities laws or other factors.
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2 STATEMENTS OF RESPONSIBILITY
This Document has been prepared by International Gold Exploration to provide information to shareholders of IGE Nordic in connection with the Offer and the issue of the Consideration Shares in International Gold Exploration.
The Board of Directors of International Gold Exploration accepts responsibility for the information given in this Document. The Board of Directors hereby declares that, to the best of our knowledge, having taken all reasonable care to ensure that such is the case; the information contained in this Document is in accordance with the facts and contains no omission likely to affect its import.
The information about IGE Nordic included in this Document is based exclusively on IGE Nordic’s public accounts and other material in the public domain. International Gold Exploration has not verified independently the information regarding IGE Nordic which is included in this Document. International Gold Exploration cannot assume any responsibility for the correctness or accuracy of the information included in this Document regarding IGE Nordic.
Stockholm, 28 November 2008
The Board of Directors of International Gold Exploration IGE AB (publ.)
Carl Ameln
(Chairman)
Ole Jørgen Fredriksen
Ulrik Jansson
Uta Stoltenberg
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3 THE VOLUNTARY OFFER
3.1 Voluntary Offer to exchange Shares in IGE Nordic with Shares in International Gold Exploration
The International Gold Exploration hereby offers to acquire all outstanding IGE Nordic shares in exchange for Shares in International Gold Exploration, all in accordance with the Securities Trading Act section 6-19, and as described in this Document. The Offer set out in this Document applies only to the shares in IGE Nordic and does not extend to any options or rights to acquire shares in IGE Nordic. The Offer is made to all IGE Nordic shareholders who may lawfully receive this Document and the Prospectus. This Document has been prepared in accordance with the provisions for voluntary offers as set out in section 6-19 of the Securities Trading Act.
3.2 The Offeror
This Offer is made by International Gold Exploration IGE AB (publ.), a public limited liability company incorporated and existing under the laws of Sweden with company registration number 556227-8043, and with its registered address at Kungsgatan 44, SE-111 35 Stockholm, Sweden.
The Shares of International Gold Exploration are registered with the VPC under ISIN SE000378119 and are listed on Oslo Børs and on Nordic Growth Market. Please see section 9 for further information in this regard.
As per the date of this Document, International Gold Exploration holds 20,000,000 shares in IGE Nordic, representing approximately 74.6% of the current issued and outstanding share capital of IGE Nordic.
3.3 The Target company
IGE Nordic AB (publ.) is the target company for the Offer. IGE Nordic is a public limited liability company incorporated and existing under the laws of Sweden with company registration number 556493-3199, and with its registered address at Kungsgatan 44, SE-111 35 Stockholm, Sweden.
The IGE Nordic shares are registered with the VPC under ISIN SE0002214528. The IGE Nordic shares have been listed on Oslo Axess since 21 December 2007, with the ticker code “IGENOR”. IGE Nordic’s share capital as of the date of this Document is SEK 2,681,604.20 divided into 26,816,042 shares with a par value of SEK 0.10.
3.4 Reasons for the Offer and Plans for the Future Business
The initial arguments for the listing of IGE Nordic have changed since December 2007. Base metal companies are less attractive investment objects than companies focusing on precious metals like diamonds and gold. Furthermore, IGE Nordic’s core nickel project is difficult to finance in today’s market. Adding to this the nickel price development has recently been weak.
Low trading liquidity and low market capitalization also makes IGE Nordic a less attractive investment alternative. Adding to this, the Offeror is closer to positive cash flow from operations than IGE Nordic. Combining the two companies will enable synergies and cost reductions which the Offeror believes are necessary in today’s market conditions.
3.5 Contact between the Parties Prior to the Offer
IGE Nordic has a close relationship with International Gold Exploration as it is 75 % owned by International
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Gold Exploration. The board and management of IGE Nordic were informed about International Gold Exploration’s intention to make an offer less than one week before the decision to make the Offer was made by International Gold Exploration and announced in public. The launch of the Offer and the terms of the Offer have not been discussed with IGE Nordic's board or management before the launch of the Offer.
The Chairman of the board of IGE Nordic, Tomas Fellbom, is also the CEO of the Offeror. Fellbom has not acted and will not act on behalf of IGE Nordic in connection with the Offer.
Furthermore, Lars Olof Nilsson is a director of both the Offeror and IGE Nordic. Nilsson has not acted and will not act on behalf of IGE Nordic or International Gold Exploration in connection with the Offer.
3.6 Impact on the Company’s Employees
In Offeror’s view, the completion of the Offer will not have any legal, economic, commercial or work-related consequences for the employees in IGE Nordic. No members of the Board of Directors or the executive management in IGE Nordic will receive special favourable terms or advantages (or prospects of such) in connection with the Offer.
3.7 Offer Price
The Offer Price is NOK 1.84 for each IGE Nordic share. The Offer Price will be settled by way of exchanging one (1) share in IGE Nordic with a par value of SEK 0.10 for four (4) shares in International Gold Exploration with a par value of SEK 0.05. In total, up to 27,264,168 new Shares in International Gold Exploration may be issued under the Offer.
The Offer Price represents a premium of 23% compared to the closing share price on 29 October 2008, the last trading day prior to the International Gold Exploration’s public announcement of its intention to make the Offer. Furthermore, the Offer Price represents a premium of 27% compared to the volume weighted average market price in the four week period ending on 29 October 2008.
The Offer Price corresponds to a market capitalization of IGE Nordic of approximately NOK 49.34 million (based on the number of shares outstanding as of the date of this Offer Document).
The Subscription Price for each Consideration Share is NOK 0.46, in aggregate NOK 12,541,517.28 for all the Consideration Shares. This corresponds to the last reported sale price for International Gold Exploration’s shares on Oslo Børs on 29 October 2008, which was the last day of trading before the Subscription Price was set by the Board after market close.
The implicit exchange rate (relative split of market value) between International Gold Exploration and IGE Nordic in terms of equity market capitalization has moved in favor of International Gold Exploration the last few months, averaging 74% in the period from 1 June 2008 to 29 October 2008.
3.8 The Offer Period
The Offer Period commences on 1 December 2008 and expires on 15 December 2008 at 17:30 (CET).
The International Gold Exploration may extend the Offer Period one or more times, however, no longer than to 9 January 2009 at 17:30 (CET). Any such extension will be part of the Offer Period. Any extensions of the Offer Period shall be announced no later than the Business Day following the expiration of the previously announced Offer Period in accordance with section 3.12 (Announcements).
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3.9 Acceptance of the Offer
Acceptance of the Offer is made by completing and signing the Acceptance Form attached as Appendix 2 hereto, and returning it to the Manager as set out below. Shareholders with IGE Nordic shares in several VPS accounts will be required to submit one Acceptance Form for each account.
Acceptance of the Offer is irrevocable and may not be withdrawn, in whole or in part, either before or after the expiration of the Offer Period, including any extension thereof, after the Acceptance Form has been received by the Manager. The acceptance shall be deemed to include all IGE Nordic shares on the VPS account identified in the Acceptance Form. The acceptance also includes any shares which are acquired and credited to the VPS account identified in the Acceptance Form before the shares are debited from such VPS account and transferred to an escrow account in the name of the Manager.
ANY SHAREHOLDER WHOSE IGE NORDIC SHARES ARE REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH PERSON IF THE SHAREHOLDER DESIRES TO EXCHANGE SUCH IGE NORDIC SHARES INTO SHARES IN INTERNATIONAL GOLD EXPLORATION IN ACCORDANCE WITH THIS OFFER.
From the date of receipt of the Acceptance Form by the Manager, the shareholder will be prevented from selling or otherwise disposing of, charging or transferring to another VPS or VPC account, the shares in IGE Nordic which are covered by the acceptance. The shares covered by the Acceptance Form may also be blocked in favour of the Manager. Otherwise, IGE Nordic shareholders who accept the Offer will maintain, to the extent permitted under applicable law, their rights as a shareholder, including voting rights, until all conditions under the Offer have been satisfied or waived.
International Gold Exploration reserves the right to reject any or all acceptances of the Offer that, in International Gold Exploration’s opinion, are not in the proper form, or which may be unlawful. International Gold Exploration also reserves the right to treat an acceptance as valid, in whole or in part, even though it is not entirely in order or not accompanied by required document(s) or which is not received at the place stated below. Neither International Gold Exploration nor the Manager nor any other person will be under any duty to give notification of any defects or irregularities in acceptance or incur any liability for failure to give any such information.
The Acceptance Form, duly completed and signed, must be sent by mail, fax or by hand to the Manager at the following address:
Handelsbanken Capital Markets Rådhusgaten 27 P.O. Box 332 Sentrum 0101 OSLO Norway Tel: +47 22 94 08 38 Fax: +47 22 94 07 68
The Acceptance Form must be received by the Manager prior to the expiration of the Offer Period.
3.10 Conditions to the Offer
The completion of the Offer is subject to the following conditions, each of which may be waived (wholly or in part) by International Gold Exploration:
(i) that the Offeror receives valid acceptances from IGE Nordic shareholders for a number of IGE Nordic shares, which together with the IGE Nordic shares already hold by the Offeror aggregate to more than 90% of the share capital and votes in IGE Nordic (on a fully diluted basis); and
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(ii) that prior to completion of the Offer, there are no changes, events, violations, circumstances or effects that were not known to the Offeror at the time of the Offer and are, or with the lapse of time, reasonably expected to become, materially adverse to the financial conditions or results or operations of IGE Nordic; and
(iii) that legislation and other regulations, court and authority decisions or similar circumstances, which are beyond the Offeror’s control and which the Offeror could not reasonably have foreseen at the time of the Offer, must not make the completion of the Offer or the acquirement of IGE Nordic completely or partly impossible or make such completion significantly difficult.
If International Gold Exploration has not publicly announced that the above conditions are satisfied or waived by the International Gold Exploration prior to 12 January 2009 at 09:00 hours (CET), then the Offer will lapse. Any waiver or satisfaction of the conditions to the Offer will be announced in accordance with section 3.12 (Announcements).
The result of the Offer will be announced in accordance with section 3.12 (Announcements) on the first Business Day after the end of the Offer Period (after extension, if any).
3.11 Amendments to the Offer
Any amendment to the Offer, which, on the date such amendment is announced, represents an improvement (or no diminution) in value (an “Amended Offer”), is binding on International Gold Exploration from the time it is made public by Oslo Børs. IGE Nordic shareholders who have accepted the Offer will automatically be given the benefit of such an Amended Offer without further action or other notice required to be given to the Manager. Such shareholders will in case of an Amended Offer continue to be bound by their prior acceptance. In case of an Amended Offer, the Offer Period will be extended, if necessary, so that at least two weeks remain to expiry of such Amended Offer. Any Amended Offer will be announced in accordance with section 3.12 (Announcements).
3.12 Announcements
Any revision or amendment of the Offer will be followed by public announcement thereof as promptly as practicable and no later than 09:00 (CET) on the Business Day following the day of such revision or amendment (or such later time and/or date as permitted by Norwegian law). International Gold Exploration will publish all announcements by way of stock exchange releases through Oslo Børs’ electronic information system and NGM Equity in accordance with applicable rules.
3.13 Completion of the Offer and Issuance of the Consideration Shares
On 26 November 2008, the extraordinary shareholders meeting of the Offeror adopted the following resolutions for the approval of the Offer and the issuance of the Consideration Shares (office translation into English):
“(a) Resolution to approve the Offer The general meeting resolved to approve the Board of Director’s decision made on October 30, 2008 to make a public Offer to the shareholders of IGE Nordic AB (publ) (IGE Nordic) to acquire all outstanding shares in IGE Nordic (in aggregate 6,816,042 shares) on the terms set forth below. The consideration for each IGE Nordic share is four (4) shares in International Gold Exploration which will be issued in accordance with b) below. The Offer is subject to the following conditions:
(i) that the Company receives valid acceptances from IGE Nordic shareholders for a number of IGE Nordic shares, which together with the IGE Nordic shares already hold by the Company aggregate to more than 90% of the share capital and votes in IGE Nordic (on a fully diluted basis); and
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(ii) that prior to completion of the Offer, there are no changes, events, violations, circumstances or effects that were not known to International Gold Exploration at the time of the Offer and are, or with the lapse of time, reasonably expected to become, materially adverse to the financial conditions or results or operations of IGE Nordic; and
(iii) that legislation and other regulations, court and authority decisions or similar circumstances, which are beyond International Gold Exploration’s control and which the Company could not reasonably have foreseen at the time of the Offer, must not make the completion of the Offer or the acquirement of IGE Nordic completely or partly impossible or make such completion significantly difficult.
International Gold Exploration may in whole or partly waive any or all of the above conditions. The Board of Directors shall be authorized to decide on the necessary adjustments of the Offer that are necessary for the completion of the Offer.
(b) Resolution to conduct an issue in kind The general meeting resolved in accordance with the Board’s proposal to conduct an issue in kind on the following terms:
- The Company’s share capital, now amounting to SEK 18,750,000 divided into 375,000,000 shares shall be increased with up to SEK 1,363,208.40 by the issue of up to 27,264,168 shares.
- The new shares shall with deviation from the shareholders’ preferential right only be subscribed by the owners of 6,816,042 shares in IGE Nordic (i.e. all shareholders of IGE Nordic except for the Company).
- As consideration for four (4) subscribed IGE shares one (1) IGE Nordic share shall be contributed in kind.
- The subscription price for the issued IGE shares is NOK 0.46 per share (corresponding to SEK 0.53) based on the last paid price for the IGE share at Oslo börs on October 29, 2008 and the exchange rate that day (i.e the day before the announcement of the Offer), which at full acceptance gives an aggregate value of NOK 12,541,517.28 for the IGE Nordic shares (corresponding to SEK 14,422,744.87 based on the exchange rate on October 29, 2008).
- The new IGE shares shall be subscribed during the period as from December 1, 2008 and up until December 15, 2008. The Company has drafted an offer document which currently is under approval by Oslo Börs and which will be made public before the subscription/offer period starts. The Board may decide to prolong the subscription/offer period. The IGE Nordic shares (capital contributed in kind) shall be contributed to IGE within five (5) days from subscription at the latest.
- The new shares shall entitle to dividends decided as from the financial year 2009.
- The new share issue is further subject to the same conditions as the Offer described under (a) above and therefore the Company reserves the right not to conduct the issue in kind if any of the above conditions is not fulfilled (unless not waived by the Company).”
Following the satisfaction or waiver of the conditions in section 3.10 (i), (ii) and (iii) the Consideration Shares will be subscribed by Handelsbanken Capital Markets on behalf and for the account of the Acceptants pursuant to the power of attorney given by each Acceptant in the Acceptance Form.
The registration of the share capital increase in the Swedish Companies Register is expected to take place on or about 23 December 2008. Delivery of the Consideration Shares to the IGE Nordic shareholders’ VPS accounts is expected to take place on or about 2 January 2009. The Consideration Shares will be transferred to the VPS account specified by the IGE Nordic shareholder in the Acceptance Form. It is expected that the Consideration Shares will be listed on Oslo Stock Exchange on or about 3 January 2009. In case the Offer Period is extended pursuant to section 3.8, the dates set out in the preceding paragraph will be changed correspondingly. Delivery of the Consideration Shares to the IGE Nordic shareholders’ VPS accounts is, in any event, going to take place on 23 January 2009 at the latest. An IGE Nordic shareholder who accepts the Offer will not under any circumstances be entitled to sell or transfer its Consideration Shares until these shares have been paid in full by such IGE Nordic shareholder. Furthermore, any IGE Nordic shareholder (having paid for its shares) that sell or transfer its Consideration
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Shares before delivery of the Consideration Shares on the said IGE Nordic shareholder’s VPS or VPC account, runs the risk that full payment by all IGE Nordic shareholders does not take place. In such case, the completion of the Offer and thereby the delivery of the Consideration Shares to the IGE Nordic shareholders may be delayed. The IGE Nordic shareholder will then run the risk that the IGE Nordic shareholder is unable to settle the sale or transfer its Consideration Shares in time.
3.14 Legislation
The Consideration Shares will be created according to the provisions of the Swedish Companies Act.
3.15 Statement from the Board of IGE Nordic
Pursuant to section 6-19 cf section 6-16 of the Securities Trading Act, the board of directors of IGE Nordic shall make public a statement setting out its opinion of the Offer and the reasons on which it is based, including its views on the effects of implementation of the bid on IGE Nordic’s interests, and on the Offeror’s strategic plans for IGE Nordic and their likely repercussions on employment and the locations of IGE Nordic’s places of business. Should the board of IGE Nordic consider itself unable to make a recommendation to the shareholders on whether they should or should not accept the Offer, it shall explain why this is so. Information shall also be given about the views, if any, of the board members and the manager effectively in charge in their capacity as shareholders of the company. If the board receives in good time a separate opinion from the employees on the effects of the bid on employment, that opinion shall be appended to the statement. Where a bid has been made by someone who is a member of the board of the offeree company, or the bid has been made in concert with the board of the offeree company, Oslo Børs shall decide who shall issue the statement mentioned above on behalf of the offeree company. Under section 6-16 of the Securities Trading Act, the statement must be given at least one week before the Offer Period expires.
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3.16 Pre-acceptances of the Voluntary Offer
In connection with the Offer, the following shareholders, representing in aggregate approximately 8.7 % of the outstanding shares in the Company, have undertaken to accept the Offer in respect of the number and percentage of shares indicated:
The pre-acceptances will also apply to any additional shares that these shareholders may acquire before the end of the Offer Period.
3.17 Interest of natural or legal persons involved in the Voluntary Offer
International Gold Exploration is not aware of any interest, including conflicting ones, which is material to the Offer.
3.18 Transaction Costs
International Gold Exploration will pay commissions and VPS / VPC transaction costs directly attributable to the Offer. Thus, shareholders who accept the Offer will not be debited with brokers’ fees or other such costs in connection with the Offer. In addition, International Gold Exploration will pay advisory fees to the Manager and fees to legal counsel. The aggregate transaction costs are expected to be approximately NOK 1,740,000 of which the advisory fee to the Manager is NOK 1,400,000 and legal fees to Rasmusson & Partners Advokat AB and Advokatfirma DLA Piper Norway DA are approximately SEK 165,000 and NOK 175,000 respectively.
All other expenses incurred by the individual IGE Nordic shareholders for advisory services and other transaction expenses will not be covered by the International Gold Exploration.
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3.19 Tax
A summary of certain Norwegian and Swedish tax rules relevant to the acceptance of the Offer is given in section 10 (Taxation). However, IGE Nordic shareholders accepting the Offer are themselves responsible for any tax liability arising from the sale of shares. They are also themselves responsible for any costs arising from obtaining any advice on this matter.
3.20 Purchase of shares in IGE Nordic outside the Offer
International Gold Exploration reserves the right to acquire IGE Nordic shares outside the Offer during the Offer Period.
3.21 Compulsory Acquisition
The International Gold Exploration intends to make a compulsory acquisition of the remaining shares in IGE Nordic upon obtaining more than 90% of the number of all outstanding IGE Nordic shares, pursuant to the section 22 of the Swedish Companies Act. Please see section 9.8 (Other Shareholder Matters) for details on applicable law.
3.22 Delisting from Oslo Axess
International Gold Exploration intends to propose a resolution to the shareholder’s meeting of IGE Nordic that an application is made to delist the IGE Nordic shares from Oslo Axess, unless Oslo Axess itself decides to de-list the IGE Nordic shares before the application for de-listing has been submitted. An application for de-listing will not be made before completion of a compulsory acquisition.
3.23 Financial Advisor and Manager
The manager for the Offer and the issue of the Consideration Shares is Handelsbanken Capital Markets, Rådhusgaten 27, P.O. Box 332 Sentrum, 0101 Oslo, Norway.
3.24 Miscellaneous
The Prospectus (including this Document) is being sent to all IGE Nordic shareholders of record as of 26 November 2008, to the address recorded on each shareholder’s VPS account.
No confirmation of receipt of acceptances or other documents will be given by, from or on behalf of the International Gold Exploration.
Additional copies of this Document and the Prospectus will be available on request from the Manager during normal business hours at:
Handelsbanken Capital Markets Rådhusgaten 27 P.O. Box 332 Sentrum 0101 OSLO Norway Tel: +47 22 94 08 38 Fax: +47 22 94 07 68
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3.25 Choice of Law and Legal Venue
Except as stated below in this section 3.25, the Offer and all acceptances thereof and this Document shall be governed by and construed in accordance with Norwegian law, save for the issuance of the Consideration Shares which shall be governed by Swedish law.
Any disputes that arise in conjunction with the Offer and/or the acceptance thereof and/or the issue of Consideration Shares which cannot be amicably resolved are subject to the exclusive jurisdiction of Norwegian courts with the agreed legal venue in Oslo.
As IGE Nordic’s registered office is in Sweden, and the shares of IGE Nordic is admitted to trading on a regulated market in Norway, partly Swedish and partly Norwegian offer rules will apply to the Offer, cf. section 6-23 of the Securities Trading Act and sections 6-13 (3) No. 1 (a) and 6-14 (2) of the Securities Trading Regulations. Oslo Børs will be the authority competent to supervise the Offer. Matters relating to the consideration offered in the Offer, in particular the price, and matters relating to the bid procedure, in particular the information on International Gold Exploration’s decision to make the Offer, the contents of the Offer Document and the disclosure of the Offer, shall be dealt with in accordance with the rules set out in the Securities Trading Act. In matters relating to the information to be provided to the employees of IGE Nordic and in matters relating to company law, in particular the percentage of voting rights which confers control and any derogation from the obligation to launch a mandatory offer, as well as the conditions under which the board IGE Nordic may undertake any action which might result in the frustration of the Offer, Swedish law will apply.
3.26 Offer Restrictions
The distribution of this Document and the offering of the Offered Shares may in certain jurisdictions be restricted by law. Persons in possession of this Document are required to inform themselves about and to observe any such restrictions. This Document does not constitute an offer of, or a solicitation of an offer to purchase, any of the Offered Shares in any jurisdiction or in any circumstances in which such offer or solicitation would be unlawful.
No actions have been taken to register or qualify the Consideration Shares to be offered as consideration in the Offer or otherwise to permit a public offering of such securities in any jurisdiction outside of Norway and Sweden. Accordingly, if you reside in any country other than Norway or Sweden, you may not be permitted to subscribe for any Consideration Shares. The Company and the Manager require persons into whose possession this Document comes to inform themselves of, and observe, all such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. Neither the Company nor the Manager accept any legal responsibility for any violation by any person of any such restrictions.
IGE Nordic shareholders should consult their professional advisors as to whether they require any governmental or other consent or need to observe any formalities to enable them to subscribe for the Consideration Shares.
United States
The Offer is not being and will not be made, directly or indirectly, in or into, or by use of mails or any means or instrumentality (including, without limitation, facsimile transmission, telephone and internet) of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States of America, its territories and possessions, any State of the United States of America and the District of Columbia (collectively, the “United States”) and the Offer will not be capable of acceptance by any such use, means, instrumentality or facilities or from within the United States.
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The Consideration Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), nor under any laws of any state of the United States. Such securities may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration under the Securities Act or an exemption from registration.
United Kingdom
Neither this Document nor any other offering material has been submitted to the clearance procedures of the Financial Services Authority in the United Kingdom. The Consideration Shares have not been offered or sold and, prior to the expiry of a period of six months from the sale of the shares, will not be offered or sold to persons in the United Kingdom except to "qualified investors" as defined in section 86 of the Financial Services and Markets Act 2000.
Canada, Japan and Australia
The Consideration Shares may not be offered, sold, resold transferred or delivered, directly or indirectly, into Canada, Japan or Australia.
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4 INFORMATION ABOUT IGE NORDIC
The information in this section 4 is retrieved from publicly available information regarding IGE Nordic, such as annual reports, interim reports, investor information, stock exchange announcements published by IGE Nordic and information available through www.igenordic.se.
4.1 General
IGE Nordic is presently an exploration company currently operating in Sweden and Norway. IGE Nordic has a large and well diversified exploration portfolio in combination with an experienced team of geologists and field technicians with core competences and a unique expertise in evaluating opportunities in the geological conditions specific to Sweden and Norway.
4.2 Selected Financial Information
4.2.1 General
The tables below include IGE Nordic’s selected consolidated financial information as of and for each of the years ended 31 December 2007, 2006 and 2005 and for the nine month periods ended 30 September 2008 and 2007. The financial information has been prepared in accordance with IFRS (International Financial Reporting Standards) and has been derived from IGE Nordic’s audited annual report for 2007 and the unaudited quarterly report for the second quarter of 2008. The information is only a summary and should be read in conjunction with and is qualified in its entirety by reference to IGE Nordic’s reported financial statements and the related notes to the financial statements included in IGE Nordic’s reports, available from IGE Nordic and at www.igenordic.se.
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4.2.2 Profit and Loss account
The tables below show a summary of IGE Nordic’s consolidated income statement for the years ended 31 December 2007, 2006 and 2005 as well as for the nine month periods ended 30 September 2008 and 2007 and third quarter 2008 and 2007.
Consolidated Income Statement Q3 Q3 Q1-Q3 Q1-Q3 Full Year Full Year Full Year2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Sales - - 16,250 - - - -
Other external expenses -1,725 -60 -6,234 -97 -1,665 -1 -37Personnel expenses -2,427 -1,185 -7,417 -1,185 -4,055 - - Other operating expenses - - -3,854 - - - - Depreciations and write downs -76 -40 -2,471 -40 -99 - -
Total operating expenses -4,228 -1,285 -19,976 -1,322 -5,819 -1 -37
EBIT -4,228 -1,285 -3,726 -1,322 -5,819 -1 -37
Net financials 583 414 2,079 414 1,357 401 1
Earnings before tax -3,645 -871 -1,647 -908 -4,462 400 -36
Tax - - - - - - -
Net profit / (loss) -3,645 -871 -1,647 -908 -4,462 400 -36
Profit to Equity holders of the Parent Company -3,645 -871 -1,647 -908 -4,462 400 -36
Minority interest - - - - - - -
Profit for the period -3,645 -871 -1,647 -908 -4,462 400 -36
Earnings per share attributable to Equity holders -0.140 -0.250 -0.060 -0.260 -0.570 0.020 -0.002
of the Parent company before and after dilution
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4.2.3 Balance sheet
The tables below show a summary of IGE Nordic’s consolidated balance sheet as of 31 December 2007, 31 December 2006, 31 December 2005, 30 September 2008 and 30 September 2007.
Consolidated Balance Sheet Q3 Q3 Full Year Full Year Full Year2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Audited Audited AuditedAssets
Intagible fixed assetsExploration and Evaluation Expenditure 44,352 40,033 41,940 10,394 10,372 Tangible fixed assetsTangible fixed assets 941 873 815 - - Long-term financial assetsShares in subsidiary / affiliated companies 26,381 - - - - Deposits with suppliers 197 104 106 - - Total non-current assets 71,871 41,010 42,861 10,394 10,372
Other receivables 1,729 885 1,649 1 905 Other receivables parent company - - 166 - - Prepaid expenses and accrued income 2,776 1,238 1,773 - - Cash and cash equivalents 59,588 2,104 94,270 549 149 Total current assets 64,093 4,227 97,858 550 1,054
Total assets 135,964 45,237 140,719 10,944 11,426
(SEK '000)Equity and liabilities
Equity attributable to equity holders of the parent companyShare capital 2,682 350 2,682 350 350 Non registered share capital - 1,650 - - - Statutory reserve 6,110 6,110 6,110 - - Other capital-contribution 87,432 - 87,432 6,110 6,110 Retained earnings and profit for the period 30,901 36,103 32,548 413 12 Total equity 127,125 44,213 128,772 6,873 6,472
Liabilities to parent company - - - - - Total long term liabilities 0 0 0 0 0
Account payables 6,526 434 3,772 - - Liabilities to parent company - - 5,321 - - Other liabilities 244 78 435 4,061 4,944 Accrued expenses and prepaid income 2,069 512 2,419 10 10 Total short term liabilities 8,839 1,024 11,947 4,071 4,954 Total liabilities 8,839 1,024 11,947 4,071 4,954
Total equity and liabilities 135,964 45,237 140,719 10,944 11,426
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4.2.4 Consolidated Cash Flow statement
The tables below show a summary of IGE Nordic’s consolidated cash flow statement for the years ended 31 December 2007, 2006 and 2005 as well as for the nine month periods ended 30 September 2008 and 2007.
Consolidated Cash flow statement Q3 Q3 Q1-Q3 Q1-Q3 Full Year Full Year Full Year2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Cash Flow from OperationsResult after financial items -3,645 -852 -1,647 -908 -4,462 400 -36
Adjustments for items not included in cash flow 76 6 -9,903 40 99 - - Income tax paid - - - - - - - Change in receivables 106 -1,960 -1,083 -2,123 -3,422 903 -848Change in receivables parent company - - 166 - -166 - - Change in liabilities 3,924 1,015 2,213 1,015 6,616 -882 4,551Change in payables to parent company - -1,503 -5,321 -450 4,871 - - Net cash flow from operations 461 -3,294 -15,575 -2,426 3,536 421 3,667
Cash Flow from investment activitiesAcquisition of intangible fixed assets -12,751 -39,738 -18,584 -40,039 -41,946 -22 -3,521Cash acquisition of shares -67 7,300 -100 6,850 6,850 - - Cash deposits - - -91 -104 -106 - - Acquisition of tangible fixed assets -56 -873 -332 -873 -874 - - Net cash flow from investment activities -12,874 -33,311 -19,107 -34,166 -36,076 -22 -3,521
Cash Flow from financing activitiesShareholders contribution - 36,587 - 36,587 36,587 - - New shares under registration - 1,500 - 1,650 - - - New issue of shares - - - - 89,764 - - Net Cash Flow from financing activities 0 38,087 0 38,237 126,351 0 0
Net change in cash and cash equivalents -12,413 1,482 -34,682 1,645 93,811 399 146
Cash and cash equivalents as at 1 January 94,270 459 94,270 459 459 149 3 Currency exchange difference - - - - - - -
Cash and cash equivalents as at end of period 59,588 2,104 59,588 2,104 94,270 548 149
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4.3 Share Capital and Shareholders
IGE Nordic has a registered share capital of SEK 2,681,104 (fully paid-up), divided into 26,811,042 shares, each with a par value of SEK 0.10 and of equal rights. IGE Nordic is registered in the Swedish Companies Register with registration number 556493-3199. The IGE Nordic shares are registered in the VPC and VPS under ISIN number SE0002214528.
The shares of IGE Nordic are listed on Oslo Axess under the ticker “IGENOR”.
The table below sets out the 20 largest shareholders of IGE Nordic as of 17 November 2008.
Shareholder Country % No. of sharesINTERNATIONAL GOLD EXPLORATION AB SWE 74.60% 20,000,000 SIS SEGAINTERSETTLE AG 25PCT CHE 5.33% 1,430,000 SKANDINAVISKA ENSKILDA BANKEN SWE 2.86% 766,062 CAR ASA KONKURSBO NOR 2.08% 556,934 HOLEN GUNNAR NOR 1.19% 320,000 JAG INVEST AS NOR 0.75% 200,000 INDEPENDENT OIL & RESOURCES ASA NOR 0.60% 160,000 AG INVEST AS NOR 0.59% 159,000 MP PENSJON NOR 0.56% 150,000 ÖDNER BENGT GEORG SWE 0.50% 134,000 SÆTER HAAKON MORTEN NOR 0.38% 101,000 SÆVIK INVEST AS NOR 0.37% 100,000 NORDNET SECURITIES BANK AB SWE 0.37% 99,500 SILVERCOIN INDUSTRIES AS NOR 0.30% 81,000 BORG VEKST AS NOR 0.30% 80,000 EIENDOMSCOMPAGNIET AS NOR 0.30% 80,000 GARPESTAD SVERRE NOR 0.30% 80,000 HARWICK HOLDING AS NOR 0.30% 80,000 JFRM AS NOR 0.30% 80,000 SVENSKA HANDELSBANKEN STOCKHOLM SWE 0.29% 76,958
Total 20 largest shareholders 92.3% 24,734,454
Others 7.7 % 2,076,588
Total number of shares 100.0 % 26,811,042
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5 INFORMATION ABOUT IGE
As a mining company, IGE will be developed with integrated activities within exploration, production and sales of high-end industrial metals and diamonds. Business development with the purpose to expand operations and develop new activity has prioritized attention. IGE evaluates structural options as well as organic growth for its current projects. The goal is to increase operational activity and develop a balanced portfolio of activities that can provide an operational cash flow as early as possible.
The legal entity of International Gold Exploration was founded in Sweden 1983. The current activities of IGE have been carried out since 1988. The Company changed its name to International Gold Exploration IGE AB during 1989.
Further information about IGE can be found in the Registration Document and on www.ige.se.
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6 LEGAL IMPLICATIONS OF THE OFFER
The Offer may result in International Gold Exploration becoming the owner of all the IGE Nordic shares validly tendered under the Offer and that International Gold Exploration becomes subject to the legislation on compulsory acquisitions described in section 9.8 (Other Shareholder Matters) below.
Other than this, the International Gold Exploration is not aware of any legal consequences of the Offer.
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7 STATUTORY AUDITORS
Ernst & Young AB with the authorized auditor Jaan Kubja as head auditor is the independent auditor for International Gold Exploration, and has been their auditor since 2004. Ernst & Young AB has its registered address at Jakobsbergsgatan 24, SE-103 99 Stockholm, Sweden. All partners in Ernst & Young AB are members of the Swedish Institute of Public Accountants (Föreningen Auktoriserade Revisorer).
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8 KEY INFORMATION
Capitalization and indebtedness
At 30 September 2008 the Company had the following capitalization and indebtedness:
Unaudited Unaudited
(SEK '000) 30/09/2008 31/12/2007
Total Current Debt 12,769 18,800
- Guaranteed - -
- Secured - -
- Unguaranteed / Unsecured 12,769 18,800
Total Non-Current Debt - -
- Guaranteed - -
- Secured - -
- Unguaranteed / Unsecured - -
Shareholder’s Equity 274,967 244,899
a) Share Capital 18,750 17,050
b) Own shares - -
c) Other Reserves 223,904 194,965
d) Minority interests 32,313 32,884
A. Cash 70,294 127,827
B. Cash equivalent - -
C. Trading securities 5,401 9,807
D. Liquidity (A)+(B)+(C) 75,695 137,634
E. Current Financial Receivables 3,403 3,967
F. Current Bank Debt 16,891 -
G. Current portion of non-current debt - -
H. Other current financial debt - -
I. Current Financial Debt (F)+(G)+(H) 16,891 0
J. Net Current Financial Indebtedness (I)-(E)-(D) -62,207 -141,601
K. Non-current bank loans 0 0
L. Bonds issued 0 0
M. Other non-current loans 0 0
N. Non-current Financial Indebtedness (K)+(L)+(M) 0 0
O. Net Financial Indebtedness (J)+(N) -62,207 -141,601
The table above should be read together with the Company’s consolidated financial statements and the related notes thereto. To the best of the Company’s knowledge, the capitalization and indebtedness as per 30 September 2008 provide a fair and valid documentation of the Company’s financial condition.
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International Gold Exploration has completed an issue of a convertible loan that provided totally SEK 14 million in 5 November 2008. Details regarding the convertible loan are described in the press release dated 5 November 2008 and the Q3 report which can be inspected on www.ige.se. Nordisk Industriutvikling which Uta Stoltenberg represents in the Board of IGE and Varukungen AB which is controlled by the Board member Ulrik Jansson has subscribed for the convertibles. There have been no other events subsequent to the end of Q2 2008 that would in a material way influence the capitalization and indebtedness presented in this Registration Document.
The Company’s equity to asset ratio is 90%.
As of 30 September 2008 IGE had SEK 70.3 million in cash and SEK 16.9 million in interest bearing debt.
Capital resources
International Gold Exploration raised approximately SEK 50.3 million (gross proceeds) through a share issue 16 April 2008. The share premium resulting from the share issues less the direct expenses has been transferred to the Company’s share premium fund. The proceeds of SEK 14 million from the convertible loan completed 5 November 2008 is considered as a bridge financing and will first and foremost be used by IGE for working capital purposes.
In the two year period from the date of this Prospectus, the Company expects that cash flow from operations will not be sufficient to cover the costs for exploration and further business development. Consequently, issue of equity instruments is likely to be used in connection with the Company’s business development. Possible new acquisitions or development of large projects will be financed separately with loans, equity, or a combination of this, depending on availability and market conditions. On a general basis, International Gold Exploration will also evaluate options with partner(s) who might be interested to acquire a part of a project for payment in cash or money invested in the project, in a so called earn-in agreement.
Working capital statement
The Group does not have sufficient working capital to cover its present requirements for the upcoming 12 months period (i.e. the whole year 2009). However, it is expected that the working capital of the Group will be sufficient to support its ongoing and planned activities at least until May 2009. Thereafter IGE considers that the working capital requirement for the Group for the remaining part of 2009 amounts to approximately SEK 15-20 million. IGE is presently evaluating different alternatives for working capital financing including project sales, farm-ins and joint ventures, as well as a review for down-sizing the Group’s capital expenditures for the next 12 months. IGE is also evaluating different alternatives of capital infusion, which can be done by the issue of shares and/or a combination of debt and issue of equity instruments (convertible loans and/or warrants) based on the authorization given by the general meeting held on November 26, 2008 encompassing as share capital increase of up to SEK 2,500,000 divided into 50,000,000 shares.
IGE is confident that the different financing alternatives described in the section above will be successful and that the required working capital will be secured during Q1 2009.
However, the working capital required for the coming 12 months period is highly dependent on the level of activities decided by the Group. IGE may change its budgeted rate of investments related to its prioritized projects if the market conditions allow. Such a decision will be based on careful reviewing of the possibility to finance such an increase of the Group activities and no increase of the investments will be done unless they are fully financed. The operations of the Group are therefore currently adapted to the development of the conditions in the capital market.
Should IGE fail to meet its working capital requirements for the coming 12 months period, some or all of the ongoing and planned activities of the Group are likely to be delayed or postponed and may, eventually, also come to a full stop. IGE may then fail to achieve projected cash flows and not be able to meet its obligations when they fall due.
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Description of cash flows
The Company’s consolidated cash flows for the first nine months of 2008 compared to the same period in 2007, and years 2007, 2006 and 2005 are summarised below:
Consolidated Cash flow statement Q3 Q3 Q1-Q3 Q1-Q3 Full Year Full Year Full Year2008 2007 2008 2007 2007 2006 2005IFRS IFRS IFRS IFRS IFRS IFRS IFRS
(SEK '000) Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Cash Flow from OperationsIncome after financial items 427 -27,913 -25,852 -45,035 -62,529 -36,404 -23,207
Adjustments for items not included in cash flow -9,544 12,224 -16,375 8,955 11,617 8,769 11,711Change in inventories - 1 15 - - 59 39Change in trade receivables -1,099 -2,773 -1,291 -12,123 -8,182 1,320 1,973Change in trade payables -3,208 -416 -6,919 3,293 15,677 -2,608 6,248Income tax paid - - - - - - - Net cash flow from operations -13,424 -18,877 -50,422 -44,910 -43,417 -28,864 -3,240
Cash Flow from investment activitiesAcquisition of tangible assets -20,532 -10,052 -33,937 -24,188 -31,677 -1,366 - Acquisition of intagible assets -17,322 -324 -36,171 -1,703 -5,276 -19,813 -13,202
Acquisition of shares in associated companies - - -442 - Acquisition of financial assets 1,031 - -13,749 -5,100 -18,151 - - Sale of financial assets - - 5,011 - - - - Net cash flow from investment activities -36,823 -10,376 -79,288 -30,991 -55,104 -21,179 -13,202
Cash Flow from financing activitiesNew share issue - - 56,880 - 89,764 131,960 66308Raised credits 14,399 - 15,300 - 89,764 131,960 66308Net Cash Flow from financing activities 14,399 - 72,180 - 89,764 131,960 66,308
Net change in cash and cash equivalents -35,848 -29,253 -57,530 -75,901 -8,757 81,917 49,866
Cash and cash equivalents as at 1 January 127,827 136,674 127,827 136,674 136,674 54,807 4,889Currency exchange difference 176 -198 -4 -212 -90 -50 52
Cash and cash equivalents as at end of period 70,293 60,561 70,293 60,561 127,827 136,674 54,807
Consolidated operating cash flow in 2007, 2006 and 2005 reflects the fact that IGE’s current focus to a large extent has been and still is on exploration and development activities. The Company had no revenues from sales in 2007.
Further details regarding the consolidated cash flows are informed in the Annual report for 2007 (which can be inspected on www.ige.se).
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9 SHARE CAPITAL AND SHAREHOLDER MATTERS
This section contains further information regarding the share capital and shareholder matters of International Gold Exploration.
9.1 The Company’s share capital before the issue of Consideration Shares
International Gold Exploration’s share capital prior to the issue of any Consideration Shares is SEK 18,750,000 divided into 375,000,000 Shares, each with a par value of SEK 0.05. 336,335,064 of the Shares of International Gold Exploration are admitted to trading on the Oslo Stock Exchange with the ticker IGE. The remaining 38,664,936 Shares are admitted to trading on the NGM Equity exchange in Sweden with the ticker IGE.
9.2 Authority to issue Shares
On 6 May 2008, the Annual General Meeting of the Company resolved to grant the Board of Directors an authorization to resolve share issues as follows (office translation into English):
“The general meeting resolved to authorize the board, to decide on increase of the Company’s share capital, on one or several occasions until the next annual general meeting, through the issuance of shares, convertibles or warrants, encompassing a share capital increase with up to SEK 1,705,000 corresponding to up to 34,100,000 shares. The preferential right of the existing shareholders may be derogated from. Payments for subscribed shares, convertible loans or warrants may be settled by way of cash contribution, contribution in kind or set-off of debt. The authorization may be used for the purpose of raising capital and/or acquisitions where the consideration in whole or in part shall be made in shares.”
The authorization was registered with the Swedish Companies Register on 27 May 2008.
The authorisation from the annual general meeting has been used by the Board in connection with the resolution to issue a convertible loan of SEK 14,000,000 on November 5 2008 as further described in section 9.1. The remaining authorization for the Board of Directors encompasses share capital increases with up to SEK 38,333.35 corresponding to up to 766,667 new shares.
On 26 November 2008, the General Meeting of the Company resolved to grant the Board of Directors with a new authorisation to resolve on issues with up to 50,000,000 new Shares in the Company. The authorization has the following wording (office translation into English):
“The general meeting resolved to authorize the board, to decide on increase of the Company’s share capital, on one or several occasions until the next annual general meeting, through the issuance of shares, convertibles or warrants, encompassing a share capital increase with up to SEK 2,500,000 corresponding to up to 50,000,000 shares. The preferential right of the existing shareholders may be derogated from. Payments for subscribed shares or convertible loans may be settled by way of cash contribution, contribution in kind or set-off of debt. The authorization may be used for the purpose of raising capital and/or acquisitions where the consideration in whole or in part shall be made in shares, convertibles and/or warrants.”
9.3 The Company’s share capital after the issue of Consideration Shares
The number of Shares in International Gold Exploration following the completion of the Voluntary Offer, and therefore the issued share capital of International Gold Exploration, will depend on the number of IGE Nordic shareholders accepting the Voluntary Offer. Provided that all shareholders of IGE Nordic tender all their shares under the Voluntary Offer, the issued share capital of International Gold Exploration will be increased by SEK 1,363,208.40 by issuance of 27,264,168 new Shares, each Share with a par value of SEK 0.05 resulting in an aggregate share capital of SEK 20,113,208.40.
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It is expected that the Consideration Shares will be listed on Oslo Stock Exchange on or about 3 January 2009. The Consideration Shares will be created under the Swedish Companies Act. The Consideration Shares is entitled to receive dividend decided as from the financial year 2009 and other shareholder rights from registration of the Share Issue in the Swedish Register of Business Enterprises and in the VPC/VPS system, i.e. from on or about 23 December 2008 (cf. also section 9.8).
9.4 Dilution
The dilutive effect in connection with the issue of the Consideration Shares will be approximately 6.8%, provided that all shareholders of IGE Nordic tender all their shares under the Voluntary Offer.
Prior to the Voluntary Offer Subsequent to the Voluntary Offer
No of shares each with a nominal value of NOK 0.05
375,000,000 402,264,168
% dilution 100.0% 6.8%
9.5 Share registrar and securities number
International Gold Exploration’s Shares are registered in book entry form in the VPS (in Norway) and VPC (in Sweden). The securities number of the Shares is ISIN SE 000378119.
The registrar is DnB NOR Bank ASA, Verdipapirservice, P.O. Box 1171 Sentrum, N-0107 OSLO, Norway.
9.6 Shareholder rights
The Shares are identical in every respect and carry the right to one vote at general meetings. None of the major shareholders have different voting rights.
All dividends of the Company shall be declared, apportioned and paid to the shareholders pro rata to the number of Shares held at the relevant date. Shareholders have pre-emption rights in new issues of securities by the Company. Such pre-emption rights may be waived by two-thirds of the votes cast as well as two-thirds of the aggregate share capital represented at the general meeting of the Company.
Any amendment of the shareholders’ rights to vote at general meetings, must be done by amending the articles of association. According to the Swedish Companies Act amendments of the company’s Articles of Association requires in general the affirmative vote of two-thirds of the votes cast as well as two-thirds of the aggregate share capital represented at the general meeting. Further, the Swedish Companies Act requires that decisions that only have the effect of altering the rights and preferences of certain share or shares, receive the approval of all the holders of such share or shares present at the meeting and who together represent not less than nine-tenth of all shares whose rights are affected, as well as the majority required for amendments to the Company's Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares, require to be supported by all of the shareholders present at the meeting who together represent not less than 90% of the share capital in the Company. Decisions that means restrictions in the number of shares which shareholders may vote for at general meeting require to be supported by two-thirds of the vote casts and nine-tenth of the shares represented at the general meeting.
All Shares carry an equal right to any surplus in the event of a liquidation of the Company.
There are neither restrictions on the transferability of the Shares nor any restrictions on foreign ownership of the Company’s Shares. Existing shareholders do not have any pre-emptive rights upon the transfer of Shares in the Company.
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9.7 International Gold Exploration’s share register in VPC
As the Company is a Swedish registered company, a statutory register of shareholders is maintained by the Swedish Central Securities Depositary VPC AB (the “VPC”) in accordance with the Swedish Financial Instruments Accounts Act (1998:1479) and the Affiliation Agreement/Issuer Agreement entered into with VPC. In order to facilitate the listing on Oslo Børs, the Company has entered into a Registrar Agreement with DnB NOR Bank ASA (“DnB NOR”). In accordance with the Registrar Agreement, 336,335,064 of the Company’s Shares are for the time being registered in the Norwegian Central Securities Depository (the “VPS”), and with DnB NOR acting as Registrar for the Company. In accordance with market practice in Norway and system requirements of the VPS and Oslo Børs, the investors in the Company will be registered in the VPS as owners of the Shares of the Company and the instruments listed and traded on Oslo Børs will be referred to as the “Shares”.
For the purpose of Swedish law, the owner of the Shares registered in the VPS and investors registered as owners of the shares in the VPS will have to exercise, indirectly through the Registrar as their nominee, all rights of ownership relating to the Shares. The investors registered as owners in the VPS must look solely to the Registrar for the exercise of all rights attached to the Shares, and in particular, shareholders registered as such in the VPS will only be entitled to vote at general meetings of the Company if he has arranged for registration of entitlement to vote (in Swedish: Rösträttregistrering) in the VPC through the Registrar at the latest 5 business days (including Saturdays) prior to the general meeting and has noticed the company of his participation at the general meeting in accordance with the notice to the meeting.
Under the Registrar Agreement, DnB NOR undertakes to maintain a register in the VPS of the beneficial shareholders of the Company. DnB NOR also undertakes to distribute all dividends and other cash amounts declared and paid by the Company in accordance with the VPC/VPS system for payment of dividends. A shareholder may at any time require (at the shareholders own cost) the Registrar to register such shareholders ownership in the Shares in the VPC. After the registration of the ownership in the VPC, the relevant shares will cease to be registered with the VPS.
The Registrar may terminate the Registrar Agreement by three months prior written notice. Furthermore, the Registrar may terminate the Registrar Agreement with immediate effect if the Company does not perform its payment obligations to the Registrar or commits any other material breach of the Registrar Agreement. In the event that the Registrar Agreement is terminated, the Company will use its reasonable best efforts to enter into a replacement agreement for purposes of permitting the uninterrupted listing of its Shares. There can be no assurance, however, that it would be possible to enter into such an agreement on substantially the same terms or at all. A termination of the Registrar Agreement could, therefore, adversely affect the Company and the shareholders.
The Registrar Agreement limits the Registrar’s liability for any loss suffered by the Company. The Registrar Agreement provides that the Registrar is not liable for any loss attributable to circumstances beyond the Registrar’s control, including, but not limited to, errors committed by others or any power and telecommunications network failure or changes in applicable legislation, and is not liable for any indirect damage or loss. Thus, the Company may not be able to recover its entire loss if the Registrar does not perform its obligations under the Registrar Agreement.
9.8 Other shareholder matters
Transfer of Shares
According to the Company’s Articles of Association, there are no general limitations on transfer of the Company’s Shares.
Disclosure requirements
According to Chapter 4 of the Swedish Securities Trading Act, a person, entity or group acting in concert that acquires shares, options for shares or other rights to shares resulting in its beneficial ownership, directly
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or indirectly, in the aggregate meeting or exceeding the respective thresholds of 5, 10, 15, 20, 25, 30, 50, 66 2/3 and 90% of the share capital or the voting rights in the Company has an obligation to notify the Company and the Swedish Financial Supervisory Authority (sw: Finansinspektionen). The same applies to disposal of shares resulting in a beneficial ownership, directly or indirectly, falling below said thresholds.
Further, under Norwegian law, an acquisition disposal or any other circumstance, that causes the shareholder’s proportion of shares and/or rights to shares to reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or an equivalent proportion of the voting rights in a company whose shares are quoted on Oslo Stock Exchange, the acquirer shall immediately notify such acquisition to the stock exchange.
Mandatory offer requirement
According to the Swedish Act on Public Takeover Bids on the Stock Market (in Swedish: Lagen om offentliga uppköpserbjudanden på aktiemarknaden) any person that acquires more than 3/10 of the voting rights of a listed company (including a Swedish company listed at Oslo Børs) is required to make an unconditional public offer for the purchase of the remaining shares in the company. Further, the shares of related parties, such as close relatives of the shareholder and companies controlled by such persons, companies in the same group of companies as the shareholder, and persons with which the shareholder is bindingly acting in concert and companies controlled by such persons, are considered equal to the shareholder’s own shares. The unconditional public offer must be made within four weeks after the threshold was passed and the person shall immediately announce his holding of shares in the company.
Compulsory acquisition
According to the Swedish Companies Act, a shareholder that holds more than nine-tenth of the shares in the Company (majority shareholder) shall be entitled to buy-out the remaining shares of the other shareholders (minority shareholders) of the Company. Furthermore, a minority shareholder whose shares may be bought out in accordance with the aforementioned is entitled to compel the majority shareholder to purchase his shares. The purchase price shall be determined to market price and for listed shares the purchase price shall correspondence to the listed value, unless specific circumstances otherwise dictates. A dispute regarding the existence of any buy-out right or obligation or the purchase price shall be determined by three arbitrators in accordance with the Swedish Arbitration Act.
Voting rights
Each share in the Company carries one vote. Each share held by a major shareholder carries the same voting right as each share held by any other shareholder.
As a general rule, resolutions that shareholders are entitled to make pursuant to Swedish law or the Company's Articles of Association require a simple majority of the votes cast. In the case of election of directors to the Board of Directors, the persons who obtain the most votes cast are deemed elected to fill the positions up for election. However, as required under Swedish law, certain decisions, including resolutions to waive preferential rights in connection with any share issue, to approve a merger or de-merger, to amend the Company's Articles of Association or to authorise the Board to resolve on share capital increases with deviation from the shareholders’ preferential rights or to resolve on reduction of the share capital, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a shareholders' meeting. Swedish law further requires that certain decisions, which have the effect of altering the rights and preferences of certain share or shares, receive the approval of all the holders of such share or shares present at the meeting and who together represent not less than nine-tenth of all shares whose rights are affected, as well as the majority required for amendments to the Company's Articles of Association. If such alterations only have effect on the rights of an entire class of shares, the decision requires the approval of one half of all the holders of shares of such class and nine-tenth of such class represented at the meeting, as well as the majority required for amendments to the Company's Articles of Association. Decisions that (i) would reduce any shareholder's right in respect of dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares, require to be supported by all of the shareholders present at the meeting who together represent not less than 90% of the share capital in the Company. Decisions that means restrictions in the number of shares which
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shareholders may vote for at general meeting require to be supported by two-thirds of the vote casts and nine-tenth of the shares represented at the general meeting.
In general, in order to be entitled to vote, a shareholder must be registered as the owner of Shares in the share register kept by the VPC. Beneficial owners of Shares that are registered in the name of a nominee are generally not entitled to vote under Swedish law, nor are any persons who are designated in the register as holding such Shares as nominees. Shareholders registered as such in the VPS will only be entitled to vote at general meetings of the Company if he has arranged for registration of entitlement to vote (in Swedish: Rösträttregistrering) in the VPC through the Registrar at the latest 5 business days (including Saturdays) prior to the general meeting and has noticed the Company of his participation at the general meeting in accordance with the notice to the meeting. For further information see section 5.10 above.
General meetings of shareholders
Through the general meeting, the Company’s shareholders exercise the supreme authority in the Company, subject to the limitations provided by Swedish law.
All shareholders in the Company are entitled to attend and vote at general meetings, either in person or by proxy. See “Voting rights” above with regard to certain restrictions on voting right applying for nominee- and VPS registered.
General meetings are conveyed by the Company’s Board of Directors. In accordance with the Company´s Articles of Association, a notice of a general meeting shall be announced in Official Gazette (Sw Post och Inrikes Tidningar) and in Dagens Industri at the latest two or four weeks before the date of the meeting depending on the type of meeting and matters to be addressed at the meeting, and shall include a proposal for an agenda for the meeting. A shareholder is entitled to submit proposals to be discussed at general meetings provided such proposals are submitted in writing to the Board of Directors in such good time that it can be entered on the agenda of the meeting.
The annual general meeting shall be called by the Board of Directors such that it can be held within six months from the end of each financial year. The annual general meeting shall deal with and decide on the adoption of the annual financial statement and annual report, the question of declaring dividend and such other matters as may be set out in the notice of the annual general meeting.
Extraordinary general meetings can be called by the Board of Directors. In addition, the Board of Directors shall call an extraordinary general meeting whenever so demanded in writing by the auditor or shareholders representing at least 10% of the share capital, in order to deal with a specific subject.
The following matters shall always be resolved by the annual general meeting:
Approval of the annual report and the auditors’ report as well as, where appropriate, the consolidated accounts and auditors’ report on the consolidated accounts.
adoption of the profit and loss account and balance sheet and, where appropriate, the consolidated profit and loss account and consolidated balance sheet; allocation of the company’s profits or losses as set forth in the adopted balance sheet; discharge from liability of the members of the Board and the managing director;
Determination of the remuneration to the Board and the auditors. Election of the Board members and, where appropriate, auditors and alternate auditors.
Additional share issuances and preferential rights
Under the Swedish Companies Act, the Company's shareholders have a preferential right to subscribe for issues of new shares by the Company. New share issues with preferential rights for the Company’s shareholders that do not require an amendment to the Articles of Associations, require a resolution by the general meeting with simple majority (more than 50% of the votes present at the meeting). The shareholders’ preferential rights to subscribe for shares in an issue may be waived by a resolution at a general meeting supported by two third of the votes and shares present at the general meeting.
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Under the Swedish Companies Act, bonus issues may be distributed, subject to resolution of the general meeting, by transfer from the Company's free equity or from its statutory reserve or revaluation reserve. Such bonus issues may be effected either by issuing new shares or by increasing the quota value of the outstanding shares.
There are no conditions imposed by the memorandum or Articles of Association of the Company which set out more stringent conditions for changes in the capital than what is required by statutory law.
Dividends
Under Swedish law, no interim dividends may be paid in respect of a financial period as to which audited financial statements have not been approved by the annual general meeting of shareholders, and any proposal to pay a dividend must be recommended or accepted by the Board and approved by the shareholders at a general meeting. The shareholders may vote to reduce (but not to increase) the dividends proposed by the Board. However, the annual general meeting may vote to increase the dividends if such obligation is set forth in the articles of association or such dividend is approved due to the right of minority shareholders to receive the minimum dividend set forth by Swedish law.
Dividends may only be paid, if after the payment the restricted equity of the Company is fully intact and presupposing that the payment is possible under the rule of prudence, e.g. the Company’s need for consolidation.
Under Swedish foreign exchange controls currently in effect, transfers of capital to and from Sweden are not subject to prior government approval except for the physical transfer of payments in currency, which is restricted to licensed banks. Consequently, a non-Swedish resident may receive dividend payments without Swedish exchange control consent if such payment is made only through a licensed bank.
All shareholders that are registered as shareholders in the VPC/VPS system at the registration date (Sw: avstämningsdag) resolved by the general meeting when making the dividend resolution, are entitled to dividend, unless otherwise decided in connection with the share issue, and dividends are paid out to the shareholders on the day decided by the general meeting. There are no restrictions on dividends or special procedures for shareholders who reside outside Sweden.
The Company’s Board will consider the amount of dividend (if any) to recommend for approval by the Company’s shareholders, on an annual basis, based upon the earnings of the Company for the years just ended and the financial situation of the Company at the relevant point in time. Hence, the shareholders do not have a right to share in the Company’s profits by way of dividends (other than under the circumstances above stated).
Change of the rights of holders of Shares
The Company’s Articles of Association do not contain any special regulations for changing the rights of holders of the Company’s Shares. Subject to specific requirements set out in the Swedish Companies Act, the general meeting may adopt a resolution to change rights attached on the Company’s Shares. Such resolution requires an amendment to the Articles of Association, which requires the same vote as other amendments to the Articles of Association. In addition, stricter majority requirements may apply depending on the manner in which the change of rights to be carried out.
Redemption and conversion rights
There are no redemption rights or conversion rights attached to the Company’s Shares.
Rights on liquidation
Under Swedish law, the Company may be liquidated by a resolution (simple majority) in a general meeting of the Company. The Shares rank pari passu in the event of return of capital by the Company upon a liquidation or otherwise.
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Reports to shareholders
The Company publishes annual and interim reports that include financial statements. The consolidated financial statements are published in accordance with the International Financial Reporting Standards, IFRS, as issued by the International Accounting Standards Board.
Notification and publication requirements
The Company will provide its shareholders, Oslo Stock Exchange, NGM Equity and the market as a whole with timely and accurate information. Notices will be published through Oslo Stock Exchange’s and NGM Equity’s respective information system and on the Company’s Internet site.
Mandatory filing requirements under the Norwegian Competition Act
The Norwegian Competition Act of 5 March 2004 No. 12 (the “Competition Act”) stipulates a mandatory filing requirement for certain mergers and transactions involving acquisition of control of another undertaking. The Competition Act applies to concentrations as defined in art. 3 of EC Council Regulation 139/2004 (2004 ECMR), i.e. to mergers between two or more previously independent undertakings, and to acquisitions of direct or indirect control on a lasting basis of the whole or parts of another undertaking. The EC Commission’s and the EC Court’s interpretation of the notion of concentration under the said regulation is relevant when determining which mergers are comprised by the Competition Act.
All mergers and transactions involving acquisition of control must be notified to the Norwegian Competition Authority (the “NCA”) if the undertakings involved in the transaction have a combined annual turnover in Norway of NOK 50 million or more. However, if only one of the undertakings involved in the transaction has an annual turnover in Norway exceeding NOK 20 million, the transaction need not be notified.
Notwithstanding the above, the filing requirements under the Competition Act do not apply to concentrations that are within the turnover thresholds of the EC Merger Regulation or equivalent thresholds in the EEA Agreement. Accordingly, the principle of one-stop-merger control applies.
Transactions must be notified to the NCA no later than when a final agreement between the parties is reached or if control over another undertaking in fact is acquired prior to a final agreement. The Competition Act allows for voluntary filing at an earlier stage. The obligation to notify the transaction is imposed on the parties to the merger or on the acquirer(s) of an undertaking.
The mandatory filing requirement under the Competition Act imposes an obligation to submit a so-called simplified notification. If the NCA finds reason to consider the transaction more closely, the NCA may require that the parties to the merger/the acquirer(s) submit(s) a so-called complete notification. The NCA must make such a requirement within 15 working days after they have received the simplified notification. If this is not done, the NCA cannot intervene against the transaction after this deadline has expired. The parties may also voluntarily submit a complete notification without having received instructions from the NCA.
Where the NCA has imposed an obligation to submit a complete notification, the implementation of the transaction must be suspended. The same applies if a complete notification is submitted voluntarily. For mergers or acquisitions of control, the stand-still obligation comes into effect as soon as the party/parties have received the order to submit a complete notification. For voluntary filings, the stand-still comes into effect from the time of submission of a complete notification. The suspension period lasts for 25 working days calculated from the time the NCA has received the complete notification. It is within this time limit that the NCA must decide whether to investigate the transaction further and warn the parties that they may interfere with the transaction. The NCA may also order a prolonged prohibition on implementation of a transaction, provided that there is reason to believe that the concentration may create or strengthen a significant restriction on competition and that a temporary prohibition is necessary in order to ensure that a potential decision from the NCA can be carried out.
If the NCA decides to investigate the transaction further, i.e. beyond the above mentioned 25 working days period, the NCA must provide a reasoned draft decision of intervention no later than 70 working days as
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from the receipt of the complete notification. The parties will then have 15 working days to submit their comments to the draft decision. The NCA must reach a final decision no later than 15 working days after the receipt of such comments. If the parties have submitted a proposal for commitments, they can request that an additional 25 working days are added to NCA's deadline to reach a final decision.
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10 TAXATION
This section contains a summary over important Norwegian and Swedish tax rules relevant to the realization of shares in IGE Nordic and shareholders in International Gold Exploration. Please note that only the potential tax liability to Norway and Sweden is described below and that any potential tax liability to other countries due to the shareholders connections to such countries are not described.
The summary is not a complete review of all tax considerations that may be relevant to the IGE Nordic and/or International Gold Exploration shareholders. The summary is based on applicable Norwegian and Swedish law and practice at the date of this Document. Such laws may be amended, also with retroactive effect.
The summary is only intended to provide a general guideline. The taxation of each IGE Nordic or International Gold Exploration shareholder depends on the specific shareholder’s situation. Each shareholder should therefore consult its own tax advisor in order to establish the full tax consequences of accepting the offer including the implications of any Norwegian, Swedish and/or other foreign tax laws.
For the purpose of the summary below, any reference to a “Norwegian shareholder”, “Swedish Shareholder” or a “foreign shareholder” refers to the tax residency and not the nationality of such shareholder.
10.1 Shareholders who are resident in Norway
10.1.1 Taxation of capital gain or losses from realization of shares in IGE Nordic
Corporate shareholders
The exchange of shares in IGE Nordic for shares in International Gold Exploration will be deemed a realization of shares in IGE Nordic under Norwegian tax legislation. Norwegian corporate shareholders are not taxable in Norway on capital gains derived from realization of Shares in IGE Nordic. Any losses related to such realization are not tax deductible.
However, pursuant to a proposed amendment, 3% of any capital gains realised and any dividends declared after 7 October 2008 shall be recognised as taxable income. If the proposal is adopted by the Norwegian Parliament this implies that any capital gain derived from the exchange of shares in IGE Nordic will effectively be subject to 0.84% income tax (28% tax rate x 3% of the capital gain).
If the exchange of shares in IGE Nordic leads to a capital loss, no part of such loss will be deductible for a corporate shareholder for tax purposes.
Individual shareholders
The exchange of shares in IGE Nordic for shares in International Gold Exploration will be deemed a realization of shares in IGE Nordic under Norwegian tax legislation. A capital gain generated by a Norwegian individual shareholder through the exchange of shares is taxable in Norway and any loss tax deductible. Such capital gain or loss is included in or deducted from the basis for computation of ordinary income in the year of disposal. Ordinary income is taxable at a rate of 28%. This is applicable irrespective of the duration of the ownership and the number of shares owned and/or disposed of.
The capital gain (loss) is equal to the consideration received (the value of the received International Gold Exploration shares) less the cost price of the share and transactions costs. From the basic calculation of the capital gain Norwegian individual shareholders are entitled to deduct a calculated tax-free allowance when calculating their taxable income (No. “skjermingsfradrag”). The tax-free allowance is calculated annually on a share to share basis, and the annual allowance for each share will be equal to the cost price of that share
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multiplied by a risk free interest rate (No. “skjermingsrente”). Any part of the calculated annual allowance exceeding the dividend distributed on the share in one year will be added to the cost price of the share and included in the basis for calculating the allowance the following year. The allowance for each share is accordingly equal to the total of (annual) allowance amounts calculated for this share for previous years, less dividends distributed on this share. The calculated allowance may only be deducted in order to reduce a taxable gain calculated upon the realization of the share, and may not be deducted in order to produce or increase a loss for tax purposes.
10.1.2 Taxation connected to Shares in International Gold Exploration
Corporate shareholders
International Gold Exploration shareholders will not be taxed by the IGE Nordic shareholders’ exchange of shares for International Gold Exploration shares.
In the future, pursuant to current tax law, Norwegian corporate shareholders are not taxable in Norway on dividends received from or on capital gains derived from realization of shares in companies situated in the EEA area such as International Gold Exploration. Any losses related to realization of shares are not tax deductible.
However, pursuant to a proposed amendment, 3% of any capital gains realised and any dividends declared after 7 October 2008 shall be recognised as taxable income. If the proposal is adopted by the Norwegian Parliament this implies that any capital gain derived from the exchange of shares in International Gold Exploration will effectively be subject to 0.84% income tax (28% tax rate x 3% of the capital gain / dividend). If the realisation of shares in International Gold Exploration leads to a capital loss, no part of such loss will be deductible for a corporate shareholder for tax purposes.
Individual shareholders
The International Gold Exploration shareholders will not be influenced by the IGE Nordic shareholder’s exchange of shares for International Gold Exploration shares.
On future realisation, pursuant to current tax law, a capital gain generated by a Norwegian individual shareholder through a sale of Shares is taxable in Norway and any loss tax deductible. Such capital gain or loss is included in or deducted from the basis for computation of ordinary income in the year of disposal. Ordinary income is taxable at a rate of 28%. This is applicable irrespective of the duration of the ownership and the number of Shares owned and/or disposed of.
The capital gain (loss) is equal to the consideration received less the cost price of the Share and transactions costs. From the basic calculation of the capital gain Norwegian individual shareholders are entitled to deduct a calculated tax-free allowance when calculating their taxable income (“skjermingsfradrag”). The tax-free allowance is calculated annually on a share to share basis, and the annual allowance for each share will be equal to the cost price of that share multiplied by a risk free interest rate (“skjermingsrente”). Any part of the calculated annual allowance exceeding the dividend distributed on the share in one year will be added to the cost price of the share and included in the basis for calculating the allowance the following year. The allowance for each Share is accordingly equal to the total of (annual) allowance amounts calculated for this Share for previous years, less dividends distributed on this Share. The calculated allowance may only be deducted in order to reduce a taxable gain calculated upon the realization of the Share, and may not be deducted in order to produce or increase a loss for tax purposes.
Dividends are taxed at 28%. An amount of the dividends similar to the allowance as described above is exempt from tax.
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10.2 Shareholders who are resident in Sweden
10.2.1 Taxation connected to capital gain or losses from realization of shares in IGE Nordic and International Gold Exploration and dividends
Taxation on realisation of shares - general The capital gain or, where applicable, the capital loss, is calculated as the difference between the sales proceeds less sales expenditure and the acquisition cost (costs related to acquisition and potential improvements) for the shares sold. The acquisition cost is calculated according to the so-called average method, implying that the tax acquisition cost is calculated as the average acquisition cost for all the Shares of the same type and class.
For publicly traded shares, the acquisition cost may be determined as 20% of the sales proceeds after deduction of expenses related to the sale; the so-called standard rule. Taxation on realisation of shares in IGE Nordic - Individual shareholders
For individuals that are Swedish tax resident and who accepts the Offer and therefore realize their shares in IGE Nordic against the Consideration Shares, the rules for mandatory deferred taxation (Sw. framskjuten beskattning) should be applicable. The transaction should therefore not result in any taxable gain or deductible loss. The Consideration Shares will in such case be deemed to be acquired at a price corresponding to the acquisition price that existed for the shares in IGE Nordic.
A future sale of the Consideration Shares will normally trigger capital gain taxation (see below) provided the rules for mandatory deferred taxation are not applicable also for that sale. According to the tax legislation, a capital gain or loss which arises when shares in IGE Nordic are realized against the Consideration Shares will be subject to taxation before the Consideration Shares are sold if and when the shareholder ceases to be resident in Sweden or to permanently live in Sweden. However, according to court practice such exit taxation is not allowed when the individual moves to another country within the EU. In that situation it is currently uncertain to what extent Sweden may tax the capital gain from the share exchange when a sale of the Consideration Shares otherwise is not taxable in Sweden due to internal rules or application of double tax treaty.
Taxation on realisation of shares in International Gold Exploration- Individual shareholders
A capital gain realized on publicly traded shares by Swedish tax resident individuals is taxed as capital income at a flat rate of 30%. A capital loss is normally deductible with 70% against other capital incomes. However, capital losses on publicly traded shares (such as the Company’s Shares) are fully deductible against capital gains on shares (publicly traded and not-publicly traded) and on publicly traded securities taxed as shares (except for parts in interest funds) and which have been realized the same year. Capital losses may not be carried forward to the following income year. If the shares in International Gold Exploration are sold against shares in an acquiring company, the rules regarding deferred taxation might be applicable also on that sale.
If a net capital income loss should arise, 30% of this loss may be credited against earned income tax, real estate tax or local real estate fee. However, if the loss exceeds SEK 100,000 only 21% of the excess portion allows for a tax credit.
Taxation on realization of shares in IGE Nordic - Corporate shareholders
For corporate shareholders that are Swedish tax resident and who accepts the Offer and therefore realize their shares in IGE Nordic against the Consideration Shares, the share exchange will, according to the main rule, result in a taxable capital gain or deductible capital loss provided the special rules for business related shares are not applicable (see below). A capital gain realized by a corporate shareholder is normally taxed as ordinary business income at a flat rate of 28%. Capital losses may only be deducted against capital gains on
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other securities taxed as shares. In certain cases capital losses may be offset against capital gains realized by group companies if group contributions can be exchanged between the companies. Capital losses that are not offset against capital gains may be carried forward to the following income year.
It should be possible to claim deferred taxation of a capital gain that arises when shares in IGE Nordic are realized against the Consideration Shares. The capital gain must in such case anyway be reported to the tax authority in the income tax return together with a claim for deferred taxation. The deferred taxable gain shall then be allocated equally to the Consideration Shares received in exchange. If deferred taxation is accepted, the capital gain shall be taxed at the latest when the Consideration Shares are transferred or cease to exist. This will however not apply if the Consideration Shares are transferred in a subsequent share exchange which meets the requirements for a further deferral of the taxation. A capital gain which is subject to deferred taxation may also be taxed if that is requested by the taxpayer.
The shares in IGE Nordic would be deemed business related if the shareholding equals at least 10% of the voting rights in the company or the shareholding is related to the business conducted by the holder or any of its affiliates. At sale of publicly traded business related shares, a capital gain is not taxable and a capital loss is not deductible, provided the shares have been business related in the hands of the shareholder for a continuous period of at least one year before the sale. Taxation on realization of shares in International Gold Exploration - Corporate shareholders When a corporate shareholder sells shares in International Gold Exploration which have been received in consideration for the shares in IGE Nordic, a capital gain will be taxable and a loss will be deductible in accordance with what has been described above as regard realization of shares in IGE Nordic. The Consideration Shares are deemed to have an acquisition price equal to their fair market value at the time of the share exchange. If a capital gain at realization of the shares in IGE Nordic is subject to deferred taxation, such gain will also be taxed at sale of the Consideration Shares.
A special order of priority is applicable for a company which accept the Offer and which already holds shares in International Gold Exploration at the time of the share exchange or acquire such shares after the share exchange when the shares are sold. The shares are deemed to be sold in the following order:
1. Shares acquired before the share exchange.
2. Shares received in the share exchange.
3. Shares acquired after the share exchange.
As regard business related shares the same apply as described above for realization of shares in IGE Nordic.
Taxation of dividends - Individual shareholders
Dividends paid to a Swedish tax resident individual are taxed in Sweden as capital income at a flat rate of 30%. The VPC or – if the shares are nominee registered – the Nominee withholds the tax as a preliminary tax.
Taxation of dividends - Corporate shareholders (limited liability companies)
Dividends paid to a Swedish corporate shareholder are normally taxed as ordinary business income at a flat rate of 28%. Dividends attributable to so-called business related shares are tax-exempt provided the shares are business related and held by the shareholder more than one year from the time when the shares became business related for the shareholder. Publicly traded shares are considered as being business related if the shareholder holds at least 10% of the voting rights in the company or if the holding otherwise is related to the business conducted by the holder or any of its affiliates.
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10.3 Shareholders who are resident in other jurisdictions
Realization of shares
Shareholders who are tax resident outside Sweden are normally not taxed in Sweden at sale of shares. Such shareholders may however be subject to tax at sale of shares in their country of residence.
An individual who is tax resident outside Sweden may however be subject to tax in Sweden on sale of shares, if the individual at any occasion during the year in which the sale take place or during any of the preceding ten calendar years has been resident or permanently stayed in Sweden. The right for Sweden to tax a sale of shares in these situation may however be limited by a tax treaty between Sweden and the country of the shareholder’s residency.
Companies which are tax resident outside Sweden may be taxed in Sweden due to a sale of shares if the company has a permanent establishment in Sweden and the shares can be allocated to the permanent establishment.
Dividend
Dividend paid out from a Swedish limited liability company to shareholders with tax residency outside Sweden is normally subject to withholding tax in Sweden. The same applies to certain payments to shareholders in connection with a reduction of the share capital, liquidation or a repurchase of shares. The statutory withholding tax rate is 30%, but if a tax treaty is applicable between Sweden and the country of the shareholder’s residency the rate is normally reduced according to the treaty. The VPC or – if the shares are nominee registered – the Nominee normally withholds the withholding tax.
Swedish withholding tax is not levied on dividend paid to foreign companies on shares which would be deemed business related if they were held by a Swedish company and provided the foreign company is deemed to be similar to such a Swedish company which are tax exempted for dividend on business related shares. Another requirement for the exemption from withholding tax in this case is however that the shares have been held for at least one year at the time of the dividend is paid out.
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11 ADDITIONAL INFORMATION
11.1 Statements by experts
This Document contains no statements by experts regarding International Gold Exploration or market conditions.
11.2 Third party information
The information in this Document that has been sourced from third parties has been accurately reproduced and as far as International Gold Exploration is aware and able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The source of third party information is identified where used.
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12 DEFINITIONS & GLOSSARY TERMS
The following definitions and glossary apply in this Document unless dictated otherwise by the context, including the foregoing pages of this Document. Definitions in plural also apply for words in singular, and vice versa.
Acceptance Acceptance of the Offer by a IGE Nordic shareholder
Private Placement The issue of the Consideration Shares to IGE Nordic shareholders who accept the Offer
Acceptance Form The form of acceptance to be used by IGE Nordic shareholders when accepting the Offer, enclosed with this Document as Appendix 2
Acceptant IGE Nordic shareholder who accepts the Offer
Appendices Appendix 1 and Appendix 2 to this Document
Articles of Association The aarticles of Aassociation of International Gold Exploration as at the date of the prospectus
Board or Board of Directors The Board of Directors of International Gold Exploration
CESR The Committee of European Securities Regulators
CET Central European Ttime
Company International Gold Exploration IGE AB (publ.) (registration number 556227-8043), a Swedish public limited company with registered address at Kungsgatan 44, SE-111 35 Stockholm, Sweden
Consideration Shares Shares in International Gold Exploration which are issued to IGE Nordic shareholders in exchange for shares in IGE Nordic under the Offer
Document This voluntary offer document and share securities note with appendices prepared in connection with the Offer and the private issueplacement of the Consideration Shares
Financial Advisor Handelsbanken Capital Markets
Group International Gold Exploration IGE AB and its subsidiaries
IFRS International Financial Reporting Standards, issued by the IASB
IGE International Gold Exploration IGE AB and its subsidiaries
IGE Nordic IGE Nordic AB (publ.) (company registration number 556493-3199), a Swedish public limited company with registered address at Kungsgatan 44, SE-111 35 Stockholm, Sweden
International Gold Exploration International Gold Exploration IGE AB (publ.) (registration number 556227-8043), a Swedish public limited company with registered address at Kungsgatan 44, SE-111 35 Stockholm, Sweden
NOK The currency in the Kingdom of Norway (Norwegian krone)
Offer The voluntary offer by International Gold Exploration to exchange IGE Nordic shares not already owned by International Gold Exploration IGE with shares in International Gold Exploration on the terms set out in this Document
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Offer Period The period when IGE Nordic shareholders may accept the Voluntary Offer, running from and including 1 December 2008 to and including 17:30 (Norwegian time) 15 December 2008, subject to extension as set out in this Document
Offeror International Gold Exploration
Oslo Børs Oslo Børs ASA
Prospectus The Prospectus issued by the Company in relation to the Issue, comprising of this Document, the Registration Document and the Summary prepared, published and approved by and filed with Oslo Børs in accordance with the Prospectus Rules
Prospectus Rules The Prospectus rules in the Securities Trading Act and the Securities Trading Regulation, which implements the Prospective Directive (EC/2003/71), including the Commission Regulation EC/809/2004, in Norwegian law
Receiving Agent Handelsbanken Capital Markets
Registration Document The Registration Document, produced under the Prospectus Rules, which together with this document and the Summary, constitutes the Prospectus
Securities Trading Act The Norwegian Securities Trading Act of 29 June 2007 No. 75 (in Norwegian: “Verdipapirhandelloven”)
Securities Trading Regulation The Securities Trading Regulation of 29 June 2007 No. 876 (as amended)
SEK The currency in the Kingdom of Sweden (Swedish krone)
Shares Shares issued by International Gold Exploration
Summary The Summary produced under the Prospectus Rules, which, together with this document and the Registration Document, constitutes the Prospectus
Swedish Companies Act The Swedish Companies Act of 2005:551 (as amended)
Swedish Companies Register The Swedish Companies Register
Voluntary Offer An offer as defined in the Norwegian Securities Trading Act of 29 June 2007 No. 75 section 6-19
VPC The Swedish Central Securities Depository
VPC account An account held with VPC to register ownership of securities
VPS The Norwegian Central Securities Depository
VPS account An account held with VPS to register ownership of securities
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APPENDICES
Appendix 1: Articles of Association of International Gold Exploration (office translation into English)
ARTICLES OF ASSOCIATION
of
International Gold Exploration IGE AB (publ)
reg.no. 556227-8043
1. Company name
The name of the company is International Gold Exploration IGE AB (publ).
2. Registered office The registered office of the company is in the county and borough of Stockholm.
3. Company business The company shall solely, through subsidiaries or through cooperation with others, engage in mining and mineral prospecting business as well as own and administrate real and personal property, as well as conduct other activities compatible therewith.
4. Share capital The share capital shall amount to a minimum of SEK 15,000,000 and a maximum of SEK 60,000,000.
5. Number of shares The number of shares shall be a minimum of 300,000,000 and a maximum of 1,200,000,000.
6. The board of directors The board of directors shall consist of three (3) to six (6) directors with no more than six (6) deputy directors.
7. Auditors For the review of the company's annual report and accounting records as well as the management pursued by the board of directors and the managing director, the company shall elect an auditing company or one (1) or two (2) auditors with one (1) deputy auditor.
8. Notice of shareholders’ meetings Notice of shareholders’ meetings shall be announced in Post och Inrikes Tidningar and in Dagens Industri.
9. Prior notice of participation In order to participate at shareholders’ meeting, shareholders must both be registered in a print-out of the shareholders’ register made five days before the meeting, and must also notify the company at 1600 hours at the latest on the date specified in the notice of the shareholders’ meeting. Such date must not be a Sunday, other public holiday, Saturday, Midsummer’s Eve, Christmas Eve, or New Year’s Eve and must not occur earlier than the fifth weekday prior to the shareholders’ meeting. Each shareholder has the right to be accompanied at shareholders’ meeting by one (1) or two (2) advisors, provided that the shareholder has notified the company of the advisors in the manner specified above.
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10. Presence by outsiders The board may rule that a non-shareholder in the company, under conditions decided by the board, may be present or otherwise follow the proceedings at the shareholders’ meeting.
11. Record date provision The company's shares are to be registered in a VPC register pursuant to the Financial Instruments Accounts Act (1998:1479).
12. Annual general meeting Annual general meeting of the shareholders shall be held within six (6) months of the expiry of the financial year. The following matters shall be addressed at the annual general shareholders’ meeting: a) Election of the chairman of the meeting.
b) Preparation and approval of the voting list.
c) Approval of the agenda.
d) Appointment of one or two persons to attest the minutes.
e) Determination as to whether the meeting has been duly convened.
f) Presentation of the annual report and the auditors’ report as well as, where appropriate, the consolidated accounts
and auditors’ report on the consolidated accounts.
g) Resolution regarding the: (i) adoption of the profit and loss account and balance sheet and, where appropriate, the consolidated profit and loss account and consolidated balance sheet; (ii) allocation of the company’s profits or losses as set forth in the adopted balance sheet; (iii) discharge from liability of the directors of the board and the managing director;
h) Resolution on the number of directors and deputy directors of the board and, where appropriate, the number of auditors and alternate auditors.
i) Determination of the remuneration to the board of directors and the auditors.
j) Election of directors and deputy directors of the board and, where appropriate, auditors and alternate auditors.
k) Other matters to be dealt with at the meeting according to the Swedish Companies Act (2005:551) or the articles of association.
13. Financial year The fiscal year of the company shall be calendar year.
____________________
Appendix 2: Acceptance Form
OFFER TO EXCHANGE ONE (1) SHARE IN IGE NORDIC AB (PUBL) WITH FOUR (4) SHARES IN INTERNATIONAL GOLD EXPLORATION IGE AB (PUBL)
This Acceptance Form shall be used to accept the Voluntary Offer (the “Offer”) by International Gold Exploration IGE AB (publ) (“International Gold Exploration”) to exchange Shares in IGE Nordic AB (publ) (“IGE Nordic”) into Shares in International Gold Exploration. The Offer Period is from and including 1 December 2008 up to and including 15 December 2008 at 17:30 hours (CET). A completed and signed Acceptance Form must be received by the Manager prior to the expiration of the Offer Period. International Gold Exploration reserves the right to reject any or all acceptances of the Offer that are received after the expiration of the Offer Period or, which in International Gold Exploration’s opinion, are not in the proper form, or which may be unlawful. International Gold Exploration also reserves the right to treat an acceptance as valid, in whole or in part, even though it is not entirely in order or not accompanied by required document(s) or which is not received at the place stated below. Neither International Gold Exploration nor the Manager nor any other person will be under any duty to give notification of any defects or irregularities in acceptance or incur any liability for failure to give any such information. Shareholders with IGE Nordic shares in several VPS accounts will be required to submit one Acceptance Form for each account. The Acceptance Form, duly completed and signed, must be sent by post, fax or be delivered by hand to the Manager at the following address: Handelsbanken Capital Markets Rådhusgaten 27 P.O. Box 332 Sentrum 0101 OSLO Norway Fax: +47 22 94 07 68
GUIDANCE TO IGE NORDIC SHAREHOLDERS Further information on the Offer can be found in the combined voluntary offer document and prospectus dated 28 November 2008 (the “Prospectus”). Capitalised words not defined herein shall have the same meaning as set forth in the Prospectus. The Offer Price is NOK 1.84 for each IGE Nordic share. The Offer Price will be settled by way of exchanging one (1) share in IGE Nordic with a par value of SEK 0.10 for four (4) shares in International Gold Exploration with a par value of SEK 0.05. Completion of the Offer is subject to the following conditions being satisfied, each of which may be waived (wholly or in part) by International Gold Exploration: (i) that the International Gold Exploration receives valid acceptances from IGE Nordic shareholders for a number of IGE Nordic shares, which together with the IGE Nordic shares already hold by
International Gold Exploration aggregate to more than 90 % of the share capital and votes in IGE Nordic (on a fully diluted basis); and (ii) that prior to completion of the Offer, there are no changes, events, violations, circumstances or effects that were not known to International Gold Exploration at the time of the Offer and are, or with
the lapse of time, reasonably expected to become, materially adverse to the financial conditions or results or operations of IGE Nordic; and (iii) that legislation and other regulations, court and authority decisions or similar circumstances, which are beyond International Gold Exploration’s control and which International Gold Exploration
could not reasonably have foreseen at the time of the Offer, must not make the completion of the Offer or the acquirement of IGE Nordic completely or partly impossible or make such completion significantly difficult.
If International Gold Exploration has not publicly announced that the above conditions are satisfied or waived by the International Gold Exploration prior to 12 January 2009 at 09.00 hours (CET), then the Offer will lapse. International Gold Exploration reserves the right to extend the Offer Period one or more times, however, no longer than to 9 January 2009 at 17:30 (CET) and/or to amend the Offer in favour of the IGE Nordic shareholders. Any amendments to the Offer are binding on International Gold Exploration from the time it is made public by Oslo Børs. Any acceptance received by the Manager is binding even if the Offer Period is extended. Shareholders who have already accepted the Offer when amendments are made will be considered entitled to any benefits arising from such amendments. ACCEPTANCE OF OFFER To International Gold Exploration and Handelsbanken Capital Markets: 1. I/We, being a shareholder of IGE Nordic, have received and reviewed the Prospectus, and hereby irrevocably accept the Offer set out therein to exchange all my/our shares in IGE Nordic registered on the
VPS/ account stated below with shares in International Gold Exploration in accordance with the terms and conditions set out in the Prospectus and this Acceptance Form. 2. I/We accept the Offer Price of NOK 1.84 for each IGE Nordic share and that the Offer Price will be settled by way of exchanging one (1) share in IGE Nordic with a par value of SEK 0.10 for four (4)
shares in International Gold Exploration with a par value of SEK 0.05. 3. I/We acknowledge that, with effect from receipt of this Acceptance Form by the Manager, I/we will be prevented from selling or otherwise disposing of, charging or transferring to another VPS account, the
shares in IGE Nordic which are covered by the acceptance. 4. I/We accept that the acceptance of this Acceptance Form also includes any shares, in addition to the shares specified in the Acceptance Form, which are acquired and credited to the VPS account identified
in the Acceptance Form before the shares are debited from such VPS account and transferred to an escrow account in the name of the Manager. 5. I/We give the Manager, with effect from receipt of this Acceptance Form by the Manager, irrevocable authority to transfer the IGE Nordic shares covered by this acceptance from my/our VPS account to a
special VPS account opened in my/our name and blocked in favour of the Manager on behalf of International Gold Exploration. 6. I/We give the Manager an irrevocable power of attorney to subscribe the Consideration Shares to be issued as consideration for the shares comprised by this Acceptance Form on my/our behalf and for
my/our account. 7. I/We give the Manager irrevocable authority to transfer the IGE Nordic shares covered by this acceptance from my/our blocked VPS account to a VPS account in the name of International Gold Exploration
upon the Offer becoming effective. I/We accept that delivery of the Consideration Shares to the IGE Nordic shareholders’ VPS accounts is expected to take place within 5 business days following the registration in the Swedish Companies Register of the share capital increase in International Gold Exploration relating to the Offer.
8. My/Our shares in IGE Nordic will be transferred to International Gold Exploration free of any encumbrances or other third-party rights whatsoever. I/We recognise that this acceptance will be valid only if any holders of rights to the shares registered on my/our VPS account have given their consent on this Acceptance Form for my acceptance and subsequent transfer of shares free of any encumbrances or other-third party rights whatsoever.
9. International Gold Exploration will pay commissions and VPS transaction costs directly attributable to my/our acceptance of the Offer. 10. I/We accept that if the Offer is withdrawn, the shares covered by this acceptance will promptly be returned to me/us by transfer to the VPS account specified on this Acceptance Form. 11. I/We confirm that my/our acceptance of the Offer is not restricted according to the laws of the jurisdiction applicable to me/us. 12. I/We accept that the Offer and all acceptances thereof shall be governed by and construed in accordance with Norwegian law, save for the issuance of the Consideration Shares which shall be governed by
Swedish law. Any disputes that arise in conjunction with the Offer and/or the acceptance thereof and/or the issue of Consideration Shares which cannot be amicably resolved are subject to the exclusive jurisdiction of Norwegian courts with the agreed legal venue in Oslo.
Specification of VPS account VPS-account number
Number of shares: Rights holder registered per:
I/we have bought shares in IGE Nordic later than four days before signing this acceptance form (Tick with an “X” in the box to the right if correct):
Accepting Shareholder: Name of shareholder Place Date Binding signature* Holder of rights: As holder of rights, I/we consent to the transfer of the shares to International Gold Exploration free of any encumbrances or other third party rights. Place Date Holders of rights’ signature* * If signed pursuant to proxy, a proxy form or company certificate confirming the authorised signature must be attached.
281473 – signatur.no
Handelsbanken Capital Markets Rådhusgaten 27
P.O.Box 332 Sentrum NO-0101 Oslo, Norway Phone: +47 22 94 08 78 Fax: +47 22 94 08 46
www.handelsbanken.com/capitalmarkets