RNS Number : 6530F
Energem Resources Inc.
13 October 2008
Posting of Information Circular, Notice of Special General Meeting
TSX/AIM: ENM
VANCOUVER, 10 October 2008 - Further to the announcement of Energem Resources Inc. (the "Company" or "Energem") released at 7.00 BST on 3
October 2008, the Company is today posting to shareholders an information circular (the "Information Circular"), together with a notice of a
special general meeting of shareholders, in connection with (i) the proposed disposal of its remaining 30% interest in the refined fuel
product tank farm and distribution facility at Apapa Port, Lagos, Nigeria (the "Disposal") and (ii) the proposed acquisition of a commercial
aircraft (the "Aircraft Purchase").
Part II of the Circular contains additional information relating to the background to and terms of the Aircraft Purchase. The sections of
Part II headed "Introduction", "Background and Reasons for the Aircraft Purchase" and "Terms of Aircraft Purchase" include information
additional to that contained in the announcement of 3 October 2008:
* confirming D.P (Jimmy) Kanakakis as a director of the company selling the aircraft and hence a party interested in the Aircraft
Purchase transaction;
* providing details surrounding the original purchase of the Aircraft by the seller in 2002;
* detailing the date of the original agreement between the Company and the seller in respect of the Aircraft Purchase; and
* providing details on the timing and mechanism for settlement of payments in relation to the consideration for the Aircraft
Purchase.
The full text of the Information Circular is set out in the appendix below.
The Information Circular, together with a notice convening a special general meeting of shareholders to be held on Thursday, 6 November 2008
in order to consider the approval of the Disposal and of the Aircraft Purchase, is today being posted to the shareholders of the Company. A
copy of the Information Circular, together with the notice of special general meeting, is also available on the Company's website:
www.energem.com .
This news release contains forward-looking statements which address future events and conditions which are subject to various risks and
uncertainties. The actual results could differ materially from those anticipated in such forward-looking statements as a result of numerous
factors, some of which may be beyond the Company's control. These factors include: the availability of funds; the costs and availability of
product; fluctuations in fuel product sale prices; currency fluctuations; changes in production costs; fluctuation in shipping costs;
availability of shipping; general market and industry conditions; political and regulatory instability and risks associated with rights to
title and ownership of assets.
Forward-looking statements are based on the expectations and opinions of the Company's management on the date the statements are made.
The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on forward-looking statements.
Energem Resources Inc (TSX/AIM:ENM). is an Africa focussed company listed on the Toronto Stock Exchange and on the London Stock
Exchange's AIM market and the holding company of a group of companies engaged in, mainly, several African countries in the bio-fuels, oil
and related sectors including logistics and supply to the mining industry in South and Central Africa and development of an up-stream oil
exploration asset. The Company has offices and/or logistics and support infrastructure in Johannesburg, London and a number of African
countries.
For further information, please contact:
Energem - Rob Rainey in Johannesburg at telephone +27 11 372*3300; Fax +27 11 454*1673 or email: info@energem.com; Refer to our website:
www.energem.com
Canaccord Adams Limited - Robert Finlay/Andrew Chubb +44 207 050 6500
Smithfield - Reg Hoare/George Hudson/Will Henderson +44 207 360 4900
Appendix
SPECIAL GENERAL MEETING OF SHAREHOLDERS
INFORMATION CIRCULAR
GENERAL INFORMATION
This Information Circular is furnished to the common shareholders ("shareholders") by management of Energem Resources Inc. (the
"Company") in connection with the solicitation of proxies to be voted at the special general meeting (the "Meeting") of the shareholders to
be held on Thursday, November 6, 2008 and at any adjournment thereof, for the purposes set forth in the accompanying notice of meeting (the
"Notice of Meeting").
All dollar ($) amounts stated in this Information Circular refer to United States dollars unless otherwise indicated. On October 9,
2008, the noon exchange rate reported by the Bank of Canada was USD1.00 equals CAD1.1486. On October 9, 2008, the noon exchange rate
reported by the Federal Reserve Bank of New York was USD1.7225 equals GBP1.00.
PROXIES
Solicitation of Proxies
The enclosed Proxy is solicited by and on behalf of management of the Company. The persons named in the enclosed Proxy form are
management*designated proxyholders. A registered shareholder desiring to appoint some other person (who need not be a shareholder) to
represent the shareholder at the Meeting may do so either by inserting such other person's name in the blank space provided in the Proxy
form or by completing another form of proxy acceptable to the Company. To be used at the Meeting, proxies must be received by Computershare
Investor Services Inc., Proxy Department, 100 University Avenue, 9th Floor, Toronto, Ontario M5J 2Y1 by 10:00 a.m. (Toronto time) on
November 4, 2008 or, if the Meeting is adjourned, by 10:00 a.m. (Toronto time), on the second last business day prior to the date on which
the Meeting is reconvened, or may be accepted by the chairman of the Meeting prior to the commencement of the Meeting. Solicitation will be
primarily by mail, but some proxies may be solicited personally or by telephone by regular employees or directors of the Company at a nominal cost. The cost of solicitation by management of the Company will
be borne by the Company.
Non-Registered Holders
Only registered holders of Common Shares or the persons they appoint as their proxyholders are permitted to vote at the Meeting. In many
cases, however, Common Shares beneficially owned by a holder (a "Non-Registered Holder") are registered either:
(a) in the name of an intermediary (an *Intermediary*) that the Non*Registered Holder deals with in respect of the shares.
Intermediaries include banks, trust companies, securities dealers or brokers, and trustees or administrators of self*administered RRSPs,
RRIFs, RESPs and similar plans, or
(b) in the name of a clearing agency (such as The Canadian Depository for Securities Limited (CDS)) of which the Intermediary is a
participant.
In accordance with the requirements of National Instrument 54-101 of the Canadian Securities Administrators, the Company has distributed
copies of proxy-related materials in connection with this Meeting (including this Information Circular) to Intermediaries and clearing
agencies for onward distribution to Non*Registered Holders. Intermediaries are required to forward the proxy-related materials to
Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Intermediaries often use service companies to
forward the proxy-related materials to Non-Registered Holders. Generally, Non-Registered Holders who have not waived the right to receive
proxy-related materials will be sent a voting instruction form which must be completed, signed and returned by the Non-Registered Holder in
accordance with the Intermediary's directions on the voting instruction form. In some cases, such Non-Registered Holders will instead be
given a proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature) which is restricted as to the number of Common Shares beneficially owned by the
Non-Registered Holder but which is otherwise not completed. This form of proxy does not need to be signed by the Non-Registered Holder, but,
to be used at the Meeting, needs to be properly completed and deposited with Computershare Investor Services Inc. as described under
"Solicitation of Proxies".
The purpose of these procedures is to permit Non-Registered Holders to direct the voting of the Common Shares that they beneficially
own. Should a Non-Registered Holder wish to attend and vote at the Meeting in person (or have another person attend and vote on behalf of
the Non-Registered Holder), the Non*Registered Holder should strike out the names of the persons named in the proxy and insert the
Non-Registered Holder's (or such other person's) name in the blank space provided or, in the case of a voting instruction form, follow the
corresponding instructions on the form.
Non-Registered Holders should carefully follow the instructions of their Intermediaries and their service companies, including
instructions regarding when and where the voting instruction form or Proxy form is to be delivered.
Revocation of Proxies
A registered shareholder who has given a Proxy in respect of the matters to be considered at the Meeting may revoke it by an instrument
in writing that is:
(a) received at the registered office of the Company (19th Floor, 885 West Georgia Street, Vancouver, British Columbia V6C 3H4) at
any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used, or
(b) provided to the chair of the meeting, at the meeting of shareholders, before any vote in respect of which the proxy is to be used
shall have been taken,
or in any other manner provided by law.
Non-Registered Holders who wish to revoke a voting instruction form or a waiver of the right to receive proxy-related materials should
contact their Intermediaries for instructions.
Voting of Proxies
Common Shares represented by a shareholder's Proxy form will be voted or withheld from voting in accordance with the shareholder's
instructions on any ballot that may be called for at the Meeting and, if the shareholder specifies a choice with respect to any matter to be
acted upon, the Common Shares will be voted accordingly. In the absence of any instructions, the proxy agent named on the Proxy form will
cast the shareholder's votes in favour of the resolutions set forth herein and in the Notice of Meeting.
The enclosed Proxy form confers discretionary authority upon the persons named therein with respect to (a) amendments or variations to
matters identified in the Notice of Meeting and (b) other matters which may properly come before the Meeting or any adjournment thereof. At
the time of printing of this Information Circular, management of the Company knows of no such amendments, variations or other matters to
come before the Meeting other than the matters referred to in the Notice of Meeting.
Voting Shares and Principal Holders Thereof
Only Common Shares without par value of the Company ("Common Shares") carry voting rights at the Meeting, with each Common Share
carrying the right to one vote. The Board of Directors of the Company (the "Board of Directors" or "Board") has fixed October 6, 2008 (the
"Record Date") as the record date for the determination of shareholders entitled to notice of and to vote at the Meeting and at any
adjournment thereof, and only shareholders of record at the close of business on that date are entitled to such notice of and to vote at the
Meeting. As of the Record Date, 175,288,003 Common Shares were issued and outstanding as fully paid and non*assessable. A complete list of
the shareholders entitled to vote at the Meeting will be open to examination by any shareholder for any purpose germane to the Meeting,
during ordinary business hours for a period of 10 days prior to the Meeting, at the office of Computershare Investor Services Inc. at 510
Burrard Street, Vancouver, British Columbia V6C 3B9.
To the knowledge of the directors or executive officers of the Company, no person beneficially owns, directly or indirectly, or
exercises control or direction over shares carrying more than 10% of the voting rights attached to the Company's issued and outstanding
Common Shares as at the Record Date, except as follows:
Name Number of Percentage of Common Shares Outstanding
Common Shares
Antonio Teixeira(1) 48,072,413(1) 27.4%
RAB Special Situations 29,679,179 16.9%
(Master) Fund Limited
________________________
(1) Represents Common Shares owned by Lyndhurst Limited ("Lyndhurst"). Mr. Teixeira has an indirect beneficial interest in Lyndhurst and
informally directs the voting and other powers over Common Shares held by Lyndhurst.
Votes Necessary to Pass Resolutions
The Company's articles provide that a quorum of shareholders is present at a meeting of shareholders, irrespective of the number of
persons actually present at the meeting, if the holder or holders of 5% of the shares entitled to vote at the meeting are present in person
or represented by proxy.
A majority of the votes cast at the Meeting (in person or by proxy) is required in order to pass the resolution referred to in item 1 of
the accompanying Notice of Meeting and a majority of the votes cast at the Meeting (in person or by proxy) by disinterested shareholders is
required in order to pass the resolution referred to in item 2 of the accompanying Notice of Meeting.
PARTICULARS OF MATTERS TO BE ACTED UPON
I. Proposed Disposal of Nigerian Fuel Product Tank Farm and Distribution Facility Interest
Introduction
Energem Petroleum Corporation Limited ("EPC"), a wholly owned subsidiary of the Company, has entered into an agreement dated October 2,
2008 (the "Yinka Agreement") between EPC (acting with its lawfully appointed nominee, Compagnie Financiere de Negoce C.F.N. S.A. ("CFN"))
and Yinka Folawiyo and Sons Limited ("Yinka") pursuant to which EPC has agreed to dispose or cause the disposal of its remaining 30%
interest in Energem Nigeria Limited ("ENL") to Yinka for a gross cash consideration of $42,719,259 (the "EPC Disposal") upon and subject to
the terms and conditions of the Yinka Agreement. The net proceeds of the EPC Disposal will reflect a deduction of approximately 3% of the
gross proceeds in settlement of transaction expenses, less a further 8.2% deduction in respect of fees payable under the Yinka Loan (as
defined below). Accordingly, the net amount receivable by the Company will be approximately $37.5 million.
ENL indirectly owns a 100% interest in a Nigerian refined fuel product tank farm and distribution facility interest located at Apapa
Port, Lagos, Nigeria (the "Apapa Facility"). Yinka is one of EPC's joint venture partners in connection with the Apapa Facility and is a
party at arm's length to the Company and its subsidiaries (the "Energem Group") and the directors, officers and other insiders of the
Company.
EPC and Yinka have also entered into a share sale deed of agreement (the "Glencore Agreement") with Glencore Finance (Bermuda) Limited
("Glencore"), a wholly owned subsidiary of privately owned Glencore International AG and a party at arm's length to each of EPC and Yinka.
Prior to entering into the Yinka Agreement and the Glencore Agreement, EPC, Yinka and Glencore respectively held a 30%, 50% and 20% interest
in ENL. Pursuant to the Glencore Agreement, Yinka has agreed to dispose of a 30% interest in ENL (from Yinka's 50% interest in ENL) to
Glencore prior to the completion of the EPC Disposal under the Yinka Agreement and for an equivalent cash consideration to that of the EPC
Disposal. The completion of the Yinka Agreement is conditional upon the completion of the Glencore Agreement.
Upon the completion of both the Glencore Agreement and the Yinka Agreement, each of Glencore and Yinka will own a 50% interest in ENL,
and EPC will cease to own any interest (other than in respect of the Shareholder Loan (as defined below)) in ENL.
In view of the amount of the consideration payable for the EPC Disposal and the amount of profit attributable to the Apapa Facility, the
rules applicable to companies whose shares are admitted to trading on the AIM market ("AIM") operated by London Stock Exchange plc (the "AIM
Rules") require that the EPC Disposal be first approved by the shareholders of the Company.
Conditions precedent to completion of the Yinka Agreement, therefore, are completion of the Glencore Agreement and the approval of the
transaction by the Company's shareholders at the Meeting.
Background
ENL was established further to an agreement dated September 10, 2004 between EPC and Yinka, as amended by an agreement dated September
7, 2006 (together, the "Joint Venture Agreement"), pursuant to which EPC and Yinka each acquired 50% of the issued share capital of ENL.
ENL in turn controls 100% of Folawiyo Energy Limited, a company incorporated and registered in Nigeria, which owns and operates the Apapa
Facility.
Historically, the Energem Group's investment in the Apapa Facility consisted of a $21.7 million loan (the "Shareholder Loan") advanced
to ENL which has been largely repaid to the Energem Group at the date of this Information Circular, save for $6.6 million which remains
repayable from the Apapa Facility's future cash flows. From data of current throughput and costs of the Apapa Facility, the Company
anticipates that the amount of $6.6 million outstanding under the Shareholder Loan will be repaid within six months. Subject always to
receipt of this final repayment of $6.6 million, the Energem Group will have realized $75.3 million for its 50% interest in the Apapa
Facility within a four*year timeframe, after fully recovering invested capital of approximately $21.7 million.
The Apapa Facility was constructed at a capital cost of $58.7 million and has been operational since commissioning in September 2006.
It provides large*scale storage facilities for refined oil products imported into Nigeria and comprises a ship jetty, offloading pipes, tank
storage and a road loading and distribution centre. The Apapa Facility is the sole privately owned facility in the region capable of
handling multiple refined oil products direct from oil tankers and the only privately owned onshore oil storage facility in the port of
Lagos which is able to accommodate vessels with a draft of up to 11 metres. Refined oil products are held in storage tanks for customers
(which include global oil companies) and a handling charge is levied for all refined oil products passing through the Apapa Facility.
In April 2008, EPC sold a 20% interest in ENL (from its then 50% stake) to Glencore for a cash consideration of $32.3 million (the
"Earlier EPC Disposal"). The Joint Venture Agreement was amended on April 29, 2008 to add Glencore as a party with a 20% interest in ENL
(with EPC's interest in ENL being correspondingly reduced to 30%).
The net contribution of the Apapa Facility to the earnings of the Energem Group for the year ended December 31, 2007 amounted to $5.6
million and for the six months ended June 30, 2008 amounted to $4.6 million. The carrying value of the Company's investment in the Apapa
Facility as at June 30, 2008 (accounted for on an equity basis) amounted to $6.1 million, excluding the outstanding balance due under the
Shareholder Loan of $6.6 million referred to above. There has been no material change to this investment carrying value since June 30, 2008.
Following completion of the EPC Disposal, the Energem Group will no longer have any equity participation in the Apapa Facility and
consequently no profits or losses of the same will be accounted for in the Company's consolidated financial statements.
Additionally, on completion of the EPC Disposal, the Company will record a substantial capital gain of approximately $31.4 million (net
of costs noted above) when compared with the carrying value of the investment in the Apapa Facility stated at June 30, 2008 of $6.1 million
and cash balances will increase by approximately $37.5 million.
Proposed Transaction Structure
Pursuant to the terms of the Yinka Agreement, EPC (acting with its lawfully appointed nominee, CFN) has agreed to sell to Yinka EPC's
remaining 30% interest in ENL, conditional on, among other things, the Company's shareholders having approved the proposed transaction and
completion of the Glencore Agreement.
EPC had originally intended to sell its remaining 30% interest in ENL to Glencore directly. Upon the Company being advised that any
disposal of EPC's remaining 30% interest in ENL would first require the approval of the shareholders of the Company, the disposal was
restructured. Concurrent with the execution of the Yinka Agreement, EPC and Yinka entered into a secured loan facility arrangement whereby
Yinka has agreed to advance a loan of $42,719,259 to EPC (the "Yinka Loan") on the terms and conditions of a facility agreement between EPC
and Yinka dated October 2, 2008 (the "Facility Agreement") pending satisfaction of the conditions precedent to the EPC Disposal (including
approval of the same by the Company's shareholders). The Yinka Loan was drawn down on October 2, 2008, on completion of the Glencore
Agreement, and it is intended that these funds will provide the Energem Group with working capital resources to pursue potential
acquisitions during the period prior to the Meeting.
Until repayment of the Yinka Loan, Yinka will have a security interest over EPC's 30% interest in ENL (which is represented by 30
ordinary shares of �1 each in the capital of ENL registered in the name of CFN, as nominee for EPC) pursuant to a security interest
agreement dated October 2, 2008 between EPC and Yinka. The amount of the Yinka Loan will be offset against the consideration due from Yinka
to EPC on completion of the EPC Disposal (subject always to the shareholders of the Company having approved the same at the Meeting) and
interest accrued on the Yinka Loan will be waived. If, for any reason, the EPC Disposal does not complete by December 1, 2008, the Yinka
Loan will accrue interest at the rate of 0.5% per calendar month from drawdown and will be repayable on December 1, 2008. EPC's aggregate
liability under the Yinka Loan is limited to the value realized from the proceeds of the sale of the ENL shares which are the subject of the
security interest in favour of Yinka.
Under the terms of the Facility Agreement, a drawdown fee of $3,530,000 (representing 8.2% of the amount of the Yinka Loan) is payable
by EPC upon drawdown of the Yinka Loan, such payment to be paid to Wincroft Enterprises Limited, as directed by Yinka. The drawdown fee was
duly paid to Wincroft Enterprises Limited on October 8, 2008.
The proposed EPC Disposal forms an integral part of the Company's publicly stated refocus on renewable energy and other development
activities in Africa, which commenced early in 2007 with the divestment of certain other non*core assets.
Rationale for the EPC Disposal, the Yinka Loan and Use of Proceeds
The proceeds from the EPC Disposal will strengthen the consolidated balance sheet of the Company, resulting in a pro forma net cash
position well in excess of the Company's current market capitalization.
The Company intends to use the proceeds from the EPC Disposal for general working capital requirements and to facilitate the Company's
strategic objectives, including investing a portion of the proceeds to further develop its bio-fuel assets (notably its jatropha*based
bio*diesel agricultural development operations in Mozambique and Malawi and its bio*ethanol producing plant in Kenya). In the short term,
the Company is seeking a number of opportunities to acquire assets in its focus area. The Company expects that the cash resulting from the
Yinka Loan and the EPC Disposal will greatly improve its ability to explore potential transactions in its focus area.
Shareholder Approval
In accordance with the AIM Rules, the Yinka Agreement provides that completion of the EPC Disposal is conditional upon prior approval of
the transaction having been received from the shareholders of the Company. At the Meeting, the shareholders of the Company will be asked to
consider and, if thought fit, to approve the following resolutions:
"RESOLVED THAT:
1. the proposed disposal by Energem Petroleum Corporation Limited ("EPC"), a wholly owned subsidiary of the Company, of its 30%
shareholding in Energem Nigeria Limited to Yinka Folawiyo and Sons Limited ("Yinka"), on the terms and subject to the conditions set out in
an agreement dated October 2, 2008 (the "Yinka Agreement") between EPC (acting with its duly appointed nominee, Compagnie Financiere de
Negoce C.F.N. S.A.) and Yinka and ancillary transactions contemplated by the Yinka Agreement (all as described in the Company's Information
Circular dated October 6, 2008 sent by the Company to its shareholders) be and are hereby authorized and approved; and
2. the Board of Directors of the Company is hereby authorized to agree to any amendments that the parties to the Yinka Agreement may
make to the Yinka Agreement that (a) are required so as to comply with the AIM Rules or the requirements of any securities regulatory
authority having jurisdiction over the Company or (b) are non*material amendments that the directors of the Company (or any duly constituted
committee) consider appropriate."
The resolution must be passed by a majority of the votes cast at the Meeting (in person or by proxy) to be effective.
Directors' Approval and Recommendation
The Board of Directors of the Company considers the EPC Disposal to be in the best interests of the shareholders of the Company.
Accordingly, the Board of Directors of the Company has unanimously approved the EPC Disposal and unanimously recommends that shareholders
vote in favour of the resolution to approve the EPC Disposal.
II. Purchase of Aircraft
Introduction
The Company proposes to acquire a 1982 Gulfstream III aircraft (the "Aircraft") from Diamond Air Charters (Pty) Limited ("DAC") for a
purchase price of $8 million (the "Aircraft Purchase").
DAC is a private company indirectly controlled as to 80% by Antonio Teixeira, Deputy Executive Chairman and a director of the Company.
Mr. Teixeira also indirectly controls approximately 27.5% of the issued and outstanding Common Shares of the Company. Mr. Teixeira, Brian
Menell (Executive Chairman and a director of the Company) and D.P. (Jimmy) Kanakakis (President, Chief Executive Officer and a director of
the Company) are also directors of DAC. Mr. Teixeira is a "control person" of the Company as that term is defined under Canadian securities
legislation in that he has direction and control over more than 20% of the outstanding common shares of the Company. The Aircraft Purchase
constitutes a "related party transaction" which is subject to the independent valuation and disinterested shareholder approval requirements
of Multilateral Instrument 61*101-Protection of Minority Security Holders in Special Transactions ("MI 61*101") adopted by the Ontario
Securities Commission and under the policies of the Toronto Stock Exchange ("TSX").
Rule 13 of the AIM Rules also classifies the proposed Aircraft Purchase as a related party transaction, requiring the directors
independent of the proposed transaction to consider the terms of the arrangements, consult with the Company's nominated adviser on the
proposals, and determine whether the arrangements are fair and reasonable insofar as the Company's shareholders are concerned.
Background and Reasons for the Aircraft Purchase
DAC originally purchased the Aircraft in November 2002, the purchase price including a sum of approximately $9 million financed by means
of a bank loan (the "Historic Finance Arrangements") from a third party finance provider, ABSA Capital (the "Lender"). At the original time
of purchase, the Company also provided an amount of $1 million to the Lender as security for DAC entering into the finance arrangements.
Following settlement of DAC's liabilities under the Historic Finance Arrangements (as more particularly detailed below), the amount of the
security paid on behalf of DAC in November 2002, plus interest accumulated thereon, was refunded to the Company by the Lender in June 2008.
The Company and its management team have used the Aircraft regularly (on arms' length commercial terms) since its purchase by DAC. When
not being used by the Company, DAC has regularly chartered out the Aircraft to third parties. The Company has borne the net Aircraft costs
after third party charter income of DAC in relation to the Aircraft. The Company has managed all aspects of the Aircraft's activities, as
well as the full administration of DAC, including the keeping of its records. In short, the Company would have acquired the Aircraft
directly itself in 2002 if it were financially able to do so at the time and has essentially borne all the net costs of ownership of the
Aircraft since that date and, in turn, has had the use of the Aircraft as its own.
Pursuant to the Company's articles and applicable British Columbia corporate law, those directors interested in a transaction must
abstain from voting on the same.
The independent members of the board of directors of the Company consider the Aircraft to be a valuable and key strategic asset to the
Company's current and future activities in Africa by facilitating direct, safe and quick access to remote areas and areas otherwise not
regularly served by scheduled commercial aircraft. It is the opinion of the Company's independent directors that use of the Aircraft has
enabled deployment of key personnel to any location in Africa on short notice and has been critical to its successes both in managing and
developing existing assets and in the acquisition of major projects in Africa. As previously done, when not required by the Company, the
Company intends to arrange for the Aircraft to be chartered out to third parties.
The expected future net cost of the Aircraft is not expected to be significantly different to the past costs experienced except that
lower financing and acquisition costs will have a positive impact on fixed costs, which have varied considerably from time to time depending
on the proportion of third party charters of the Aircraft to the Company's use of the Aircraft.
Terms of Aircraft Purchase
On May 8, 2008, the Company entered into a conditional agreement with DAC to purchase the Aircraft from DAC for a consideration of $8
million (the "May Agreement"). Conditions precedent to the May Agreement were the Company obtaining the necessary shareholder and
regulatory approvals for the proposed transaction, as well as securing third party financing, within 30 days of the date thereof. On May 9,
2008, the Company undertook to the Lender to settle all amounts outstanding under the Historic Finance Arrangements on behalf of DAC. On May
13, 2008, an amount of ZAR36,190,000 (equivalent to U.S.$4.7 million) (the "Deposit Amount") was paid to the Lender in full and final
settlement of DAC's obligations under the Historic Finance Arrangements, and the Company took conditional possession of the Aircraft
(pending completion of the May Agreement). However, the Company was unable to satisfy the conditions precedent to the May Agreement within
the requisite time period, and the May Agreement lapsed in June 2008.
In August 2008, each of the Company and DAC expressed their intentions to conclude the transaction contemplated by the May Agreement
and, on August 28, 2008, a further agreement (the "Aircraft Purchase Agreement") was entered into, restating the terms upon which the
Company proposes to acquire the Aircraft from DAC. Pursuant to the terms of the Aircraft Purchase Agreement (and subject always to the
Company receiving the necessary shareholder and regulatory approvals for the transaction within 90 days from the date of signature thereof)
the Company agreed to purchase the Aircraft from DAC for an aggregate consideration of $8 million (including the Deposit Amount). The
balance of $3.3 million for the purchase price of the Aircraft will be settled by way of set-off against past costs incurred by the Company
on behalf of DAC (such costs including, for example, the costs incurred in 2005 for complete refurbishment of the Aircraft).
Completion of the Aircraft Purchase Agreement is conditional upon the Company having secured financing for its benefit for the full
amount of the $8 million purchase price, the approval of the Company's disinterested shareholders of the transaction, and regulatory
approval pursuant to both TSX policies and AIM Rules.
To finance the proposed Aircraft Purchase, the Company has arranged for a financing facility (denominated in South African Rands) of
U.S.$8 million with WesBank Aviation Finance ("WesBank"), a division of FirstRand Bank to be made available to Energem Aviation (Pty) Ltd.
(a wholly*owned subsidiary of the Company incorporated specifically for this purpose), such financing being conditional only upon the
Company obtaining the requisite shareholder approval of the Aircraft Purchase. Given that the Company has previously advanced the Deposit
Amount to DAC and that the $3.3 million balance of the purchase price will be set off against accrued costs payable by DAC to the Company,
there will be no further sums payable to DAC and the Company will receive the full amount of cash from this new aircraft financing facility
of $8 million.
The financing facility, which will be secured over the Aircraft by WesBank, is repayable over 60 months in quarterly installments of
ZAR1,463,000 (approximately U.S.$400,000) and will bear interest at 15.5% per annum (fluctuating with the South African prime lending rate).
A final "balloon" payment of approximately 35% of the loan amount is payable at the end of the term of the financing facility.
Valuation
Engagement and Credentials of Valuator
Mecrep International of Johannesburg, South Africa (the "Valuator") was retained by the Company to provide an independent valuation on
the Aircraft (the "Valuation") further to MI 61*101 and TSX policies governing related party transactions. The Company has determined the
Valuator to be qualified and independent to provide the Valuation.
The Valuator is a firm which was established in 1994 in South Africa and provides various services relating to aircraft, including
brokerage services, financing arrangements, valuations, and documentary services. The Valuator has advised the Company that it has done
numerous valuations of aircraft for individuals, corporations, and banks and other firms providing aircraft financing facilities.
The Valuator has stated in the Valuation that it does not represent any manufacturer, agent, owner or operator and, as such, have acted
in good faith as an independent evaluator on behalf of the Company to assess the market value of the Aircraft.
The Company is the party responsible for paying for the Valuation.
Summary of Valuation
A copy of the Valuation dated October 1, 2008 is attached to this Information Circular. The following summary of the Valuation is
qualified in its entirety by reference to the actual text of the Valuation.
In the Valuator's opinion, the true and fair retail price for the Aircraft in South Africa as at October 1, 2008 was $8,469,000 (which
is $469,000 more than the $8 million purchase price for the Aircraft under the terms of the Aircraft Purchase Agreement).
In connection with the Valuation, the Valuator did the following:
� Referred to Aircraft Blue Book Price Guide, Avitas Blue Book of Jet Aircraft Values, and conducted extensive Internet
research to carry out the assessment of the Aircraft.
� Took into consideration and made adjustments for airframe and engine times from new and/or overhaul, as well as any
modifications or upgrades that have been made to the Aircraft.
� Made adjustments for any previous disclosed or undisclosed damage history, where applicable.
� Considered the following specific items applicable to the Aircraft:
o the Aircraft*s low total flying time.
o the complete refurbishment of the Aircraft in September 2005.
o the complete overhaul of the Aircraft*s engines some 2,817 hours ago, leaving them with almost two*thirds of their
operational life remaining.
o the Aircraft*s extensive and costly upgrade of communication and navigation equipment over and above normal systems.
Prior Valuation
The Valuator had previously provided the Company with a valuation dated March 5, 2008 (the "Prior Valuation") wherein the Valuator had
concluded that the true and fair retail price for the Aircraft in South Africa as at March 5, 2008 was $8,496,000. A copy of the Prior
Valuation is also attached to this Information Circular.
Shareholder Approval
In accordance with Rule 13 of the AIM Rules, the directors independent of the proposed Aircraft Purchase consider, having consulted with
the Company's nominated adviser, Cannacord Adams Limited, that the terms of the proposed Aircraft Purchase are fair and reasonable insofar
as the Company's shareholders are concerned.
At the Meeting, the minority or disinterested shareholders of the Company will be asked to consider and, if thought fit, to approve the
following resolutions:
"RESOLVED THAT:
1. the proposed purchase by the Company of a 1982 Gulfstream III aircraft from Diamond Air Charters (Pty) Limited ("DAC") for U.S.$8
million on the terms and subject to the conditions set out in a certain agreement dated May 8, 2008, as reinstated and amended August 28,
2008 (the "Aircraft Purchase Agreement"), between the Company and DAC (all as described in the Company's Information Circular dated October
6, 2008 sent by the Company to its shareholders) be and is hereby authorized and approved; and
2. the Board of Directors of the Company is hereby authorized to make any amendments to the Aircraft Purchase Agreement that (a) are
required by any securities regulatory authority having jurisdiction over the Company or (b) are non*material amendments that the directors
of the Company (or any duly constituted committee) consider appropriate."
Pursuant to the requirements of MI 61*101 and TSX policies, the Aircraft Purchase is required to be approved by a majority of the votes
cast by minority or disinterested shareholders ("Minority Approval").
To the knowledge of the directors and officers of the Company, after reasonable enquiry, the number of votes attached to Common Shares
that will be excluded from the determination of Minority Approval is 48,252,668, which are held by the following persons who are "interested
parties" in the Aircraft Purchase given their interest in or position with DAC or who are related parties of such interested parties:
Name Number of Common Shares Beneficially Owned or Controlled or
Directed
Antonio Teixeira 48,072,413(1)
Brian Menell 83,754
Jimmy Kanakakis 96,501
________________________
(1) Represents 48,072,413 Common Shares owned by Lyndhurst. Mr. Teixeira has an indirect beneficial interest in Lyndhurst and informally
directs the voting and other powers over Common Shares held by Lyndhurst.
Directors' Approval and Recommendations
In their deliberations on the Aircraft Purchase, the disinterested directors of the Company (i.e. those who are not "interested parties"
in the Aircraft Purchase) have considered the factors described in this Information Circular under "Background and Reasons for the Aircraft
Purchase", reviewed the Valuation, and have noted that the Aircraft has been regularly used by the Company since November 2002 and is
regarded by management of the Company to be a valuable and key strategic asset of the Company.
Accordingly, the Board of Directors of the Company (with Antonio Teixeira, Brian Menell and Jimmy Kanakakis each disclosing his interest
in the Aircraft Purchase and abstaining from discussions and voting on the Aircraft Purchase in accordance with the requirements of the
Business Corporations Act (British Columbia) and the Company's articles) has approved the Aircraft Purchase and recommends that shareholders
vote in favour of the resolution to approve the Aircraft Purchase.
INTEREST OF informed persons IN MATERIAL TRANSACTIONS
Except as otherwise disclosed herein or as previously disclosed in a information circular of the Company, no informed person (i.e.
insider) of the Company, no proposed director of the Company, and no associate or affiliate of any informed person or proposed director has
had any material interest, direct or indirect, in any transaction since January 1, 2007 or in any proposed transaction which has materially
affected or would materially affect the Company or any of its subsidiaries.
Information under the heading "Interest of Management and Others in Material Transactions" in the Company's Annual Information Form
dated April 8, 2008 for the financial year ended December 31, 2007 is incorporated by reference herein. The Annual Information Form is filed
on SEDAR at www.sedar.com and, upon request to the Company at info@energem.com or by telephone at +27 11 454 3099 to its office in
Johannesburg, Republic of South Africa, the Company will promptly provide a copy free of charge to a securityholder of the Company.
OTHER MATTERS
Management of the Company is not aware of any other matters to come before the Meeting other than as set forth in the Notice of the
Meeting. If any other matter properly comes before the Meeting, it is the intention of the persons named in the enclosed Proxy form to vote
the shares represented thereby in accordance with their best judgement on such matter.
ADDITIONAL INFORMATION
Additional information relating to the Company is available on SEDAR at www.sedar.com and on the Company's website at www.energem.com.
Financial information relating to the Company is provided in the Company's comparative financial statements and management's discussion
and analysis for its financial year ended December 31, 2007 which are available on SEDAR and on the Company's website at www.energem.com and
may also be obtained by emailing a written request to the Company at info@energem.com or by telephoning the Company at +27 11 454 3099 to
its office in Johannesburg, Republic of South Africa.
DATED as of the 10th day of October, 2008.
BY ORDER OF THE BOARD
*D.P. (Jimmy) Kanakakis*
D.P. (Jimmy) Kanakakis
President, Chief Executive Officer and Director
CONSENT
TO: British Columbia Securities Commission
Ontario Securities Commission
Toronto Stock Exchange
AIM Market of the London Stock Exchange
We refer to the formal valuations dated March 5, 2008 and October 1, 2008, which we prepared for Energem Resources Inc. in connection
with its proposed purchase of a 1982 Gulfstream III aircraft. We consent to the filing of the formal valuations with the securities
regulatory authority and the inclusion of the formal valuations in this document.
Dated the 10th day of October, 2008
"MECREP INTERNATIONAL"
[Copy of Valuation and Prior Valuation]
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCFFEFWSSASELS
Energem (LSE:ENM)
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Energem (LSE:ENM)
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