EAST AFRICA RESOURCES LIMITED 
By
22 January 2014
Dear Shareholder
Pursuant to East Africa Resources Limited's ("East Africa") announcement made on 8 January 2014 about East Africa's intention to invite Shareholders of East Africa as at 4:00pm AWST on the Record Date of 17 January 2014 (the "Record Date") to participate in East Africa's one (1) for three (3) non renounceable entitlement issue, the Directors of East Africa are pleased to offer ("Entitlement Issue") you as an East Africa shareholder (an "Eligible Shareholder") on the Record Date to subscribe for one (1) new ordinary fully paid share ("New Share") in the capital of East Africa for every three (3) existing ordinary fully paid shares in the capital of East Africa held by you on the Record Date at the issue price of $0.01 (1 cent) per New Share to raise up to $758,025 before expenses of the Entitlement Issue.
Each New Share will rank equally with the existing shares in the capital of East Africa. The Entitlement Issue allows Eligible Shareholders to acquire the New Shares without brokerage or other costs that would apply to an on-market purchase of shares.
The purpose of the Entitlement Issue is to raise up to $758,025 for expenditure on the Company's exploration activities in Africa and working capital.
Entitlements and Acceptance
The Entitlement of Eligible Shareholders to participate in the Entitlement Issue is determined on the Record Date. Your Entitlement is shown on the personalised Entitlement and Acceptance Form accompanying this letter.
Acceptances must not exceed your maximum Entitlement (as shown on the Entitlement and Acceptance Form), although you may accept a lesser number of New Shares should you wish to take up only part of your Entitlement. If your acceptance exceeds your Entitlement, acceptance will be deemed to be for your maximum Entitlement and any surplus application monies will be returned to you.
The rights to New Shares under this offer are non-renounceable. Accordingly, there will be no trading of rights on the ASX and you may not dispose of your rights to subscribe for New Shares under the offer to any other party. If you do not take up your Entitlement to New Shares by the Closing Date, the Offer to you will lapse.
ShortfallIf you do not wish to take up any part of your Entitlement, you are not required to take any action. That part of your Entitlement not taken up will form part of the Shortfall. The Directors of the Company reserve the right to issue the Shortfall at their discretion.
Opening and Closing DatesThe Offer opens on the Opening Date, being 22 January 2014. The Company will accept Entitlement and Acceptance Forms until 5:00pm AWST on the Closing Date being 11 February 2014 or such other date as the Directors in their absolute discretion shall determine, subject to compliance with the Listing Rules.
Issue and Despatch
The expected date for issue of New Shares offered by this Offer and despatch is expected to occur on the dates specified in the Indicative Timetable set out below.
It is the responsibility of Applicants to determine the allocation prior to trading in the New Shares. Applicants who sell New Shares before they receive their holding statements will do so at their own risk.
Application for official quotation by the ASX of the New Shares offered pursuant to this Offer has been made. If approval is not obtained from the ASX before the expiration of three (3) months after the date of this Offer (or such period as varied by the ASIC) the Company will not issue any New Shares and will repay all application monies for the New Shares within the time prescribed under the Corporations Act, without interest as if this letter was a prospectus, which it is not.
The fact that the ASX may grant official quotation to the New Shares is not to be taken in any way as an indication of the merits of the Company or the New Shares offered under this Entitlement Issue.
The Company will not be issuing certificates to Eligible Shareholders. Instead, Eligible Shareholders will be provided with a statement (similar to a bank account statement) that sets out the number of New Shares allotted to them under this Offer. The notice will also advise holders of their Holder Identification Number (HIN) and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.
Overseas Eligible Shareholders
This offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Offer Document.
It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of the New Shares these Shareholders would be offered and the cost of complying with regulatory requirements on each relevant jurisdiction. Accordingly, the Offer is not being extended and New Shares will not be issued to Shareholders with a registered address which is outside Australia and New Zealand.
New Shares to which any Eligible Shareholders who are not resident in Australia and New Zealand, would otherwise be entitled, will form part of the Shortfall.
The New Shares are not being offered or sold to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of New Shares is being made in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand).
In accordance with the Securities Act (Overseas Companies) Exemption Notice 2002 (NZ), a person who, on the Record Date was registered as a holder of Shares with a New Zealand address but who, as at the time of this Offer no longer holds Shares is not eligible to participate in this Offer.
The Directors do not consider it appropriate to give Eligible Shareholders advice regarding the taxation consequences of subscribing for New Shares under this Offer. The Company, its advisers and its officers do not accept any responsibility or liability for any taxation consequences to Eligible Shareholders.
Eligible Shareholders should consult their professional adviser in connection with subscribing for New
Shares under this Offer.
An investment in New Shares should be regarded as speculative. In addition to the general risks applicable to all investments in listed securities, there are specific risks associated with an investment in the Company which are, without limitation, risks associated with economic conditions, the ability of the Company to continue to raise funds to satisfy its obligations, exploration success, operating risks, commodity price volatility, exchange rates, Government policy, native title, environmental matters and share market conditions.
The Offer
The Company intends to raise up to approximately $758,025 via a non-renounceable pro-rata Entitlement Issue, on the basis of one (1) New Share for three (3) Shares (Offer), held as at 4:00pm AWST on 17 January 2014 (Record Date) to eligible Shareholders with a registered address in Australia and New Zealand (Entitlement Issue).
Shares under the Entitlement Issue will be offered at $0.01 per New Share. Based on the current capital structure (and assuming no Options or warrants to acquire Shares are exercised prior to the Record Date) a total of an additional 75,802,547 New Shares will be issued.
Where the determination of the Entitlement of any Eligible Shareholder results in a fraction of a New
Share, such fraction will be rounded up to the nearest whole New Share.
Shareholders who hold less than 20,000 Shares will be offered priority to apply for any Shortfall of New Shares available under the Entitlement Issue (Shortfall Priority Offer). Those Shareholders eligible to participate will receive, upon request, a customised Shortfall Priority Application Form which sets out the maximum number of Shortfall Shares for which their application will be considered. If the aggregate number of Shortfall Shares is insufficient to meet all of the Shortfall Priority Applications, directors will allocate these applications on the basis of fulfilling applications from the smallest Shareholders first.
Use of funds
Completion of the Offer will result in an increase in cash on hand of up to approximately $758,025 (before the payment of costs associated with the Offer).
The Company intends to apply the funds raised from the Offer as set out below.
Exploration on Eastern Rift, Madaba and new ventures | $532,336 |
Working capital | $193,195 |
Costs of the offer | $32,494 |
Total | $758,025 |
The above table is a statement of current intentions as of this Offer Document. As with any budget, intervening events (including exploration success or failure) and new circumstances have the potential to affect the ultimate way funds will be applied. The Board reserves the right to alter the way funds are applied on this basis.
Enquiries Concerning OfferEnquiries concerning the Entitlement and Acceptance Form can be obtained by calling 08 9227 3270 (within Australia) and 61 8 9227 3270 (outside Australia).
ACTION REQUIRED BY ELIGIBLE SHAREHOLDERS How to accept the Offer
Your acceptance of the Offer must be made on the personalised Entitlement and Acceptance Form accompanying this Offer. Your acceptance must not exceed your Entitlement as shown on that form. If it does, your acceptance will be deemed to be for the maximum Entitlement.
You may participate in the Offer as follows:
(a) If you wish to accept your Entitlement in full, complete the Entitlement and Acceptance Form, filling in the details in the spaces provided and follow the payment instructions set out in that form; or
(b) If you only wish to accept part of your Entitlement:
(i) fill in the number of New Shares you wish to accept in the space provided on the
Entitlement and Acceptance Form; and
(ii) following the payment instructions set out in that form; or
(c) If you do not wish to accept all or part of your Entitlement, you are not obliged to do anything. All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to
"East Africa Resources Limited" and crossed "Not Negotiable". Please note that payment via BPAY must be made by no later than 2:00pm AWST on the Closing Date namely, 11 February 2014. Applicants should be aware that their own financial institution may implement earlier cut off times with regard to electronic payment and it is the responsibility of the Applicant to ensure that funds are submitted through BPAY by the date and time mentioned above. If you elect to pay by BPAY, you must follow the instructions for BPAY set out in the Entitlement and Acceptance Form and you will not need to return that form to the Company's Share Registry.
Your completed Entitlement and Acceptance Form and money must be forwarded to the Company's
Share Registry, Computershare Investor Services Pty Limited, so that they are received no later than
5:00pm AWST on the Closing Date being 11 February 2014. Entitlement and Acceptance Forms with cheques can be delivered as follows:
By Post: Computershare Investor Services Pty Limited
GPO Box 505, Melbourne VIC 3001
The Offer is non-renounceable. Accordingly, a holder of Shares may not sell or transfer all or part of his/her/its Entitlement.
CAPITAL STRUCTUREThe capital structure of the Company immediately following the completion of the Offer, assuming all available rights are taken up is expected to be as follows:
Shares | Number |
Shares on issue at date of this Offer | 227,407,640 |
New Shares now offered | 75,802,547 |
Total Shares on issue at completion of the Offer | 303,210,187 |
The capital structure of the Company following the completion of the Entitlement Issue is summarised below:
Description Number of Shares Amount Raised$
Shares on Issue
New Shares the subject
227,407,640
75,802,547 758,025
of the Offer
303,210,187
DIRECTORSThe Directors of the Company will be taking up their full entitlement under the Entitlement Issue. At the date of this document the Directors have the following relevant interests in Shares:
NAME | NUMBER OF SHARES |
P L Munachen | 6,599,966 |
K M Law | 1,307,677 |
H D Kennedy | 49,074,458 |
R E Kirtlan | 2,970,000 |
M R Griffiths | 884,333 |
E A Myers (alternate for PL Munachen) | 1,133,914 |
The Indicative Timetable for the Entitlement Issue is as follows:
Announcement of Entitlement Issue and Application for Quotation of New Shares (Appendix 3B) | Wednesday, 8 January 2014 |
Letter to Shareholders advising of Entitlement Issue | Friday, 10 January 2014 |
Ex-Date: Shares Quoted ex-Entitlement | Monday, 13 January 2014 |
Record Date | Friday, 17 January 2014 |
Issue Cleansing Notice in accordance with Section 708AA of Corporations Act | Wednesday, 22 January 2014 |
Despatch offer of Entitlement Issue to Eligible Shareholders | Wednesday, 22 January 2014 |
Closing Date | Tuesday, 11 February 2014 |
Securities quoted on a deferred settlement basis | Wednesday, 12 February 2014 |
Notification of under subscriptions | Friday, 14 February 2014 |
Despatch of Holding Statements and deferred settlement ends | Wednesday, 19 February 2014 |
In this document the following words and phrases have the following meanings:
Applicant refers to a person who submits an Entitlement and Acceptance Form. Application refers to the submission of an Entitlement and Acceptance Form. ASIC means Australian Securities & Investments Commission. ASX means ASX Limited (ACN: 008 624 691) and where the context permits, the Australian Securities Exchange operated by ASX Limited. ASX Listing Rules means Listing Rules of ASX and any other rules of ASX which are applicable while the Company is admitted to the Official List, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX. Board means the Board of Directors of the Company as constituted from time to time. CHESS means ASX Clearing House Electronic Subregistry System. Closing Date means the date on which this Offer closes, being 5:00pm AWST, 11February 2014.
Corporations Act means the Corporations Act 2001 (Cwth). Company means East Africa Resources Limited (ABN: 36 060 774 227) Dollar or $ means Australian dollar unless otherwise stated. Eligible Shareholder means a Shareholder whose details appear on the Company's register of Shareholders as at the Record Date. Entitlement means the entitlement to subscribe for one (1) New Share for every three (3) Shares held by an Eligible Shareholder on the Record Date and Entitlements have a corresponding meaning. Entitlement and Acceptance Formmeans the personalised Entitlement and Acceptance Form accompanying this Offer in respect of the Entitlement Issue.
New Share means a New Share proposed to be issued pursuant to this Offer. Offer means the non-renounceable pro rata offer of New Shares at an issue price of $0.01 (1 cent) each on the basis of one (1) New Share for every three (3) Shares held on the Record Date pursuant to this Offer. Offer Period means the period commencing on the Opening Date and ending on theClosing Date.
Opening Date means 22 January 2014. Option means an option to acquire a Share. Quotation means quotation of the New Shares on ASX. Record Date means 17 January 2014. Rights Issue means the Offer. Section means a section of this Offer. Share means an ordinary fully paid share in the capital of the Company. Shareholder means a holder of Shares. Shortfall means the number of New Shares comprising the difference between
75,802,547 and the number of the New Shares for which valid
Applications have been received and accepted by the Company by the
Closing Date from the Eligible Shareholders.
Please contact East Africa by calling 08 9227 3270 (within Australia) and 61 8 9227 3270 (outside
Australia) if you have any queries in relation to this Offer or how to accept it.
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