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AFX - African Oxygen Limited - Announcement relating to the acquisition and

Release Date: 04/01/2011 15:47:01      Code(s): AFX
AFX - African Oxygen Limited - Announcement relating to the acquisition and     
installation of a 200 ton per day GOX 6000 air separation plant by Afrox        
African Oxygen Limited                                                          
(Incorporated in the Republic of South Africa)                                  
(Registration number: 1927/000089/06)                                           
ISIN: ZAE000067120                                                              
Share Code: AFX                                                                 
NSX Code: AOX                                                                   
("Afrox" or "the Company")                                                      
DAY GOX 6000 AIR SEPARATION PLANT BY AFROX                                      
1. INTRODUCTION                                                                 
Shareholders are advised that Afrox has entered into an agreement dated 22      
December 2010 with Linde AG ("Linde"), its controlling shareholder, to          
acquire proprietary technology and equipment for a new GOX 6000 Air             
Separation plant ("the GOX 6000 Plant") for a cash purchase consideration of    
approximately Euro 10.9 million (or c.R97 million) ("the GOX 6000               
Acquisition"). The GOX 6000 Acquisition represents the first phase of the       
Following the GOX 6000 Acquisition, Afrox will commence with the second phase   
of the project which will entail the installation and integration of the GOX    
6000 Plant at its Pretoria West Air Separation Plant ("the GOX 6000             
Installation"). Afrox is currently in the process of considering contractual    
obligations relating to the GOX 6000 Installation and once contractual          
obligations have been entered into, a further announcement will be made. The    
cash cost of the GOX 6000 Installation is expected to be approximately Euro     
10.4 million (or c.R93 million).                                                
The total capital expenditure relating to the GOX 6000 Acquisition and the      
GOX 6000 Installation (collectively "the Transaction") is expected to be        
approximately Euro 21.3 million (or c.R190 million).                            
2. TERMS OF THE TRANSACTION                                                     
The GOX 6000 Acquisition                                                        
Linde Engineering (a division of Linde) will provide the full lump sum          
turnkey ("LSTK") plant consisting of a 200 ton per day GOX 6000 Air             
Separation Unit incorporating an Argon rectification column and associated      
It is anticipated that risk and ownership of the GOX 6000 Plant will pass to    
Afrox within 24 months of placing the order with Linde. The payment structure   
for the GOX 6000 Acquisition is based on various milestones throughout the      
ensuing 24 months.                                                              
The GOX 6000 Installation                                                       
The GOX 6000 Installation will take place between 2011 and 2013.                
The integration into product and service lines as well as the civil             
infrastructure will be undertaken internally by Afrox Technical and             
It is estimated that the GOX 6000 Plant will be fully integrated within the     
existing Afrox operations in January 2013.                                      
3. RATIONALE                                                                    
Afrox`s Merchant Gases business supports a well developed industrial packaged   
gases and extended product offering. This business contributes substantially    
to the overall profitability of the Company.                                    
The Transaction will enable Afrox to substantially enhance its production       
facilities. This will ensure that the Company is well positioned to defend      
and grow Afrox`s market share and brand reputation in the merchant gases        
4. SMALL RELATED PARTY TRANSACTION                                              
Linde currently owns 173,046,413 Afrox shares, comprising 50.47% of the share   
capital of Afrox including treasury shares (or 56.08% excluding treasury        
shares), and is thus the controlling shareholder of Afrox. Linde is therefore   
regarded as a related party to Afrox in terms of the Listings Requirements of   
the JSE Limited and accordingly written confirmation is required from an        
independent professional expert, confirming that the GOX 6000 Acquisition is    
fair to Afrox`s shareholders.                                                   
Rand Merchant Bank (a division of FirstRand Bank Limited) and Bateman           
Engineering N.V. have been appointed as the joint independent experts           
("Experts"). The Experts have confirmed that the terms of the GOX 6000          
Acquisition are fair to the Afrox shareholders. The report of the Experts       
will be available for inspection at the registered office of Afrox up until 1   
February 2011.                                                                  
The pro forma financial effects of the GOX 6000 Acquisition on Afrox`s          
earnings per share, headline earnings per share, net asset value per share      
and net tangible asset value per share for the six month period ended 30 June   
2010 are not significant (i.e. are less than 3%), and have therefore not been   
4 January 2011                                                                  
Joint independent expert and Transaction sponsor                                
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Joint independent expert                                                        
Bateman Engineering N.V.                                                        
Barnard Jacobs Mellet Corporate Finance (Proprietary) Limited                   
Date: 04/01/2011 15:47:01 Supplied by www.sharenet.co.za                     
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