AFARAK WILL ACQUIRE 49% BALANCE of SYNERGY AFRI...

16:45 London, 18:45 Helsinki, 3 April 2019 - Afarak Group Plc ("Afarak" or "the Company") (LSE: AFRK, OMX: AFAGR) 

AFARAK WILL ACQUIRE 49% BALANCE of SYNERGY AFRICA LTD (Joint Venture)

The Board of Directors of Afarak has approved a transaction in which Afarak and Joint Venture partner will agree on a share transfer of 49% of Synergy Africa Ltd at a nominal value of USD 49. After this transaction Afarak will hold 100% of Synergy Africa Ltd and the Joint Venture agreement will be terminated. Synergy Africa and the Joint Venture were established in 2010, when Chromex Mining Plc was acquired by the Joint Venture.

The transaction is expected to be signed and executed within next 2-3 weeks. With this transaction, Afarak will acquire full control over its mining assets and will consolidate Synergy Africa as a subsidiary. The acquisition of the of the Joint Venture interest will be accounted for in Q2’2019. This is likely to give rise to a significant accounting gain due to the revaluation of the Afarak 51% initial holding due to the change in control, according to IFRS.

This transaction simplifies the group structure and will allow the company to consolidate the Synergy Africa results as a subsidiary fully into the Afarak accounts. If Synergy Africa had been consolidated as a subsidiary in 2018 Afarak Group’s revenue would have increased by EUR 29 million, and EBITDA by EUR 1 million.

Guy Konsbruck, CEO said that “we are extremely glad to have reached this agreement, as the future growth potential of AFARAK resides largely in our mining activity. Additionally, our niche approach to the Ferro Chrome production requires full control over our mining assets to guarantee sustainable availability of high-quality ore.”

As a part of this transaction, the current loan from the Joint Venture partner to Synergy Africa of GBP 18 million will be restructured in a way that

• GBP 3 million originating from a loan from another group company (EWW) towards the Joint venture partner will be offset;
• remaining balance loan of GBP 15 million owed to the Joint Venture partner will be treated as senior debt by Synergy Africa Ltd, and repaid over a period of up to 5 years, with only a small portion of GBP 1.5 million payable shortly after completion.

The Board of Directors
Afarak Group

For additional information, please contact:

Afarak Group Plc

Guy Konsbruck, CEO, [phone], [e-mail]
Jean Paul Fabri, [phone], [e-mail]

Financial reports and other investor information are available on the Company's website: www.afarak.com.

Afarak Group is a specialist alloy producer focused on delivering sustainable growth with a Speciality Alloys business in southern Europe and a FerroAlloys business in South Africa. The Company is listed on NASDAQ Helsinki (AFAGR) and the Main Market of the London Stock Exchange (AFRK).

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London Stock Exchange
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AFARAK WILL AQUIRE 49% BALANCE of SYNERGY AFRICA LTD (Joint Venture)