Mining company Central African Gold PLC said it is buying an 84.7 pct interest in Falcon Gold Zimbabwe Ltd and the entire issued share capital of Olympus Gold Mines Ltd for about 3.2 mln stg, in cash and shares, effective March 1.
The group said that the acquisitions are in line with its strategy of becoming a leading mid-tier operating gold company, with an initial target of about 200,000 ounces of annualised low-cost gold production and 7.5 mln ounces of resource by the end of 2008.
Central African said that the combined resource estimates for both operations stands at 2.48 mln oz gold ('Au') with JORC compliant reserves of 632,000 oz Au.
Falgold operations:
The Falgold operation includes the Dalny mine which is situated 36 km
north of Kadoma in the Chakari district (approximately 175 km south-west of
the capital, Harare). On current reserves it has an estimated life of mine
of approximately six years as an underground operation plus an additional
one year of tailings recovery. The Company believes that significant
potential exists for the development of an open pit, low grade, bulk-mining
operation within the greater Dalny shear zone.
The Golden Quarry mine is situated approximately 30 km south east of the
town of Gweru (approximately 180 km north-east of Bulawayo) and consists of
an operational underground mine with a dedicated milling circuit and
beneficiation plant.
The Venice mine, which has a wide range of exploration targets, is
located approximately 28 km south of Kadoma and is currently on care and
maintenance. The mine has a modern metallurgical facility that has capacity
to process 18,000 tonnes of ore per month. This area is a high priority
target for the Company in terms of exploration potential.
Olympus operations:
Olympus operates the Old Nic mine near Bulawayo, one of the oldest gold
mines in Matabeleland. The mine currently has an estimated two year life,
although the Company believes this could be extended with additional
exploration.
Olympus also holds the rights to the Camperdown mine located on claims to
the north east of Shurugwi approximately 30 km south east of Gweru.
Production is sourced from a dual open pit and underground operation with a
life of mine of approximately seven years. The Camperdown mine is a high
priority for the Company for a fast tracked exploration and mine development
programme.
While Falgold and Olympus have been valued on properties and operations that have mineral assets with defined mineral resources and ore reserves, the two companies have significant additional ground holdings covering approximately 12,300 hectares that were not included in the valuation but are considered to be geologically prospective. A Competent Person's Report, commissioned by the Company, indicates that with the requisite work, these additional properties could add material value to both Falgold and Olympus.
Current JORC compliant mineral resource estimates for Falgold and Olympus:
Summary of Mineral Resources and Mineral Reserves as at 30 September 2006 Mineral Resources Ore Reserves
Category t ('000) g/t Au oz. ('000) Category t ('000) g/t Au oz. ('000)
Measured 24,860 1.32 1,057 Proved 7,150 1.06 244 Indicated 6,606 2.41 512 Probable 4,237 2.85 388 Inferred 12,213 2.32 909 Total 43,679 1.76 2,478 Total 11,387 1.73 632 *Mineral Resources inclusive of Ore Reserves
The reserves and resources are a combination of surface sources (open pit and rock dump/slimes) and underground sources. At the Dalny mine complex, the underground reserve is 640,000 tonnes at a grade of 8.07g/t Au, while at the Venice mine complex the reserve is 274,000 tonnes at a grade of 7.27g/t Au. In both cases there are significant tonnages in the resource category grading at between 4.5g/t Au and 5g/t Au.
CAG Attributable Mineral Resources and Ore Reserves Mineral Resources Ore Reserves Mineral Asset Equity Total Attributable Total Attributable % koz koz Au koz Au koz Au Falgold 85% 2,067 1,757 366 311 Olympus 100% 410 410 266 266 Total 2,477 2,167 632 577
CAG's CEO Greg Hunter said, 'The acquisition of a second producing asset in arguably one of the highest gold endowed Achaean greenstone belts in the world, allows us to rapidly leverage our position up the value curve for our shareholders in an attractive gold price environment. Coupled with a significant reserve and resource base, the acquisition complements our gold production profile and strategy in Ghana. The 'blue sky' component of this acquisition also complements the greenfield exploration portfolio being established in Mali and Botswana.
'As a team we have a track record of successfully operating in Zimbabwe, a country we believe is geologically exciting, has good infrastructure, a solid skills base and easy access given its proximity to South Africa. This transaction gives us a foothold in a country that ranks third behind South Africa and Ghana in total historic gold production and comes with production that can be ramped up in short order with a nominal capital injection, an experienced operating team and an impressive footprint in terms of exploration potential.'
The aggregate consideration of approximately US$6.2 million (approximately £3.2 million) for the acquisition will be satisfied via US$ 4.5 million (approximately £2.3 million) in cash and the balance through the issue of 9,000,000 new Ordinary Shares in the Company at 9.64 pence per share. Application has been made for the new Ordinary Shares to be admitted to AIM on 1 March 2007. The new Ordinary Shares will rank pari passu with the existing ordinary shares in the Company.
The £:US$ exchange rate is using an exchange rate of £1 equals US$1.9525 and taken from the Bank of England website as at 22 February 2007. The £:ZIM$ exchange rate is using an exchange rate of £1 equals ZIM$488.21 taken from the Reserve Bank of Zimbabwe website as at 22 February 2007.
Conference call and webcast:
Shareholders are invited to participate in a conference call or audio webcast where CEO, Greg Hunter, will brief them on the transaction. Conference call participants will be given the opportunity to ask questions.
Monday, 26 February 2007 London: 14:00 - Johannesburg: 16:00
The webcast can be accessed at either:
www.cag.com or at http://www.corpcam.com/CAG26022007
To access the live conference call toll-free, dial:
UK 0800 917 7042
CANADA 1 866 519 5086
South Africa 0800 200 648 USA 1800 860 2442
A playback of the conference call will be available at:
UK 0808 234 6771
South Africa & Other +27 11 305 2030 USA 412 317 0088
The playback code for this call is 2542£
* * ENDS * *
For further information please contact or visit www.centralafricangold.com or contact:
Greg Hunter Central African Gold Plc Tel: +27 (0)82 882 4222
In London:
Hugo de Salis St Brides Media & Finance Ltd Tel: +44 (0)20 7242 4477
Simon Raggett Strand Partners Limited Tel: +44 (0)20 7409 3494 Braden Saunders Strand Partners Limited Tel: +44 (0)20 7409 3494
In South Africa: Nicole Broome Central African Gold Tel +27 11 676 2500 Mobile +27 83 601 1702 Charmane Russell Russell and Associates Tel: + 27 11 880 3924 (Tel) Mobile + 27 82 372 5816
Notes to Editors:
Central African Gold Plc, admitted to AIM in April 2004, was established to acquire gold assets with a geographical focus on Africa. The Company has established a sound portfolio with projects in Ghana, Mali and Botswana. It has a highly experienced management team, which has worked together for four years managing six underground greenstone gold mining operations and building exploration portfolios.
CAG's portfolio includes the producing Bibiani gold mine and prospecting licences in Ghana, which it acquired from AngloGold Ashanti Ltd, two joint ventures in Mali covering 23 prospective permits and licences in Botswana covering the extension of the Kraaipan greenstone belt from South Africa. The directors are evaluating additional prospects in Africa to establish CAG as a leading mid-tier African gold producer with world class exploration and production assets.
This information is provided by RNS The company news service from the London Stock Exchange
source news : newsdesk@afxnews.com gp/gp
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