Become a Member
  • Track your favourite stocks
  • Create & monitor portfolios
  • Daily portfolio value
Sign Up
Quickpicks
Add shares to your
quickpicks to
display them here!

Acquires 2.48m oz Gold

26th Feb 2007 07:02

Central African Gold PLC26 February 2007 Central African Gold Plc / Ticker: CAN / Market: AIM / Sector: Gold Mining 26th February 2006 Central African Gold Plc ("CAG" or "the Company") Adds 2.48 million oz gold to resource base through acquisition of the gold mining assets of Falgold and Olympus in Zimbabwe Central African Gold Plc, the AIM quoted gold mining and exploration company, isacquiring an 84.7% interest in Falcon Gold Zimbabwe Limited ("Falgold") and theentire issued share capital of Olympus Gold Mines Limited ("Olympus"), twoZimbabwean based gold operations for an aggregate consideration of approximatelyUS$6.2 million (approximately £3.2 million) to be satisfied by a combination ofcash and shares. These transactions will be effective 1 March 2007. Theacquisitions are in line with the Company's strategy of becoming a leadingmid-tier operating gold company, with an initial target of circa 200,000 ouncesof annualised low-cost gold production and 7.5 million ounces of resource by theend of 2008. Falgold and Olympus are gold mining companies with the rights to extensive claimareas located throughout Zimbabwe, with exploration properties and miningactivities centred on the Kadoma, Shurugwe and Bulawayo regions. The combinedresource estimates for both operations stands at 2.48 million oz gold ("Au")with JORC compliant reserves of 632,000 oz Au. In the financial year to 31September 2006 both companies combined generated turnover of ZIM$1.83 billion(approximately £3.75 million) and an attributable net profit of ZIM$199.7million (approximately £409,045) having produced 21,031.5 oz Au. (Due tohyperinflation in Zimbabwe investors should be aware that conversion rates fromZimbabwe Dollars to Pounds Sterling are likely to vary materially). Following the completion of these acquisitions, the Company intends to initiatea process of revising and updating the mineral resource estimates and orereserve classification as well as applying modern and efficient miningtechniques to improve the productivity and profitability of the operations.Falgold, listed on the Zimbabwe Stock Exchange, and Olympus, which is anunlisted private company, share the same management and majority shareholders.It is CAG's intention to incorporate Olympus into Falgold, which will remainlisted. The Company believes the listing gives the people of Zimbabwe access toan exciting company and sector of their economy. CAG continues to activelyengage with the Reserve Bank of Zimbabwe, Ministry of Mines and Zimbabwe StockExchange to ensure that Falgold is able to function effectively and efficiently. 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 thathave mineral assets with defined mineral resources and ore reserves, the twocompanies have significant additional ground holdings covering approximately12,300 hectares that were not included in the valuation but are considered to begeologically prospective. A Competent Person's Report, commissioned by theCompany, indicates that with the requisite work, these additional propertiescould 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 244Indicated 6,606 2.41 512 Probable 4,237 2.85 388Inferred 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 androck dump/slimes) and underground sources. At the Dalny mine complex, theunderground reserve is 640,000 tonnes at a grade of 8.07g/t Au, while at theVenice mine complex the reserve is 274,000 tonnes at a grade of 7.27g/t Au. Inboth cases there are significant tonnages in the resource category grading atbetween 4.5g/t Au and 5g/t Au. CAG Attributable Mineral Resources and Ore Reserves Mineral Resources Ore ReservesMineral Asset Equity Total Attributable Total Attributable % koz koz Au koz Au koz AuFalgold 85% 2,067 1,757 366 311Olympus 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 inarguably one of the highest gold endowed Achaean greenstone belts in the world,allows us to rapidly leverage our position up the value curve for ourshareholders in an attractive gold price environment. Coupled with a significantreserve and resource base, the acquisition complements our gold productionprofile and strategy in Ghana. The "blue sky" component of this acquisition alsocomplements the greenfield exploration portfolio being established in Mali andBotswana. "As a team we have a track record of successfully operating in Zimbabwe, acountry we believe is geologically exciting, has good infrastructure, a solidskills base and easy access given its proximity to South Africa. Thistransaction gives us a foothold in a country that ranks third behind SouthAfrica and Ghana in total historic gold production and comes with productionthat can be ramped up in short order with a nominal capital injection, anexperienced operating team and an impressive footprint in terms of explorationpotential." The aggregate consideration of approximately US$6.2 million (approximately £3.2million) for the acquisition will be satisfied via US$ 4.5 million(approximately £2.3 million) in cash and the balance through the issue of9,000,000 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 1March 2007. The new Ordinary Shares will rank pari passu with the existingordinary shares in the Company. The £:US$ exchange rate is using an exchange rate of £1 equals US$1.9525 andtaken from the Bank of England website as at 22 February 2007. The £:ZIM$exchange rate is using an exchange rate of £1 equals ZIM$488.21 taken from theReserve Bank of Zimbabwe website as at 22 February 2007. Conference call and webcast: Shareholders are invited to participate in a conference call or audio webcastwhere CEO, Greg Hunter, will brief them on the transaction. Conference callparticipants 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 orcontact: 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 3494Braden 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 1702Charmane 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 toacquire gold assets with a geographical focus on Africa. The Company hasestablished a sound portfolio with projects in Ghana, Mali and Botswana. It hasa highly experienced management team, which has worked together for four yearsmanaging six underground greenstone gold mining operations and buildingexploration portfolios. CAG's portfolio includes the producing Bibiani gold mine and prospectinglicences in Ghana, which it acquired from AngloGold Ashanti Ltd, two jointventures in Mali covering 23 prospective permits and licences in Botswanacovering the extension of the Kraaipan greenstone belt from South Africa. Thedirectors are evaluating additional prospects in Africa to establish CAG as aleading mid-tier African gold producer with world class exploration andproduction assets. This information is provided by RNS The company news service from the London Stock Exchange

Related Shares:

Canal+
FTSE 100 Latest
Value8,600.52
Change57.96