20th Dec 2006 08:05
Central African Gold PLC20 December 2006 Central African Gold Plc ("CAG" or "the Company") Acquires Bibiani gold mine and related assets and licences in Ghana Readmission of Existing Ordinary Shares and Admission of Placing Shares Central African Gold Plc, an AIM listed gold mining and exploration company, ispleased to announce that following satisfaction of all of the relevantconditions precedent it has today completed the acquisition of the Bibiani goldmine and related assets and liabilities, including prospecting licence in Ghanafrom AngloGold Ashanti Limited ('AGA') ("the Acquisition"). The Acquisition,which will immediately provide the Company with production and revenuegeneration, is part of CAG's growth strategy aimed at rapidly building theCompany into a significant African gold producer, with extensive world classexploration and production assets. The Bibiani gold mine and 19.3 sq km Bibiani North Prospecting Licence ("PL") inGhana were acquired for an aggregate consideration of US$40 million, of whichUS$4 million of the consideration is payable on assignment of the PL to CAG'ssubsidiary within 90 days after closing, should this occur. To finance the acquisition CAG raised £16.1 million (US$30.6 million) by way ofa placing via the issue of an estimated 179,192,896 Placing Shares, comprising161,642,570 Ordinary Shares at a Placing Price of 9 pence per Ordinary Share andUS$3 million or an estimated 17,550,326 Ordinary Shares to AGA, at a price setat the volume weighted average trading price of the Ordinary Shares in the 20trading days preceding today's completion date as part of the transaction. Thebalance of the consideration will be met from existing cash resources. Under therequirements of the South African Reserve Bank ("SARB"), AGA is required to sellthese estimated 17,550,326 Ordinary Shares within 90 days from their effectiveadmission to trading on AIM. Nevertheless, AGA has entered into an orderlymarket agreement with CAG and has agreed to work with the Company to makefurther applications to the SARB in order to achieve an extension of theaforementioned 90 day period. The Bibiani mine, located 250 km north west of Accra, is situated in theSefwi-Bibiani Greenstone Belt. This belt is one of the most prospective in Ghana, and also hosts Newmont's Ahafo (circa 16 million oz resource) and Redback's Chirano (circa 2.3 million oz resource) operations (Source: Metals Economic Group, 2006). CAG aims to re-state the resource through exploration,re-establish hard rock mining operations and develop new mining opportunities onthe Mining Lease and PL through exploration. Importantly, there is a wellmaintained 2.7 million tonnes per annum processing facility already on site(built eight years ago at a cost of circa US$50 million). CAG intends to continue with the re-treatment of the current tailings at a rateof approximately 4,000 ounces of gold recovered per month to ensure immediaterevenue generation. It will commence with a phased capitalisation of theunderground mining operations as soon as practicable. The Board's business plansees underground production commencing during the third quarter of 2007 with abuild up to an initial target tonnage of 100,000 tonnes per month by the thirdquarter of 2008, where at this point it is anticipated gold production will beat a rate of approximately 100,000 ounces per year. CAG's team of experiencedmining professionals will utilise their expertise and techniques to achieve theCompany's objectives of increasing production and the resource base from boththe current mining lease and Bibiani North. Since its discovery in 1902, Bibiani has yielded approximately 4 million ouncesof gold from both underground and open pit mining operations. The Board intendsto increase Bibiani's resource base from its stated inventory of gold as at 31December 2005 of 100,000 ounces of ore reserve and 900,000 ounces of mineralresource (JORC compliant) as stated in AGA's audited 2005 accounts. Re-statingthe resources should result in an increased resource base that is in line withthe Company's business plan and intention to develop the main undergroundoperation; and secondly, provide a full understanding of the data density in themodel which will enable prioritisation of underground drilling and sampling forconversion of resources to reserves and identification of new resources.Detailed mine planning and scheduling will be updated in accordance with the newmodel. Additionally, the Company has received credit committee approval from a leadingSouth African banking group to provide debt financing of up to US$15 million(subject to the satisfaction of certain standard conditions precedent). Ifconcluded, this additional financing will enable the Company to access furtherfunds to optimise future development of Bibiani as an alternative to furtherequity issues at the current share price. CAG's CEO Greg Hunter said, "CAG's strategy is to become a leading mid-tieroperating gold company, with an initial target of circa 200,000 ounces ofannualised low-cost gold production and 7.5 million ounces of resource by theend of 2008. The acquisition of Bibiani is a great deal for us and complimentsour existing exploration portfolio in Mali and Botswana. Our focus is ongeologically attractive gold regions and we are currently evaluating otheropportunities in order to fulfil our growth objectives." Application has been made for the readmission of the existing Ordinary Sharesand warrants and the admission of 161,642,570 Placing Shares to trading on AIM.The new Ordinary Shares to be admitted pursuant to the Placing will rank paripassu with the existing Ordinary Shares of 0.1p each in the Company and dealingsare expected to commence today. Admission of the estimated 17,550,326 OrdinaryShares being subscribed for by AGA is expected to take place on 28 December 2006following separate application. * * ENDS * * For further information please contact or visit www.centralafricangold.com orcontact: Greg Hunter Central African Gold Plc Tel: +27 (0)82 882 4222 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 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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