29th Sep 2006 07:04
Central African Gold PLC29 September 2006 Central African Gold Plc / Ticker: CAN / Index: AIM / Sector: Mining & Exploration Embargoed for release: 07:00 29 September 2006 Central African Gold Plc ("CAG" or "the Company") Proposed Acquisition of the Bibiani gold mine and related assets and licences in Ghana Proposed Placing of up to 210,000,000 Ordinary Shares Re-admission of Existing Ordinary Shares and Admission of Placing Shares to trading on AIM Notice of Annual General Meeting and Notice of Extraordinary General Meeting Central African Gold Plc, the AIM listed gold mining and exploration company, ispleased to announce an update on its acquisition of the Bibiani gold mine andrelated assets and liabilities, including licences in Ghana from AngloGoldAshanti Limited ("AngloGold Ashanti") and the parallel fund raising. Thetransaction is part of the Company's aggressive growth strategy implemented bythe new Board, aimed at rapidly building CAG into a significant African goldproducer with extensive world class exploration and production assets. Overview • Conditionally agreed to acquire the Bibiani gold mine and the 19.3km(2) Bibiani North Prospecting Licence ("PL") in Ghana from AngloGold Ashanti for a cash consideration of US$40 million with US$4 million contingent on the PL • Placing to raise up to a maximum of £25,200,000 (US$47,862,360), before expenses, through the issue of up to 210,000,000 Placing Shares at 12 pence per share, to fund acquisition and secure production and development • The Bibiani gold mine is situated in the Sefwi-Bibiani Greenstone Belt, one of the most prospective belts in Ghana • Provides the Company with immediate production and revenue generation • Re-establishment of hard rock mining operations and development of new mining opportunities on the Mining Lease and Prospecting Licence • Proven and Probable Reserves of 260,000 ounces of contained gold • Measured and Indicated Resources of 20,533,000 tonnes at 1.11g/t Au for 733,000 ounces and total Inferred Resources of 4,600,000 tonnes at 4.2g/t Au for 624,000 ounces of contained gold (JORC Compliant) • A well maintained 2.7 million tonnes per annum processing facility is on site (built 8 years ago at a cost of circa US$50m) • Intention is to increase production at Bibiani following re-commencement of an underground production programme in the second half of 2007 • Objective is to establish a leading mid-tier operating gold company, with an initial target of 200,000 ounces of annualised low-cost gold production and 7.5 million ounces of resource by the end 2008 • Licences in Mali and Botswana provide exploration targets in geologically attractive gold regions - exploration ongoing • Highly experienced Board in place with strong and respected team driving business forward - continually looking for new opportunities to increase project portfolio Greg Hunter CAG Chairman and CEO said: "This acquisition represents asignificant step in the evolution of the Company as it will transform it into aproducer and provide it with significant exploration potential as well as avaluable foothold in Ghana, a major gold producing African country. We havealready acquired and are progressing our exploration properties in Mali andBotswana and we are considering other potential acquisitions in Africa. Ourobjective is to establish CAG as a leading mid-tier operating gold company, withan initial target of 200,000 ounces of annualised low-cost gold production and7.5 million ounces of resource in 2008. "The Bibiani gold mine has yielded in the order of 4 million ounces of gold froma combination of opencast and underground mining. The Bibiani North prospectinglicence is contiguous with the current mining lease and new structuralinterpretation has already generated multiple exploration targets. "The CPR prepared by Snowden, estimates the total Measured and IndicatedResources at Bibiani of 20,533,000 tonnes at a grade of 1.11g/t Au for 733,000ounces of contained gold. The total Inferred Resources at Bibiani are 4,600,000tonnes at a grade of 4.2g/t Au for 624,000 ounces of contained gold. Snowdenconsiders that we can apply a re-modelling of the orebody and conduct targeteddrilling to the existing resources to raise the confidence level and increasethe resource base. Snowden believes that the current resource statement does notfully represent the opportunity that exists on the mining lease and prospectinglicence. Snowden concur that the Bibiani gold mine, as an underground operation,represents a viable mining venture. "We have three primary objectives for the asset including the re-establishmentof hard rock mining operations and development of new mining opportunities.Firstly we will continue with the re-treatment of the current tailings at a rateof approximately 4,000 ounces of gold recovered per month, secondly weanticipate commencement of underground mining operations during the thirdquarter of 2007, with a build up to an initial target tonnage of 100,000 tonnesper month by the third quarter of 2008. At this point it is anticipated goldproduction will be at a rate of approximately 100,000 ounces per year. "Thirdly we have already prioritised 15 initial targets and a detailedexploration programme has been developed to systematically evaluate theseopportunities and identify resources in addition to the business plan andthereby increase the current planned mine life." The Company is proposing to raise up to a maximum of £25,200,000 beforeexpenses, through the issue of up to 210,000,000 Placing Shares at 12 pence perPlacing Share. The money raised will be used to fund the acquisition and secureproduction and development. The Annual General Meeting and the ExtraordinaryGeneral Meeting of the Company will be held at Third Floor, Aldermary House,10-15 Queen Street, London at 9:15 a.m. at 9:00 a.m. and 9:15 a.m.respectively, on 23 October 2006. The Re-admission document ("Admission Document") setting out details of theProposals and including a notice of the EGM, accompanied by the form of proxy,will be posted to Shareholders today. In accordance with the AIM Rules, tradingin the Ordinary Shares on AIM was suspended on 22 August 2006 pending thepublication of this document. Such trading will recommence on the posting of theAdmission Document to Shareholders. This announcement does not constitute, orform part of, an offer or an invitation to purchase any securities. For further information please visit www.centralafricangold.com or contact: Greg Hunter Central African Gold Tel: +27 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 1. Introduction On 22 August 2006, CAG announced that it had signed a binding agreement toacquire the Bibiani gold mine and related assets, including the Mining Lease andProspecting Licence, as well as related liabilities in Ghana from twosubsidiaries of AngloGold Ashanti Limited. The consideration for the Acquisitionconsists of a cash payment of US$40 million and the assumption of certainliabilities associated with the Bibiani gold mine. The cash payment may bereduced by US$4 million if the term of the Prospecting Licence, which forms partof the assets, is not extended to a date at least 12 months from Completion ofthe Acquisition. The Proposed Transaction encompasses the completion of theAcquisition and the Placing, which is intended to finance the purchase price ofthe Acquisition and provide the Company capital for future investment inBibiani. Pursuant to the AIM Rules, the Proposed Transaction will constitute a reversetakeover. It is therefore subject to Shareholder approval, which will be soughtat the Extraordinary General Meeting to be held at Third Floor, Aldermary House,10-15 Queen Street, London at 9:15 a.m. on 23 October 2006. In addition, theAnnual General Meeting, held immediately prior to the Extraordinary GeneralMeeting, will provide for the submission to Shareholders of the resolutionsreferred to in the notice of meeting, including election of directors,re-appointment of auditors, receipt of accounts for the period ended 31 December2005 and matters relating to the allotment of securities. 2. Background Information on CAG CAG was incorporated on 26 November 2003 and admitted to trading on AIM on 26March 2004. It was established to identify and acquire projects in the naturalresources sector with particular emphasis on gold projects in central andsouthern Africa. During the period since admission to trading on AIM, theCompany has acquired and is progressing prospective exploration properties inMali and Botswana and has reviewed and is currently considering other potentialacquisitions in Africa. The Acquisition represents a significant step in theevolution of the Company, as it will transform the Company into a producer andprovide it with significant exploration potential on the Mining Lease andProspecting Licence and a valuable foothold in Ghana, a major gold producingAfrican country. 3. Business Objectives and Strategy The Company's business strategy is to effectively identify, acquire and developgold projects and properties in Africa. The Company's current exploration assetsare located in the major African mining countries of Mali and Botswana. Thecompletion of the Acquisition will give the Company a producing asset in Ghana,another major gold producing country in Africa. The Company's management team has extensive mining and exploration experience,and has worked together over a number of years managing underground greenstonegold mining operations and developing exploration portfolios. The Company's objective is to establish itself as a leading mid-tier operatinggold company, with an initial target of 200,000 ounces of annualised low-costgold production and 7.5 million ounces of resource in 2008. The Company intendsto accomplish this objective through a combination of acquisitions of producingassets and identification and development of greenfield and brownfieldexploration activities. In addition to the Proposed Transaction, the Company will continue toinvestigate other acquisition opportunities in Africa that fit into theCompany's overall strategy and objectives. 4. Current Assets 4.1 Mali Mali is a landlocked country in north-west Africa. Despite the recent growth inthe gold mining sector, Mali is an immature mining country where modernexploration techniques have only recently been introduced. However, the countryhas become Africa's third largest gold producer and is home to some of thelowest cost gold mines in the world. To date, over 20 million ounces of gold have been discovered in western Mali,with a focus in the Kedougou-Kenieba Inlier District. The Inlier is host toAngloGold Ashanti Limited and Iamgold Corp's Sadiola and Yatela mines andRandgold Resources Limited's recently started Loulo-Yalea operation (which hastotal mineral reserves in excess of 9.9 million ounces of gold at 4.12g/t Au). The southern Mali auriferous area, or Boure District, is host to the Morila andSyama mines and to deposits in Bagoe, Yanfolila, Kalana and Kangaba.Randgold-AngloGold's Morila mine has produced more than 3 million ounces of goldsince it went into production in October 2000. Additionally, the Syama depositwas recently estimated by current owner, Resolute Mining Limited, to have atotal resource of 66.6 million tonnes at 3.0g/t Au for 6.43 million ounces ofgold. Mali Goldfields SA CAG entered into a joint venture with Mali Mining House ("MMH") on 19 December2005 (amended 25 July 2006), and has an 80% interest in the joint venturecompany, Mali Goldfields SA. Mali Goldfields SA holds or is to be transferredexploration licences ("permis de recherches" or "autorisations d'exploration")for 20 properties covering more than 2,500 km(2) of the prospective BirimianGold Belts in southern and western Mali. MMH is a company established by membersof the Malian Union Nationale Des Operateurs Miniers and received a 20%free-carried interest in the joint venture company in exchange for contributionof the initial properties. CAG is providing the technical and financialresources necessary to progress the various projects and will be repaid for itsadvances prior to payment of any dividends. The joint venture's exploration permits, covering both the western and southernMali gold districts, are underlain by highly prospective Lower ProterozoicBirimian geology. CAG has completed a due diligence phase on the properties andhas prioritized 16 properties for follow-up exploration. In line with the Malian Mining Code, in the eventuality that a mine isdiscovered of a size that triggers the statutory 10% free-carried interest ofthe Malian Government, then MMH will reduce its stake by 5% and CAG will do thesame, to accommodate the Government's participation. Expenditure by CAG in connection with Mali Goldfields SA to 30 June 2006amounted to approximately US$174,000. CAG has committed up to US$1.5 million ofexpenditure on exploration of the properties held by Mali Goldfields SA to 31December 2007. Songhoi Ressources SA On 26 July 2006, CAG entered into a joint venture with the Malian explorationcompany Mani SARL ("Mani") to investigate three gold exploration licences in theprospective Kenie'ba district in western Mali. CAG will fund exploration on theproperties through a joint venture company, Songhoi Ressources SA, of which CAGholds an 80% equity interest and Mani holds a 20% free-carried interest. The initial programme will focus on the 154km(2) Medinandi property, which issituated in the southern part of the Kenieba window of lower Proterozoic ageBirimian strata, roughly 150km southwest of the town of Kenieba. The propertycovers the southern extension of the Senegal-Mali shear zone, a formationassociated with multi-million ounce gold deposits such as Sadiola and Loulo/Yalea. Whilst gold was first discovered on the permit in 1953, and was the subject of anumber of more recent exploration programmes in the late 1990s, it has remainedlargely under-explored due to thick soil cover. CAG has initiated the collationof existing geological data and has planned a systematic exploration programmefor the Medinandi property. Enhanced ASTER (Advanced Spaceborne Thermal Emissionand Reflection Radiometersatellite) imagery and structural interpretations,coupled with multi-element soil geochemistry and geospatial information systems("GIS") syntheses, provides the basis for target prioritisation. A number of "walk-up" drill targets have already been identified, including validation ofprevious drilling and inferred resources. It is anticipated that the drillingprogramme will commence in the fourth quarter of 2006. In total, CAG hascommitted approximately US$370,000 for exploration expenditure in connectionwith Songhoi Ressources SA to 31 December 2007. Like the MMH joint venture, in the event that a mine is discovered of a sizethat triggers the statutory 10% free-carried interest of the Malian Government,then Mani will reduce its stake by 5% and CAG will do the same, to accommodatethe government's participation. 4.2 Botswana Botswana is a landlocked country in southern Africa underlain by continentalcrust spanning practically the whole of the Earth's geological record. Mineralextraction, principally diamond mining, dominates economic activity, thoughtourism is a growing sector. Copper, nickel and soda ash production also playsignificant, though smaller, roles in the national economy. Golden Tau Mining In Botswana, CAG holds its interests through a 53% stake in Golden Tau MiningLimited ("Golden Tau"), an Australian-based exploration company, which wasacquired by the Company in May 2004 for a cash consideration of £246,060including expenses. Golden Tau, through its Botswana-registered subsidiary, ownsthe exploration rights over one prospecting licence covering the north-westextension of the Kraaipan Greenstone Belt from South Africa into southernBotswana. The prospecting licence relates to an area of 872km(2) in southernBotswana and covers most of the area underlain by the Kraaipan GreenstoneTerrane, an Archaean greenstone belt that is the extension of the greenstonebelt from South Africa, which hosts significant mines such as Harmony GoldMining Company Limited's Kalgold Operation (4 million ounce gold resource). Golden Tau's exploration to date in Botswana has involved geological mapping,airborne geophysic surveys and limited percussion and diamond drilling. Therehave been initial indications of gold mineralisation, although the economicviability of these occurrences has yet to be fully ascertained. The structuralsetting of the Kraaipan Greenstone Belt is complex and needs further detailedevaluation. Golden Tau has initiated a data collation and remote sensing study,which will lay the foundation for ascertaining targets worthy of follow-up work. Golden Tau has just begun compiling data for the leases in Botswana. Independentmining consultant, Snowden, considers that the Company will be able to processefficiently this data and move into a generative phase on the relativelyunexplored prospective greenstone belts covered by the leases. The presence ofsignificant mineral endowment on the South African extents of the greenstonebelt together with the results of limited exploration, in the Directors'opinions, supports the prospectivity of the leases. 5. Bibiani 5.1 The Bibiani gold mine The Bibiani gold mine is located in western Ghana, 250km north-west of theGhanaian capital of Accra. The mine is in the Sefwi-Bibiani Greenstone Belt,host to over 17 million ounces of gold mineral resources and the second-mostsignificant gold-bearing belt in Ghana, after the Ashanti Belt to the east. Themain Bibiani orebody was discovered in 1902, and has since yielded in the orderof 4 million ounces of gold from a combination of opencast and undergroundmining. The underground mining operations, which took place between 1927 and1968, reportedly produced 7 million tonnes at an average recovered grade of 9g/tAu for 2 million ounces of gold. Ashanti Goldfields Limited, a predecessor of AngloGold Ashanti Limited,purchased the Bibiani gold mine in June 1996 for a purchase price of US$125million and subsequently invested US$80 million in capital to develop theproject. A 2.7 million tonne per annum processing facility was commissioned in1997 at a cost of US$51 million. In the opinion of the Directors, based on theirvisit to the site, the processing facility has been well maintained. Open-pitoperations were carried out between 1998 and 2005 and have produced over 1.8million ounces of gold, bringing total gold production from the mine to over 3.8million ounces. The main Bibiani pit was closed due to a geotechnical sidewallfailure in 2005 and since then AngloGold Ashanti Limited has largely beenprocessing tailings at the site. 5.2 Bibiani North The Bibiani North (Donkota-Ansuontaa) Prospecting License is located in theAtwima District of the Ashanti Region, centred at 6.33 N and 2.18 W and is heldby AngloGold Ashanti Bibiani. The size of the licence is approximately 19.3km(2). The southern boundary of the licence is about 2.5km north of the town ofBibiani, and is contiguous with the northern extension of the Mining Lease. Previous exploration There have been three periods of exploration on or around the ProspectingLicence since the early 1990's, conducted by Gencor (1992 to 1994), Echo Bay(Ghana) Limited ("Echo Bay") (1995 to 1996) and Ashanti Goldfields Company/AngloGold Ashanti Limited (1996 to present). Gencor conducted surface geochemical sampling and sampled the old stopes of theBibiani North mine. Echo Bay effected an airborne geophysical survey, includingmagnetics, radiometrics and very low frequency surveys, over the licence area.Echo Bay also drilled 11 diamond holes. Further work on the Prospecting Licenceby Ashanti Goldfields Company, now AngloGold Ashanti Limited, was delayed untila settlement was reached on the farm-in rights of Echo Bay, which was achievedin the latter part of 1996. AngloGold Ashanti Bibiani was created to operate thenew Bibiani gold mine and was also given responsibility for further explorationof the Mining Lease and the Prospecting Licence. AngloGold Ashanti Bibianirenewed the licence on behalf of Atwima Amanano Goldfields in 1997/1998.AngloGold Ashanti Bibiani bought out Atwima Amanano Goldfields in 2000 afterwhich the licence was again renewed in May 2001. AngloGold Ashanti Bibiani hasbeen responsible for conducting exploration activities on the ProspectingLicence to date. The principal work carried out by AngloGold Ashanti Bibiani on the ProspectingLicence from 1997 to 2001 includes soil sampling, aerial photography anddrilling. AngloGold Ashanti Bibiani's exploration has tailed off since 2003.However, in 2005 an integrated GIS study was undertaken to further delineateexploration targets. The target generation exercise utilised all available data(geophysical, soil geochemistry) and comparisons with known occurrences. Anassessment of the potential for further open pittable resources was made basedon a comparison of known mineralisation styles and volumes with a geologicaltarget generation exercise. Targets were defined from each of the individualdatasets/interpretations, and were combined to produce a series of integratedpriority targets for both the Mining Lease and Prospecting Licence areas.AngloGold Ashanti Bibiani also reviewed existing geological interpretations,and, largely utilizing the newly acquired aeromagnetic data, completed a revisedinterpretation. Several significant gold in soil anomalies were found to bepresent across the licence area. AngloGold Ashanti Bibiani assessed therelationship between the revised geology and these anomalies, and concluded thatelevated gold values frequently appear to be related to porphyritic lithologies,similar to Redback Mining Inc.'s Chirano deposits located to the south. This wasespecially evident at Pamunu North where the soil anomalies are clearlyconstrained by the limit of the individual intrusions. Preliminary work undertaken by CAG As part of its due diligence, CAG has collated all the exploration data,reviewed AngloGold Ashanti Bibiani's work, and subsequently undertaken its ownstructural geology/GIS target generation study. This work was instrumental inunderstanding the geological upside of both the Bibiani gold mine and environsas well as the Prospecting Licence. CAG's work has resulted in a new structural interpretation that CAG believes canbe used as a predictive tool for underground and surface exploration. Thisstructural model, when utilized to constrain existing exploration data,generated six new targets as well as constraining the AngloGold Ashanti Bibianiinterpretations. Further collation of all the satellite pit drilling hasprovided a basis for a systematic and phased exploration programme on the MiningLease and the Prospecting Licence. Fifteen targets that overlap have now beenprioritized for follow-up work. The exploration programmes include a combinationof infill soil sampling, detailed geophysical and structural geology mapping andtrenching followed by a number of phases of RC and DDH drilling, as well asappropriate metallurgical testwork. 5.3 Further information on Bibiani resources and reserves The CPR was prepared by Snowden as at 29 August 2006 and provides estimates ofmineral resources and reserves at Bibiani. The mineral inventory at Bibiani comprises in situ resources associated with theBibiani gold mine and the satellite deposits. The inventory also comprisesstockpiles of mineralised material and tailings contained in surface storagefacilities. The total Measured and Indicated Resources at Bibiani are 20,533,000tonnes at a grade of 1.11g/t Au for 733,000 ounces of contained gold. The totalInferred Resources at Bibiani are 4,600,000 tonnes at a grade of 4.2g/t Au for624,000 ounces of contained gold. The Bibiani and satellite resources are quotedat cut-off grades of 2g/t Au and 0.75g/t Au, respectively. Snowden has reviewedthe classification and found it to be in accordance with the JORC Code (2004). Snowden considers that CAG can add to the resource base at the Bibiani gold mineand the satellite deposits through the development of applied geologicalknowledge to the existing geological models, and then apply targeted drilling tothe existing resources to raise the confidence level and increase the resourcebase. Snowden considers there is an opportunity to improve the resource estimateby reinterpreting the data to incorporate lithological and structural data. Thiswill aid in understanding controls on the mineralisation at Bibiani and assistin optimizing drill programmes to define additional resources. It is alsorecommended that the model be extended at depth as mineralization has beenintersected in drillholes 200m below the base of the model. Snowden considersthat there is substantial value to be added to the resource by developing alith-structure framework for the resource estimate. The reserves at Bibiani comprise in situ resources associated with the Bibianigold mine and the old tailings facilities. Reserve estimates have been generatedby AngloGold Ashanti Limited and CAG staff for the tailings material, whileSnowden reviewed the underground resources and provided an estimate of in situreserves. At this stage, Snowden is not prepared to classify the in situ orereserves higher than into the Probable category in accordance with the JORC Codedue to some uncertainties described in the CPR. Ore reserves are summarized inthe following table: Deposit Classification Tonnes Grade (Au g/t) Metal Ounces (Au) Glamco tailings Proved 2,613,000 1.05 88,000Glamco tailings Probable 364,000 0.94 11,000Sub-Total Tailings 2,977,000 1.03 99,000Bibiani in situ Probable 1,243,000 1.02 161,000Total Proved and Probable 4,220,000 1.92 260,000 Snowden prepared a valuation for the Bibiani gold mine in the CPR, based on theresources and reserves discussed in the CPR. The financial model quantifies therevenues, costs and capital expenditure over the life of the mine. A discountedcash flow model was constructed based on post tax/pre-finance real cash flowsfor the Bibiani gold mine. Three distinct scenarios were assessed based onvarious development and production schedules, as well as the respective capitalrequirements accompanying them. Snowden concludes that the project cash flow based on sound technical inputparameters and estimated projections shows that all three of the scenariosconsidered in the CPR will be cash flow positive for the full life of the mine.Net present values for the three scenarios are positive across a range ofdiscount rates (8%, 10% and 12%). It is Snowden's opinion that the Bibiani goldmine, as an underground operation (drawing initially from material contained intailings dumps), under current gold prices, represents a viable mining venturethat will continue to enhance social conditions in the Bibiani area in Ghana,whilst achieving CAG's corporate objectives. 5.4 Plans for Bibiani CAG's team of experienced mining and geoscience professionals will utilise theirexpertise and techniques to achieve the Company's objectives of increasingproduction and the resource base from both the current Mining Lease and theProspecting Licence. CAG has three primary objectives for the re-establishmentof hard rock mining operations and development of new mining opportunities onthe Mining Lease and Prospecting Licence: • Geological remodelling of the Bibiani orebodies - CAG intends to increase Bibiani's resource base from its stated inventory of gold as at 31 December 2005 of 100,000 ounces of ore reserve and 900,000 ounces of mineral resource (JORC compliant), as stated in AngloGold Ashanti Limited's audited 2005 accounts. Work has commenced on compiling the existing data for the purpose of a comprehensive geological re-interpretation. The AngloGold Ashanti Limited model of the Bibiani orebodies was established on an 'ore outline' grade cut-off of approximately 3g/t Au without the geological structure having been modelled. Further, the existing modelling has not contemplated a bulk underground mining scenario. There are contiguous mineralised drill intersections that presently are not included in the model of the stated resources. The immediate re-interpretation of data by CAG will serve two main purposes: firstly, re-stating the resources should result in an increased resource base that is in line with the Company's business plan and intention to develop the main underground operation; and secondly, a full understanding of the data density in the model will enable a prioritization of underground drilling and sampling for conversion of resources to reserves and identification of new resources. Detailed mine planning and scheduling will be updated in accordance with the new model. • Immediate Production - CAG will continue with the re-treatment of the current tailings at a rate of approximately 4,000 ounces of gold recovered per month. The Company will commence with a phased capitalization of the underground mining operations as soon as practicable after Completion. The CAG business plan sees underground production commencing during the third quarter of 2007 with a build up to an initial target tonnage of 100,000 tonnes per month by the third quarter of 2008 where at this point it is anticipated gold production will be at a rate of approximately 100,000 ounces per year. CAG's development program will extend the existing decline from 9 level to 14 level together with the construction of a new decline from surface to 14 level, which will both mitigate the risk of a single access operation and will provide a dedicated low cost conveyer haulage of ore to the Run of Mine stockpile at the plant. CAG's mining team have inspected the existing underground excavations and have determined a wide long hole stoping mining method as appropriate for the orebody and believe this is achievable given the team's experience in this style of mining. A pay-limit of under 2g/t Au enables stope widths of between 10m and 40m which has been planned against the existing measured and indicated and converted inferred resources. • Exploration - CAG is of the view that there is considerable upside on both the Mining Lease and Prospecting Licence. The Company has utilized its in-house skills and proprietary technology to complete a target generation study over the properties which has highlighted 15 initial targets that have been prioritized. A detailed exploration program has been developed to systematically evaluate these opportunities. The Company's exploration and structural geology expertise will be focused initially on resource conversion in line with achieving milestones relating to the underground production plan. A deep surface drilling program has been planned to establish geological continuity of the upper level mineralisation of the main Bibiani orebody and this is expected to identify resources in addition to the business plan and thereby increase the current planned mine life. Concurrently with the initial focus on underground resources, the Company will evaluate satellite oxide resources that exist and could in short order provide an ore source to augment the current tailings production. CAG's proposed mine plan for the re-establishment of underground operations atBibiani involves accessing the main orebodies currently in close proximity tothe existing ramp and level infrastructure developed by the previous ownerssince 2002. The width, extent and continuity of the defined orebodies lends tolonghole open stoping as the mining method of choice. Underground inspection ofold stopes confirms that rock mass conditions are suitable for this method. 6. The Proposed Transaction Under the terms of the Acquisition Agreement, CAG has agreed to purchase, andthe Vendors have agreed to transfer to a subsidiary of CAG, the entire businessconducted by the Vendors at the Bibiani gold mine in Ghana as a going concern,including the assignment of the Mining Lease and (subject to extension) theProspecting Licence. CAG has agreed to pay the Vendors an aggregate cash purchase price of US$40million at Completion and shall assume certain on-going liabilities associatedwith the Bibiani gold mine. US$4 million of the cash purchase price iscontingent on the duration of the Prospecting Licence being extended by thegovernment of Ghana to a date at least 12 months from the closing date of theAcquisition. CAG has deposited in escrow US$1 million, which is payable, incertain circumstances, to the Vendors if the resolution approving theAcquisition is not passed by Shareholders or CAG is unable to raise sufficientfunds to comply with its obligations under the Acquisition Agreement. Completionis contingent upon satisfaction of a number of conditions precedent, includingcertain approvals and consents of the Government of Ghana, consent of the GhanaMineworkers Union to the cession and delegation of the collective bargainingagreement at the Bibiani gold mine to CAG's subsidiary, CAG raising sufficientfunds, and approval of the Acquisition by Shareholders. Further information in respect of the Acquisition Agreement is given in theMaterial Contracts Summary included in paragraph 11 of Part VI of the AdmissionDocument. The Company plans to raise up to £25,200,000 (US$47,862,360) by theissue of up to 210,000,000 Placing Shares at a Placing Price of 12 pence pershare to provide funds to pay the balance of the purchase price for theAcquisition, to develop the Bibiani gold mine and for general working capitalpurposes. It is expected that Admission of the Placing Shares will take place onthe day of Completion, which is expected to occur on or around 1 November 2006(subject to satisfaction of the conditions precedent). The Placing is describedfurther in paragraph 9 below. 7. Current Trading and Prospects During the period since 31 December 2005, the Company has continued to implementits business strategy, through significant work on its projects in Mali andBotswana and exploration of other potential acquisitions and permitopportunities. Management of the Company was strengthened in March of this year through theaddition of Greg Hunter, as Chief Executive Officer, and Mark Rosslee, asFinancing Director, supported by a strong technical team bringing expertise ingeology and exploration, engineering and metallurgy and corporate and financialissues. All of the team have extensive experience and relationships throughoutAfrica and are familiar with the challenges and opportunities of the continent.The Company's balance sheet was strengthened by an institutional placing inApril which raised approximately £9 million and introduced a number ofsignificant institutional shareholders to the Company's Shareholder base. The Acquisition represents a significant step in the evolution of the Company,as it will transform the Company into a producer and provide it with significantexploration potential on the Mining Lease and Prospecting Licence and a footholdin Ghana, a major gold producing African country. In addition, the Company has continued to evaluate and consider a number ofother acquisitions and licensing opportunities in Africa to enhance theCompany's existing holding and advance its strategic objectives. Additional details of developments over the past year can be found in theCompany's annual financial statements for the year ended 31 December 2005 andinterim financial statements for the six months ended 30 June 2006 contained inPart IV of the Admission Document. 10. Details of the Placing and Use of Proceeds The Company is proposing to raise up to £25,200,000 (US$47,862,360), beforeexpenses, through the issue of up to 210,000,000 Placing Shares at 12 pence pershare. The Placing, which is not underwritten by Hichens, will be conditionalupon, inter alia: a) the Placing Agreement not being terminated by either Hichens or Strand in respect of a material breach thereof by the Company; b) the Placing not raising less than £21,000,000; c) approval by the Shareholders of the Acquisition at the Extraordinary General Meeting; d) the Company notifying Hichens and Strand that the conditions precedent to Completion under the Acquisition Agreement have been satisfied or waived; and e) the London Stock Exchange having agreed to admit the Placing Shares to trading on AIM at 8.00 a.m. on 1 November 2006 (or such later date as the Company, Strand and Hichens may agree but in any case no later than 31 December 2006). The Placing is expected to be made by means of a placing of Ordinary Shares tocertain institutional investors in the United Kingdom and elsewhere. Assuming the maximum Placing, the Placing Shares will represent 44 per cent. ofthe Enlarged Share Capital. Therefore, Shareholders who do not participate inthe Placing will be diluted to that degree if the maximum Placing is made. The net proceeds of the Placing, assuming the maximum Placing, are estimated toamount to £24,350,000 (US$46,247,955), of which US$39,000,000 (£20,533,881) willbe utilized to pay the balance of the purchase price under the AcquisitionAgreement. The Directors expect to place at least 175,000,000 Placing Shares,which would raise £21,000,000 (US$39,885,300). The Directors expect that theexisting cash assets of the Company will be utilized, along with the balance ofthe net proceeds of the Placing, to develop the Bibiani gold mine and continuework on the exploration properties. Any remaining funds will be applied toprovide funds for general working capital purposes and to finance theinvestigation and execution of strategic acquisitions. The Placing Shares, on issue, will rank pari passu in all respects with theExisting Ordinary Shares. The Placing will be conditional upon the conditionsset out above being satisfied by 31 December 2006. However, the Companyanticipates that the conditions will be satisfied earlier. Assuming that theconditions are satisfied by 23 October 2006, it is anticipated that the PlacingShares will be issued shortly thereafter. On this basis, dealings in the PlacingShares will commence and CREST accounts would be credited by 1 November 2006 andcertificates dispatched by 8 November 2006. 9. Board of Directors Mr. Gregory David Hunter, Chairman and Chief Executive Officer, aged 42 Gregory Hunter, who has a B.Sc in Mining Engineering, has worked extensively inthe resource sector in both financial and technical capacities. He was formerlyChief Executive Officer of Southern African resource company Metallon Gold and adirector of Ridge Mining plc. Prior to this, he was a rated analyst and head ofmining research at Deutsche Securities, focusing primarily on the gold andplatinum sectors. Mr. Hunter also spent two years at UAL Merchant Bank and anumber of years with AngloGold Limited. Mr. Mark William Rosslee, Finance Director, aged 44 Mark Rosslee, a Chartered Accountant with a graduate diploma in MiningEngineering, was Finance Director of Metallon Gold, having been the ChiefFinancial Officer at both SouthernEra Diamonds Inc. and Southern Platinum Corp.He gained extensive experience in the mining industry with the De Beers Group atboth a corporate and operational level over a period of 12 years. Mr. Roy Aubrey Pitchford, Non-executive Director, aged 56 Roy Pitchford has more than 20 years' senior management and executive experiencein Southern Africa, 13 years of which were in the mining industry. He was ChiefExecutive Officer of Cluff Resources Zimbabwe Limited, Delta Gold Zimbabwe (Pvt)Limited and Zimbabwe Platinum Mines Limited ("Zimplats"), which was listed onthe Australian Stock Exchange. He is also a Past President of the Chamber ofMines of Zimbabwe. Roy was closely involved in building Zimplats and creating acompany with a platinum group metal resource base in excess of 300 millionounces. This included taking the Ngezi opencast platinum mine into productionand the re-commissioning of the Selous Metallurgical Complex at the end of 2001.He was also closely involved in Impala Platinum Holdings Limited's acquisitionof Zimplats in September 2005. Mr. Hunter and Mr. Rosslee were appointed to the Board on 8 March 2006 and theircurrent term of office expires at the Annual General Meeting. Mr. Pitchford wasappointed to the Board on 1 January 2004 and his current term of office expiresat the Annual General Meeting. The resolutions at the Annual General Meetingwill propose the Directors' re-election to the Board. 10. Lock-ins and Orderly Market Arrangements Pursuant to the terms of the Placing Agreement, Mr. Pitchford has agreed not totransfer the Ordinary Shares in which he has an interest for a period of oneyear from the date of Admission. No other lock-in agreements have been enteredinto by Directors or other related parties under the AIM Rules. 11. Dividend Policy The Company has not paid any dividends since its incorporation. The Directorsintend to devote the Company's cash reserves to exploration and developmentactivities in the short to medium term and intend to commence the payment ofdividends only when they consider it to be commercially prudent to do so, havingregard to the availability of the Company's distributable profits and theretention of funds required to finance future growth. 12. Annual General Meeting and Extraordinary General Meeting The Admission Document appends notices convening the Annual General Meeting andthe Extraordinary General Meeting of the Company, to be held at Third Floor,Aldermary House, 10-15 Queen Street, London at 9:00 a.m. and 9:15 a.m.,respectively, on 23 October 2006. The following resolutions will be proposed at the Annual General Meeting: 1) to authorise the Directors pursuant to section 80 of the Act to allot relevant securities including, amongst others, the Placing Shares; 2) to receive the accounts of the Company for the period ended 31 December 2005; 3) to re-appoint Roy Pitchford as a director; 4) to re-appoint Gregory Hunter as a director; 5) to re-appoint Mark Rosslee as a director; 6) to re-appoint Baker Tilly as auditors and authorise the Directors to fix their remuneration; and 7) to authorise the Directors to allot relevant securities for cash as if the statutory pre-emption rights set out in section 89 of the Act did not apply to such allotment. Resolutions (1) - (6) will be proposed as Ordinary Resolutions and resolution(7) will be proposed as a Special Resolution at the Annual General Meeting. Theresolution to be proposed at the Extraordinary General Meeting will be toapprove the Acquisition. This resolution will be proposed as an OrdinaryResolution. 13. Admission Document The Admission Document setting out details of the Proposals and including anotice of the EGM, accompanied by the form of proxy, will be posted toShareholders today. Copies of the Admission Document will be available to thepublic free of charge from today at the offices of Strand Partners Limited at 26Mount Row, London SW1 3SQ and at Salans, Millennium Bridge House, 2 LambethHill, London EC4B 4AJ during normal business hours on any weekday (other thanSaturdays and public holidays), until one month following the date of admission. 14. Expected Timetable of Principle Events Resumption of trading on AIM 29 September 2006 Latest time and date for receipt of Forms of Proxy 9:00 a.m. on 21 October 2006for the Annual General Meeting Latest time and date for receipt of Forms of Proxy 9:15 a.m. on 21 October 2006for the Extraordinary General Meeting Annual General Meeting 9:00 a.m. on 23 October 2006 Extraordinary General Meeting 9:15 a.m. on 23 October 2006 Re-admission of the Existing Ordinary Shares 1 November 2006* Admission of the Placing Shares effective and 1 November 2006*dealings commence on AIM Closing of the Acquisition 1 November 2006* CREST accounts credited by 1 November 2006* Dispatch of definitive certificates by 8 November 2006* *assuming all conditions precedent are by then satisfied or waived All future dates referred to in the Admission Document are subject to change atthe discretion of the Company, Strand and Hichens. * * ENDS * * Strand Partners Limited, which is authorised and regulated in the United Kingdomby the Financial Services Authority, is acting as nominated adviser and brokerto the Company in connection with the Acquisition, Placing and proposedadmission and re-admission of the Enlarged Share Capital to trading on AIM. Itsresponsibilities as the Company's nominated adviser under the AIM Rules are owedsolely to the London Stock Exchange and are not owed to the Company or to anyDirector or to any other person in respect of his decision to acquire shares inthe Company in reliance on any part of this announcement. Strand Partners Limited is not acting for anyone else and will not beresponsible to anyone other than the Company for providing the protectionsafforded to its clients or for providing advice in relation to the contents ofthis announcement or the Acquisition, the Placing or the proposed admission andre-admission of the Enlarged Share Capital to trading on AIM. No representationor warranty, express or implied, is made by Strand Partners Limited as to thecontents of this announcement, without limiting the statutory rights of anyperson to whom this announcement is issued. The information contained in thisannouncement is not intended to inform or be relied upon by any subsequentpurchasers of Placing Shares (whether on or off exchange) and accordingly noduty of care is accepted in relation to them. Strand Partners Limited has approved the contents of this announcement solelyfor the purpose of section 21 of the Financial Services and Markets Act 2000.The principal place of business of Strand Partners Limited is 26 Mount Row,London W1K 3SQ. The Directors of Central African Gold Plc, accept responsibility, individuallyand collectively, for the information contained in this announcement and forcompliance with the AIM Rules. This announcement does not constitute, or form part of, an offer or aninvitation to purchase any securities. DEFINITIONS The following definitions apply throughout this announcement, unless the contextrequires otherwise: "Acquisition" the proposed acquisition of Bibiani by a wholly-owned subsidiary of the Company pursuant to the Acquisition Agreement"Acquisition Agreement" the agreement dated 22 August 2006 between the Company and the Vendors relating to the Acquisition"Act" the Companies Act 1985, as amended"Admission" the re-admission of the Existing Ordinary Shares to trading on AIM and the admission of the Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules"AIM" the market of that name operated by the London Stock Exchange"AIM Rules" the rules for AIM companies as published by the London Stock Exchange from time to time"AngloGold Ashanti AngloGold Ashanti (Bibiani) Limited, a wholly-owned subsidiary of AngloGold Ashanti Limited Bibiani""AngloGold Ashanti Ghana" AngloGold Ashanti (Ghana) Limited, a wholly-owned subsidiary of AngloGold Ashanti Limited"Annual General Meeting" the annual general meeting of the Company to be held at 9:00 a.m. on 23 October 2006, notice of which is attached to the Admission Document"Bibiani" the Bibiani gold mine and related assets and mining and prospecting licences located in Ghana"Board" or "Directors" the board of directors of the Company"Combined Code" the "Combined Code on Corporate Governance" published in July 2003 by the Financial Reporting Council"Company" or "CAG" Central African Gold plc"Completion" completion of the Acquisition in accordance with the Acquisition Agreement"CPR" the competent person's report relating to the current operations of the Company and the Bibiani gold mine prepared by Snowden dated 29 August 2006"Enlarged Share Capital" the Ordinary Shares in issue immediately following Admission (excluding any Ordinary Shares that may be issued pursuant to the exercise of any options or warrants prior to Admission)"Existing Ordinary Shares" the 265,751,023 Ordinary Shares in issue at the date of the Admission Document"Extraordinary General Meeting" the extraordinary general meeting of the Company to be held at 9:15 a.m. on 23 October 2006 (or such later time on that date as the Directors may determine after the Annual General Meeting has concluded), notice of which is attached to the Admission Document"Forms of Proxy" the forms of proxy which accompany the Admission Document for use by holders of Existing Ordinary Shares in connection with each of the Annual General Meeting and the Extraordinary General Meeting, respectively"FSMA" the Financial Services and Markets Act 2000"Ghana" the Republic of Ghana"Golden Tau" Golden Tau Mining Limited, an Australian-based exploration company in which the Company has a 53% interest"Hichens" Hichens, Harrison & Co. Plc, nominated broker to the Company"London Stock Exchange" London Stock Exchange plc"Mani" Mani SARL, a Malian exploration company and holder of a 20% interest in Songhoi Resources SA"Mining Lease" the 30 year mining lease entered into on 19 May 1997 between the State of Ghana and AngloGold Ashanti Bibiani, in respect of the area of approximately 49.82km2, located at Bibiani in the Western Region of Ghana"MMH" Mali Mining House, a company established by members of the Malian Union Nationale Des Operateurs Miners and holder of a 20% interest in Mali Goldfields SA"Ordinary Shares" ordinary shares of 0.1 pence each in the capital of the Company"Placees" the subscribers of Placing Shares pursuant to the Placing"Placing" the conditional placing by the Company of the Placing Shares"Placing Agreement" the conditional agreement dated 28 September 2006 between the Company, the Directors, Strand and Hichens"Placing Price" 12 pence per Placing Share"Placing Shares" the up to 210,000,000 Ordinary Shares which are the subject of the Placing"Proposed Transaction" the Acquisition and the Placing"Prospecting Licence" the prospecting licence held by AngloGold Ashanti Bibiani, originally issued on 27 June 2004 and most recently extended on 4 May 2006 to 31 December 2006, in respect of the area of approximately 19.3km(2), located at Bibiani North in the Western Region of Ghana"Shareholders" the holders of Ordinary Shares of the Company"Snowden" Snowden Mining Industry Consultants (Pty) Limited"Strand" Strand Partners Limited, nominated adviser to the Company"Vendors" AngloGold Ashanti Bibiani and AngloGold Ashanti Ghana This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Canal+