Admission to AIM

7th Feb 2006 08:00

China Goldmines PLC07 February 2006 China Goldmines Plc 7 February 2006 Admission to the Alternative Investment Market Placing of New Ordinary Shares China Goldmines Plc, which was formed to develop and grow its gold project inChina, today announced its admission to AIM and a placing of New OrdinaryShares. Placing Highlights • £4.5 million (before expenses) of new money raised for the Company • Placing of 7,500,000 New Ordinary Shares at 60p per share • Expected market capitalisation on admission of approximately £13.5 million • First dealing of New Ordinary Shares inter alia, expected to be on 7 February 2006 • Proceeds to be used to: • Enable further investigation and analysis to delineate gold resources in China's Hunan Province • Commission Bankable feasibility study as immediate precursor to seeking finance to exploit reserves through the new Joint Venture Company China Goldmines Highlights • China Goldmines has entered into its first agreement in China - a Joint Venture with the Hunan Geology and Exploration Bureau through The Hunan Westralian Mining Company Ltd in the Guanzhuang Project, an existing gold producing area in the Hunan Province • Through the Joint Venture, China Goldmines has the right to receive 80% of distributed profits • The Hunan Geology and Exploration Bureau resource estimate report indicates gold resources at Guanzhuang Project to be 1.2m ounces to a depth of no more than 325m. The Directors intend to use modern techniques to explore to depths in excess of 1,000m • Benefits of the Guanzhuang Project include, high grade ore, low capital and operating costs, simple metallurgy, skilled labour pool and existing infrastructure • Potential to generate production revenues within two years from exploitation of these brown field sites and existing mines • Experienced Board of Directors and operational management team Commenting on today's announcement, Frank Vanspeybroeck, Chief Executive, said: "China Goldmines was created to address the significant opportunities that existfor the international management and funding of businesses in China. With aburgeoning economy, the Chinese Government has made clear its support for thedevelopment of the country's mining resources. The AIM funding should let usmaximise this opportunity. We are delighted to be making our debut on AIM. "With our strong Board and management team, the right partners, access to provenprospects and appropriate initial financing, we face the future with bothenthusiasm and confidence." Enquiries:China Goldmines Frank Vanspeybroeck, CEO + 61 411 166 276 Marinko Vidovich, CFO + 61 41 997 4744 Bell Lawrie Jamie Cumming / Tracy Mackenzie +44 141 221 7733Brunswick Kevin Byram / Mark Antelme +44 207 404 5959 KEY INFORMATION CGM has been established to develop mining prospects in China with an initialspecific focus on gold. Through a subsidiary, CGM has secured its firstexploration and development agreement in China. The Group has entered into a Chinese foreign co-operative Joint Venture Contractwith Brigade 407 to form the Hunan Westralian Mining Company Limited ("JVC").The purpose of the JVC is to explore and develop the Cooperation Area. Subject to the terms and conditions of the Joint Venture Contract and, inparticular, subject to the investment of US$900,000, the Group will have theright to receive up to 80 per cent. of the distributed profits from the JVCompany although in certain circumstances this could rise to 90 per cent. ormore if Westralian exercises its first right of refusal over Brigade 407'sshares. There is a history of goldmining in the two main prospects within the GuanzhuangProject Area. A site visit was conducted which found that, in the ShenjiayaProspect, there are five operational mines (two fulltime and three whereproduction is intermittent), two mines are in development and one further mineis dormant. In the Xiaotaoyuan Prospect there is a history of local small scalemining over shear-vein structures. In early 2004 the Group commissioned a Competent Persons Report on the mineralpotential of the cooperation area. The CPR concluded as follows: "The mineral properties, in which CGM has or is directly or indirectly earningan interest, are considered to be 'Exploration Projects' which are inherentlyspeculative in nature. RSG Global considers, nonetheless, that the projects havebeen acquired on the basis of sound technical merit. The properties are alsoconsidered to be sufficiently prospective, subject to varying degrees ofexploration risk, to warrant further exploration and assessment of theireconomic potential, consistent with the proposed programmes." and "The Guanzhuang project has good potential for realising a significant miningopportunity." Brigade 407 has produced a resource estimate report (using Chinese resourcestandards, which do not meet international JORC Code standards), estimatingthat, based on their assessments, there is a gold resource of 1.2million ouncesto a depth of no more than 325m within the Guanzhuang Project. On the basis ofBrigade 407's report, the RSG report and their own experience, the Directorsbelieve that the consolidation of the various interests in the Cooperation Areaprovides an exploration and development target of, potentially, over one millionounces of gold. The Directors believe that the Guanzhuang Project benefits from several keyfactors including: • a high grade ore; • low capital and operating costs; • stable ground conditions; • simple metallurgy; • exploitation of brown fields or existing mines with potential for production revenues within two years; • existing infrastructure and low-cost skilled labour pool; and • the Group's experienced board of directors and operational management team. The Placing of 7,500,000 New Ordinary Shares will raise £4.5 million (beforeexpenses) for the Company.These funds will enable the Group to: • undertake geological (and geotechnical) investigation, analysis and interpretation to delineate gold resource reserves in the Cooperation Area; and • prepare a Feasibility Study; and • to commission a Bankable Feasibility Study as an immediate precursor to seeking the necessary finance to exploit reserves through the Joint Venture Company. THESE KEY POINTS ARE DERIVED FROM AND MUST BE READ INCONJUNCTION WITH THE WHOLEOF THE ADMISSION DOCUMENT. SOLE RELIANCE SHOULD NOT BE PLACED ON THE INFORMATIONSET OUT ABOVE. This information is provided by RNS The company news service from the London Stock Exchange

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