4th Apr 2007 07:00
Avocet Mining PLC04 April 2007 AVOCET MINING PLC AVOCET RESTRUCTURES MALAYSIAN EXPLORATION INTERESTS AND GAINS STRATEGIC STAKE IN SELINSING GOLD MINE Avocet Mining PLC ("Avocet" or "the Company") announces that it has entered intoa Memorandum of Understanding ("MOU") with Moncoa Corporation ("Moncoa"), todivest ("the Divestment") its interest in one of its Malaysian subsidiaries,Damar Consolidated Exploration Sdn. Bhd. ("Damar"), in a deal that combines theBuffalo Reef prospect and adjoining Selinsing gold mine. The consideration tobe paid to Avocet, which will be paid in two separate tranches, amounts to atotal value of approximately US$6.5 million based on a placement value ofCDN$0.50 per Moncoa share. Damar, a wholly owned subsidiary of Avocet, is thelicense holder of the Buffalo Reef prospect in Malaysia, which contains aJORC-compliant Indicated and Inferred Resource of 185,300 ounces of gold and isopen along strike and at depth. The transaction will be split into two components. Initially, Avocet will divesta 51% interest in Damar to Moncoa for CDN$1,750,000 in cash and 5,500,000 sharesplus 2,750,000 warrants in Moncoa. Avocet will also receive a further 500,000shares, plus 250,000 warrants, in Moncoa at the same time, which will giveMoncoa the obligation to acquire the remaining 49% interest in Damar within 12months for an additional issue of 6,000,000 shares and up to a further 3,000,000warrants. Avocet has agreed not to dispose of 11,500,000 of the Moncoa sharesfor at least two years from the date of completion of the transaction, which isexpected before June 2007. All warrants will be exercisable at CDN$0.65 for 24months from the date of issuance. Following both stages of the transactionAvocet will have a fully diluted shareholding in Moncoa of just under 20%. Moncoa is a Canadian company listed on the Toronto Venture Exchange (TSX-V,ticker MON), which is currently finalising the completion of the purchase of theSelinsing gold mine, located immediately to the south of Damar's Buffalo Reefprospect in Malaysia. The transaction satisfies the Foreign Investment Committee of Malaysia's (FIC)requirement for Avocet to divest at least 30% of its equity interest in Damar,whilst allowing the Company to participate in the exploration and development ofBuffalo Reef and the adjoining Selinsing gold mine by becoming a significantshareholder in Moncoa. Completion of the transaction is subject to Moncoa finalising a CDN$9.0 millionprivate placement at CDN$0.50 per share, the acquisition by Moncoa of 51% of theSelinsing mine with an option to acquire the additional 49%, due diligence byboth parties and all regulatory approvals, which include Moncoa obtaining FICapproval from the Malaysian Government. Additionally, Moncoa will fund a CDN$400,000 exploration program on the Damarprospects over a period not to exceed two years. Avocet will receiveapproximately US$6 per ounce for any reported Measured, Indicated and InferredResources complying with the JORC Code discovered over and above the currentlyreported 185,300 ounces of gold. A report on the Selinsing gold mine completed by Snowden Mining IndustryConsultants has confirmed an Indicated Resource of 4.82 million tonnes at anaverage grade of 1.49 g/t for 230,000 ounces of gold. The report also states anInferred Resource containing 10.32 million tonnes at 1.17 g/t for 388,000 ouncesof gold. Avocet's Penjom mine remains wholly owned by the Company and, not being part ofthis transaction, is not subject to any FIC divestment requirements. Thistransaction enables Avocet to focus on the continued expansion of its Penjomgold mine located approximately 45 km from Buffalo Reef, while retaining aninterest in the expansion and development at Buffalo Reef - Selinsing. The Divestment may not be accounted for in the financial year ending 31 March2007, depending on the completion date. Following the completion of thefinancial year ending 31 March 2007, Avocet expects to provide a trading updatefor the full year during the first week of May. Jonathan Henry, Chief Executive Officer, commented: "We have owned and explored the Buffalo Reef prospect for a number of years, butit has not met our threshold for continued exploration or the development of astand-alone mine. By combining this asset with the Selinsing gold mineimmediately to the south, our continued exposure to the combined projects willallow us to participate in the upside offered through a significant equityinterest in Moncoa." All references to the Buffalo Reef resource have been approved for release by MrPeter Flindell, BSc (Hons) MAusIMM, Chief Geologist for Avocet, who has morethan 20 years experience in the field of activity concerned and is a CompetentPerson as defined by the JORC Code (2004). He has consented to the inclusion ofthe material in the form and context in which it appears. ________________________________________________________________________________ For further information please contact: Avocet Mining PLC Buchanan Communications Grant Thornton Corporate Bobby Morse, Director Finance Jonathan Henry, Ben Willey, Fiona KindnessChief Executive Officer Associate Director 020 7728 3414020 7907 9000 020 7466 5000 www.grant-thornton.co.ukwww.avocet.co.uk www.buchanan.uk.com Notes to Editors Avocet is a mining company listed on the AIM market of the London Stock Exchange(Ticker: AVM). The Company's principal activities are gold mining andexploration in Malaysia (as 100% owner of the Penjom mine, the country's largestgold producer), Tajikistan (as 75% owner and operator of ZGC, Tajikistan'sprincipal gold mine), and Indonesia (as 80% owner of the North Lanut gold minein North Sulawesi). The Company has a number of advanced mining and explorationprojects in Asia and owns 26% of Dynasty Gold Corporation, a Canadian listedexploration company active in Western China. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AVM.L