25th Jan 2010 07:00
China Goldmines PLC
Friday, 22 January 2010
China Goldmines plc
('the Company' or 'CGM')(AIM:CGM)
USD 2.2m further payment received from the disposal of Westralian Resources Pty. Ltd. ('WES')
USD23m (approx) unaudited cash position following receipt of further payment
USD 25.7m in total now received from Cosmos Castle Management Limited ('Cosmos') following disposal
The Company will finalise the reorganisation of the Group once the 31 December 2009 audit is completed by the re-structuring of Global Resource Ventures Ltd
Strategic review, managed by new Chairman, Robert Adair, in process
The Board will update on the investment targeting process shortly
The Company today announces that pursuant to the sale and purchase agreement entered into with Cosmos dated 26 August 2009 (the 'Sale and Purchase Agreement') it has received a further payment of USD 2.2m.
As described in the Company's circular dated 1 September 2009, the sum of USD 2.9m was withheld from the upfront payment made by Cosmos and held pursuant to custodian arrangements pending the payment of outstanding liabilities and employment related termination costs and the resolution of any claims and legal proceedings. Of the USD2.9m, the sum of USD 421khas been released to Cosmos to cover outstanding accounts payable and contingent liabilities at the date of the disposal of WES. A further sum of USD 200k has been released to Cosmos for a period of six months to enable it to meet potential liabilities from pending court actions in China which relate, predominately, to employment matters. At the end of the six month period it is intended that CGM and Cosmos will verify and reconcile the total amount expended to meet the liabilities arising from these court actions. . The gross consideration received by the Company for the acquisition was USD26.35m. Warranties, indemnities and CGM's parent guarantee in respect of the disposal were capped at USD10m and expire on 29 September 2010. These warranties as set out in the circular dated 1 September 2009 and relate principally to title, financial position and accuracy of accounts: the Company is currently not aware of anything which may lead to a claim. Of the gross consideration China Goldmines has now received cash proceeds of USD 25.7m.
As of today the Company now has an unaudited cash position of approximately USD23m and is in the process of a strategic review to assess how best to serve shareholders in its current status as an investing company. In December 2009 Mr Robert Adair was appointed to the board of CGM as Non-executive Chairman. Mr Adair, a UK national with significant PLC experience, is currently undertaking a strategic review of CGM's options on how best to achieve maximum value for existing shareholders.
Commenting today Mr Robert Adair, Chairman, said: "We have now successfully secured cash proceeds of USD 25.7m from the disposal of WES. This has removed a substantial area of uncertainty for the Company and, as a result, the Company now has net assets of approximately USD 23m (approximately 29p per share), practically all in cash with minimal liabilities other than those associated with the Sale and Purchase Agreement described above. Following my appointment as Chairman in December of last year I am now working closely with management and shareholders in order to look at the options available to maximise shareholder value from CGM's strong cash position. These include acquiring businesses or assets: in this we are unlikely to restrict our search solely to the resources sector and will consider other business areas. If we do not find anything suitable then we would look to return the funds to shareholders."
For further information, call:
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China Goldmines plc |
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Robert Adair |
Mobile: 07872-930114 Office: 01845-537037 |
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Frank Vanspeybroeck (CEO) |
+86 845 38531 |
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Marinko Vidovich (CFO) |
+61 8 6216 5200 |
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Brewin Dolphin Ltd (Nominated Adviser) |
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Alex Dewar |
+44 131 529 0276 |
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Threadneedle Communications Laurence Read/Beth Harris |
+44 (0)20 7653 9855 |
Related Shares:
CGM.L