14th Dec 2007 10:33
Central African Gold PLC14 December 2007 Central African Gold Plc / Ticker: CAN / Index: AIM / Sector: Mining & Exploration Central African Gold Plc ("CAG" or "the Company") Proposed placing of 60,000,000 new ordinary shares of 0.5p each at £0.26 per share to raise approximately £15.6 million in gross proceeds (the "Placing") Central African Gold Plc, the AIM quoted gold mining and exploration company, ispleased to announce that, subject to shareholder approval, the Company proposesto raise £15.6 million (before expenses) through the issue of 60,000,000 newordinary shares ("Placing Shares") at a price of £0.26 per share. The fundsraised, together with the additional flexibility provided by the recentlysecured extension to the Company's existing debt facility, will be utilised tofund the development of CAG's African production and exploration portfolio inGhana, Mali, Zimbabwe and Botswana. The Placing is conditional, inter alia, upon the passing of Resolution 1 by theshareholders at the Extraordinary General Meeting which the Directors haveconvened for 10.a.m. on 8 January 2008. At the EGM Shareholders will be asked toconsider and, if thought fit, pass two Resolutions: Resolution 1, disapplyingpre-emption rights for existing shareholders in respect of the Placing; andResolution 2, subject to Resolution 1 being passed, disapplying until the nextAGM pre-emption rights for existing shareholders in respect of the issue forcash of up to 5% of the Company's Enlarged Share Capital. CAG has receivedirrevocable undertakings from certain Shareholders to vote (or procure the vote)in favour of the Resolutions in respect of 27,223,274 Ordinary Shares,representing in aggregate approximately 25.7 per cent. of the Company's existingissued share capital. A circular containing a notice of the EGM is being postedto the Company's shareholders today. The Company's aim is to realise an initial annualised gold production target of200,000 oz and build a resource base of 7.5 million oz Au by the end of 2008.The Placing was conducted by RBC Capital Markets ("RBC"), with both existing andnew institutional investors and is subject to the passing of Resolution 1 by theshareholders. Central African Gold's CEO Greg Hunter said, "These funds will enable us todevelop our extensive gold portfolio across Africa. At our flagship Bibianiproject, exploration and development work has already increased ore definitionat the Bibiani Main Zone by 288% to 2.68 million ounces Au and total globalmineral resources by 300% to 3.23 million oz Au, as well as a 391% increase inthe underground ore reserve estimate at Bibiani to 1.05 million ounces Au. Totalgold production for the year ending 31 December 2007 is expected to be circa25,000 to 30,000 ounces and we are forecasting production to reach an annualisedrate of 100,000 ounces by the end of 2008. In Zimbabwe our focus is on the DalnyMine and the Golden Quarry/Camperdown complex where we are aiming tosignificantly increase production and milling capacity as well as provide anupgrade of underground infrastructure and access to additional reserves. TheMedinandi Project in west Mali is proving to be very exciting with approximately500,000 ounces of gold resources delineated during 2007. With this capital Ibelieve that we can truly define the value of our portfolio and reward thesupport of our valued shareholders." Use of proceeds • Considerably increase production at the Bibiani gold mine in Ghana in 2008 and advance ongoing exploration at its satellite pits - estimated underground ore reserve of circa 1.05 million oz Au • Initiate recapitalisation and fast track exploration at its Falcon and Olympus Zimbabwean properties - current estimated reserves of circa 632,000 oz Au • Commence an advanced drilling programme at its Medinandi project in Mali -current estimated resource of circa 505,000 oz Au • Advance Mali and Botswana exploration programmes to understand the true economic potential of these areas • Currently reviewing other potential acquisitions in Mali, Democratic Republic of Congo, South Africa and Zimbabwe to expand portfolio Bibiani gold mine, Ghana The Company's primary focus has been to develop and progress its operations atthe Bibiani gold mine in Ghana. In line with this, CAG is planning toconsiderably increase production at the Bibiani gold mine in 2008 and advanceits ongoing exploration at its satellite pits. Since CAG took over management ofBibiani in December 2006, a Reverse Circulation ('RC') and Diamond Core Drilling('DD') programme has been implemented, testing extensions to the Main Zone ofthe Bibiani orebody and satellite oxide pits. In July 2007, a threefold increasein its underground resource estimate for the Bibiani orebody was announced, withthe underground mineral resource estimate at the Bibiani Main Zone increasing bycirca 288% to 2.68 million oz Au and total global mineral resources increasingby circa 300% to 3.23 million oz Au. These results provided a good indicationand strong basis for sustainable mineral resource to ore reserve conversion. Inaddition, following the revised mineral resource estimation announced in July,CAG reported a circa fourfold increase (approximately 391%) in the undergroundore reserve estimate at Bibiani to 1.05 million oz Au, which further underpinnedthe Board's confidence in the potential for the advancement of an economicallysound long-life underground mining operation. CAG is currently developing a mechanised long-hole open stoping operation belowthe main Bibiani open pit, initially through the extension of an existingdecline to 9 level (approximately 270 metres below surface). During the thirdquarter of 2008, CAG intends to commission a 2.8km decline from the run of mine("ROM") pad which will allow for both the conveyance of ore as well as accessfor men and materials. The conveyor decline will have a design capacity of200,000 tonnes per month ("tpm"). The Company has contracted a select team ofexperienced Australian and South African mining and engineering personnel tospearhead the initial development phase of the mine. The bulk of the miningequipment is already commissioned underground. Initial underground developmenthas commenced, with old stope cleanup in progress, whilst initial stopingcommenced at the end of November 2007. The Bibiani process plant has a capacity of 225,000 tpm. Underground productionis phased to achieve 100,000 tpm during the fourth quarter of 2008. Thefavourable geology and drilling results are providing impetus to assessexpanding the planned output to over 150,000 tpm. CAG mined 23,000 tonnes of ore in November 2007 at grades of between 2.5-3.0g/tAu, above management's internal forecasts, and is expecting to expand on thistonnage significantly in December 2007 at anticipated grades of around 3.0g/tAu, in line with the current mining plan. Total gold production for the year ending 31 December 2007 is expected to becirca 25,000 to 30,000 ounces and management is forecasting production to reachan annualised rate of 100,000 ounces by the end of 2008. Zimbabwe CAG is planning to recapitalise and fast track exploration at its Zimbabweproperties. In February 2007, CAG acquired an 84.7% interest in Falcon GoldZimbabwe Limited and the entire issued share capital of Olympus Gold MinesLimited, two Zimbabwean based gold operations (including the Dalny mine, Venicemine, Golden Quarry mine, Camperdown mine and Old Nic mine) for an aggregateconsideration of approximately £3.1 million (US$6.2 million). The investment into the Falgold and Olympus assets in Zimbabwe was premised onCAG's view on the geological prospectivity of the portfolio. Coupled to that,the location relative to South Africa, a mining heritage, the availability ofskills and basic infrastructure all made Zimbabwe an investment destination thatranked well relative to other African locations. However, the country and theassets have their challenges. CAG has therefore put in place a Reserve Bank ofZimbabwe sanctioned loan structure of some £1.5m that allows it to remit fundsbetween CAG and Falgold. To date, just in excess of £0.5m of this facility hasbeen utilised. This allows CAG to provide limited but necessary support torecapitalise the infrastructure of the mine, restock necessary consumables whenrequired and position the businesses to expand into what the Directors expect tobe a potential Zimbabwean turnaround in the medium term. The focus is on the Dalny Mine and the Golden Quarry/Camperdown complex. At theDalny Mine, an expansion of the milling capacity is being undertaken as well asan upgrade of underground infrastructure and access to additional reserves. Atrenching and bulk sampling programme is also being undertaken on two surfaceoxide deposits to investigate the amenability to heap leaching. At the GoldenQuarry/Camperdown complex, upgrades are being undertaken on the metallurgicalplant to ensure sustained and cost effective throughput, while upgrades are alsobeing undertaken on the two existing heap pads at Camperdown. However, thelonger term strategic value is the drive to scope and evaluate the Camperdownorebody, which has a large surface oxide opportunity. Initial investigation andscoping on the re-opening of the Venice Mine is also being undertaken. The exploration programme during 2007 and 2008 has been and will continue to befocused largely on data compilation and digitisation, so as to enable a betterunderstanding of the scope and nature of targets, as well as prioritisation offollow-up work. A fundamental step forward on all the properties during 2008will be satellite image enhanced mapping studies, including structural analysisand modelling of ore bodies where applicable information is available. Theemphasis on target prioritisation will be on delineation and evaluation ofopencast opportunities. These exploration programmes will have a significanteffect on the Falgold growth strategy through: • The anticipated increase of all the operations' life-of-mine through underground drilling; • certain opencast opportunities providing flexibility in assessing plant expansion options; and • structural studies providing predictive models that in turn will improve the "hit rate" of exploration drilling, as well as the basis for sustainable production. With these objectives in mind, field exploration has been initiated on theopencast targets of the Dalny shear zone, inclusive of multi element soilgeochemistry, trenching, and heap leach bench test-work on mineralised zones.Surface RC and DD drilling programmes are planned based on the outcome of theabove work, which is expected to ultimately advance certain targets to miningstage. Also, an underground drilling programme has been initiated at the Dalnymain project, where a broad (10-30m) mineral envelope grading 2-4g/t Au is beingevaluated from surface to 9 level (approximately 270 metres below surface) totest a conceptual open pit target. A DD drilling programme has been planned andis scheduled to commence in January 2008, to further delineate an opencastexpansion at Camperdown. Mali The Company has built a strong position in Mali through joint venture agreementsand has assembled a highly prospective portfolio of assets consisting of 20properties spanning over circa 2,500 sq km in the south and west of the country.It's CAG's objective to advance its drilling programme at its Medinandi propertyand continue to develop its exploration projects in Mali. To date, CAG haseffected follow-up ground programmes on all 20 of its Mali properties. This workis currently being prioritised into follow-up targets for the 2008 field season(November 2007-July 2008). The Medinandi Project in west Mali is the Company's most advanced project, withapproximately 500,000 ounces of gold resources delineated during 2007. Furtherreverse circulation ("RC") and diamond core ("DD") drilling is prioritised atMedinandi during 2008. The whole permitted area will be investigated with a highresolution airborne geophysical survey planned for Q1/Q2 2008. Other groundgeophysical surveys (such as induced polarisation ("IP") is planned, coupledwith trench and reverse-air-blast ("RAB")/RC follow-up drilling. In southern Mali, four properties have been prioritised for RAB drilling duringQ1/Q2 2008. Infill soil geochemistry, pitting and trenching programmes areplanned on the other properties. CAG will also continue advancing regionalstructural targeting in Mali south. Botswana In October 2007, CAG announced it had consolidated 100 per cent. ownership ofMotako from Golden Tau, and renewed the Kraaipan prospecting licence for afurther 3 years commencing on 1 July 2007. The Kraaipan prospecting licence extends over 430.3 km(2) of the north westwardstrike continuation of the Archean Kraaipan greenstone belt, originating fromSouth Africa. The belt is highly prospective for gold, with past production andresource figures indicating approximately four million ounces of gold at theGold Ridge mine in South Africa. To date, Golden Tau has undertaken a detailedexamination of previous reconnaissance work completed in the 1980's. Explorationhas included geological mapping, airborne geophysical surveys and limitedpercussion and DD drilling. The results have indicated gold mineralisationalthough the economic viability is yet to be determined. The next phase of exploration on the Kraaipan prospecting licence, scheduled forearly 2008, will entail more detailed structural mapping combined with theintegration of enhanced Aster imagery with the existing data-sets. Follow-uptargets will be reviewed and re-prioritised. CAG has initiated collation of thisdata with remote sensing and structural interpretations. Priority targets are tobe tested in the field with systematic trenching and RC/DD drilling whereapplicable. The technical information in this announcement has been reviewed by PhilBentley, CAG Manager: Geology and Exploration. Mr Bentley is a registeredSACNASP professional and is the Company's Competent Person with respect tomineral reserves and mineral resource estimation. Placing details RBC, on behalf of the Company, has conditionally placed 60,000,000 PlacingShares with institutional and other investors at the Placing Price to raise netproceeds of approximately £14.8 million after expenses. The Placing Shares will, on their Admission to trading on AIM, be credited as fully paid and rank pari passu in all respects with the Company's existing issued Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Ordinary Shares after that date. The Placing Shares represent approximately 56.6 per cent. of the Company's existing issued share capital. Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM. It is expected that, conditional upon the passingof Resolution 1 at the EGM, dealings in the Placing Shares will commence on 9January 2008. Following the Placing there will be 166,079,962 Ordinary Shares in issue. ThePlacing Shares will represent approximately 36.1 per cent of the enlarged sharecapital of the Company. * * ENDS * * For further information please contact or visit www.centralafricangold.com orcontact: Central African Gold PlcGreg Hunter/Nicole Broome Tel: +27 (0) 11 676 2500 London:St Brides Media & Finance LtdHugo de Salis/Felicity Edwards Tel: +44 (0) 20 7242 4477 Strand Partners LimitedSimon Raggett /Braden Saunders Tel: +44 (0) 20 7409 3494 RBC Capital MarketsMartin Eales/Andrew Smith Tel: +44 (0) 20 7029 7881 South Africa:Russell and AssociatesCharmane Russell Tel: + 27 11 880 3924 Mob: + 27 82 372 5816 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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