9th May 2008 07:00
Patagonia Gold PLC09 May 2008 PATAGONIA GOLD PLC Trading Symbol PGD.L PATAGONIA GOLD FORMS A STRATEGIC PARTNERSHIP WITH FOMICRUZ S.E. FOR THE DEVELOPMENT OF PROPERTIES IN SANTA CRUZ, ARGENTINA Patagonia Gold SA ("PGSA"), a wholly owned subsidiary of Patagonia Gold Plc, ispleased to report that it has entered into a Letter of Intent ("LOI") withFomento Minero de Santa Cruz Sociedad del Estado ("Fomicruz SE"), a wellestablished and respected mining company wholly owned by the pro-mininggovernment of Santa Cruz Province, Argentina. The LOI sets out the key terms and conditions of a strategic partnership betweenPGSA and government owned Fomicruz SE for the future development of PGSA'smining properties in Santa Cruz province, including the gold and silver projectsof Lomada de Leiva, Cap Oeste and La Manchuria Main Zone, together withproperties currently owned by Fomicruz SE. PGSA and Fomicruz SE will, subject to the approval by their respective Board ofDirectors, enter into a detailed Shareholders Agreement which will include thefollowing terms: •A new company ("NEWCO") will be created in which PGSA will acquire a 90% interest and Fomicruz SE will acquire a 10% interest. •PGSA will contribute to NEWCO approximately 100,000 hectares of its mining properties in Santa Cruz province consisting of the; La Paloma, El Tranquilo and La Manchuria block of properties •Fomicruz SE. will contribute to NEWCO approximately 100,000 hectares of mining properties located in the very prospective Deseado Massif, close to PGSA's El Tranquilo and La Manchuria block of properties. •PGSA will invest US$ 5 million, over a 5 year period, on exploration expenditures on the properties contributed by Fomicruz S.E. •PGSA will fund all the exploration expenditures on NEWCO's properties to pre-feasibility stage. •Further development of the properties, through feasibility to production, will be funded on a pro-rata basis. •PGSA will manage the exploration and potential future development on the properties. Commenting on the agreement, Patagonia Gold's Deputy Chairman Mr. Carlos Miguenssaid: "We are very pleased with the strategic partnership agreed with Fomicruz SE toprogress our Santa Cruz mining properties towards production. Fomicruz SE is awell established and respected mining and petroleum company owned by thepro-mining government of Santa Cruz and therefore we are happy to have a strongpartner with excellent expertise who will assist us in the sustainabledevelopment of our projects, with special attention on the environmental, socialand economic matters for the benefits of the communities nearby and the wholeprovince. This agreement allows PGSA to significantly expand its land position in theDeseado Massif and we are confident of our ability to apply our provenexperience in identifying high grade gold and silver deposits on the Fomicruz SEproperties". Miguel Angel Ferro, Fomicruz SE's President said: "We look forward to being a partner of an Argentine based mining company such asPatagonia Gold S.A. on their advanced projects in the province, and to havingtheir exploration expertise applied to our properties. We are very proud to beworking together with the well known and respected local businessman, CarlosMiguens, who is investing in our province. Our experience in the Santa Cruzresource industry, including our investment in the nearby Cerro Vanguardia mine,will help facilitate the rapid development of the projects, which will bringsignificant benefits to the people of nearby communities, including the towns ofPerito Moreno and Gobernador Gregores." ENDS For more information, please contact: Bill Humphries/Richard Prickett David Bick / Mark LongsonPatagonia Gold Plc Square 1 ConsultingTel: +44(0)20 7409 7444 Tel : +44(0)20 7929 5599 Simon Raggett / Angela Peace Alastair Stratton / Tim GrahamStrand Partners Ltd Matrix Corporate Capital LLPTel: +44(0)20 7409 3494 Tel : +44(0)20 7925 3234 / +44(0)20 7925 7852 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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