12th Jul 2007 07:00
Central African Gold PLC12 July 2007 Central African Gold Plc / Ticker: CAN / Market: AIM / Sub-sector: Gold Mining 12 July 2007 Central African Gold Plc ("CAG" or "the Company") Update through letter to shareholders Central African Gold Plc, the AIM traded gold mining and exploration company,today wrote to shareholders updating them on the Company's activities andexplaining the context of the Kola Permit announcement made on 9 July 2007. Thetranscript of the letter is below. Dear Shareholder, As many of you will be aware, the company announced on 9 July 2007 that it hadsuspended activities on the Kola permit, which to date had only consisted of theplanning of an exploration programme. This follows the announcement made justone month previously that we had signed a heads of agreement on the project. The announcement coincided with a sharp downward movement in the share price,albeit on relatively small traded volumes, and the receipt of a number ofqueries from shareholders. The board believes that it is appropriate to providethe necessary context to shareholders for this announcement and to outlinerecent developments related to Central African Gold Plc ("CAG") which, in theboard's opinion, put the Kola announcement into its true context. Our primary focus is Bibiani in Ghana The focus of the directors has been, and remains, one of establishing CAG as aleading mid-tier African gold producer with world class exploration andproduction assets. Our main emphasis has been the underground project at theoperating Bibiani gold mine in Ghana, whilst at the same time producing fromtailings, with targeted production in FY2007 being in the region of 50,000 oz ofgold from both surface and underground sources. We are well on track to achievethis. As we stand, a large component of our mining fleet for the Bibiani gold mineunderground project has arrived on site and is being commissioned by the teamsof local and ex-patriot underground bulk mining specialists hired to manage theproject. We have conducted our first trial underground blast, development onventilation raises has started and additional general mine development work hasbeen initiated ahead of schedule. Stoping and the build up of undergroundproduction is set to commence in September as anticipated. Our surface drilling programme initiated in January 2007, whilst not complete,is showing signs of yielding good results, confirming the continuity of theorebody and supporting the confidence we have always displayed in the Bibianigold mine and the region as a whole. It may be possible to access some areasfor mining from the conveyor decline that is planned from the run of mine pad tobelow current planned underground mining infrastructure. Importantly, this couldprovide an additional unplanned source of ore. We look forward to announcing adetailed release on Bibiani in the near future, which includes a revised reserveand resource statement. Our portfolio in Mali Our portfolio in Mali currently consists of 23 properties covering some 2,500km(2). On the 29 May 2007, post a successful field season on the Medinandi permitin west Mali, the exploration work delivered a resource estimate of some 500,000oz of gold grading 4.55 g/t Au, which we expect to increase with furtherdrilling. In addition to the area being drilled, there are four other walk-updrill targets on the property, which underpin our belief that the area is hostto a significant economic gold system. On the balance of the portfolio, over 10,700 assays effected to date with 39follow-up gold targets identified, of which 16 are being prioritised, and sixare clustered and structurally controlled gold anomalies. In particular, theYanfolila district is highly encouraging with a number of 2-7 km long clusteredgold-in-soil anomalies. Where would Kola fit in? While the Kola permit could complement CAG's existing interests in south Maliand the country as a whole, and may still do so, the current impasse has not andwill not result in a financial loss for the Company besides de minimis legalfees. Would we like Kola? Yes. Does it currently feature in our growth strategy?No. Have we started investing in the project? No. Current activities to date hadonly consisted of the planning of an exploration programme. As cited in the release on 9 July 2007, we remain positive of being able topotentially conclude the transaction but, in the interests of good governance,we issued the announcement in respect of the suspensions of activities. If wedo not complete the transaction, this will not affect our portfolio of assets inMali, which remains large, robust and attractive in its own right, and if we do,the Kola permit is effectively a bonus to this portfolio. Operating in Zimbabwe We continue to be positive about the long-term prospects for Zimbabwe. While thesituation on the ground is difficult, for now it is not unmanageable. Reliablepower supply is our single largest issue, but we are looking at ways to addressthe situation. Options in Botswana We continue to review our Botswana property, Kraaipan, with a view to eitherselling or taking our equity interest up to 100%. In conclusion We have been pleased more recently at the consistency of the share price, thevolumes traded and the general response of the market to the consolidation. Itis the board's belief that once we quantify production from the undergroundproject at Bibiani and the integrity of the orebody is confirmed, we will berewarded in terms of a suitable rating relative to our peers. In summary, the board believes that the Company is well placed to achieve itsobjectives of becoming a leading mid-tier African gold producer with world classexploration and production assets. We will continue to look at potential forgrowth in the medium and long-term, including resolving the issues around Kola. It's business as usual for CAG though. Yours sincerely, Greg Hunter * * ENDS * * For further information please contact or visit www.centralafricangold.com orcontact: Central African Gold PlcGreg Hunter Tel: +27 (0)82 882 4222 In 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 In South Africa:Central African GoldNicole Broome Tel: +27 11 676 2500 Mob: +27 83 601 1702 Russell and AssociatesCharmane Russell Tel: + 27 11 880 3924 Mob: + 27 82 372 5816 Notes to Editors: Central African Gold Plc, admitted to AIM in April 2004, was established toacquire gold assets with a geographical focus on Africa. The Company hasestablished a sound portfolio with projects in Ghana, Mali, Zimbabwe andBotswana. It has a highly experienced management team, which has worked togetherfor four years managing six underground greenstone gold mining operations andbuilding exploration portfolios. CAG's portfolio includes the producing Bibiani gold mine and prospectinglicences in Ghana, which it acquired from AngloGold Ashanti Ltd, two jointventures in Mali covering 23 prospective permits and licences in Botswanacovering the extension of the Kraaipan greenstone belt from South Africa. CAGrecently acquired five mines and extensive exploration properties in Zimbabwe.The directors are evaluating additional prospects in Africa to establish CAG asa leading mid-tier African gold producer with world class exploration andproduction assets. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Canal+