Result of Strategic Review

Result of Strategic Review

China Goldmines today announces the result of its strategic review led by Robert Adair, Non-executive Chairman, which has been conducted following his appointment in December 2009. It has been decided that the Company will assess new projects within a clearly defined rationale to potentially acquire and build value for shareholders utilising current funds of approximately $23 million. Any decision regarding specific acquisitions will be subject to shareholder approval and if a suitable proposition is not found a return of capital will be proposed to shareholders.

Acquisition Strategy

The core principal of CGM's acquisition strategy is to examine projects where we believe shareholder value can be created using the Company's existing funds of $23m. While CGM's existing expertise is in mining the Company will also assess assets within the oil and gas sector, given Robert Adair's significant track record in the industry, and sectors outside of resources providing certain key parameters are met. Based on the conclusions of the strategic review the assessment framework for new projects is as follows:

Resource propositions (oil and gas or mining):

Producing or near production assets

Third party resource validation

Medium to low political risk

Non resource propositions:

Revenue generating

Profitable or near to profit

Market leader or recognised as one of the market leaders

High barriers to entry

Strong UK / European market position

While CGM is currently examining a range of options and approaches through its own channels, proposals from outside the Company and its Advisors will be considered providing the above criteria are met. Viable propositions with incumbent management team are being sought with a view that a transaction might be completed by the end of September 2010.

CGM post disposal of its gold mining subsidiary

Following the disposal of its gold mining subsidiary on 29 September 2009, CGM is now classified under the AIM Rules as an investing company. Accordingly, the Company is required to complete an acquisition or acquisitions (or otherwise implement an investing strategy, (which will be subject to the approval of shareholders) no later than 28 September 2010. The Company is not subject to the Takeover Code as its securities are Admitted to AIM and its place of central management and control is outside the United Kingdom.

As at 28 February 2010, the Company's assets were represented by a cash balance of c. US $23m.. CGM is guarantor to warranties made to the acquirer of the mining subsidiary with a maximum liability of $10m. These warranties expire at the end of September 2010.

All material obligations, liabilities or responsibilities of the Company and its subsidiary GRV expire on 28 September 2010, save for any antecedent breaches claimed by the acquirer which have not been resolved. The aggregate liability of the Company and GRV under the Share Purchase Agreement is limited to US$10m. 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. It is reassured that it successfully negotiated the release of $2.2m as announced on 22nd January 2010.

Commenting today Robert Adair, Chairman, of China Goldmines said: "Our clear focus at CGM is to do the best thing for shareholders over the next twelve months who we will look to keep fully informed. We shall work towards using the funds returned to us, from the recent sale of our gold mining subsidiary, to invest in a suitable project that could potentially derive higher value for our investors than a return of cash. Our objective is to examine projects that could quickly derive benefit from deployment of the funds we have at our disposal. We are currently undergoing a process of review of assets with our Advisors but look forward to receiving any proposal that meet our core criteria as outlined above."

For indications of interest from parties:

Propositions should detail the nature of the business, the management credentials, the existing shareholder structure and a 3 year financial performance. Resource propositions should also detail the reserve / resource base. The directors will consider propositions in the context of execution risk.

All indications of initial interest should be made available by email to the contacts detailed below at Brewin Dolphin Investment Banking with copies sent to the Company at the following two email addresses [email protected] and [email protected].

Enquiries: