30th Jul 2009 15:18
MERCATOR GOLD plc("Mercator Gold", "Mercator" or "the Company")
London: 30 July 2009
Sale of Interest in Indonesian Gold Project
Mercator is pleased to announce it has agreed to sell its interest in the Area 81/Derewo River gold project for 50 million shares in a company to be named Paniai Gold Limited and to be listed on the National Stock Exchange (NSX) of Australia.
Paniai Gold shortly intends to raise A$0.5 million in pre-IPO funding ahead of an IPO targeted to raise in excess of A$2 million.
Paniai Gold will carry out alluvial gold mining operations on a granted mining permit at Area 81/Derewo River in joint venture with a local company, with gold production expected to commence before the end of 2009.
The transaction will allow Mercator to realise tangible value from its involvement in the Area 81/Derewo River gold project.
On the completion of the I.P.O Mercator's shareholding will represent approximately 17% of Paniai Gold Ltd which is expected to have a market capitalization of approximately $Aus 10 million following the proposed listing. The fundraising is being sponsored on a best-endeavours basis by Australian stockbrokers BGF Equities Pty Ltd.
Paniai Gold is the holder of a 50% interest in a joint venture ("the JV") over the Area 81/Derewo River project with a local company called PT Madinah Qurrata'ain. At present, the JV has one granted 40 ha mining permit, plus applications pending for another 1,800 ha of mining permits and approximately 170,000 ha of exploration permits. An environmental impact study relating to the applications has recently been completed and lodged with the Provincial authorities in Papua, which constitutes a key step towards the permits being granted.
The JV will initially mine substantial bodies of gold bearing alluvial gravels located within its granted mining permit adjacent to the Derewo River. Gold production is expected to commence before the end of 2009. In addition, the JV plans to undertake exploration for alluvial and hard-rock gold deposits within the additional permit areas that have been applied for. The project will be managed by Mr Trevor Neal who has extensive and successful experience in conducting alluvial gold mining operations in Papua New Guinea for over 20 years. The joint venture has already begun to mobilize the necessary equipment to site in anticipation of the commencement of production.
The JV enjoys strong support from the authorities within the Regency of Paniai, the administrative district in central Papua Province in which it is active, as well as from the local population.
Patrick Harford, Managing Director of Mercator Gold plc, comments:
"The Papuan project introduced to the company by Mr Barry Smith, an Indonesia-based Australian, will soon be a gold producer and an active explorer in an area of exceptional potential. The local operation will be run under the supervision of Mr Trevor Neale, a geologist with great experience in the Indonesian and Papua New Guinea region. He has owned and operated his own successful alluvial gold mine in PNG for many years and is an investor in Paniai Gold Limited. The sale of our interest for a substantial shareholding in Paniai Gold Ltd, a well funded and well managed company, is a great result for Mercator's shareholders"
For further information please contact
Mercator Gold plc
Michael Silver, Chairman Tel: +44 (0) 20 7929 1010
Patrick Harford, Managing Director
Email: [email protected]
Website: www.mercatorgold.com
Bankside Consultants Ltd Tel: +44 (0) 20 7367 8888
Simon Rothschild
Oliver Winters
Cenkos Securities plc
Adrian Hargrave Tel: +44 (0) 20 7397 8900
Beth McKiernan
Old Park Lane Capital PLC
Forbes Cutler, Director of Corporate Broking Tel: +44 (0) 20 7518 2603
AIM: MCR
Related Shares:
ECR Minerals