Acquires 2.48m oz Gold
February 26 2007 - 2:03AM
UK Regulatory
RNS Number:8286R
Central African Gold PLC
26 February 2007
Central African Gold Plc / Ticker: CAN / Market: AIM / Sector: Gold Mining
26th February 2006
Central African Gold Plc ("CAG" or "the Company")
Adds 2.48 million oz gold to resource base through acquisition of the gold
mining assets of Falgold and Olympus in Zimbabwe
Central African Gold Plc, the AIM quoted gold mining and exploration company, is
acquiring an 84.7% interest in Falcon Gold Zimbabwe Limited ("Falgold") and the
entire issued share capital of Olympus Gold Mines Limited ("Olympus"), two
Zimbabwean based gold operations for an aggregate consideration of approximately
US$6.2 million (approximately #3.2 million) to be satisfied by a combination of
cash and shares. These transactions will be effective 1 March 2007. The
acquisitions are in line with the Company's strategy of becoming a leading
mid-tier operating gold company, with an initial target of circa 200,000 ounces
of annualised low-cost gold production and 7.5 million ounces of resource by the
end of 2008.
Falgold and Olympus are gold mining companies with the rights to extensive claim
areas located throughout Zimbabwe, with exploration properties and mining
activities centred on the Kadoma, Shurugwe and Bulawayo regions. The combined
resource estimates for both operations stands at 2.48 million oz gold ("Au")
with JORC compliant reserves of 632,000 oz Au. In the financial year to 31
September 2006 both companies combined generated turnover of ZIM$1.83 billion
(approximately #3.75 million) and an attributable net profit of ZIM$199.7
million (approximately #409,045) having produced 21,031.5 oz Au. (Due to
hyperinflation in Zimbabwe investors should be aware that conversion rates from
Zimbabwe Dollars to Pounds Sterling are likely to vary materially).
Following the completion of these acquisitions, the Company intends to initiate
a process of revising and updating the mineral resource estimates and ore
reserve classification as well as applying modern and efficient mining
techniques to improve the productivity and profitability of the operations.
Falgold, listed on the Zimbabwe Stock Exchange, and Olympus, which is an
unlisted private company, share the same management and majority shareholders.
It is CAG's intention to incorporate Olympus into Falgold, which will remain
listed. The Company believes the listing gives the people of Zimbabwe access to
an exciting company and sector of their economy. CAG continues to actively
engage with the Reserve Bank of Zimbabwe, Ministry of Mines and Zimbabwe Stock
Exchange to ensure that Falgold is able to function effectively and efficiently.
Falgold operations:
*The Falgold operation includes the Dalny mine which is situated 36 km
north of Kadoma in the Chakari district (approximately 175 km south-west of
the capital, Harare). On current reserves it has an estimated life of mine
of approximately six years as an underground operation plus an additional
one year of tailings recovery. The Company believes that significant
potential exists for the development of an open pit, low grade, bulk-mining
operation within the greater Dalny shear zone.
*The Golden Quarry mine is situated approximately 30 km south east of the
town of Gweru (approximately 180 km north-east of Bulawayo) and consists of
an operational underground mine with a dedicated milling circuit and
beneficiation plant.
*The Venice mine, which has a wide range of exploration targets, is
located approximately 28 km south of Kadoma and is currently on care and
maintenance. The mine has a modern metallurgical facility that has capacity
to process 18,000 tonnes of ore per month. This area is a high priority
target for the Company in terms of exploration potential.
Olympus operations:
*Olympus operates the Old Nic mine near Bulawayo, one of the oldest gold
mines in Matabeleland. The mine currently has an estimated two year life,
although the Company believes this could be extended with additional
exploration.
*Olympus also holds the rights to the Camperdown mine located on claims to
the north east of Shurugwi approximately 30 km south east of Gweru.
Production is sourced from a dual open pit and underground operation with a
life of mine of approximately seven years. The Camperdown mine is a high
priority for the Company for a fast tracked exploration and mine development
programme.
While Falgold and Olympus have been valued on properties and operations that
have mineral assets with defined mineral resources and ore reserves, the two
companies have significant additional ground holdings covering approximately
12,300 hectares that were not included in the valuation but are considered to be
geologically prospective. A Competent Person's Report, commissioned by the
Company, indicates that with the requisite work, these additional properties
could add material value to both Falgold and Olympus.
Current JORC compliant mineral resource estimates for Falgold and Olympus:
Summary of Mineral Resources and Mineral Reserves as at 30 September 2006
Mineral Resources Ore Reserves
Category t ('000) g/t Au oz. ('000) Category t ('000) g/t Au oz. ('000)
Measured 24,860 1.32 1,057 Proved 7,150 1.06 244
Indicated 6,606 2.41 512 Probable 4,237 2.85 388
Inferred 12,213 2.32 909
Total 43,679 1.76 2,478 Total 11,387 1.73 632
*Mineral Resources inclusive of Ore Reserves
The reserves and resources are a combination of surface sources (open pit and
rock dump/slimes) and underground sources. At the Dalny mine complex, the
underground reserve is 640,000 tonnes at a grade of 8.07g/t Au, while at the
Venice mine complex the reserve is 274,000 tonnes at a grade of 7.27g/t Au. In
both cases there are significant tonnages in the resource category grading at
between 4.5g/t Au and 5g/t Au.
CAG Attributable Mineral Resources and Ore Reserves
Mineral Resources Ore Reserves
Mineral Asset Equity Total Attributable Total Attributable
% koz koz Au koz Au koz Au
Falgold 85% 2,067 1,757 366 311
Olympus 100% 410 410 266 266
Total 2,477 2,167 632 577
CAG's CEO Greg Hunter said, "The acquisition of a second producing asset in
arguably one of the highest gold endowed Achaean greenstone belts in the world,
allows us to rapidly leverage our position up the value curve for our
shareholders in an attractive gold price environment. Coupled with a significant
reserve and resource base, the acquisition complements our gold production
profile and strategy in Ghana. The "blue sky" component of this acquisition also
complements the greenfield exploration portfolio being established in Mali and
Botswana.
"As a team we have a track record of successfully operating in Zimbabwe, a
country we believe is geologically exciting, has good infrastructure, a solid
skills base and easy access given its proximity to South Africa. This
transaction gives us a foothold in a country that ranks third behind South
Africa and Ghana in total historic gold production and comes with production
that can be ramped up in short order with a nominal capital injection, an
experienced operating team and an impressive footprint in terms of exploration
potential."
The aggregate consideration of approximately US$6.2 million (approximately #3.2
million) for the acquisition will be satisfied via US$ 4.5 million
(approximately #2.3 million) in cash and the balance through the issue of
9,000,000 new Ordinary Shares in the Company at 9.64 pence per share.
Application has been made for the new Ordinary Shares to be admitted to AIM on 1
March 2007. The new Ordinary Shares will rank pari passu with the existing
ordinary shares in the Company.
The #:US$ exchange rate is using an exchange rate of #1 equals US$1.9525 and
taken from the Bank of England website as at 22 February 2007. The #:ZIM$
exchange rate is using an exchange rate of #1 equals ZIM$488.21 taken from the
Reserve Bank of Zimbabwe website as at 22 February 2007.
Conference call and webcast:
Shareholders are invited to participate in a conference call or audio webcast
where CEO, Greg Hunter, will brief them on the transaction. Conference call
participants will be given the opportunity to ask questions.
Monday, 26 February 2007 London: 14:00 - Johannesburg: 16:00
The webcast can be accessed at either:
www.cag.com or at http://www.corpcam.com/CAG26022007
To access the live conference call toll-free, dial:
UK 0800 917 7042
CANADA 1 866 519 5086
South Africa 0800 200 648
USA 1800 860 2442
A playback of the conference call will be available at:
UK 0808 234 6771
South Africa & Other +27 11 305 2030
USA 412 317 0088
The playback code for this call is 2542#
* * ENDS * *
For further information please contact or visit www.centralafricangold.com or
contact:
Greg Hunter Central African Gold Plc Tel: +27 (0)82 882 4222
In London:
Hugo de Salis St Brides Media & Finance Ltd Tel: +44 (0)20 7242 4477
Simon Raggett Strand Partners Limited Tel: +44 (0)20 7409 3494
Braden Saunders Strand Partners Limited Tel: +44 (0)20 7409 3494
In South Africa:
Nicole Broome Central African Gold Tel +27 11 676 2500
Mobile +27 83 601 1702
Charmane Russell Russell and Associates Tel: + 27 11 880 3924 (Tel)
Mobile + 27 82 372 5816
Notes to Editors:
Central African Gold Plc, admitted to AIM in April 2004, was established to
acquire gold assets with a geographical focus on Africa. The Company has
established a sound portfolio with projects in Ghana, Mali and Botswana. It has
a highly experienced management team, which has worked together for four years
managing six underground greenstone gold mining operations and building
exploration portfolios.
CAG's portfolio includes the producing Bibiani gold mine and prospecting
licences in Ghana, which it acquired from AngloGold Ashanti Ltd, two joint
ventures in Mali covering 23 prospective permits and licences in Botswana
covering the extension of the Kraaipan greenstone belt from South Africa. The
directors are evaluating additional prospects in Africa to establish CAG as a
leading mid-tier African gold producer with world class exploration and
production assets.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQOKPKKCBKDFBB
Central African Gold (LSE:CAN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Central African Gold (LSE:CAN)
Historical Stock Chart
From Jul 2023 to Jul 2024
