Joint Venture with Majestic Gold Corp.
September 14 2006 - 4:57AM
UK Regulatory
Central China Goldfields plc
`GGG' or `the Company'
JOINT VENTURE WITH MAJESTIC GOLD CORP.
OPTION TO PURCHASE 100%
LONDON - 14 September 2006
Introduction:
Central China Goldfields plc (AIM: GGG) the mineral exploration and development
company operating in China, has signed a Letter of Intent with Majestic Gold
Corp. of Canada (TSX.V: MJS) allowing GGG the option to earn 51% of the entire
portfolio of MJS's mining properties in China for a total consideration of
CAN$12.5 million (approximately �6 million). The funds will be used for the
exploration and development of these properties.
Upon earning its 51%, GGG then has the option to purchase the remaining 49%
through the issue of GGG shares.
Majestic Gold Corp. ("Majestic") is a Canadian publicly quoted gold exploration
and development company with property sites located in China's most prolific
gold belts. Majestic currently holds 3.7% of GGG's ordinary share capital.
The Properties subject to the Option Agreement:
The properties under the joint venture include Song Jia Guo, in the Shandong
Province of Eastern China. This is a near-production gold deposit with a mining
licence, a pilot mining plant capable of processing 120 tonnes of ore per day
and four levels of extensive underground development. The deposit lies on the
western edge of the Muping-Fushan Gold Belt. This Gold Belt hosts 20% of the
known gold deposits on the Jiaodong Peninsula which in turn accounts for 25% of
China's annual gold production. Majestic confirms their property has inferred
resources of 13.2 Mt @ 0.97 g/t Au for 414,000 oz of gold.
Majestic's second most promising property is Sawayaerdun, located in the highly
prospective Tian Shan Gold Belt in Xinjiang Province, Western China. This belt
hosts numerous high quality gold deposits including Muruntau (140 million oz)
and Kumtor (13.9 million oz). To date Sawayaerdun has a reported resource of
1.38 million ounces of gold (17.9 Mt @ 1.16 g/t Au for 607,000 oz indicated and
24.4 Mt @ 1.09 g/t Au for 773,000 oz of inferred). The directors of both
companies believe that there is potential to substantially increase these
resources.
The resources quoted for Song Jia Gou and Sawayaerdun were independently
calculated by Wardrop Engineering Inc. and were produced in accordance with the
Canadian Stock Exchange requirements (Canadian NI 43-101 reporting standards).
Importantly, both of these properties have obtained mining licences which means
that the joint venture can commence mining immediately.
GGG have commissioned Golder Associates (UK) Limited to conduct a technical due
diligence of the properties and their report is still in progress. The
directors of GGG and Majestic will be working together to complete a
Feasibility Study and to substantially increase the production of the Song Jia
Guo deposit within an 18 month period.
Further details of Majestic properties can be found at: http://
www.majesticgold.net/
Principal terms and conditions of the Option Agreement:
In a signed Letter of Intent, it has been agreed that GGG has the option to
earn 51% of a newly formed BVI-registered company which will hold all of
Majestic's Chinese interests for a total consideration of CAN$12.5 million
(approximately �6 million). The funds will be used for the exploration and
development of these properties. The initial payment of CAN$3 million
(approximately �1.4 million), payable within five business days of approval of
the deal by the Canadian Stock Exchange, will be followed by a payment of CAN$3
million (approximately �1.4 million) on 31 January 2007, and CAN$6.5 million
(approximately �3.1 million) on 30 June 2007.
In the event that the directors of GGG decide not to continue the joint
venture, after the initial CAN$3 million contribution and prior to the Company
earning its 51%, the Company has the right to convert its total contribution
into ordinary shares in Majestic at a price of CAN$0.50 per share for the
initial CAN$3 million and using the weighted 10 days' average of Majestic's
price for the remaining contribution.
Upon earning its 51%, GGG has 90 days to notify Majestic whether it wishes to
exercise its option to purchase the remaining 49% of the shares by issuing GGG
shares. Should GGG decide not to purchase the remaining 49%, Majestic has the
option to earn back 2% (resulting in Majestic holding 51% and GGG 49%) by
contributing CAN$500,000 for the exploration and development of these
properties.
The option agreement will be subject to satisfactory completion of technical,
legal and financial due diligence and regulatory approval by the Canadian Stock
Exchange.
The initial payment will be satisfied through internal resources. In
anticipation of the option agreement being finalised and to accelerate the
exploration at both the Snow Mountain and Nimu Projects, GGG is considering its
options.
Background to the Option Agreement:
The directors of Majestic and GGG believe both companies are likely to benefit
by fast tracking Majestic's two lead projects into earlier production as part
of a new joint venture. The directors of both companies see this as an
important first step in part of a consolidation strategy of junior companies
operating in China through which they feel companies will achieve more by
pooling their resources and working together to achieve common goals.
This joint venture will enable GGG to significantly shorten the period before
generating regular cash flow. When added to its existing flagship Snow Mountain
gold and Nimu copper-molybdenum projects, GGG will have four potential `company
makers'. This deal is in line with GGG's strategy of growth to become the
premier mining and exploration company in China.
Related Party Transaction:
Mr. John Charles Forrest finance director of GGG is also a director of Majestic
and currently holds 1.25 million ordinary shares (circa 1.5% of current issued
ordinary share capital of GGG), 1.25 million warrants and 670,000 options in
GGG. Mr. Forrest has no shareholding in Majestic. Mr. Forrest is considered a
related party for the purposes of this transaction.
The directors (excluding Mr Forrest), having consulted with HansonWesthouse
LLP, the Company's nominated adviser, consider the terms of the transaction to
be fair and reasonable in so far as the shareholders are concerned.
Dr. Jeff Malaihollo, Managing Director of Central China Goldfields, commented:
"This is a very important deal for us and it was crucial that Majestic had
already received mining licences for Song Jia Guo and Sawayaerdun. This
agreement gives Central China Goldfields the opportunity to own interests in
two high-quality projects, one of which has a pilot production plant. The
directors anticipate to increase the production of Song Jia Gou substantially
within 18 months. Central China Goldfields now has a direct interest in some of
the best projects available in China."
"This agreement is a further demonstration of our expansion strategy, which is
to become a premier player in China through our own exploration efforts, the
development of under-capitalised mines and through beneficial corporate deals."
Additional Details:
The following table is the list of properties under the joint venture. Majestic
owns 90% of three of the BVI subsidiaries but has the right to purchase the
remaining 10% third party interest using cash and/or shares.
Majestic has already entered into joint venture agreements for MJS Anaui Gold
Ltd. (BVI) and MJS Shandong Gold Ltd. (BVI) to TSX-V listed Trans America
Industries Ltd. The Option Agreement entered into by Central China Goldfields
covers only Majestic's 45% interest (with the right to purchase an additional
5%) of these two BVI companies.
The Letter of Intent between Majestic and GGG dictates that the third party
interest in each of the existing BVI companies can be acquired by the newly
formed BVI-company and the shares to be issued to the third party shall be
shares of GGG and Majestic in proportion to their respective interests in the
BVI-company.
Majestic's BVI Percentage Principal Asset
Subsidiary held
MJS Tianshan Gold 90% 90% Interest in Sawayaerdun Licence Area:
Inc. (BVI) 123.17 km�
MJS Jiodong Gold Ltd. 90% 60% Interest in Fushan Licence Area: 17.03 km
(BVI) �
MJS Yantai Gold Ltd. 90% 60% Interest in 13 Licences:
(BVI)
* Song Jia Guo Area: 4.11km�
* Dazai Area: 11.63 km�
* Shugezhuang Area: 10.95 km�
* Chenjiaguo Area: 4.10 km�
* North of Shuidao Area: 2.57 km�
* Houzhang Heiniu Area: 9.74 km�
* Jialong Area: 6.66 km�
* Nan Kuang Area: 3.07 km�
* Helizhuang Area: 7.17 km�
* ChangJia Zhuang Area: 1.02 km�
* WuZhua Area: 9.57 km�
* Zhaodao Mountain Area: 1.03 km�
* Futia Area: 4.44 km�
MJS Anaui Gold Ltd. 45% 90% Interest in 2 Licences:
(BVI)
* Licence #3700000510712
* Licence #3700000510828
MJS Shandong Gold 45% 60% Interest in Majestic Zhaoyuan Gold Ltd.
Ltd. (BVI)
* Yantai Geigezhuang (SW)
* Yantai Muping Jicheng
* Jiaodong Basin (NE)
Forward Looking Statements:
Certain information included in this press release, including any information
as to our future financial or operating performance and other statements that
express management's expectations or estimates of future performance,
constitute "forward-looking statements." The words "expect", "will", "intend",
"estimate" and similar expressions identify forward-looking statements.
Forward-looking statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by management, are inherently
subject to significant business, economic and competitive uncertainties and
contingencies. The Company cautions the reader that such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements of GGG to be
materially different from the Company's estimated future results, performance
or achievements expressed or implied by those forward-looking statements and
the forward-looking statements are not guarantees of future performance. These
risks, uncertainties and other factors include, but are not limited to:
legislative, political or economic developments in the jurisdictions in which
the Company carries on business; operating or technical difficulties in
connection with mining or development activities; employee relations; the
speculative nature of gold exploration and development, including the risks of
diminishing quantities or grades of reserves; contests over title to
properties, particularly title to undeveloped properties; and the risks
involved in the exploration, development and mining business.
The Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future
events or otherwise, except as required by applicable law.
For further information, please contact:
Central China Goldfields plc HansonWesthouse LLP
Dr. Jeffrey Malaihollo Anita Ghanekar / Cailey Barker
Tel: 020 7621-0200 Tel: 020 7601 6100
Email: info@ccgoldfields.com
Website: www.ccgoldfields.com
Public Relations: Gresham PR Ltd King & Shaxson Capital Limited
Neil Boom Nick Bealer
Tel: 020 7404-9000 Tel: 020 7426-5986
Notes to Editors:
About Central China Goldfields:
AIM listed Central China Goldfields plc (AIM: GGG) develops and explores for
economically mineable Gold, Silver and Copper projects in China focusing on
areas with historical production where modern mine extraction methodology have
been under utilised. The company's core skill is to move under-valued
exploration assets quickly through to mine ready deposits. The Company is keen
to grow through exploration, development and acquisitions.
GGG's property portfolio is currently made up of two flagship projects: the
Snow Mountain Project in Sichuan Province (Carlin style), the Nimu
Copper-Molybdenum Project in Tibet (copper oxide) and three other projects: the
Dong Mao Huo Mine in Nei Menggu (oxide gold), the De Ming Ding Project in Tibet
(porphyry copper) and the Xiang Shui Tan Silver-Gold Project in Hubei Province
(vein type).
GGG and its local partners have defined a total of 1,300,000 ounces of gold and
>600,000 tonnes of contained copper in these projects (all Chinese standards).
All properties are under-explored and GGG is actively developing these
projects, including a drilling programme at Snow Mountain and geophysical
survey at Nimu.
About Majestic Gold Corporation:
The Majestic Gold Corp. (TSX.V: MJS) is a Canadian gold exploration and
development company, with numerous property sites located within China's most
prolific gold belts. The company focuses on projects at or near the development
stage, where the potential for low-cost production can provide a greater return
on investment.
The Sawayaerdun property located in the Xinjiang Province is situated in the
highly prospective Tian Shan Gold Belt. The belt hosts numerous world class
gold deposits including Muruntau (140 million ounces) and Kumtor (13.9 million
ounces).
Majestic also has two properties located in the Shandong Province of China on
the Western edge of the Muping-Fushan Gold Belt, which hosts 20% of the known
gold deposits on the Jiaodong Peninsula. The Muping property consists of 13
exploration licenses, one of which is Song Jia Guo, and covers an area of 75.03
km2. This area is also host to the Donggezhuan Deposit which is one of the
largest gold deposits in the belt. The virtually unexplored Fushan Gold
Property is located on the western side of the belt and consists of a 17.03 km2
mineral exploration permit.
END
GGG Resources (LSE:GGG)
Historical Stock Chart
From May 2024 to Jun 2024
GGG Resources (LSE:GGG)
Historical Stock Chart
From Jun 2023 to Jun 2024
