GGG Ggg Resources

 
TIDMGGG 
 
Central China Goldfields plc 
 
                           (`GGG' or `the Company') 
 
London 10 July 2009 
 
                  UPDATE ON PROPOSED DISPOSAL OF NIMU PROJECT 
 
On 2 June 2009 it was announced that the Company's local joint venture partner, 
the Sichuan Bureau of Metallurgy and Geological Exploration ("SBMGE") had 
approached Central China with a view to acquiring the Company's interest in the 
Nimu Project. Since that announcement the Company has entered into an 
agreement, conditional, inter alia, upon the approval of Shareholders for the 
disposal of its interests in the Nimu Project (the "Disposal"). 
 
This Disposal would be deemed to be a disposal resulting in a fundamental 
change of the business for the purpose of AIM Rule 15. By virtue of being 
deemed to be a fundamental change of business, the Disposal is conditional on 
approval of 75 per cent of shareholders. The Company will therefore post a 
circular to shareholders shortly setting out details of the proposed Disposal and 
containing a notice convening an EGM. 
 
The Nimu Project is the principal asset of the Company in which the Company had 
made significant progress over the last two years and in which the Board 
believed the Company may have discovered a substantial porphyry copper deposit. 
Twenty one holes were drilled in the Gangjiang Licence in Nimu over the last 
two drill seasons with eighteen hitting mineralisation. 
 
Background to the Disposal 
 
Despite the above mentioned exploration successes the Company's local joint 
venture partner, SBMGE, is of the opinion that it should take full 
responsibility for the future development of the Nimu Project itself and has 
made clear it wishes to purchase the Company's local subsidiary, Lasa Tianli, 
which owns the Company's interests in the Nimu Project. The purchase, if 
approved, would be made by Sichuan Institute of Metallurgical Geology and 
Exploration, a subsidiary of the SBMGE. 
 
It is the opinion of the Board that the Company could only successfully 
progress the Nimu project on the basis of a shared desire to operate under the 
joint venture arrangement with its local partner. Given the recent change of 
approach by SBMGE the Board believes that it would now be in the best interests 
of the Shareholders to accept their offer. 
 
The Directors have considered alternative strategies and negotiated for 
increased consideration but believe that following the approach from SBMGE it 
would become increasingly difficult to find other investors or secure a higher 
offer. The Directors consider the current offer for the Nimu Project is the 
only viable offer for the Nimu Project. 
 
Having taken into account the status of global equity capital markets and the 
depressed commodity prices as well as the long term nature of the project and 
large capital expenditure required, the Board will reluctantly recommend that 
the shareholders vote in favour of the proposal. 
 
Principal terms and conditions of the Sale and Purchase Agreement 
 
The consideration for the sale of equity and interest will be Rmb71M and 
payment will be made in three tranches within six months. The first payment of 30 
per cent being Rmb21.3M is to be made within seven days from the effective date, 
being 5 August 2009. The second payment of 35 per cent being Rmb24.85M is to be made 
within 3 months of the effective date and the third payment of 35 per cent being 
Rmb24.85M is to be made within 6 months of the effective date. 
 
The Company will, under Chinese law, be obliged to pay approximately 35 per 
cent in tax on the proceeds of the Disposal. 
 
The Disposal agreement is between Chengdu Zhong Cheng Mining Technology 
Development Co., ("Chengdu") and SIMGE. Chengdu is a 100 per cent owned 
subsidiary of the Company which in turn owns 75 per cent of Lasa Tianli Mining 
Co., Ltd which in turn holds the Company's 30 per cent interest in the Nimu 
Project. 
 
The Company has a put a book value of approximately GBP2.9 million for the Nimu 
Project in its last accounts. 
 
Remaining business of the Company 
 
If the Disposal is approved the Company will have total cash reserves of 
approximately GBP4.5 million as well as the Dong Mao Huo gold project. The 
Directors intend to fast track Dong Mao Huo into production and have signed an 
agreement with a subsidiary of the CITIC-Anhua group to develop and contract 
mine the deposit. 
 
Related party transaction 
 
The Directors, having consulted with Hanson Westhouse Limited, the Company's Nominated 
Adviser, consider the terms to be fair and reasonable in so far as the 
Shareholders are concerned. 
 
For further information, please contact: 
 
Central China Goldfields plc               Hanson Westhouse Limited 
 
Dr. Jeffrey Malaihollo                     Tim Metcalfe / Martin Davison 
 
Tel: 020 7621 0200                         Tel: 020 7601 6100 
 
Email: info@ccgoldfields.com 
 
www.ccgoldfields.com                       Alexander David Securities Limited 
 
                                           Nick Bealer / David Scott 
 
                                           Tel: 020 7448 9820 
 
 
 
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