More to kolar,merger still on24 Mar 2016 23:01
RNS Number : 2895M
Kolar Gold Limited
15 July 2014
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KOLAR GOLD LIMITED
Update for shareholders and investors
Since its listing on AIM in June 2011, Kolar Gold's objective has been to become one of the leading participants in the developing Indian gold exploration and mining sector. Following the elections in India earlier this year, the Board of Kolar Gold believes that the environment for the Company's activities has improved and remains confident of progress in the future.
The Board reviewed its strategy in 2013, in light of the slow pace of progress with its gold licence and exploration activities, and revised its arrangements with its partner, Geomysore Services India Private Limited ("GMSI"), in order to focus on developing prioritised, later stage gold exploration and mining licences. At the same time measures were taken to reduce costs and preserve cash.
As part of this revised strategy, in August 2013 Kolar Gold entered into new arrangements with GMSI, which included further investment at that time and which included Nick Spencer joining the board of GMSI. In exchange for dissolving the 2011 agreements with GMSI, the cancellation of a loan of £300,000 to GMSI from Kolar Gold and the investment of £700,000, Kolar Gold gained a 30per cent shareholding in GMSI. This investment gave Kolar Gold direct exposure to GMSI's extensive portfolio of Indian gold licence rights and applications, including a new project at Jonnagiri that did not fall under Kolar Gold's initial 2011 agreements with GMSI. In October 2013, GMSI was granted a mining licence at Jonnagiri, the first such grant in India for gold since 2003. Jonnagiri has 720k ounces of JORC Resource and an exploration target of 2-5Moz, which was validated by a competent person's report conducted by Mining Associates. GMSI is now working on developing this resource. Kolar Gold has recently invested $100,000 into GMSI for ongoing expenses. GMSI continues to discuss its options with the Kolar Gold Board and third parties with regard to securing future financing however Kolar Gold has no obligation to make any further investment. Kolar Gold's holding in GMSI is currently 24.65 per cent.
In December 2013 Deccan Gold Mines ("DGM"), whose shares are listed on the Bombay Stock Exchange and which currently has a market capitalisation of $22m, announced that its board had, subject to relevant regulatory approvals and consents, given its in-principle approval for an amalgamation of DGM and Australia India Resources ("AIR") - the largest shareholder in GMSI. This merger is proposed under a court approved Scheme of Arrangement in Mumbai. DGM has a number of gold mining assets, key amongst them being the Ganajur Prospect Licence, which has 308k ounces of JORC Resource confirmed by SRK mining consultants and a final stage mining lease application pending. Upon completion of the proposed am