Rns...11 Feb 2010 08:16
Central China Goldfields plc ("the Company") Heads of Agreement signed with Auzex Resources Limited Option to Joint Venture Bullabulling Gold Property 11 February 2010 Central China Goldfields plc is pleased to announce that it has signed a Heads of Agreement with Auzex Resources Limited ("Auzex") (AZX.ASX) which provides an exclusive option to joint venture, with Auzex, the Bullabulling Gold Property in the Coolgardie Goldfield, Western Australia ("Bullabulling"). The terms of the signed Heads of Agreement are as follows: * The Company will subscribe for a A$1.5 million placement in Auzex at A$0.25 per share ("the Placement") for an exclusive option over the Bullabulling gold property until 7 April 2010. * Under the Placement, the Company will be issued with 1.5 million shares immediately and a convertible note with a face value of A$1.125m which will convert into 4.5 million Auzex shares at such time as Auzex obtains the requisite authority to issue such shares at a General Meeting of Auzex ("the Note"). Following completion of the Placement, and upon exercise of the Note, the Company will own 12.9 per cent. of Auzex's issued share capital. * Consideration for the Placement is to be satisfied by payment of A$500,000 in cash and the issuance of 14,044,944 shares in Central China Goldfields plc at 4 pence per share by the Company to Auzex. Application for the new shares to be admitted to AIM has been made and this is expected to occur on 17 February 2010 . Following the allotment of the new shares in the Company Auzex will hold approximately 7.1 per cent. of the Company's issued share capital. * Assuming completion of satisfactory due diligence, Central China Goldfields plc will pay A$2.5 million to Auzex to exercise the option at the end of or within the option period, to earn a 50% interest in the Bullabulling Property. * The A$ 2.5 million will be used at Bullabulling, in part, to replace the security bonds for the mining tenements (approximately A$ 1.25 million) and also to pay up to A$ 800,000 for existing building, plant and machinery at Bullabulling. * Upon exercise of the option, the development of Bullabulling will be governed by a Joint Venture Agreement between the Company and Auzex. It is envisaged that feasibility and development expenditure for Bullabulling, will be jointly funded on presentation of a budget. If either party should elect not to contribute, then they will be diluted on a straight line basis, using an initial valuation of A$5 million. * The majority owner of Bullabulling will manage the joint venture. In the event of 50:50 ownership and no clear majority, a management committee will be set up to represent the interests of both parties. Bullabulling Gold Property The Bullabulling project straddles the Great Eastern Highway, 70km south west of Kalgoorlie in Western Australia. The property consists of a sizeable land holding (60km2) consisting of a series of licences an