Canal+ Regulatory News (CAN)

23 Aug 2006 07:01

Central African Gold PLC23 August 2006 Central African Gold Plc / Ticker: CAN / Index: AIM / Sector: Mining & Exploration 23 August 2006 Central African Gold Plc ("CAG" or "the Company") Proposed purchase of Bibiani gold mine in Ghana from AngloGold Ashanti Limited ("AngloGold Ashanti") Central African Gold Plc, the AIM listed gold mining and exploration company, ispleased to announce, further to its announcement dated 27 July 2006, that it hasentered into a conditional agreement to purchase the Bibiani gold mine andBibiani North Prospecting Licence ("Prospecting Licence") in Ghana fromAngloGold Ashanti for an aggregate cash consideration of US$40 million ("theAcquisition"). Extension of the Prospecting Licence is currently under review bythe Ghana Minerals Commission. The consideration payable for the Acquisitioncomprises US$40 million on completion with US$4 million repayable to the Companyin the event extension of the Prospecting Licence is not granted. The Acquisition represents the first stage in fulfilling CAG's strategy ofeffectively identifying and acquiring gold projects in order to achieve theCompany's objective of becoming a focussed gold production company with a worldclass exploration portfolio. The Bibiani mine, located 250km north west of Accra, is situated in theSefwi-Bibiani Greenstone Belt. This belt is one of the most prospective inGhana, and also hosts Newmont's Ahafo (circa 16 million oz resource) andRedback's Chirano (circa 2.3 million oz resource) operations (Source: MetalsEconomic Group, 2006). Since its discovery in 1902, Bibiani has yieldedapproximately 4 million oz of gold from both underground and open pit miningoperations. The 2.7 million ton per annum processing facility was commissionedin 1997, and in the opinion of the directors has been well-maintained. CAG's objective is to increase Bibiani's resource base from its stated inventoryof gold as at 31 December 2005 of 100,000 ounces of ore reserve and 900,000ounces of mineral resource (JORC compliant) as stated in AngloGold Ashanti'saudited 2005 accounts and achieve immediate gold production from the continuedprocessing of tailings. The Company intends to commence underground productionin the second half of 2007. CAG's team of experienced mining professionals willutilise their expertise and techniques to achieve the Company's objectives ofincreasing production and the resource base from both the current mining leaseand Bibiani North, the above mentioned Prospecting License covering an area of19.3 km2. The Acquisition constitutes a reverse takeover for the Company and isconditional, inter alia, on a fundraising by the Company, obtaining Ghanaiangovernment and Minerals Commission approval and approval by the Company'sshareholders at an extraordinary general meeting ("Shareholder Approval"). Onexecution of the agreement, the Company paid a deposit of US$1 million into anescrow account ("Deposit"). The Deposit will be applied towards satisfaction ofthe consideration for the Acquisition and, should the transaction not complete,is fully refundable to the Company, save where it does not proceed due tofailure to obtain Shareholder Approval . Full details relating to the Acquisition and associated fundraising, includingan independent competent person's report and notice of extraordinary generalmeeting, will be set out in a circular to shareholders which will be publishedas soon as practicable. Until such time, trading in the Company's shares willremain suspended. CAG's CEO, Greg Hunter, commented: "We have an excellent team in place toachieve our objective of increasing production and unlocking resource conversionto reserves using our advanced technology, data integration and modelling, tobegin a new chapter in Bibiani's history. I am confident that we will be able togrow the production and earnings potential quickly and efficiently." * * ENDS * * For further information please visit the Company website on www.centralafricangold.com or contact: Greg Hunter Central African Gold Tel: +27 (0)82 882 4222Hugo de Salis St Brides Media & Finance Ltd Tel: +44 (0)20 7242 4477Simon Raggett Strand Partners Limited Tel: +44 (0)20 7409 3494 This information is provided by RNS The company news service from the London Stock Exchange