CGM.L Regulatory News (CGM)

7 Nov 2007 13:00

China Goldmines PLC07 November 2007 7 November 2007 China Goldmines plc ("China Goldmines" or the "Company") Transfer of mines at Guanzhuang Project complete China Goldmines plc (AIM: CGM), the gold resources company focussed on the discovery and development of gold projects in the Hunan Province of China, announces that it has successfully achieved a major milestone in the formal transfer of all eight producing Gold Mines in the Shenjiaya Prospect into the Company's possession and 100% control, with all mining permits and licences in place for it to be an immediate gold producer. The acquisition of the mines follows the placing of 25,025,416 new OrdinaryShares of 1p each at 120p per new Ordinary Share (the "Placing") which raised£30million before expenses for the Company and which was announced on 28September 2007 and approved at an Extraordinary General Meeting of the Companyon 22 October 2007. Following the completion of the Placing and the transfer of the mines, theCompany will, as outlined in the Circular to Shareholders dated 28 September2007, now undertake a three-stage programme for the development andconsolidation of the mines, which will proceed as follows: Stage 1: Consolidation and Refurbishment (2007 - 2009) In the first stage of development, the Company plans to: •Upgrade and modernise the underground conditions, equipment and practices at each of the mines. •Increase the underground workforce from 300 to over 750 by the start of 2010. •Increase the underground development from approximately 120 metres per month to over 3,000 metres per month during 2009. Stage 2: Infrastructure Development (2010) In the second stage of development, the Company plans to: •Improve the load and haul practices through mechanisation. •Make further enhancements to communications and ventilation. •Introduce more modern drilling equipment to increase productivity. •Construct a processing plant linked underground to all eight of the Gold Mines. It is the Directors expectation that they may require additional finance (which may be equity or debt) to complete the construction of the processing plant. Stage 3: Mechanised Mining (2011 onwards) In the final phase of development, the Company plans to: •Move to mechanised mining at the same time as continuing the level exploration along the strike length of the ore body and continued vertical development to explore and prepare deeper mining blocks. •Construct a vertical haulage shaft and locomotive haulage to underground crusher and loading stations. The consolidation of the Gold Mines over the course of 4 years is targeted toachieve approximately 100,000oz produced per year by the end of 2010 increasingto approximately 160,000oz per annum once the engineering development programmeis complete in 2011. On 24 July 2007 the Company announced the resource estimate on the GuanzhuangProject based on the findings of the Independent Geological Report. This included a JORC Code compliant Inferred Resource estimate of 5.1 million tonnes at 11 g/t gold containing 57,000 kg of gold equivalent to 1.8 million oz. Commenting on the transfer, Frank Vanspeybroeck (CEO), said:"China Goldmines has successfully achieved its short term strategy to be a gold producer by the acquisition of 8 producing Gold Mines. We now look forward to implementing our gold mining development strategy to improve the logistics of the mines. In order to do so, we plan to work together with the local communities and existing workforce at the mines, using our combined expertise to improve the mines and increase their production levels. "I would also like to welcome on board our new shareholders and thank both them and our existing shareholders for their support which is enabling the Company to deliver on its development strategy." Ends For additional information: China Goldmines plc Frank Vanspeybroeck (CEO) Mobile: +61 41 116 6276 Alec Worrall +44 207 788 7621 Marinko Vidovich (CFO) Mobile: +61 41 997 4744 Changsha Office +86 731 515 8211 Brewin Dolphin Limited +44 141 221 7733(Nominated Adviser) Alan Stewart (Corporate Finance) Parkgreen Communications +44 20 7851 7480 Justine Howarth Erica Nelson This information is provided by RNS The company news service from the London Stock Exchange