Last checked at 15 Jun 2018 07:52
15 June 2018
China Nonferrous Gold Limited
(“CNG” or the “Company”)
Consultancy Contract for the Construction of Tailing Ponds
China Nonferrous Gold Limited 中国有色黄金有限公司 (AIM: CNG), the mineral exploration and mining company currently mining the Pakrut gold project in the Republic of Tajikistan, is pleased to announce that the Company has authorised its subsidiary, Kryso Resources Limited, to enter into a new supplementary consultancy contract for the construction of tailing ponds with China 15th Metallurgical Construction Group Co., Ltd (“15MCC”), the former contractor of the tailing-pond project, due to material changes to the planned flotation tailing ponds in the construction site. China Nonferrous Metals International Mining Co., Ltd (“CNMIM”) will no longer act as the agent for the Company regarding the contract.
As described in the "Award of Consultancy Contracts" announcement on 2 September 2014, CNMIM was authorised, while acting as agent for the Company, to enter into two consultancy contracts for the Company, one of which was for the construction of tailing ponds. It is no longer necessary for CNMIM to act as agent for CNG as Kryso Resources Limited is familiar with the contract and this simplification is expected to create cost and contract performance efficiencies.
A supplementary consultancy contract between Kryso Resources Limited and 15MCC has been entered into as the unit cost of construction in terms of material cost, equipment cost and employee salaries has significantly reduced in recent years. Thus, a supplementary contact has been signed, updated with the latest price and quantity of the construction for the tailing ponds.
The unit contract price in the supplementary contract is much lower than the original contract mainly due falling costs of labour, reducing from 230.48 RMB/day to 150 RMB/day, cement reducing from 1,404 RMB/tonne to 780RMB/tonne, sand reducing from 162RMB/m3 to 140RMB/m3, gravel reducing from 125RMB/m3 to 112RMB/m3, and steel bars reducing from 7,440RMB/ton to 7270.3RMB/ton. The Company estimates the total construction cost of the new contract to be approximately 103 RMB million (US$ 16.23 million) and the total consultancy fee is maintained as 17% of the construction cost (approximately 17.5 RMB million (US$ 2.76 million)).
Related Party Transaction
As 15MCC is an associate of CNMIM, a substantial shareholder in the Company and pursuant to AIM Rule 13, the entry into the supplementary consultancy contract is deemed to be a related party transaction. The Company’s board of directors (excluding Wu Xiang, Yu Lixian and Zhang Hao, who are appointees of CNMIM) consider, having consulted with CNG’s Nominated Adviser, Investec Bank plc, that the terms of the supplementary consultancy contract are fair and reasonable insofar as the shareholders of CNG are concerned.
For further information please visit the Company’s website (www.cnfgold.com) or contact:
China Nonferrous Gold Limited
Yu Lixian, Managing Director
Tel: +86 10 8442 6681
Investec Bank Plc
Jeremy Ellis, Alexander Ruffman
Tel: +44 (0)20 7597 5970
Blytheweigh
Tim Blythe, Camilla Horsfall
Tel: +44 (0)20 7138 3224
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