Last checked at 24 Aug 2012 11:20
Kryso Resources Plc
("Kryso" or the "Company")
MINE CONSTRUCTION AGREEMENT AWARDED
Mine Construction Agreement
Kryso Resources Plc (AIM: KYS), the mineral exploration and development company developing the Pakrut Gold Project (the "Project") in Tajikistan, is pleased to announce that it has awarded China No.15 Metallurgical Construction Group Co., Ltd ("15th MCC") a RMB256 million (US$40 million) contract for construction of the underground mine (the "Construction Agreement").
Established in 1953, 15th MCC has over 20,000 employees and has built a significant number of medium and large sized mining projects. They have also built power stations, cement production lines and highways.
15th MCC were awarded the contract following a competitive tender process undertaken by Kryso with multiple proposals. Factors taken into account in awarding the contract to 15th MCC included their significant experience in similar projects and the speed with which they anticipate completing the construction work.
The works to be undertaken by 15th MCC pursuant to the Construction Agreement will comprise construction of the main ramp, mining area ramp, east air shaft, west air shaft, level and sublevel development works, chambers, ore pass, exploration works, mining and cutting works, installation of equipment for the mine, construction of a flood discharge tunnel for the tailings dam and ancillary works.
Terms of the Agreement
The total bid price for the development was RMB256 million (US$40 million), inclusive of a contingency of RMB28 million (US$4 million) that shall only be paid where 15th MCC has demonstrated an additional entitlement as prescribed under the terms of the contract. The Company expect to publish a revised feasibility study updating both capital and operating expenditure requirements in the near future.
Works are due to commence in September 2012 and completion is scheduled for March 2014, with production to commence immediately thereafter.
Pursuant to the terms of an agency agreement entered into on 24 May 2012 between the Company and China Nonferrous Metals Int'l Mining Co., Ltd. ("CNMIM"), the Company's largest shareholder with approximately 25.5% of the issued share capital, CNMIM was appointed as the Company's agent for the purposes of entering into certain agreements in connection with the development of the Project. Accordingly, following approval by the Company, CNMIM has entered into an agreement as agent for the Company and Limited Liability Company Pakrut (the Company's indirect wholly-owned subsidiary) appointing 15th MCC to carry out the construction of the underground mine development for Pakrut.
Kryso's Managing Director, Craig Brown, commented:
"Having secured the debt financing for the Project last quarter, we are now able to enter into the key construction contracts, such as this underground mine construction contract, to take the Company forward to gold production. The mine construction is the longest duration item of capital expenditure, and we expect to be able to announce the other key construction contracts relating to power lines, processing facilities and the tailings dam shortly".
Related Party Transaction
15th MCC is an associate of CNMIM, and as a result, pursuant to AIM Rule 13, the entry into the Construction Agreement by CNMIM as agent of the Company is deemed to be a related party transaction. The Independent Directors of the Company namely Craig Brown, Abuali Ismatov and Leonard Li consider, having consulted with Kryso's Nominated Adviser, Investec Bank Plc, that the terms of the transaction are fair and reasonable insofar as the shareholders of Kryso are concerned. Furthermore the entire Board concluded that the award of the contract to 15th MCC was in the best interests of the Company prior to making the award.
For further information please visit the Company's website (www.kryso.com) or contact:
Kryso Resources Plc
Craig Brown, Managing Director
Tel: +44 (0) 20 7349 9160
Investec Bank Plc
Jeremy Ellis, Chris Sim, Neil Elliot
Tel: +44 (0)20 7597 5970
XCAP Securities Plc
Jon Belliss
Tel: +44 (0) 207 101 7070
Walbrook PR
Paul Cornelius
Tel: +44 (0)20 7933 8780
About the Pakrut Gold Project
The Pakrut Gold Project, of which Kryso has 100% ownership, is situated in Tajikistan approximately 112km northeast of the capital city Dushanbe. The Pakrut Gold Project has estimated total JORC compliant resources of 5,020,000 oz Au (assuming a cut-off grade of 0.5 g/t Au) and is located within the Tien Shan gold belt, which extends from Uzbekistan into Tajikistan, Kyrgyzstan and western China, and hosts a number of multi-million ounce gold deposits.
About Tajikistan
Tajikistan is a secular republic located in Central Asia. The country is a member of the Commonwealth of Independent States and the Shanghai Cooperation Organisation. Tajikistan hosts numerous operating precious metal mines as well as the largest aluminium smelter in Central Asia. Kryso's management team has extensive experience in the mining industry in Tajikistan.
Copyright Business Wire 2012