Georgina Energy Regulatory News (GEX)

13 Feb 2006 09:43

Glencar Mining PLC13 February 2006 GLENCAR MINING PLC Glencar Signs Agreement with Gold Fields on Sankarani Project, Mali Glencar Mining plc ("Glencar" or "the Company") is pleased to announce theexecution of a legally binding, conditional agreement (the "Agreement") withOrogen Holdings BVI Limited, ("Gold Fields") a wholly owned subsidiary of GoldFields Limited relating to the Sankarani project in Mali, West Africa. Pursuantto the Agreement, Gold Fields must spend up to US$12 million in explorationexpenditures in order for it to earn a 65% interest in three of the fiveexploration licences in Glencar's Sankarani Project. Glencar's Sankarani Project consists of five exploration concessions at Bokoro,Sanioumale, Farasaba, Solona and Komana in southwestern Mali, totalling 1,250square kilometres in area. Under the terms of the Agreement, Gold Fields mayearn an interest in the Bokoro, Sanioumale and Farasaba concessions, (the"Property") by making exploration expenditures as follows: • Gold Fields will be entitled to earn a 25% right to the Property by incurring exploration expenditures of US$2.5 million by 31 December 2007, the Phase 1 Earn-in Period. • Gold Fields will be entitled to a 51% right to the Property by incurring exploration expenditures of US$4 million in aggregate by 31 December 2008, the Phase 2 Earn-in Period. • Gold Fields will then be entitled, but not required, to increase its stake in the Property by acquiring a further 14% interest, increasing its overall stake to 65%, by funding additional exploration if required and a Feasibility Study, prior to 30 June 2011, subject to a maximum additional expenditure of US$8 million (US$12 million in total) for such additional interest, the Phase 3 Earn-in Period. The Agreement also provides that, following completion of a positive feasibilitystudy, Glencar may require that Gold Fields provides Glencar's share of thesenior finance required to build a mine, in which case Glencar will transfer afurther 5% interest in the Property to Gold Fields. Gold Fields will have theright to recover any such finance provided on behalf of Glencar, from theproceeds of production at an interest rate of LIBOR plus 2%. The Agreement is subject to certain conditions precedent, such as MaliGovernment approval of the transfer of the three concessions to a new Maliancorporate entity to be owned jointly by Glencar and Gold Fields, following thecompletion of the Phase 1 Earn-in Period. The Agreement is also subject to theconclusion of a Shareholders Agreement between the relevant subsidiaries of GoldFields and Glencar. However, pending the satisfaction of the conditionsprecedent, anticipated to be before 30 June 2006, Gold Fields has agreed toimmediately commence exploration funding under the terms of the Agreement and itis expected that field work will commence within the next 10 days. Shouldcertain of the conditions precedent not be met by the due date and thoseconditions are not waived, then the Agreement falls away except that the fundsexpended by Gold Fields up to a maximum of US$1 million shall be repayable fromthe proceeds of production from any mine found on the Property, but shall not berepayable at all in the event that no commercial deposit is found on theProperty by Glencar or its subsidiary. The effect of this Agreement (if it becomes unconditional) is that should acommercial deposit be found within the Property, Glencar may retain a 15%interest in a producing mine, without having to raise further funding tocontribute to the capital cost of that mine or mines. In addition, shouldGlencar exercise the option which it has with Africa Resources s.a.r.l. and LaSociete Malienne de la Petite Mine d'Or s.a.r.l., the two Malian companies whichhold the concessions, Glencar may acquire the 5% interest in the Property heldby those companies for a total of US$1 million (on the basis that only one minewill be found within the Property as a whole), thereby bringing its carriedinterest in a mine to 20%. This Agreement does not affect the ownership of the Solona concession or theKomana concession, upon the latter of which Glencar has recently completed adrilling programme which encountered bonanza gold grades. Glencar will continueto work independently on these concessions which will now be referred tocollectively as the Yanfolila Project. The Bokoro, Sanioumale and Farasabaconcessions will now be referred to collectively as the Sankarani Project. TheAgreement anticipates that Gold Fields may be given first refusal on the Komanaconcession, should Glencar in the future wish to bring in a major to assist inthe further development of the Komana project. Glencar is very pleased to have concluded this agreement with Gold Fields, oneof the world's largest gold producers. The terms are favourable to Glencar,securing a substantial exploration expenditure on very prospective ground. TheGold Fields technical team is very strong and focussed, and will be a big assetto the aggressive exploration programme which is now about to commence on theSankarani Project. For further information, please contact: Glencar Mining plcHugh McCullough, Chief ExecutiveTel: +353 1 661 9974e-mail: info@glencarmining.ie Heneghan PRRachel WatchornTel: +353 1 6607395e-mail: rachel@hpr.ie 13 February 2006 This information is provided by RNS The company news service from the London Stock Exchange