09/29 Indochina Goldfields Completes Ownership Restructuring Of Bakyrchik Gold
Mine In Kazakhstan, Expanding Interest To 86 Percent
SINGAPORE, Sept. 29 /CNW/ - R. Edward Flood, President, and Robert M.
Friedland, Chairman, announced today that Indochina Goldfields Ltd. has
completed the ownership restructuring of the Bakyrchik gold mine project in
northeast Kazakhstan, expanding its direct operating interest in the project
to 80 percent. The independent shareholders of London-based Bakyrchik Gold PLC
ratified the ownership change at an extraordinary general meeting held earlier
today. The plan to restructure the company was approved by 86 percent of the
votes cast by the independent shareholders.
``This acquisition represents a cornerstone transaction for Indochina
Goldfields in the development of the company as a major long-term producer of
gold, as well as copper, in the Asian mining arena,'' Mr. Friedland said.
Indochina Goldfields paid US$65 million to expand from its original 15
percent interest in the Bakyrchik gold mine to a direct 80 percent operating
interest. The total consideration includes US$15 million, for repayment of the
portion of a bridge loan used to pay the second of four mine-purchase
installments to the Government of Kazakhstan. Indochina Goldfields also
assumed an obligation of US$30 million to make the two final project purchase
installment payments to the government. The remaining US$20 million
consideration represents the extinguishment of a working capital loan facility
from Indochina Goldfields to Bakyrchik Gold which will leave Bakyrchik Gold
debt-free, and with approximately US$4.5 million working capital for general
corporate purposes.
Indochina Goldfields continues to hold approximately 28 percent of the
outstanding common shares of Bakyrchik Gold PLC, which now holds 20 percent of
the Bakyrchik gold mine project. This holding constitutes an additional
indirect six percent interest in the project for Indochina Goldfields.
``Indochina Goldfields will now hold the controlling interest in one of the
largest undeveloped gold projects in the world,'' Mr. Flood said. ``As
operator, Indochina Goldfields will take steps to develop the Bakyrchik
complex in a timely manner, in a series of three carefully engineered, phased
expansions.''
The measured, indicated and inferred resource of the project, which remains
open-ended, has been estimated to total approximately 13 million ounces of
gold. The resource consists of 10.5 million ounces within the definitive
feasibility study (DFS) area as calculated by Minproc Engineers Limited of
Perth, Australia, and an additional 2.5 million ounces outside the DFS area
calculated by Western Services Engineering of San Ramon, California.
Kvaerner Metals of Toronto, Canada, has been retained to complete a detailed
engineering evaluation and optimized production plan. Production options being
evaluated by Kvaerner Metals include a Phase I production-mining rate of
approximately 500,000 tonnes of ore annually, to yield approximately 125,000
ounces of gold. Phase II expansion mining will increase the mining rate to
approximately one million tonnes of ore annually to yield approximately
275,000 ounces of gold. Phase III expansion to produce over 600,000 ounces per
year is currently in the pre-feasibility study stage at Kvaerner Metals.
Indochina Goldfields expects to release the final results of the 500,000
tonne per year Phase I study in the fourth quarter of this year. The company
is proceeding immediately with a program of underground mine development and
construction for Phase I.
Indochina Goldfields recently completed the purchase, for its own account,
of a one-million-ounce gold hedge facility over a ten-year period guaranteeing
a floor price at an average of US$362.50 per ounce of gold.
``The revised production plan provides attractive financial results even at
today's gold prices,'' Mr. Flood said. ``And, in order to maximize the value
of the Bakyrchik deposit for Indochina Goldfields' shareholders, the company
will implement significant operational and process improvements combined with
a selling price floor to protect against further declines in the price of
gold.''
Indochina Goldfields' other assets include gold and copper properties and
other interests in Indonesia, Myanmar, South Korea, Vietnam and Fiji.
Indochina Goldfields Ltd. shares trade on the Toronto Stock Exchange and the
Australian Stock Exchange under the symbol ING.
Information about Indochina Goldfields and its projects is available on the
company's Web site, goldfields.com.
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