This may explain a few things....
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Indochina Goldfields Ltd - News Release
Interest to be acquired in Bakyrchik gold mine
Indochina Goldfields Ltd ING
Shares issued 62,944,618 Dec 13 close $16.00
Mon 16 Dec 96 News Release
Mr R. Edward Flood and Mr Robert Friedland report
Indochina Goldfields has agreed to acquire a significant, direct stake in
the Bakyrchik gold mine in eastern Kazakstan as part of the first full
privatization of a major, government controlled gold mine in Central Asia.
The acquisition is being made possible by the decision of the government of
the Republic of Kazakstan to sell its 60% interest in the Bakyrchik mining
joint venture. As a result of the transaction, the Bakyrchik mining joint
venture will become the 100% owner of the entire mine complex, including
buildings, equipment, technical information and leasehold rights to the
mine property.
Indochina Goldfields, through a separate agreement, will purchase from
London based Bakyrchik Gold PLC a 15% direct interest in the joint venture
pursuant to completion of registration requirements in Kazakstan. Bakyrchik
Gold, which has owned 40% of the joint venture since 1992, will increase
its holding to 85%.
In October of this year, Indochina Goldfields acquired 26.3% of the
outstanding shares of Bakyrchik Gold, making it Bakyrchik's largest single
shareholder.
In the unlikely event that Bakyrchik Gold shareholders decline to support
the acquisition at an extraordinary general meeting, Indochina Goldfields
may, on its own account, assume Bakyrchik Gold's rights and obligations to
acquire the government's interest. However, Indochina Goldfields fully
supports the acquisition and will actively encourage other shareholders to
vote in favour of resolutions approving terms of the agreement.
The agreement announced December 16 1996 in Almaty, London and Vancouver
will give Singapore based Indochina Goldfields a combined direct and
indirect interest of approximately 37% in a resource of more than 10.5
million ounces of gold, with significant potential for expansion.
Key features of the agreement include:
The total consideration for the purchase of the government's interest in
the entire property complex is US$60 million, payable in four equal
installments over a 16 month period, plus a US$5 million signing payment.
Upon signing of the agreement on December 13, Indochina Goldfields paid the
government of Kazakstan the signing payment of US$5 million as well as the
initial installment. The remaining balance of US$45 million is the
responsibility of Bakyrchik Gold.
Indochina Goldfields has also agreed to provide Bakyrchik Gold with a 12
month working capital loan facility of US$20 million secured by part of
Bakyrchik's joint venture interest in the mine.
Key tax and commercial benefits provided in the original 1992 contract
between Bakyrchik Gold and the government of Kazakstan will be retained.
The privatization agreement adds valuable new elements, including the
unrestricted right for the joint venture to export refined gold and dore
bullion without having to go through the government auction. This is one of
the first agreements in the region permitting such rights.
Indochina Goldfields and Bakyrchik Gold will be responsible for pro rata
costs and will be entitled to receive revenue in proportion to their
participating interests. The Bakyrchik mine joint venture will pay the
government a royalty equal to 5% of net profits after its investment and
capital costs have been recovered from profits.
The joint venture will have the right to operate the mine in accordance
with international mining practices, until all reserves and resources are
exhausted.
Minproc Engineers, of Australia, is working to complete dual feasibility
studies into alternative initial production plans of both 250,000 ounces
and 100,000 ounces of gold a year. Results of the studies are expected by
the end of January 1997. Bakyrchik Gold believes that one of the two
options will be the first step in a multi-phased development that will lead
to a world class mining complex capable of producing at least 750,000
ounces a year.
Based on Soviet-era drilling data collected between 1954 and 1991, the gold
resource at the Bakyrchik mine has been estimated at more than 10.5 million
ounces. A recently completed, 29,000 metre confirmatory drilling program
showed that, in areas tested, the results obtained from the Soviet data
understate the contained gold by at least 8%.
An independent estimate by a major South African company has suggested that
there could be nearly 50 million ounces of gold just in the central zone of
the overall Bakyrchik complex.
(c) Copyright 1996 Canjex Publishing Ltd. canada-stockwatch.com |
