FOR FURTHER INFORMATION PLEASE CONTACT:
East Asia Gold Corp.
John B. Hite
President
(509) 467-5200
(509) 467-5045 (FAX)
THE CANADIAN DEALING NETWORK HAS NEITHER APPROVED NOR
DISAPPROVED
THE INFORMATION CONTAINED HEREIN.
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: EAST ASIA GOLD CORP.
11,519,971 Shares Issued
CANADIAN DEALING NETWORK SYMBOL: EAGC
NOVEMBER 2, 1998
East Asia Gold Corp. - Bonanza-Grade Copper-Cobalt Mine
in Africa
SPOKANE, WASHINGTON--
NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. NEWSWIRE
SERVICES
Following its earlier announcement about its right to earn a 55
percent interest in the Mukondo deposit; today EAST ASIA GOLD
CORP. (EAGCO) announces that it has signed a second Definitive
Agreement with LA GENERALE DES CARRIERES ET DES MINES (GECAMINES),
the state-owned mining corporation, and with COMIEX-Congo,
s.a.r.l. (COMIEX) a Congolese corporation. This second agreement
grants EAST ASIA GOLD CORP. (EAGCO) the right to earn a 55 percent
interest in the Luishia mine, a high grade copper-cobalt mine in
Katanga Province, Democratic Republic of the Congo. Cash flow
studies suggest that the Company's 55 percent interest in the
property will have a Net Present Value of $357,000,000.
GEOLOGY AND ORE RESERVES
Luishia was mined from 1913 to 1948 and the mine produced about
8.3 million tonnes at a grade of 7.26 percent copper. GECAMINES
reports a proven ore reserve of 6,900,000 tonnes grading 2.7
percent copper and a probable grade of 0.87 percent cobalt (many
of the older drill holes were not assayed for cobalt). The ore
deposit has an additional probable/possible reserve of 50,180,000
tonnes grading 2.09 percent copper and 0.10 percent cobalt. These
reserves are based on more than 400 drill holes.
The 6.9 million ton proven ore reserve is defined, in part, by
eight long trenches cut across the strike of the orebody. The
higher grade values from these trenches are summarized on the
following table.
/T/
TRENCH NO. WIDTH (M) COPPER (Percent) COBALT (Percent)
-----------------------------------------------------------------
T-1 49 2.05 0.50
-----------------------------------------------------------------
T-2 43 1.84 0.42
-----------------------------------------------------------------
T-3 125 1.65 0.73
-----------------------------------------------------------------
26 4.58 3.99
-----------------------------------------------------------------
T-4 116 3.03 2.05
-----------------------------------------------------------------
T-5 64 4.15 1.74
-----------------------------------------------------------------
T-6 49 1.91 0.29
-----------------------------------------------------------------
94 3.14 1.65
-----------------------------------------------------------------
14 3.95 0.06
-----------------------------------------------------------------
T-7 24 3.86 0.07
-----------------------------------------------------------------
T-8 106 2.62 0.29
-----------------------------------------------------------------
WEIGHTED
AVERAGES 65m 2.73 Percent 1.11 Percent
-----------------------------------------------------------------
/T/
In addition, two holes on the north end define a new target
dipping south. These two holes intercept, respectively, 20 metres
grading 5.73 percent copper and 32 metres grading 5.00 percent
copper. Similarly, four holes on the south end of the mine define
a dipping target with a weighted average of 44 metres grading 2.33
percent copper (cobalt was not assayed in these holes). These
drill holes indicate the excellent potential to expand the ore
reserves of this large deposit.
LOCATION AND ACCESS
The Luishia Mine is located 80 kilometres northwest of Lubumbashi,
the capital of Katanga Province. Lubumbashi is served by jet
aircraft from Kinshasa and Johannesburg, South Africa. The town
is also a rail hub with railway connections south to ports in
South Africa and east to the port of Dar es Salaam in Tanzania.
The infrastructure is excellent; the concession borders a well-
maintained paved highway leading to Lubumbashi. Hydroelectric
power lines and the main electric-powered railroad both cross the
concession and a power line leads to the main pit. Water, mill
sites and tailings disposal sites are all located on the
concession.
Not for Dissemination in the United States or to U.S. Newswire
Services. The Canadian Dealing Network has neither approved nor
disapproved the information contained herein.
TERMS
Under the terms of the Definitive Agreement EAGCO has agreed to
pay $7,400,000 over the next 18 months, provide a bankable
feasibility study within 30 months and provide the necessary
capital to place the mine in production to earn its 55 percent
interest. A final payment of $9,100,000 is due 60 days after
start of commercial production. The Company will be entitled to
preferential payback of all invested capital plus interest and
will be the mine operator. A small finder's fee is payable to a
third party for introducing the Company to this investment
opportunity.
ECONOMICS
The Company believes that the mine can be placed in production
initially as a vat leach or heap leach operation at a capital cost
of about $60,000,000 with later expansion to a larger mine and
mill complex to treat sulfide ores. Cash flow studies suggest
that the Company's 55 percent interest in the property will have a
Net Present Value of $357,000,000 based on an average copper price
of $0.80 per pound, an average cobalt price of $15 per pound, the
reserve figures provided by Gecamines, and a ten year mine life.
EAGCO has a report completed by an independent professional
engineer who has recommended a program of drilling and
metallurgical testing followed by a feasibility study. This study
is expected to require at least 24 months to complete and to cost
about $5 million. The Company expects to raise the necessary
funds to develop this project through an equity placement and a
joint venture.
This agreement has been ratified by the Board of Directors.
ON BEHALF OF THE BOARD OF DIRECTORS
"John B. Hite" (Signed)
John B. Hite, President
-30- |
