Gabe,
Here's the deal - again:
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SEPTEMBER 23, 1999
Birim Goldfields in Pact With Ashanti Goldfields
MONTREAL, QUEBEC--Birim Goldfields Inc. is pleased to announce
that it has entered into agreements with Ashanti Goldfields
Company Limited (ASL:NYSE; AHD.U:TSE) which will allow Birim's
Mampon gold deposit, located within the Dunkwa licenses in Ghana
to be brought into production, resulting in an important cash
infusion into Birim.
Under one agreement, Ashanti acquires a 100 percent interest in
the mineral rights in a 40 sq.km. area which includes all the
known mineralisation in the vicinity of the Mampon deposit. It is
the intention of Ashanti to transport the open-castable ore either
to their Obuasi operations or to the Ayanfuri mine some 25
kilometers to the west, which was scheduled for closure in the
first quarter of 2000.
Terms of this agreement include a cash payment to Birim of
US$500,000 as well as an advanced royalty. The former will be
paid to Birim upon signing a more formal agreement (2-3 weeks)
while the amount of the advanced royalty, paid prior to the
commencement of mining (expected to occur within the next six
months), will be based on the number of recoverable gold ounces as
defined in an upcoming feasibility study to be conducted by
Ashanti and audited by Birim. The royalty schedule for the heap leachable ore is as follows:
- US$20 per recoverable ounce of gold for the first 40,000 ounces;
- US$25 per recoverable ounce for the next 20,000 ounces;
- US$30 per recoverable ounce on production exceeding 60,000
ounces.
In addition, there is a corresponding sliding scale applied to
ounces recovered from the more refractory transitional and
sulphide material that ranges from US$10/ounce to US$15/ounce.
Further, in the event of an increase in the price of gold during
the mining phase, Birim will receive, for all recovered ounces, an
additional US$0.20 per ounce for each US$1.00 exceeding US$300 per
ounce up to a maximum gold price of US$350/ounce.
An independently calculated resource of 600,000 ounces of gold
already exists for the Mampon deposit. Management believes that
out of this indicated resource, approximately 175,000 recoverable
ounces, grading 5.0 g/t gold, can be extracted by means of an open
cast operation.
Under a parallel agreement, Ashanti has agreed, by means of a
private placement, to purchase US$500,000 of Birim treasury shares
at the price of C$0.30/share. As well, Birim shall issue to
Ashanti US$500,000 of convertible debentures. The debenture will
have a 3-year maturity, bear interest at a rate of LIBOR plus 1
percent, calculated on a semi-annual basis, and can be convertible
into Birim shares at a conversion rate of C$0.45/sh. Upon certain
conditions, the debentures may be redeemed by either Birim or the
debenture holder. Both these transactions will take place upon
signing of the same formal agreement as mentioned earlier. Total
cash injection at that moment, including the cash payment, will
therefore be US$1,500,000.
"Over the last six months we have been holding discussions with
front-line gold producers for the purpose of advancing to the next
stage some of our gold properties in Ghana", says Denis Simoneau,
President & CEO of Birim. "We are very happy to enter into this
deal since it provides us, in the short term, with an estimated
minimum US$4 million plus additional upside from our most advanced
project. At the same time", adds Simoneau, "we are confident that
possibilities exist for similar arrangements elsewhere on the
remaining 190 sq.km. Dunkwa property. This, along with our 7,000
sq.km. Bui concession to the north should prove to be the
underpinnings which will allow Birim to grow independently."
Completion of these agreements is subject to a number of
conditions, some of which are the approval from the Board of
Directors of both companies and approval from the appropriate
regulatory bodies.
Ashanti Goldfields Limited is a major gold producer with head
office in Accra, Ghana. It has a long history of gold production,
its mines in Ghana having been in operation since the turn of the
century. It is currently producing gold at an annual rate of 1.6
million ounces from operating mines in Ghana, Guinea and Zimbabwe.
The Geita Project in Tanzania, once in commercial production in
the third quarter of 2000, will add a further 400,000 ounces of
gold yearly.
Birim Goldfields Inc. is a mining exploration firm whose mission
is to explore and develop gold deposits in Ghana, West Africa.
The Company currently has 21.2 million common shares outstanding.
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Note that the next payment is to be for "heap leachable ore" An "advanced royalty, (is to be) paid prior to the commencement of mining (expected to occur within the next six months), will be based on the number of recoverable gold ounces as defined in an upcoming feasibility study to be conducted by Ashanti and audited by Birim."
There is also another 'royalty' clause in the terms of the agreement that deals with "more refractory transitional and sulphide material". That clause, however, would probably only click in after about three years of mining (50,000 oz/yr) and is based upon 'produced ounces'. BGI would be paid a range from US$10/ounce to US$15/ounce for mined ounces.
It is still possible that BGI could receive another payment from ASL in the not too distant future. Whether ASL survives or not is still a big question mark. I would think that, since ASL stock dominates the stock market in Ghana and the company is so important to the social and political fabric of Ghana, a way will be found by all parties concerned to ensure that the company survives.
If ASL were to fold, the bankers and 'partners', who are on the hook with ASL, will suddenly find themselves needing to come up with over 10 million ounces of gold on the open market with no ASL or other supplier able to provide that gold. Somehow, I don't think they want that to happen.
Brian |
