AGU Angus&Ross

    RNS Number : 2698L
  Angus & Ross PLC
  07 January 2009
   

    7th January 2009
    ANGUS & ROSS PLC
    ("A&R" or "the Company")
    AIM:   AGU.L



    A&R SIGNS CONTRACT WITH MRI TRADING AG ("MRI") FOR BLACK ANGEL CONCENTRATES OFF-TAKE AGREEMENT AND WORKING CAPITAL FINANCE


    Off-take Agreement
    A&R announces that it has today entered into a life of mine off-take agreement with MRI to sell its expected production of zinc and lead
concentrates from its Black Angel mine in Greenland. 

    The selling price will be based on the LME Settlement Price, as published in the Metal Bulletin, and adjusted for treatment charges,
with appropriate penalties and premiums.

    The market value of the concentrates is financed as they are produced, even though shipment may not be possible for several months due
to climatic conditions. 

    Ore Processing Developments
    A&R has been working with MRI for several months to improve the operational performance as set out in the Bankable Feasibility Study. To
this end a number of additional studies were undertaken by SGS Mineral Services and Wardrop Engineering to determine the most efficient way
for a concentrate to be produced on site at Maarmorilik. The outcome of this work is the design of a mill, to be built inside the mine,
using optical ore sorting to separate the ore from the host rock followed by conventional froth flotation to produce saleable Zinc and Lead
concentrates.

    This change to the operational plan increases the need for capital expenditure by approximately US$10m but significantly reduces the
operating cost, to the extent that it is now expected that, during Phase 1, the average production cost of a tonne of Zinc or Lead will
enable Black Angel to be a low quartile producer. 

    Financing Plan
    The Company is still in discussions with Cyrus Capital Partners Europe LLP (Cyrus) regarding a possible restructuring of the US$12.5m
loan and it is hoped that an announcement will be made shortly. Cyrus has indicated that it is supportive of the Company and its management
team's efforts and intentions to develop the Black Angel project and see the Company develop into a successful international mining
business.  

    Funding for capital expenditure and mine development costs is likely to be met by a mixture of bank based term loan and convertible loan
stock. 

    Future Prospects
    Once the project finance is fully available it will take approximately 18 months to build the mine and its processing plant and the
first shipment of concentrate could be achieved during 2011. 

    The Demand for Zinc
    During recent months many Zinc mines have been closed, placed on care and maintenance or significantly reduced their rate of production
and yet the LME spot price of the metal has continued to fall. Octagon Capital Corporation stated in December "..a careful analysis of the
fundamentals of the Zinc market leads us to believe that not only will demand continue to increase over the long term, due to China's
insatiable appetite for resources, but supply will fall far short of expectations in 2009, resulting in a Zinc deficit this year". This
leads Octagon to believe that zinc prices will increase progressively throughout 2009.   


    CEO Nicholas Hall commented -

     "The signing of this agreement with MRI is the first step towards the transformation of Angus & Ross into a fully operational mining
company. Our team has developed an operating plan which will make the Black Angel a low cost, high quality Zinc and Lead concentrate
producer.  

    MRI is the ideal trading partner for A&R as it is able to ensure that we achieve the premium value of the Black Angel concentrate; MRI
is also providing our working capital finance, through the pre-selling of concentrate, before shipment, at a very competitive interest rate.
The contract recognises the exceptionally high quality of the Black Angel concentrates such that a premium will be paid over and above the
publicly quoted benchmark Treatment Charge.

    The prospect of a firmer zinc market will be a considerable help in completing the funding package and the continued support of Cyrus
provides the Company with a firm base from which to develop the Black Angel. 

    We are starting the New Year with renewed enthusiasm" 



    About MRI
    MRI Trading AG is a top-tier trader of concentrates and other non-ferrous raw materials. It is part of the MRI Group of companies, a
leading investment and trading group in the commodities arena. The Group has a global presence through its offices in Beijing and Shanghai,
Santiago de Chile, Lubumbashi, Johannesburg, New Delhi and Brisbane.

    About Octagon
    Octagon Capital Corporation is a Toronto based investment bank.


 Enquiries:




 Angus & Ross plc                     
 Robin Andrews, Chairman             07802 484 975
 Nicholas Hall, Chief Executive      07931 709 053


                                      
 Fox-Davies Capital                  0207 936 5200
 Daniel Fox-Davies


  
 Bishopsgate Communications Limited
 Nick Rome
                                      
                                     0207 562 3366
  
 Teathers 
 Jeff Keating
 Sebastian Jones
                                      
                                     0207 426 9000

    NB: This release has been approved by the Company's technical staff in accordance with the recent Guidance Note for Mining, Oil and Gas
Companies issued by the London Stock Exchange in respect of AIM companies, which outlines standards of disclosure for mineral projects.




This information is provided by RNS
The company news service from the London Stock Exchange
 
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