Acquisition
April 07 2009 - 3:48AM
UK Regulatory
TIDMAGU
RNS Number : 2544Q
Angus & Ross PLC
07 April 2009
ANGUS & ROSS plc
("A&R" or "the Company")
AIM: AGU.L
Conditional acquisition of the Nalunaq gold mine in Greenland
A&R has agreed non legally binding heads of terms to acquire Nalunaq Gold Mine
A/S ("NGM") from Crew Gold Corporation ("Crew") together with the debt due from
NGM to Crew for a total consideration of US$1.5 million cash. Completion is
subject to the provision of finance and is expected to take place before the end
of April 2009.
Crew has operated the Nalunaq gold mine from mid-2004 to the end of 2008. Over
the period, it produced approximately 308,000 ounces of gold.
NGM's assets include mining and exploration licences, mining equipment, a fully
operational mine camp and ship loading harbour facilities located close to the
town of Nanortalik at the southern tip of Greenland. NGM has a fully paid
environmental bond of 16 million Danish Kroner (DKK) (approximately US$2.87
million), which is expected to be sufficient for all mine closure liabilities.
As at the effective date of the transaction, other than the mine closure
obligations and the debt due to Crew, NGM will not have any other debt or
trading liabilities.
Crew has previously completed more than 19,000 metres of tunnelling and over
30,000 metres of diamond drilling.
A&R is planning to submit revised mining and environmental plans to the Bureau
of Mines and Petroleum in Greenland as soon as possible and to restart mine
production in Q3 2009. The target annual production rate will be approximately
35,000 ounces of gold per annum.
A&R believes that it can operate the mine profitably by adopting a mining method
that will enable it to employ predominately local labour and by producing a
concentrate on site. Approximately 75% of the gold mineralisation at the Nalunaq
gold mine occurs as "free" gold. Initially, A&R will produce a high grade
(target grade of 20 grams Au per tonne) gold concentrate through screening and
simple gravity separation. The concentrate will be shipped to a remote mill for
processing into doré bars which will then be refined and sold as gold.
Within the first two years of operation, A&R intends to construct a process mill
and gold plant on site which will eliminate the costs of concentrate shipping
and external processing.
Preliminary life of mine plans completed by A&R indicate that a further 350,000
ounces of gold can be recovered from the Nalunaq gold mine during a remaining 10
year mine life.
Total capital expenditure anticipated in the first year of operations is $7.9
million, including estimated pre-production costs of $2.4 million. Preliminary
estimates by A&R suggest that total achievable cash costs of production will be
approximately US$600 per ounce and this figure should reduce when the ore can be
fully processed on site.
The finance for NGM will be partly through an equity placing supported by a gold
loan, the details of which have not yet been finalised.
At present, the Nalunaq gold mine is closed and is being run on a care and
maintenance basis. For the 12 months to 31 December, 2007, NGM recorded a loss
before tax of approximately DKK95 million (approximately US$17 million). As at
31 December, 2007, NGM had assets of approximately DKK316m (approximately US$57
million) and liabilities of approximately DKK568m (approximately US$101 million)
1. The value of NGM's assets in Crew's consolidated accounts to 31 December,
2008, has been written down to nil.
A further announcement will be made on completion of the acquisition.
CEO Nicholas Hall commented -
"The opportunity to acquire the Nalunaq gold mine represents an excellent
opportunity for A&R to establish near term positive cash flow.
Crew experienced trading losses during part of its period of operations but the
revised mining plan and on site processing will materially reduce the cost base
to the point that operating profits can be expected from the very start for A&R.
Our methodology and forecasts are currently being reviewed by an independent
mining consultant.
Anticipated production from Nalunaq this year will complement the continued
development of the Black Angel lead and zinc mine, where production is forecast
to commence in late 2010.
The acquisition is a major step in the transformation of the Company from being
a pure exploration business into an international mining company with high grade
mining activities in Greenland.
Our team is expanding and I look forward to announcing further transitional
steps in the near future."
1 Currency conversions have been calculated using the current exchange rate of
approximately US$0.1794 to 1DKK.
+----------------------------------------------------------+---------------------------+
| Enquiries: | |
| Angus & Ross | 07931 709 053 |
| plc | |
| Nicholas | 0207 936 5200 |
| Hall, Chief | |
| Executive | 0207 562 3366 |
| | |
| Fox-Davies | 0161 832 2174 |
| Capital | |
| Jason | |
| Bahnsen | |
| | |
| Bishopsgate | |
| Communications | |
| Limited | |
| Nick Rome | |
| | |
| WH Ireland | |
| Limited | |
| David Youngman | |
| Adrian Kirk | |
+----------------------------------------------------------+---------------------------+
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
END
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