Mine Construction Agreement
24 June 2014
China Nonferrous Gold Limited
(“CNG” or the “Company”)
Mine Construction Agreement
China Nonferrous Gold Limited (AIM: CNG), the mineral exploration and development company currently developing the Pakrut gold project (the “Project”) in the Republic of Tajikistan (“Tajikistan”) announces that it has terminated the mine construction agreement (the “Construction Agreement”) with China No.15 Metallurgical Construction Group Co., Ltd (“15MCC”) and replaced it with a consultancy arrangement with 15MCC.
The rationale behind this change is that 15MCC was not able to obtain the relevant licences to perform the Construction Agreement for the construction of the underground mine in Tajikistan. Limited Liability Company Pakrut (“LLC Pakrut”), CNG’s wholly-owned subsidiary, however, does have the necessary licences to act as contractor to construct the mine. Therefore, under the consultancy agreement, 15MCC provides consultancy services to CNG which directs and supervises LLC Pakrut to construct the mine.
Terms of the Consultancy Agreement
The total estimated cost of mine construction under the Consultancy Agreement remains at approximately RMB256 million (US$40 million).
15MCC shall receive a fee under the Consultancy Agreement equal to the difference between the target costs of construction and the actual costs of construction.
Overall mine construction continues to progress according to plan. The main decline at the mine, including development and support, has achieved a depth of more than 1000 lineal metres from a planned total of 1,800 lineal metres, while construction of the west ventilation access decline will be completed soon, having reached 430 lineal metres from a planned total of 520 lineal metres. The exploration adit No. 1 has been widened and re-supported and has reached the ore body. Mine preparation is well underway and the Company expects to begin ore extraction in the fourth quarter of 2014.
Pursuant to the terms of an agency agreement entered into on 24 May 2012 between the Company and China Nonferrous Metals Int’l Mining Co., Ltd (“CNMIM”), the Company’s largest shareholder with approximately 38.44% of the issued share capital, CNMIM was appointed as the Company’s agent for the purposes of entering into certain agreements in connection with the development of the Project. Accordingly, following approval by the Company, CNMIM has entered into the Consultancy Agreement as agent for the Company.
Related Party Transaction
15MCC is an associate of CNMIM and, as a result, pursuant to AIM Rule 13, the entry into the Consultancy Agreement is deemed to be a related party transaction. The independent directors of the Company, namely Abuali Ismatov, Leonard Lee (Li Li), Wang Yubin and Che Pizhao consider, having consulted with the Company’s Nominated Adviser, Investec Bank plc, that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.
For further information please visit the Company’s website (www.cnfgold.com) or contact:
|China Nonferrous Gold Limited|
|David Tang, Managing Director|
|Tel: +86 10 8442 6681|
|Investec Bank Plc|
|Jeremy Ellis, George Price|
|Tel: +44 (0)20 7597 5970|
|Jon Belliss, Guy Peters|
|Tel: +44 (0)20 3693 1470|
|Paul Weigh, Tim Blythe, Halimah Hussain|
|Tel: +44 (0)20 7138 3204|
The Pakrut gold project, of which CNG has 100 per cent ownership, is situated in Tajikistan approximately 120km northeast of the capital city Dushanbe. Pakrut is located within the Tien Shan gold belt, which extends from Uzbekistan into Tajikistan, Kyrgyzstan and Western China, and which hosts a number of multi-million ounce gold deposits.
CNG is currently in a construction phase with mining contractors on site developing the underground mine and surface infrastructure.
Tajikistan is a secular republic located in Central Asia. The country is a member of the Commonwealth of Independent States and the Shanghai Cooperation Organisation. Tajikistan hosts numerous operating precious metal mines as well as the largest aluminium smelter in Central Asia. CNG's management team has extensive experience in the mining industry in Tajikistan.