06 May 2004 11:01
Michelago to become major gold producer in China
MELBOURNE, May 6 AAP - Australian gold explorer Michelago Ltd will be among the major foreign gold producers
operating in China after getting the go-ahead to acquire the BioGold facility in Shandong Province on the country's
eastern seaboard. Shareholders have approved the acquisition of an 82 per cent stake in the plant which is scheduled to
produce more than 280,000 ounces of gold this year The acquisition will generate Michelago's maiden production
revenue, with first entitlements expected in the September 2004 quarter. Subject to remaining approvals from Chinese
authorities, Michelago will join Australian resources group Sino Gold as the only Australian and international company
to have reached producer status in China's deregulating gold sector. Shares in the Sydney-based company lifted one
cent to 10 cents by 1055 AEST today. "The shareholder support will allow Michelago to move forward with its
strategy of becoming one of the largest gold producers operating in China," Michelago managing director Peter
Secker said today. "The acquisition will deliver Michelago's first cash flows from next quarter, providing
opportunity to further grow the BioGold facility and the Company's other projects in China." The acquisition
will be funded from a combination of existing cash reserves, the exercise of existing share options and a proposed debt
facility and a proposed share placement to the Canadian-based Bactech Corporation. Bactech is a joint developer of the
BACOX bioleaching process used in the BioGold plant. Michelago's future operations in China were expected to be
fully funded out of the profits to be generated by the BioGold facility. The acquisition also entitles Michelago to the
exclusive licence for BACOX for up to 10 years in China, Mongolia, Siberia and Korea. The BioGold assets are being
acquired from Shandong Tarzan BioGold Co Ltd. and include a Bactech bacterial oxidation processing plant, gold smelter
and a 51 per cent interest in a gold refinery. Mr Secker said Michelago would initially buy in concentrates to process
through the Shandong plant as a large number of the country's small-scale mining operations required downstream
processing. Michelago is targeting production of 287,000 ounces in 2004 from the BioGold plant, building to 322,000
ounces by 2006. All gold production will be sold to the Shanghai Gold Exchange. Michelago's 18 per cent partner in
the BioGold venture, the Laizhou Gold Group, said in Sydney today that the sale to Michelago showed China "was
certainly open for business". "There will be a strong continuation of the current de-regulation of
China's resources and mining industry," Laizhou Gold Group chairman Angkang Zhang said. As well as the BioGold
operation, Michelago has three other regional gold projects in China including the an interest in the Jinya Gold Project
in the Guangxi Province in southeast China; a letter of intent allowing the company to earn a 51 per cent interest in
any gold resources below 500m in a 45 square kilometre patch of the Shandong Peninsula in eastern China and the ability
to earn 100 per cent interest in an exploration project in the Xinjiang Province in China's far west. AAPe
[AAP News] |
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