MEDIA
RELEASE
8
NOVEMBER 2007
MONARCH ACQUIRES HILL 50 GOLD
Monarch Gold Mining Company (ASX /
DIFX:MON) has boosted its golden footprint with the $65 million acquisition of
the Mount Magnet Gold Operations project which includes the historic Hill 50
mine.
Monarch has acquired the project from
South African based Harmony Gold Mining Company (JSE/HAR), and includes the
Hill 50, Great Fingall, St George, Star and Big Bell mines.
Consideration for the acquisition is
$65 million which is made up of cash, equity and convertible notes.
The asset package comprises a resource
inventory of 2.7M ounces of gold, tenements covering approximately 1,100 square
kilometres, along with a 2.7mtpa capacity plant.
The resource inventory of 2.7m ounces
of gold are comprised as Measured Resource 1.1 million tonnes @ 3.1 g/t Au for
0.1 million ozs, Indicated Resource 16.0 million tonnes @ 3.4 g/t Au for 1.7 million ozs and Inferred
Resource 9.0 million tonnes @ 3.0 g/t Au for 0.9 million ozs.
Monarch Chairman Michael Kiernan said
the acquisition was a defining step for the Company and its shareholders.
“This is a world class mining
project, with one of the largest landholding packages in the area,” Mr
Kiernan said.
“This is a significant step
toward achieving our goal of becoming a 500,000 ounce per annum gold producer
by 2009, and this project will provide a substantial contribution to profit for
Monarch shareholders,” Mr Kiernan said.
The acquisition will complement
Monarch’s current projects in the WA Goldfields region, where it is the
largest independent landholder. Following the acquisition, Monarch will have
total JORC compliant resources of 5.0m ounces.
“Monarch now has two world
class gold mining projects – Davyhurst/Mt Ida and Hill 50 – and
with the gold price now surpassing US$800 per ounce, we are well positioned to
capitalise on the potential of these historic projects,” Mr Kiernan said.
Harmony’s acting Chief
Executive Graham Briggs said the company had divested the project as part of a
global corporate reorganisation
of its assets.
“Harmony views Monarch as being
the best-placed gold mining company to drive this project forward, and with a
significant equity interest in the development of the project, we have
confidence that there is long term value in the project under the Monarch
umbrella,” he said.
Mr Kiernan said Monarch intended to
put the Hill 50 mine on care-and-maintenance for up to two years, while it
focussed on exploration activities across landholdings.
Monarch will launch a substantial
drilling program on the landholding to extend the current 2.7 million ounce
gold resource base.
“We will allocate $10 million
per year for the next two years into exploration on the extensive Mt Magnet
tenements, with a dedicated explorative team to review and re-optimise existing
resources,” he said.
Mr Kiernan said
the Company aimed to recommence mining within 18 – 24 months, and had an
initial production target of 150,000 ounces per annum.
The acquisition would be partly
funded through capital raised in Monarch’s listing on the Toronto Stock
Exchange (TSX) in early 2008. In preparation for the TSX listing, Monarch will
consolidate its capital on a one-for-three basis.
Terms
Total consideration for the acquisition is A$65 million, including:
• Cash
A$30 million
• Monarch shares (issued at 7 day VWAP) A$20 million
• Convertible note A$15
million
o
3 yr term
o
5% per annum interest
o
30% premium for
conversion to issue price
o
Secured by the asset
A$5 million deposit on signing of contract with Harmony (50%
non-refundable).
The Monarch shares to be issued will be subject to shareholder
approval.
For further information, please contact:
Michael Kiernan Warrick Hazeldine
Chairman - Monarch Gold Purple
Communications
Tel: 08 9481 6422 Tel:
+61 (0)8 9485 1254
Mob:
0417 944 616
Background
The Company has a resource base of
more than 5.0 million ounces, three state-of-the-art gold treatment plants, and
has dominant ground positions in the prolific gold mining region to the
north-west of Kalgoorlie.
Monarch now has the largest
Australian-controlled ground position in the Kalgoorlie
region, and an expanded footprint in the Mount Magnet
region.
Monarch remains firmly on track with
its production targets, with mining commenced at the Davyhurst and Mt Ida
projects. Monarch’s production at Davyhurst has an average head grade of
5.3g/t Au.
Growth Strategy
Monarch’s growth strategy is
focused on four potential production centres in Western Australia:
Davyhurst - gold resources of 1.5M ozs within a
2,000 sq km tenement package and 1.2mtpa gold processing facility (+1.2Moz
historic production)
Riverina Project - indicated and inferred gold resources
totalling 1.64 million tonnes @ 3.8 g/t Au for 200,000oz.
Mt Ida - resources are stated as 143,000t at
24.0 g/t containing 110,650oz of gold within four areas - the Baldock, Whinnen,
Meteor and Timoni deposits. Monarch commenced mining gold in July 2007.
Minjar - gold resources of over 400,000oz within
a 1,722 sq km tenement package and 600,000tpa gold processing facility
(+120,000oz historic production)
Bellevue - gold resources of 120,000oz associated
with the historic Bellevue Gold Mine, one of WA’s premier gold operations
(750,000oz historic production)
Mt Magnet – gold resources of 2.7M ounces, ground package
of 330 tenements covering approximately 1,100 square kilometres. A 2.7mtpa
capacity gold processing facility.
Monarch’s strategy has been to
capture opportunities for the consolidation of gold development assets which
have not in the past realised their full potential, either due to a lack of
capital or to limited exploration.
Monarch is focused on gold
production, with a target to be producing 500,000oz per annum by December 2009.
For further information visit: www.monarchgold.com.au
This report is based on information compiled by John
Davis, who is a Member of the Australian Institute of Mining and Metallurgy and
the Australian Institute of Geoscientist. Mr Davis has sufficient experience
which is relevant to the style of the mineralisation and type of deposit under
consideration and to the activity which he is undertaking, to quality as a
Competent Persons as defined in the 2004 Edition of the Australasian Code for
Reporting for Exploration Results, Minerals Resources and Ore Reserves. Mr
Davis is a full time employee of the Company. This report accurately reflects
the information complied by Mr Davis. Mr Davis has consented to the inclusion
of this information in the form and context in which is appears in this report.
***
The new
Spam Act commenced on 10 April 2004. This Act is aimed at reducing the amount
of unauthorised emails you receive. You have been receiving e-mails
containing information and news releases from us on behalf of our clients
because you are an important contact of Purple Communications, a boutique
stakeholder communications consultancy. If you do not wish to
receive such emails from Purple, please click mailto: purple@purplecom.com.au
subject=UNSUBSCRIBE or reply to this email and put UNSUBSCRIBE in the subject
line and we will not email you again.
If
you do not reply, we will continue sending you relevant news and information
via email. However, all future emails will allow you to unsubscribe.
Issued by
Purple Communications
Level 3, 28
Kings Park Road, WEST PERTH WA 6005
Ph: 08 9485 1254 Fax: 08
6263 0455
purple@purplecom.com.au