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Wits Basin Provides Update on China Global
Mining Resources
Monday July 23, 7:23 am ET
MINNEAPOLIS--(BUSINESS WIRE)--Wits Basin
Precious Minerals Inc. (OTCBB:WITM)
which has the option to purchase China
Global Mining Resources ("CGMR") is pleased
to provide this update. CGMR is a British
Virgin Islands corporation which has the
right under certain agreements to acquire
varying interests in gold, nickel and iron
ore mining properties in the People's
Republic of China ("PRC").
To date, Wits Basin has provided CGMR
capital in the form of loans in excess of
US$8 million to secure rights to develop
four various properties in the PRC. The
option exercise requires a nominal equity
payment.
The capital to procure these development
rights was provided by China Gold, LLC of
Kansas City, Kansas pursuant to the
Company's existing line of credit with such
firm. The remaining $15 million on the line
of credit is subject to approval by both
lender and borrower prior to drawdown. The
terms of this loan provide that any
outstanding balance immediately prior to the
completion of the merger with Easyknit
Enterprise Holdings Limited (SEHK: 616),
will automatically convert into the
Company's common stock at $1 per share.
The long term financing for these projects
is believed by the Company to be available
subject to the completion and satisfaction
of all necessary and required due diligence
and execution of final documentation. This
due diligence includes but is not limited to
approvals by the local, and in some cases,
Central Government of the PRC as well as
verification of rightful land position,
permits and environmental compliance. This
due diligence requires verification to the
satisfaction of all governing authorities in
addition to local governments and the
Central Government, such as stock and
various other regulatory authorities. The
current environment in PRC to foreign
investments is a favorable climate and the
Company believes approvals will be granted
for either joint ventures or wholly owned
acquisitions. The process for both financing
and Government approvals are closely tied
together. All financings will require final
and complete due diligence and all
Governmental approvals will require complete
financing. This means the time line for
closings will likely involve several steps
of final third party reports and review then
followed by final Governmental submissions.
It is likely to take 30 days or longer to
finalize all outside due diligence and an
additional similar time frame for
Governmental consents.
The Company has explored several methods of
financing these properties including the
formation of joint ventures, direct stock
sale and stand-alone investments with IPO
targets. These various financing options
have resulted in several non-binding term
sheets as well as expressions of interest to
proceed. Any financing or other ownership
structure will require the consent of
Easyknit, which consent can not be
unreasonably withheld.
Summary of
Properties
CGMR has secured rights to
develop or control the following properties
in the PRC:
1. The iron ore property located in Maanshan,
known as Nanjing Sudan Mining Co., Ltd. and
assets from both of Maanshan Zhao Yuan
Mining Co., Ltd. and Xiao Anshan Mining Co.,
Ltd.
2. An Iron Deposit at Lao Wan in the Hubei
Province, known as the Yun County Changjiang
Mining Company Limited.
3. A nickel mine, known as the Sino-American
Hua Ze Nickel & Cobalt Metal Co., Ltd.
4. The Taizhou Gold Mine in Xian, Shaanxi
Province, currently generating a positive
cash flow.
About the
Maanshan Iron Ore Properties
The principal business of
Maanshan Mining is the mining, processing
and selling of iron ore and concentrates.
The Xiao Anshan iron ore mine is located in
Maanshan in the Anhui province. Maanshan
Mining is comprised of two operating iron
ore mines: 1) The Xiao Nan Shan Iron
Deposits ("Xiao Nan Shan") and 2) the Ma
Tang Iron Deposits ("Ma Tang"). In addition,
there is a processing plant called the
Nanjing Sudan Processing Plant.
Maanshan Mining estimates that the total
iron ore available for extraction from the
two mines, (both of which are open pits) is
approximately 95 million tons, with Xiao Nan
Shan at approximately 73 million tons and Ma
Tang at approximately 22 million tons.
Maanshan Mining believes that these
extraction estimates are sufficient to allow
for mining activities, under the proposed
production targets, to continue for
approximately 15 years.
The proximity of the two mines to its
markets allows Maanshan's customers access
to favorably low transportation costs,
especially in comparison with those of
imported iron ore.
Maanshan Mining completed a new production
line in June 2006, which has increased
overall production of iron ore concentrates
by 150% to 250,000 tons from 100,000 tons
per annum previously. Furthermore, Maanshan
Mining plans to increase the production
capacity of its mining operations and
processing capability to produce 600,000
tons of iron ore concentrates in 2008 and
1,000,000 tons of iron concentrates in 2009.
Once the Company obtains its interest in
this mine, the Company intends to use a
portion of its financing commitments to
fully permit and add development to these
two properties to the extent permitted under
PRC mining law.
About the Yun
County Changjiang Mining Company
The Yun County Changjiang
Mining Company Limited owns the exploration
rights of Lao Wan Iron Deposit covering
approximately 17.78 sq. kilometers in Yuan
County, Hubei Province (Lao Wan) in the PRC
and a processing plant with an annual
production capacity of 200,000 tonnes of
iron ore concentrate.
Lao Wan is a large-scale magnetite ore
deposit with an average ore grade of 15% to
20%. The current owner estimates that there
are 100 million tonnes of iron ore reserve
grading above 30%, and a total of more than
600 million tonnes of iron ore reserves for
this mine.
Construction of a processing plant to
produce iron ore concentrate is proceeding
with anticipated production of approximately
200,000 tonnes per annum. The proximity of
this mine to its markets and customers
allows the owner to enjoy relatively low
transportation costs compared to that of
imported iron ore. Currently, China is the
largest net importer of iron ore in the
world.
About the
Sino-American Hua Ze Nickel & Cobalt Metal
Company
The Sino-American Hua Ze
Nickel & Cobalt Metal Company including the
Xing Wang Nickel Mine is located in the
Qinghai province. The Company has recently
signed a Heads of Agreement to acquire
interests in the Xing Wang Nickel Mine, and
related production facility, and refinery.
This mine, which is currently in production,
has reserves estimated to contain in excess
of 400,000 tonnes of metal, as reported by
the official China geological survey. CGMR
is currently in the process of completing
its due diligence on this project and will
prepare a comprehensive report on all the
materials it has reviewed and plans to
release this report in the near term.
About the
Taizhou Gold Mine
CGMR has purchased certain
rights to acquire up to a 51% interest in
the Taizhou Gold Mine which is currently in
production on a cash flow positive basis.
CGMR has also selected an
underwriter/sponsor to perform a pre-IPO
study on this mine with the ultimate
intention of funding extensive development
and production facility upgrades. The
selected underwriter/sponsor is the same one
that completed the Lingboa Gold Company Ltd.
transaction in 2006. Full engineering
reports and audited financial statements
have been provided to the
underwriter/sponsor.
Tongguan County Taizhou Mining Co., Ltd. was
established in June 2004 with registered
capital of RMB10 million. Its legal
representative is Mr. Ma Qianzhou. The
Taizhou Mining Company is engaged in the
exploration, mining and processing of gold,
as well as other metals including copper,
lead, silver and molybdenum.
The Taizhou Mining Company owns three mining
licenses and two exploration licenses, which
covers a mining and exploration area of
approximately 30 sq kilometers. The Company
intends to release detailed additional
information in the near term regarding this
project.
At present, Taizhou Gold Mine's proven gold
reserve is approximately 100,000 ounces. In
recent years, they carried out exploration
on 25 ore bodies with aggregate exploration
length of 15,000 meters. According to the
analysis of proven mineral ore, the area has
superior mineral geological conditions at an
average grade of 4.88 grams per tonne.
Tongguan County is situated in Xiaoqinling
region at the junction of Shaanxi province,
Henan province and Shanxi province, which is
an active gold production base in China with
excellent mineral geological conditions.
Lingbao city in the Henan province, the
second largest region of China in terms of
gold reserves, is also located in this
region. Tongguan County has been awarded as
"Huaxia Gold City" by the China Gold
Association.
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About Wits
Basin Precious Minerals Inc.
We are a minerals
exploration and development company holding
interests in three exploration projects and
currently do not claim to have any mineral
reserves on any project. Our common stock
trades on the Over-the-Counter Bulletin
Board under the symbol "WITM." To find out
more about Wits Basin Precious Minerals Inc.
(OTCBB:WITM) visit our website at
www.witsbasin.com.
Forward-Looking
Statements and Risk Factors
The statements included in this press
release concerning predictions of economic
performance and management's plans and
objectives constitute forward-looking
statements made pursuant to the safe harbor
provisions of Section 21E of the Securities
Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933,
as amended. This press release contains
forward-looking statements that involve
risks and uncertainties that could cause
actual results to differ materially. Such
statements are valid only as of today, and
we disclaim any obligation to update this
information. These statements are subject to
known and unknown risks and uncertainties
that may cause actual future experience and
results to differ materially from the
statements made. These statements are based
on our current beliefs and expectations as
to such future outcomes. These risks and
uncertainties include, among others, the
Company's and CGMR's ability to obtain or
maintain regulatory approvals; the Company's
ability to obtain necessary financing; the
Company's ability to consummate the Easyknit
merger; the Company's and CGMR's ability to
complete the various mining project
acquisitions in the People's Republic of
China, which are subject to execution of
final documentation, completion of due
diligence and receipt of necessary
financing; and other risks and uncertainties
described in the Company's filings from time
to time with the Securities and Exchange
Commission (the "SEC"). The Company
disclaims any obligation to update its
forward-looking statements.
In addition, the exploration for and
development of mineral deposits involves
significant financial risks, which even
experience and knowledge may not eliminate,
regardless of the amount of careful
evaluation applied to a process. While the
discovery of a mineral deposit may result in
substantial rewards, few properties are
ultimately developed into producing mines.
Moreover, we cannot make any estimates
regarding probable reserves in connection
with any of our projects and any estimates
relating to possible reserves are subject to
significant risks. Therefore, no assurance
can be given that any size of reserves or
grades of reserves will be realized. If a
discovery is made, the mineral deposit
discovered, assuming recoverable, may differ
from the reserves already discovered and
recovered by others in the same region of
the planned areas of exploration. Further,
the cost of exploration and exploitation can
be extensive and there is no assurance that
we will have the resources necessary or the
financing available to pursue projects we
currently hold interests in or to acquire
interests in other mineral exploration
projects that may become available. The
risks we face are numerous and detailed
information regarding these risks may be
found in filings made by us with the
Securities and Exchange Commission,
including our most recent annual report on
Form 10-KSB, quarterly reports on Form
10-QSB and reports on Form 8-K.
This press release does not constitute an
offer to exchange or sell or an offer to
exchange or buy any securities. This
document may be deemed to be solicitation
material in respect of the proposed merger
of Wits Basin and Easyknit.
An offer of securities in the United States
pursuant to a business combination
transaction will only be made through a
prospectus which is part of an effective
registration statement filed with the SEC.
In connection with the proposed transaction,
Easyknit will file a registration statement
on Form F-4, which will include a proxy
statement of Wits Basin that also
constitutes a prospectus of Easyknit, and
other documents with the SEC. Shareholders
of Wits Basin are encouraged to read the
definitive registration statement on Form
F-4 and any other relevant documents filed
or that will be filed with the SEC,
including the definitive proxy
statement/prospectus that will be part of
the definitive registration statement on
Form F-4, as they become available because
they contain or will contain important
information about the proposed merger. The
final proxy statement/prospectus will be
mailed to shareholders of Wits Basin.
Investors and security holders will be able
to obtain the documents free of charge at
the SEC's web site,
www.sec.gov,
or from Wits Basin's Investor Relations at
Lighthouse Communications (866) 739-0390 or
info@lhcom.bz.
Participants
in Solicitation
Wits Basin and its directors and executive
officers and other members of management and
employees may be deemed to be participants
in the solicitation of proxies from the
shareholders of Wits Basin in connection
with the proposed merger. Information about
the directors and executive officers of Wits
Basin and their ownership of Wits Basin
common stock is set forth in its Annual
Report on Form 10-KSB, as filed with the SEC
on April 16, 2007. Additional information
regarding the interests of such participants
may be obtained by reading the registration
statement on Form F-4 and proxy
statement/prospectus when it becomes
available.
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Contact Information for Wits Basin Precious
Minerals Inc.
Stephen King, CEO � (612) 490-3419 or
Vance White,
Chairman � (866) 214-WITM(9486)
For further information please contact:
Lighthouse Communications, LLC
1-866-739-0390 or
via email at:
info@lhcom.bz
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