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Central China Goldfields

  • BY: Andrew Hore |
  • POSTED: 02/06/2009 |

Central China Goldfields says its partner wants to buy it out of its Nimu copper project.

The shares were suspended on 2 June 2009 at 3.875p each, which values CCG at £7.11m.

The Sichuan Bureau of Metallurgy and Geological Exploration has approached CCG in order to acquire its interest in Nimu. The project consists of seven exploration licences and these were transferred by SBMGE to the joint venture company in January 2008.

No formal offer has been made and it is unclear how much the SBMGE will be willing to pay or what the terms of the transaction will be. Any deal is subject to shareholder approval.

CCG has decided that it should suspend its shares while the negotiations continue. It believes that they will create uncertainty. Once the situation is clarified CCG says that trading in the shares should resume. However, CCG still has not published its 2008 annual report and it has to do that by the end of June 2009 or the suspension will have to continue.

CCG signed the joint venture agreement in May 2006 and it has the right to earn a 75% interest by spending RMB216m over six years - the majority in years five and six. 

In January 2009, CCG has reached agreement with the SBMGE about the payment for the Snow Mountain gold project. The sale was announced in April 2008 but payment was delayed by the Sichuan earthquake. The RMB35m due was spent on the final RMB28.8m property payment for Nimu and the rest on drilling and exploration. This took the earned interest in Nimu to 30%.

If the Nimu stake is sold CCG’s main interest will be in the Dong Mao Huo gold project in Northern China.

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