Acquisition and placement



    TORONTO, Dec. 13 /CNW/ - Sino Gold (ASX Code: SGX, SEHK: 1862) announces
that it has entered into agreements to acquire an effective 72% interest in
the Eastern Dragon gold-silver deposit in northern China and a private
placement for an amount of approximately A$170 million via a bookbuild.
    Commenting on this acquisition, Sino Gold Chief Executive Officer Jake
Klein said:
    "Eastern Dragon Lode 5 is an outstanding near-surface gold-silver deposit
with the potential to be a low-cost mine. The district has demonstrable
potential for additional epithermal gold deposits and this acquisition
complements our nearby Sanjianfang Joint Venture."
    "We are pleased to have acquired a majority interest in this high-grade
deposit which we have pursued for several years."
    "We believe this acquisition will add significant shareholder value and
reinforces our first mover position in a country that we believe is likely to
become the world's largest gold producer this year."

    
    Main Points

    -  Agreements signed to acquire an effective 72% interest in Eastern
       Dragon Lode 5 in Heilongjiang Province, China at a cost of
       US$90 million, subject to various conditions precedent.

    -  Acquisition of 72% interest, achieved through the acquisition of 90%
       of Rockmining (a private Hong Kong company), is part of a strategic
       partnership with the vendor in relation to gold opportunities in
       Heilongjiang province.

    -  Eastern Dragon Lode 5 is a high-grade, low-sulphidation epithermal
       gold-silver deposit which has been tested by extensive trenching,
       diamond drilling and underground development.

    -  The local Chinese joint venture partner has identified a resource to
       Chinese standards, as approved by the national Ministry of Land and
       Resources in 2003.

    -  Further verification work is required prior to reporting an Identified
       Mineral Resource for Lode 5 in accordance with internationally
       accepted standards, principally Australasia's JORC Code and National
       Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI
       43-101").

    -  Potential to produce gold at a low cash cost.

    -  Private placement to raise approximately A$170 million in two stages
       (the "Offer").

    -  Merrill Lynch and Macquarie Group are acting as joint lead managers
       and bookrunners to the Offer.

    -  Gold Fields, Sino Gold's largest shareholder and strategic partner, to
       participate in the placement pro-rata to their shareholding of
       approximately 16.5%.
    

    Eastern Dragon Gold Project

    Sino Gold has pursued the Eastern Dragon gold deposit for several years
as it was identified as the Company's highest priority acquisition target.
    An exploration brigade under the Non-ferrous Metals Geology and
Exploration Bureau ("Brigade") discovered gold mineralisation at Eastern
Dragon in 1998, which is located in northern China's Heilongjiang Province.
    The Brigade is also Sino Gold's partner at the nearby Sanjianfang Joint
Venture and this long-standing relationship laid the foundation for this
acquisition.
    Exploration at Eastern Dragon has focussed primarily on Lode 5 where
gold-silver mineralisation has been identified over a strike length of 600m
and to a depth of 250m.
    Sino Gold has entered into agreements to acquire 90% of Rockmining Group
Company Limited (a private Hong Kong company) for US$90 million. Rockmining
has an 80% equity interest in Hei He Rockmining Development Limited, which is
a joint venture with the Brigade. This acquisition forms part of a broader
strategic partnership with Rockmining whose associated companies own more than
20 Exploration Licences in Heilongjiang Province.

    The US$90 million acquisition price is payable in five installments,
which are expected to be payable on the following dates:

    
    -  $US4 million (deposit paid in November 2007);

    -  US$9 million within 14 days;

    -  US$40 million payable by 10 January 2008;

    -  US$28 million payable by 28 February 2008;

    -  US$9 million payable on 28 February 2008,
    

    subject to satisfaction of various regulatory, governmental, commercial
and procedural conditions precedent that are typical for a transaction of this
nature in China.

    The above installments will only be made following achievement of key
milestones, with the majority of the funds being paid to the Heilongjiang
Provincial Ministry of Land and Resources. Hence, in the event that all of the
conditions precedent are not able to be satisfied in the requisite time, the
Company expects that the relevant funds would be repaid.
    The joint venture holds an Exploration Licence covering the Eastern
Dragon Lode 5 gold deposit. Sino Gold has also secured an exclusive right to
acquire up to 80% of the surrounding Exploration Licence (53km(2) in area) for
a price to be determined by two independent valuations and, failing agreement,
at average of the two valuations. During 2008, Sino Gold intends to evaluate
Lode 5 and also progress the acquisition of the surrounding Exploration
Licence. All partners to the joint venture are expected to contribute to
future costs proportionately to their joint venture interests.

    
    Eastern Dragon's Lode 5 has been extensively sampled by the Brigade via:

    -  surface trenching;

    -  45 diamond drill holes totalling 8,155m; and

    -  underground development on two levels comprising 870m in 32 crosscuts
       off 1,058m of level development.
    

    Further confirmation work is required prior to reporting a Mineral
Resource for Lode 5 in accordance with internationally accepted standards
including Australasia's JORC Code and NI 43-101.
    Sino Gold also intends to undertake additional metallurgical,
geotechnical, mining studies and progress the permitting, so as to fast track
this project into development.

    
    The key characteristics of Lode 5 are as follows:

    -  low-sulphidation epithermal quartz-adularia vein system;

    -  north-south strike with near vertical dip of approximately 80- west;

    -  veins average 6m in width, pinching and swelling between 2m and 23m in
       width;

    -  simple mineralogy of mainly quartz, adularia and pyrite, (less than 3%
       sulphides); and

    -  initial testwork completed by the Brigade indicates potentially good
       metallurgical recoveries for gold and silver.
    

    Initial studies of the potential development of Eastern Dragon Lode 5
indicate:

    
    -  Mining via a small open pit followed by an underground operation;

    -  Simple CIL processing plant; and

    -  Potential for low cash operating costs.
    

    The Brigade has identified at least ten other quartz-vein prospects
containing anomalous gold values or mineralisation in the surrounding
Exploration Licence area, most of which require further evaluation. In
addition, Sino Gold will continue to explore the Sanjianfang Exploration
Licence immediately south of Eastern Dragon.
    The terrain around Eastern Dragon is gentle, covered by light birch
forest and the area is sparsely populated. Infrastructure is relatively good
with an airport served by a domestic airline within three hours of site. Power
and water are available nearby.

    Placement

    Sino Gold intends to undertake a private placement for an amount of
approximately A$170 million at a price to be determined via a bookbuild
commencing on Thursday, 13 December 2007. The Offer is expected to comprise
two tranches:

    
    -  Tranche 1 - an unconditional tranche of approximately 9.79 million
       shares, equal to the remaining balance of Sino Gold's 15% placement
       capacity; and

    -  Tranche 2 - a conditional tranche for the remainder of the placement,
       which will be subject to approval at an Extraordinary General Meeting
       of Sino Gold shareholders, which is currently expected to be held in
       January 2008.
    

    Merrill Lynch and Macquarie Group are acting as joint lead managers, with
Austock Corporate Finance acting as a broker to the issue.

    Sino Gold's major shareholder, Gold Fields Limited, has confirmed its
intention to participate in the placement pro-rata to their current
shareholding in Sino Gold of approximately 16.5%.

    
    The funds raised by the placement are planned to be used as follows:

    -  Eastern Dragon acquisition and associated costs ~A$105 million;

    -  Eastern Dragon exploration and working capital ~A$5 million;

    -  Construction, pre development, feasibility and exploration of various
       assets including Beyinhar, Nibao, Biogold and White Mountain along
       with general working capital ~A$40 million;

    -  General working capital and exploration and development of other
       existing assets ~A$20 million.
    

    Beyinhar is one of the assets of Golden China Resources Corporation
("Golden China"). Approximately 92.5% of the Golden China common shares were
recently taken up by Sino Gold following the expiry of Sino Gold's offer (the
"Take-Over Bid") to acquire all of the issued and outstanding Golden China
common shares. Sino Gold intends to shortly compulsorily acquire the remaining
Golden China common shares not tendered to the Take-Over Bid pursuant to
applicable Canadian securities and corporate law.

    Competent Person

    The potential quantities and grades referred to in this announcement are
conceptual in nature at this stage, and there has not been sufficient
information to define a Mineral Resource in accordance with the JORC Code and
National Instrument 43-101 - Standards of Disclosure for Mineral Projects, and
that it is uncertain if further exploration will result in the target being
delineated as a Mineral Resource. In addition, no Ore Reserves have been
identified, and none may be identified, and no preliminary assessment has yet
been completed by Sino Gold.
    Disclosure on potential quantity and grade has been based on information
supplied by Mr Phillip Uttley, who is Sino Gold's Chief Geologist and takes
responsibility for the information in this report which relates to exploration
results. He is a Fellow of The AusIMM and has over 27 years relevant
experience in exploration and evaluation of gold deposits, including the
estimation of resources in structurally controlled, epithermal and
replacement-style gold deposits. Mr Uttley is a full-time employee of Sino
Gold and has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity
that he is undertaking to qualify as Competent Person as defined in the 2004
Edition of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves ("2004 JORC Code") and consents to the publication
of this information in the form and context in which it appears. JORC is a
'recognized code and FAusIMM is a recognized designation', under Canadian
reporting standard NI 43-101.

    Cautionary Statement on Forward-Looking Information

    There can be no assurance that the Eastern Dragon acquisition or the
private placement will be completed on terms acceptable to Sino Gold, or at
all, or, if the Eastern Dragon acquisition is completed that it will prove
viable or profitable for Sino Gold, that Sino Gold will not face difficulties
in managing the investment or integrating the acquisition with its operations
or that it will be able to achieve the strategic purpose of such an
acquisition.
    Certain information included in this release, including any information
as to future financial or operating performance and other statements that
express expectations or estimates of future performance, constitute
"forward-looking statements". The words "expect", "will", "intend", "estimate"
and similar expressions identify forward-looking statements. Forward-looking
statements are necessarily based upon a number of estimates and assumptions
that, while considered reasonable by management of Sino Gold are inherently
subject to significant business, economic and competitive uncertainties and
contingencies. Sino Gold cautions the reader that such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual financial results, performance or achievements of
Sino Gold to be materially different from their respective estimated future
results, performance or achievements expressed or implied by those
forward-looking statements and the forward-looking statements are not
guarantees of future performance. These risks, uncertainties and other factors
include, but are not limited to: changes in the worldwide price of gold or
certain other commodities (such as fuel and electricity) and other currencies;
changes in U.S. dollar interest rates or gold lease rates; risks arising from
holding derivative instruments; ability to successfully integrate acquired
assets; legislative, political or economic developments in the jurisdictions
in which Sino Gold carries on business; operating or technical difficulties in
connection with mining or development activities; employee relations;
availability and increasing costs associated with mining inputs and labour;
the speculative nature of exploration and development, including the risks of
diminishing quantities or grades of reserves, adverse changes in our credit
rating, contests over title to properties, particularly title to undeveloped
properties; and the risks involved in the exploration, development and mining
business. These factors are discussed in greater detail in Sino Gold's
statutory releases filed with the Australian securities regulatory
authorities.
    Sino Gold disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future
events or otherwise, except as expressly required by applicable law.

    NEITHER THE ASX NOR THE SEHK HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR
    THE ADEQUACY OR ACCURACY OF THIS RELEASE.




For further information:

For further information: regarding Sino Gold: Investor Enquiries: Jake
Klein, CEO or Roger Howe, Investor Relations, +61 2 8259 7000,
info@sinogold.com.au; Media Enquiries: Kate Kerrison, +61 2 6746 3221,
kate@katekerrison.com.au

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SINO GOLD MINING LIMITED

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