Acquires 89% Controlling Interest in AIM-Quoted
Central African Gold Plc
Central African Gold PLC Owns Extensive Portfolio
of Gold Mining Assets and Operations in Zimbabwe
- Targeted objective is to reach consolidated annualized gold
production of -
- 50,000 to 60,000 ounces within 18 to 24 months
- 100,000 ounces within 4 to 5 years
- Ultimate goal is to reach 200,000 to 250,000 ounces of annualized
gold production and become a mid-tier gold producer
- Investment represents -
- Substantial increase in New Dawn's gold mining business
- Focus on and commitment to gold mining in Zimbabwe
TORONTO, June 16 /CNW/ - New Dawn Mining Corp. (TSX:ND) ("New Dawn" or the "Company") reported that effective June 16, 2010, it had made an investment resulting in the acquisition (the "Acquisition") of an approximately 89% controlling interest in Central African Gold Plc ("CAG") from the three largest shareholders of CAG (the "Sellers"). CAG is a gold mining company with operations in Zimbabwe, the shares of which are admitted to AIM, a market operated by the London Stock Exchange plc.
New Dawn also contemporaneously completed a purchase, by way of Deeds of Assignment, of the convertible and non-convertible debt (the "Debt"), consisting of both principal and accrued interest, owed by CAG to the Sellers amounting to approximately US$7,080,000 (equivalent to approximately Cdn$7,316,000) (the "Assignment"), the result of which is that the Debt is now owed to New Dawn by CAG.
The Acquisition and the Assignment were accomplished through New Dawn's wholly-owned subsidiary, NDM (UK) Ltd.
CAG, through its wholly-owned subsidiary, Falcon Mines Holdings SA (Luxembourg), owns an approximate 84.7% interest in Falcon Gold Zimbabwe Limited ("Falgold"), a company currently listed and trading on the Zimbabwe Stock Exchange, and a 100% interest in Olympus Gold Mines Limited ("Olympus"), a private Zimbabwe company.
The completion of the Acquisition is consistent with New Dawn's stated business objective to become a mid-tier gold producer and the 'in-country consolidator' of gold mining assets in Zimbabwe. With this investment in CAG, New Dawn has taken a major step towards realizing this objective. Through this transaction, New Dawn is increasing its gold resource base and associated mining capability to support a consolidated annualized production of 50,000 to 60,000 ounces of gold within the next 18 to 24 months, followed by an increase to 100,000 ounces of gold within four to five years, with the ultimate goal of reaching a consolidated annualized production target of 200,000 to 250,000 ounces of gold.
Significant properties owned by CAG and its subsidiaries are summarized below. These properties are currently conducting limited operations or are under care and maintenance. The following factual information was included in a 2007 Competent Person's report commissioned by CAG and prepared in accordance with the Australian JORC rules.
1. The Dalny Mine is situated 36km north of Kadoma in the Chakari
district, approximately 175km southwest of the capital, Harare. The Dalny
Mine consists of greater than 3,500 claims covering a strike length of
some 25 kilometers. Historical production (to 2006) was 2.44 Million oz
of gold from 10.2 Million tonnes of ore treated at a grade of 7.42 g/t.
The claims are 100% attributable to Falgold. The mine complex consists of
an underground operation with an associated ore treatment plant and the
potential for gold recovery from tailings material.
2. The Golden Quarry Mine is situated approximately 30km southeast of the
town of Gweru, which is approximately 180km northeast of Bulawayo. The
Golden Quarry Mine consists of over 1,250 claims. The claims are 100%
attributable to Falgold. The mine complex consists of an underground
operation with a dedicated milling circuit and beneficiation plant.
3. The Venice Mine is situated approximately 28km south of Kadoma. The
Venice Mine consists of over 2,500 claims that have numerous exploration
targets. Historical production (to 2002) was 0.318 Million oz of gold
from 2.5 Million tonnes of ore treated at a grade of 3.77 g/t. The claims
are 100% attributable to Falgold. The mine complex has a metallurgical
facility that has capacity to process 18,000 tonnes of ore per month.
4. The Camperdown Mine is situated to the northeast of Shurugwi,
approximately 30km southeast of Gweru. The Camperdown Mine consists of 9
claims. The claims are 100% attributable to Olympus. The ore body
previously produced ore material from both a dual open pit and an
underground mining operation.
5. The Old Nic Mine is situated on the eastern part of Bulawayo, and is
one of the oldest gold mines in Matabeleland. The Old Nic Mine consists
of 17 claims. The claims are 100% attributable to Olympus. Historical
production (to 2006) was 0.290 Million oz of gold from 0.98 Million
tonnes of ore treated at a grade of 9.44 g/t.
The Company expects to file a technical report to the standards of NI 43-101 with reserve and resource estimates for these properties in due course.
To view Location Map for the Dalny, Golden Quarry, Venice, Camperdown, and Old Nic Mines, please visit: http://files.newswire.ca/880/New_Dawn.DOC
Exploration - Falgold and Olympus have significant additional ground holdings in various parts of Zimbabwe which are considered to be geologically prospective.
The transaction was structured in two parts:
- The Acquisition
Under the terms of the Acquisition, NDM (UK) LTD acquired 890,412,258
ordinary shares in CAG, representing an approximate 89% interest in
CAG (as at the date of the Acquisition) owned by the Sellers, in
exchange for the issuance of 3,543,329 shares of New Dawn common
stock (valued at Cdn$1.14 per share based on volume-adjusted market
prices for the previous 10 days). The Acquisition resulted in an
effective price of Cdn$0.0044 or (pnds stlg)0.0029 (based on
Cdn$1.5026/(pnds stlg) 1.00) for each ordinary share of CAG.
- The Assignment
Under the terms of the Assignment, the Sellers assigned to New Dawn
their interests in and benefits of the Debt owed by CAG to the
Sellers, in exchange for the issuance of 5,324,560 shares of New Dawn
common stock (valued at Cdn$1.14 per share based on volume-adjusted
market prices for the previous 10 days) and four-year warrants
entitling the Sellers to subscribe for 2,216,972 shares of New Dawn
common stock exercisable at Cdn$2.00 per share (valued at Cdn$0.62
per warrant based on Black-Scholes option-pricing model).
As a result of the Acquisition and Assignment transactions, New Dawn has issued a total of 8,867,889 common shares, and four-year warrants which, if exercised, will result in the issuance of an additional 2,216,972 common shares of New Dawn. In conformance with the rules of the Toronto Stock Exchange, the Company obtained written shareholder consents from its three major shareholders, which in the aggregate own 61.7% of the Company's issued and outstanding shares, approving the issuance of the common shares and warrants as consideration for the Acquisition and Assignment transactions.
The warrant terms provide that if during a period of 10 consecutive trading days, the closing price of New Dawn's common shares is not less than Cdn$3.00 per share, New Dawn may at any time within 10 days following such period accelerate the expiration date of the warrants to a date which is not less than 30 days from the date on which New Dawn provides the warrant holder notice of the acceleration.
Taking into account the completion of the Acquisition and Assignment, New Dawn has 38,026,593 shares of common stock issued and outstanding. The Sellers acquired a 23.3% interest in New Dawn, excluding the warrants, with Emerging Capital Partners holding a position greater than 10% in New Dawn at 12.8%.
All shares and warrants issued or to be issued to the Sellers under the Acquisition and Assignment are subject to a one-year lock-up.
The Company intends to seek representation on and control of the CAG Board of Directors in due course. Once this has been achieved, the Company will commence a strategic review of all aspects of CAG's assets and operations, including reserves/resources, operations, management, control structures and systems, listing status, capital structure and future capital requirements. In particular, the Company is evaluating CAG's short-term and long-term working capital requirements to fund the development and operations of CAG's gold mining assets, which the Company contemplates will be addressed through a combination of internally generated funds and new debt and/or equity.
In conjunction with this investment, Bryce Fort, a Managing Director and Founding Partner of Emerging Capital Partners ("ECP"), Washington, D.C., is expected to join the Board of Directors of New Dawn. ECP has been investing in Africa since 2000, and was the first private equity group to raise more than $1.6 billion for investment in companies across the African continent. ECP has a ten-year track-record of investing in Africa through six successful funds. Before Mr. Fort joined ECP in 2002, he worked for Deutsche Bank AG's European Healthcare Corporate Finance Group, which executed mergers and acquisitions, equity and debt financings for pharmaceutical, biotech and medical device companies. Mr. Fort currently sits on the boards of directors of Cellcom Ltd. and Wananchi Group Holdings.
About New Dawn ...
New Dawn is a Zimbabwe-focused junior gold company currently expanding gold production at its Turk and Angelus Mines, exploring for gold, and identifying and pursuing other development projects, as well as actively assessing other value accretive acquisition opportunities in Zimbabwe.
New Dawn owns and operates the Turk and Angelus Mines in the upper southwest area of Zimbabwe that has the potential to produce an estimated 35,000 to 50,000 ounces of gold per annum. New Dawn owns the property outright on which these mines are located.
New Dawn is currently developing a revised and updated strategic business plan in light of its acquisition of a controlling interest in CAG, with a view towards reaching consolidated annualized gold production of 50,000 to 60,000 ounces within the next 18 to 24 months, increasing to 100,000 ounces within four to five years, and then ultimately to 200,000 to 25o,000 ounces.
Additionally, the Company is reviewing and assessing CAG's extensive portfolio of exploration properties in Zimbabwe for future investment and development.
For further information on New Dawn's gold reserves and resources, visit the Company's website at www.newdawnmining.com or the Company's filings on SEDAR at www.sedar.com.
The TSX has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.
The contents of this news release were supervised and reviewed by Ian R. Saunders, B.Sc., who is President, Chief Executive Officer, and a Director of New Dawn Mining Corp., and who is a Qualified Person within the meaning of NI 43-101.
Special Note Regarding Forward-Looking Statements: Certain statements included or incorporated by reference in this news release, including information as to the future financial or operating performance of the Company, its subsidiaries and its projects, constitute forward-looking statements. The words "believe," "expect," "anticipate," "contemplate," "target," "plan," "intends," "continue," "budget," "estimate," "may," "schedule" and similar expressions identify forward-looking statements. Forward-looking statements include, among other things, statements regarding targets, estimates and assumptions in respect of gold production and prices, operating costs, results and capital expenditures, mineral reserves and mineral resources and anticipated grades and recovery rates. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Such factors include, among others, risks relating to reserve and resource estimates, gold prices, exploration, development and operating risks, political and foreign risk, uninsurable risks, competition, limited mining operations, production risks, environmental regulation and liability, government regulation, currency fluctuations, recent losses and write-downs and dependence on key employees. See "Risk Factors" in the Company's Annual Information Form - 2009. Due to risks and uncertainties, including the risks and uncertainties identified above, actual events may differ materially from current expectations. Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein. Forward-looking statements are made as of the date of this press release and the Company disclaims any intent or obligation to update publicly such forward-looking statements, whether as a result of new information, future events or results or otherwise.
SOURCE New Dawn Mining Corp.
For further information: For further information: Investor Relations Contact: Richard Buzbuzian, +1 416.585.7890; President and Chief Executive Officer: Ian R. Saunders, +1 416.585.7890; Visit us on the internet: http://www.newdawnmining.com or Email us at: firstname.lastname@example.org