Sino Gold and Golden China announce signing of agreement regarding proposed takeover offer for Golden China


    TORONTO, Aug. 13 /CNW/ - Sino Gold Mining Limited ("Sino Gold")
(ASX: SGX, SEHK:1862 ) and Golden China Resources Corporation ("Golden China")
(TSX/ASX: GCX) today announced that they have entered into an agreement (the
"Agreement") regarding a proposed offer (the "Offer") by Sino Gold for all of
the outstanding common shares of Golden China.
    The Agreement, which values Golden China at A$80.7 (C$73.0) million, has
the unanimous support of the Golden China board of directors. Under the
proposed Offer, Golden China shareholders would receive one Sino Gold share
for every 4.5 Golden China common shares they hold. Following successful
completion of the Offer, should Sino Gold acquire all of the currently
outstanding Golden China shares, Golden China shareholders would collectively
hold an interest of approximately 6.5%(1) in Sino Gold.
    The Offer values Golden China at a 51% premium over the TSX closing price
on 10th August 2007, and a 48% premium over the 10 day TSX volume weighted
average trading price of the Golden China common shares.
    Sino Gold believes that the proposed acquisition of Golden China provides
an attractive addition to its asset base and enhances its growth profile as
Golden China's Beyinhar project is advanced to development status.
    Commenting on the proposed Offer, Sino Gold's Chief Executive Officer,
Jake Klein, said:
    "We have previously indicated that we intend to acquire advanced
exploration assets that have the potential to be developed once our second
mine, White Mountain, starts commercial production in early 2009.
    "Golden China's assets fit perfectly with this strategy and enables Sino
Gold to focus on a potential third mine development. Importantly, Golden
China's key assets are all within the three areas in which Sino Gold already
has significant activity and capacity.
    "This acquisition will further consolidate Sino Gold's position as the
leading foreign gold company in China. Our financial strength and operating
expertise will ensure that the full potential of the Golden China assets is
    "Importantly, the Sino Gold offer provides Golden China shareholders with
significant value for their shares, and the opportunity to participate in the
future growth of the combined company."
    Golden China's President & Chief Executive Officer, Greg Starr, added:
    "We are excited by the current and potential value created for our
shareholders from the acquisition by Sino Gold. The combined assets and
strengths of the two companies diversifies the opportunities for our combined
shareholders and brings increased financial and management strength to the
exploitation of Golden China's asset base."

    Rationale for the Offer

    Golden China is a gold exploration and production company listed on the
Toronto Stock Exchange ("TSX") and Australian Securities Exchange ("ASX")
whose principal asset is the advanced Beyinhar exploration project located in
Inner Mongolia, People's Republic of China.
    Sino Gold believes that the Golden China assets are complementary to its
own project portfolio and its operational expertise. Sino Gold has the ability

    -  Rapidly advance the Beyinhar project to production. Golden China has
       previously publicly stated that its intention is to develop a
       100,000 ounce production base at Beyinhar;

    -  Extract full value from the BioGold processing facility in Shandong
       province; and

    -  Unlock regional exploration synergies at the Nibao project, which is
       located near to Sino Gold's Jinfeng mine in Guizhou Province, People's
       Republic of China.

    The Offer would provide significant benefits to Golden China
shareholders. By accepting the Offer, Golden China shareholders would become
shareholders in a company with a successful track record of developing gold
mines in China and enhancing shareholder value. Benefits are expected to

    -  The opportunity to realize an attractive premium for their Golden
       China shares;

    -  Enhanced share trading liquidity;

    -  Greater access to development finance, a robust balance sheet and
       strong cash position; and

    -  Access to a company with a team of over 600 experienced mining and
       exploration employees.

    Details of the Offer

    Under the proposed Offer, Golden China shareholders would receive 1 Sino
Gold ordinary share for every 4.5 Golden China common shares they own. The
Offer implies a value for each Golden China share of A$1.42 based on the
closing price of Sino Gold shares on ASX of A$6.40 on 10 August 2007 (the
"Implied Offer Price"). The Implied Offer Price represents a premium of 51% to
the closing price of Golden China shares on the TSX on 10 August 2007 of
    The Implied Offer Price values Golden China's equity at A$80.7 (C$73.0)
million(2). If the Offer is successful and Sino Gold acquires all of the
Golden China shares, Golden China shareholders would collectively hold an
interest of approximately 6.5%(3) in Sino Gold and would share in the expected
ongoing benefits of the combined companies.
    In addition to the proposed Offer for Golden China's common shares, the
Agreement contemplates that each outstanding Golden China option, warrant and
convertible security would be proposed to be amended so as to provide that the
holder would be entitled to receive, upon the exercise or conversion thereof,
in lieu of a Golden China common share, for every 4.5 held, one Sino Gold
ordinary share on substantially the same terms and conditions as the
outstanding Golden China security, except that the exercise price will reflect
the Exchange Ratio and options issued to current employees, officers and
directors of Golden China will be fully vested, subject to the right of Sino
Gold to offer the holders of each Golden China option, warrant and convertible
security the right to cash out their right to receive a Golden China common
share at a discount to be determined by Sino Gold.
    The Offer is not expected to be made in the United States.

    Details of the Agreement

    Under the Agreement (a copy of which will be filed shortly on SEDAR at, Sino Gold and Golden China have agreed to negotiate in good
faith and to use their best efforts to enter into a definitive support
agreement (the "Definitive Support Agreement") on customary terms to provide
for the making and support of the Offer. There are a number of conditions
precedent to the entry into of the Definitive Support Agreement, including,
among others, receipt by Golden China of a fairness opinion from a financial
advisor that the Offer consideration is fair from a financial point of view to
the Golden China shareholders, mutual board of director approvals, and mutual
no material adverse change conditions.
    Sino Gold has already entered into lock-up agreements with Peter Secker
and with Stephen Everett, who hold in aggregate approximately 5.3% of the
currently outstanding Golden China common shares. While generally irrevocable,
these agreements can be terminated by the locked-up shareholders in certain
circumstances, including if Golden China terminates the Agreement in order to
enter into an agreement to support a bona fide unsolicited superior proposal
that Sino Gold fails to match.
    In the Agreement, Golden China has agreed, among other things, that it
will not directly or indirectly solicit any third party with respect to
alternative transactions to the Offer.
    The Agreement may be terminated by either party if the Definitive Support
Agreement has not been entered into by September 10, 2007, or if Golden China
enters into a binding agreement before then with respect to a bona fide
unsolicited superior proposal.
    If Golden China terminates the Agreement in order to enter into an
agreement with respect to a bona fide unsolicited superior proposal that Sino
Gold fails to match, a C$500,000 "break" fee will be payable by Golden China
to Sino Gold.

    Conditions of the Offer

    The Offer is expected to be subject to certain conditions, including a
90% minimum acceptance condition; receiving regulatory approvals on
satisfactory terms; and no material adverse changes or other material adverse
events occurring in relation to Golden China. The final form of these
conditions, and other conditions, remain to be determined, however, and are
expected to be negotiated as part of the Definitive Support Agreement. There
can be no assurance that a Definitive Support Agreement will be entered into,
or that the Offer will in fact be made.
    Assuming the Definitive Support Agreement is entered into by the
September 10, 2007 deadline, it is expected that formal documentation for the
Offer (a takeover bid circular from Sino Gold and a Golden China directors'
circular) would be sent to Golden China shareholders in October 2007.
    In the event of the successful completion of the Offer, Sino Gold and
Golden China expect to seek to terminate the listing of the Golden China
common shares on the TSX and of the Golden China common share CDIs on the ASX.

    Interim Financing

    In addition, subject to the entry into of the Definitive Support
Agreement, Sino Gold has agreed to subscribe for up to the lesser of C$5
million worth of Golden China common shares and such number of Golden China
common shares from treasury as will result in it owning 9.9% of the issued and
outstanding Golden China common shares, at C$0.85 per share, to assist Golden
China with its operations. This private placement is subject to required
regulatory approvals.

    About Sino Gold (ASX: SGX, SEHK: 1862)

    Sino Gold has been active in China since 1996.
    The Company owns 82% of the Jinfeng gold mine in Guizhou Province,
southern China. Jinfeng will be the one of the largest gold mines in China
when the project achieves planned initial production. Sino Gold is determined
to increase Jinfeng's gold production to optimal levels as quickly as
    The 95%-owned White Mountain project in Jilin Province, northeast China,
is on-track to become Sino Gold's next mine. Development is planned to
commence during the September 2007 quarter following receipt of the Provincial
Project Approval.
    Sino Gold has demonstrated capability to gain approvals for, and to
successfully develop, gold projects in China. Sino Gold is a growth gold
company that is actively pursuing a discovery and acquisition strategy. With a
"first mover" advantage, it holds a strong competitive position in China.
    The above summary is sourced from Sino Gold's public disclosure.

    About Golden China Resources (TSX and ASX: GCX)

    Golden China's shares are listed on the main boards of both the Toronto
Stock Exchange and as CDIs on the Australian Securities Exchange. Golden
China's major assets consist of:

    -  The 95%-owned Beyinhar project is located in the Chinese province of
       Inner Mongolia, some 325 km northeast of the capital city, Hohhot. The
       project lies within a productive orogenic belt hosting several skarn,
       orogenic/mesothermal veins and porphyry copper-gold deposits. Recent
       drilling intercepts at Beyinhar include 68 metres at 5.3g/t gold from
       66 metres. This indicates that Beyinhar hosts a primary sulphide
       deposit in addition to a near surface, bulk-mineable oxide and heap
       leachable gold deposit with a continuous high-grade zone. In January
       2007, Golden China announced that it had identified an initial Mineral
       Resource consisting of a Measured Resource of 4.7 million tonnes at
       1.00g/t gold, 12.8 million tonnes at 0.78g/t gold, for combined
       Measured and Indicated of 17.6 million tonnes at 0.84g/t gold
       containing 475,000 ounces and an Inferred Resource of 7.5 million
       tonnes at 0.54g/t gold for 130,000 ounces. The resource estimate was
       undertaken by Mario E. Rossi, of GeoSystems International, Inc.
       ("GSI"), a qualified person as defined by NI 43-101, based on the
       results from a drilling program that was undertaken in 2004-2006. On
       April 27, 2007, Golden China announced the results of a NP43-101
       compliant Preliminary Assessment of the Beyinhar Gold Project Inner
       Mongolia, People's Republic of China by Kappes Cassiday Australia, and
       Associates Pty Ltd (the "Scoping Study") which suggests the project's
       ability to initially produce 100,000 ounces per year for a low cash
       cost per production ounce of between US$260 and US$280, with capital
       expenditures of only US$29 million. A copy of the Scoping Study is
       available on the company's website ( and on
       SEDAR (

    -  Golden China's 99.5% owned BioGold Facility located in Shandong
       Province includes a CIL plant, a bacterial oxidation (BACOX(C)) plant,
       a base metal flotation circuit, 51% of a gold refinery, and a seat on
       the Shanghai Gold Exchange. The facility purchases gold concentrates
       from a number of mining operations and produces about 100,000 ounces
       of 99.99% gold bullion annually. An expansion to the BACOX(C) plant is
       currently underway, which is planned to double that plant's processing

    -  The 70%-owned Nibao project is located in western Guizhou Province
       within the Golden Triangle of southern China. In September 2006,
       Golden China announced that it had identified an initial Mineral
       Resource consisting of a Measured Resource of 2.9 million tonnes at
       3.54g/t gold containing 330,000 ounces, an Indicated Resource of
       3.92 million tonnes at 1.72g/t gold containing 217,000 ounces and an
       Inferred Resource of 6.5 million tonnes at 1.46g/t gold, containing
       305,000 ounces of gold. Golden China's ownership of the project is
       expected to increase to 84% on a decision to mine. The resource
       estimate was undertaken by Scott Wilson Roscoe Postle Associates Inc.
       (Scott Wilson RPA) based on drilling assay results to June 25, 2006 of
       410 drill holes comprising 41,600 metres.

    -  Golden China has a minority ownership interest in the Gold Ridge Mine
       in the Solomon Islands through its approximately 19.3% equity holding
       in Australian Solomon's Gold (TSX: SGA).

    The above summary is sourced from Golden China's public disclosure.

    Competent Persons

    The information in this report that relates to Exploration Results,
Mineral Resources or Ore Reserves of Sino Gold has been approved for release
by Mr Phillip Uttley (FAusIMM), who is Sino Gold's Chief Geologist and has
sufficient experience in relation to the style of mineralisation and type of
deposit under consideration to qualify as a Competent Person as defined by the
"Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves" (The JORC Code 2004 Edition). JORC is a 'recognized code and
FAusIMM is a recognized designation', under NI 43-101. Mr Uttley has consented
to inclusion of this information in the form and context in which it appears.
    Mr. Peter Secker, BSc (Hons) Mining Engineering, MAusIMM, is Golden
China's Vice President of Exploration and Development and its qualified person
as defined by National Instrument 43-101. Mr. Secker is overseeing the
company's exploration work and supervised the preparation of the information
in this release.

    Cautionary Statement on Forward-Looking Information

    Certain information included in this Press 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
and Golden China (collectively, the "Companies"), as applicable, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies. The Companies caution 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 each of the Companies, as applicable, 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 the Companies carry 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 the Companies respective statutory releases
filed with the Australian securities regulatory authorities and in Golden
China's most recent Annual Information Form filed with the Canadian provincial
securities regulatory authorities.
    Each of the Companies disclaim 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.


    (1) Based on Sino Gold ordinary shares of 181,616,415 and Golden China
        common shares and share rights totaling 56,775,551.
    (2) Based on Golden China common shares and share rights totaling
    (3) Based on Sino Gold ordinary shares of 181,616,415 and Golden China
        common shares and share rights totaling 56,775,551.

For further information:

For further information: regarding Sino Gold please contact: Investor
Enquiries: Jake Klein, CEO or Roger Howe, Investor Relations, +61 2 8259 7000,; Media Enquiries: Kate Kerrision, +61 2 6746 3221,; Or visit the Sino Gold website;
For further information regarding Golden China please contact: Investor
Enquiries: Greg Starr, President & CEO, +61 2 9252 8055,; or Garry Stein, Vice President & Chief Investment
Officer, (416) 366-8818 Ext. 230,; Media Enquiries:
Renmark Financial Communications Inc., Barbara Komorowski, (514) 939-3989,; Or visit the Golden China website

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