Acquisition
31 December 2003 - 11:14PM
UK Regulatory
RNS Number:7663T
New Millennium Resources NL
31 December 2003
NEW MILLENNIUM RESOURCES NL
("NMR" or the "Company")
ACQUISITION OF ANGOLA RESOURCES PTY LTD
New Millennium Resources NL announces that it has agreed to acquire 100% of
Angola Resources Pty Ltd ("Angola Resources").
Angola Resources is an Australian company that has a 34% stake in the Lapi
Diamond Project located in Angola in the African Continent.
This joint venture, with Angola Resources' Angolan partners ENDIAMA and Mombo
LDA, holds diamond Concession Area C9, located 30 km north of the large,
operating Catoca diamond mine in northeast Angola. Extensive mapping and
exploration has identified an inferred resource of 3.7 million carats and the
tenement has the potential to deliver a profit of US$112 per carat recovered.
There is potential for 8.7 million carats just in the currently known area.
ANGOLA
Angola, now politically stable, is attracting international investment in its
rich natural resources of diamonds, oil, gas, iron ore, minerals and timber.
Angola has large resources of gem quality diamonds, renowned for their size and
quality which is reflected in the attainable prices.
Concession Area C9, is located 45km northeast of Saurimo, the provincial capital
of Lunda Sul. Saurimo has an airport with a number of daily flights connecting
it with the capital of Angola, Luanda. An all weather road to Luanda provides
ready access for construction and operating equipment.
Concession Area C9 is 323sq.km in area and is near to and downstream of the
large operating Catoca diamond mine. Four rivers, including the Rio Chicapa,
flow through the tenement, providing sufficient water for operations.
The sparse vegetation and mostly flat landscape lends itself to both land and
dredging operations with low production costs.
Concession Area C9, while having a sizable inferred alluvial diamond resource,
has kimberlite pipes which carry diamonds but which require further exploration.
The Angolan Government has signed the United Nations agreement to certify all
diamonds produced and has provided secure title to the tenement.
Angola Resources has put in place a highly experienced management team that aims
to pursue the exploration and development programme planned for the tenements.
The project will require a three month, US$300,000 conformation prospecting
programme to be completed, following the completion of which an exploitation
agreement will be signed that will allow for the installation of the primary
production plant, requiring a 6-months construction period. The project is
expected to be cash flow positive 6 months after production commences.
BENEFITS TO NEW MILLENNIUM RESOURCES
The Lapi Diamond Project will initially produce diamonds from an alluvial mine
that is expected to generate an initial cash operating surplus of US$1.2 million
per month. Under the terms of the prospecting agreement NMR will own 34% of the
project. Following the signing of the exploitation agreement it is proposed that
for the first 36 months after the commencement of production, NMR will receive
the first 30% of the profit to recover its capital expenditure before
distribution of the remaining 70% to all parties according to their share of the
project. Accordingly, NMR's effective profit sharing for the first 36 months of
production will be 54.5%.
From commencement of operations, pay back of start up capital is expected to
take six months based on a production rate of 10,000 carats recovered per month.
After five months of production, it is proposed to increase production to 20,000
carats per month by increased utilisation of available plant.
The project has identified reserves to maintain planned production levels for 14
months and identified resources to maintain production at the proposed level for
an additional 6.5 years. A planned exploration programme funded from mining cash
flow (after the commencement of operations) is planned to convert resources to
reserves and identify further resources during the initial two years of
production. The directors of NMR believe that the exploration potential of the
project has the capacity to increase alluvial resources and identify a hard rock
(kimberlite) diamond source (three kimberlite pipes have been previously
identified on the concession).
The directors of NMR consider that the strategic investment in the industry will
enable the Company's corporate strategy to be achieved.
The consideration payable for Angola Resources will be the issue of 18 million
new shares in NML. Application will be made for the new shares to admitted to
trading on AIM and dealings are expected to commence on 9 January 2004.
The acquisition is a related party transaction under the AIM Rules since the
sole shareholder in Angola Resources is Nikolajs Zuks, the managing director of
the Company. The directors of the Company, other than Mr Zuks, consider, having
consulted with its nominated adviser, Seymour Pierce Limited, that the terms of
the acquisition are fair and reasonable insofar as shareholders in NMR are
concerned.
For further information, please contact
Mr Nik Zuks
Managing Director
New Millennium Resources NL
Tel: +618 9368 0388
This information is provided by RNS
The company news service from the London Stock Exchange
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