Kolar Gold Limited Update on GMSI - Drilling and Study (3431D)
06 July 2016 - 4:00PM
UK Regulatory
TIDMKGLD
RNS Number : 3431D
Kolar Gold Limited
06 July 2016
6 July 2016
"This announcement contains inside information"
Kolar Gold Limited
Update on GMSI: funding for further drilling and completion of
economic feasibility study agreed
Kolar Gold Limited ("Kolar Gold" or the "Company"), the Indian
focussed gold exploration and mine development company, provides
the following update on its investment in Geomysore Mining Services
(India) Private Limited ("GMSI").
On 30 March 2016 the Company issued its interim statement for
the six months to 31 December 2015 (the "Interims") and stated that
GMSI was in the process of raising US$2.2m (the "GMSI Fundraising")
for additional drilling and to complete the economic feasibility
study (the "EFS") in relation to the East Block open pit mine. At
that time, the Company stated that it would not be able to
participate in the GMSI Fundraising without raising further funds
itself and, in not participating, its interest in GMSI would be
diluted proportionately.
Since the issue of the Interims, the four major shareholders
that hold 95.6% of the issued shares have been in discussions
regarding further investment in GMSI. GMSI has prepared a revised
budget and exploration timescale. These discussions have now
concluded, resulting in one of the four major shareholders in GMSI,
Thriveni Earth Movers Private Limited ("Thriveni"), a leading
Indian mining company and a drilling contractor to GMSI, agreeing
(subject to an EGM of shareholders in GMSI to be held on 7 July
2016) to invest US$2.4 million into GMSI at a price per new share
of INR 1,300 compared with the previous funding round of INR
1,444.5. Assuming completion of this investment, Kolar Gold's
shareholding will reduce from 23.4% to 20.5% and Thriveni will
become the largest shareholder in GMSI with 38.0%.
This funding is expected to enable GMSI to undertake the
additional drilling of up to 10,000 metres in relation to the East
Block open pit mine, complete the EFS and provide sufficient
working capital to the end of 2016.
As at 31 December 2015, Kolar Gold valued its investment in GMSI
at GBP3.02 million. This fundraising values Kolar Gold's investment
at GBP3.3 million (based on the current sterling/rupee exchange
rate).
All GMSI's shareholders retain their rights to subscribe for new
shares in any subsequent fundraising on a pro rata basis.
Harvinder Hungin, Chairman of Kolar Gold Limited, commented:
"We are delighted that GMSI has agreed funding to undertake the
additional drilling and to complete the feasibility in relation to
the open pittable resource at Jonnigiri. This is another important
step towards realising the possibility of building one of the first
producing gold mines in India for decades."
For further information please contact:
Kolar Gold Limited
Harvinder Hungin +44 1481 702 400
N+1 Singer (Nomad and Broker)
James Maxwell / Jen Boorer +44 20 7496 3000
Tavistock
Ed Portman / Nuala Gallagher +44 20 7920 3150
About Kolar Gold Limited:
Kolar Gold is a partner and investor in an Indian gold
exploration and mine development company in India, GMSI, and is
also itself pursuing a gold project in the Kolar region in India,
the privatisation of BGML. The company's shares are traded on the
AIM market (Ticker: KGLD).
GMSI has a significant portfolio of gold permits and rights
across India. It has rights to 32 known gold mineralised project
areas including 22 granted Reconnaissance Permits, 2 Prospecting
Licences and 1 mining lease area covering a total of 12,568 square
kilometres in the states of Andhra Pradesh, Karnataka, Madhya
Pradesh and Tamil Nadu. GMSI has a gold mining lease at Jonnagiri
which was granted in October 2013.
Kolar Gold is also jointly pursuing, with the BGML mine employee
unions, the acquisition and revival of the historic BGML gold mine
in the Kolar Goldfields in Karnataka. The BGML gold mine had
produced 25 million ounces of gold over 120 years until its closure
in 2001.The Kolar Goldfields is one of the most prospective
underdeveloped Archaean Greenstone Belts in the world and is
considered comparable to the Archaean Greenstone Belts of South
Africa, Canada and Western Australia in geology, structure and
style of mineralisation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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