Kolar Gold Limited HoA with GMSI and Board Changes (9204L)
August 19 2013 - 2:00AM
UK Regulatory
TIDMKGLD
RNS Number : 9204L
Kolar Gold Limited
19 August 2013
19 August 2013
Kolar Gold Limited
Kolar Gold secures equity interest in GMSI to develop Indian
gold projects
&
Board Changes
Kolar Gold Limited (AIM: KGLD, referred to as 'KGL', 'Kolar
Gold' or the 'Company') today announces that it has entered into a
binding Heads of Agreement ("HoA") with Geomysore Services India
Private Limited ("GMSI"), to invest funds into GMSI and develop a
number of advanced stage quality gold projects in India, including
the Jonnagiri Gold Project which already has a JORC compliant
Resource.
The Company is also pleased to announce that Mr Vaidyanathan
Venkateswaran Sivakumar will be joining the Board as a
Non-Executive Director with immediate effect. Mr Sivakumar will be
SUN Mining's representative on the Board and he will replace Shiv
Khemka who is stepping down as a Non-Executive Director of the
Company with immediate effect due to other work commitments.
Heads of Agreement with GMSI
The granting, exploration and development of key gold licences
in India remains the Company's primary focus. The Board has
completed its strategic review and its first decision is for KGL,
through its wholly owned subsidiary, Kolar Gold Mauritius (KGM) to
sign a HoA with GMSI for KGM to acquire a 30% equity interest in
GMSI for a cash consideration of GBP700,000. In addition, KGL and
GMSI have entered into an agreement for the cancellation of a
GBP300,000 loan made by KGL to GMSI last year. The Transaction
constitutes a substantial transaction under AIM Rule 12.
Kolar Gold already has a close and on-going operational
relationship with GMSI via an Option Agreement and Mine Operator
Agreement ("the Agreements" - details of which are set out in the
Company's Admission Document). KGL entered into the Agreements in
order to secure rights over the 14 Kolar Gold Projects. The parties
have now entered into an agreement to dissolve the Agreements and
return all rights in the Kolar Gold Projects to GMSI.
Under the terms of the HoA, KGL will instead acquire a 30%
equity interest in GMSI, who with KGL will explore and develop its
gold portfolio of 49 gold projects. The directors believe that this
30% interest will permit the Board to more easily accelerate KGL's
establishment in India and increase access to gold projects nearer
to production as well as spreading licence risk over a larger
portfolio Under the HoA, KGM will be entitled to nominate one
director to the board of GMSI and any GMSI resolution or corporate
action with respect to certain corporate and operational matters
will require KGM's consent.
KGL continues to search for additional quality gold projects in
India to increase its portfolio and by taking a 30% equity interest
in GMSI, the Board aim to accelerate KGL's establishment in India
and increase access to gold projects nearer to production as well
as spreading licence risk over a larger portfolio. KGL will also
get access to a number of Indian operational partners that are now
assisting GMSI with the licence grant process.
GMSI already has a well-established office in Bangalore and a
strong gold exploration team of experienced geologists in place.
Over the last 15 years GMSI have secured the rights to 49 gold
projects from a large number of Reconnaissance Permits being
granted and explored over the years. Project rights and first
applications in process which are the subject of the Transaction
include 11 Reconnaissance Permits, 32 Prospecting Licences and 6
Mining Leases covering 11,066km(2) across India with 1.36Moz JORC
resources defined, including the Kolar Gold Projects. There are no
profits attributable to the assets which are the subject of the
Transaction.
KGL is particularly excited about GMSI's main gold project,
Jonnagiri which is located in Andhra Pradesh, Southern India. It is
a mining lease application with central government approval that is
presently at the final step in the application process with the
state government. Jonnagiri has a 710,000oz JORC Resource with
significant gold mineralisation intersections of 41 m grading 5.83
g/t Au at 400 m depth and 13.7 m grading 12.0 g/t Au or 22.7m at
7.52 g/t Au at a vertical depth of 320 m.
KGL is still pursuing the privatisation of the historic BGML
gold mines in the Kolar Goldfields, Karnataka which has recently
had a favourable Supreme Court Order instructing the Mines Ministry
to proceed with the prepared sale tender to revive the famous gold
mines. Upon tender release, KGL and the united ex-employees unions
intend to participate in the tender and utilise their right of
first refusal to counter any other bids.
No further disclosures are required under Schedule Four of the
AIM Rules.
CEO Nick Spencer commented today: "This is a significant step
towards consolidating our gold position in India by focussing on
and developing a few quality later stage gold projects with GMSI.
GMSI has a large gold portfolio of tenement rights, an experienced
gold exploration team and an established office that we can both
utilise. KGL and GMSI believe that together they can focus
resources on quality gold deposits such as Jonnagiri.
Jonnagiri has an exploration target of 2-5Moz and management
believes it is likely to become India's first private operational
gold mine in 3-4 years time."
Board Changes
Mr Vaidyanathan Venkateswaran Sivakumar is a director of the SUN
Group of which SUN Mining and Exploration Limited ("SUN Mining") is
a subsidiary company. SUN Mining holds 18.3% of the issued share
capital of GMSI and 10.98% of the issued share capital of KGL.
A list of Mr Sivakumar's current and past directorships held
within the last five years is set out below:
Current Directorships:
-- Trident Mineral Resources Private Limited
-- Premier Minerals Exploration Private Limited
-- Jhansi Mining Pvt Limited
-- Premier Nickel Mines Private Limited
-- Indian Australian Mining Company Private Limited
-- Geomysore Services India Pvt Limited
-- Goan Mineral Resources Private Limited
-- Elcom Systems Private Limited
-- Boula Platinum Mining Private Limited
-- Planet Metals India Private Limited
-- Sun-Area Real Estate Private Limited
Directorships held in the last five years:
-- Deccan Gold Mines
-- Mason Global Limited
-- Gumberg India Private Limited
-- Baryam Consultants and Infratech Private Limited
-- Ripudaman Consultants and Infratech Private Limited
-- Sun Clean Renewable Power Private Limited
-- Rus Sun Hydro Limited
Mr Sivakumar, aged 50, confirms he holds no shares in the
Company and there is no further information to be disclosed in
accordance with Rule 17 and Schedule Two paragraph (g) of the AIM
Rules of Companies.
Chairman Harvinder Hungin added: "On behalf of the Board of
Kolar, I am delighted to welcome Sivakumar and we look forward to
working closely with him as the Company continues to acquire
additional licences and explore for gold in India. I would also
like to thank Shiv for all his contributions over the years. "
Enquiries:
Kolar Gold Limited
Nick Spencer / Chris Clowes +617 3846 0211
N+1 Singer (Nomad and Joint Broker)
James Maxwell / Jenny Wyllie +44 20 7496 3000
Ocean Equities Limited (Joint
Broker)
Guy Wilkes / Will Slack +44 20 7786 4370
Tavistock Communications
Edward Portman +44 20 7920 3150
Churchgate Partners
Sumir Bhadwaj +44 7768 696760
-END-
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