Black Angel – Acquisition of Minority Stake
07/02/2006
Press Release
Angus & Ross PLC, the AIM listed mining company with advanced exploration zinc assets in Greenland, is pleased to announce that it has received acceptances from all of the minority shareholders of Black Angel Mining Limited (“BAM”) in respect of its offer to acquire their stake in that company.
BAM will therefore become a wholly owned subsidiary of Angus & Ross PLC following completion. The acquisition will be satisfied through the issue of 14.9 million new ordinary shares in Angus & Ross PLC (“New Ordinary Shares”) in a four for five share swap. BAM minority shareholders are also entitled to a warrant to subscribe for 4 New Ordinary Shares for every 5 BAM shares held at 20p each exercisable during the period of 6 months from 3rd February 2006.
The New Ordinary Shares issued under the offer and pursuant to the exercise of the warrants are subject to a nine month lock-in.
The acquisition of the minority stake in BAM will give Angus & Ross PLC 100% of its highly prospective, near-term zinc assets. In addition, BAM has approximately £600,000 of cash on its balance sheet.
The transaction has been executed following the completion of the pre-feasibility study of the Black Angel zinc/lead project in Greenland by mining consultancy Wardell Armstrong International Limited (WAI).
In their studies they say : “The Black Angel Project represents an encouraging target to develop a future mine and mill complex centred on the known reserves and infrastructure left behind by earlier mining operations, so long as it is augmented with additional tonnage of high grade zinc/lead/silver mineralization.”
Later in the report WAI say : “There are several visible and encouraging indications for the potential to increase this preliminary reserve figure within the area surrounding the existing mine site. Recent work by WAI and BAM has identified extensions to a number of small satellite deposits within the locality of the Black Angel mine. These represent additional resources that may not require considerable further exploration to upgrade their classification to reserves - thereby adding significantly to the financial viability and robustness of the Black Angel project.”
Work this summer will therefore include a substantial drilling programme as well as site preparation for the potential reopening of the old mine.
Andrew Zemek, COO of Angus and Ross and CEO of BAM said:
“Our team has delivered upon its objective of increasing its exposure and focus on the highly prospective Black Angel zinc project.
We now have full ownership of the Black Angel mine, which, according to WAI, and using a zinc price of $1,950/tonne and a lead price of $1100/tonne, and mill-feed grades of 18% Zinc and 4.5% Lead, has a Net Present Value of US$52M (using a 10% discount rate) and an IRR of 35. Any additional ore found improves the economic case enormously".
WAI believe there is a high probability of finding additional ore. One of the examples given in the scoping study shows that an additional 1.3 million tonnes of mill feed would increase the NPV of the project to US$189m.
For further information visit the company website www.angusandross.com or contact:
Robin Andrews, Angus & Ross plc, 01751 430 988
Billy Clegg, Edward Westropp, Financial Dynamics 020 7831 3113
Notes to Editors:
The Black Angel mine, located on the west coast of Greenland, was active between 1973 and 1990, producing 11M tonnes of high grade zinc, lead and silver ore. An estimated 2.4M tonnes of ore still remains in the mine, much of it in the pillars, from which a high proportion of the ore will be extracted.
The engineering plan by WAI envisages utilising an existing 6 km tunnel from the shipping facility to the Nunngarut satellite ore body connecting to a new 10 km road, in turn leading to a new entrance at the rear of the mine. This access will permit both exploitation of the adjacent satellite ore bodies and further exploration of the surrounding area.
The processing technology will allow for separate on-site concentration of the zinc and lead with tailings being put back into the mine, minimizing environmental concerns at the same time as creating additional roof support. Seven main areas with known zinc occurrences have been identified as targets for diamond drilling in the 2006 season.
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