Result of Strategic Review

 

TIDMCGM 
 
RNS Number : 1990I 
China Goldmines PLC 
08 March 2010 
 

                          Result of Strategic Review 
 
China Goldmines today announces the result of its strategic review led by Robert 
Adair, Non-executive Chairman, which has been conducted following his 
appointment in December 2009. It has been decided that the Company will assess 
new projects within a clearly defined rationale to potentially acquire and build 
value for shareholders utilising current funds of approximately $23 million. Any 
decision regarding specific acquisitions will be subject to shareholder approval 
and if a suitable proposition is not found a return of capital will be proposed 
to shareholders. 
 
Acquisition Strategy 
The core principal of CGM's acquisition strategy is to examine projects where we 
believe shareholder value can be created using the Company's existing funds of 
$23m. While CGM's existing expertise is in mining the Company will also assess 
assets within the oil and gas sector, given Robert Adair's significant track 
record in the industry, and sectors outside of resources providing certain key 
parameters are met.  Based on the conclusions of the strategic review the 
assessment framework for new projects is as follows: 
Resource propositions (oil and gas or mining): 
Producing or near production assets 
Third party resource validation 
Medium to low political risk 
 
Non resource propositions: 
Revenue generating 
Profitable or near to profit 
Market leader or recognised as one of the market leaders 
High barriers to entry 
Strong UK / European market position 
 
 
While CGM is currently examining a range of options and approaches through its 
own channels, proposals from outside the Company and its Advisors will be 
considered providing the above criteria are met. Viable propositions with 
incumbent management team are being sought with a view that a transaction might 
be completed by the end of September 2010. 
CGM post disposal of its gold mining subsidiary 
Following the disposal of its gold mining subsidiary on 29 September 2009, CGM 
is now classified under the AIM Rules as an investing company. Accordingly, the 
Company is required to complete an acquisition or acquisitions (or otherwise 
implement an investing strategy, (which will be subject to the approval of 
shareholders) no later than 28 September 2010. The Company is not subject to the 
Takeover Code as its securities are Admitted to AIM and its place of central 
management and control is outside the United Kingdom. 
As at 28 February 2010, the Company's assets were represented by a cash balance 
of c. US $23m.. CGM is guarantor to warranties made to the acquirer of the 
mining subsidiary with a maximum liability of $10m.  These warranties expire at 
the end of September 2010. 
All material obligations, liabilities or responsibilities of the Company and its 
subsidiary GRV expire on 28 September 2010, save for any antecedent breaches 
claimed by the acquirer which have not been resolved. The aggregate liability of 
the Company and GRV under the Share Purchase Agreement is limited to US$10m. 
These warranties as set out in the circular dated 1 September 2009 and relate 
principally to title, financial position and accuracy of accounts: the Company 
is currently not aware of anything which may lead to a claim.  It  is reassured 
that it successfully negotiated the release of $2.2m as announced on 22nd 
January 2010. 
Commenting today Robert Adair, Chairman, of China Goldmines said: "Our clear 
focus at CGM is to do the best thing for shareholders over the next twelve 
months who we will look to keep fully informed. We shall work towards using the 
funds returned to us, from the recent sale of our gold mining subsidiary, to 
invest in a suitable project that could potentially derive higher value for our 
investors than a return of cash. Our objective is to examine projects that could 
quickly derive benefit from deployment of the funds we have at our disposal. We 
are currently undergoing a process of review of assets with our Advisors but 
look forward to receiving any proposal that meet our core criteria as outlined 
above." 
For indications of interest from parties: 
Propositions should detail the nature of the business, the management 
credentials, the existing shareholder structure and a 3 year financial 
performance.  Resource propositions should also detail the reserve / resource 
base.  The directors will consider propositions in the context of execution 
risk. 
All indications of initial interest should be made available by email to the 
contacts detailed below at Brewin Dolphin Investment Banking with copies sent to 
the Company at the following two email addresses [e-mail] 
and [e-mail]. 
Enquiries: 
 
+---------------------+------------------------------------+ 
| China Goldmines                                          | 
+----------------------------------------------------------+ 
| Robert Adair        | Tel:[phone]                | 
|                     | Email:                             | 
|                     | robert.adair@chinagoldmines,com    | 
+---------------------+------------------------------------+ 
| Marinko Vidovich    | Tel:[phone]                | 
|                     | Email:                             | 
|                     | [e-mail]           | 
+---------------------+------------------------------------+ 
| Brewin Dolphin      |                                    | 
| (Nomad)             |                                    | 
+---------------------+------------------------------------+ 
| Alexander Dewar     | Tel:[phone]               | 
|                     | Fax:[phone]               | 
|                     | Email:                             | 
|                     | [e-mail]     | 
+---------------------+------------------------------------+ 
| Neil McDonald       | Tel:[phone]               | 
|                     | Fax:[phone]               | 
|                     | Email:                             | 
|                     | [e-mail]       | 
|                     |                                    | 
+---------------------+------------------------------------+ 
| Threadneedle        |                                    | 
| Communications      |                                    | 
+---------------------+------------------------------------+ 
| Laurence Read       | Tel:      [phone]         | 
|                     | Email:                             | 
|                     | [e-mail] | 
+---------------------+------------------------------------+ 
| Beth Harris         | Tel:      [phone]         | 
|                     | Email:                             | 
|                     | [e-mail]   | 
+---------------------+------------------------------------+ 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCVELFBBXFBBBX