Re Joint Venture

RNS Number:2768J
Gold Mines Of Sardinia PLC
27 March 2003

Gold Mines of Sardinia plc ("GMS" or the "Company")



Joint Venture



Gold Mines of Sardinia is introducing a Canadian company, Canley Developments
Inc, as a joint venture partner to some of its mining and exploration projects
on the Italian island of Sardinia.



Three separate arrangements will see Canley granted an option to earn a 45%
stake in the Furtei gold mine, have the right to negotiate a joint venture on
two other GMS exploration tenements on Sardinia, and pay #1 million for a
placement of shares and warrants in GMS.



The chief executive of GMS, John Morris, said the new relationship with Canley
was a significant step in reinvigorating gold exploration and development in
Sardinia.



"This is an arrangement which benefits both companies," Morris said. "GMS is
keen to introduce a new partner to its world-class exploration tenements, and
Canley is looking for an opportunity to expand."



The Furtei component of the deal involves Canley being issued with an option to
earn a 45% stake in the mine and its surrounding exploration tenements in return
for spending the whole of the exploration and mining expenditure required for
the Furtei project, to an amount of Euro15 million. The option is for eight years.
Canley can earn its interest in two stages of 22.5% for each Euro7.5 million spent,
at a minimum rate of Euro1 million in the first year, and Euro2 million in each
successive year. Morris said the arrangement with Canley, which is to be
followed by a more detailed warrant agreement, is subject to a 30-day due
diligence and confirmation of funding period ending on 7 April.



Furtei is the first modern gold mine in Italy. Over the past five years it
produced 138,000 ounces of gold. Open pit operations ended towards the end of
the year 2002. Geological studies have indicated an extensive resource, which
may be accessible by underground mining techniques.



The second part of the arrangement gives Canley a right, exercisable for six
months, to nominate two areas of up to 100 square kilometres other than the
Monte Ollasteddu prospect. Canley will then have the exclusive ability for 3
months to negotiate with GMS on the terms of a possible joint venture for
exploration and mining on the nominated areas.



The #1 million placement of shares and warrants will be at a price and other
terms to be determined, together with a more detailed warrant agreement, on or
before 7 May 2003. The funds raised by GMS from the placement will be used for
exploration and development on the Company's other concessions in Sardinia, and
for working capital.



At Furtei, the first year's drilling calls for a budget of not more than Euro1
million. Sardinia Gold Mining SpA (SGM), a subsidiary of GMS, will manage the
project under a joint operations committee.



The final structure of the joint venture at Furtei is expected to be 45% each to
GMS and Canley, and 10% with Progemisa, a corporation owned by the Sardinian
Government. After Canley has earned its 45% interest, it will pay 50% of all
Furtei project costs, and GMS, which presently funds the whole of the project's
expenditure requirements under separate arrangement with Progemisa, the
remaining 50%. If Canley earns only a 22.5% interest, it will pay 25% of Project
Costs and the Company will effectively pay 75%.



Canley has advised GMS, as follows:



"Canley Developments (Canley) was established in 2001.  Based In Vancouver
Canada, Canley is a public company listed on the TSX Venture Exchange, traded
under the symbol CDD. There are approximately 8,800,000 shares in issue. Between
the consolidations within the mining industry and low commodity prices, which
forced several companies out of the mining industry, Canley's plan is to acquire
advanced stage projects and rapidly build a diversified mining company.
Furthering this plan, Canley has acquired a large magnetite project called
Lodestone Mountain in British Columbia (B.C.), which it plans to place into
production, supplying magnetite to the coal market in B.C. Canley has been
reviewing precious metal projects around the world, searching for advanced stage
projects with strict criteria. Namely, a location in a stable country possesses
good infrastructure, project must have good grade of ore per ton and has good
potential to expand areas of known mineralisation. The management of Canley
feels the Furtei Gold Mine fits these criteria and more."



Ends...



For more information, please contact:



Zoe Biddick or James Benjamin
Biddicks
Financial Public Relations
Tel:       [phone]
Fax:       [phone]
Email:     [e-mail]
           [e-mail]




                      This information is provided by RNS
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