CENTRAL ASIA RESOURCES LIMITED 17 July 2015
ASX / MEDIA ANNOUNCEMENT SALE OF DALABAI PROJECT FOR A$6.9M CONSIDERATION Sale of Dalabai Project
Central Asia Resources Limited (the Company) (ASX: CVR) is pleased to announce that it has entered into a Binding Heads of Agreement with Uroven OMR LLP ("Uroven or "The Buyer"), a special purpose private company registered in Kazakhstan, for the commercial sale of CVR's 90% interest in the Dalabai Gold Project ("Dalabai") in Kazakhstan. The sale is subject to certain conditions precedent.
As part of the purchase of Dalabai, the Buyer will assume all Dalabai related debts, including:
Dalabai debt, including bank debt as at 15th July 2015, (US$2.6m/A$3.46m)
Gold Line repayments (1480 oz gold, valued at approximately AUD $2.3m using current gold price of AUD $1,550/oz). The Gold Line was established in 2013 and 2014 between CVR and a private entity, West Asia Minerals Ltd.
In addition to assuming the Dalabai debts, the Buyer will also make the following cash payments to
CVR:
US$300,000 (A$400,000) upon execution of a formal Sale and Purchase Agreement;
US$200,000 (A$266,000) upon commencement of gold production if production commences by 15 September 2015, otherwise on 15 December 2015; and
A 1% Gross Royalty from Dalabai production, capped at US$360,000 (A$480,000)
commencing from 1 January 2016 and paid during 2016 and 2017.
These amounts total approximately AUD $6.9m using an exchange rate of US$0.75/A$. The Board is satisfied that this represents a reasonable return for shareholders given the difficulty of securing finance for Dalabai, and it's relatively short mine life.
CVR will be required to seek shareholder and regulatory approvals of relevant matters including under the ASX Listing Rules and the Corporations Act 2001 (Cth) in respect of the sale of Dalabai. CVR will also require a waiver of pre-emptive right from the minority partner in Dalabai, Kazakhstan- Australia LLP. Approval from West Asia Minerals Ltd, the lender of the Dalabai Gold Line, is required for the transfer of this loan from CVR to the Buyer.
The Buyer will purchase Palm ES, the operating company for Dalabai, and operate Dalabai under a Management Agreement with Onzhas LLP, whose subsidiary company holds the subsoil licence for Dalabai.
If the agreement is terminated other than due to The Buyer's breach of fault, CVR will be liable to repay up to US$60,000 plus any amounts repaid to existing Dalabai creditors by the Buyer.
C/o- 311-313 Hay St, Subiaco, Western Australia 6008
PO Box 8282, Subiaco, Western Australia 6008
P: +61 8 6489 0600 F: +61 8 9388 3701
ABN: 13 113 816 158
ASX / Media Announcement Dalabai Project Sale Planned Resumption of Trading on the ASX
The Company will use some of the initial funds received from the sale to complete its 2014 Kazakh and Australian audits and lodge its 2014 Annual Report and accounts. Subject to the satisfaction of ASX, it is anticipated that the trading suspension on shares in the Company will then be lifted.
Comment from Peter Thompson, Managing Director:
"We are pleased to announce a binding deal for this sale with a group of Kazakh industry professionals. The significant reduction in company debt and injections of cash should allow the Company to resume trading on the ASX and to focus on its larger asset, Altyn Tas, whose exploration licence was recently extended until 2018."
END
For further information contact:
Peter Thompson
Managing Director
Central Asia Resources Limited
Ph: (+61) 417 979 169 (+7) 771 507 2936 www.info@centralasia.com.au
Jason Campbell
Company Secretary
Central Asia Resources Limited
Ph: +61 8 6489 0600
The Almaty, Kazakhstan office of Rosenblatt & Company, an international emerging markets law firm, acted as legal advisors to CVR.
ABOUT CENTRAL ASIA RESOURCES
Central Asia Resources Limited (ASX: CVR) is focused on exploration, development and production of gold in Kazakhstan. The Company holds two license areas in Kazakhstan. These include four deposits with JORC Resources, all of which have exploration upside, and areas of significant prospectivity based on extensive exploration during Soviet times. The license areas are within recognised gold belts, and close to operating mines and infrastructure. Trial mining commenced at the first project, Dalabai in February 2012 using shallow open pit mining and heap leach technology, with a further 1,040oz produced in late 2013 from leaching of stockpiled material.
Altyn Tas Project
The Altyntas project is located 500km north-west of Almaty in the Tien Shen gold province, and 40km from the Akbakai gold mine. The Altyn Tas project includes gold deposits at Altyn Tas, Kepken and Kengir. Resources for the Altyn Tas deposit are quoted at 13.9 million tonnes at 1.34g/t gold for 598,000oz, of which 25% is Indicated and 75% is inferred. An updated 2014 resource estimate is in preparation and is expected to report a smaller overall resource but with a greater proportion in the Indicated category.
Dalabai
The Dalabai Project is located in the Chu Ili gold best in Southern Kazakhstan, approximately 2.5hrs drive from the
country's largest city, Almaty. It is well serviced logistically with proximal main road and rail infrastructure. The project was acquired by Central Asia Resources in 2008 with the current plant built in 2011. Trial mining commenced in Dalabai in February 2012 using shallow open pit mining and simple heap leach extraction through November 2012.
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ASX / Media Announcement Dalabai Project SaleDisclaimer
Certain statements included in this announcement may constitute forward looking information. This information is based upon a number of estimates and assumptions made by the Company in light of its experience, current conditions and expectations of future developments, as well as other factors that the Company believes are appropriate in the circumstances. While these estimates and assumptions are considered reasonable, they are inherently subject to business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking information provided by the Company, or on behalf of, the Company. Such factors include, among other things, risks relating to additional funding requirements, commodity prices, exploration, acquisition, development and operating risks, competition, production risks, regulatory restrictions, including environmental regulation and liability and potential title disputes. Forward-looking information is no guarantee of future performance and, accordingly, investors are cautioned not to put undue reliance on forward -looking information due to the inherent uncertainty therein. Forward-looking information is made as at the date of this announcement and the Company disclaims any intent or obligation to update publicly such forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by law.
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