MEDIA
RELEASE
19 March
2008
MONARCH MOVING FORWARD WITH MOUNT MAGNET
Monarch Gold Mining Company
(ASX /DIFX:MON) is well advanced with arrangements for the recently announced
the acquisition of the Mount Magnet Gold Operations project, and will hit the
ground running with its exploration and optimization activity when it takes
possession next month.
Monarch announced the
acquisition of the project, which includes the historic Hill 50 mine, from
Harmony Gold Mining in November last year and will take possession on 1 April
2008. The purchase process is due for settlement on 30 June 2008.
The $65 million purchase
price included a $30 million cash component, with $5 million already paid on
signing, and $11 million to be funded through Environmental bonds. The balance as previously
announced will be equity ($20m) and convertible note ($15m).
Mount Magnet funding status
Cash component (A$30
million):
$19 million cash
$11 million
Environmental bonds (to be bank funded)
Current
Position:
$5 million
paid
$14 million (outstanding)
Mt Magnet surplus asset
sales
$5 million (expected)
Balance cash due 30
June 2008 $9
million
“We expect to yield
A$5 million cash from the sale of surplus assets including a surplus ball mill,
excess housing infrastructure, motor vehicles and non-core plant and
spares. This will leave Monarch to raise less than $10 million in equity
to complete the Mount
Magnet acquisition in
June,” Mr Kiernan said.
“Despite capital
and credit markets changing substantially in recent times, we believe the
fundamentals of the project, including the strength in the gold market, make a
compelling investment case,” Mr Kiernan said.
The Mt Magnet asset
package comprises of a resource inventory of 2.7M ounces of gold, tenements
covering approximately 1,100 square kilometres, along with a 2.7mtpa capacity
plant.
It is intended to put the Hill
50 mine on care-and-maintenance for up to two years, while the focus is on
exploration activities.
“We have budgeted
for a full year exploration program of $10 million,” he said.
“Drilling is due to commence in May on the most prospective advanced projects
including the Galaxy ‘Big Pit’ concept.” The higher
gold prices will have a significant impact on resource modelling.
Monarch also intends to
investigate the economic iron ore potential in the Mount Magnet
area. A high level review including detailed magnetics and ground knowledge
indicates potential for significant tonnages of iron formation. Further work is
required to determine the economic potential.
“The Monarch Board
is confident 2008 will be a strong year for an unhedged gold and bank debt free
producer with exposure to the robust gold price.”
For further information, please contact:
Michael
Kiernan
Warrick Hazeldine
Chairman - Monarch
Gold
Purple Communications
Tel: +61 (0)8 9481
6422
Tel: +61 (0)8 9485
1254
Mob: +61 (0) 417 944 616
Background
The Company has a
resource base of more than five million ounces, three state-of-the-art gold
treatment plants (Davyhurst, Minjar and Mt Magnet), and has dominant ground
positions in the prolific gold mining region to the north-west of Kalgoorlie.
Monarch now has the
largest Australian-controlled ground position in the Kalgoorlie
region and an expanded footprint in the Mount Magnet
region.
Monarch remains firmly on track with its production targets,
with mining commenced at the Davyhurst and Mt Ida projects.
Growth Strategy
Monarch’s
growth strategy is focused on two major potential production centres in Western Australia:
Davyhurst Gold Project –
Davyhurst Project gold resources of over 1.5 million ounces within a 2,000 sq
km tenement package and 1.2mtpa gold processing facility (+1.2Moz historic
production). First bullion was poured in August 2007. Davyhurst Gold
Project incorporates the Riverina Project - indicated
and inferred gold resources totalling 1.64 million tonnes @ 3.8 g/t Au for
200,000oz and also the Mt Ida Project - resources are stated as
143,000t at 24.0 g/t containing 110,650oz of gold within four areas - the
Baldock, Whinnen, Meteor and Timoni deposits. Monarch commenced mining gold in
July 2007.
Mt Magnet Gold Project –
gold resource of 2.7 million ounces, a ground package of 330 tenements covering
approximately 1,100 square kilometres and a 2.7mtpa capacity gold processing
facility (+10 million ounces of current resources and past production).
Monarch’s
strategy has been to capture opportunities for the consolidation of gold
development assets which have not in the past realised their full potential,
either due to a lack of capital or to limited exploration.
For further information visit: www.monarchgold.com.au
So far as it relates to ore and mineralisation, this report
is based on information compiled by John Davis, who is a Member of the
Australian Institute of Mining and Metallurgy and the Australian Institute of
Geoscientist. Mr Davis has sufficient experience which is relevant to the style
of the mineralisation and type of deposit under consideration and to the
activity which he is undertaking, to quality as a Competent Persons as defined
in the 2004 Edition of the Australasian Code for Reporting for Exploration
Results, Minerals Resources and Ore Reserves. Mr Davis is a full time employee
of the Company. This report accurately reflects the information complied by Mr
Davis. Mr Davis has consented to the inclusion of this information in the form
and context in which is appears in this report.
Monarch Gold Mining Company
Projects