TORONTO, Ontario, Dec. 17, 2003 (PRIMEZONE) -- Number of shares outstanding: 32,447,625
BacTech Mining Corporation (TSX Venture:BM) ("BacTech") announced today that it has signed a Memorandum of Understanding ("MOU") to participate in a joint venture in China through an equity investment in Australian listed Michelago Limited ("Michelago"; ASX:MIC) and certain related transactions. BacTech, and its technology partner Mintek of South Africa, have agreed to participate in a newly formed joint venture company with Michelago and Shandong Tarzan Biogold Co., Ltd. ("Biogold").
Biogold holds the rights to market the BacTech/Mintek bioleaching technology in China, Mongolia, Siberia and Korea and has been utilizing the technology at the gold bioleaching facility at Laizhou, Shandong owned and operated by Biogold. The bioleach plant has been operating since 2000 and has treated concentrates sourced from various mines in China. The plant has been producing approximately 50,000 ounces on an annual basis and has the capacity to increase production in the future.
Recently, Michelago was granted an option by Biogold to acquire up to 82% of a joint venture company that will operate and own the Shandong plant. BacTech/Mintek will participate in the joint venture through an equity investment in Michelago equal to 27% of the value of the operating plant. The purchase price of the Michelago shares to be acquired by BacTech/Mintek will be determined by the weighted average share price for the 15 trading days prior to the registration of the joint venture company provided that the price will not be less than A$0.13 per share. The value of the bioleach plant will be determined by the Zenith Corporate Advisory Group of Beijing, China and will be completed in January, 2004.
The other terms of the joint venture agreement are as follows;
1. Michelago will pay BacTech/Mintek (57.5%/42.5%) the
outstanding royalty obligations due to BacTech/Mintek from
Biogold equal to US$472,000 in cash and/or shares of
Michelago, at Michelago's option. The payment will be made
in four quarterly payments commencing the day the Joint
Venture Company (JVCO) is operational.
2. Michelago has agreed to process all gold ores and
concentrates produced by its joint venture with the Laizhou
Jincheng gold mining operation at the bioleaching plant.
3. The joint venture company shall have a right of first refusal
to process ore from future Michelago mine developments or
operations in China that produce refractory ores or
concentrates that require bacterial oxidation. The joint
venture company will determine whether the processing will
take place at the existing Shandong plant or at a new plant
to be constructed in the vicinity of the project.
4. BacTech shall have a right of first refusal to purchase
refractory ores or concentrates that require bioleaching
which are produced from future Michelago mine developments or
operations and that Michelago decides to sell.
5. Michelago will arrange for BacTech acquire up to a 30% equity
interest in projects held by the Laizhou Jincheng Gold Mining
Company, Michelago's joint venture partner in China.
6. The joint venture will hold the regional marketing rights for
the BacTech/Mintek bioleaching technology license for a
period of five years, renewable for an additional five years
at the joint venture company's option.
The completion of the transactions contemplated by the MOU are subject to the negotiation and execution of definitive agreements, the formation of the joint venture company, confirmation of the royalties payable by Biogold to BacTech/Mintek and receipt of all requisite regulatory approvals and third party consents.
The proposed transactions in China will be the third project for BacTech under its new strategy of owning and operating mining assets either directly or through joint ventures.
CORPORATE PROFILE On August 5, 2003, BacTech announced the closing of its acquisition of a 55% interest in the Tonkin Springs Gold Mine located in north-central Nevada on the prolific Cortez Trend. On November 12, 2003 BacTech announced its second acquisition, the optioning of 100% of the McKinnon Creek gold project in southeast British Columbia.
BacTech has developed and patented bioleach technology for the treatment of refractory ores and concentrates to enhance the recovery of gold, silver and base metals. BacTech has commissioned three commercial bioleach plants for the recovery of gold and more recently has successfully demonstrated its technology in the selective recovery of precious and base metals from complex sulphide concentrates. Bioleaching is a commercially accepted and environmentally friendly alternative to conventional smelting operations and provides BacTech with a distinct market advantage in the acquisition and operation of mineral properties. BacTech's business is to own and operate mining projects independently or in joint venture.
The TSX Venture Exchange has not reviewed and does not accept any responsibility for the adequacy or accuracy of this release.