19/03/2008 - 08:58

Monarch moving forward with Mount Magnet

19/03/2008 - 08:58

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Monarch Gold Mining Ltd said today that it is well advanced with arrangements for the recently announced $65 million acquisition of the Mount Magnet Gold Operations, and that it is ready to get started with the exploration when it takes possession next mo

Monarch Gold Mining Ltd said today that it is well advanced with arrangements for the recently announced $65 million acquisition of the Mount Magnet Gold Operations, and that it is ready to get started with the exploration when it takes possession next month.

"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," Monarch Gold Mining chairman, Michael 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," he 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," Mr Kiernan said.

"Drilling is due to commence in May on the most prospective advanced projects including the Galaxy 'Big Pit' concept."

The company said in the announcement that higher gold prices will have a significant impact on resource modelling.

 

Full announcement pasted below:

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."

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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