SINGAPORE (CNW-PRN)–Marcus Randolph–President of First Dynasty Mines Ltd.–announced Thursday that the company reached a definitive agreement to acquire up to 100 percent of Global Gold Armenia Ltd. from its current parent company–Global Gold Corporation.
The definitive agreement replaces the preliminary agreement originally announced in February and gives First Dynasty immediate management control of Global Armenia and its projects.
Global Armenia is a party to a joint venture with agencies of the Armenian government to construct a $12 million plant at Ararat to recover gold from mine tailings and to conduct feasibility studies on the redevelopment of the Zod and Meghradzor mines–all in Armenia. Estimated resources at the three projects total 6.3 million ounces of gold.
Under the terms of the definitive agreement with Global Gold–First Dynasty has committed to invest sufficient funds to permit Global Armenia to meet its ongoing joint venture obligations and will thereby earn an incremental equity interest in Global Armenia.
Upon reaching 80 percent–First Dynasty will have 18 months to issue four million special warran’s to Global Gold to acquire the remaining 20 percent of Global Armenia.
Global Gold will receive additional special warran’s if reserves at Zod and Meghradzor exceed specified targets. Each special warrant will be convertible into one common share of First Dynasty. The issuance of First Dynasty special warran’s and certain other obligations of First Dynasty under the definitive agreement are subject to regulatory approval.
"Finalizing our agreement with Global Gold clears the way for us to work together to accelerate the finalization of additional joint venture agreemen’s with our Armenian co-venturers covering the re-development of the Zod and Meghradzor mines." said Randolph. "These discussions are well advanced and we estimate that these agreemen’s will be completed in about two months."
The proposed redevelopment of the Zod and Meghradzor mines is expected to proceed as a fifty-fifty joint venture between Global Armenia and the Armenian government. Global Armenia’s interest in the Ararat tailings plant will be 50 percent to 67 percent–depending upon metallurgical performance.
The basis for the proposed Zod and Meghradzor agreemen’s is a business plan which has been jointly developed by Global Armenia and the Armenian government. This plan targets progressive escalation of gold production to 470,000 ounces annually by year 2001. Initial production–at a rate of 24,000 ounces per year from the tailings plant–is expected to start late in 1997.
"We entered into a partnership with Global Gold and the Armenian government when we announced First Dynasty’s entry into Armenia in February," Randolph said. "Our mutual goal is to re-establish Armenia as a major gold producer. We now have had several months to work with our new partners and we are delighted with the progress we have made.
"This is continuing confirmation of the attractiveness of Armenia as a place to invest and demonstrates that the Armenian government is an excellent business partner."
Azerbaijan recently claimed sovereigty over the Zod Gold mine.
The Azeri foreign ministry stated that ir was "illegal" for Armenia and US companies to excavate the gold mine–since it was not on Armenian territory. The mine was developed by Armenia in the 1970’s.