Listing on the Toronto Stock Exchange
Following the Closing, the Corporation may not be able to maintain the listing of the Common Shares on the TSX as the Corporation will no longer have an advanced property for the purposes of the TSX’s listing requirements. In order to maintain the listing of the Common Shares on the TSX, the Corporation will be required to obtain an advanced property. There is no assurance that the Corporation will be able to acquire an advanced property on terms acceptable to it, if at all.
PART VI – FUTURE PLANS FOR THE CORPORATION
As previously stated, the Corporation intends to distribute to its shareholders the net cash proceeds resulting from the disposition of 600,000 Newmont Common Shares. The remaining 200,000 Newmont Common Shares will be available for working capital, after payment of fees and expenses in respect of the Transaction, the payment of outstanding indebtedness of the Corporation to third parties and the setting aside of a reserve to pay any taxes which may be owing as a result of the Transaction or otherwise. See ‘‘Information Concerning the Transaction – Details of the Transaction.’’ It is anticipated that working capital will amount to approximately $9,000,000, assuming the exercise of certain options and warrants, a Newmont Common Share price of US$38.00 and a Canadian dollar exchange rate with the American dollar of 1.37038 being the exchange rate on September 8, 2003. Moydow management is currently reviewing a number of projects with a view to acquisition or investment. The Corporation presently intends to remain focussed on gold mineral projects within the regions of West Africa and North America. In the immediate future, Moydow intends to continue with exploration efforts on the True Grit project in Newfoundland, reactivate its exploration activities at its Kanyankaw East property (Ghana) and commence more aggressive exploration activities at its Hwidiem property (Ghana). The Hwidiem property is adjacent to the Ntotoroso project and less than three kilometres from the E-Zone deposit. The property is largely alluvial covered which does not lend itself to normal early stage exploration activities. Subsequent to the injection of working capital as a result of the Closing of the Transaction, Moydow will have the funds to conduct drilling on the property in order to better assess its mineral potential.
On August 7, 2003, Moydow announced the results of its first phase drilling program at the True Grit project in Newfoundland. This first phase of drilling comprised a 1,251-metre, 22 hole diamond drilling program. All drill holes except TG3 and TG4 were drilled to a depth of approximately 50 m at azimuths ranging 295-300 degrees and inclined at –45 degrees. TG3 and TG4 were drilled vertically to depths of 103 and 121.3 m, respectively. The drilling was designed to test a broad zone of low-grade gold mineralization hosted within a sequence of thinly bedded pelites and lesser phylites and characterized by finely disseminated arsenopyrite-pyrrhotite-pyrite mineralization and numerous narrow quartz veinlets and stringers. Previous drilling in two diamond drillholes (TG1 and TG2) by the property vendor Alex Turpin, a local prospector, had returned 0.48 g/t Au over 42.7 m. The zone occurs within a 2600 m by 800 m coincident gold, arsenic and antimony soil anomaly. High-grade arsenopyrite-bearing quartz veins located approximately 1.2 km to the northwest of this low-grade zone assayed 15.9 g/t Au over 1.0 m and 189.0 g/t Au over 0.5 m from saw-cut channel samples. The 2003 drilling program has confirmed the results obtained in holes TG1 and TG2, and has outlined similar mineralization along two sections located approximately 200 m and 350 m to the north-northwest. The best intersection 27 was obtained in hole TG4, which returned 0.6 g/t Au over 117 m including a 26 m wide section grading 0.83 g/t Au from TG4. Intersections ranging from 16 to 46 m with grades of 0.45 to 0.75 g/t Au were encountered in holes TG3, 11, 12, 22 and 23. Gold grades across the mineralized sections are very consistent with the highest individual assay reported being 15 g/t Au. The true width and attitude of the mineralization has not been determined at this time. A second follow-up diamond drill program of 1,300 metres began on August 26, 2003.
A number of recent transactions involving the sale of gold properties have been reviewed and compared with the sale of the Moydow interest in the Ntotoroso property. The review was focused on transactions that would have as much in common with the Ntotoroso transaction as possible and, therefore, would preferably be transactions involving undeveloped gold properties in Africa, and specifically in Ghana if possible. The common denominator in making a comparison between such transactions is usually the transaction cost per ounce of gold reserves with allowance for the fact that gold reserves do vary in quality.
1. Mampon, Ghana
In April 2003 Golden Star Resources Ltd. acquired the undeveloped Mampon property in Ghana from Ashanti Goldfields Company Limited for $9.5 million. The Mampon property is located about 30 kilometres from the Bogosu mine and processing plant operated by Golden Star, and is reported to have probable mineral
reserves of 1.5 million tonnes grading 5 grams per tonne (g/t) gold for in-situ gold reserves of about 240 000 ounces. After allowing for the ten percent carried interest for the Government of Ghana, the cost per ounce of gold in the transaction was about $44.
2. Tarkwa-Damang, Ghana
In January 2003 IAMGOLD Corporation acquired Repadre Capital Corporation for $218 million. The major gold assets of Repadre were an 18.9 percent interest in each of the Tarkwa and Damang operating gold mines in Ghana. After deduction of the value of the royalty interests and liquid assets held by Repadre, the value placed on the interests in the Tarkwa and Damang mines would be about $120 million. Gold reserves at the two mines for the account of IAMGOLD are approximately 2.0 million ounces resulting in a cost of about $60 per ounce.
3. Yamfo-Sefwi, Ghana
In late 2001 following announcement of an offer by AngloGold to acquire Normandy, an independent detailed evaluation of all of the Normandy assets was carried out on behalf of the Normandy shareholders. Included in those assets were undeveloped properties on the Yamfo-Sefwi belt in Ghana, including the 50 percent Ntotoroso 13 interest, but for which feasibility studies had been completed. The range of values for those properties was $94 to $115 million. The Normandy share of ore reserves for those properties was 50 million tonnes grading 2.3 g/t gold for 3.6 million contained ounces of gold, for an appraised value of $27 to $33 per ounce of gold.
Several other transactions related to gold projects in Africa, and particularly Mali and Tanzania, were also reviewed and compared with the proposed Ntotoroso transction. The range of values of $23.0 to $29.1 million determined in this Fairness Opinion for the consideration being offered by Newmont for the purchase of the 50 percent interest of Moydow in the Ntotoroso property would reflect a value of $50 to $65 per ounce for the Ntotoroso gold reserves attributable to Moydow after allowance for the carried interest of the Ghanaian government. After considering the quality of the gold reserves at Ntotoroso, and the stage of development of the project, relative to other transactions and valuations reviewed for comparison, the Ntotoroso sale transaction is being done under terms that compare reasonably with other recent transactions of a similar nature.