Congo Resources

[Berliner]

Moto Goldmines Limited - Issue of 2006 annual financial statements

http://www.newswire.ca/en/releases/archive/March2007/30/c9019.html

In November 2006 the Company entered into an agreement ("November 2006
Protocol") with Okimo to enter into a simplified contractual arrangement that
will govern the development of and future production activities at the Moto
Gold Project in the north east of the Democratic Republic of Congo ("DRC").
Under the November 2006 Protocol the parties re-iterated the validity of the
existing contracts and agreed the following principal terms:

<<
- The Existing Contracts be amalgamated in favour of a 30 year lease
in respect of a newly consolidated perimeter in favour of Borgakim
or an exploitation company covering approximately 2,350 sq kms,
with the balance of the area being released to Okimo.

- The interests of the partners in the exploitation company be
Okimo 30% (non-dilutable), the Company 60% and Orgaman sprl
("Orgaman") 10%.

- The Company will pay to Okimo through Borgakim, US$5 million, and
the exploitation company will pay ongoing monthly rentals of
US$350,000 until the commencement of production.

- Okimo currently owes Orgaman approximately US$21 million. The
Company has agreed through Borgakim to purchase this debt from
Orgaman on terms to be negotiated in an agreement between the
Company, Borgakim, Okimo and Orgaman. The Company has agreed to
purchase the debt from Orgaman and to pay Orgaman approximately
US$8 million in respect of interest accrued to date on this debt
as described below.

- Borgakim has agreed to provide Okimo with the funding required to
pay the arrears and balance due to its employees of retirement age
according to the findings of an audit to be conducted by Okimo;
such funds form a non-interest loan to Okimo which is to be repaid
by Okimo with its share of income generated by the project.
>>

The mineral rights held by Okimo are granted until November 2008, subject
to extension for force majeure. Pursuant to the new DRC Mining Code Okimo is
required to transform its existing rights into an exploitation licence under
the Mining Code. Okimo is yet to commence this procedure. Once the rights have
been transformed into an exploitation licence such mineral rights are
renewable (subject to satisfying certain conditions) on application for
periods of fifteen years (upon granting of an application), until the deposits
are exhausted.
In January 2007, certain of the Company's subsidiaries received letters
from the then Chief Executive Officer of Okimo and now Vice Minister of Mines
claiming certain obligations under the Existing Contracts had not been
satisfied and giving the relevant company ninety days to rectify matters. The
Company strongly disputes that it has failed to satisfy any performance
criteria under any of the contracts with Okimo and is seeking formal
withdrawal of the letters. The Company has received a copy of a letter to the
former CEO of Okimo from the Chairman of Okimo making it clear that he had no
authority to write the letters, but the Company is still awaiting formal
withdrawal of the letters.
Further documentation has been prepared by the Company to implement the
November 2006 Protocol. However the Company was requested to wait until the
appointment of the new Government of the DRC and the appointment of officials
to the state companies following the recent elections before progressing the
documentation. The relevant appointments have been made; however the recent
outbreak of unrest in the capital may delay the withdrawal of the letters from
the former CEO of Okimo and finalisation and implementation of these ancillary
documents. These financial statements have been prepared on the basis of the
agreements contained in the November 2006 Protocol.
In light of the current potential challenges to the Group's title, the
Company has been actively updating influential people in the DRC and
internationally, including the board and current executive team at Okimo and
the new ministers, as to the Company's activities and has engaged both
international and local DRC legal experts to prepare and take the appropriate
legal action. The Board is also meeting frequently both to review the position
and to determine the appropriate action. The Board is seeking to achieve
resolution of the issues as soon as practicable.