Erdene Gold to issue three million shares to Xstrata
2006-02-14 09:24 ET - News Release
Mr. Peter Akerley reports
XSTRATA COAL ACQUIRES 9.8% STAKE IN ERDENE
Erdene Gold Inc. has entered into an alliance agreement with Xstrata Coal Canada Ltd., a subsidiary of Xstrata PLC, pursuant to which Xstrata Coal will subscribe for three million common shares of Erdene at $1.00 per share resulting in Xstrata Coal owning a 9.8-per-cent equity interest in Erdene. The transaction is expected to close Feb. 16, 2006, subject receipt of all necessary regulatory approvals.
"This agreement with Xstrata Coal marks a pivotal point in the growth of Erdene and is great news for our shareholders," said Peter Akerley, Erdene president and chief executive officer. "It will allow us to more aggressively test advanced projects and continue with the creation of new opportunities with an initial focus on coal. This partnership combines Erdene's strong pipeline of strategically located, early stage properties in Mongolia with Xstrata's established relationships in Asia and ability to invest in and support world-class projects."
"With this investment in Erdene, Xstrata Coal gains exposure to a strong inventory of projects and a senior management team with established local knowledge of mineral resources in Mongolia. We look forward to working with Erdene in helping advance their many exciting opportunities," said Xstrata Coal chief executive, Peter Coates.
Highlights of the alliance agreement
Xstrata Coal will be granted a first option to enter into a joint venture and earn a 75-per-cent interest in any coal opportunity in Mongolia identified by Erdene by financing all work through completion of a feasibility study. Should Erdene elect to develop or pursue third party participation in any non-coal projects or properties in Mongolia or elsewhere, Xstrata Coal will have a 60-day right to review all supporting project information and, if it wishes to participate in the project, to negotiate the terms of its participation before Erdene may make the opportunity available to another party or develop the property itself. Xstrata Coal will have the right to name a nominee to the board of directors of Erdene. The rights granted to Xstrata Coal under the alliance agreement expire if Xstrata does not maintain a 5-per-cent equity position in Erdene although parties' rights and obligations for any established joint venture survive.
Conference call and webcast
Management of Erdene will hold a conference call at 9:30 a.m. ET today to discuss the agreement and answer questions. Participants can access the call by dialling 1-800-814-4862 or 416-644-3414. The call will also be webcast live at the company's website.
A replay of the call will be available until midnight on March 1, 2006, by dialling 1-877-289-8525 or 416-640-1917 and entering passcode 21177079 (followed by the number sign).
About Xstrata
Coal Xstrata Coal is a wholly owned subsidiary of Xstrata Coal Pty. Ltd., one of the Xstrata PLC group of companies. It is amongst the world's largest producers of export thermal coal and a significant producer of coking coal. Xstrata Coal has interests in a diverse portfolio of over 30 coal mines located in Australia and South Africa with a project in Canada, and employs around 10,000 people, including contractors. Xstrata PLC is a major global diversified mining group, listed on the London and Swiss stock exchanges and is listed in the FTSE Top 50. The group is headquartered in Zug, Switzerland, and has approximately 24,000 employees worldwide, including contractors. Xstrata maintains a meaningful position in six major international commodity markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver. The group's operations and projects span five continents and eight countries: Australia, Canada, South Africa, Spain, Germany, Argentina, Peru and the United Kingdom.
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