Buffalo Gold signs investment MOU with China Railway Resources and finance the Mt Kare project in Papua New Guinea
Brian McEwen, President and CEO of Buffalo Gold Ltd (TSX VENTURE: BUF)(OTCBB: BYBUF)(FRANKFURT: B4K) is pleased to announce that the Co has signed a Memorandum of Understanding (M.O.U.) with China Railway Resources Co LTD. (“CRRC”), a wholly owned subsidiary of China Railway Group Limited (“CREC”) (www.crec.cn) to invest directly into the Co as well as finance the Mt Kare project in Papua New Guinea and the grassroots projects in Australia. “CREC” is a public company registered in the People’s Republic of China and one of the largest civil construction companies in the world. From January 2008 to June 2008 CREC reported profit attributable to the equity holders of the Co of RMB1.906 billion (US$332,000,000 CDN), representing a year-on-year growth of 190%. CREC has created a Resource Development Branch to invest in overseas mineral development projects.
Buffalo Gold’s CEO, Brian McEwen commented, “We are very excited to have signed this MOU with CREC. Raising money for early stage projects is extremely difficult in the current market, and as such our Australian properties and even the Mt Kare project have been underexplored for the past year. Buffalo now has a partner with the financial backing to complete exploration and evaluation at Mt Kare and our portfolio of grass roots projects in Australia. This allows us to focus on completing the underground feasibility study at our Furtei operation in Sardinia so that we can increase our revenues from that project.”
Under the terms of the M.O.U., CRRC intends to:
-Make an equity investment into Buffalo of US$3,000,000 CDN at US$0.10 for each unit. Each unit contains one common share and one half share warrant at US$0.30 per share for one-year from date of closing.
-Make a project investment US$7,500,000 CDN into Buffalo’s Mt Kare JV with Madison Minerals within 24 months of signing to earn 54% of the project.
-Earn up to 72% in the project by making a cash payment of US$5,000,000 CDN to the Mt Kare JV and completing a feasibility study on the project. CRRC will earn 82% with a total project investment of at least US$40,000,000 CDN.
-Make a total project investment into Buffalo’s Australian portfolio of US$2,500,000 CDN to earn 60%. CRRC can earn up to 80% in any of the projects by advancing to the stage of resources as defined in NI 43-101.
The M.O.U. is contingent on CRRC completing due diligence on Buffalo and its assets and receiving all approvals, including approval from the TSX Venture Exchange.
Time is of the essence and the proposed schedule is for CRRC to begin due diligence and site visits and within two weeks of signing and if satisfied with the due diligence to finalise terms and conditions within eight weeks of signing.
Madison-Buffalo joint venture
The interests of Buffalo Gold and Madison Minerals in the Mt. Kare project are currently held via a joint venture agreement dated June 25, 2007 by which Buffalo has a 60% interest and Madison a 40% interest, which is subject to dilution in certain circumstances. Completion of the transactions set out in the M.O.U. would result in the replacement of that joint venture agreement with a new agreement, providing for, among other matters:
-Fixing Madison’s interest in the project at 40% of the total retained Madison-Buffalo interest at all stages going forward, not subject to dilution.
-A cash payment from Buffalo to Madison of US$352,165 CDN on regulatory acceptance of an agreement in respect of the matters set out in the M.O.U.
-Receipt by Madison of 40% of the US$5,000,000 US dollars cash payment to the JV as set out above.
-Retention by Madison of 3.2% interest in the project at the point of CREC’s earning its 82% interest.
-Relief from a requirement that Madison fund a portion of the JV’s expenditures on the Mt. Kare project since July 14, 2008 or, in the alternative, face dilution of its interest to an amount less than 40%.
Madison confirms that it is the owner of 3,521,648 shares of Buffalo Gold Ltd
China Railway Group Ltd (“CREC”) is one of the largest civil construction companies in the world and the largest railway, road, bridge and tunnel construction company in Asia. The Company’s current ranking in Fortune 500, as published in the US Fortune magazine in 2008, is 341, rank 332 in the ”Top 500 Brands in the World” list prepared by World Brand Laboratory in 2008, and rank 433 in the ”Global 500” published in the Financial Times.
About Buffalo Gold
Buffalo’s vision is to build shareholder value by growing a gold mining company through a combination of exploration and acquisition. The Co became a gold producer in November 2007 with the acquisition of the Furtei mine, and is exploring projects in Sardinia, Papua New Guinea and Australia.
To find out more about Buffalo Gold Ltd (TSX VENTURE: BUF), please visit the company website at www.buffalogold.ca. To find out more about Madison Minerals Inc. (TSX VENTURE: MMR) please visit the company website at www.madisonminerals.com.
Brian McEwen is the Qualified Person for Buffalo and has read and approved the contents of this news release.
On behalf of the Board of directors of BUFFALO GOLD LTD.
Brian McEwen, President and Chief Executive Officer
On behalf of the Board of directors of MADISON MINERALS INC.
Chet Idziszek, President and Chief Executive Officer
This press release contains certain forward looking statements, which area based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected. Buffalo undertakes no obligation to upgrade forward looking statements if circumstances or managements estimates or opinions should change. The reader is cautioned not to place undue reliance on forward looking statements.
Contacts: Buffalo Gold Ltd Julie Hajduk Investor Relations (604) 685-5492 or Toll Free: 1-888-685-5492 (604) 685-2536 (FAX: 4.19, -0.30, -6.68%) Email: firstname.lastname@example.org Website: www.buffalogold.ca
Madison Minerals Inc. David Scott Investor Relations (60… or Toll Free: 1-8… (604) 331-8773 (FAX: 4.19, -0.30, -6.68%) Email: email@example.com Website: www.madisonminerals.com
This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
SOURCE: Madison Minerals Inc. and Buffalo Gold Ltd October 22, 2008