Metallica Afcan reworks Sino Gold deal

Junior Afcan Mining (AFK-V) has agreed to postpone, for two years, a US$700,000 payment due to Australian-based Sino Gold. The payment had been due at the end of 2003.

The deal also calls for Afcan to buy back the net profit interest (NPI) royalties payable to Sino from production at the TJS (Tanjianshan) gold project in northwestern China.

Under the original agreement, to acquire an 85% interest in the TJS project, Afcan agreed to pay a 15% NPI interest capped at US$5.5 million. That requirement has been replaced by fixed annual payments (from the end of 2004 through 2009) totalling US$2 million. Half of that total will take the form of a royalty of US$2 per oz. on production exceeding 600,000 oz. Afcan can buy out the payments at any time.

The loan to Afcan from Sino will bear interest at the rate of U.S. prime plus 2% on a quarterly basis.

Afcan says drill results from the Jinlonggou deposit at TJS indicate that mineralization is continuous to the satellite deposit at Pubugou and perhaps to deposit M7. The best result occurred in hole 58, which cut 19.4 metres of true width running 10.6 grams gold.

Selected results from drilling on other areas of the resource include the following:

— Hole 43 — 12.5 metres (true width) grading 3.2 grams gold per tonne.

— Hole 44 — 1.5 metres of 14.8 grams gold.

— Hole 48 — 13.5 metres of 4.7 grams gold.

— Hole 53 — 20.1 metres grading 6.8 grams gold.

— Hole 61 — 17 metres averaging 2.7 grams gold, plus a lower, 12.2-metre interval of 3.6 grams gold.

Drilling will soon test the eastern extensions of the overall deposit.

The remaining 15% in TJS is held by The First Brigade for Geology and Mineral Exploration of Qinghai Province and Dachaidan Gold Mine.

(US$ per tonne)