London junior picks up Bibiani mine

London-listed junior Central African Gold (CAN-L) has struck a deal with AngloGold Ashanti (AU-N, AGD-L) to buy the Bibiani gold mine in Ghana, along with the Bibiani North exploration permit.

AngloGold gets US$36 million for the mine and related assets, including the mining lease, plus US$4 million for the adjoining permit ground. An application to extend the permit is before the Ghanaian government now, and the deal for the permit is conditional on the extension of the permit period.

The transfer of the lease and permit also need the government’s approval, and the asset sale needs the consent of the South African Reserve Bank.

Bibiani produced 24,000 oz. gold in the six months ended June 30, at a total cash cost of US$329 per oz. Year-end proven and probable reserves were 4.3 million tonnes grading 1 gram gold per tonne

Central African, which has been inactive for most of 2006, plans to raise the money for the purchase through a proposed reverse-takeover financing. At the end of 2005 the company had 1.1 million in net current assets, with 1.2 million in cash, and so it will need to get most of the cash for the deal from the takeover transaction.

Central African had announced in late July that it was in discussions for a reverse takeover. The company said it would have particulars in a circular to shareholders. Until then, the company’s shares are under a trading halt.