Kilo Goldmines comments on award of iron ore block in Afghanistan

Tuesday, 29 Nov 2011

Kilo Goldmines Ltd while responding to press reports that it has been awarded one of four concession blocks comprising the Hajigak iron ore deposit in Afghanistan by the Afghan Ministry of Mines confirmed that it has submitted a bid in response to a request for proposals from the MOM for the mining rights to the four concession block Hajigak iron ore deposit.

The company has not been notified by the MOM of the outcome of the bidding process.

It said “If selected, Kilo would have the exclusive right to negotiate with the MOM for the mining rights to the concession block for which it was selected as a preferred bidder before a final award is made.”

Although the bid was submitted in the name of the Company, the bid was prepared by an independent group, led by David Buckle, a UK based corporate financier, who would be responsible for the financing and management of the project. If awarded, the project would be held in a new entity with Kilo receiving an initial 20% interest, subject to dilution but with no funding obligation. The independent financing and management structure was presented in the bid documents submitted to the MOM. The Principals are required to reimburse Kilo for expenses incurred in the bidding process and to indemnify it for any losses sustained.

The bid was initiated earlier in the year and the Board determined that it would be in the best interests of the Company to continue with the bid given the potential financial benefits and limited downside risk following the agreement of the Principals to reimburse the Company for expenses and provide it with indemnification.

The Hajigak iron ore deposit is situated in the mountainous Bamyan province, 130 km west of the capital, Kabul. It is one of several iron deposits within this area and is the largest located to date.

Kilo Goldmines Ltd is a Canadian gold exploration company operating in the Democratic Republic of Congo. The Company has over 7,000 square kilometers of favorable Archaean Kabalian greenstone in the Kilo Moto area in north eastern DRC. Kilo recently announced an inferred resource on the Adumbi Deposit of the Somituri Project of which the Company owns a 71.25% interest in the DRC entity that holds the Somituri Project Exploitation Permits. The Company is also working on a number of other prospective areas which contain historical workings in the same region. It also has a joint venture with Rio Tinto Ltd. on potential iron ore licences in north eastern DRC.