Moto Goldmines Limited
TSX : MGL
AIM : MOE

Moto Goldmines Limited

December 31, 2007 03:00 ET

Moto Goldmines Agrees to Increase Interest in the Moto Gold Project and to Placement to Sam Jonah

PERTH, WESTERN AUSTRALIA--(Marketwire - Dec. 31, 2007) - Moto Goldmines Limited ("Moto" or the "Company")(TSX:MGL)(AIM:MOE) is pleased to announce that it has entered into agreements with its joint venture partner, Societe d'Organisation, de Participation et de Management ("Orgaman") in relation to the Moto Gold Project and with Sam Jonah, KBE, Chairman of the Company, to the following effect:

- Moto will simplify its joint venture arrangements and increase its interest in the Moto Gold Project to 70% by acquiring Orgaman's 10% interest for aggregate consideration of approximately US$34.6 million, comprising 9,319,211 common shares in Moto (to be issued at C$2.93 per share) and a cash payment of approximately US$7.5 million to repay shareholder loans made by Orgaman to Borgakim Mining sprl ("Borgakim") and the other subsidiary companies through which the Moto Gold Project is held, plus interest on the cash element from signing to completion; and

- In conjunction with this acquisition, Mr Jonah has agreed to subscribe for 2,717,874 common shares in Moto at a price of C$2.78 per share to raise proceeds of approximately C$7.6 million to demonstrate his ongoing support for the Company and the Moto Gold Project.

Following the completion of these transactions, Moto will hold a 70% interest in the Moto Gold Project. The remaining 30% is a non dilutive interest held by L'Office des Mines d'Or de Kilo-Moto ("OKIMO"), a Congolese state-owned company. Completion is expected to occur on or about 30 January 2008 and is subject to receipt of required listing and regulatory approvals from the Toronto Stock Exchange (the "TSX") and that successful application is made for the admission of the new shares to the AIM Market of the London Stock Exchange ("AIM").

The Board believes that, by increasing its percentage holding in the Moto Gold Project and reducing the number of parties to the joint venture arrangements, it will be able to more rapidly progress the contractual arrangements required to enable the development and financing of the Moto Gold Project.

Sam Jonah, Chairman of the Company, commented "I have confidence in the Moto Gold Project and I am pleased to have the opportunity to show this by subscribing for further shares to assist Moto in increasing its percentage ownership of the Project. Having completed the feasibility study and increased our interest in the Project we will be focussing on finalising the joint venture arrangements with OKIMO so as to enable us to progress and develop the Project in the interests of all stakeholders."

Acquisition of joint venture partner's interest in the Moto Gold Project

Moto and Orgaman currently hold their 70% interest in the Moto Gold Project through their ownership of a number of Moto subsidiaries that are incorporated in the Democratic Republic of Congo ("DRC"). Orgaman has agreed to transfer its interests in those subsidiaries (comprising shares and shareholder loans) to Moto for an aggregate consideration of approximately US$34.6 million comprising 9,319,211 common shares in Moto (to be issued at C$2.93 per share) and a cash payment of approximately US$7.5 million to repay shareholder loans made by Orgaman to Borgakim and to the other subsidiaries concerned. The cash portion will bear interest at 8% per annum from signing to completion. The issuance of the Moto common shares is conditional upon receipt of listing and regulatory approvals from the TSX and that successful application for the admission of the new shares is made to AIM.

William Damseaux and Jean-Claude Damseaux are the controlling shareholders of Orgaman. As at today's date, they hold directly 570,290 Moto common shares and Orgaman holds 1,166,000 Moto common shares for a total shareholding of 1,736,290 shares. Following completion of this transaction and the issuance of Moto common shares to Mr Jonah described below, Orgaman, William Damseaux and Jean-Claude Damseaux as a group will hold approximately 14.75% of Moto's then issued share capital.

In assessing this acquisition, the Directors (other than Mr Jonah, who has not taken part in the assessment) have valued the assets being acquired at approximately US$34.6 million.

Pursuant to the November 2006 Protocol between Moto and OKIMO (announced by the Company on November 8, 2006) Moto is to acquire certain debts owed by OKIMO to Orgaman (the "OKIMO Loan") and the contractual arrangements between Moto and OKIMO are to be further simplified into one agreement regarding the Moto Gold Project (the "Consolidated Lease Agreement").

As part of the agreements announced today, Moto has formalised the documentation to reflect its agreement with Orgaman to acquire the OKIMO Loan for a purchase price equal to its face amount and accrued interest to date, of approximately US$31.1 million (the "Assignment"). The purchase price will bear interest at 8% per annum and will be paid to Orgaman as to US$10 million within seven business days of the effective date of the Assignment, US$10 million on the first anniversary of the effective date and the balance of approximately US$11.1 million and accrued interest on the second anniversary of the effective date. Moto has also agreed to certain other protections for Orgaman if it abandons the Moto Gold Project prior to payment in full to Orgaman.

The Assignment is conditional on the Consolidated Lease Agreement and the Tripartite Agreement, referred to below, being entered into. As part of the November 2006 Protocol, it was agreed that the OKIMO Loan would only be removed from the books of OKIMO once an agreement (the "Tripartite Agreement") is entered into among OKIMO, Moto/Borgakim and Orgaman confirming completion of the assignment of the OKIMO Loan. Moto and Orgaman have agreed in the negotiation of the Tripartite Agreement to seek the insertion of a clause that the OKIMO Loan, less interest accrued during the force majeure period, being an amount of approximately US$23 million as at today's date, is assumed by Borgakim.

Pending the Tripartite Agreement being entered into, Moto has agreed that Orgaman will be granted a charge over an effective 10% interest in Borgakim or the Moto DRC subsidiary that will hold the Consolidated Lease Agreement. If the Tripartite Agreement is not entered into within 18 months, Orgaman will be entitled to exercise the charge and become again involved in the management of the Moto Gold Project, unless Moto pays the outstanding amount due to Orgaman under the Assignment.

Moto has the option to pay up to 50% of any instalment of the purchase price for the OKIMO Loan by the issuance to Orgaman of Moto common shares, subject to receipt of regulatory approvals. The number of Moto common shares to be issued will be determined by reference to the volume weighted average price of Moto common shares on the TSX for the five trading days immediately prior to the payment date converted to US dollars at the noon rate of exchange published by the Bank of Canada on the last day of the five-day period.

If there is a change of control of Moto, all unpaid amounts due by Moto in respect of the purchase price (together with accrued interest) will become payable within seven days. If a change of control occurs before the Consolidated Lease Agreement and the Tripartite Agreement become unconditional, then Orgaman can require payment only upon the Assignment of the Okimo Loan becoming effective.

Orgaman has agreed that for twelve months it will not dispose of the Moto common shares issued to it pursuant to the above transactions without first offering such shares to Mr Jonah and to Moto. Pursuant to applicable Canadian securities laws, Orgaman will be restricted from selling any common shares issued in connection with these transactions in Canada for four months, absent an exemption from registration and prospectus requirements.

The Directors (other than Mr Jonah), having consulted with RFC Corporate Finance Ltd, the Company's nominated adviser, consider that the terms of the transactions with Orgaman are fair and reasonable in so far as its shareholders are concerned.

Sam Jonah, KBE to increase his holding in Moto as a sign of ongoing support

Sam Jonah, KBE, Chairman and a Director of Moto, has agreed to subscribe for 2,717,874 Moto common shares at a subscription price of C$2.78 per share for aggregate gross proceeds of approximately C$7.6 million (approximately US$7.5 million). The Company will use the subscription proceeds to make the cash payments to Orgaman, as described above. The subscription is subject to all regulatory approvals being obtained and to completion of the acquisition from Orgaman of its interest in the Moto Gold Project, described above.

Mr Jonah has agreed that for twelve months he will not dispose of the Moto common shares issued pursuant to this subscription, except pursuant to a recommended takeover offer or plan of arrangement or a transfer approved by the board of directors of Moto (such approval not to be unreasonably withheld).

Under his existing arrangements with Moto, Mr Jonah is entitled to be issued options equal to 5% of any material share issuances by the Company. Mr Jonah has waived his entitlement to be issued options in respect of his subscription for shares but will be issued options to acquire 465,961 Moto common shares on completion of the transaction with Orgaman, in accordance with Moto's stock option plan. Following the issue of these options, Mr Jonah will hold an aggregate of 3,559,600 options to subscribe for Moto common shares.

Immediately after the issuance of the common shares to Orgaman and Mr Jonah, Mr Jonah will hold an aggregate of 2,717,874 Moto common shares representing approximately 3.63% of the then outstanding Moto common shares. If Mr Jonah were then to exercise all options currently held by him (including the options referred to above), Mr Jonah would hold an aggregate of 6,277,474 Moto common shares representing approximately 7.73% of what would then be the issued common shares of Moto (without giving effect to the issuance of any other shares of Moto pursuant to any other issued options).

The placement to Mr Jonah is conditional upon completion of the acquisition of Orgaman's interest in the Moto Gold Project described above.

The Directors (other than Mr Jonah) consider, having consulted with RFC Corporate Finance Ltd, the Company's nominated adviser, that the terms of the subscription by Mr Jonah are fair and reasonable in so far as the its shareholders are concerned.

GICC Consultancy Agreement

In order to expedite the progress of the Moto Gold Project, the Company has engaged Generale Industrielle et Commerciale au Congo ("GICC"), a DRC-based consultancy group, to assist Moto in obtaining the Consolidated Lease Agreement, negotiating the documentation relating to the Moto Gold Project and obtaining of all relevant government approvals and consents to enable the development of the Moto Gold Project.

If such agreements and approvals are obtained within 11 months of engaging GICC, Moto will pay GICC US$2 million and issue GICC 1,886,948 Moto common shares less such number of common shares as have a value at that time equal to US$2 million, based on the volume weighted average price of Moto common shares on the TSX for the previous five trading days converted to US dollars at the noon rate of exchange published by the Bank of Canada on the last day of the five-day period. If, during the 12 months following completion of the services, the price of Moto common shares on the TSX exceeds C$11.92 or C$15.90, a further 628,982 common shares will be issued to GICC on each such share price level being exceeded as deferred compensation. If there is a change of control of Moto, certain of the shares will be required to be issued even if the conditions and thresholds have not been met, but the obligation to issue further shares shall lapse.

Nominated adviser for the purposes of AIM: RFC Corporate Finance Ltd Contact: Jamie Wright

Additional Notes:

Share Capital: Following the issuance of common shares to Orgaman in connection with the acquisition of Orgaman's interest in the Moto Gold Project and the share subscription by Mr Jonah, the issued share capital of the Company will increase from 62,898,270 to 74,935,355 common shares with the following changes in significant shareholdings and directors' interests, assuming no other share issuances take place prior to completion:



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Interest Interest
following following
Current Current completion of completion of
interest interest transactions transactions
Shareholder (Shares) (%) (Shares) (%)
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Orgaman/Messrs.
Jean-Claude and
William Damseaux (i) 1,736,290 2.76% 11,055,501 14.75%
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Mr Jonah (ii) Nil Nil 2,717,874 3.63%
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Mackenzie Financial
Corporation (iii) 8,750,000 13.9% 8,750,000 11.68%
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(i) Messrs. Jean-Claude Damseaux and William Damseaux hold directly 570,290 shares, the balance in the above table is held by Orgaman. In addition two senior managers of Orgaman hold shares in Moto. Mr Antoine Lokondo holds 37,550 shares and options to purchase 100,000 shares exercisable at C$7.65 per share and Mr Augustin Yenga 10,000 shares.

(ii) In addition to the common shares set out in the table above. Sam Jonah also holds options to purchase 3,093,639 common shares (comprising 1,750,000 options exercisable at C$2.60, 400,000 options exercisable at C$3.15, 275,000 options exercisable at C$7.65 and 668,639 options exercisable at C$2.97) and will be entitled to receive options to purchase an additional 465,691 common shares on completion of the transactions with Orgaman.

(iii) Based on the most recent public filing made by Mackenzie Financial Corporation.

Caution Regarding Forward Looking Statements: Statements regarding Moto's plans to increase its interest in the Moto Gold Project and advance development of the Moto Gold Project are forward looking. There can be no assurance (i) regarding the final nature of the detailed agreements implementing the transactions described in this news release or that the detailed agreements will be concluded in a form that is satisfactory to the parties involved; (ii) that regulatory approvals required in connection with these transactions will be obtained; or (iii) that the Moto Gold Project will be successfully developed, that any mineralisation previously disclosed in respect of the Moto Gold Project will be proven to be economic, that anticipated metallurgical recoveries will be achieved, that future evaluation work will confirm the viability of deposits identified with the project or that future required regulatory approvals will be obtained.

An exchange rate of US$1.00 equals C$1.0073 has been used in this announcement.

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