Canaf Group Inc.

Canaf Group Inc.

November 20, 2007 16:41 ET

Canaf Group Inc. Announces Agreement to Acquire Majority Share in Mining Company in the Democratic Republic of the Congo

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 20, 2007) - Canaf Group Inc. (TSX VENTURE:CAF) ("Canaf" or the "Company") announced today that it has entered into an arms-length agreement with New Stone Mining SPRL, a registered company in the Democratic Republic of the Congo. The agreement includes the acquisition of a majority 51% shareholding of New Stone Mining, a small privately owned company based out of Kinshasa, the Democratic Republic of the Congo (DRC).

New Stone Mining has been exploring and operating in the DRC (formerly Zaire) since 1990. In 1999, New Stone Mining was officially registered as a company in the DRC and has since gained several mining concessions in the Luozi, de Kasai, Occidental and the Oriental Province in the Eastern Congo areas. Additionally, New Stone Mining owns a number of concessions in Tanzania that entitle the company to mine, recover and further prospect for diamonds, gold, semi-precious stones, and rare-earth materials. All concessions and assets are 100% owned by New Stone Mining Mining.

New Stone Mining has already established two mining operations in the areas of Tshikapa and Kisingani which enable mining operations all year round. New Stone Mining is now in the process of taking two mining operations into full production after carrying out feasibility studies. Exploration has shown the diamond grade to be between 15 to 20 carats per 100 tonnes of gravel. The company has also estimated that a gold recovery plant would yield up to 1.8 grams of gold per cubic meter when run with the diamond production. New Stone Mining estimates the life of one of the mines to be about 14 years. Please note that these are internal estimates only.

Canaf Group understands that there are problems associated with alluvial mining but has identified that this acquisition is an opportunity to take advantage of some new technology. New Stone Mining has developed a system of gravel extraction and separation using barges, pumps and secure separation systems; no human contact is required. Canaf sees this as a unique, secure method of alluvial diamond and gold extraction. Limited information can be supplied as equipment and methodologies have been customised and developed uniquely for New Stone Mining.

This agreement is subject to regulatory approval, financing and a satisfactory due diligence review of New Stone Mining and its properties, including obtaining audited financial statements and NI 43-101 compliant reports on the property.

Under this agreement, Canaf will purchase 51% of New Stone Mining for a total sum of US$20 million. An initial US$1 million is to be paid by February 1, 2008 subject to various conditions being met. The agreement is expected to close no later than May 1, 2008. Upon closing, the balance of the purchase price will become due, however the balance is payable within 24 months from the effective date, free of interest. Canaf anticipates that the majority, if not all, of the outstanding balance, will be paid from proceeds generated from diamond production.

Canaf Group is now in the process of putting a small team together to carry out the necessary due diligence on New Stone Mining and all of its assets. Canaf sees this acquisition as a potentially lucrative opportunity in one of the richest mining areas on the continent.

David Way, President and CEO

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Canaf Group Inc.
    Brad Jefferson
    (604) 767-3977
    (604) 682-2275 (FAX)
    Ascenta Capital Partners Inc.
    Bryson Goodwin
    Investor Relations
    (604) 684-4743 ext. 239 or Toll Free: 1-866-684-4209
    (604) 939-1292 (FAX)