Mandorin Goldfields Inc.

Mandorin Goldfields Inc.

November 21, 2005 09:00 ET

Mandorin: Agreement To Acquire Greenstone Gold And Copper-Gold Exploration Project/Mine Portfolio

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 21, 2005) - Mandorin Goldfields Inc. ("Mandorin" or "the Company") (TSX VENTURE:MGD) is pleased to announce the following:

Agreement to Acquire Greenstone Gold and Copper-Gold Exploration Project/Mine Portfolio

Mandorin, on behalf of its joint venture project company, Duration Gold Limited ("DGL"), has reached agreement to acquire a 100% interest in a portfolio of mines and advanced gold projects in Zimbabwe (the "Duration Projects").

Further to the strategic alliance between Mandorin and its investment group joint venture partner in DGL, as announced in Mandorin's news release of October 31, 2005, Mandorin has been actively conducting due diligence on "low technical risk" projects to determine their suitability for acquisition. The proposed acquisition of the Duration Projects is in line with the joint venture's strategy to focus on low technical risk, advanced gold projects. Mandorin currently has a direct 39% interest in DGL and, through the above-mentioned strategic alliance, has majority voting control and management control of DGL.

The Duration Projects are located on the Mvuma, Kwe Kwe and Bulawayo greenstone belts and are within a 100-km radius of the town of Kwe Kwe or of the city of Bulawayo, Zimbabwe. They include 100% interests in the Gaika, Athens, Umviga, Durban, Sunace and Queens mines; a 65% interest in the Hope Fountain group of mines/prospects; and a 49% interest in a joint venture with Casmyn (Pvt) Ltd on the Peter Pan - Sandy - Tiberius mines.

The Duration Projects are currently owned by Duration Investments (Pvt) Ltd. ("DIPL"), a private family company which assembled the portfolio through acquisitions from various previous owners over the last several years. DIPL has a successful half-century of mining history in Zimbabwe and has a well-established management and operations team which has a demonstrated history of building and operating successful greenstone gold mines. Mr. John Muir, Managing Director of DIPL, who has managed the business for more than two decades, will remain in key management control of DIPL and enter into a management contract with DIPL as part of the acquisition. DIPL is at arms' length to Mandorin and DGL.

The Duration Projects' combined mining claims and leases and mine sites possess substantial infrastructure, including metallurgical extraction plants, mine accommodation, equipped workshops, offices, analytical laboratories and an extensive inventory of equipment including an earth moving fleet, light and heavy road vehicles, crushers, mills and other metallurgical and mining apparatus.

Mandorin has assessed the Duration Projects as possessing attractive upgrade potential owing to their perceived highly prospective localities and favourable geological attributes. Many of the sites have an extended production history and, in many cases, are reported to have substantial residual mineral resources. In the case of the two largest projects (Gaika and Athens), the mines were closed as a result of the financial crisis in Zimbabwe in recent years, which made access to capital difficult and prevented the then owners from pursuing development plans.

With the more recent revival of gold mining operations and a more favourable mining investment and fiscal/tax environment in Zimbabwe, which are considered to be key to restoring the country to prosperity, Mandorin believes it is a particularly opportune time to acquire the Duration Projects. However, Mandorin recognises that local participation will be essential in the development and operation of the mines and is actively engaged in discussions with very supportive local interests and government departments and agencies.

Historical Production And Historical Resource Estimates

In the course of its review of the Duration Projects, Mandorin has been provided with historical production data, as well as historical estimates of mineral resources, contained in reports prepared on certain of the Duration Projects prior to their acquisition by DIPL. While DIPL has owned the Duration Projects, no work has been done, or reports commissioned, for the purpose of defining resources at these properties by a "competent person" or "qualified person" in accordance with international standards.

The following table sets out historical production data and historical resource estimates with respect to the Gaika, Athens and Sunace mines. A qualified person has not done sufficient work to classify the historical resource estimates as current mineral resources or mineral reserves. Mandorin is not treating the historical estimates as current mineral resources or mineral reserves as defined in National Instrument 43-101 ("NI 43-101"). The historical estimates should, accordingly, not be relied upon. While Mandorin is not relying on these historical resource estimates, Mandorin believes that the historical estimates are relevant because they, when viewed with historical production figures, provide a qualitative indication of the scale of these projects.


PROJECT PRODUCTION(1) Tonnes Grade Tonnes copper
Gaika(3) 700,000 oz
gold @ 8.8 g/t 15,950,000 2.7 g/t 1,354,000 oz gold
Athens(4) 410,000 oz
gold @ 4.0 g/t
35,000 tonnes
copper 1,014,000 7.6 g/t 248,000 oz gold
0.8% 8,400 tonnes copper
Sunace(5) 208,000 oz
gold @ 9.1 g/t 4,533,000 3.7 g/t 539,000 oz gold

(1) All of the historical production figures presented pre-date the historical resource estimates.

(2) All of the historical resource estimates presented include inferred resources.

(3) The historical resource estimates for the Gaika mine are reportedly estimated by the mine's consultant geologist and were supplied to a Zimbabwean bank which, in turn, reported them as being current as at May 1998. Some of the mine's internal reports made available to Mandorin include credible independent technical reviews which support the information reported by the bank, including the estimation methodology applied. Detailed data files and various reports with well-detailed estimation methodology are available to Mandorin; however, the original samples and borehole cores are, unfortunately, no longer available. The data is further supported by information supplied under confidentiality agreement from a major mining company which undertook a due diligence investigation on the property shortly before closure of the mine in October 1999. This includes extensive data from drilling and trench sampling conducted by that company. Reported production for the period from October 1998 to September 1999 was 18,000 oz of gold. Production during the earlier period from the reported historical resource estimate date of May 1998 to September 1998 is not known to Mandorin.

(4) The historical resource estimates for the Athens mine are as at June 1997 and are contained in an independent technical report dated July 1997 on the mine and were reportedly prepared in accordance with the Australasian "JORC Code". The independent technical reviewers are recognised industry professionals of good standing. The mine is reported to have ceased production in January 1998. Production for the 6-month period between the resource report date and the mine closure is not known to Mandorin. DIPL has reportedly treated mine tailings containing less than 2000 oz of gold and unquantified copper content during plant commissioning trials.

(5) The historical resource estimates for the Sunace mine are as at August 1999 and are contained in an independent technical report dated August 24, 1999 on the mine. The report is based on both historic data and check sampling undertaken by the reviewer. Estimation methodology and data validation is well-reported. The author of the report is a well-respected, experienced geologist of good standing known to Mandorin. Unfortunately, all underlying samples and data are lost and will not be available to Mandorin. Mandorin is not aware of any reported production subsequent to this estimate.

Principal Acquisition Terms

The agreement terms provide for DGL to acquire the shares of DIPL and all rights to shareholder loans for GBPPounds Sterling 1,714,000 (approximately Cdn.$3,582,000) payable in shares of DGL. The expected aggregate shareholding of existing DIPL shareholders in DGL following the transaction, and pre-financing of DGL through any issue of shares, is approximately 9%. Completion of the transaction is conditional on the listing of DGL on a stock exchange or other public securities market and receipt of all applicable governmental and regulatory approvals. DGL shares issued in exchange for DIPL shares pursuant to the acquisition are likely to be subject to a 24-month escrow. The current DIPL shareholders will have the right to nominate Mr. Muir as a director of DGL for so long as they shall collectively own more than 5% of DGL.

Prior to completion of the transaction, the shareholders of DIPL will be required to advance additional shareholder loans of the equivalent value of US$1 million to DIPL to be used for such business purposes as shall be approved by DGL. Within 12 months of the completion of the transaction, DGL will be required to advance a shareholder loan to DIPL of a minimum value of GBP Pounds Sterling 1.2 million to be used for the expansion of DIPL's mining operations.

The agreement terms are effective until June 30, 2006, unless otherwise agreed.

Upon completion of the contemplated transaction with DIPL, Mandorin's interest in DGL is expected to be approximately 35% without giving effect to any dilution as a result of any DGL equity financings prior to or after DGL's acquisition of DIPL. Mandorin's investment group joint venture partner in DGL is expected to maintain an interest in DGL equal to Mandorin's. It is expected that their collective interests will represent the majority interest in DGL and, through the reported strategic alliance between them, Mandorin will effectively have voting and management control of DGL for the time being.

Three Gold Recovery Plants Nearing Completion

The construction and upgrade of three carbon in pulp (CIP) gold plants on the Athens, Queens and Durban mine properties is currently nearing completion. These plants will complement existing production from a fourth centrally located CIP gold plant at Umviga and additional capacity from static leach facilities at Queens and Athens. The revenue generated will be utilised to initiate a focussed and prioritised exploration program. Mandorin regards this gold production as incidental to trial mining and exploration development and will not place reliance on early cash flows as these are expected to be irregular until the plants are fully commissioned.

Qualified Person

Scientific and technical information contained in this news release has been verified by Mr. Peter Haworth (Pr Eng; PrSciNat), Vice-President of Mineral Resource Development of Mandorin, who acts as Mandorin's "Qualified Person".


"The proposed acquisition is a major step in the development of Mandorin as a serious participant in the gold mining industry. We have grasped the opportunity to participate in a portfolio of quality greenstone gold projects.

The current small scale production will be continued and expanded, with the revenue generated initially being applied to funding a comprehensive exploration program.

Over the coming months, management will be working hard to:

- initiate extensive exploration programs including trial mining and ore processing,

- re-commission / upgrade a number of the production plants, and

- initiate pre-feasibility studies for the opening of additional projects assessed to have long-term potential, such as a sulphide operation at the Athens mine.

In my opinion, Zimbabwe holds some of the most geologically prospective ground I have encountered anywhere in Africa and I am excited to introduce Mandorin, through Duration Gold, as a substantial participant in this terrain.

This acquisition complements the Company's interest in the Klipwal Gold Project in South Africa and provides the company with a substantial operating base from which to grow and diversify."

Errol is well-experienced in operating in Zimbabwe. As Technical Director of Metallon Gold, the largest gold mining company in Zimbabwe, which operates five mines in the country and produces over 120,000 oz of gold per annum, Errol had constant high level contact with industry players, authorities and regulatory bodies in Zimbabwe. The combination of Errol's knowledge of operating at corporate management level in Zimbabwe, together with John Muir's depth of operational experience, are seen as key factors toward ensuring success.


On behalf of

Mandorin Goldfields Inc.

Malcolm L Stevens, Executive Chairman and President

Errol Smart, Director and Chief Executive Officer

Statements in this press release other than purely historical information, including statements relating to the Company's future plans and objectives or expected results, constitute forward-looking statements. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in mineral exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements.

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

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