Moto Goldmines Limited
TSX : MGL
AIM : MOE

Moto Goldmines Limited

July 07, 2008 08:15 ET

Moto Signs Consolidated Lease and Revised Technical and Financial Assistance Agreement With Okimo

PERTH, WESTERN AUSTRALIA--(Marketwire - July 7, 2008) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH ANY US NEWSWIRE SERVICE

Moto Goldmines Limited ("Moto") (TSX:MGL)(AIM:MOE) is pleased to announce that its wholly owned subsidiary, Borgakim Mining sprl ("Borgakim"), has entered into a lease agreement with L'Office des Mines d'or de Kilo-Moto ("Okimo"), the Congolese para-statal entity with whom it is developing the Moto Gold Project (the "Consolidated Lease"). The Consolidated Lease provides that:

- the various existing leases in respect of the Moto Gold Project that had been granted by Okimo in favour of Moto's subsidiaries in the Democratic Republic of Congo ("DRC") have been amalgamated in favour of the Consolidated Lease issued to Borgakim;

- the Consolidated Lease, which sits on ten of Okimo's new exploitation permits (the "Okimo Exploitation Permits") issued following the transformation of its previous concession rights pursuant to the Congolese Mining Code, is in respect of a newly consolidated perimeter of 1,841sq kms. The perimeter includes the Karagba, Durba and Camp Chauffeur sites previously part of the perimeter covered by the contract of technical and financial assistance dated December 30, 2003 (the "ATF Contract");

- the Consolidated Lease has the same term as the Okimo Exploitation Permits. These permits last initially until May 2014 and are then subject to renewal in accordance with the Congolese Mining Code;

- the balance of the areas held by Moto's subsidiaries have been returned to Okimo in accordance with the arrangements agreed in November 2006. (All of Moto's current reserves and resources are within the Consolidate Lease area); and

- Borgakim will pay a monthly rental to Okimo of US$350,000 in respect of the Consolidated Lease, as from the execution of the Consolidated Lease until the commencement of production. In addition, Borgakim is responsible for paying the surface rents payable by Okimo under the Okimo Exploitation Permits in respect of the Consolidated Lease area. This amounts to approximately US$1,000,000 per year.

Borgakim and Okimo are currently carrying out the necessary formalities for the registration of the Consolidated Lease with the Congolese Mining Registry.

Borgakim has agreed that the US$5,000,000 premium which was the amount agreed to be paid November 2006 will be paid in full upon registration of the Consolidated Lease. The balance currently outstanding is US$3,750,000. Borgakim and Okimo have also entered into a revised financial and technical assistance contract ("Revised ATF Contract"), conditional on the Consolidated Lease becoming effective, which replaces the ATF Contract, to the following effect:

- Borgakim will provide technical and financial assistance to Okimo within a perimeter (the "ATF Perimeter") prescribed in the Revised ATF Contract in relation to the following matters, up to the amounts specified below:

- Rehabilitation of the N'Zoro hydro-electrical plant (funded by Borgakim with the costs expected to be in the region of US$300,000);

- Exploitation of the "Durba Tailings", including the conception, acquisition, construction and commissioning of a re-treatment unit (funded by Borgakim up to US$1,500,000);

- Exploration programme - planning and carrying out an exploration programme within the ATF Perimeter aimed at identifying economically workable resources which could constitute a source of gold for Okimo (funded by Borgakim up to US$1,500,000);

- Acquisition of production plant - assisting Okimo in selecting and installing a production unit if the exploration programme referred to above has identified economically workable resources (funded by Borgakim up to US$3,000,000);

- The total expenditure expected to be provided by way of financial assistance under the agreement amounts to approximately US$6,300,000. Borgakim will also provide technical assistance to Okimo in developing its own capacity of production.

- All expenditure incurred by Borgakim or provided to Okimo in respect of the projects set out above will be by way of loans to Okimo, to be reimbursed from 30 per cent of the profits generated by Okimo's own exploitation activities and, in the event said profits should be insufficient, from the dividends that it will receive from Borgakim, the joint venture company; and

- Detailed agreements relating to each of the projects set out above will be entered into by Borgakim and Okimo to specify the details of the work to be carried out, the parties' obligations and liabilities with respect to such work and the timetable for implementation.

As announced by Moto on December 31, 2007, it has agreed with Societe d'Organisation, de Participation et de Management ("Orgaman") to acquire a mixed currency debt owed by Okimo to Orgaman (the "OKIMO Loan"), which as at June 30, 2008 amounted to approximately US$30.3 million and Euro 1.6 million. The first payment due to Orgaman of US$9.7million and Euro 0.5 million in respect of the OKIMO Loan will be payable within seven business days of the Consolidated Lease and a tripartite agreement (to be entered into among Okimo, Moto/Borgakim and Orgaman confirming completion of the assignment of the OKIMO Loan (the "Tripartite Agreement")), becoming effective. The Tripartite Agreement is currently under discussion. Moto has the option to settle 50 per cent of these amounts through an issue of shares.

Moto and Okimo have also been in discussions as regards a revised and updated protocol agreement, as part of an agreement between the parties as to how to deal appropriately with the matters raised by the Commission for Revisitation and the DRC Government. This agreement is intended to cover the basis of Okimo's participation in the joint venture, including its 30 per cent free carried interest, and the other financial terms of the joint venture interest, including miscellaneous financial assistance which is being sought by Okimo as well as the Tripartite Agreement for the transfer of the OKIMO Loan. Although discussions are advanced, the agreement is only likely to be concluded once approved as part of the "revisitation" process. There remains some uncertainty regarding the timing and nature of this process.

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