Birim Goldfields in Pact With Ashanti Goldfields

10:04 a.m. Sep 23, 1999 Eastern

MONTREAL--(BUSINESS WIRE)--Sept. 23, 1999--Birim Goldfields Inc. (TSE:BGI.) is pleased to announce that it has entered into agreements with Ashanti Goldfields Company Limited (ASL:NYSE; AHD.U:TSE) which will allow Birim's Mampon gold deposit, located within the Dunkwa licenses in Ghana to be brought into production, resulting in an important cash infusion into Birim.


Under one agreement, Ashanti acquires a 100 percent interest in the mineral rights in a 40 sq.km. area which includes all the known mineralisation in the vicinity of the Mampon deposit. It is the intention of Ashanti to transport the open-castable ore either to their Obuasi operations or to the Ayanfuri mine some 25 kilometers to the west, which was scheduled for closure in the first quarter of 2000.


Terms of this agreement include a cash payment to Birim of US$500,000 as well as an advanced royalty. The former will be paid to Birim upon signing a more formal agreement (2-3 weeks) while the amount of the advanced royalty, paid prior to the commencement of mining (expected to occur within the next six months), will be based on the number of recoverable gold ounces as defined in an upcoming feasibility study to be conducted by Ashanti and audited by Birim. The royalty schedule for the heap leachable ore is as follows: - US$20 per recoverable ounce of gold for the first 40,000 ounces; - US$25 per recoverable ounce for the next 20,000 ounces; - US$30 per recoverable ounce on production exceeding 60,000


ounces.


In addition, there is a corresponding sliding scale applied to ounces recovered from the more refractory transitional and sulphide material that ranges from US$10/ounce to US$15/ounce.


Further, in the event of an increase in the price of gold during the mining phase, Birim will receive, for all recovered ounces, an additional US$0.20 per ounce for each US$1.00 exceeding US$300 per ounce up to a maximum gold price of US$350/ounce.

An independently calculated resource of 600,000 ounces of gold already exists for the Mampon deposit. Management believes that out of this indicated resource, approximately 175,000 recoverable ounces, grading 5.0 g/t gold, can be extracted by means of an open cast operation.


Under a parallel agreement, Ashanti has agreed, by means of a private placement, to purchase US$500,000 of Birim treasury shares at the price of C$0.30/share. As well, Birim shall issue to Ashanti US$500,000 of convertible debentures. The debenture will have a 3-year maturity, bear interest at a rate of LIBOR plus 1 percent, calculated on a semi-annual basis, and can be convertible into Birim shares at a conversion rate of C$0.45/sh. Upon certain conditions, the debentures may be redeemed by either Birim or the debenture holder. Both these transactions will take place upon signing of the same formal agreement as mentioned earlier. Total cash injection at that moment, including the cash payment, will therefore be US$1,500,000.


"Over the last six months we have been holding discussions with front-line gold producers for the purpose of advancing to the next stage some of our gold properties in Ghana", says Denis Simoneau, President & CEO of Birim. "We are very happy to enter into this deal since it provides us, in the short term, with an estimated minimum US$4 million plus additional upside from our most advanced project. At the same time", adds Simoneau, "we are confident that possibilities exist for similar arrangements elsewhere on the remaining 190 sq.km. Dunkwa property. This, along with our 7,000 sq.km. Bui concession to the north should prove to be the underpinnings which will allow Birim to grow independently."


Completion of these agreements is subject to a number of conditions, some of which are the approval from the Board of Directors of both companies and approval from the appropriate regulatory bodies.


Ashanti Goldfields Limited is a major gold producer with head office in Accra, Ghana. It has a long history of gold production, its mines in Ghana having been in operation since the turn of the century. It is currently producing gold at an annual rate of 1.6 million ounces from operating mines in Ghana, Guinea and Zimbabwe. The Geita Project in Tanzania, once in commercial production in the third quarter of 2000, will add a further 400,000 ounces of gold yearly.


Birim Goldfields Inc. is a mining exploration firm whose mission is to explore and develop gold deposits in Ghana, West Africa. The Company currently has 21.2 million common shares outstanding.