Gold Mines of Sardinia Limited

A.C.N. 009 234 851

15 Mar 2000
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March 15, 2000

For immediate release

Gold Mines of Sardinia reports preliminary results for 1999

Reduced production due to lower gold prices
Turnover down 29% to Aus$13.7 million
Efficiency improvements reduce overheads by 37%
Company retains a loss of Aus$8.1 million (1998: Aus$7.5 million)
Private placing to raise 4.0 million
Introduction of new gold mining extraction technology (Geobiotics)

Perth/London, 15 March 2000 Following a mixed year for the gold mining industry, Gold Mines of Sardinia Limited ("GMS" or the "Company"), today reports preliminary results for year ended December 31, 1999. The low price of gold for the majority of the year contributed to lower revenues by 29.1%. The company retained a loss of Aus$8.051m, which compares with a loss of Aus$7.458m for the previous year.

Efficiency improvements made at Furtei and the increased reliance on local labour have allowed Gold Mines of Sardinia to significantly reduce overheads. As the increased gold price at the end of 1999 continues into 2000, Gold Mines of Sardinia is more optimistic for revenues from sales in the current year.

The Company also announces that it proposes to raise approximately 4.0 million (approximately 3.878 million after expenses) by way of a private placing to new and existing institutional investors of 22,222,222 new ordinary shares, representing approximately 11.25 per cent of the existing issued ordinary share capital of the Company, at 18p per share. The placing is being fully underwritten by SG Securities (London) Ltd who have the right to terminate the placing in certain circumstances prior to the allotment of the placing shares.

Application will be made to the London Stock Exchange and to the Australian Stock Exchange for the placing shares to be admitted to trading on the Alternative Investment Market and the Official List of the Australian Stock Exchange (respectively). Admission to both exchanges is expected to become effective on Monday 27 March 2000. The placing shares will, when allotted, rank pari passu in all respects with the existing issued ordinary shares of the Company.

In addition to the expected proceeds from the placing, the Company has applied for approximately USD8.2 million of grants and low-interest loans of which USD2.8 million has been promised during 2000. In addition, the Directors have identified a further USD6.9 million of grants and low interest loans that they anticipate will become available to the Company in the future.

The monies raised are to be used to fund the further development of the Furtei sulphide mine and the associated work on the Giobiotics treatment, the fast-tracking of the feasibility study at Osilo and the exploration and drilling of other identified sites.

Peter Hambro, Executive Chairman of GMS commented, "Our work on the sulphides at Furtei using Giobiotics puts us at the forefront of new mining technology. We anticipate that it will help Gold Mines of Sardinia to achieve our intended targets of producing approximately 100,000 oz. of gold per annum by 2003, with further increases thereafter.

GMS has consistently exceeded its production targets to date and has grown its contained reserves to approximately 1.41 million oz. of measured and indicated gold, approximately 3.5 million oz. of silver and 20,000 tonnes of copper.

Recent results from the initial testing of Furtei ore using Geobiotics technology have been encouraging. In laboratory conditions on a 200kg sample, the gold recovery has been shown to increase from 23% to 87% and it is expected that part of the placing proceeds will be used to fund the development of Geobiotics processing facilities.

In addition to the existing work at Furtei and Osilo, a further 2,800 km. sq. of exploration ground has been pegged for future use and the additional funds available to the Company will enable it to explore these areas more fully.

Lawyers acting for the Company have reviewed the claim made by the San Martino Water Company for Lit19,000 million (USD9.5 million) and have advised the Company that in their opinion there is a contingent liability of Lit1,472 million (USD0.74 million). The Company hopes that it can settle this claim at a lower figure.

Notes to Editors

Gold Mines of Sardinia Limited holds an exclusive right to explore for precious metals on the island of Sardinia. It currently operates a gold mine in the south at Furtei (established in 1997) and in 1999 expanded its operations to a site in the north at Osilo.

Press contacts

SG Securities (London) Ltd +44 20 7638 9000
Frank Moxon, Director

Edelman Public Relations +44 20 7344 1200
Curtis Fox, Director

This press release is not an offer of shares for sale or subscription in the United States or elsewhere. In particular, the shares may not be offered or sold in the United States absent of registration under the U.S. Securities Act of 1933 (as amended) or an exemption from such registration. No public offering of shares will be made in the United States or any other jurisdiction.

SG Securities (London) Ltd is acting for Gold Mines of Sardinia Limited in connection with the placing and will not be responsible to any other person for providing the protections afforded to its customers or advising any such person in connection with the placing.

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Copyright 2001 Gold Mines of Sardinia Limited
Last modified: May 01, 2001