Gold Mines of Sardinia Limited

A.C.N. 009 234 851

16 June 2000
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Gold Mines of Sardinia completes Strategic Alliance with Homestake

-- Gold Mines of Sardinia confirms the issue of 7.31% of new equity to

Homestake Mining Company of California --

London/Perth, 16 June 2000 – Gold Mines of Sardinia Limited (ASX: GMS, LSE: GMN) today announced that Homestake Mining Company of California (Homestake) (NYSE: HM, ASX: HSM. TSE: HCX) has successfully completed its due diligence investigation into GMS's Sardinia operations and as such GMS has issued and allotted 17,334,396 new shares (7.31% of GMS's expanded capital) to Homestake in accordance with the resolution passed by GMS's shareholders at the Annual General Meeting held on May 31, 2000. As part of the same transaction, GMS has acquired 6,500,000 ordinary shares in Navan Resources Plc (10.07% of Navan's issued capital) from Homestake.

Application has been made for the new GMS shares to be admitted to the Australian Stock Exchange and the Alternative Investment Market of the London Stock Exchange. Admission is expected to become effective on 22 June 2000.

The agreement forms the basis for a strategic alliance that allows Homestake a three-year option to nominate up to 20% of Gold Mines of Sardinia’s exploration tenements outside of the Furtei and Osilo projects as a joint venture area. In any such joint venture GMS would have a 25% free carried interest and Homestake would have a 75% interest. Homestake would be responsible for 100% of the cost of any joint venture, through to the completion of any final feasibility study.

The agreement also allows Homestake first right of refusal (within 30 days) to match any offer GMS receives from a third party to acquire any part of its licence area on the island of Sardinia, so long as Homestake retains a significant holding in Gold Mines of Sardinia.

Peter Hambro, Chairman of Gold Mines of Sardinia, said, "I am delighted that this agreement has been approved. I have worked with Homestake on ventures in the past and look forward to working with them again in the future. The deal provides us with a strategic partner to develop the resources in Sardinia as well as a stake in Navan Resources – a company that runs an extensive gold mine at Chelopech in Bulgaria with similar characteristics to our operations in Sardinia and base metal mining operations in Spain."

For more information, please contact:

Gold Mines of Sardinia

John Morris
Gold Mines of Sardinia Limited
Chelsea Professional Centre
3/145 Stirling Highway
Nedlands, WA 6009
Phone: +61 8 9389 7711
Fax: +61 8 9389 7722
e-mail: gms@gmsltd.com.au

 

Joel Beckman, Edelman PR Worldwide

+44 20 7344 1511

jbeckman@edeluk.com

 

Homestake Mining Company

Igor Levental, Vice President, Investor Relations

+1 415-983-8169

http://www.homestake.com

Notes to Editors:

Gold Mines of Sardinia 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 at Osilo. In March the company completed a successful private placement, raising £4m, and also recently announced the appointment of Rudolf Agnew as a non-executive director. Shares in the company are listed on the Australian Stock Exchange and London’s Alternative Investment Market (AIM).

Homestake Mining Company is an international gold mining company with operations and exploration activities in the United States, Canada, Australia and Chile. The company also has active exploration programs in Argentina. Shares of the company’s common stock are listed on the New York Stock Exchange, the Australian Stock Exchange and the Basel, Geneva and Zurich Stock Exchanges in Switzerland. Homestake began gold mining operations over 120 years ago, and is one of the oldest listed companies on the New York Stock Exchange still in its original business.

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