By
20 January 2012
Dear Shareholder
I am writing to you today on behalf of the Board of Directors
to update you on the merger proposal announced to the ASX on
29 August 2011 between Auzex Resources Limited (Auzex) and
GGG Resources plc (GGG). As detailed in the announcement,
Auzex and GGG have entered into an agreement to merge the two
companies in order to create a new and exciting exploration /
pre-development gold company called Bullabulling Gold
Limited.
An interim board has been established to assume day-to-day
responsibilities for the development of the Bullabulling Gold
project and the merger between Auzex and GGG consisting of 3
members from each Board being:-
Auzex | GGG |
Chris Baker | Nigel Clark |
John Lawton | Jeff Malaihollo |
Greg Partington | Michael Short |
Post the merger, Auzex Shareholders will immediately become part of Bullabulling Gold Limited which will own 100% of the Bullabulling Gold Project and be listed on the ASX and AIM. The consolidation of the Bullabulling Gold project provides the following benefits to Auzex Shareholders:-
- establishment of a unified, locally based management team with the sole focus on the development of the Bullabulling Gold project
- allows the Bullabulling Gold project to be accelerated through feasibility to development
- greater access to global capital markets by being dual listed on ASX and AIM
- cost efficiencies associated with a single corporate entity
- provides a platform to build a significant Australian gold company and attract and retain high quality staff
- retain 100% exposure to the potential upside development of the Bullabulling gold project
- increased scale which should provide additional liquidity and scope for re-rating
Bullabulling Gold project
The Bullabulling gold project has been significantly advanced
from where the Auzex/GGG Joint Venture exercised its option
to acquire the project in August 2010. The resource base at
Bullabulling has been increased from 431,000 ounces to
2,603,000 ounces during this period and I expect the resource
to be increased as a result of the Phase 2 drilling program
which was completed on 18 December 2011, on time and within
budget. Assays are currently being received for the final
holes and we expect to be in a position to update the
resource in February 2012.
We recently issued a Scoping Study (see ASX announcement 19
December 2011) on the project that reviewed the main
parameters of the project and gave the JV substantial
confidence to progress to a pre-feasibility study (PFS) and
if successful then onto a bankable feasibility study (BFS).
The Scoping Study was completed to obtain an initial
understanding of the economics (within a plus/minus 30%
accuracy) of the project which will then be further refined
in the PFS and BFS. The Scoping Study identified a
substantial gold project capable of producing approximately
230,000 ounces of gold per annum over a
10 year period. The study also highlighted that there is a
significant level of cost improvements that can be made at
both operating and capital cost levels that will enhance the
economics of the project. Our focus at present is to
concentrate on these areas and provide ongoing updates to any
improvements in the numbers reported in the Scoping Study
announced to the market on 19 December 2011.
