re: + +bactech treatment of refractory ore From the BacTech...

re: + +bactech treatment of refractory ore From the BacTech Company:

"China

On December 17, 2003, BacTech signed a Memorandum of Understanding ("MOU") to participate in a joint venture in China through an equity investment in Australian listed Michelago Limited ("Michelago"; ASX: MIC) and certain related transactions.

BacTech, and its technology partner Mintek of South Africa, have agreed to participate in a newly formed joint venture company with Michelago and Shandong Tarzan Biogold Co., Ltd. ("Biogold"). Biogold holds the rights to market the BacTech/Mintek bioleaching technology in China, Mongolia, Siberia and Korea and has been utilizing the technology at the gold bioleaching facility at Laizhou, Shandong owned and operated by Biogold.

The bioleach plant has been operating since 2000 and has treated concentrates sourced from various mines in China. The plant has been producing approximately 50,000 ounces on an annual basis and has the capacity to increase production in the future.

Recently, Michelago was granted an option by Biogold to acquire up to 82% of a joint venture company that will operate and own the Shandong plant.

BacTech/Mintek will participate in the joint venture through an equity investment in Michelago equal to 27% of the value of the operating plant. The purchase price of the Michelago shares to be acquired by BacTech/Mintek will be determined by the weighted average share price for the 15 trading days prior to the registration of the joint venture company provided that the price will not be less than A$0.13 per share.

The value of the bioleach plant will be determined by the Zenith Corporate Advisory Group of Beijing, China and will be completed in January, 2004.

The other terms of the joint venture agreement are as follows:

1. Michelago will pay BacTech/Mintek (57.5%/42.5%) the outstanding royalty obligations due to BacTech/Mintek from Biogold equal to US$472,000 in cash and/or shares of Michelago, at Michelago's option. The payment will be made in four quarterly payments commencing the day the Joint Venture Company (JVCO) is operational.

2. Michelago has agreed to process all gold ores and concentrates produced by its joint venture with the Laizhou Jincheng gold mining operation at the bioleaching plant.

3. The joint venture company shall have a right of first refusal to process ore from future Michelago mine developments or operations in China that produce refractory ores or concentrates that require bacterial oxidation. The joint venture company will determine whether the processing will take place at the existing Shandong plant or at a new plant to be constructed in the vicinity of the project.

4. BacTech shall have a right of first refusal to purchase refractory ores or concentrates that require bioleaching which are produced from future Michelago mine developments or operations and that Michelago decides to sell.

5. Michelago will arrange for BacTech acquire up to a 30% equity interest in projects held by the Laizhou Jincheng Gold Mining Company, Michelago's joint venture partner in China.

6. The joint venture will hold the regional marketing rights for the BacTech/Mintek bioleaching technology license for a period of five years, renewable for an additional five years at the joint venture company's option.

The completion of the transactions contemplated by the MOU are subject to the negotiation and execution of definitive agreements, the formation of the joint venture company, confirmation of the royalties payable by Biogold to BacTech/Mintek and receipt of all requisite regulatory approvals and third party consents".