re: + set to emerge as major foreign gold producer MICHELAGO SET...

re: + set to emerge as major foreign gold producer MICHELAGO SET TO EMERGE AS MAJOR FOREIGN GOLD PRODUCER IN CHINA

China "open for business" - Laizhou Gold Group Chairman

Listed Australian gold explorer, Michelago Limited, is set to become one of the major foreign companies producing gold in China.

This follows approval by a meeting of Michelago shareholders for the Company to acquire the operating BioGold production facility in Shandong Province on China's eastern seaboard.

The BioGold plant has more than 280,000 ounces of gold production scheduled for this year. The acquisition of an 82% stake in the BioGold plant will also generate Michelago's maiden production revenue, with first entitlements expected in the September 2004 quarter.

Subject to remaining approvals from Chinese authorities, Michelago will join fellow listed Australian resources group, Sino Gold, as the only Australian and international companies to have reached producer status in China's deregulating gold sector.

"The shareholder support will allow Michelago to move forward with its strategy of becoming one of the largest gold producers operating in China," Michelago's Managing Director, Mr Peter Secker, said today. "The acquisition will deliver Michelago's first cash flows from next quarter, providing opportunity to further grow the BioGold facility and the Company's other projects in China," Mr Secker said.

The Company will fund the BioGold acquisition from a combination of existing cash reserves, the exercise of existing share options and a proposed debt facility and a proposed share placement to Canadian-based Bactech Corporation, a joint developer of the BACOX bioleaching process used in the BioGold plant.

"Importantly, Michelago’s future operations in China are anticipated to be fully funded out of the profits to be generated by the BioGold facility, reducing the Company’s traditional reliance on equity issues for funding," Mr Secker said.

The acquisition also entitles Michelago to the exclusive licence for BACOX for up to 10 years in China, Mongolia, Siberia and Korea. The BACOX process is able to treat metallurgically complex ores.

The BioGold processing plant The China assets are being acquired from Shandong Tarzan BioGold Co Ltd. and include a Bactech bacterial oxidation processing plant, gold smelter and a 51% interest in a gold refinery.

"The BioGold facility has the particular ability to focus on the treatment of refractory and semi-refractory gold ores/concentrates," Mr Secker said. "Some 70% of China's gold production is from refractory ores which, because of their sulphide content, cannot be treated by conventional cyanide solutions.

"The BACOX technology overcomes this problem." Mr Secker said Michelago would initially buy in concentrates to process through the Shandong plant as a large number of the country's small-scale mining operations required downstream processing. "We also plan to add to throughputs from building up our own mined ore inventory from exploration successes," he said.

Michelago is targeting production of 287,000 ounces in 2004 from the BioGold plant, building to 322,000 ounces by 2006. All gold production will be sold to the Shanghai Gold Exchange. China "Open For Business"

In supporting Michelago's transformation to producer status, one of China's largest local gold producers confirmed that China was "open for business" in terms of the gold sector.

Mr Angkang Zhang, Chairman of Laizhou Gold Group, Michelago’s 18% partner in the BioGold venture, said in Sydney today that China "was certainly open for business". "There will be a strong continuation of the current de-regulation of China’s resources and mining industry," Mr Zhang said.

"The Sino Foreign Joint Venture (SFJV ) structure designed to encourage foreign investment in China's resources, is now well established and well accepted, both within China and among overseas companies that have established or are intending to establish operations in China.

"Through Michelago’s own exploration and mining endeavours, the Laizhou Gold Group and other Chinese gold miners, I am confident that a steady and reliable concentrate stream will be secured for the BioGold facility.”

In addition to the BioGold operation, Michelago has three other regional gold projects in China: - Guangxi Province (southeast China): An interest in the Jinya Gold Project (currently under negotiation).

This hosts an inferred gold resource of 650,000 ounces of gold, in addition to a registered 90% SFJV interest in gold exploration projects located near the Jinya Gold Project - Shandong Peninsula (eastern China): A Letter of Intent allowing the Company to earn a 51% interest in any gold resources below 500 metres depth in an area of 45 square kilometres on the Peninsula, and - Xinjiang Province (far western China):

An exploration project entitling the Company to earn a 100% interest in a 2,700 square kilometre gold and copper exploration area, west of the city of Urumqi.

The resolutions were passed at a general meeting of Michelago shareholders in Sydney late yesterday. Mr Zhang was among those attending the meeting.

MEDIA CONTACTS: Peter Secker Michelago Limited 0407 426 912 Kevin Skinner Field Public Relations (08) 8234 9555 / 0414 822 631