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17 December 2003 Company Announcements Office Australian Stock Exchange Limited 2 The Esplanade PERTH WA 6000

Dear Sir/Madam

"Michelago increases proposed share in BioGold to 82% and enters into strategic gold processing technology licence Highlights

The Directors of Michelago are pleased to announce the following developments in relation to the Company’s proposal to acquire an equity interest in Shandong Tarzan Biogold Ltd (BioGold), an existing 300,000 oz pa gold producer in Shandong Province, PRC.

1. Michelago has successfully negotiated to increase its proposed equity investment in BioGold from 51% to 82%.

2. Michelago has entered into a strategic alliance, through a memorandum of understanding, with BacTech Mining Corporation Ltd of Toronto, Canada (BacTech) and Mintek of Randburg, South Africa (Mintek), the owners of the Bacox technology used at the BioGold operations, to hold the single, exclusive Bacox license in China, Mongolia, Siberia and Korea for up to 10 years.

Details Michelago has advanced its ongoing negotiations with BioGold by replacing the Letter of Intent signed in August 2003 with two more detailed Memorandums of Understanding (together called the BioGold MOU) between Michelago, BioGold and BacTech/Mintek.

The primary terms of the BioGold MOU can be summarised as follows:

1. Michelago and BioGold propose to establish a new Sino Foreign Joint Venture (the BioGold SFJV) to acquire and own the BioGold assets.

2. Michelago will directly acquire 82% of the equity interest in the BioGold SFJV.

3. BacTech/Mintek will participate in the BioGold SFJV through taking an equity investment in Michelago (that is, a placement of Michelago shares) equal in value to 27% of the value of the BioGold plant.

The value of the BioGold plant is currently subject of ongoing negotiation and due diligence. It is anticipated that the BioGold plant will be acquired through a combination of debt and equity within Michelago’s
current financial resources.

The issue price of the Michelago shares will be determined by the weighted average share price trading on ASX for the 15 trading days prior to the registration of the BioGold SFJV but will not be less than A$0.13 cents per share and will be subject to shareholder approval.

4. The BioGold SFJV will hold the BacTech/Mintek proprietary bioleaching technology license in China, Mongolia, Siberia and Korea for a period of five years, renewable for an additional five years at the holders option.

In consideration, Michelago will pay BacTech/Mintek US$472,000 in cash and/or Michelago shares, at Michelago’s option, as full payment of all outstanding license fees. This payment will be made in four quarterly payments commencing the day the BioGold SFJV is operational and if Michelago shares are issued in consideration, which will be put to shareholders for approval, those shares will be issued at the weighted average share price trading on ASX for the 15 trading days prior to the registration of the BioGold SFJV.

5. The BioGold SFJV will treat refractory concentrates from Laizhou Jincheng’s mining operations in Shandong Province. Michelago will grant a first right of refusal in favour of the BioGold SFJV’s existing bacterial processing facilities (or any new bacterial processing facilities that the BioGold SFJV constructs) as the process and facility of choice to process any concentrates from Michelago’s future mine developments in China.

6. Should Michelago or Laizhou Jincheng choose to sell down equity in any of their existing gold exploration/mining joint ventures in the PRC, Bactech/Mintek will be offered a first right of refusal to acquire that equity. As part of Michelago’s due diligence of the BioGold assets and transaction, Grant Thornton completed the first draft of its Due Diligence Report in early December 2003.

This document is currently being reviewed. In addition, Michelago has appointed the Zenith Corporate Advisory Group in Beijing to carry out a valuation of the BioGold enterprise, based on the Due Diligence report. This valuation will be completed in early January 2004, at which time detailed contract negotiations with BioGold will commence.

The proposed transaction will be subject to all usual local and Provincial government regulatory approvals in Shandong and as required under the Corporations Act and the ASX Listing Rules.

Upon conclusion of the due diligence process and prior to finalisation of the BioGold SFJV documentation it is proposed that Michelago will call a general meeting of shareholders to consider and vote on the proposed transaction.

Yours sincerely Michelago Limited Peter Secker Managing Director"