overview of spin off of gold assets

Background and Overview of Spin Off of Gold Assets


Background and Overview of Spin Off of Gold Assets to Tusker Gold Limited. The Company intends to focus its activities on extracting value for shareholders from the Kitongo gold project, which the Company currently has an option to purchase and its uranium and base metal projects. To give effect to this, the Company proposes to restructure its mineral exploration assets through the transfer of all of its gold assets (other than the Kitongo gold project) (Gold Assets) to Tusker Gold Limited (a WHOLLY OWNED SUBSIDIARY of the Company) (TG).

The Company intends to retain 50,000,000 fully paid ordinary shares in the capital of TG (TG Shares) and then seek a listing of TG on ASX through an initial public offering of 50,000,000 TG Shares at $0.20 per TG Share to raise $10,000,000 (Capital Raising).

IDG Shareholders will also be given an opportunity to participate in a priority offer under the Capital Raising. Of the 50,000,000 TG Shares that will be offered, a maximum of 5,000,000 TG Shares will be offered to existing Shareholders.

It is proposed that Mr Peter Pynes and Mr Timothy Kestell will be directors of TG when it lists on ASX.

Now...The Nyanzaga Project covers more than 350 km2 in the Lake Victoria goldfields and hosts the Tusker deposit, for which a resource of 4.5 million ounces estimated in accordance with JORC guidelines was reported by Sub Sahara in September 2006. Indago has now updated this resource to allow selective mining opportunities to be evaluated. The updated total resource is 102M tonnes @ 1.3g/t gold (4.2moz gold) above a cutoff of 0.4 g/t gold. Details of this estimate are contained in the ASX Announcement of 30th June 2009.

Kilimani is located approximately 600 metres to the north east of the Tusker deposit, and is not partof the current Tusker Resource. The Kilimani prospect is considered to have significant potential todeliver a near surface oxide open pittable resource. Based on successful exploration drilling Indago istargeting delivering a near surface oxide resource of 4 – 6 Mt @ 1.2 – 1.6 g/t Au for a targetendowment of 160 – 310,000 oz of gold. This target is based on existing 80 - 100 metre spaced historicdrilling over a strike length of 650 metres..

Collection and analysis of data pertaining to the Tusker and Kilimani deposits continues. Follow-up of regional targets continues with mapping, geochemical sampling and trenching currently underway. A re-interpretation of available magnetic and VTEM data has recently been completed and has yeilded a number of new targets..


Kitongo Gold Project – (Not Included in the Spin Off of Gold Assets)
• Targeted as an opportunity to provide early production in parallel to the advancement of
the Nyanzaga feasibility study
• Indago approached IAMGOLD to acquire Kitongo
− 100% interest
− Located 25km from Nyanzaga
− Covers more than 106km2
• Completed transaction in June 2009
− Pay USD$0.43m on signing SPA
− Further USD$0.2m by Dec 2010
− USD$0.4m at 3rd month of commercial production (targeted for early 2011)
− 2% NSR on commercial production
• Indago intends to develop Kitongo as a heap leach with near term gold production

I believe we should see the latest development as positive news and perhaps give more credit to our current IDG directors.

Indago director Tim Kestell said that this structure would provide Indago shareholders with the best returns in both the short and long terms. "It's the option which gives shareholders the best of both worlds," Mr Kestell said. "It provides significant upside yet limits Indago’s exposure to the risks associated with developing the project. It also shows that Indago’s new board is totally focused on making disciplined decisions that will provide the best results for shareholders."