Afcan reworks TJS deal

Junior Afcan Mining (AFK-V) has reached an agreement to postpone for two years a US$700,000 payment due to Australian-based Sino Gold at year-end.

Also under the new deal, Afcan will buy back the net profit interest royalties payable to Sino from production at the TJS (Tanjianshan) gold project in northwestern China.

Under the original agreement to acquire an 85% interest in the TJS project, Afcan agreed to pay a 15% net profit interest capped at US$5.5 million. The new agreement calls for that to be replaced by fixed annual payments (from the end of 2004 through 2009) totalling US$2 million. Half of that will take the form of a royalty of US$2 per oz. on production exceeding 600,000 oz. Afcan can buy out the payments at any time.

The loan to Afcan from Sino will bear interest at the rate of U.S. Prime plus 2% on a quarterly basis.

Earlier this month, drilling by Afcan on the Jinlonggou resource at TJS indicated that the minreralization is continuous to the satellite deposit at Pubugou and perhaps to deposit M7. The best result came in hole 58, which cut 19.4 metres of true width running 10.6 grams gold.Selected results from drilling on other areas of the resource include:

• Hole 43 -12.5 metres (true width ) running 3.2 grams gold per tonne;
• Hole 44- 1.5 metres of 14.8 grams gold;
• Hole 48 – 13.5 metes of 4.7 grams gold;
• Hole 53 – 20.1 metes grading 6.8 grams gold; and
• Hole 61, which returned 17 metres averaging 2.7 grams gold, and a lower, 12.2-metre interval running 3.6 grams gold.

Drilling will further test the eastern extensions of the orebody in 2004.

The remaining 15% in TJS is held by The First Brigade for Geology and Mineral Exploration of Qinghai Province and Dachaidan Gold Mine.

Shares in Afcan were 4, or nearly 8% higher, at 55 in afternoon trade in Toronto following the news on Dec. 24.