GobiMin Signs Framework Agreement To Sell its Chinese Nickel Properties

GobiMin Signs Framework Agreement To Sell its Chinese Nickel Properties

GobiMin Inc. announce that it has entered into two revocable framework agreements with Xinjiang Xinxin Mining Industry Co., Ltd. to dispose of its three nickel-copper mining properties, namely Yellow Mountain East, Xiangshan and Yellow Mountain, in Hami, Xinjiang Uygur Autonomous Region of the People’s Republic of China. The proposed transaction will be facilitated through the sale of its two Chinese subsidiaries, Xinjiang Yakesi Resources Co. Ltd. (“Yakesi”) and Hami Jubao Resources Co. Ltd (“Jubao”). Xinxin, based in Xinjiang, is China’s second-largest nickel producer. It became public on The Stock Exchange of Hong Kong Limited in 2007.

Terms of the Transaction

Pursuant to the Framework Agreement and prior to the completion of the Transaction, Yakesi and Jubao will distribute as dividend to their existing shareholders their retained earnings as of October 31, 2008 and repay all shareholder loans outstanding. Immediately thereafter, Xinxin will acquire 100% equity interest of Yakesi and Jubao for a total cash consideration of RMB540 million (CAD$96 million). GobiMin presently owns 93.55% of Yakesi and 95.16% of Jubao respectively through its wholly owned subsidiary, Alexis Investments Limited (“Alexis”). In order to complete the Transaction, GobiMin will procure the minority shareholders of Yakesi to sell their stake at the same time. Xinxin will make an initial deposit of RMB25 million (CAD$4.46 million) within 3 days from the date of the Framework Agreement. It is estimated that GobiMin will receive net proceeds of RMB490 million (CAD$87.5 million) before Chinese tax upon completion of the Transaction.

In addition, GobiMin presently holds as of October 31, 2008 cash and cash equivalents outside of Yakesi and Jubao of approximately CAD$18.4 million and receivables from Yakesi and Jubao of approximately CAD$7.1 million (before taking into account of the distribution of the retained earning as of October 31, 2008).

The definitive sales and purchase agreement will be entered into before December 15, 2008 subject to: a) the approval of the board of directors and shareholders (where applicable) of Alexis, GobiMin and Xinxin; b) the completion of the audit of accounts of Yakesi and Jubao until October 31, 2008 and the due diligence review by Xinxin;

c) the regulatory approvals.

In case the Transaction cannot be consummated due to the Company’s fault, a breakup fee of RMB25 million (CAD$4.46 million) is payable by the Company in addition to refund of the initial deposit.

The Transaction is expected to close before February 6, 2009.

Exchange rate used: CAD $1 = RMB 5.6

Benefits of the Transaction

As previously announced on October 20, 2008, the Company has started a strategic review on its mining projects due to the recent dramatic decline of nickel and copper price. As a result of the review and after detailed financial analysis, the management believes that the Transaction will increase the Company’s financial resources, reduce shareholders’ risk and potential shareholders dilution while providing an optimal return of value to its shareholders, especially in light of GobiMin’s current market capitalization of approximately CAD$31 million on the basis of 71 million outstanding shares. Most of all, the Company is of the view that the current market conditions will provide exciting opportunities for cash rich mining companies.

The Transaction has the full support of the Company’s board of directors and management team.

GobiMin’s Other Exploration Projects

Upon completion of the Transaction, the Company will aggressively pursue its other projects:

1. The potential future development of the newly discovered Yanxi Project using typical low-cost Chinese mining methods. The NI 43-101 compliant Indicated Mineral Resources total 15 million tonnes at 0.75% copper (254 million lbs of contained copper) while Inferred Mineral Resources total 10 million tonnes at 0.71% copper (160 million lbs of contained copper); 2. The exploration of projects under 4 other exploration companies in Xinjiang; and

3. The acquisition of identified high grade mining projects for metals such as iron, copper, lead and zinc.

About GobiMin

GobiMin is a junior mining company with nickel/copper sulphide operations and development properties in northwestern China. Through its subsidiaries, Xinjiang Yakesi Resources Co. Ltd. and Hami Jubao Resources Co. Ltd., GobiMin controls three concessions, within a 10-kilometre radius, totaling 455 hectares. In operation since 1999, GobiMin currently operates two underground mines (Yellow Mountain East and Xiangshan) and is also currently developing its Yellow Mountain nickel/copper deposit.

GobiMin also has 40% interest in the newly discovered Yanxi Copper Deposit in Hami region.

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