GVM Gvm Metals

RNS Number:8473Q
GVM Metals Ltd
07 February 2007

                               GVM METAL LIMITED



           Heads of Agreement reached to acquire Kelso Mining Limited



GVM Metals Limited ('GVM' or the 'Company') today announces that it has agreed
terms for the acquisition of Kelso Mining Limited ('Kelso') whose principal
asset is the right to acquire 70% of the issued share capital of Coal of Africa
Limited ('CoAL').  CoAL is a South African company that owns the Mooiplaats coal
project and surrounding New Order prospecting rights.  The properties owned by
CoAL are located within 2 kilometres of the Camden Power Station near Ermelo and
are beside the main rail line to the Richards Bay export coal terminal.



A Competent Persons Report ('CPR') on the CoAL properties is currently being
prepared by SRK Consulting and it is a condition of the Kelso acquisition of
CoAL that the CoAL properties contain a JORC and SAMREC compliant resource in
excess of 450 million tonnes of coal.  The CPR is expected to be made available
by April 2007.



The terms of the CoAL agreement contain a number of preconditions including
regulatory and Kelso shareholder consent and the completion of due diligence
satisfactory to the Company.  As well as the precondition to the JORC and SAMREC
status of the resources, the transaction is to complete 90 days after South
African Ministerial consent to the transfer of New Order Mining Title.



Kelso also owns the Itawes nickel project located in the northern Mindanao
province in the Philippines.  Whilst the Mineral Production Sharing Agreement is
expected to be granted by the Department of Environment and Resources shortly,
GVM will have the right to sell the Itawes project back to the Itawes vendors
for a nominal consideration, whilst retaining a minority interest, should the
CoAL transaction not close and/or the Mineral Production Sharing Agreement not
be granted.



The maximum consideration for the Kelso acquisition is approximately #10
million.  This consideration is made up as follows:



a.       An initial consideration of #3.7 million, comprising cash of #2 million
and #1.7 million in new GVM shares to be issued at its mid-market price with but
within a minimum and maximum price range of 20-30 pence per share;

b.       Subject to completion of the CoAL acquisition, a deferred consideration
#4 million in new GVM shares to be issued at its mid-market price with a minimum
and maximum price range of 20-30 pence per share; and

c.       Subject to completion of both the CoAL acquisition and receipt by the 
Itawes project of its Mineral Production Sharing Agreement, an additional deferred
consideration of #2.2 million of which #1.5 million is payable in cash and
the balance in new GVM shares to be issued at its mid-market price with a
minimum and maximum price range of 20-30 pence per share.



The acquisition of Kelso requires the approval of GVM shareholders.  Once final
agreements have been executed, a Notice of Meeting will be sent to GVM
shareholders providing full details of the acquisition.  This is expected by no
later than 31 March 2007.



Following completion of the acquisition, should GVM decide to exercise the
option to acquire 70% of CoAL, the consideration will be #30 million of which a
#3 million deposit has already been paid by Kelso  The balance is payable as to
#17 million on completion in cash and the balance in cash 12 months thereafter.
The CoAL agreement is not expected to be completed for at least four months to
allow time for the completion of the Competent Person's Report and to receive
relevant regulatory consents.



The Company will provide further technical details regarding the potential
resources, development, production or other indicative technical data when SRK
Consulting report is completed.





For more information contact:

Simon Farrell, Managing Director   GVM                       +61 417 985 383 or +61 8 9322 6776
Leesa Peters / Jos Simson          Conduit PR                +44(0) 20 7429 6606
Olly Cairns / Romil Patel          Corporate Synergy Plc     +44(0) 20 7448 4400


www.gvm.com.au


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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