Aurum Mining: Kentor Releases Aurum From Warranties, Indemnities

LONDON (Dow Jones)--Aurum Mining PLC (AUR.LN) said Thursday that as part of its option agreement with Kentor Gold Limited (KGL.AU) to acquire Aurum's remaining 10% stake in the Andash asset for consideration of $1.8 million, Kentor has released Aurum from all the warranties and indemnities that were given to Kentor by Aurum when Aurum disposed of its 80% stake in the Andash asset in December 2009. MAIN FACTS: -The release from these potential contingent liabilities is a key step for the Company as it significantly simplifies the Company's balance sheet and it now allows the Company's Board to focus on the next phase of the Company's transformation. -A number of the Company's major Shareholders have recently made known their preference for Aurum to return capital to Shareholders. -As a result the Board is now proposing a twin strategy to return a very substantial proportion of the Company's existing cash to Shareholders while preserving the Company's ability to deliver value from both the residual 10% holding in the Andash asset and from the Company's continued AIM-quoted status. -Free cash in the Company at the end of June was GBP8.6 million. -This balance takes into account all known existing liabilities in the Group, but does not allow for the costs of implementing the return of capital and related matters and does not include any contingency for any potential U.K. tax liability that could arise in the financial year ending March 31. -While the Board is confident that there are no outstanding tax liabilities for the Company for this period, the tax returns for the year will need to be finalized and submitted to HMRC prior to any return of cash. -The Board has already taken steps to reduce costs and preserve cash, and is currently reviewing its ongoing structure and future cash requirements. -Shares closed Wednesday at 13.0 pence. By Iain Packham, Dow Jones Newswires; 44-20-7842-9269; iain.packham@dowjones.com (END) Dow Jones Newswires July 15, 2010 02:25 ET (06:25 GMT)