RNS Number:6727Q
Gold Mines Of Sardinia PLC
08 October 2003


For Immediate Release          8 October 2003


              Gold Mines of Sardinia plc ("GMS" or the "Company")

              Gold Mines of Sardinia plc enters into an agreement
      for a business combination with Full Riches Investments Ltd ("FRI")

Key Points

* The proposed agreement successfully concludes the search by GMS for a
strategic partner to exploit its extensive interests in Sardinia.

* The resulting company will benefit from the expertise of senior
management with demonstrably successful track records as directors of Bolivar
Gold Corporation, one of our existing joint venture partners.

* The Board of GMS believes that the relationship delivers three key
objectives for GMS:

-          the new management team will have established relationships with
relevant Italian government and industrial authorities, and an enviable track
record of raising funds for mining operations on the Toronto stock exchange;

-          completion of the proposed fundraisings by FRI will provide the new
company with C$10 million of working capital of which US$500,000 of an interim
US$1.5 million facility has already been injected into the Sardinian operating
company; and

-          a further condition of the agreement is the introduction by FRI of an
appropriate third party joint venture partner who will operate and finance all
future exploration in Sardinia (excluding areas already under a joint venture
agreement).


Jon Pither, GMS Chairman, commented:


"Today's announcement concludes our search for a key strategic partner to unlock
the opportunities presented by our properties in Sardinia. Our proposed
relationship with Full Riches Investments Ltd will deliver a wealth of proven
industry experience together with particular knowledge of Italian government and
industrial authorities. I believe that this may prove to be valuable in the
group's pursuit of the necessary concession and access rights for ongoing
exploration and mining in Sardinia. The enlarged group will also benefit from
substantial new funding for development, on completion of the proposed
transaction, as well as access to new sources of funding going forward. This
agreement has the potential to establish the foundations that will deliver real
value to shareholders and I shall be urging you to study the forthcoming
circular in detail and vote in favour of this exciting opportunity at an EGM."


Press enquiries:

Martin Groak, Director, Gold Mines of Sardinia plc       Tel: 07949 209 301

Louis Castro, Williams de Broe Plc                       Tel: 020 7588 7511

Zoe Biddick/Shane Dolan, Biddicks                        Tel: 020 7448 1000



Full text of the announcement:

The Directors of Gold Mines of Sardinia are pleased to announce that it has
entered into an arm's length agreement (the "Agreement") with Full Riches
Investments Ltd, a public company listed on the Toronto Stock Exchange Venture
Exchange ("TSXV") and incorporated in Canada pursuant to which FRI and GMS have
agreed to complete a business combination (the "Business Combination").

Pursuant to the Business Combination, GMS will form a new subsidiary
incorporated under the laws of a Canadian jurisdiction ("GMS Canco"). GMS will
then sell the shares of its wholly-owned subsidiary, Gold Mines of Sardinia Pty
Limited ("GMS Australia") which owns all of GMS's assets and operations, to GMS
Canco in consideration for shares in GMS Canco. FRI will be amalgamated with GMS
Canco to form a new corporation ("Newco"). Pursuant to the terms of the
amalgamation: (i) GMS, as the sole shareholder of GMS Canco, will receive common
shares of Newco representing, in aggregate, 50% of Newco's issued and
outstanding common shares (on a fully diluted basis) as of the date of the
completion of the amalgamation (the "Closing Date"); and (ii) the shareholders
of FRI will receive common shares of Newco representing, in aggregate, 50% of
Newco's issued and outstanding common shares (on a fully diluted basis) as of
the Closing Date. In conjunction with the completion of the Business
Combination, it is a condition of closing that GMS shall distribute the shares
of Newco received on the amalgamation to its shareholders, through a winding-up
or reduction of capital, or in some other manner.

Completion of the Business Combination is subject to the successful completion
of C$10,000,000 in equity financings by FRI, at least C$4,000,000 of which must
have been completed before the execution of the definitive documentation for the
transaction. In connection with the Business Combination, FRI is expected to
announce a non-brokered private placement of up to 40,000,000 special warrants
of FRI (the "Special Warrants") at a price of C$0.10 per Special Warrant for
gross proceeds of approximately C$4,000,000 (the "Private Placement"). Each
Special Warrant will be exercisable, for no additional consideration, to acquire
one common share of FRI. The use of proceeds of the financings will be to
finance the Interim Financing (described further below), future exploration and
development expenses and general working capital for Newco.

Completion of the Business Combination is also subject to the execution and
delivery by FRI of a joint venture agreement with a third party relating to the
exploration, development and/or operation of properties to be acquired by Newco
with the appropriate mining expertise and financial capacity. In addition, as
requested by the Board of GMS, the management of Newco will, in connection with
the completion of the Business Combination, be required to enter into consulting
agreements having a minimum two year term to make available to Newco assistance
and expertise in its business activities in Italy, including assisting in
government relations and industrial relations, and to assist Newco to obtain
necessary concessions and access rights required for exploration and mining in
Sardinia.

Interim Financing

In conjunction with the Business Combination, FRI has agreed to arrange an
interim financing (the "Interim Financing") for GMS of up to US$1,500,000 to be
drawn down by GMS in two tranches. The Interim Financing shall bear interest at
a rate of 10.0% per annum from the date of issue, payable on maturity and will
mature on a date following the completion of the Business Combination such that
the obligations of GMS thereunder will be assumed by Newco on completion of the
Business Combination. The Interim Financing will be direct obligations of GMS,
secured by a pledge over GMS' holding in GMS Australia and may be converted into
a joint venture interest if the Business Combination is not completed by March
1, 2004. All funds advanced under the Interim Financing will be paid directly to
the account of Sardinia Gold Mining SpA("SGM"), a subsidiary of GMS and be used
primarily for the expenses of SGM.

The first tranche of the Interim Financing in the principal amount of US$500,000
has now been advanced to GMS. At the request of GMS, the second tranche of the
Interim Financing in the principal amount of US$1,000,000 will be advanced as
soon as practicable upon satisfaction of certain conditions precedent to the
completion of the Business Combination, as well as the execution and delivery
into escrow on terms satisfactory to FRI of a signed joint venture agreement
which the parties have agreed to enter into, at the election of FRI, if the
Business Combination has not been completed by March 1, 2004 (details of which
are summarised below).

Further to the completion of the first tranche of the Interim Financing, FRI has
the right to appoint two directors to GMS's board of directors. Accordingly,
Miguel de la Campa and Jose Francisco Arata have been nominated by FRI to the
board of Directors of the Company.

In order to complete the first tranche of the Interim Financing prior to the
completion of the Private Placement, FRI obtained a bridge facility (the "Bridge
Facility") in the principal amount of US$500,000 with Endeavour Mining Capital
Corp. ("Endeavour"). The Bridge Facility matures on October 31, 2003 and bears
interest at a rate of 10% per annum, payable on the earlier of the principal
prepayment date or the maturity date. As security for the Bridge Facility, FRI
has agreed to assign its rights under the Agreement to Endeavour. As additional
consideration for providing the Bridge Facility to FRI, FRI has agreed to issue
Endeavour 150,000 common shares in the capital of FRI.

Joint Venture

If the Business Combination is not completed by March 1, 2004, FRI and GMS have
agreed to form a joint venture for the exploration and mining of all project
areas held by GMS or its subsidiaries in Sardinia, Italy at that date, subject
to any agreements GMS may have entered into with third parties prior to such
date. The terms of the joint venture are that FRI will receive a 15% vested
interest in the properties upon forgiving the amount due under the Interim
Financing, and FRI will have the right to earn up to a total of 60% interest
upon completion of a bankable feasibility study. Alternatively, FRI could,
within two weeks following March 1 2004, opt not to go ahead with the JV and
instead seek repayment of all the Interim Financing within 90 days of that date.
At this point GMS will seek alternative financing arrangements.

In the event that a delay in completing the Business Combination before March 1,
2004 occurs for reasons outside the reasonable control of FRI and GMS, they will
negotiate in good faith to endeavour to agree to a reasonable extension of the
date for completing the Business Combination.

FRI is effectively a shell company quoted on the TSXV which has not actively
conducted business since September 2002.


The proposed Board of Directors of Newco after completion of the Business
Combination is expected to include Serafino Iacono, Miguel de la Campa, both of
whom are on the board of Bolivar Gold Corporation with which GMS announced a
joint venture on 5 September 2003, Neil Woodyer, Gordon Keep, Jose Francisco
Arata, Perry Dellelce and at least 2 representatives of the current GMS Board.


It is the intention of FRI and GMS to apply to their respective stock exchanges
to have Newco listed on the TSX Venture and AIM markets.


The completion of the Business Combination is subject to the approval of the
TSXV and all other necessary regulatory approval. The completion of the Business
Combination is also subject to additional conditions precedent, including
shareholder approval of FRI and GMS of the Business Combination. Accordingly the
shares of GMS will remain suspended until a circular has been sent to
shareholders seeking shareholder approval for the proposals outlined in this
announcement.


Press enquiries:

Martin Groak, Director, Gold Mines of Sardinia plc           Tel: 07949 209 301

Louis Castro, Williams de Broe Plc                           Tel: 020 7588 7511

Zoe Biddick/Shane Dolan, Biddicks                            Tel: 020 7448 1000







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

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