African Gold has eliminated all its long-term British and Zimbabwe debt by selling its Beehive mining operations to the loan note holders. Chairman, Dr John Teeling, described it as an "elegant deal" and "good for both sides".

The operations consist of the Eva, Babs, Beehive and Antelope mines as well as a milling facility. Dr Teeling said the mines have been on care and maintenance since early 1999 and require significant new investment to be brought back into operation. The mines, he added, have been losing about £8,000 per week.

The deal reduces Afgold's debt by £1,215,000, strengthens the group's balance sheet which "will enable us to move forward by considering projects in gold and other metals in Zimbabwe and elsewhere in Africa", said Dr Teeling. Interest and operating costs will be reduced by £235,000 per annum and reserves will be boosted by a £500,000 writeback.

African Gold will continue to operate the Inez mine which produces some 60 ounces of gold per week and will still have some local Zimbabwe creditors and "a small amount of local bank debt", the group said. The Inez mine, said Dr Teeling, has the capacity to produce 150 ounces of gold per week.