Vatukoula Gold Mines VGM.LN Strategic Investment by Xintai Re-Affirms Confidence in Vatukoula's Long Term Prospects

29th August 2012 Vatukoula Gold Mines plc. ("Vatukoula" or "the Company") Strategic Investor Xintai commits to invest £10.3 million in an equity financing at a substantial premium to the market Vatukoula Gold Mines Plc. (AIM:VGM), the AIM listed gold producer and explorer, is pleased to announce that it has entered into an agreement with Shengen Xintai International Mine Industry Group Co. Ltd. ("Xintai") where Xintai has agreed to invest £10.3 million for the issue of 20 million new ordinary shares, at a premium of approximately 60% over the share price as at 28 August 2012. The financing will be completed in two tranches via the issue of a £3,195,900 convertible loan ("Loan Note") and the issue of 13,812,374 new ordinary shares in the Company at a price of 51.65 pence per share ("Placing") to raise £7,134,091. The Loan Note will automatically convert to 6,187,626 ordinary shares upon closing of the Placing, such that Xintai will invest a total of £10.3 million to acquire a total of 20 million new ordinary shares. The Loan Note, which bears a coupon of 5% per annum and has a term of one year, is expected to be completed on or around August 31, 2012. The Placing is anticipated to be completed within three days of receipt of Chinese Foreign Exchange State Approval for the transfer of funds, which is expected to occur in late September. The net placing proceeds will be added to working capital and used towards a number of key strategic objectives including the Vatukoula mine's ongoing development and capital investment programme. This programme will allow the mine to increase production to a sustainable and profitable level. On the basis that the Placing is approved and the Loan is converted Xintai will hold 20,000,000 shares or 17.01% of the enlarged share capital of the Company. Xintai's involvement with the Company is expected to bring new expansion opportunities at the Vatukoula property and will mean the Board will be able to consider a wider range of growth opportunities than those that were previously available to it. China Gold Science and Technology Ltd ("CGST") will act as Xintai's cooperative partner, bringing significant environmental, technical and economic resources to the project. In addition the Company has been informed that Xintai are currently negotiating the purchase of further shares in the Company from existing shareholders ("Additional Shares"). If these negotiations are successful it is anticipated Xintai's holding would increase to up to 29.9% of the enlarged share capital of the Company. On completion of the Placing and the acquisition of the Additional Shares the Board of Directors of VGM has agreed that Xintai will be invited to nominate two directors to the Vatukoula Board of Directors. Mr Dingli Wang, CEO of Xintai commented; "I believe that Vatukoula represents an excellent investment opportunity because of the potential that the mine in Fiji represents and its strong board and management. Shareholders will benefit from our cooperation, which will combine complementary experience and skills to further develop the Fijian assets."  Mr David Paxton, CEO of VGM commented; "Xintai's strategic investment is a significant step for VGM. It is not only a vote of confidence in the Vatukoula Gold Mine but it puts the Company on a sound financial footing for the expansion of the mine and allows us access to further technical expertise via Xintai's technical partners CGST."