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TORONTO,
ONTARIO--(Marketwire - Nov. 18, 2009) - CASTLE GOLD CORPORATION
("Castle Gold" or the "Corporation") (TSX
VENTURE:CSG) is pleased to announce that it has closed its private
placement (the "Private Placement") (previously announced on
November 6th, 2009), pursuant to which it has issued an aggregate of
3,684,210 common shares of the Corporation (the "Common
Shares") at a price of C$1.00 per Common Share to raise aggregate
gross proceeds of approximately C$3,684,210. In connection with the
Private Placement, the Corporation paid a cash finder's fee in the
amount of C$184,210.
The Common Shares issued in the Private Placement have a hold period
expiring on March 11, 2010; however, this resale restriction does not
prevent Subscribers in the Private Placement from tendering their
Common Shares to any take-over bid. The proceeds from the financing
will be used to accelerate Castle Gold's enhanced production expansion
at El Castillo and to pay one-time expenses associated with Argonaut
Gold Inc.'s ("Argonaut Gold") proposed all cash acquisition
of all of the shares of Castle Gold.
The Private Placement remains subject to the approval of the TSX
Venture Exchange. The securities described herein have not been
registered under the U.S. Securities Act of 1933, as amended, and may
not be offered or sold in the United States unless registered under the
Act or unless an exemption from registration is available.
Subject to the terms and conditions of the Support Agreement between
Argonaut Gold and Castle Gold, on or before November 24th, 2009
Argonaut Gold will offer to acquire, by way of a take-over bid, all of
the issued and outstanding Common Shares of Castle Gold, for
consideration consisting of C$1.25 in cash subject to an increase in
such consideration by C$0.01 for every 1% increase in the price of gold
calculated from a starting gold price of US$1,050 to the five day
average London Gold Fix (PM) price for December 18, 21, 22, 23 and 24,
2009, provided that the maximum final offer price shall not exceed C$1.50
per Common Share as previously announced on October 28th, 2009 (the
"Offer"). On November 17th, 2009 the London Gold Fix (PM) price was
US$1,134.75, as reported on http://www.kitco.com/gold.londonfix.html,
representing a percentage increase of 8.1% from US$1,050 which equates
to a price of approximately C$1.33 on that date (e.g. C$1.25 + C$0.08).
James Mark Plaxton, Chairman of the Board and M&A Committee, and
Interim President of Castle Gold, comments; "Castle Gold has been
advised by Argonaut Gold that Argonaut Gold has obtained subscription
orders from prospective purchasers in a brokered private placement of
common shares of Argonaut Gold, which will result in aggregate gross
proceeds in excess of the capital that would be required to pay the
maximum cash consideration offered to Shareholders of Castle Gold
pursuant to the Offer if the final Offer price equals the maximum of
C$1.50 per share, for all of the issued and outstanding Common Shares.
Argonaut Gold further advised that its brokered private placement is
expected to close on or prior to November 23, 2009, with the proceeds
to be placed into escrow pending the take-up of the Castle Gold shares
under the Offer."
Since the announcement of the Offer, additional lock-up agreements have
been received from shareholders, bringing the total to 42,502,031
common shares and options of Castle Gold in support of the Offer
representing 52% of the issued and outstanding common shares on a fully-diluted
basis. As well, all of the subscribers in the private placement had
already delivered lock-up agreements, and as such these additional
shares are subject to the lock-up agreements. This increases the total
number of common shares and options of Castle Gold in support of the
Offer to 46,186,241 representing 54% of the issued and outstanding
common shares on a fully-diluted basis.
As previously announced on October 28th, 2009, all of the members of
Management and Directors of Castle Gold have entered into lock-up
agreements for all of the common shares and options of Castle Gold they
beneficially own or over which they exercise control or direction of in
support of the Offer. All of the members of Management and Directors of
Castle Gold fully support the Offer and will deposit all of their
common shares to the Offer and highly recommend all Castle Gold
shareholders support the Offer by depositing all of their common shares
under the Offer.
Shareholders of Castle Gold who would like to support the Offer, whom
have not already done so, should contact James Mark Plaxton by email at
MPlaxton@CastleGoldCorp.com
or Rory Quinn by email at RQuinn@CastleGoldCorp.com
to obtain information regarding the completion of a lock-up agreement.
It is anticipated that Argonaut Gold's offering circular and Castle
Gold's directors' circular for the Offer will be mailed to shareholders
on or before November 24, 2009. These materials and the corresponding
news release will provide important information about the Offer and
instructions for depositing common shares under the Offer.
About Castle Gold
Castle Gold Corporation is a gold producer with projects focused in the
Americas. Castle Gold owns a 100% interest in the El Castillo gold mine
in Mexico and a 50% interest in the El Sastre gold mine in Guatemala.
Castle Gold is also advancing exploration and development work at its
La Fortuna gold-silver-copper project in Mexico.
Forward Looking Statements
Certain statements in this press release constitute
"forward-looking" statements that involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Castle Gold to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. When used in
this news release, words such as "will be used" and similar
expressions to the extent they relate to Castle Gold are intended to
identify forward-looking statements. There is no assurance that any
strategic transaction will be completed. Unless required by applicable
securities law, Castle Gold does not assume any obligation to update
forward-looking statements.
TSX-V Trading Symbol: CSG Total Shares Outstanding: 79.2MM Fully Diluted: 85.9MM 52-Week Trading Range: C$1.28 to $0.15
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this news release.
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