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VANCOUVER,
BRITISH COLUMBIA--(Dec. 3, 2010) - Columbus Gold Corporation (TSX VENTURE:CGT) (the "Company" or
"Columbus Gold")
is pleased to announce that it has entered into a definitive option
agreement to acquire the Paul Isnard gold project
in French Guiana which includes the 2 million ounce Montagne
D'Or gold deposit. French Guiana is a department of France bordering Brazil
and Suriname in South America.
In 2008, SRK
completed a Preliminary Assessment at Montagne D'Or and estimated a 43-101
compliant inferred resource of 2 million ounces gold from 33.2 mt grading
1.69 gpt. The Montagne D'Or gold deposit is open in every direction
laterally and at depth.
Robert
Giustra, Chairman & CEO of Columbus Gold, stated: "The
acquisition of the Paul Isnard gold project, anchored by the 2 million
ounce Montagne d'Or orebody is a company transforming event that overnight
has transformed Columbus Gold from an early stage gold explorer to
potentially a developer. The deposits at Paul Isnard have considerable
scope for expansion, they are amenable to open pit mining and initial
metallurgical tests performed at the Montagne d'Or deposit indicate
recoveries of approximately 90% from conventional leaching. In
addition, infrastructure is good and the port of St. Laurent is located
only 85 km away by road. The project also has the distinction of being
located in a politically stable country."
Pursuant to the
agreement (the "Agreement")
with Auplata S.A. ("Auplata"),
the 100% owned subsidiary of Auplata, SOTRAPMAG SAS ("SOTRAPMAG")
and Auplata's largest shareholder Pelican Venture SAS ("Pelican"),
all French companies, Columbus Gold can earn a 100% interest in Paul Isnard
by making minimum exploration expenditures of US$7 million and completing a
Bankable Feasibility Study over a four year period. Columbus Gold must
also issue shares to Auplata over the four year period totaling 49% of
Columbus Gold's issued and outstanding share capital when including any
shares issued under a private placement to Pelican in the
total. Pelican will complete a part and parcel private placement in
Columbus Gold at a price of $0.215 per share for a total of up to 15% of
Columbus Gold's issued and outstanding share capital after giving effect to
the private placement. The private placement is intended to provide
Pelican with an incentive to assist with government and community
relations, a role Columbus Gold deems important to the successful
development of Paul Isnard. For additional details concerning the
terms of the Agreement or of the transactions contemplated herein please
see below.
The Paul Isnard
project is located approximately 180 km west of the capital city of
Cayenne, French Guiana and consists of eight mining permits totaling 135 km2
and a pending application for two additional mining permits totaling a
further 14.4 km2. The Paul Isnard project area has been an
important centre of alluvial and colluvial gold mining operations since the
late 19th century with reported estimated production of about
two million ounces.
The project
occurs within the northernmost of two east-west trending Proterozoic
greenstone belts making up the French Guiana sector of the Guiana
Shield. The greenstone terrain hosts important gold deposits in French
Guiana and neighboring countries, including Rosebel in Suriname, and is
generally considered to represent an extension of the productive and much
more extensively explored and developed Birimian System greenstone belts of
West Africa.
Modern
exploration focused on primary gold mineralization at Paul Isnard has been
limited but includes geological, geochemical and geophysical surveys, and
75 diamond core holes totaling 12,983 metres, carried out by Golden Star
Resources largely from 1995 to 2007. Most of this work, including 60
holes for 11,454 metres, has been directed at the Montagne d'Or gold
deposit which consists of a linear mineralized body within laminated felsic
volcanic rocks outlined and partially delineated for a strike length of
3,000 metres and dip length up to 200 metres. The deposit consists of
two closely spaced, mineralized layers, respectively averaging about 65 and
35 metres in thickness, and multiple smaller, sub parallel gold-bearing
bands and stringer zones. It is open internally, between widely spaced
drill holes at 50 to 200 metre centres, along strike and at depth.
A mineral
resource estimate, categorized as Inferred per NI 43-101 reporting
standards, was completed by SRK Consulting as at February 29, 2008, for
Golden Star Resources Ltd. Applying a cutoff grade of 0.5 grams per
tonne gold, SRK estimated a resource of 33,200,000 tonnes grading 1.69 gpt
gold for 2,000,000 contained ounces gold. Columbus Gold is
commissioning an updated 43-101 report which will be filed on SEDAR within
45 days.
The Columbus
program will be focused on the Montagne d'Or deposit where infill drilling
is planned to convert Inferred resources to Measured and Indicated
categories, and holes drilled at greater depths and along strike are
planned in order to increase the mineral resources. Numerous less
developed gold prospects and untested geochemical anomalies which occur
throughout the project area will also be evaluated.
Columbus Gold has
the option of earning directly into the Paul Isnard gold project or
indirectly by earning into SOTRAPMAG which controls 100% of Paul Isnard
subject to underlying royalties. Columbus Gold can earn an initial 51%
interest in Paul Isnard by:
- issuing
shares to Auplata on the Effective Date (as defined below) totaling,
after issue, 30% of Columbus Gold's issued and outstanding share
capital, which total includes any shares to be issued to Pelican
pursuant to the private placement;
- making
minimum exploration expenditures of US$2 million by the first
anniversary of the Effective Date;
- issuing
additional shares to Auplata by the first anniversary of the Effective
Date such that, after issue, Auplata will own 40% of Columbus Gold's
issued and outstanding share capital, which total includes the 30% of
Columbus Gold's share capital previously issued to Auplata and
Pelican;
- making
additional minimum exploration expenditures of US$5 million by the
second anniversary of the Effective Date; and
- issuing
additional shares to Auplata by the second anniversary of the
Effective Date such that, after issue, Auplata will own 49% of
Columbus Gold's issued and outstanding share capital, which total
includes the 40% of Columbus Gold's share capital previously issued to
Auplata and Pelican. The Agreement stipulates that under no
circumstances may Auplata (together with the shares issued to Pelican)
own 50% or more of the Company.
Upon earning an
initial 51% interest, Columbus Gold can elect to earn an additional 49%
interest in Paul Isnard for a total interest of 100% (subject to underlying
royalties) by completing a Bankable Feasibility Study by the fourth
anniversary of the Effective Date.. Auplata will retain the right to
extract certain surface ores until the fourth anniversary of the Effective
Date.
All share
issuances to Auplata pursuant to the Agreement will be subject to escrow
until the second anniversary of the Effective Date. In addition,
Auplata will be subject to a standstill provision restricting it from
acquiring additional shares of Columbus Gold.
The transactions
contemplated in the Agreement are subject to a number of conditions
precedent which must be satisfied by May 31st, 2011 and once
satisfied will define the effective date of the Agreement (the "Effective Date"). Among
other things, the conditions precedent include stock exchange and regulatory
approvals of the Agreement and related transactions, and the Company
obtaining a positive title opinion in connection with the property. In
addition, Columbus Gold will be required to raise a minimum of US$2 million
(net of the proceeds of the Pelican private placement).
The Agreement is
also subject to a 60 day due-diligence period by Columbus Gold and a 15 day
due-diligence period by Auplata. Completion of the transaction is also
subject to shareholder approval of the shareholders of Columbus Gold, and
the transaction cannot close until the required shareholder approval is
obtained.
Subject to TSX
Venture Exchange approval, a finder's fee of up to CAN$142,855, may be
payable in cash or shares by Columbus Gold in connection with the
Agreement, to Bernard Nicolet of Paris, France or to his nominee.
Columbus Gold's
independent consultant and Qualified Person, John Prochnau (P. Geo), B.Sc.
(Mining Engineering), M.Sc. (Geology), has reviewed and approved the
technical content of this news release.
ON BEHALF OF THE
BOARD,
Robert F.
Giustra, Chairman & CEO
This release
contains forward-looking information and statements, as defined by law
including without limitation Canadian securities laws and the "safe
harbor" provisions of the US Private Securities Litigation Reform Act
of 1995 ("forward-looking statements"), respecting the Agreement,
the conditions precedent in connection therewith, and the Company's
fund-raising plans. Forward-looking statements involve risks, uncertainties
and other factors that may cause actual results to be materially different
from those expressed or implied by the forward-looking statements,
including without limitation the success or failure of the Company's or
Auplata's due diligence inquiries; ability to obtain regulatory, shareholder,
and TSX Venture Exchange approval of the transactions contemplated under
the Agreement; the ability to pass the transactions contemplated under the
Agreement through applicable French law; the ability to obtain applicable
exemptions from prospectus and registration requirements in connection with
the issuance of securities of the Company; the ability to satisfy the
conditions precedent contained in the Agreement, including without
limitation the ability to obtain a positive title opinion, and complete
fundraising; the ability to complete milestones under the Agreement (if
ultimately approved) in order to earn into the property, including without
limitation the ability to obtain qualified workers, financing, permits,
approvals, equipment, and ultimately a Bankable Feasibility Study in
connection therewith; ability to obtain alternate financing; changes in the
market; decisions respecting whether or not to pursue the transactions
contemplated under the Agreement (either at the due diligence stage, pre-approval
stage, or post-approval stage, if ultimately approved); non-performance by
contractual counterparties; and general business and economic conditions.
Forward-looking statements are based on a number of assumptions that may
prove to be incorrect, including without limitation assumptions about:
general business and economic conditions; that the Company and Auplata will
be able to successfully complete the conditions precedent to the Agreement,
including without limitation the ability to obtain a positive title
opinion, complete required fundraisings including with Pelican, and the
ability to obtain regulatory, TSX Venture Exchange, and shareholder
approval of the transactions contemplated under the Agreement; that due
diligence will be successful for both the Company and Auplata; that the
Company will be able to complete necessary milestones under the Agreement
in a timely and successful fashion; that French law will allow the
transactions contemplated under the Agreement to succeed; that the Company will
desire to continue earning into the Property over time; the ability to
locate sufficient financing for ongoing operations; and general market
conditions. The foregoing list is not exhaustive and we undertake no
obligation to update any of the foregoing except as required by law.
Neither the TSX
Venture Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.
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