TORONTO, ONTARIO--(Marketwire - Oct. 5, 2011) - Carpathian Gold Inc. (News - Market indicators)(the "Corporation" or "Carpathian") is pleased to announce that its Board of Directors has approved the execution by the Corporation of a committed underwriting with Macquarie Bank Limited ("Macquarie Bank") for a Project Loan Facility ("Facility") ranging from US$75 to US$97million and associated currency and commodity price protection facilities to fund the construction and development of the Corporation's Riacho dos Machados Gold Project (the "Project") in Brazil.

Mineracao Richao dos Machados Ltda. ("MRDM"), a wholly owned Brazilian subsidiary of the Corporation, will be the borrower under the Facility. The Corporation will act as guarantor of the Facility until Project completion. MRDM will enter into a combination of currency price protection to de-risk exposure to both capital and operating costs, and commodity price protection with respect to approximately 26% of the proven plus probable reserves, in order to provide down side price protection for repayment of the loan. The size and structure of these facilities will be determined in the context of the market prior to documentation and closing of the Facility. The Facility is to be provided in two tranches and has a 5-year term carrying an interest rate of LIBOR plus 5.0% to 5.5% prior to Project completion and then 4.5% to 5.0% following Project completion. The Facility can be repaid at any time prior to the expiry of the term subject to only to standard interest rate break costs.

The Corporation has the option to increase the maximum amount of the Facility from US$75 million to up to US$97 million, subject to then prevailing commodity and currency price levels. Should the Corporation draw on the additional US$22 million it will issue to Macquarie Bank three year warrants of the Corporation at an exercise price equal to a 30% premium to the ten day VWAP, subject to a minimum exercise price of $0.65 (representing a total of approximately 16.5 million shares) and a maximum price of $0.95 per share (representing a total of approximately 11.6 million shares).

Dino Titaro, President and CEO commented "This Facility represents a significant milestone for the development of the Riacho dos Machados Gold Project, especially in these uncertain and challenging times where debt facilities are generally difficult to obtain. We are delighted with the firm committed underwriting by Macquarie Bank following their detailed due diligence on the Project".

Draw down on the Facility will occur upon satisfaction of various conditions precedent, including detailed Facility and Security documentation. 

While the Facility documentation is being completed the Corporation is continuing to advance the Project from its current cash treasury. As outlined in the Corporation's press release dated September 16, 2011, the Ad Referendum for the Licença Instalaçâo has been received, thereby enabling it to proceed with the overall construction of the Project. Additionally, the Corporation has announced that it has selected Caterpillar ("CAT") equipment for its mining fleet. The initial order of mining equipment has been signed and it is anticipated that the equipment deliveries to the Project will commence in the second quarter of 2012. A contract mining group has been selected to commence the pre-stripping of the deposit prior to the arrival of the CAT equipment. The secondary and tertiary crushers, and the ball mill and ancillary grinding equipment, have been purchased, based on a processing capacity of 9,000 tpd, and are scheduled to be shipped to the Project site this fall. The Project currently calls for a 7,000 tpd milling operation. 

In order to meet its previously announced time line of targeting the commencement of gold production by the end of 2012/early 2013, the Corporation has initiated the building of the starter tailing dam and the engineering and permitting of the power upgrade transmission line. Optimization and enhancing of the mining schedule, gold throughput and gold recovery are nearing completion. All key senior management personnel for the Project have also been hired.

Background Highlights of the RDM Feasibility Study

• Proven and probable open-pit reserves of 20.9 million tonnes at 1.24 g/t Au for 830,200 ounces of gold (based on a US$950 per ounce gold pit-shell).

• Initial 8-year mine life at a mill throughput of approximately 7,000 tonnes per day utilizing conventional open-pit mining and crushing-grinding with CIL recovery of gold.

• Average annual recoverable gold production of 93,400 ounces (100,000 ounces/year in the first three years of operation).

• Average cash operating cost over the life of mine of US$558 per ounce.

• After-tax project NPV of US$205 million based on a 5% discount rate at US$1,450 per ounce with an IRR of 31.6%.

• Estimated start-up capital of US$160 million as of April 1, 2011 (the Corporation has spent approximately US$15 million on the Project since the Feasibility Study and currently has allocated an additional US$35 million from its treasury for the Project).

• Global measured plus indicated mineral resource of 936,600 ounces (inclusive of mineral reserves) with another 587,300 ounces in the inferred category.

• Additional opportunities for future conversion of resources to reserves and resource growth, reduction in capital and increased mill feed grade. 

About Carpathian

The Corporation is an exploration and development company whose primary business interest is developing near-term gold production on its 100% owned Riacho dos Machados Gold Project in Brazil, which is currently focusing on activities surrounding construction, along with progressing its exploration and development plans on its 100% owned Rovina Valley Au-Cu Project located in Romania. On a company wide basis, the Corporation currently hosts NI 43-101 resources of 4.0 million ounces of gold in the measured plus indicated categories and 4.5 million ounces of gold in the inferred category, as well as 759.1 million pounds of copper in the measured plus indicated category and 663.1 million pounds of copper in the inferred category.

The Riacho dos Machados Gold Project is targeted to produce in the order of +/-100,000 ounces of gold per annum, with an anticipated goal for the commencement of production in late 2012 or early 2013. The Rovina Valley Project in Romaniawill enhance the Corporations growth profile as a mid-tier gold producer.

Mr. Titaro is the qualified person (as defined in National Instrument 43-101) overseeing the design and implementation of the present work programs. He is responsible for preparing the technical information contained in this news release.

Forward-Looking Statements: This press release includes certain statements that may be deemed "forward-looking statements". Forward-looking statements are frequently characterized by words such as "plan", "expect", "Project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" or "will" occur. All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Corporation expects, are forward-looking statements. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurance that forward-looking statements will prove to be accurate, as results and future events could differ materially from those anticipated statements. The Corporation undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.