PRESS RELEASE

 

tsx.v: CI, Frankfurt: T9N, otc-bb: CNGZF                                                                         September 1, 2009

---

 

---

Vancouver, British Columbia - September 1, 2009 - Canada Gold Corporation (TSX Symbol: CI, Frankfurt: T9N, OTC-BB Symbol: CNGZF) (�Canada Gold� or the �Company�) has signed a binding option agreement with a private Peruvian citizen to acquire a 100% interest in the surface rights of a 53 hectare (131 acre) property in the Suyo District, Ayabaca Province, Department of Piura, Peru, through its Peruvian subsidiary Procesadora CanOrePro SA.

 

The land will be the site of the Company�s first toll gold ore processing plant, situated in the heart of the small scale mining activities of northern Peru.  The property is adjacent to the paved Pan-American Highway, which provides year-round access.  Electrical power is available through the local utility, and water can be obtained from a well-understood, shallow regional aquifer system.  By locating the plant close to these small scale mining activities, Canada Gold can become the destination of choice for the miners who, for the most part, lack their own processing facilities.  The local miners will benefit considerably once the Canada Gold plant is commissioned, as they currently pay to transport their mined ores to existing toll processing plants located 1,400 km south.  Canada Gold is on-track to have the first modern ore processing plant operating in this area, with an initial capacity of 300 t/day.  The business plan contains minimal exploration or mining risk as the Peruvian Ministry of Energy and Mines currently estimates there are approximately 6,000-7,000 small scale miners actively working this area of Peru.

 

With the option agreement in place, the Company anticipates plant construction will be completed within 12-15 months. The Company will now finalize the selection of an appropriate consulting group to initiate the Environmental Impact Assessment (EIA) as required by Peruvian law, as well as perform detailed topographical survey and confirmatory water well drilling, which in turn will allow for the initiation of detailed engineering for the project.    

 

The option agreement is conditional upon receipt of all required regulatory approvals, including the approval of the TSX.

 

Canada Gold has been formed for the express purpose of developing toll ore processing facilities in small-scale (artisanal) mining communities.  By providing local miners with access to advanced ore processing techniques, the Company�s toll processing model seeks to assist these mining communities establish sustainable socio-economic standards by encouraging entrepreneurship, curtailing health and safety risks, improving access to education and equipment, reducing environmental degradation, and minimizing the pressures contributing to child labor.

 

Local communities are showing strong support for the project as they understand the local social and economic benefits of having a modern processing facility located within their existing mining areas.  Regional and Federal regulators have also voiced strong support for the project.  The Canada Gold facility will provide an alternative processing option to the numerous small unregulated mercury amalgamation plants in the area and the associated health and environmental impacts accruing from these small scale processing activities.  The start-up and commissioning of Canada Gold�s first processing plant in northern Peru is scheduled for late 2010.

 

 

Much of the developing world possesses significant informal artisanal small scale mining communities, notorious for their low health, safety and environmental standards, yet recognized for their significant social and economic influence.  The organization of Communities and Small Scale Mining (�CASM�) suggests between 13 and 20 million men, women, and children from over 50 developing countries are active in small scale activities, with 100 million more dependent on this sector for their livelihood.     

 

For more information, please contact the office or visit www.canadagold.com.

 

On Behalf of the Board,

 

 

Dave McMillan

Executive Chairman

Canada Gold Corporation

 

Chad McMillan

Vice President, Communications

(604) 685-5851 or Toll Free: (888) 685-5851

Fax: (604) 685-7349

ir@canadagold.com

 

Corporate Office:

Suite 520 - 700 West Pender St

Vancouver, BC CANADA

V6C 1G8

 

This communication to shareholders and the public contains certain forward-looking statements. Actual results may differ materially from those indicated by such statements. All statements, other than statements of historical fact, included herein, including, without limitations statements regarding future production, are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. 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.