Castle Gold Announces Stock Repurchase Program
CASTLE GOLD CORP. (Castle Gold, the Company) (TSX Venture Exchange: CSG) is pleased to announce authorization and implementation of a stock repurchase program also referred to as a Normal Course Issuer Bid under the rules and policies of the TSX Venture Exchange.
Castle Gold Corp. announced today that its Board of Directors has authorized the repurchase of up to 10% of the public float (excludes escrowed or other non-transferable securities and securities held by senior officers, directors and 10% security holders (i.e. 7,028,820 Shares)) as allowed under a Normal Course Issuer Bid, and up to a maximum purchase price of $1.20 CAD per share.
The Company may purchase shares from time to time on the open market or in negotiated purchases. The timing and amounts of any such repurchases will be at the discretion of the Chairman, subject to market conditions and other factors, and will be in accordance with applicable securities laws and other legal requirements. The stock repurchase program will be affected through BMO Nesbitt Burns but does not obligate the Company to acquire any specific number of shares and may be discontinued at any time.
Chairman James Mark Plaxton stated: "The Board's authorization of the share repurchase program reflects its confidence in Castle Gold's business (e.g. its two producing gold mines, the potential of its gold production ramp up currently underway, ongoing gold project development work currently underway, and most importantly its people's abilities (i.e. the mine building, operating, and management teams) and its belief that Castle Gold shares are significantly undervalued. Furthermore, this program rewards the loyalty of long-term shareholders by reducing the number of shares outstanding while providing liquidity to other investors that may be forced to sell due to the current global credit crisis. There is a leveraged effect on earnings per share over time by reducing shares outstanding (S/O) (e.g. 75,310,782 - 7,028,820 = 68,281,962 S/O); such programs have the effect of boosting reported earnings per share when the company reports results.
Despite Castle Gold Corp.'s recent achievements, its stock price, along with so many other publicly traded companies, has been recently affected by extraordinary market conditions. We are acutely aware that our current share price in no way reflects the Company's current strengths and growth potential. We as well as many other fundamentally sound companies are caught up in events not of our making and, as a result, our stockholders have been unfairly penalized. Be assured, however, we are a strong and resilient company and we will continue to improve and grow. We have achieved a great deal and are well positioned to restore shareholder value."
- The company has been producing gold for over a year from two mining operations, the first being the small high grade El Sastre Gold Mine in Guatemala and the second being the El Castillo Gold Mine in Mexico with Castle Gold's total equity ounces of production currently at 20,000 to 25,000 ounces of gold per annum;
- Commercial Gold Production at the El Castillo Mine in Mexico was achieved on July 1st, 2008 and the initial expansion phase is underway that will enhance production to a sustainable 25,000 to 30,000 ounces per annum, expected in early 2009;
- A second phase expansion at the El Castillo Gold Mine in Mexico, expected to be phased in during the second half of 2009, has the potential to enhance annual gold production to in excess of 50,000 ounces;
- Current NI 43-101 compliant proven and probable reserve estimates stand at 46.8 million tonnes at 0.5 grams per tonne for 752,000 ounces of contained gold at El Castillo alone with potential for further increases in resources and reserves through additional in-pit and near-pit, in-fill drilling;
- At Castillo there is the potential for further increases in production and further reduction in costs as a result of pit optimization and efficiency activities, studies on which are currently underway; and
- Studies are underway to determine the potential to both increase gold-silver-copper resources and determine the scope of commercial development at the Company's wholly owned La Fortuna property in Mexico.
The Board of Directors of Castle Gold has issued a resolution effectively locking-down the treasury shares for the foreseeable future. Meaning no new shares will be issued in the foreseeable future. Only non-dilutive financing facilities will be pursued by management and subject to the review of the Finance Advisory Committee and final approval by the Board of Directors of the Company.
In addition, no directors, officers or insiders of the issuer, or any associates of an insider or any associates or affiliates of the issuer, are permitted to sell Shares during the term of the Share Repurchase Program.
About Castle Gold
Castle Gold Corporation is a growth oriented gold producer with projects focused in the America's. The Company 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 and at its El Sastre and El Arenal project in Guatemala.
For further information please contact:
James Mark Plaxton
Chairman Castle Gold Corporation
MPlaxton@CastleGoldCorp.com
or by general email, info@castlegoldcorp.com or visit our website, www.castlegoldcorp.com.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.
You can also view this News Release on our website at:
http://www.castlegoldcorp.com/s/NewsReleases.asp?ReportID=326837
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