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News Release
Brigus Gold To Eliminate 100% of Gold
Hedge Commitments and
Sells Gold Stream
for US$56.3 Million
Halifax, Nova
Scotia; November 9, 2010� Brigus
Gold Corp. (�Brigus Gold� or the �Company�) (TSX
and NYSE Amex: BRD) announces that it intends to eliminate 100% of its
forward gold sales contract obligations (�hedge�) effective January 2011 and
will benefit from selling 100% of its Black Fox Mine gold production at spot
prices going forward.
Brigus Gold also announces that it has entered into
a gold stream agreement with Sandstorm Resources Ltd. (�Sandstorm�) pursuant
to which Sandstorm has agreed to purchase 12% of the gold production from the
Black Fox Mine beginning in January 2011 and 10% of future production from
the Black Fox Extension covering a portion of the adjoining Pike River
property (the �Gold Stream�). Sandstorm will make an upfront payment of
US$56.3million which Brigus will use to unwind the
balance of its forward gold sales contracts terminating the obligation to
deliver 99,409 ounces from October 2011 to March 2013 and as a result Brigus will become an unhedged
gold producer. Sandstorm will also pay Brigus
ongoing per ounce payments of US$500 subject to an inflationary adjustment
beginning in 2013, not to exceed 2% per annum.
Brigus Gold has the option, for a 24 month period,
to reduce the Gold Stream to 6% of production from the Black Fox Mine and
4.5% of production from the Black Fox Extension for a payment of US$36.6
million.
The Black Fox Mine is located in Matheson, Ontario, Canada, in the Timmins
Gold District and has been in commercial production since May 2009. Brigus Gold has operated Black Fox as an open pit mine
since commencement of production and in mid 2010, began development of the
underground portion of the mine.
In the 3rd quarter of 2010, the Black Fox Mine produced 21,526 ounces of
gold, an increase of 19 percent over the 2nd quarter. Cash
costs for the full year 2010 are expected to be within a range of $500 and
$550 per ounce in line with projections.
During the current quarter (4th quarter) Brigus
will be focused on construction and development to commission the underground
portion of Black Fox Mine early in 2011. Mine development, including
construction of the new vent raise and relocation of the underground ramp and
portal, is in progress. Logistical issues related to construction and
relocation of the new portal to the pit floor have
resulted in a delay of approximately one month. As a result of these
issues, production from the open pit will be reduced during the
quarter. During this period of reduced pit production, some ores will
be drawn from low grade ore stockpiles, resulting in projected 4th
quarter production of between 16,000 and 19,000 ounces of gold.
Brigus Gold�s Chairman, Chief Executive Officer and President Wade K. Dawe
commented, �In the four months following completion of the merger to form
Brigus Gold, corporate debt has been reduced by 70 percent and the gold hedge
book will be eliminated, thus increasing the Company�s leverage to the
current gold market. With the restructuring of Brigus Gold�s balance
sheet and with Black Fox�s higher grade production from the underground
operations ramping up, we are now focused on production growth and
profitability.�
He continued, �The Sandstorm deal implies a value of approximately US$475
million exclusively for the Black Fox Mine. This transactional value
excludes giving any value to our Grey Fox property, the Goldfields
development project, and Mexican and Dominican Republic exploration assets,
yet represents an over 50% increase from our market capitalization of
US$305.8 million.�
�This is a very significant and transformative deal for Sandstorm,� stated
Nolan Watson, President and Chief Executive Officer of Sandstorm, �The Black
Fox Mine will provide us with immediate cash flow from gold sales but we are
really committing to an asset that we believe has superior growth prospects
on the exploration front. Brigus Gold has assembled an excellent
operating team and is in a position to grow the project effectively.�
About Brigus Gold
Brigus Gold is a growing gold producer committed to maximizing shareholder
value through a strategy of efficient production, targeted exploration and
select acquisitions. The Company operates the wholly owned Black Fox Mine in
the Timmins Gold District of Ontario, Canada. The Black Fox Mine
is located in the Township of Black River-Matheson, Ontario, Canada. Brigus Gold is also advancing the Goldfields
Project located near Uranium City, Saskatchewan, Canada, which hosts the Box
and Athona gold deposits. In Mexico, Brigus Gold holds a 100 percent interest
in the Ixhuatan Property located in the state of Chiapas, and an 80 percent
interest in the Huizopa Joint Venture, an early stage, gold-silver
exploration joint venture located in the State of Chihuahua. In the Dominican
Republic, Brigus Gold also has a joint venture covering three mineral exploration
projects.
About Sandstorm
Resources
Sandstorm Resources Ltd. is a growth focused resource based company that
seeks to complete transactions with companies that have advanced stage
development projects or operating mines. By making upfront payments to
its partners, Sandstorm receives gold purchase agreements (i.e. metal stream
deals). Sandstorm helps other companies in the resource industry grow
their businesses, while acquiring attractive assets in the process.
Sandstorm is focused on low cost operations with excellent exploration
potential and strong management teams. Sandstorm has completed gold
purchase agreements with Luna Gold Corp., SilverCrest Mines Inc., Santa Fe Gold Corporation, Rambler Metals and Mining plc
and Brigus Gold Corp. For more information visit: www.sandstormresources.com.
Contact
Information:
Wendy Yang, Vice President of Investor Relations
Phone:
303-524-3203
E-mail: ir@brigusgold.com
Sean Tufford, Director of Investor Relations
Phone:
902-422-1421
Toll Free: 1-866-785-0456
Email: stufford@brigusgold.com
Website: www.brigusgold.com
Cautionary and
Forward-Looking Statements
Statements contained in this news release which are not historical facts are
forward-looking statements that involve risk, uncertainties and other factors
that could cause actual results to differ materially from those expressed or
implied by such forward-looking statements. All statements regarding
the ability of the Company to further eliminate its forward gold sales
contracts, to exercise the option to reduce the Gold Stream, to maintain cash
costs within a projected range of $500 and $550 per ounce of gold, to resolve
logistical issues related to the construction of the underground portion of
the Black Fox Mine, and to deliver future growth and profitability, and the
continuation of a rising gold price are forward-looking statements and
estimates that involve various risks and uncertainties. This
forward-looking information includes, or may be based upon, estimates,
forecasts, and statements as to management's expectations with respect to,
among other things, the outcome of legal proceedings, the issue of permits,
the size and quality of the company's mineral resources, progress in
development of mineral properties, future production and sales volumes,
capital and mine production costs, demand and market outlook for metals,
future metal prices and treatment and refining charges, and the financial
results of the Company.
Important factors that could cause actual results to differ materially from
these forward-looking statements include environmental risks and other
factors disclosed under the heading �Risk Factors� in Brigus Gold�s most
recent annual report on Form 10-K filed with the United States Securities and
Exchange Commission and elsewhere in Brigus Gold�s documents filed from time
to time with the Toronto Stock Exchange, the NYSE Amex Equities, the United
States Securities and Exchange Commission and other regulatory
authorities. All forward-looking statements included in this news release
are based on information available to the Company on the date hereof.
The Company assumes no obligation to update any forward-looking statements,
except as required by applicable securities laws.
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