(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)
Desert Gold Ventures Inc. (TSX VENTURE:DAU)(OTCQX:DAUGF) (the "Company" or
"Desert Gold") is pleased to announce that it has entered into a definitive sale
of shares agreement (the "Share Exchange Agreement") dated June 20, 2011 with
TransAfrika Resources Cyprus Limited (the "Vendor"), a Cypriot company, pursuant
to which Desert Gold has agreed to acquire all of the issued and outstanding
shares of TransAfrika Belgique S.A. ("TransAfrika"), a Belgian company, from the
Vendor (the "Proposed Acquisition"). The Vendor is an indirect subsidiary of
TransAfrika Resources Limited, a widely held private company existing under the
laws of Mauritius.
Transaction Highlights
-- Desert Gold intends to acquire TransAfrika which has an extensive
portfolio of advanced mineral projects in Central and West Africa,
including Mali, Senegal and Rwanda.
-- The Byumba Project in Rwanda has an initial inferred resource of 5.5
million tonnes grading 1.48 grams per tonne ("g/t") gold. A National
Instrument 43-101 ("NI 43-101") report has confirmed 257,000 ounces of
inferred gold for the Byumba Project.
-- The Mali concessions cover 112 sq. kilometers with seven discovered gold
occurrences highlighted by drill results ranging from 4 meters ("m") at
9.31 g/t gold to 18 m at 1.26 g/t gold.
-- The accumulated loss of TransAfrika as reflected in the unaudited
financial statements for the period ending March 31, 2011 was US$15
million, which includes exploration expenditures incurred on its
subsidiary companies in Rwanda, Mali and Senegal.
-- Desert Gold intends to conduct a concurrent financing to be led by MGI
Securities Inc., the proceeds of which will be used to conduct further
drilling on the most promising of these projects during the next twelve
months and for general corporate purposes.
Summary of the Proposed Transaction
Under the terms of the Share Exchange Agreement, Desert Gold will acquire all of
the issued and outstanding shares of TransAfrika from the Vendor in exchange for
the issuance to the Vendor and it nominees, of an aggregate of 20,000,000 common
shares of Desert Gold. In addition, Desert Gold will be required to issue a
further 12,000,000 common shares, in aggregate, to the Vendor and its nominees
in the event that within a two year period from the closing of the Proposed
Acquisition, Desert Gold publishes a NI 43-101 compliant resource calculation
disclosing that the mineral properties located in Rwanda, Mali and Senegal which
were acquired from TransAfrika pursuant to the implementation of the Proposed
Acquisition (the "Mineral Properties") contain an additional 1,000,000 ounces of
gold. The common shares issuable by Desert Gold pursuant to the Proposed
Acquisition may be subject to escrow conditions as determined in accordance with
TSX Venture Exchange ("TSX-V") policies.
No Non-Arm's Length Party (as that term is defined under TSX-V policies) of the
Company has any direct or indirect beneficial interest in TransAfrika or is an
insider of TransAfrika, and there is no relationship between any Non-Arm's
Length Party of the Company and any Non-Arm's Length Party of TransAfrika.
The Proposed Acquisition is conditional upon, among other things, receipt of all
necessary regulatory, stock exchange, director and shareholder approvals and the
completion of satisfactory due diligence by both Desert Gold and the Vendor. The
Proposed Acquisition is also subject to the completion of a brokered private
placement financing (the "Financing") for minimum gross proceeds which, together
with cash on hand, will result in Desert Gold having at least CDN $10,000,000 in
available cash upon the closing of the Proposed Acquisition. The Financing will
be on a best efforts basis to consist of subscription receipts at an issue price
of CDN$0.75. If all of the conditions to the closing of the Proposed Acquisition
are satisfied, each Subscription Receipt will, without payment of any additional
consideration or taking further action, entitle the holder to receive one unit
("Unit") of the Company. Each Unit will consist of one common share of the
Company and one-half of one common share purchase warrant of the Company (each
whole common share purchase warrant, a "Warrant"). Each Warrant will entitle the
holder to purchase one common share of the Company at a purchase price of
CDN$1.50 per share for a period of 24 months after completion of the Proposed
Acquisition. The proceeds of the Financing will be used to fund future
exploration expenditures in respect of the Mineral Properties and for working
capital and general corporate purposes. Desert Gold has engaged MGI Securities
Inc. to act as agent on a best efforts agency basis in connection with the
Financing. Consequently, it is anticipated that the Proposed Acquisition will be
exempt from the sponsorship requirements of the TSX-V.
TransAfrika was incorporated on December 28, 2007 under the laws of Belgium. As
reflected in the audited financial statements of TransAfrika prepared based on
IFRS for the periods ended December 31, 2010 and 2009, TransAfrika had total
assets of US$1,585,548 (US$2,538,078 - December 31, 2009), working capital of
US$1,096,429 (US$1,925,714 - December 31, 2009), total liabilities of US$265,967
(US$192,356), shareholder equity of US$1,319,581 (US$2,345,722 - December 31,
2009) and a net operating loss of US$1,076,701(US$4,031,025 - December 31,
2009). The accumulated loss of TransAfrika as reflected in the unaudited
financial statements for the period ending March 31, 2011 was US$15 million,
which includes exploration expenditures incurred on its subsidiary companies in
Rwanda, Mali and Senegal (US$11,016,480 - March 31, 2010).
Upon completion of the Proposed Acquisition, it is anticipated that the board of
directors of the Company will consist of three members of the current board of
directors designated by Desert Gold and three nominees of the Vendor, which will
include Theo Christodoulou. In addition, it is expected that Ayub Khan, Desert
Gold's current President and Chief Executive Officer will resign from that
position and will hold the position of non-executive Chairman of the board of
directors of Desert Gold. Further, on completion of the Proposed Acquisition,
the following persons will be appointed to positions as executive officers of
Desert Gold: Roeland van Kerckhoven (President and Chief Executive Officer),
Jared Scharf (Chief Financial Officer) and Louw van Schalkwyk (Vice-President,
Exploration).
Roeland van Kerckhoven (59), spent more than 29 years of his career with the
Anglo American group of companies, serving for the last 15 years as CFO and
business development director of Anglo Platinum until he retired in March 2007.
Since joining TransAfrika in 2008 as President and Chief Executive Officer, he
has overseen the discovery and evaluation of a portfolio of assets and has been
actively involved in negotiations with African governments and joint venture
partners.
Theo Christodoulou (38), CA(SA) (MBA-Duke USA) worked at PricewaterhouseCoopers
for nearly 5 years, after which he joined Deutsche Bank He worked for the bank
for 11 years which included 5 years as Director (and head of Metals and Mining
in South Africa). Theo then founded the corporate finance company, AC Squared
Solutions in 2010. Theo has extensive experience in advising on mining
initiatives, project finance planning and management, M&A, IPO's and BEE
structuring across Africa.
Louw van Schalkwyk (51), BSc. Hons (Geology), started his career as an
exploration geologist with Gold Fields of South Africa Limited in 1984 and was
promoted to senior geologist. In 1992 he moved to consulting and contracting
geology, working on gold and base metal exploration for various major and junior
exploration and mining companies in sub-Saharan Africa. These include Rio Tinto
Plc, Anglo American, Iscor Limited and Pangea Minerals Ltd. His ability to
integrate geology with applied exploration techniques led to the discovery of
the Gams East Zinc deposit while working as project manager for Anglo American.
It is anticipated that following completion of the Proposed Acquisition and the
Financing, no person or company will own more than 10%, calculated on an
undiluted basis, of the issued and outstanding Desert Gold common shares.
Ayub Khan, President and CEO of Desert Gold said, "The acquisition of
TransAfrika and the experienced technical team which comes with the company,
melds well with Desert Gold's strategy of focusing on advanced stage mineral
projects in established and recognized mining countries. TransAfrika's gold
projects in Central and Western Africa, especially the Byumba Concession in
Rwanda, are a perfect complement to Desert Gold's emerging gold production
profile in North America."
"Following this transaction, the new Desert Gold will have sufficient funds to
explore the mineral properties in Western Africa. We're excited about combining
our skill sets in Africa and North America to develop and grow this company,"
added Roeland van Kerckhoven President and Chief Executive Officer of
TransAfrika and incoming and President and Chief Executive Officer of Desert
Gold.
About TransAfrika Belgique S.A.
TransAfrika has acquired a portfolio of advanced mineral projects in Central and
West Africa the most important of which include:
Rwanda: TransAfrika, through its wholly owned subsidiary TransAfrika Rwanda Gold
Ltd., has acquired 100% ownership of two exploration permits in the two main
gold domains in Rwanda. These include permit No 107/16.03/05 issued on 13
November 2007 covering 90,119 hectares ("ha") (Byumba) and 7,044 ha (Rusizi),
and permit No 0040/16.03/05 issued on 1 September 2008 covering 14,754 ha
(Nyamugali) and 684 ha (Rusizi Extension). The exploration permits lie within
the Central African Kibaran Orogen stretching from Katanga, Democratic Republic
of Congo, into Uganda. The Kibaran hosts Banro's Twangiza, Namoya, Lugushwa and
Kamitunga deposits with a total resource of 10.5 million ounces of gold ("Au").
Whilst Rwanda hosts a number of coltan, tin and tungsten mines as well as small
artisanal gold mines, TransAfrika's Byumba Project is the first significant gold
resource discovered in the country. These properties currently represent early
stage exploration targets. The Byumba Project is located in the Gicumbi District
in the Northern Province of the Republic of Rwanda. A diamond drilling program,
comprising 33 holes for 5,183 m was carried out between July 2008 and August
2009 by TransAfrika on the Byumba Project and an inferred resource of 5,551 kt
at a grade of 1.48 g/t for 257,000 ounces Au was declared for the Rubaya
deposit. Mineralization is of the disseminated type and occurs in 14 parallel
higher grade zones within a broad mineralized zone of up to 80 m wide and is
expected to be amenable to open pit mining. Drilling tested the mineralization
over a strike of 1,160 m. The Rubaya deposit is open down dip and along strike
and has yet to be fully delineated. The next phase of drilling is intended to
increase the resource. To date TransAfrika has spent USD $7.6 million in
exploration expenses in respect of its properties in Rwanda.
Mali: TransAfrika, through its subsidiaries and joint venture agreements, has
three exploration permits (EP) focused on gold in Mali. The permits in Mali are
held by TransAfrika Mali SA, a joint venture company incorporated in Mali held
74% by TransAfrika and 13% by each of the two joint venture partners. The
permits include Farabantourou, PR08/3549 covering 112 km2, Loulo-Est, PR 08/349
covering 52 km(2)and Segala-Ouest, PR 09/396 covering 16 km2. The permits are
underlain by Birimien volcano-sedimentary formations of the Kenieba inlier.
Several gold mines occur within the Kenieba inlier, including Loulo, Sadiola,
Yatela, Tabakoto, Segala and Sabodala. Realization of the importance of the
Birimian rocks as the major source of gold in West Africa led to a series of
discoveries and mine development over the last two decades in the West African
countries of Ghana, Ivory Coast, Guinea Mali and Burkino Faso, leading to Ghana
and Mali becoming the second and third largest producers of gold in Africa. The
Senegal-Mali Fault Zone ("SMFZ") straddles the Farabantourou permit. Mines
associated with the SMFZ include Loulo (11.5 million ounce gold resource) and
Sadiola (9.2 million ounce gold resource). The Loulo-Est and Segala Ouest
permits are adjacent to the Segala/Tabakoto Mines (3.32 million ounce gold
resource) with gold mineralization extending from the Segala Mine onto the
Segala Ouest permit. All of these mines are open pit operations with underground
potential. The TransAfrika permits have potential to host similar deposits.
Since acquiring the permits, TransAfrika has conducted exploration work on these
permits including soil sampling, trenching, auger drilling, IP surveys, reverse
circulation ("RC") drilling and diamond drilling. On Loulo-Est, TransAfrika
drilled 60 RC holes and 12 diamond drill holes on soil anomalies for a total of
8,224 m. 29 of the holes intersected more than 1 g/t Au. Intersections include
values of up to 21 g/t Au over 1 m and intersection widths of up to 7 m at 1.95
g/t Au.
Between 2001 and 2003, 823 RC holes were drilled on Frabantourou for a total of
53,139 m. This drilling program was a follow-up on targets identified by
geochemical surveys, aeromagnetic surveys and artisanal workings. Gold
mineralization was discovered in six areas; Barani, Barani East, Keniegoulou,
Dambamba, Kousilli and Linnguekoto. Significant mineral intercepts include 4 m
at 9.31 g/t Au and 6m at 7.90 g/t Au at Barani East, 4 m at 5.90 g/t Au and 20 m
at 1.62g/t Au at Keniegoulou, 7 m at 2.04 g/t Au and 12 m at 1.88 g/t Au at
Dambamba and 4 m at 6.16g/t Au at Kousilli. Further TransAfrika drilling gave
values of 1.26 g/t over 18 m. Since 2008 TransAfrika spent a total of USD $5.4
million in exploration expenses in respect of its properties in Mali.
Senegal: TransAfrika through its subsidiary TAR Senegal SA has acquired the
Souroundou gold exploration permit with an area of 299.33 km2 in eastern Senegal
on the Faleme river on the border with Mali. The geological setting is similar
to that of the Malian permits. The permit is immediately north of and adjacent
to the exploration permit area held by Mineral Deposits Limited which operates
the Sabodala Mine. Exploration work carried out up until May 2010 included a
soil geochemical covering the south-western part of the permit (a total of 1,612
soil samples were collected), hard rock grab sampling of outcrops in areas of
anomalous soil values, and an IP survey over areas with anomalous gold in soil
values. To date TransAfrika has spent a total of USD $347,000 in exploration
expenses in respect of its properties in Senegal.
NI 43-101 technical reports have been completed for all projects in Rwanda, Mali
and Senegal and were prepared by Coffey Mining, an independent geological
consulting firm. The authors Mark McKinney, Janine Flemming and Kathleen Body
are Qualified Persons as defined by NI 43-101 for the purposes of this news
release. Copies of the technical reports will be available on SEDAR following
review and approval by the TSX-V.
About Desert Gold Ventures Inc.
Desert Gold Ventures Inc. is an advanced exploration and development company
which holds a 50% participating interest in a joint venture agreement with
Kinross Goldbanks Mining Company (a subsidiary of Kinross Gold Corporation) of
Toronto, Ontario in respect of the Goldbanks Mining property located in Pershing
County, Nevada, USA.
This news release does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities in the United States. The securities have not
been and will not be registered under the United States Securities Act of 1933,
as amended (the "U.S. Securities Act") or any state securities laws and may not
be offered or sold within the United States or to U.S. Persons unless registered
under the U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available. All dollars in this release are
in Canadian funds.
Completion of the transaction is subject to a number of conditions, including
exchange acceptance and disinterested shareholder approval. The transaction
cannot close until the required shareholder approval is obtained. There can be
no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in a Filing Statement to be
prepared in connection with the transaction, any information released or
received with respect to the Proposed Transaction may not be accurate or
complete and should not be relied upon. Trading in the securities of Desert Gold
should be considered highly speculative.
FORWARD-LOOKING STATEMENTS
This press release includes certain "forward-looking statements". All statements
regarding the ability of the Company to successfully complete the Proposed
Acquisition and the Financing, to successfully integrate the businesses of
Desert Gold and TransAfrika and to delineate new resources in proposed drilling
programs 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. All statements that are not historical facts,
including without limitation statements regarding future estimates, plans,
objectives, assumptions or expectations of future performance, are "forward -
looking statements". We caution you that such "forward looking statements"
involve known and unknown risks and uncertainties that could cause actual
results and future events to differ materially from those anticipated in such
statements. Such risks and uncertainties include the inability of the Company to
close the Proposed Acquisition and the Financing due to the state of the capital
markets and other risk factors as discussed in the Company's filings with
Canadian securities regulatory agencies. The Company expressly disclaims any
obligation to update any forward - looking statements except as may be required
by law.
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