Otis Gold Corp. ("Otis" or the "Company") (TSX VENTURE: OOO) is
pleased to announce that it has executed an agreement (the
"Purchase Agreement") to purchase a 100% interest in the Kilgore
Gold Project (the "Kilgore Gold Project") and related assets from
Bayswater Uranium Corporation ("Bayswater") for staged payments of
US$1.75 million and 2.0 million shares. The Purchase Agreement
replaces an Option agreement ("Option Agreement") dated June 4th,
2008 in which Bayswater granted Otis the right to earn up to a 75%
interest in the advanced stage Kilgore Gold Project and related
assets, including the early-stage Hai and Goldbug precious metal
projects.
The benefits to Otis of increasing its interest in the Kilgore
Gold Project and related assets are as follows:
-- Under the existing Option Agreement, Otis was required to issue 2.2
million shares and complete a pre-feasibility study (expected to cost up
to $1.0 million) to reach a 75% ownership interest. Under the new
Purchase Agreement, Otis has acquired a 100% interest in exchange for
stage payments of US$1.75 million in cash and the issuance of 2.0
million shares;
-- The existing 2% NSR in favour of Bayswater is eliminated, materially
enhancing future project economics; and
-- Ownership of 100% of the asset substantially increases the flexibility
respecting the timing of the exploration and potential development of
the Kilgore Gold Project.
Subject to regulatory approval, the cash will be paid according
to the following schedule: US$750,000 in 45 days, US$750,000 in 4
months, and US$250,000 in 12 months. Also subject to regulatory
approval, issuance of the shares will be according to the following
schedule: all shares will be issued at closing and, in addition to
the statutory 4-month hold period, will be subject to hold periods
which will expire 6 months after closing (as to 500,000 shares), 12
months after closing (as to 500,000 shares), 18 months after
closing (as to 500,000 shares) and 24 months after closing (as to
500,000 shares). Under the existing Option Agreement, to date Otis
has paid US$200,000, issued 1,300,000 common shares and completed
over US$3,000,000 in exploration work. Closing will occur within 45
days of the date of the Purchase Agreement, subject to regulatory
approval.
The Kilgore Gold Project comprises a large, 5 square mile,
volcanic-hosted epithermal gold system situated on the northern
margin of the eastern Snake River Plain. Pliocene-age
mineralization is hosted in Miocene lithic and crystal tuff on the
margin of a caldera setting. Mineralization style and setting, host
rock type and thickness, and overall size of the mineralizing
system are analogous to those characterizing the Round Mountain,
Nevada and McDonald Meadows, Montana multi-million ounce
volcanic-hosted disseminated gold deposits, where high-grade,
coarse-gold feeder veins also exist.
Since initiating activities at Kilgore in mid-2008, Otis has
completed 56 diamond drill holes totalling approximately 11,500
metres at the Kilgore Gold Project. Additionally, metallurgical
testing on four samples from Mine Ridge is being conducted by
McClelland Labs of Reno, Nevada, and an Environmental Scoping Study
by Golder Associates is in progress. In 2011, Otis is planning an
aggressive drill program that will include additional resource
development drilling at the Mine Ridge deposit and exploration
drilling at the highly prospective Dog Bone Ridge geophysical
targets (see News Release dated September 15, 2010). Additionally,
in 2011 Otis will be completing an updated NI 43-101 resource
calculation on the Mine Ridge deposit to reflect drilling completed
from 2008 to 2010.
Otis is extremely pleased with the acquisition and has budgeted
for all cash payments from its existing working capital. States
Craig Lindsay, President of Otis: "This is a major milestone in the
development of Otis that adds immediate shareholder value at a
favourable cost to the Company. We felt it was critical to have a
100% interest in our flagship project as we advance Kilgore towards
a production decision and we look forward to fully realizing the
potential of the Kilgore Gold Project in the future."
John R. Carden, Ph.D., Lic. Geo., a Qualified Person as defined
by National Instrument Policy 43-101, is responsible for the
technical information contained in this News Release.
About the Company
Otis is a resource company focused on the acquisition,
exploration, and development of precious metal deposits in Idaho,
USA. Otis is currently developing its flagship property, the
Kilgore Gold Project, located in Clark County, Idaho.
ON BEHALF OF THE BOARD
Craig T. Lindsay, President and CEO - Otis Gold Corp.
This press release contains forward-looking information within
the meaning of applicable securities laws relating to the closing
of the PP. The use of any of the words "intend", "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "believe", "plans", "intends"
and similar expressions may identify forward-looking information.
Readers should not place undue reliance on the forward-looking
information contained in this press release. Specific
forward-looking information contained herein relates specifically
to the acquisition of the Kilgore Gold Project.
The forward-looking information contained in this press release
is made as of the date hereof and the Company undertakes no
obligation to update publicly or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, unless so required by applicable securities laws.
This news release does not constitute an offer to sell or a
solicitation of an offer to sell any 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.
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.
Contacts: Otis Gold Corp. Craig T. Lindsay 604.683.2507
604.683.2506 (FAX) craig@otisgold.com www.otisgold.com
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