ValGold and Northern Gold Close Garrison Property Sale
May 16 2011 - 2:27PM
Marketwired
ValGold Resources Ltd. (TSX VENTURE: VAL) and Northern Gold Mining
Inc. (TSX VENTURE: NGM) are pleased to announce that the companies
have closed the sales agreement of the Garrison Gold Property
located in north eastern Ontario. Under the terms of the sales
agreement announced on April 7th, 2011, Northern Gold has purchased
ValGold's 100% interest in the Garrison property. TSX Venture
approval of the transaction was granted on April 14, 2011.
In consideration for this sale, ValGold received at the closing
on Friday May 13th, 2011:
-- a cash payment of C$325,000 and a promissory note for an additional
C$325,000 to be paid on or before August 13, 2011;
-- 16 million common shares in Northern Gold ("Northern Gold Shares")
giving ValGold aggregate ownership of approximately 14.8% of the issued
and outstanding shares of Northern Gold on a non-diluted basis.
-- a 2% net smelter return royalty of which (i) half (i.e. 1%) can be
acquired by Northern Gold for C$5 million paid to ValGold at any time
upon the earlier of thirty-six months following the date of closing and
the commencement of commercial production, and (ii) the remaining 1% can
be acquired for a further payment of C$10 million at any time upon the
earlier of seventy-two months following the date of closing and the
commencement of commercial production.
For a period ending on the earlier of twenty-four months after
closing or a change of control Northern Gold has a right to vote
the Northern Gold Shares. In addition, Northern Gold has a right of
first refusal to provide a buyer for any sale by ValGold in excess
of 160,000 Northern Gold Shares in any calendar month.
Under the terms of the original Garrison Option and Joint
Venture Agreement, Northern Gold had the right to earn up to an
undivided 80 percent interest in the Garrison Property. Northern
Gold could acquire a 50 percent undivided interest in the property
by making cash payments to ValGold of $1,000,000 over four years,
with all or part of the payments being made in Northern Gold stock
at Northern Gold's option. To earn the 50 percent interest Northern
Gold was also required to complete work on the property in the
amount of $4,000,000 over four years, with $500,000 to be spent on
the property in the first year of the agreement and not less than
$750,000 to be expended in each of the subsequent years. After
earning the 50 percent interest, Northern Gold had the right to
increase its interest to 80 percent by making additional cash
payments of $1,000,000 over four years (again with all or part of
the payments being made in Northern Gold stock at Northern Gold's
option) and completing additional work on the property in the
amount of $4,000,000 over four years. At the time of closing the
buy-out of the Garrison Option and Joint Venture Agreement,
Northern Gold was in the second year of the option agreement and
had made $400,000 in payments ($200,000 in cash and the issuance of
2.2 million in shares in satisfaction of the other $200,000 payment
obligation) and had incurred over $3,000,000 in exploration
expenditures.
For the purposes of National Instrument 62-103 early warning
reporting, the address of ValGold Resources Ltd. is 1400 - 570
Granville Street, Vancouver, British Columbia V6C 3P1. Prior to the
closing the buy-out of the Garrison Option and Joint Venture
Agreement, ValGold owned a total of 1,437,500 common shares of
Northern Gold. As a result of the sale, ValGold was issued 16.0
million common shares of Northern Gold for an aggregate holding of
17,437,500 common shares of Northern Gold representing
approximately 14.7% of the 118,758,415 common shares issued and
outstanding on a post-closing basis. ValGold acquired the common
shares of Northern Gold for investment purposes, and has no current
intention to increase the beneficial ownership of, or control or
direction over, securities of Northern Gold.
Martin Shefsky, President and CEO of Northern Gold commented,
"This is an important step in Northern Gold's objective of
developing the Garrison Property. As 100% owner of the Garrison
Property, Northern Gold will have complete flexibility in
completing exploration and development. ValGold has been a great
partner and we look forward to our ongoing relationship with
ValGold as a significant shareholder."
Stephen Wilkinson, President and Chief Executive Officer of
ValGold also commented, "ValGold shareholders should be pleased
with this transaction as it returns to our company an asset that
represents a significant monetary gain that should enable us to
realize additional value in line with the growth of the project.
With our anticipated increased cash flows we plan to re-invest in
existing key properties and to pursue new investments to generate
greater value for our shareholders. We have great confidence in the
ability of Northern Gold to continue its successful development of
the Garrison Property."
About Northern Gold
Northern Gold Mining Inc. is a TSX-V listed, publicly traded
junior resource company based in Toronto, Ontario, dedicated to the
discovery and development of high value mineral deposits in the
proven mining camps of Kirkland Lake and Timmins in North Eastern
Ontario. Northern Gold is focused on developing two advanced stage
gold deposits on the Garrison Gold Property. The Property is
located within the Abitibi greenstone belt along the
Porcupine-Destor and the Munro Fault systems. The Property hosts
several gold mineralized showings in addition to the two advanced
stage exploration targets, the Jonpol and Garrcon Deposits, for
each of which NI 43-101 compliant mineral resources have been
calculated, and the less advanced 903 gold mineralized area.
Historic diamond drilling by previous operators was completed in
all three referenced areas. The Jonpol Technical Report was posted
on SEDAR October 21, 2009 and the Garrcon Technical Report was
posted on SEDAR November 5, 2010. The Garrison Gold Property has
historic mining infrastructure at both the Jonpol and Garrcon
Deposits and producing mines are located in close proximity to the
property.
About ValGold
ValGold Resources Ltd. is an international mineral development
company based in Vancouver, Canada. The Company's objective is to
generate wealth for its stakeholders by seeking out, acquiring and
advancing properties with recognizable but under-explored mineral
resources.
ValGold's commitment to realize world-class mineral deposits is
based on a strategy that employs three key fundamental
criteria:
-- Mineral rights to extensive areas in prospective but non-traditional and
under-explored regions.
-- Mineral exploration projects with potential for substantial development.
-- Experienced management with exploration, mining and financial expertise.
Incorporated in 1987, ValGold is listed on Tier 1 of the TSX
Venture Exchange under the symbol VAL.
CAUTIONARY STATEMENT: Neither 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: Northern Gold Mining Inc. Martin R. Shefsky President
and CEO 416.366.7300 416.366.7301 (FAX) mshefsky@northerngold.ca
www.northerngold.ca ValGold Resources Ltd. Stephen J. Wilkinson
President & Chief Executive Officer (604) 687-4622 (604)
687-4212 (FAX) info@valgold.com www.valgold.com