Feb 16 2011
Terry Coughlan, President and CEO of GoGold Resources Inc., announces that the Company today has signed a binding letter of intent to acquire all of the issued and outstanding securities of Mexican Gold Holdings Corporation Incorporated, a Canadian company, by way of security exchange.
MHC and MHC's wholly owned Canadian subsidiary, North American Gold Holdings Corporation Incorporated ("NAHC"), together own 100% of Minera Dorango Dorado S.A. DE C.V., a Mexican company, ("MDD"). MDD is a party to agreements to earn a 100-per-cent interest in five (5) gold and silver properties consisting of a number of Mexican mining concession titles (the "Claims") covering approximately 24,000 hectares in Durango, Mexico (the "MDD Agreements").
"This is a significant milestone for us", stated Terry Coughlan, President and CEO of GoGold, "based on my experience in Mexico, the work the MDD team has completed over the past two years, with regards to consolidating such a large group of claims is highly commendable. The area is reminiscent of when I first visited Ocampo in 1999 where we developed one of the largest gold mines in Mexico which now employs over 3,000 people. Our company today is well positioned financially and we look forward to advancing our exploration activities in the district."
Under the terms of the LOI, GoGold will issue 14 million shares of the Company to the shareholders of MHC and pay a total of $1,100,000. The LOI is subject to TSX Venture Exchange (the "Exchange") and other regulatory approvals. As well, closing is subject to satisfactory due diligence by the Company, a satisfactory NI 43-101 geological report being completed by GoGold and approved by the Exchange, execution of a definitive share exchange agreement, approval of the GoGold board of directors and other customary approvals for transactions of this type. GoGold also agreed to make a non-refundable payment of $115,000 to MHC for entering into a confidentiality and standstill agreement.
The Claims are host to an epithermal gold/silver system that extends for more than 15 kilometres. Widespread gold in quartz veins, breccias and stockworks occurs over the length of the system. The district has been mined on a small scale historically and has produced gold reportedly from as far back as the 1700's. MHC has spent the last two years assembling the claim area and developing relationships with local officials, geologists, contractors and inhabitants. Their exploration work over the last two years included recognisance sampling which identified gold and silver in veins and in large disseminated alteration zones along the entire strike of the system.
The terms of the MDD Agreements provide MDD with an option to acquire a 100% interest in the Claims in exchange for the following:
i. a first year payment of $140,000;
ii. a total work commitment for all Claims for the first three years of $900,000 and a total work commitment for years four through eight for all Claims of $2,650,000;
iii. paying a minimum advance royalty of $130,000 per annum starting in year three and ending in year eight. The royalty is based on a payment of up to $4.00 per ounce of gold equivalent NI 43-101 compliant mineable reserves ("Reserves"). Any advance royalty payments will be applied against the final royalty payment due. MDD has agreed to pay the current optionors of the Claims an ongoing royalty of up to $4.00 per ounce of any future increase in Reserves; and
iv. MDD may exercise the option to acquire the Claims at any time by paying the royalty or at the end of the eight year period provided all payments above have been made.
Trading of GoGold's stock has been halted and will remain halted, pursuant to Exchange Policy 5.3, until filing with and review of an NI 43-101 geological report for the Claims by the Exchange.
The Company also advises that Mr. Daniel Whittaker has replaced Mr. Glenn Jessome effective today as Corporate Secretary. The Company would like to thank Mr. Jessome for his contribution to the Company.
Mr. Terry Coughlan, PGeo, President and CEO of GoGold, is the qualified person as defined by National Instrument 43-101 and is responsible for the preparation of this release.