HALIFAX, NOVA SCOTIA, Dec. 29, 2009 (Marketwire) -- Linear Gold Corp. (TSX:LRR) ("Linear") announces that it has received notice from Kinross Gold Corporation that they will not exercise their option to acquire an initial 60% interest in the Ixhuatan Project, thereby allowing Linear to maintain its 100% interest in the project.
The Ixhuatan Project covers an area of over 98,000 hectares, in Chiapas, Mexico, including the Campamento Gold Deposit. The Campamento Gold Deposit is a high-grade, gold-silver deposit situated at or near surface. In June 2006, Linear announced the results of a National Instrument 43-101 compliant gold and silver resource on the Campamento Deposit that included 1,041,000 ounces of gold in the measured and indicated categories with an additional 703,000 ounces in the inferred category (at a 0.50 gram per tonne cut-off). The total silver content in the deposit was calculated at 4,400,000 ounces in the measured and indicated categories with an additional 2,260,000 in the inferred category.
Pursuant to the October 2007 option agreement between Linear and Kinross, Kinross made an initial payment to Linear of US$1.0 million and was required to incur a minimum of US$15 million of expenditures on the Ixhuatan Project within a 24-month period, following which they had a 90 day period to exercise their option to acquire an initial 60% interest in the Project for US$45 million. Kinross would have then had a further option to increase its interest in the Project to 70% by making an additional payment of US$55 million and would have been required to make a payment of up to US$15 million based on the size of the proven and probable gold equivalent reserve.
Pursuant to the terms of the agreement, Kinross will pay Linear US$3,387,390, representing the difference between the minimum US$15 million expenditure and the actual work costs incurred by Kinross during the option period.
Wade Dawe, President and Chief Executive Officer of Linear, stated, "Kinross has been an excellent partner to lead and fund the exploration program on the Ixhuatan Project over the past two years. Maintaining a 100% interest in the Ixhuatan Project provides Linear with a strategic pipeline of projects to compliment the development of our Goldfields Project in northern Saskatchewan."
Giving effect to this development, Linear is debt-free and well positioned for advancing development of the Goldfields Project with $45 million in cash and 44.2 million shares outstanding. In addition, Linear holds a 100% interest in the Goldfields Project, in Northern Saskatchewan, and the Ixhuatan Project, Mexico, together hosting gold resources of over 2 million ounces (National Instrument 43-101 compliant), as well as carried interests in three Dominican Republic Properties subject to earn-in agreements that provide for the completion of feasibility studies at no expense to Linear.
Mr. Mike Sylvestre, P.Eng., a qualified person under National Instrument 43-101, has reviewed and approved the scientific and technical information in this press release.
Cautionary Note Regarding Forward-Looking Information This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the future financial or operating performance of Linear and the Goldfields Project, statements regarding exploration prospects, statements regarding synergies and financial impact of the proposed transaction, the terms and conditions of the transaction, the benefits of the proposed transaction, the identification of mineral reserves and resources, costs of and capital for exploration and development projects, exploration and development expenditures, timing of future exploration and development activities, expected production, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is based on various assumptions and on the best estimates of Linear, as the case may be, as of the date hereof, and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company (and the company resulting from the successful completion of the proposed transaction) to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral prices; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities, and as well as those risks identified under "Risk Factors" disclosure sections in the documents filed under the profile of SEDAR by Linear from time to time. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.