TORONTO, ONTARIO, May 11, 2010 (Marketwire) -- Auriga Gold Corp. ("Auriga Gold" or the "Company") is pleased to announce that the Company has an agreement to acquire the past-producing Puffy Lake Gold Mine and adjacent properties from Pioneer Metals ULC ("Pioneer"). The properties are located 50 km northeast of the town of Flin Flon, Manitoba. Pioneer is a wholly-owned subsidiary of Barrick Gold Corporation.
The Puffy Lake Gold Mine features a 1,000 tonne-per-day mill and concentrator in excellent condition, a deposit developed by a ramp to a depth of 130 meters, and infrastructure related to the past-producing mine. In 1993, Kilborn Engineering Pacific Ltd. estimated that the property contained probable resources of 1,346,200 tonnes of mineralization at a grade of 8.57 g/t gold and possible resources of 883,700 tonnes at a grade of 7.15 g/t gold. The resource was estimated as part of a 1993 feasibility study prepared for Pioneer and uses a cut-off grade of 3.5 g/t gold and minimum width of 1.2 meters. The resource is a historical resource that predates NI 43-101, is not compliant with current definitions, has not been verified by the Company, and consequently should not be relied on by investors. The Puffy Lake Mine produced over 28,000 ounces of gold in 1988 and 1989.
Auriga Gold's agreement is to acquire 100% of Pioneer's interest in the Puffy Lake Gold Mine subject to a 3% net smelter royalty that reduces to 2.5% and 2% if gold is below US$1,000/oz and US$750/oz, respectively. The agreement also provides for the acquisition of Pioneer's 54% interest in the adjacent Nokomis Property, subject to a right of first refusal held by a 3rd party. In consideration of the acquisitions, Auriga Gold will make total payments of $2.5 million and issue stock to Pioneer valued at $1.0 million. Closing of the acquisition is subject to financing and regulatory approvals and is anticipated to occur on or before June 30, 2010.
Auriga Gold will combine its exploration and development activity of both the Puffy Lake property and Nokomis Property as the Maverick Gold Project. Richard Sutcliffe, Auriga Gold's CEO, stated "This acquisition agreement positions Auriga Gold as a new Canadian company focused on gold resource expansion, near-term production, and project acquisition in the Flin Flon greenstone belt and adjacent areas of central Canada. Maverick Gold will be our flagship project and exploration program. We look forward to completing the acquisition and initiating a substantial drilling program with the objective of improving the quality and quantity of the resource at Maverick Gold".
Auriga Gold also announces that the company has entered into an agreement with Sandfire Securities Inc. (the "Agent") to complete an offering of securities of the Company by way of private placement to accredited investors. An offering amount up to $10 million is targeted with the number, type and terms of securities to be issued to be determined by the Company in consultation with the Agent. Closing of the offering is anticipated to occur on or before June 30, 2010 and will be subject to receipt of applicable regulatory approvals.
Auriga Gold has 8,475,101 shares outstanding, is a reporting issuer, and is not currently listed for trading on a recognized stock exchange. The Company's strategy is to explore and develop gold and precious metal deposits located in the principal gold districts of Manitoba and Saskatchewan, Canada.
This release was prepared by management of the Company who takes full responsibility for its contents. No stock exchange, securities commission or other regulatory authority has approved or disapproved of the information contained herein.
Some statements contained in this release are forward looking and, therefore, involve uncertainties or risks that could cause actual results to differ materially. Such forward-looking statements include comments regarding mining and milling operations, mineral resource and reserve statements and exploration program performance. Factors that could cause actual results to differ materially include availability of funds from financing, metal price volatility, economic and political events affecting metal supply and demand, fluctuations in mineralization grade, geological, technical, mining or processing problems, exploration programs and future results of exploration programs, future profitability and production.
Historical resources in this release are historical estimates that predate NI 43-101 and are not compliant with current definitions, have not been verified by the company and consequently should not be relied on by investors.