SAN GOLD
LAUNCHES TIMMINS EXPLORATION SUBSIDIARY
San Gold Corp. intends to transfer to its wholly owned subsidiary, SGX
Resources Inc., its interest, subject to receipt of certain consents, in five
option agreements relating to mineral properties located in and around Timmins,
Ont. The corporation has determined to spin off the properties to SGX in order
to form a new company that will explore and develop high grade gold deposits in
Canadian mining camps.
San Gold will continue to
focus its activities on developing its high grade gold mines, deposits and
exploration properties in the Rice Lake belt of Manitoba and on developing
advanced stage deposits in other areas as they may be acquired according to a
strict internal acquisition protocol. The recently announced Davidson-Tisdale
property interest acquisition near Timmins will remain in San Gold since it is
an advanced stage development and exploration property.
San Gold shareholders will
continue to benefit from any SGX exploration successes indirectly through San
Gold's continuing equity investment in SGX.. San Gold will not be obligated to
enter into any future investments and shall not be responsible for any costs
associated with SGX's ongoing exploration activities. However, San Gold has
agreed to issue certain shares of San Gold pursuant to the Timmins Option
Agreements and San Gold has agreed to remain bound to issues those shares,
subject to receipt of compensation from SGX for the issuance of such shares and
subject to receipt of applicable regulatory and stock exchange approvals. San
Gold will receive aggregate consideration of $2,500,000 in exchange for
transferring the Properties to SGX, an amount approximately equal to the funds
so far expended on the Properties. Payment to San Gold will be in the form of
19,000,000 common shares of SGX (the "SGX Common Shares"), at a
deemed price of $0.1316 per share ($2,500,000) in compensation for cash
expended and initial opportunity risk undertaken by San Gold. San Gold
currently holds 6,000,000 SGX Common Shares.. San Gold shall retain a first
right of refusal to purchase any SGX property for a period of five years
following the date of the sale and transfer of the Properties.
SGX, currently a private
Manitoba incorporated company, shall undertake a private placement offering
(the "Offering") of up to 2,400,000 units ("Units") at a
price of $2.75 per Unit for gross proceeds of $6,600,000. Each Unit will be
comprised of ten SGX Common Shares issued as "flow-through shares"
within the meaning of the Income Tax Act (Canada) and one regular SGX Common
Share, for an effective cost of $0.25 per share. Each Unit shall carry eleven
SGX Common Share purchase warrants ("Warrants"). Each Warrant will
entitle the holder thereof to purchase one SGX Common Share at a price of $0.30
per share for a period of 12 months from the date of issuance. San Gold shall
not participate in the Offering. Certain insiders of San Gold may participate
in the Offering.
Upon completion of the
Offering, SGX will no longer be a wholly-owned subsidiary of the Corporation.
Assuming full subscription to the Offering, San Gold shall then own 48.6% of
SGX on an undiluted basis, and 32.1% on a fully diluted basis in the event that
all the Warrants are exercised.
Hugh Wynne, Executive
Chairman of San Gold, and Dale Ginn, CEO of San Gold, are the initial directors
of SGX. Following the completion of the Offering, Mr. Ginn will resign as a
director of SGX in order to completely devote his services to the benefit of
San Gold. Mr. Wynne will remain as a Director of SGX in order to maintain
continuity with San Gold as SGX's largest initial shareholder. SGX's
exploration management team is already in place in Timmins and is currently
operating the Properties for San Gold on a consulting basis. W.S. Ferreira,
P.Geo., and D. Ginn, P.Geo., are the Qualified Persons for San Gold under
National Instrument 43-101.
San Gold
Corp.
1-800-321-8564
www.sangoldcorp.com