FOR IMMEDIATE RELEASEMay 8, 2012
No. 2012-05-01
Open Gold Signs Letter of Intent for the Mitchell Project with Foundation Resources Inc.
Vancouver, BC, Canada � May 8, 2012 � Open Gold Corp. (TSX Venture Exchange: OPG; Frankfurt Stock Exchanges: 5OG) (the �Company� or �Open Gold�) is pleased to announce that it has signed a Letter of Intent ("LOI") with Foundation Resources Inc. (FDN: TSX-V) (�Foundation�) for an option to acquire 100% of the Mitchell Massive Sulfide Project. The transaction is subject to TSX Venture Exchange approval and the execution of a definitive agreement between the parties.
The strategic acquisition of the Mitchell Project allows Open Gold to develop and explore in one of the pre-eminent and safest mining jurisdictions in the world. The short and long-term forecasts for copper and gold show continued growth in consumption and demand. The previous exploration work completed by Foundation indicates significant upside potential with this property. The 2,256 ha Mitchell Project is located approximately 10 kilometres southwest of the former South Bay Mine (1.6 Mt mined @2.5% copper, 14% zinc and 120 g/t per ton silver). The infrastructure at the property is excellent , being situated approximately 80 kilometres east of the Town of Red Lake, Ontario with access via the South Bay Road that extends east off of Highway 105 and runs along an electrical grid
Terms Open Gold has an option to earn a 100-per-cent interest in the Mitchell Project from Foundation Resources by making the following payments and issuing the following common shares to the vendors:
A. Cash payments, total of $120,000 broken up as follows
- $25,000 upon exchange approval of the letter agreement; and
- An additional $35,000 on April 30th 2013; and
- An additional $60,000 on April 30th 2014
B. Shares issued, total of 1,200,000 dispersed as follows
- 525,000 common shares with exchange approval
- 450,000 additional shares April 30th 2013
- 225,000 shares on April 30th 2014
C. Within 10 days of the completion of a feasibility study on any part of the Property, Open Gold will notify in writing of Foundation of its right to "buy back" up to a maximum 25% interest in the Property (the �Back-in Right�) . Upon receipt of such notice Foundation has 30 days to notify Open Gold in writing if it intends to exercise the Back-in Right. The Back-in right entitles Foundation to "buy back" an equity interest in the Property of between 5%, to a maximum of 25% by paying to Open Gold. Gold 2 x expenses on their back in right.
D. Open Gold will assume any previous commitments and agrees to complete $1,000,000 of exploration on the property. The vendors will retain a 2-per-cent net smelter royalty on the property, of which 1 per cent can be purchased for $1-million. The agreement remains subject to acceptance by the TSX-V.
About the Mitchell Property The Property occurs within the southern Birch-Uchi Greenstone Belt in the Uchi Subprovince of the Superior Province of the Canadian Shield and contains felsic-intermediate metavolcanic units similar to those found at the South Bay Mine. A recent HELI-TEM (time-domain electromagnetic system) survey flown in September 2011 by Foundation detected two prominent �bulls-eye� electromagnetic anomalies �A� and �B� of potential base metal-sulphide (copper-zinc-silver) bodies located, respectively, in the western and eastern parts of the property
(Figure 1). Anomaly �A� is subcircular in shape, which measures about 1.0 kilometre in both north-south and east-west directions. Anomaly �B�, which trends north-south, is over 1.6 kilometres long and 200 to 400 metres wide. These two anomalies are located approximately 3.0 kilometres apart from each other. A few historical holes in the late 1960s drilled in the Anomaly �A� area intersected volcanogenic massive sulphide or VMS-type exhalite horizons. Up to 5.5 m wide semi-massive to massive and 23.0 m wide stringer sulphide mineralization consisting of
pyrite-pyrrhotite-chalcopyrite-sphalerite mineral assemblage has been reported. This drilling was shallow and mineralization remains untested along strike, down plunge and at depth below 100-metre vertical. The second electromagnetic anomaly �B� is largely untested by drilling. The results of the current HELI-TEM survey suggest thorough drill testing of Anomaly �B� is warranted. Only one historical hole that was drilled in the Anomaly �B� area intersected 5.0 m of stringer and massive
pyrite-pyrrhotite-chalcopyrite-sphalerite mineralization along the felsic-mafic metavolcanic contact.
John Harrop, PGeo, FGS, a Qualified Person as defined in National Instrument 43-101, has reviewed the technical information contained in this news release. He has relied upon historical reports which he could not personally verify, but has no reason to doubt the reliability of these reports.
On behalf of the Board of Directors
OPEN GOLD CORP. �Peeyush Varshney� Peeyush Varshney, LL.BPresident & CEO The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.