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Canada Gold Options Up To a 75% Interest in the 155km2 Northern Arm Gold Property, Ontario, From Entourage Metals Inc.
The Option Includes a Right of First Refusal to Purchase The Remaining 25% Interest at a Later Date
Vancouver, British Columbia, Canada - January 30, 2013 - Canada Gold Corporation (TSX-V: CI, FSE: T9NB, OTC-BB: CNGZF) ("Canada Gold" or the "Company") is pleased to announce it has signed a binding Letter of Intent providing the Company an Option to acquire up to a 75% interest in the 155km2 (square kilometer) Northern Arm Gold Property (the "Property") from Entourage Metals Inc. (tsx.v: EMT) ("Entourage"). The Northern Arm Property is located within the Hemlo Greenstone Belt in north central Ontario, approximately 10 kilometers north of Barrick Gold Corporation's Hemlo deposit. The original Hemlo deposit was discovered in 1981 and the Hemlo Mines have since produced more than 20 million ounces of gold while 250,000 ounces of gold are currently being produced per annum. Strong potential exists for additional discoveries in the Hemlo region, though limited exploration has occurred in the area despite having very similar geology to the Hemlo Mines deposits. The Northern Arm Property straddles approximately 90% of a 40 kilometer long, gold prospective geological trend that has yet to be systematically explored. Entourage Metals has recently consolidated the Property area for the first time as it was previously staked and owned by various smaller entities and groups.
Terms of the Northern Arm Option
In order to exercise the Option, Canada Gold will be required to complete the items referred to in paragraphs 1 and 2, below.
- To earn a 65% interest in the Property, Canada Gold will complete the following (the "65% Option"):
- Year 1:
- Pay $10,000 to the Vendor upon TSX Venture Exchange Approval;
- Pay $40,000 to the Vendor at least 10 days prior to the first date in 2013 by which the Vendor is required to make a cash option payment under an underlying option agreement(s) to maintain such option in good standing;
- Spend $300,000 in work on the Property and issue 250,000 common shares to the Vendor by December 31st, 2013;
- Year 2:
- Pay $50,000 to the Vendor at least 10 days prior to the first date in 2014 by which the Vendor is required to make a cash option payment under an underlying option agreement(s) to maintain such option in good standing; and
- Spend $450,000 in work on the Property, and issue 250,000 common shares to the Vendor by December 31st, 2014;
- Year 3:
- Pay $75,000 to the Vendor at least 10 days prior to the first date in 2015 by which the Vendor is required to make a cash option payment under an underlying option agreement(s) to maintain such option in good standing; and
- Spend $750,000 in work on the Property and issue 250,000 common shares to the Vendor by December 31st, 2015;
- Year 4:
- Pay $75,000 to the Vendor by June 30, 2016; and
- Spend $1,000,000 in work on the Property and issue 500,000 common shares to the Vendor by December 31st, 2016;
- Canada Gold will earn an additional 10% in the Project for total of 75% by completing the following by December 31st, 2017 (the "10% Option"):
- Spend $1,000,000 in work on the Property, pay the Vendor $75,000 and issue 500,000 common shares to the Vendor; and
- Complete a National Instrument 43-101 compliant resource calculation on the Property.
- Should Canada Gold at any time file a National Instrument 43-101 compliant resource estimate indicating 1,000,000 million ounces of gold or greater, the Company will make a one-time payment to the Vendor consisting of 1,000,000 common shares.
Upon full exercise of the Option or, if the 65% Option is exercised but the 10% Option is not exercised, upon termination of the 10% Option, a joint venture will be formed between the parties with the party having the greatest interest (initially Canada Gold) as Operator and the parties will enter into a Joint Venture agreement which will provide for, among other things, the assumption by the parties pro-rata in accordance with their respective interest in the Property of the obligations under underlying agreements and royalties and a 30 day Right of First Refusal to purchase the other party"s interest in the Property.
Historical Work
The compilation of historical exploration data shows that there are significant mineral occurrences that have been historically identified on the property with multiple deposit styles (Ontario Geological Survey, Map 2614), the highlights of which are shown below:
- Volcanics: Caravelle No.4: 7.70% Cu, 0.24% Pb, 4.28 % Zn, 8.23 g/t Au, 116 g/t Ag (drill hole grab).
- Kusin Showing: 10.7% Zn, 8.9% Pb and 85.7 g/t Ag (trench grab).
- Carroll Occurrence: 6.85 g/t Au, 0.54% Zn, and 70 g/t Ag (trench grab).
- Iron Formations: Season Lake Occurrence: 1.03 g/t Au (stripped outcrop grab).
- Qued Occurrences: Up to 8.85 g/t Au (OGS grab).
- Porphyries: Hemlo Gold Occurrence: 37.35 g/t Au over 1.0 meter (old drill hole).
The Ontario Government has also completed a thorough aeromagnetic/electromagnetic survey over the property area using 100 meter spacing, the details of which will be provided on the Company's website in the coming days.
Northern Arm Property Map
Meanwhile, in the summer of 2012, Entourage commenced an initial soil sampling, geological mapping and prospecting program on the Northern Arm Property. For reference, the Northern Arm Property has been subdivided into several project areas, including the Valley Lake, Gowan Lake, Hemlo North, Theresa Lake, and White Lake areas. (See below).
North Arm Gold Property Areas
A total of 1,980 soil samples were recently collected from the Gowan Lake area covering the northwestern portion of the Northern Arm Property. The majority of the area is covered by glacial till and while the mean value of gold samples over this portion of the Property was less than the detection limit (1 ppb) with the 95 percentile at 7 ppb Au, 14 samples exceeded the interpreted threshold limit, ranging from 47 ppb to 1,800 ppb Au, with a median value of 341 ppb Au. Of significance was the spatial association of these anomalous samples forming distinct clusters and trend lines; suggesting underlying bedrock and structural control. The highest gold value is associated with a four kilometer trend of anomalous gold in soil, parallel with the geological contact between intrusive and volcanic rocks. These lithogeochemical contacts are commonly sites for gold mineralization within Archean rocks and these initial findings bode well for the exploration potential of the Northern Arm Gold Property.
Gowan Lake Area 2012 Soil Geochemistry Survey Map
2013 Work Program
While these results are encouraging, the systematic exploration of this large trend is just underway. The Company's Northern Arm exploration program will be Operated by Entourage's exceptional exploration team which include several members credited with the discovery of Underworld Resources' 1.6 million ounce White Gold deposit located in the Yukon, Canada, and sold to Kinross Gold Corporation for US $135.3 million in 2010, as well former Senior Geologists of Barrick Gold intimately involved in the expansion of the Hemlo Mines.
The 2013 exploration program for the Northern Arm Property will fall under the supervision of John C. Florek, P.Geo, Vice-President of Exploration for Entourage Metals, who is a Qualified Person as defined by National Instrument 43-101. Mr. Florek is an avid geologist with over 20 years experience in mineral exploration and development. He is a Professional Geologist and holds a MSc in the Geological Sciences. His role prior to joining Entourage Metals was as Senior Geologist with Barrick at Hemlo Mines, where he was intimately involved in extending the mine life at Hemlo Mines. He was also part of the team that received the 2008 Developer of the Year Award, awarded by the Northwestern Ontario Prospectors Association. Mr. Florek was previously responsible for the management and execution of mineral exploration for Placer Dome and BHP Minerals and has explored for a broad range of commodities (principally gold, base metals, and nickel) throughout Canada, the United States, Australia, Europe, Central America, and South America. Mr. Florek prepared and approved the information contained in this release.
In 2013, Canada Gold and Entourage's shareholders will benefit from an aggressive and systematic exploration program targeting this large and promising Northern Arm trend, scheduled to start as soon as possible, which will include additional geological mapping, ground induced polarization (IP) surveys, further rock & soil sampling, mechanical trenching, and drilling. Access to the Northern Arm Property is excellent via the Trans-Canada Highway, which connects to Route 614 that bisects the Property and links to additional logging roads throughout the area. More information on this exploration program will be provided when available.
Management Comments
Chad McMillan, President & CEO of Canada Gold, comments that, "I am thrilled to announce this exciting new opportunity for Canada Gold shareholders. To be invited to participate with such a proven group in the exploration of this large and untested gold trend indeed represents a great step in the potential of this Company. The Northern Arm Project features many of the characteristics we all look for in an attractive mining project; a large prospective target area, similar geology and close proximity to an existing discovery, nearby production infrastructure, excellent access, located in a stable jurisdiction, and led by a strong technical management team. I believe coupling this opportunity with the Company’s experienced management team and exceptional share structure offers tremendous upside potential for our shareholders."
A Finder's Fee will be payable each by the Vendor and Canada Gold upon TSX-V acceptance of this agreement and such Finder's Fee.
This acquisition is subject to TSX Venture Exchange approval.
On Behalf of the Board,
Chad McMillan
President & CEO
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements: Certain disclosure in this release, including statements regarding the Company's plans for and intentions with respect to the acquisition and exploration of the Northern Arm Property constitute "forward-looking statements" and "forward-looking information" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. In making the forward-looking statements in this release, the Company has applied certain factors and assumptions that the Company believes are reasonable, including that the Company is able to obtain any required government or other regulatory approvals and any required financing to complete the Company's property options and planned exploration activities, that the Company is able to procure equipment and supplies in sufficient quantities and on a timely basis and that actual results of exploration activities are consistent with management's expectations. However, the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors relating to the Company's operation as a mineral exploration company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such uncertainties and risks may include, among others, actual results of the Company's exploration activities being different than those expected by management, uncertainties involved in the interpretation of drilling results and geological tests, delays in obtaining required government or other regulatory approvals or financing, inability to procure equipment and supplies in sufficient quantities and on a timely basis, equipment breakdowns and bad weather. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on forward-looking statements. The Company does not intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
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