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(MoneyNewsWire.Net, March 14, 2014 ) -- Press Release Distribution Services --
Vancouver, B.C - Columbus Gold Corp. (CGT: TSX-V) (“Columbus Gold”) is pleased to announce that it has executed the definitive option agreement (the “Agreement”) with major gold producer Nord Gold N.V. contemplated in the binding letter of intent dated September 17, 2013 under which Nord Gold has been granted the right to earn a 50.01% interest in certain licences at Columbus Gold’s 100% owned Paul Isnard gold project in French Guiana, which host the 5.37 million ounce Montagne d’Or gold deposit (the “Project”).
Pursuant to the terms, Nord Gold must pay US$4.2 million in cash to Columbus Gold no later than May 21, 2014. The US$4.2 million payment is mandatory and is not subject to any conditions. In addition, during the earn-in period, Columbus Gold is the operator and benefits from a 10% management fee on certain expenditures; the 2014 work program at the project is budgeted at US$11.8 million.
Robert Giustra, CEO of Columbus Gold, commented on the terms of the deal in September 2013: “This agreement is exceptional not only by its requirement for an experienced and world class mine developer to fund a considerable amount of spending but also for the fact that Columbus Gold shareholders retain half the project at feasibility. In addition, the deal provides Columbus Gold with the option to participate in mine construction or to delegate it to Nord Gold for a resulting significant and valuable equity interest for Columbus Gold shareholders in a large producing mine.”
A 26,600 meter, 135 hole drilling program is currently underway at Montagne d’Or which contains a NI 43-101 compliant inferred gold resource using a cut-off grade of 0.3 g/t of 5.37 million ounces of gold within 117.1 million tonnes at an average grade of 1.43 g/t. Using a cut-off of 1 g/t the deposit hosts 4.15 million ounces of gold within 58.1 million tonnes at an average grade of 2.22 g/t. For additional details, please refer to the Technical Report (as defined below).
Nord Gold may earn a 50.01% interest in the Project by completing a bankable feasibility study (the “BFS”) and by expending not less than US$30 million in 3 years in staged work expenditures, which includes the requirement for Nord Gold to pay Columbus Gold US$4.2 million in cash no later than May 21, 2014. If Nord Gold earns its interest it will take ownership of 50.01% of the shares of SOTRAPMAG S.A.S. (“SOTRAPMAG”), the wholly owned French subsidiary of Columbus Gold that owns the Project and Columbus Gold will retain a 49.99% interest. SOTRAPMAG will be the joint venture company. In the event that SOTRAPMAG decides to advance the Project to mine construction and commercial production, Columbus Gold may elect to fund SOTRAPMAG pro-rated to its 49.99% interest or allow Nord Gold to solely fund, whereby Columbus Gold’s interest would be diluted pursuant to a straight-line formula. The initial deemed value of each party’s interest in SOTRAPMAG, which affects the rate of dilution, will vary based on the ounces of proven & probable reserves estimated in the BFS (the “Ounces”). For example, pursuant to the formula, 2 million Ounces would require Nord Gold to spend approximately US$160 million to dilute Columbus Gold to a 25% interest; 3 million Ounces would require Nord Gold to spend approximately US$210 million to dilute Columbus Gold to a 25% interest; and 4.5 million Ounces would require Nord Gold to spend approximately US$270 million to dilute Columbus Gold to a 25% interest. In the event that SOTRAPMAG decides not to move forward to mine construction and commercial production within 4.5 months after completion of the BFS, Nord Gold must offer 0.01% of SOTRAPMAG to Columbus Gold for a determinable price and each party will then hold 50% of SOTRAPMAG.
During the option period, Nord Gold has agreed to a standstill under which it will not obtain 20% or greater of the outstanding voting securities of Columbus Gold, will not solicit proxies from Columbus Gold’s shareholders, will not attempt to engage in discussions respecting fundamental transactions involving Columbus Gold, and will vote any securities it holds in favour of management proposals put forward by Columbus Gold.
The Agreement is subject to receiving confirmation from the French government that it has no objection to the option. The Agreement contains other provisions standard for an option agreement, including an area of interest, force majeure extensions and termination provisions. A copy of the Agreement will be available in due course on Columbus Gold’s SEDAR profile at sedar.com.
ABOUT NORD GOLD
Nord Gold (LSE: NORD) is publicly traded on the London Stock Exchange and is an international pure-play emerging-markets gold producer established in 2007. Nord Gold has expanded rapidly through acquisitions and organic investment, achieving a rate of growth unmatched in the industry during that period. In 2013, Nord Gold’s gold production was 924,000 oz. It operates nine mines in Russia, Kazakhstan, Burkina Faso and Guinea. Nord Gold has one development project, four advanced exploration projects and a diverse portfolio of early exploration projects and licenses in CIS and West Africa. Nord Gold employs over 10,000 workers on two continents.
Rock Lefrançois, P.Geo. (OGQ), Columbus Gold’s Chief Operating Officer and Qualified Person under National Instrument 43-101, has reviewed and approved the technical content of this news release. For additional technical details on the Project, please see the technical report “Paul Isnard, French Guiana, Mineral Resource Estimate, NI 43-101 Technical Report” with an effective date of November 23, 2012 (the “Technical Report”), filed on Columbus Gold’s SEDAR profile at sedar.com on March 14, 2013.
For more information regarding the letter of intent dated September 17, 2013, please see Columbus Gold’s news release of September 18, 2013.
ON BEHALF OF THE BOARD,
Robert F. Giustra
Chairman & CEO
Neither the 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.
For more information contact:
Investor Relations
604-634-0970 or
1-888-818-1364
info@columbusgroup.com
This release contains forward-looking information and statements, as defined by law including without limitation Canadian securities laws and the "safe harbor" provisions of the US Private Securities Litigation Reform Act of 1995 ("forward-looking statements"), respecting the option, the earn-in conditions, the BFS, the payment of US$4.2 million, advancement of project to mine construction and possible sale of 0.01% interest thereafter, the standstill, and the other conditions under the Agreement. Forward-looking statements involve risks, uncertainties and other factors that may cause actual results to be materially different from those expressed or implied by the forward-looking statements ...
Columbus Gold Corp.
Investor Relations
1-888-818-1364
info@columbusgroup.com
Source: EmailWire.Com 
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