Barkerville Gold Mines Ltd.

Barkerville Gold Mines Ltd.

August 27, 2010 21:17 ET

Barkerville Announces Closing of $5,535,000 Brokered Private Placement Offering

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 27, 2010) - Barkerville Gold Mines Ltd. (TSX VENTURE:BGM)(FRANKFURT:IWUB) (the "Company") announces that it has closed its private placement secured debt financing (the "Offering") which was previously announced on July 23, 2010, July 26, 2010 and August 9, 2010, and for which D&D Securities Company acted as lead agent together with MGI Securities Inc. as co-agent and other agents as part of the selling group (collectively, the "Agents").

The Company raised a total of Cdn$5,535,000 from the issuance of $5,535,000 of senior secured convertible notes (the "Notes") and 6,509,160 common share purchase warrants (the "Warrants") of which $4,500,000 was issued on a brokered basis and the balance was raised directly by the Company. Management was of the opinion that it was unnecessary to incur any further debt than necessary.

The Notes are for a two year term and bear interest at an annual rate of 10% per year, payable quarterly. The Notes are convertible at the option of the holder (the "Noteholder") into common shares of the Company (the "Shares"), at any time after 18 months from the date of issuance for a conversion price of $0.85 per Share. In the event of a change of control of the Company, the Noteholders will have the option to have their Notes redeemed by the Company. The Notes may be redeemed for cash at the option of the Company at any time after 6 months from the date of issuance, without penalty or premium. So long as any Notes remain outstanding, the Company may not undertake any further debt financings without prior approval of 66 2/3% of the Noteholders outstanding at that time.

The Notes were issued pursuant to a trust indenture among the Company, its wholly-owned subsidiary, 0847423 B.C. Ltd, and Computershare Trust Company of Canada. The Company has granted a charge against the QR Mining Lease, subject to permitted obligations and liabilities, to secure its obligations under the Notes. Commencing February 2011, the Company will use 25% of its Free Cash Flow on a monthly basis to redeem the Notes on a pro rata basis, thereby reducing the outstanding obligations of the Company to the Noteholders.

The Warrants are exercisable for a period of 2 years from the date of issuance at a price of $0.85 per share. If, after four months and one day after closing, the volume weighted average trading price of the Company's shares, for a period of 20 consecutive trading days exceeds $2.00, the Company may within five days after such event, provide notice to the warrant holders of the early expiry and thereafter, the Warrant will expire 30 days from such notice.

Upon completion of the Offering, the Company will have 58,122,228 Shares outstanding, and upon conversion of the Notes and exercise of the Warrants, on a fully-diluted basis, there will be 71,143,099 Shares outstanding. All securities issued are subject to hold periods expiring December 28, 2010 in accordance with applicable securities legislation.

The proceeds of the Offering will be used towards mill operations and development at the QR Mine and Mill, as well as towards exploration and development of the Cariboo Gold Project and to provide working capital.

The Agents received a 6% cash commission on $4,500,000 of Notes and a 6% finder's fee was paid to registered securities dealers on $1,000,000 of Notes.

The Offering is subject to final approval from the TSX Venture Exchange.

This press release does not constitute an offer to sell, or a solicitation of an offer to sell, any of the foregoing securities in the United States. The foregoing securities will not be registered with the U.S. Securities and Exchange Commission and may not be offered or sold within the United States without registration or an applicable exemption from the registration requirements of the United States Securities Act of 1933 and any applicable state securities laws.

On Behalf of the Board of Directors

J. Frank Callaghan, President and CEO

About Barkerville Gold Mines Ltd.

The Company has been developing its Cariboo Gold Project in Barkerville, B.C., which encompasses (from northwest to southeast) the former producing Hardscrabble Tungsten Mine, Mosquito Creek Gold Mine (now on care and maintenance), Aurum Mine, Island Mountain Mine, Cariboo Gold Quartz Mine, Bonanza Ledge (proposed mine), the Cariboo Thompson Gold & Silver Mine and the Cariboo Hudson Mine. The Company commenced operations in the Cariboo District in 1994 and since that time has focused on the exploration and development of its gold properties. Mineral tenures in the Historic Cariboo Goldfields encompass approximately 111,000 hectares (275,000 acres) over a 60 km long by 20 km wide belt. In the Barkerville Gold Camp, 101 creeks have reported placer gold production. Recorded gold production from the area totals more than 3.8 million ounces, including an estimated 2.64 million ounces from placer mining and 1.23 million ounces from lode mining. The Company does not have any of its future gold production hedged.

Forward-Looking Statements

This news release contains forward-looking statements based on management's expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Offering, together with any statements about the Company's growth strategy, product development, market position, expected expenditures and financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "projects", "indicates", and similar expressions. This news release may include statements regarding exploration results and budgets, reserve estimates, mineral resource estimates, work programs, capital expenditures, timelines including timelines for third-party studies and issuance of permits to operate by various government agencies, strategic plans, the market price of metals, costs, or other statements that are not a statement of fact. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements due to a variety of risks, uncertainties and other factors. The Company's forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and the Company does not assume any obligation to update forward-looking statements if circumstances or management's beliefs, expectations and opinions should change. Many factors, including those discussed more fully elsewhere in this release and in documents which may be filed with the British Columbia Securities Commission, the Alberta Securities Commission, the Ontario Securities Commission, the TSX Venture Exchange, as well as others, could cause results to differ materially from those stated.

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.

Contact Information

  • Barkerville Gold Mines Ltd.
    J. Frank Callaghan
    President and CEO
    604-669-6463 or Toll Free: 1-800-663-9688
    604-669-3041 (FAX)