Chrysos Capital Corporation
TSX VENTURE : CSZ.P

October 27, 2009 17:29 ET

Chrysos Concludes Agreement With Merrex

HALIFAX, NOVA SCOTIA--(Marketwire - Oct. 27, 2009) -

NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA

Tom Hickey, President and CEO of Chrysos Capital Corporation ("Chrysos")(TSX VENTURE:CSZ.P) a capital pool corporation, announces:

Qualifying Transaction

Chrysos has concluded a formal asset purchase agreement dated October 27, 2009 (the "Merrex Agreement") with Merrex Gold Inc. ("Merrex")(TSX VENTURE:MXI) for the acquisition (the "Transaction") of the following assets (the "Merrex Assets"):

(a) 50% interest in 572 claims in Nova Scotia (the "NS Claims"), which include the Jubilee Zinc-Lead Project in Victoria County, Nova Scotia (the "Jubilee Claims"), and two ancillary properties, the Cape Breton Regional Zinc Claims and the Eastville Permits;

(b) a 100% interest in 229 claims in the Red Lake District, Northwestern Ontario (the "Red Lake Claims"); and

(c) Merrex's exclusive strategic alliance with AgeanGold Madencilik Ltd., a 90% interest in Merrex Insaat Madencilik Sanayi Tasimacilik ve Ticaret Ltd. Sti. ("Merrex Turkey") which holds twelve early-stage exploration permits, which is subject to an earn-in option agreement for 50% of the Turkish Claims by Roscan Minerals (BVI) Corp (the "Roscan Option").

The Transaction is conditional on Chrysos concluding a purchase agreement with Societe Touba Mining SARL ("Touba") in form and substance satisfactory to Chrysos, to acquire a 100% interest (subject to vendor retained royalties and mandatory government free carried royalty and elective participation) in the Niaouleni Property in Mali, West Africa, particulars of which are detailed below.

Chrysos will issue 18,675,000 common shares at $0.17 per common share for total consideration of $3,174,750.00 for the Merrex Assets and will fund the recommended $413,600.00 Phase 1 drill program for the Jubilee Claims.

Pursuant to TSX Listings Policy 2.4, the arm's length purchase of the Jubilee Claims will be Chrysos's qualifying transaction (the "Qualifying Transaction"). The Qualifying Transaction remains subject to a number of closing conditions including, inter alia, shareholder and regulatory approvals and adequate financing.

Tom Hickey, President and CEO of Chrysos stated "We are very excited about the Jubilee Zinc-Lead Project and the potential to increase the resource estimate in both size and grade. Furthermore, the gold acquisition in Mali, Africa will add a notable precious metal component to our asset mix with the added benefit of experienced management and field teams and a prominent strategic partner, Touba Mining."

Greg Isenor, President and CEO of Merrex further commented "We are eager to begin a new exploration project in Mali, and we are particularly fortunate so much prior exploration has been done. We view the Niaouleni Gold Project as being in an advanced exploration stage with numerous targets drill ready."

Qualifying Property

The Jubilee Claims are the Chrysos' Qualifying Property. It is comprised of a 50% interest in five exploration licenses totaling 189 claims: #06221 (23 claims), #06218 (12 claims), #5726 (75 claims), #5727 (39 claims) and #5728 (40 claims) all situate in the Little Narrows region of Cape Breton, Nova Scotia.

Chrysos commissioned a NI 43-101 geological report from Mercator Geological Services Limited. The Mercator Report dated August 20, 2009 and with a revised date of October 14, 2009 focuses on two of the five Jubilee licenses #06221 (23 claims) and #06218 (12 claims).

The Jubilee Property is a zinc-lead prospect. It has considerable historical exploration and Merrex has completed seventy drill holes on Licenses 06218 and 06221 since 2005: two holes during 2005, thirteen during 2006, thirty-six during 2007 and the remaining nineteen in 2008.

These drill programs culminated in a CIMM Standards and National Instrument 43-101 compliant resource estimate (Mercator 2007):



Mineral Resource Estimate for Jubilee Property - November 12th, 2007

------------ ------------ --------- ---------- ------ ------ ------------
Equivalent
Resource Zn% Tonnes Tonnes Lead % Zinc % Zinc
Category Threshold(i) (Rounded) Equivalent %
------------ ------------ --------- ---------- ------ ------ ------------
Inferred 2.50 3,140,877 3,140,000 0.89 3.81 4.71
------------ ------------ --------- ---------- ------ ------ ------------

(i)Note: Zn Equivalent calculated as Zn Equivalent equals (Zn% + Pb%)
based on averaged July to October 2007 zinc and lead market pricing


The Mercator Report recommends further diamond drill on the Jubilee Property. A Phase 1 program of 1,500 metres at an aggregate cost of $413,600 is recommended with a Phase 2 program of 5,000 metres at an aggregate cost of $1,412,400 recommended contingent on the success of Phase 1.

Additional Property Interests.

Pursuant to the Merrex Agreement Chrysos will also acquire the following additional property interests:

The Cape Breton Regional Zinc Claims

The Cape Breton Regional Zinc Claims, in which Chrysos will acquire a 50% interest, are three properties: Middle River (60 claims), Baddeck Forks (2 claims) and River Denys (32 claims), all located in Cape Breton, Nova Scotia. These three claim groups comprising 94 claims totaling 8,644 acres were staked for their geologic potential to host Jubilee-style zinc-lead mineralization. Preliminary exploration, including exploratory diamond drilling, at Middle River (three holes) and Cains Mountain (one hole), was conducted primarily for assessment work purposes. None of the exploratory drill holes returned any significant assays.

The Eastville Permits

The Eastville Exploration Licenses, in which Chrysos will acquire a 50% interest, are one contiguous property comprised of three licenses totaling 84 claims: # 5845 (49 claims), #5846 (22 claims) and #6528 (13 claims) located in Colchester and Pictou Counties, Nova Scotia. As with the Cape Breton Regional Zinc Claims, the Eastville Permits were staked for their geologic potential to host Jubilee-style zinc-lead mineralization. No material exploration has been undertaken to date.

The Red Lake Exploration Licenses

The Red Lake Exploration Licenses are a 100% interest in 17 non-contiguous claim blocks totaling 229 claims in the Red Lake and Birch Lake areas of Ontario, east of the active Red Lake, Ontario mining camp. Within the Red Lake exploration licenses the area of primary interest is the Birch-Uchi Project comprised of seven claims groups totaling 230 individual claims located approximately 80 kilometres east-northeast of the town of Red Lake, Ontario. Individually, the properties are known as: Shabumeni (118 claims), East Swain (16 claims), Shabumeni River (16 claims), Skinner (32 claims), Women River (30 claims), Premier Lake (9 claims) and Confederation Lake (9 claims).

Historically Merrex conducted early stage, grassroots exploration programs. During 2006 preliminary prospecting and grab sampling of outcrop exposures and historical showings returned anomalous gold values including three samples ranging from 59 to 387 ppb, four samples ranging from 1308 to 2788 ppb, three samples ranging from 4456 to 7474 ppb and three samples ranging from 22184 to 30395 ppb gold. In 2007-2008 an exploration program of prospecting, sampling, outcrop stripping and geological mapping returned anomalous gold values from both previously known and unknown mineral occurrences on the property including one sample of 73.6 g/t Au.

Merrex Turkey

The Turkish properties are being acquired through the acquisition of a 90% shareholding in a Turkish corporation, Merrex Insaat Madencilik Sanayi Tasimacilik ve Ticaret Ltd. Sti., ("Merrex Turkey"). Merrex Turkey has a strategic alliance for the exploration for gold in western Turkey with AgeanGold Madencilik Ltd. Sti. ("Agean"), a Turkish corporation. The remaining 10% of the shares of Merrex Turkey are owned by Agean.

Pursuant to the strategic alliance AgeanGold and its shareholders act exclusively for Merrex Turkey to identify and secure exploration permits and all permits so identified are offered to Merrex Turkey at cost on a 'first refusal' basis. Pursuant to the strategic alliance Merrex Turkey will be 100% funded and wholly controlled by Chrysos and Chrysos will recover cash advances and related expenses prior to any profit distribution. The strategic alliance operates on a month-to-month basis.

On August 1, 2008, Merrex and AgeanGold optioned (the Roscan Turkey Option) to Roscan Minerals (BVI) Corp. a 50% interest in its Turkey properties for $1,000,000 in exploration expenditures over three years, the initial $300,000 of which was incurred over the 2008-2009 exploration season. Chrysos will be the Operator during the earn-in period and receive a management fee as Operator. Roscan Minerals (BVI) Corp. has not yet elected to proceed with the second year of its option.

The Turkish landholdings are comprised of twelve exploration permits in four regions: Efemcukuru (two permits of 2180 hectares), Odemis (four contiguous permits totaling 7450 hectares), Ordu-Ulubey-Sayaca (one permit of 887 hectares) and Kure (five contiguous permits totaling 8588 hectares).

The Efemcukuru permit is contiguous to the south of Eldorado Gold's 30 square kilometre Efemcukuru Project which has a reported proven and probable reserve of 3,875,000 tonnes grading 10.04 grams per tonne gold totaling 1,221,000 ounces of contained gold and has reported drill intersections as high as 41.54 g/t gold over 35.3 meters and 218.6 g/t gold over 5.6 meters.

The Efemcukuru permits are located in Izmir province on the south-west coast of Turkey approximately 20 kilometers from the provincial capital Izmir. The Kure and Odemis permit areas are also in Izmir province; Kure approximately 83 kilometres from Izmir and Odemis approximately 64 kilometres from Izmir. The Ordu-Ulubey-Sayaca permit is located in Ordu province in the north-east of Turkey near the Black Sea approximately 22 kilometres from the provincial capital Ordu.

Exploration conducted pursuant to the Roscan Turkey Option during the 2008-209 exploration season included rock sampling, stream sediment sampling, assaying and mapping, with additional data compilation from publicly available sources.

After the closing of this acquisition, Chrysos will either, subject to Roscan Minerals (BVI) Corp. so electing, continue with the Roscan Turkey Option until Roscan Minerals (BVI) Corp. earns its 50% interest or Chrysos will seek other option/joint venture partners for its Turkish exploration permits.

Niaouleni Gold Project

Chrysos has agreed to acquire from Societe Touba Mining SARL ("Touba") a 100% interest in two exploration permits (the "Niaouleni Permits") in Southwest Mali for $150,000 and the issuance of 6,000,000 common shares from treasury. Chrysos has also agreed to pay a total of $250,000 to acquire prior exploration data and reports, clear title encumbrances and reimburse costs of ongoing exploration.

The Niaouleni Permits are subject to a 10% free carried and an elective 10% participating royalties in favour of the Mali government and a 5% net profit interest and a 2% Net Smelter Royalty retained by the vendor. The net smelter royalty is convertible into 5,000,000 common shares of Chrysos after December 31, 2011 at the election of either party.

The Niaouleni Permits are two exploration permits totaling 94 square kilometers located in southwestern Mali south of the Niger River near the Guinea border.

Historically the Niaouleni Region is one of the oldest sites of artisnal gold workings in Mali, with recorded activity dating back to the fourteenth century. The mineralization is characterized by nuggets and fine visible gold, much of which is platy and angular suggesting that it is very close to source. All quartz veins, breccias and stockwork systems known in the area carry gold and appear to represent the surface expression of deeper sources. The gold is frequently found intergrown with pyrite, magnetite and haematite. The principal areas of present artisnal workings within the Niaouleni Permits are know as the Lebre Plateau, Niaouleni South, Kankou Moussa and Goingoindougou.

There has been considerable historical exploration but more recent exploration on the Niaouleni Permits. As noted above, such prior exploration data and reports as are available are being acquired concurrently with the acquisition of the Niaouleni Permits.

Directors and Management

The following individuals will be the directors and officers of Chrysos after the Transaction is concluded:

Nicholas Tintor, B.Sc. (Chairman of the Board of Directors)

Mr. Tintor is President and CEO of Homeland Uranium Inc., a private company. A graduate of the University of Toronto (B.Sc., Geology), with more than 30 years of experience in the mining industry, Mr. Tintor has extensive experience in junior mining company management, finance and project acquisition. Mr. Tintor is also a director of Macusani Yellowcake Inc., San Anton Resource Corporation and is a former officer and remains a director of Anaconda Mining Inc. Prior to joining Anaconda Mining Inc. in 1997, Mr. Tintor worked in the field as an exploration geologist for Urangesellschaft (Canada) Ltd. and the Ontario Geological Survey.

Mr. Tintor is a Member of the Canadian Institute of Mining and Metallurgy, The Society of Economic Geologists, The Geological Association of Canada and is a Member of the University of Toronto's Department of Geology Industry Steering Committee.

Gregory Isenor, B.Sc., P.Geo. (President and Director)

Mr. Isenor, the President and CEO of Merrex Gold Inc., is a professional geologist, NI 43-101 'qualified person' and businessman. He has over 35 years experience in the mineral and oil and gas resource industries and has worked throughout the world including North America, Asia, Africa, Australia and New Zealand.

Mr. Isenor was President, CEO and Director of Jilbey Gold Exploration Ltd. prior to its takeover by High River Gold Mines Ltd. in 2005, and was instrumental in the identification of the Bissa gold deposit in Burkina Faso, West Africa, which was the principal asset of Jilbey. He is currently a director of Riverstone Resources Inc. a publicly traded company, and is actively involved with their exploration programs in Burkina Faso. Mr. Isenor is also involved in several private companies, and initiated the start up of Jubilee Minerals Ltd., which via a reverse takeover formed Merrex Gold Inc. He is also President and Director of Glencoe Resources Inc. and Vice President of Prince Edward Gas Inc.

As President and CEO of Merrex Gold Inc., Mr. Isenor identified and developed the Siribaya Gold Project, 50% of which was optioned to IAMGOLD Corporation for $12M in combined private placement investment and exploration commitments.

Mr. Isenor is a twelve-year Director of the Prospectors and Developers Association of Canada and a Director and past president of the Chamber of Mineral Resources of Nova Scotia.

Mr. Isenor holds a Bachelor of Science, Geology degree (1970) from Acadia University and is a member of the Association of Professional Geoscientists of Nova Scotia.

John Cumming, B.A., L.L.B., L.L.M. (Executive Vice-president and General Counsel, Corporate Secretary and Director)

Mr. Cumming, a corporate, securities and mining lawyer and businessman, has been active in the Canadian securities markets and resource exploration sector for 30 years. Mr. Cumming was President and Director of Merrex Resources Inc. which, was reorganized in 2005 into Merrex Gold Inc. Mr. Cumming was the deal architect and principal negotiator of Merrex's Siribaya-IAMGOLD option agreement.

Mr. Cumming was the senior securities and mining law partner at a mid-sized Canadian law firm until 1992. Mr. Cumming has served as a director and officer of numerous public resource corporations since beginning his legal career in 1978. He was a founding shareholder of St. Philips Resources Inc. which, in joint venture with the Hunter Dickinson Group, found the Kemess Gold/Copper Mine. Both joint venture companies were sold in 1996 in a $200 million take-over bid.

Mr. Cumming holds Bachelor of Arts (1974) and Bachelor of Laws (1977) degrees from the University of British Columbia and a Masters in Laws (1993) degree from King's College, University of London with a specialty in corporate and commercial law. Mr. Cumming has served as a director and officer of numerous public resource corporations since beginning his legal career in 1978.

Tom Hickey, P.Eng. (Executive Vice-President, Chief Financial Officer and Director)

Tom Hickey holds a degree in civil engineering and over 14 years experience in the oil and gas sector focused primarily on the downstream petroleum and petrochemical sectors.

Mr. Hickey founded Front Line Safety and served as President and CEO for 12 years with the company developing its international business in many parts of the world including the Middle East, Brazil, Mexico and Europe. Front Line Safety was recognized with numerous industry excellence awards. Mr. Hickey sold his interest in Front Line in 2006.

In June, 2007 Mr. Hickey joined Keltic Petrochemicals as COO. During his tenure he negotiated a $25M private equity financing and completed all provincial and federal permitting for Keltic's major project, and completed the project on budget and ahead of schedule.

Mr. Hickey is active in community organizations including serving on a number of boards including chairing the Offshore Technology Association of Nova Scotia, the Construction Association of Nova Scotia and the Canadian Diabetes Association Drive Out Diabetes Tournament. Mr. Hickey is a former Director of ImmunoVaccine Technologies Inc.

Mr. Hickey has been personally recognized with numerous awards including Canada's Top 40 Under 40, BDC Young Entrepreneur of the Year, Ernst & Young Entrepreneur of the Year and twice as Eastern Canada's Top 50 CEOs.

Colman O'Brien, B. Eng. (Director)

Mr. O'Brien is a businessman and entrepreneur with a Bachelor's Degree of Computer Engineering from McMaster University Mr. O'Brien is a director of PetroWorth Resources. Mr. O'Brien formerly served as CEO of Advanced Media Services, Executive Vice-president of Wealth Management at Rockwater Capital Inc., President and Vice-Chairman of Bay Street Direct Inc., Senior Vice-president and Manager of TD Evergreen, Vice-president and Investment Advisor at Merrill Lynch/Dean Witter/Midland Walwyn and Manager with Texas Instruments.

Walter Henry, CFA (Director)

Walter Henry, a Chartered Financial Analyst, is Vice-President, Finance and Chief Financial Officer of Royal Nickel Corp. Previously Mr. Henry was CFO for Juno Special Situations Corp, Alturas Minerals Corp. and Tiberon Minerals Ltd., Manager at CIBC World Markets and Assistant Vice-president, Mining and Infrastructure, within the Financial Advisory Services Group of Price Waterhouse Coopers Securities Inc. He is a Director of Golden Odyssey Mining Inc. and Consolidated Westview Resource Corp., both TSX Venture listed companies.

Mr. Henry has extensive experience in the areas of International Project Financing, Capital Markets Financing, Commercial Bank Financing, Financial Reporting, Controls and Taxation Matters, Treasury and Financial Risk Management and Public Corporation Investor Relations.

Mr. Henry is currently enrolled in the Directors Education Program jointly developed by the Institute of Corporate Directors and the Rotman School of Management, University of Toronto. Mr. Henry is an associate member of AIMR/Toronto Society of Financial Analysts and an associate of the Institute of Canadian Bankers.

James M. Patterson, Ph.D., P. Geo. (Director)

Dr. Patterson is a professional geologist and an independent economic and exploration geological consultant, and Executive Consultant to FNX Mining Company Inc. Dr. Patterson has forty years experience in initiating, developing, conducting and supervising all phases of mineral exploration, ore reserve audits and valuations worldwide including Canada, Ireland, Thailand, Malaysia and Indonesia. He was involved with the discovery of several mineral deposits in Ireland and immigrated to Canada in 1978 to bring a lead mine into production in Nova Scotia.

Dr. Patterson was Exploration Vice-President of FNX Mining Inc. and assisted with the revival and building of FNX from a $20 million company to a $2.5 billion leading Canadian mining company. In addition, Dr. Patterson has held numerous senior positions in various other mineral exploration companies during his career including as a Director of Jilbey Gold Exploration until its 2005 takeover by High River Gold and as a director of Hornby Bay Exploration Ltd., Crowflight Minerals Inc. and Mispec Resources Inc. Dr. Patterson is a Director of Merrex Gold Inc., Garson Gold Corp. and International Millennium Mining Corp.

Dr. Patterson holds an Honours Geology Degree from Trinity College, Dublin, Ireland and a Ph.D. in Mining Geology from the Royal School of Mines, London University, England. Dr. Patterson is a practicing member of the Association of Professional Geoscientists of Ontario, former member of the Society of Economic Geologists and is the founding President of the Irish Association for Economic Geology. In addition, Dr. Patterson has numerous publication credits on mineral exploration and development of mining environmental frameworks.

Concurrent Financing

The Qualifying Transaction is subject to completion of a concurrent equity financing.

Chrysos proposes a brokered and non-brokered private placement of units and flow-through shares for a minimum of $2,100,000 and a maximum of $3,100,000 as follows:



---------------------------------------------------------------------------
Minimum $2,100,000 Maximum $3,100,000
Financing Financing
---------------------------------------------------------------------------
Flow Through Shares 2,105,263 2,105,263
@ $0.19 shares $400,000 shares $400,000
---------------------------------------------------------------------------
10,000,000 15,882,353
Units @ $0.17 shares $1,700,000 shares $2,700,000
---------------------------------------------------------------------------
12,105,263 17,987,615
Totals shares $2,100,000 shares $3,100,000
---------------------------------------------------------------------------


Each Unit will be comprised of one Chrysos common share and one-half of one Chrysos common share purchase warrant. Each whole warrant will entitle the holder to acquire a common share at a price of $0.25 per share for a period of 24 months. The Flow Through shares will not carry a share purchase warrant but will entitle the holder to certain Income Tax Act benefits. The current officers and directors of Chrysos may subscribe under the private placement(s).

There are currently 6,500,000 common shares of Chrysos outstanding. After completion of the Qualifying Transaction, the aforementioned maximum financing and the Niaouleni acquisition there are expected to be a maximum of 49,162,615 common shares of Chrysos outstanding (excluding the exercise of any options or warrants).

This press release was prepared under the supervision of Peter C. Webster, P. Geo., President Mercator Geological Services who is a Qualified Person as defined under National Instrument 43-101. Peter C. Webster has reviewed the scientific and technical information in this press release.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, further due diligence, and Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Chrysos should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Chrysos Capital Corporation
    Thomas J. Hickey
    President
    902 456-2568
    902 446-2001 (FAX)