GOLCONDA RESOURCES LTD.
TSX VENTURE : GA

GOLCONDA RESOURCES LTD.

September 29, 2009 18:01 ET

Golconda Announces the Issuance of a Secured Convertible Subordinated Debenture Unit

CALGARY, ALBERTA--(Marketwire - Sept. 29, 2009) - Golconda Resources Ltd. (the "Corporation" or "Golconda") (TSX VENTURE:GA) is pleased to announce the completion of a private placement of a debenture unit (the "Debenture Unit"). The Debenture Unit is comprised of a secured convertible subordinated debenture (the "Debenture") in the principal amount of $250,000 and a right (the "Right"), with the Right entitling the holder thereof to purchase a convertible secured subordinated debenture in the principal amount of $250,000 (the "Second Debenture") at any time prior to the Maturity Date (as defined below). The Corporation may at any time prior to the Maturity Date request the advance by the Debenture holder, subject to the satisfaction of certain conditions, of the second tranche of the principal amount of $250,000 by the exercise of the Right. The securities issued pursuant to this private placement are subject to a four-month hold period.

The Debenture has a one-year term (the first anniversary of the Debenture being the "Maturity Date") and bears an interest rate of 13% per annum payable quarterly in arrears. The principal amount of the Debenture is convertible, in whole or in part, into common shares of the Corporation ("Common Shares") at the option of the holder at any time prior to the close of business on the Maturity Date at a conversion price of $0.15 per Common Share. The Debenture holder will receive accrued and unpaid Interest on the Debenture to the date of conversion. The conversion price is subject to standard anti-dilutive provisions. The Debenture is redeemable at the option of Golconda at any time prior to the Maturity Date upon not more than 30 days prior written notice during which period the Debenture holder shall have the option to convert the Debenture into Common Shares.

The terms of the Second Debenture will be the same as the terms of the Debenture other than that the principal amount of the Second Debenture will be convertible, in whole or in part, into Common Shares at the option of the holder at any time prior to the close of business on the Maturity Date at a conversion price equal to the greater of the closing price of the Common Shares on the day prior to the date of issuance of the Second Debenture and $0.15 per Common Share. The Second Debenture will rank on a pari passu basis with the Debenture.

The Corporation intends to use the proceeds from this private placement for general working capital purposes. The completion of the private placement is subject to final TSX Venture Exchange approval.

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.

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