Golden Reign Resources Ltd.

Golden Reign Resources Ltd.

June 29, 2009 11:06 ET

Golden Reign Acquires Interest in the San Albino-Murra Gold Property, Nicaragua

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 29, 2009) - Golden Reign Resources Ltd. (the "Company" or "Golden Reign") (TSX VENTURE:GRR) is pleased to announce that it has entered into an option agreement, subject to regulatory approval, to acquire an 80% interest in the San Albino-Murra Mining Concession (the "Property") located in the Department of Nueva Segovia, northwestern Nicaragua.

The Property, which is held by a private Nicaraguan company, Nicoz Resources S.A. ("Nicoz"), under a 25 year mining license expiring February 3, 2027, covers an area of 8,700 hectares (87 sq km) and has a long history of exploration and mining.

Nicaragua, a mining-friendly jurisdiction, is situated in the Central American Gold Belt, which extends from Costa Rica in the south to Guatemala in the north. Within this prolific gold belt, estimates of historical production total more than 20 million ounces.

Option Terms

Under the terms of the option agreement (the "Agreement"), Golden Reign may earn its 80% interest in the Property (the "Earn-In") by:

(a) making cash payments to Mr. Frank Mena Marenco (the "Optionor"), as follows:

(i) US$30,000 (paid) on signing of the Agreement;

(ii) US$100,000, of which US$50,000 is to be paid upon delivery of an acceptable legal title opinion to the Property and receipt by the Company of conditional acceptance to the Agreement by the TSX Venture Exchange ("TSX-V) and the remaining US$50,000 is to be paid upon receipt by the Company of final acceptance of the Agreement by the TSX-V (the "Approval Date"), such approval to be provided on or before August 31, 2009; and

(iii) US$40,000 on each six month anniversary of the signing of the Agreement, for the duration of the option earn-in period.

(b) incurring aggregate exploration expenditures of US$5,000,000 on the Property, as follows:

(i) US$200,000 on or before the first anniversary of the Approval Date;

(ii) US$1,000,000 on or before the second anniversary of the Approval Date;

(iii) US$1,800,000 on or before the third anniversary of the Approval Date; and

(iv) US$2,000,000 on or before the fourth anniversary of the Approval Date.

(c) issuing a total of 4,000,000 common shares of the Company, as follows:

(i) 1,000,000 common shares to be within five business days of the Approval Date; and

(ii) 1,000,000 common shares to be issued on each of the first, second and third anniversary dates of the Agreement.

A total of 80% of the share capital of Nicoz will be held in escrow in the name of the Company or its assignees by an arm's length third party until the earlier of: the completion of the Earn-in by Company; or termination of the Agreement, whereby the Company's interest in Nicoz will revert back to the Optionor.

During the term of the Agreement, the Company shall have the right to vote the 80% interest in the share capital of Nicoz. Golden Reign will appoint the directors and officers of Nicoz; however, not less than one director shall act on behalf of the Optionor and two directors shall act on behalf of the Company, with the number of officers appointed utilizing the same ratio.

The Company and the Optionor have agreed to jointly incorporate a private Nicaraguan operating company ("Opco"), which will be responsible for all operational activities on the Property. Golden Reign will appoint a manager and staff for Opco, in consultation with the Optionor. Further, the directors and officers will be appointed by Golden Reign, but shall number no fewer than one director acting on behalf of the Optionor and two directors acting on behalf of the Company, with the number of officers appointed utilizing the same ratio. The Company will direct Opco during the term of the Agreement. The Optionor will provide ongoing advice and consultation.

Upon the Company earning an undivided 80% interest in the Property (the "Earned Interest"), the Optionor will have 60 days in which to decide to:

(a) proceed under a participating joint-venture agreement, prepared in accordance with standard industry practices; or

(b) elect to convert its 20% working interest to a 3% Net Smelter Royalty ("NSR") and cause the transfer of its working interest to the Company. In which case, the Company has the right to purchase 50% of the NSR, or 1.5%, for an amount of US$1,850,000, and, further, will have the right of first refusal to purchase the remaining 1.5% NSR should it be offered for sale at any time.

Upon notice to the Optionor of a commercial production decision, the Company at its election will issue to the Optionor additional shares in its capital or cash or a combination thereof, the value of which is to be equivalent to US$3,500,000. Any shares issued as a result of a commercial production decision will be subject to the approval of all necessary regulatory authorities, including the TSX-V, and any conditions and requirements which may be required by such regulatory authorities, including a four month hold resale restriction from the date of issuance of any shares. In addition, the Optionor agrees to:

(a) not sell, transfer or dispose of more than 1,000,000 of such shares per calendar quarter; and

(b) grant the Company or its designee the right of first refusal to purchase the shares.

Golden Reign has arranged for the preparation of a NI 43-101 technical report.

On behalf of the Board,

Kim Evans, CGA, Director & CFO

Forward-Looking Statements: Some of the statements contained herein may be forward-looking statements which involve known and unknown risks and uncertainties. Such forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to political risks involving the Company's exploration and development of mineral properties interests, the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, the inability or failure to obtain adequate financing on a timely basis and other risks and uncertainties. Such information contained herein represents management's best judgment as of the date hereof, based on information currently available.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Golden Reign Resources Ltd.
    Kim Evans, CGA
    Director & CFO
    (604) 685-4655 or Toll Free: 1-888-685-4655
    (604) 685-4675 (FAX)