Mengold Resources Inc.

Mengold Resources Inc.

January 04, 2008 12:49 ET

Mengold Closes $310,000 Second Tranche of Private Placement and MineralFields Group Withdraws From Mengold Financing

MONTREAL, QUEBEC--(Marketwire - Jan. 4, 2008) - Mengold Resources Inc. ("Mengold") (TSX VENTURE:MNI) is pleased to announce that it has closed the second tranche of a private placement through the sale of 775,000 units (the "Units") at a price of $0.40 per Unit, for proceeds of $310,000. This tranche is part of a private placement of 1,775,000 Units for total proceeds of $710,000.

Each Unit consists of one flow-through common share and one-half of one transferable share warrant (each whole share purchase warrant a "Warrant"). Each Warrant entitles the holder to acquire one additional common share at a price of $0.45 for a 12-month period from the closing date and thereafter at a price of $0.55 per share for an additional 12-month period. The Warrants will be subject to an accelerated expiry in the event that the weighted average trading price of the common shares of Mengold on the TSX Venture Exchange is, for a period of at least 21 consecutive trading days, more than $0.50 per common share in the first year of the exercise period. Mengold may then accelerate the expiry time to 14 calendar days from the date express written notice is provided to the holders of Warrants.

All securities issued in conjunction with the private placement will be subject to a four month hold period expiring on May 1, 2008. Insiders acquired 125,000 Units of the financing. Subject to regulatory approval, the Company will pay cash finder's fees of $15,600 and issue 22,000 compensation options. The compensation options entitle the holder to acquire an aggregate of 22,000 Units at an exercise price of $0.40 per Unit for a period of two years from the closing date.

Proceeds of the private placement will be used to fund Mengold's exploration activities which are currently focused on the Burchell Lake and Goldcreek Properties in the Shebandowan area, west of Thunder Bay, Ontario. A drill program is scheduled to begin by mid-January and with the closing of this private placement, the Company has sufficient funds to meet the costs of the program.

Mengold also regrets to inform that the MineralFields Group has withdrawn its subscription of 2,500,000 Units for an aggregate of $1,000,000 as previously disclosed in Mengold's news release issued on December 17, 2007 (see NR-07-12). The MineralFields Group had reviewed and approved Mengold's December 17 news release prior to its dissemination but subsequently argued that it had not approved its dissemination. At the request of the MineralFields Group, the escrow agent has returned the subscription funds to the MineralFields Group. The MineralFields Group has advised Mengold that it withdrew its subscription due to pricing concerns regarding the subsequent trading price of Mengold shares.

Mengold Resources Inc. is engaged in mineral exploration for precious and base metals. The Company is currently conducting exploration programs at the Burchell Lake and Goldcreek Properties, both prospective for gold, copper, and zinc, in the Shebandowan area of Ontario. Mengold also holds the Mountain River Property near Sainte-Anne-du-Lac, Quebec. Mengold has 33,470,088 common shares outstanding.

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

Contact Information

  • In Canada
    Mengold Resources Inc.
    Joel Scodnick, President and Chief Executive Officer
    (705) 522-4439 or (807) 629-7516
    (705) 522-8694 (FAX)
    Mengold Resources Inc.
    Douglas G. Reeson, C.F.O. and Director
    (416) 533-0323
    (416) 533-2890 (FAX)
    In Europe
    Mengold Resources Inc.
    W. Ian L. Forrest, Chairman and Director (FAX)