Abzu Gold Ltd.

TSX VENTURE : ABS
OTCQX : ABZUF


Abzu Gold Ltd.

January 10, 2013 15:33 ET

Abzu Gold Announces Closing of $2.5 Million Strategic Investment and Change of Directors

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 10, 2013) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Abzu Gold Ltd. (TSX VENTURE:ABS)(OTCQX:ABZUF) ("Abzu" or the "Company") announces that, further to its news releases of September 18, 2012 and July 23, 2012, it has closed the strategic investment (the "Investment") by Stonehouse Construction Pte Ltd. ("Stonehouse") and four shareholders of Stonehouse (collectively with Stonehouse, the "Strategic Investors") of an aggregate of 22,727,273 units (the "Units") at a price of $0.11 per Unit for gross proceeds of $2,500,000. Each Unit is comprised of one common share (a "Share") of the Company and one common share purchase warrant (a "Warrant") of the Company. Each Warrant is exercisable into an additional Share for a period of 12 months from closing of the Investment at an exercise price of $0.125 per Share.

All securities issued to the Strategic Investors pursuant to the Investment are subject to a hold period which expires on May 10, 2013. The net proceeds of the Investment will be used by the Company for the advancement of the Company's Nangodi Project and for general corporate purposes.

Pursuant to the terms of the definitive share purchase agreement between the Company and Stonehouse, provided the Strategic Investors hold 10% or more of the issued and outstanding Shares, Stonehouse will be entitled to appoint from time to time directors of the Company up to a maximum of 40% of the number of directors of the Company at any time. The Strategic Investors also have a pre-emptive right to participate in any subsequent equity financing of the Company in order to maintain their respective proportionate ownership interests in the Company (on an undiluted basis) (collectively, the "Rights"). The Rights will terminate in respect of the Strategic Investors in the event that the collective share ownership of the Strategic Investors at any time falls below 10% of the Shares.

Accordingly, in connection with the Investment, the Company has appointed Messrs. Eric Wardle and David Savage to the Company's board of directors. At the same time as Mr. Wardle's and Mr. Savage's appointments, the Company received Dr. Paul Klipfel's resignation as a director of the Company. Dr. Klipfel will continue to serve full-time as President of the Company.

David Savage has held senior executive roles in the construction industry in Australia, Asia and the Middle East for more than 25 years and holds a Bachelor of Civil Engineering from Deakin University in Victoria, Australia. He is currently the Executive Chairman of Stonehouse and is also Chairman and President of KazaX Minerals Inc. (TSX VENTURE:KZX).

Eric Wardle has worked in the construction industry for the last 28 years in the United Kingdom, Middle East, Africa and Asia. He has held senior executive roles for the last 13 years and is currently the Managing Director of Stonehouse. Mr Wardle holds a B. Sc. degree in Civil Engineering from the University of Salford, UK and in 1991 became a member of the Institution of Civil Engineers, UK.

Pursuant to the Investment, each of Stonehouse and Riad Tawfiq Mahmood Al Sadek ("Mr. Al Sadek") has acquired 9,090,909 Units of the Company. Each of Stonehouse and Mr. Al Sadek now has ownership and control over 9,090,909 Shares of the Company and 9,090,909 warrants.

As a result of the Investment, each of Stonehouse and Mr. Al Sadek will hold approximately 10.2% of the current issued and outstanding common shares of the Company. Each of Stonehouse and Mr. Al Sadek would own 18,181,818 Shares representing 18.5% assuming exercise of the 9,090,909 warrants in the Company currently held by each of Stonehouse and Mr. Al Sadek.

Each of Stonehouse and Mr. Al Sadek has advised the Company that they hold their securities in the Company for investment purposes and have no present intention to acquire further securities of the Company, although they may in the future acquire or dispose of securities of the Company, through the market, privately or otherwise, as circumstances or market conditions warrant.

A copy of the Early Warning Reports filed for Stonehouse and Mr. Al Sadek with the applicable securities regulators regarding the above acquisition is available on SEDAR (www.sedar.com).

Tim McCutcheon, CEO, commented, "We are very happy that Stonehouse is now a shareholder of Abzu and we look forward to working with Messrs. Savage and Wardle and the entire Stonehouse team to advance our core property Nangodi. While 2012 was a very difficult year for Abzu, we are starting 2013 as a fully funded company ready to advance our properties and create value."

On behalf of the board of directors of ABZU GOLD LTD.

Tim McCutcheon, Chief Executive Officer

Cautionary Statements

This news release contains forward-looking statements that are not historical facts. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include those risks set out in Abzu's public documents filed on SEDAR at www.sedar.com. Although Abzu believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, Abzu disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

This news release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in any jurisdiction; nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful. The securities referred to herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons absent registration or an applicable exemption from registration requirements.

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 press release, which has been prepared by management.

Contact Information

  • Abzu Gold Ltd.
    Tim McCutcheon
    Chief Executive Officer
    604-638-3288