Kinbauri Gold Corp.

Kinbauri Gold Corp.

March 10, 2008 13:46 ET

Anglo Pacific Group to Provide $7.5M to Kinbauri in Exchange for Net Smelter Return at El Valle/Carles

OTTAWA, ONTARIO--(Marketwire - March 10, 2008) - Kinbauri Gold Corp. ("Kinbauri") (TSX VENTURE:KNB)(FRANKFURT:3KG.DE) is pleased to announce that Anglo Pacific Group (APF.L) has agreed to purchase a Net Smelter Return from Kinbauri for C$7.5M.

The agreement is an important strategic milestone for Kinbauri as it allows the Company to complete drilling and development plans at its El Valle/Carles mines and mill in northwestern Spain with minimum dilution of share capital. Most significantly, the injection of $7.5M of non-dilutive capital at this point in time will allow Kinbauri the option to complete its feasibility study by November of this year without further equity placements. The delivery of the study will then allow the Company to finance the remainder of its pre-production and production development by non-dilutive alternatives.

Under the terms of the agreement, Anglo Pacific will fund Kinbauri, through the issuance of a convertible debt instrument in the amount of $7.5M. Principal is to be repaid through a 2.5% net smelter return royalty on Kinbauri's El Valle/Carles project located in Asturias, Spain. The royalty increases to 3% in the event gold prices exceed $1,100 an ounce. Upon repayment of principal, the instrument converts to a net smelter return royalty. In the event that production from the El Valle mill does not exceed a rate of 90,000 ounces of gold per year on or before Dec 31, 2012, the outstanding principal can be converted at Anglo Pacific's option into common shares at a price equal to the lower of $0.73 or the discounted market price at the time of conversion. In connection with the transaction, Kinbauri has agreed to issue 1.5 million warrants to Anglo Pacific; each warrant is exercisable into one common share for a period of two years from the date of closing at an exercise price of $0.90. M Partners, the agent in the transaction, will be paid a fee of 3.5% of the gross amount of the debt instrument. The final agreement is subject to regulatory approval, title verification and definitive documentation.

Dr Vern Rampton, President and CEO of Kinbauri commented, "Our agreement with Anglo-Pacific is a solid endorsement of Kinbauri's plan to quickly re-start the 2,000 tpd El Valle mill. We are most pleased that our corporate goal of achieving production at El Valle by 2010 is now within reach without any further dilutive financing."

Gold and Copper Resources at El Valle and Carles

On January 17th Kinbauri filed a N.I. 43-101 compliant technical report. This report delineated Kinbauri's resources as of November 7th 2007 as:

- Total Measured + Indicated: 725,200 oz Au and 87,100,000 lbs. Cu (4,159,000 tonnes at 5.4 g Au/t and approximately 0.97% Cu(1)).

- Total Inferred: 1,042,000 oz Au and 50,000,000 lbs. Cu (5,357,000t at 6.1g Au/t and approximately 0.56% Cu(2)).

(1) 0.97% Cu for 4,054,000 tonnes resource, copper resource and grade is not estimated for 105,000 tonnes resource.

(2) 0.56% Cu for 4,074,000 tonnes resource, copper resource and grade is not estimated for 1,283,000 tonnes resource.

(3) With the exception of 78,000oz. Au (898,000 tonnes @2.7g/Au/t), all resources are located at El Valle and Carles.

In its press release of March 7, 2008 Kinbauri announced that recent drilling at El Valle has suggested a 300m extension of known mineralization in the Northwestern Area of the Black Skarn that could result in resources mirroring or exceeding those resources presently delineated within the Central and South Areas of the Black Skarn on the eastern flank of the intrusion. These latter two Areas contain indicated resources of 105,362 ounces gold and 16.8 million pounds copper (912,588t grading 3.6g Au/t and 0.84% Cu) and inferred resources of 85,596 ounces gold and 12.8 million pounds copper (768,505t grading 3.5g Au/t and 0.76% Cu), as noted in Kinbauri's N.I. 43-101 compliant technical report of January 17th, 2008.

Kinbauri is a TSXV - Tier 1 Mineral Exploration Company focused on the development of mineral properties, primarily precious metal prospects in northwestern Spain, Nevada and Canada. Its immediate focus is to expand and upgrade resources to reserves at the El Valle property in Asturias, Spain in order to start operations at the mine and existing mill complex there in 2010. It currently has 43,608,320 common shares issued and outstanding.

Anglo Pacific Group PLC generates returns for shareholders by receiving royalties from coal mines in Australia operated by BHP and Rio Tinto. The strategy of Anglo Pacific is to pay a substantial proportion of these royalties to shareholders as dividends, while reinvesting the balance in strategic listed and unlisted mineral exploration and production opportunities with a view to obtaining more royalties for shareholders. Anglo Pacific is resolved to continue its policy of pursuing other mining interests by adopting an active, merchant banking approach to each project to achieve better returns at reduced risk. For further information see

M Partners is a full service investment dealer based in Toronto, Ontario. For further information see


This press release contains certain forward-looking statements, which are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected. Kinbauri undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

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