Augen Gold Corp.
TSX VENTURE : GLD

Augen Gold Corp.

February 16, 2011 10:55 ET

Augen Gold Enters Into Option and Joint Venture Agreement With Sanatana

TORONTO, ONTARIO--(Marketwire - Feb. 16, 2011) - Further to the Company's press release dated 15 December 2011, Augen Gold Corp. ("Augen Gold" or "the Company") (TSX VENTURE:GLD) is pleased to announce that it has entered into a definitive option and joint venture agreement (the "Definitive Agreement") with Sanatana Diamonds Inc. ("Sanatana"), a company listed on the TSX Venture Exchange under the trading symbol STA, wherein Sanatana was granted an option to acquire up to 51% undivided interest in the rights to 46 mineral concessions in Ontario (the "Claims") owned by Augen Gold along with a right of first refusal to acquire 9 mineral concessions in Ontario (the "ROFR Claims") owned by Augen Gold (together, the "Transaction"). The Claims and the ROFR Claims are located within the townships of Yeo, Chester, Neville and Benneweis in Ontario and total approximately 19,006 acres.

Pursuant to the terms of the Definitive Agreement, Sanatana will have an option to earn a 50% undivided interest in the Claims (the "50% Interest") by:

  1. on or before the dates indicated below, making the following cash option payment and share issuances:

    1. paying to Augen Gold $150,000 within 10 days of applicable regulatory approval for the Definitive Agreement (the "Effective Date"),

    2. allotting and issuing to Augen Gold 2,000,000 shares in the capital of Sanatana, as fully paid and non-assessable, within 10 days of the Effective Date,

    3. allotting and issuing to Augen Gold a further 1,500,000 shares in the capital of Sanatana, as fully paid and non-assessable, on or before the first anniversary of the Effective Date,

    4. allotting and issuing to Augen Gold a further 1,500,000 shares in the capital of Sanatana, as fully paid and non-assessable, on or before the second anniversary of the Effective Date; and

  2. on or before the dates indicated below, making the following exploration expenditures on the Claims (collectively, the "Expenditures"):

    1. $1,000,000 in exploration expenditures on or before the first anniversary of the Effective Date,

    2. a further $1,500,000 in exploration expenditures on or before the second anniversary of the Effective Date, and

    3. a further $2,500,000 in explorations expenditures on of before the third anniversary of the Effective Date.

Pursuant to the terms of the Definitive Agreement if Sanatana earns the 50% Interest in accordance with the provisions set forth above the parties will enter into a joint venture agreement with respect to the Claims. Sanatana will have the right to earn a further one percent (1%) interest (for a total interest of 51%) (the "51% Interest") in the Claims by completing and delivering to Augen Gold a pre-feasibility study on or before the fifth anniversary of the Effective Date. It is also a term of the Definitive Agreement that for as long as Sanatana and Augen Gold are parties to an option or joint venture with respect to the Claims or the ROFR Claims that Augen Gold will have the option to purchase up to 10% of any securities issued in any future equity offerings by Sanatana, on the same terms and conditions of such offering.

Closing of the Transaction is subject to Exchange approval. Third parties may receive a finder's fee in connection with the Transaction within the maximum amount permitted by the policies of the Exchange.

About Sanatana

Sanatana Diamonds Inc. is an exploration stage company with projects in the Northwest Territories and the Yukon. The Company has an experienced management team and Board of Directors. Sanatana Diamonds, headquartered in Vancouver, is listed on the TSX Venture Exchange (TSX VENTURE:STA).

About Augen Gold

Augen Gold is a gold exploration company with 23,685 hectares of staked and patented mining claims in the Southern Swayze Greenstone Belt, including the formerly producing Jerome Gold Mine. The claims cover a 45-kilometre long section of the Ridout Deformation Zone, believed to be the western extension of the Kirkland Lake/Larder Lake Break. The geological setting is comparable to the major gold camps of Timmins and Kirkland Lake, and the claims contain numerous gold showings that have received very little historical exploration. Augen Gold is the first company to have assembled such a coherent ground position. Augen Gold has performed a detailed airborne geophysical survey over the whole area, and its sampling program has confirmed the historically reported gold values. The correlation of many gold showings with geophysical features indicates excellent potential for the discovery of additional deposits. The Company's objectives are to aggressively explore the gold showings that correlate with geophysical anomalies, continue resource definition at the Jerome Mine, and to expand its property portfolio with highly prospective mineral assets.

For more information on the South Swayze Project, please refer to the Company's NI 43-101 compliant technical report "Amended and Restated Technical Report on the Augen Gold Corp. Claims, Porcupine Mining Division, District of Sudbury, Ontario, Canada" (effective April 8, 2008, available on the Company's profile at www.sedar.com).

For more information on Augen Gold, visit our website at www.augengold.ca.

The Company's documents may also be accessed at www.sedar.com.

This news release contains forward-looking statements. These statements are based on information currently available to the Company and the Company provides no assurance that actual results will meet management's expectations. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to, among other things, results of exploration, project development, reclamation and capital costs of the Company's mineral properties, and the Company's financial condition and prospects, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for minerals; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of the Company; and other matters discussed in this news release. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. The Company does not undertake to update any forward-looking statement that may be made from time to time by the Company or on its behalf, except in accordance with applicable securities laws.

Shares outstanding: 126MM

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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