Aura Gold Inc.

Aura Gold Inc.

March 27, 2007 19:40 ET

Aura Gold to Acquire Brazilian Copper-Gold Development Project

TORONTO, ONTARIO--(CCNMatthews - March 27, 2007) - Aura Gold Inc. ("Aura Gold") (TSX:ORA) is pleased to announce that it has entered into an agreement to acquire the Arapiraca project, which includes the advanced stage Serrote da Laje copper-gold-iron deposit, from Zoneplan Limited and Repalla (Holdings) Inc. The acquisition, which is subject to due diligence, definitive documentation, minority shareholder approval and regulatory approvals, will be an excellent platform for growth and development and is expected to be the first of several such acquisitions.


- Total land area of the Arapiraca project is approximately 150,000 hectares - a district-size land package

- The Serrote da Laje deposit was delineated in two phases of Compania Vale Rio Doce ("CVRD") drilling (89 holes, 16,897 m) in the mid 1980s and late 1990s

- Serrote da Laje has historic, non-NI 43-101 compliant, measured and indicated resources of 116.7 million tonnes averaging 0.53% copper and 0.16 g/t gold, and 10.2 million tonnes of non-NI 43-101 compliant inferred resources averaging 0.27% copper and 0.25 g/t gold

- In 2002, CVRD's, non-NI 43-101 compliant metallurgical testing suggested recoveries of up to 92% copper and 68% gold, producing concentrates containing 38% to 42.2% copper and 2.5 to 5.7 g/t gold

- CVRD exploration defined an additional 39 outlying targets, only 9 have been drilled in 39 holes totaling 5,481 m - 30 non-drilled targets remain unexplored

- The Caboclo target, 13 km northwest of Serrote da Laje, has an historic, non-NI 43-101 compliant inferred resource of 20 million tonnes at an average grade of 0.62% copper and 0.17 g/t gold; the mineralized system at Caboclo has indications of size in excess of Serrote da Laje.

Historical Technical Information

Technical information contained herein including resource calculations is historic and is not compliant with NI 43-101. Notwithstanding the foregoing, Mel Klohn, L.P. Geo., Vice President, Exploration for Aura Gold Inc. and Qualified Person for the purposes of this news release, has reviewed the source data and considers that this information is the most recent available information and relevant enough to continue with due diligence investigations. Aura Gold cautions that the historical data do not conform to NI 43-101 and should not be relied upon. As part of the due diligence, an independent NI 43-101 Technical Reports will be prepared and filed.

Arapiraca Project

The Arapiraca Project is located near the center of Alagoas State in northeastern Brazil. The project extends more than 30 km northwest from the outskirts of the city of Arapiraca, with a population of approximately 200,000, and consists of 26 exploration licenses covering a total area of 46,572 ha. In addition, license applications are being filed for more than 100,000 additional hectares covering areas of favorable geology and geophysical anomalies. Infrastructure in the area of the project is excellent with electric energy, labour, communication and transportation networks, including paved highways and railroad, all readily available.

Copper was first discovered in the region following the completion of geological and airborne geophysical surveys by the Brazilian Geological Survey in 1977. CVRD followed up geophysical anomalies from these surveys in the early 1980s with ground geophysical surveys, stream sediment and soil sampling to identify targets of interest. In 1982, a promising copper-gold occurrence was discovered at Serrote da Laje ("Rocky Ledge Hill"), 10 km from Arapiraca, and subsequently explored in detail with two drilling campaigns in the mid 1980s and late 1990s.

At Serrote da Laje, CVRD completed 89 holes totalling 16,897 m, defining a copper-gold-iron deposit extending from surface to 300 m in depth over a 500 m by 800 m area with 100 m drill spacings. At least three resource evaluations were carried out by CVRD, including one completed under contract by Gemcom in 2002. This recent historical study, prepared by polygonal evaluation methods using the influence distances of vertical sections spaced 100 m apart, a copper cut-off grade of 0.2% and a density of 3.12 g/cm3, estimated the Serrote da Laje deposit to contain 116.7 million tonnes of measured and indicated mineral resources averaging 0.53% copper and 0.16 g/t gold, plus 10.2 million tonnes of inferred mineral resources averaging 0.27% copper and 0.25 g/t gold. It should be noted that the 100 m by 100 m drill grid may be too broad to allow more than only a small part of any resource present at Serrote da Laje to be classified as anything other than an inferred mineral resource. Due to the uncertainty of inferred mineral resources, it cannot be assumed that all or any part of the Serrote da Laje deposit can be upgraded to indicated or measured mineral resources.

An in-house scoping study by CVRD in 2002 showed that approximately 80% of the Serrote da Laje deposit could be mined using open-pit methods. Metallurgical tests indicated recoveries up to 92% for copper and 68% for gold, producing concentrates containing 38% to 42.2% copper and 2.5 to 5.7 g/t gold. Aura Gold cautions that this historical metallurgical work is preliminary and incomplete. There is no certainty that similar recoveries or concentrate grades will be obtained by further detailed metallurgical studies.

The Serrote da Laje deposit geology and mineralization appear to be very similar to the currently producing Caraiba copper mine located approximately 325 km to the west in Bahia state. The copper mineralization in both deposits occurs mainly disseminated in layered norite-to gabbro complexes and hosted primarily within massive to semi-massive magnetite. At Serrote da Laje, the mineralized material contains other metals that Aura Gold believes might constitute possible valuable by-products. These include iron contained in the magnetite (magnetite comprises as much as 50% of the deposit), vanadium (average 0.08%), nickel (average 0.1%), silver (average 1.5 g/t), tellurium (average 5 ppm), gallium (average 72 ppm) and small amounts of palladium and platinum. The iron appears to be an abundant, easily enrichable potential by-product that could add significant value to any future operation. Serrote da Laje is only 5 km from a railroad linking Arapiraca to Maceio, the state capital and an important industrial seaport city, approximately 135 km to the east. Furthermore, Brazil's only important large copper smelter, Camacari, is 586 km away by rail from the project. Ore from the producing Caraiba copper mine is transported by rail to this smelter.

Commenting on the acquisition Vic Bradley, President and CEO of Aura Gold said: "Completion of this major acquisition has the potential to turn Aura Gold into a mine developer and production company - a significant move for a one year old exploration company. The advanced stage Serrote da Laje is similar to Yamana Gold's very successful Chapada Mine with significant infrastructure and the iron ore potential. Chapada went from an advanced exploration project to a commercial copper and gold producer in less than three years."

Additional Exploration Potential

In 2000, CVRD launched a regional exploration program to identify other new copper deposits similar to Serrote da Laje. A new airborne magnetic and EM survey defined 39 outlying targets, of which only 9 were tested by drilling (39 holes for 5,481 m). The major portion of this reconnaissance drilling was focused on two targets, Caboclo and Lagoa do Algodao (24 holes totaling 3,185 m). The remaining 30 non-drilled targets are largely unexplored.

At the Caboclo target, 13 km northwest of Serrote da Laje, CVRD defined copper-gold inferred resources estimated in 2002 as totaling 20 million tonnes at an average grade of 0.62% copper and 0.17 g/t gold.

Mineralization at Serrote da Laje and the outlying targets is interpreted as having been formed by epigenetic hydrothermal processes. Host rocks are early Proterozic-age mafic to ultramafic differentiated norite-gabbro complexes intruding sandy to pelitic sedimentary rocks. All units are deformed and highly metamorphosed to upper amphibolite or granulite facies. Copper mineralization (mainly chalcopyrite with some bornite) occurs as disseminated fracture fillings, agglomerations or remobilized veins in the mafic to ultramafic rock bodies and is characteristically associated with massive zones of magnetite and biotite. Gold occurs in microscopic grains within sulphide minerals or in microfractures within some of the copper minerals. The rocks in the region are almost totally concealed by soil cover. Because of the close association of copper with magnetite, geophysical magnetic surveys - together with soil or stream sediment geochemical sampling - have been the most effective early-stage exploration tools employed to date. Aura Gold plans to continue utilizing these tools to identify, prioritize and define additional potential copper-gold targets in this district-sized region.

Proposed Terms for the Acquisition

As consideration for purchase of the Arapiraca assets, Aura Gold will issue approximately 341 million units of the corporation. Each unit shall consist of one Aura Gold common share and one-half common share purchase warrant. Each whole warrant will entitle the holder to purchase one Aura Gold common share at a price of $1.00 for a period of 4 years from the closing date of this transaction. The vendors will have the right to participate in new equity financings to maintain up to their pro rata interest in Aura Gold and will be entitled to place a representative on Aura Gold's Board of Directors. Aura Gold will pay Net Smelter Return royalties on future production to Zoneplan of 0.75% on copper, 1.0% on gold and 2.5% on all other mineral production. Repalla (Holdings) Inc. is an entity related to a director of Aura Gold, although it does not hold a controlling interest in the Arapiraca Project.

Resulting Capitalization After Acquisition

It is proposed that Aura Gold's capital stock, after consummation of this acquisition, will be consolidated on the basis of 1 new share for 7 old shares. After this acquisition and consolidation, Aura Gold's capital structure will be approximately:

Issued and outstanding 57.3 million
Share purchase 26.3 million
warrants shares
Stock options 2.7 million
(employees) shares

Fully diluted 86.3 million

Cash that would be raised upon exercise of all warrants and all options aggregates approximately $190 million.

New President & CEO

Aura Gold and Patrick Downey, P.Eng., have agreed that Patrick will become President & CEO of Aura Gold while Vic Bradley will move to the position of Chairman. In that capacity, Patrick will manage the due diligence process of the acquisition.
Patrick is a Professional Engineer with extensive development and operations experience throughout the world, with a focus on South America. Most recently he served as President and CEO for Viceroy Exploration Ltd. prior to its acquisition by Yamana Gold. He was also President of Oliver Gold Ltd. where he successfully negotiated the merger to form Canico Ltd., which acquired the Onca Puma Nickel project in Brazil and was recently purchased by CVRD and is now in development.

Vic Bradley said "The proposal to have Patrick join Aura Gold as President & CEO will enhance our ability to transform Aura Gold into a mine developer and potential producing company. His substantial mine operating experience and financial market skills are welcomed by our executive team. I will be pleased to relinquish the senior executive role to a much-seasoned mining engineer". Commenting on this, Patrick Downey stated, "I am very pleased to have this opportunity. This asset has a very strong resource base and some of the best exploration upside I have seen in some time."

Timeline to Closing

Aura Gold will begin due diligence on the acquisition immediately which will include (1) in-fill drilling to confirm and upgrade the historical resources at Serrote da Laje; (2) additional metallurgical tests; (3) the preparation and filing of NI 43-101 Technical Report, including a NI 43-101-compliant Resource Estimation.

It is expected that shareholder and regulatory approvals for the transaction will be sought following the successful completion of the due diligence process around mid June. Aura Gold anticipates holding a special shareholders meeting in July to obtain this support.

About Aura Gold Inc.

Aura Gold Inc. (TSX:ORA) is a Canadian exploration company focused on the discovery of gold deposits in Brazil. Aura Gold's projects are the Cumaru, the Inaja Greenstone Belt and the North Carajas Claims, which total approximately 600,000 hectares in the Carajas Metallogenic Province of north-central Brazil. The Carajas region is host to a significant number of world-class deposits of iron ore, gold, copper, nickel, manganese and bauxite. Aura Gold will continue to expand its current land position and use the acquisition of a development stage project to drive future growth.

Cautionary Statement:

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This news release includes certain "forward-looking statements". All statements other than statements of historical fact included in this release, including without limitation, statements regarding potential mineralization and reserves, exploration results, future plans and objectives of Aura Gold, are forward-looking statements that involve various risks and uncertainties. There can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Aura Gold's expectations are the risks detailed herein and from time to time in the filings made by Aura Gold with securities regulators.

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