Baymount Incorporated

Baymount Incorporated

December 19, 2011 10:50 ET

Baymount Announces Letter Agreement re: Mining Asset

TORONTO, ONTARIO--(Marketwire - Dec. 19, 2011) - Baymount Incorporated ("Baymount" or the "Company") (TSX VENTURE:BYM) is pleased to announce that it has entered into a Letter of Intent ("LOI") with Nevada Exploration Inc. ("NGE") (TSX VENTURE:NGE), whereby Baymount may earn a joint venture interest in NGE's Fletcher Junction Gold Project, in Mineral County, Nevada (the "Property"). Under the terms of the LOI, Baymount will have the option to earn a 51% interest in the Property by funding $5,825,000 in qualifying expenditures and making $600,000 in payments over 4 years (the "Earn-In"). The Year 1 payment of $60,000 is due upon the signing of a definitive agreement and the Year 1 work commitment of $580,000 is a firm obligation. Subject to TSX Venture Exchange approval, Baymount may elect to pay up to 50% of the cash payments due under the definitive agreement by issuing Baymount Common Shares. NGE will act as the Operator during the Earn-In. If Baymount completes the Earn-In, Baymount may earn an additional 14%, for a total of 65%, by completing a feasibility report. Once NGE and Baymount complete a definitive agreement, the companies will issue a further news release with additional details. The foregoing is hereinafter referred to as the "Transaction."

In addition to the Transaction, Baymount is also in the course of non-exclusive negotiations with Macallan Equity Inc., the Company's partner in the Belleville racetrack project, concerning the sale of all of its assets and properties pertaining to its Belleville racetrack project and related lands and the restructuring of its currently outstanding debts and obligations. Further announcements will be forthcoming upon the entering into of agreements pertaining to such matters. Any such sale will not affect the progress of the development of the Company's project in Belleville and Baymount and its management team will continue to work with all stake holders to ensure that it moves forward in a timely manner. Even if a sale is concluded, Baymount will continue to assist in whatever way is required to ensure the continuity of the project, and will likely continue to have a financial interest in the project.

The proposed Transaction constitutes a "Change of Business" for the Company, as such term is defined and understood under the rules and policies of the TSX Venture Exchange (the "Exchange"). Accordingly, the transaction will be subject to review by the Exchange and to the approval of the directors and shareholders of Baymount. A management information circular and proxy statement in respect of the proposed Transaction will be prepared, delivered to shareholders and filed in accordance with Policy 2.4 of the Exchange on SEDAR at in advance of the closing of the proposed Transaction. The proposed Qualifying Transaction is not a "non-arm's length qualifying transaction" within the meaning of Policy 2.4 of the Exchange.

Concurrent with the completion of this Transaction, the Company will complete an equity financing to raise up to $1.5 million (the "Financing").

Completion of the Transaction is subject to a number of conditions, including, but not limited to: negotiation and entering into of a formal agreement between the parties within 60 days; satisfaction of the initial listing requirements of the Exchange; Exchange approval of the Transaction; completion of the Financing; a satisfactory due diligence review by Baymount; receipt of a current report completed in accordance with National Instrument 43-101; completion or waiver of Sponsorship; and the approval of the board of directors and shareholders of Baymount. In connection with its application to the Exchange for approval of this Transaction, the Company expects to seek an exemption from the requirement for a Sponsor.

In accordance with Exchange policies, trading in the Company's common shares has been halted. It is expected that this halt will remain in place until closing of the Transaction.

Nevada Exploration Inc.

NGE is an exploration company focused on gold in Nevada. NGE is led by an experienced management team that has been involved with the discovery of more than 30 million ounces of gold in Nevada.

NGE is aggressively applying the latest in "blind deposit" exploration technology to identify, acquire, and advance new exploration properties in Nevada's highly prospective, yet underexplored covered basins. Specifically, NGE has developed proprietary hydrogeochemistry (groundwater chemistry) exploration technology to explore for gold in Nevada's covered basins where traditional exploration techniques are challenged.

Using its industry leading exploration technology, NGE has assembled a portfolio of nine new gold projects, and with over 20,000 hectares (75 sq mi), is evolving as a major player in this world class jurisdiction. NGE's business model is to leverage its properties and technology to create shareholder value through generative exploration, joint ventures, and other exploration partnerships.

The Fletcher Junction Gold Project

The Fletcher Junction Gold Project is located approximately 19 miles southwest of Hawthorne, Nevada, four miles north of the Aurora mining district and six miles northeast of the Nevada ‐ California state line on the northeast flank of the Bodie Hills. The Fletcher Junction Project consists of 127 unpatented mining claims comprising the FJ claim group, covering approximately 10.3 sq‐km (4.0 sq‐mi) or 1,028 hectares (2,540 acres) in Mineral County, west central Nevada. Pediment Gold LLC ("PGL"), a wholly owned subsidiary of NGE, owns 100% of the Property, subject to an underlying 1.25% NSR to a third party. Some further details concerning the Property (from NGE's website: are as follows:

  • The Property is located in Mineral County, Nevada, within the Walker Lane mineral belt of southwest Nevada, approximately 30 km (19 miles) southwest of Hawthorne, Nevada.
  • The Fletcher Junction target lies adjacent to the Aurora Crater and is covered by a thin, post-mineral layer of basalt and alluvium. Prior to NGE's activities, the target had not been previously explored.
  • NGE identified very high concentrations of gold and trace elements in spring water flowing from beneath the cover in late 2004 as part of its Groundwater Chemistry Sampling Program.
  • NGE secured the target by staking unpatented mining claims and then followed up the encouraging hydrogeochemistry results with additional groundwater, vegetation, soil, and float rock geochemical sampling, as well as detailed geologic mapping.
  • NGE completed a Phase I drilling program in 2008 and intersected hydrothermally altered and geochemically anomalous bedrock similar in size, alteration-style, and trace-element chemistry to the nearby Aurora mining district, which produced nearly 2,000,000 total ounces of gold and 2,400,000 ounces of silver.
  • The project is ready for a Phase II angled, core hole drilling program designed to intersect high-angle quartz veins believed to contain high-grade gold-silver mineralization.

Completion of the Transaction is subject to a number of conditions, including Exchange acceptance and disinterested Shareholder approval. The Transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Management Information Circular that is to be prepared in connection with the transaction, any information released or received with respect to the Change of Business may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.


Graham Simmonds, President and Chief Executive Officer

Forward-looking Statements

This press release contains certain forward-looking statements with respect to the Company. These forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated. We consider the assumptions on which these forward-looking statements are based to be reasonable, but caution the reader that these assumptions regarding future events, many of which are beyond our control, may ultimately prove to be incorrect.

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 the release.

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