Blue Gold Mining Inc.
TSX VENTURE : BGX

Blue Gold Mining Inc.

June 26, 2012 07:00 ET

Blue Gold Signs Definitive Agreement to Option Three Gold-Rich Porphyry Targets From Paget Minerals

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 26, 2012) - Blue Gold Mining Inc. (TSX VENTURE:BGX) ("Blue Gold") is pleased to announce that it has entered into a definitive agreement with Paget Minerals Corp. (TSX VENTURE:PGS) ("Paget") whereby Blue Gold has the option to earn up to a 65% interest in three porphyry targets (collectively referred to as "the Project") within Paget's Ball Creek Project in the Golden Triangle region of northwestern British Columbia. The Project includes the Main gold-copper porphyry target, Rainbow gold porphyry target, and the Cliff copper-gold porphyry target.

The total Project area covers 145km2 and is well situated only eight kilometres due west of Highway 37 (and the Burrage airstrip), and 38 kilometres north of the terminus of the new Northwest Transmission Line transfer station at Bob Quinn (due for completion in 2014). The region is known to host several world class gold and copper-gold deposits (including Galore Creek and Shaft Creek), and the Project area includes numerous prospective gold, gold-copper, and copper-gold porphyry and epithermal gold targets.

Main Target

The Main Target is a gold-copper porphyry located in the southeastern portion of the Project. Limited, relatively shallow drilling was completed in 2011 by Paget, with initial results returning 0.35 g/t gold and 0.14% copper over 180 metres in hole BC-11-03. Historical drill results include 0.75 g/t gold and 0.22% copper over 192 metres in hole 74-3, and 0.58 g/t gold and 0.13% copper over 163 metres in hole 74-2. The calculated weighted average grade of the historical drill results to date is 0.5 g/t gold and 0.2% copper. Porphyry-style mineralization has been mapped and drilled over an area of 1,250 x 400 metres and remains open in all directions.

Rainbow Target

The Rainbow Target is a gold-rich porphyry located four kilometres west of the Main Target, with mineralization hosted in sheeted and banded quartz veinlets. The banded veins are characterized by a high gold-to-copper ratio. In 2011, Paget drilled the first-ever holes on the target, returning 0.76 g/t gold, 0.05% copper and 2 g/t silver over 91 metres, including 1.13 g/t gold, 0.07% copper and 3 g/t silver over 22 metres, starting from surface in hole RN-11-01.

Cliff Target

The Cliff Target is a copper-gold porphyry situated immediately south of the Main Target, separated by 600 metres of propylitic alteration and gossanous outcrops, indicating that the two porphyries may be connected at depth. Stockwork quartz veining is coincident with a magnetic low measuring 1,700 x 400 metres, with assays up to 0.74% copper and 0.15 g/t gold. Bedrock chip sampling of a continuously-mineralized, 270 metre section averaged 0.2% copper (historic sampling in 1971).

TERMS OF THE TRANSACTION

Pursuant to the transaction, Blue Gold will:

  • Receive an exclusive right to earn a 51% undivided interest in the Project by incurring $2 million in expenditures, on a firm commitment basis, by the first anniversary of the closing date, and $4 million in expenditures (optional) by the second anniversary of the closing date. Blue Gold shall become operator upon closing of the transaction;
  • Receive an exclusive right, at Blue Gold's sole election, to earn a further 14% for an aggregate undivided interest in the Project of 65%, by incurring an additional $12-million in expenditures in the three-year period following the 51% earn-in date;
  • Receive a right of first offer for any direct or indirect sale, transfer, option, joint venture or other transaction on any of the claims outside the project area that form part of Paget Mineral's Ball Creek Project, and;
  • Upon the TSX Venture Exchange granting final approval to the transaction, acquire 9.9%, on a partially diluted basis, of Paget's outstanding shares on a private placement basis by subscribing for 6,054,212 units at a price of $0.16 per unit (a "Unit") for a total purchase price of $968,673.92. Each Unit shall be comprised of one common share and one half of one common share purchase warrant (each whole warrant, a "Warrant"). Each Warrant shall be exercisable into one common share of Paget at an exercise price of $0.30 for a period of 2 years following the closing of the transaction.
  • Blue Gold shall maintain a pre-emptive right to maintain its equity ownership position in Paget for a period of three years from the date of closing of the private placement.

The closing of the transaction is conditional upon receipt by Paget and Blue Gold of final TSX Venture Exchange approval and the private placement is conditional upon receipt by Paget of final TSX Venture Exchange approval.

All technical information contained in this release has been reviewed and approved by Dave Kuran, P. Geo., of Kuran Exploration Ltd., a consultant to Blue Gold and a "qualified person" within the meaning of National Instrument 43-101. Exploration work and drill assays completed by Paget Minerals have not been verified by Mr. Kuran, however Paget Minerals has given him no reason to doubt their authenticity. Additionally, drill results contained in this release that are historical in nature have not been verified by Blue Gold.

Further details on Blue Gold's activities can be found on the Company's website at www.bluegoldmining.com and on SEDAR at www.sedar.com.

This new release may contain forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed in the management discussion and analysis section of our interim and most recent annual financial statements or other reports and filings with the TSX Venture Exchange and applicable Canadian securities regulations. We do not assume any obligation to update any forward-looking statements.

Neither the 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.

Contact Information

  • Blue Gold Mining Inc.
    Mark O'Dea
    Chairman and CEO
    604-683-7790

    Blue Gold Mining Inc.
    Sean Tetzlaff
    Chief Financial Officer
    604-683-7790
    www.bluegoldmining.com