SOURCE: Brazil Gold Corp.

May 18, 2011 10:26 ET

Brazil Gold Enters Into Binding Letter of Intent to Acquire Iluminadora Property

BELLEVUE, WA--(Marketwire - May 18, 2011) - Brazil Gold Corp. (OTCBB: BRZG) ("Brazil Gold"), a precious metals exploration company focused on South America, today announced that it has signed a binding letter of intent (LOI) to enter into an Agreement, following an option period, to acquire 80 percent of the Iluminadora Property in the Department of Arequipa in southern Peru.

Iluminadora Project

Iluminadora is a gold-silver copper mineral system with a long history of modest production starting with evidence of pre-Colonial mine workings for gold. Subsequently, the deposit yielded gold production from high-grade veins by a German company in the 1930's and 40's, and this has been followed by additional production more recently from artesanals.

The Property is comprised of approximately 30 square kilometers, within which the Company has assay results from more than 1,300 rock samples. These data demonstrate high-grade gold veins, in addition to gold, silver and copper mineralization within hydrothermal and intrusive breccias, stockworks, and skarns. Most mineralization is hosted by multi-phase igneous rocks, intruding a package of sedimentary rocks including reactive carbonates.

Under the terms of the LOI, Brazil Gold has a 60-day exclusivity period to perform Due Diligence on the Property and to negotiate an option agreement with the Property owner. In consideration for such exclusivity, Brazil has agreed to spend $25,000 on exploration activities during the Due Diligence period. Brazil Gold and the Property owner have agreed upon key terms of the option agreement. The LOI will be filed as an attachment to the Company's Form 10-Q, which will be filed this week with the Securities and Exchange Commission.

The Company's in-house team of geological experts has performed thorough analysis and due diligence of Iluminadora's legacy exploration and production data. Due to its age, that data is not in 43-101 compliant format. If the results of its due diligence are positive, as the Company expects, it will enter into an option agreement that provides for earning up to 80 percent of the Iluminadora Property by making total cash payments of $800,000 and spending $2 million on exploration activities over the course of the next five years. If the Option is exercised by Brazil Gold, it will own an 80 percent controlling interest on the Property and will enter into a JV with the owner to develop it.

Leigh Freeman, Brazil Gold Chief Executive Officer, commented, "Iluminadora translates as 'beacon,' a light to lead the way. It is an ideal first project for Brazil Gold. It affords our team of proven mine-finders a highly prospective large mineral system to explore using our unique combination of traditional exploration methods and proprietary high-technology data processing methods. With our unique exploration model, we can efficiently explore an overlooked gap in one of the most important mineral trends in the South America.

"We are excited about the prospective value of Iluminadora, and highly confident that it is the right property to capitalize on Brazil Gold's strengths," Mr. Freeman added. "Accordingly, and having already agreed with Iluminadora's owner on key option terms, the Board of Directors has decided to pass on the Brazil Shield and Luziana projects that we had under due diligence from earlier this year -- so that we may focus all of our resources and energy on Iluminadora at this time."

Forward-Looking Statements

Statements in this news release that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Words such as "expects," "intends," "plans," "may," "could," "should," "anticipates," "likely," "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management. The statements by our officers, and other statements regarding: optimism related to the business; expanding exploration and development activities; conversion of an LOI into, and completing, a binding agreement for mineral project acquisitions; as well as the prospects, forecasts and projections for such mineral projects under LOI or owned; and other statements in this press release are forward-looking statements. Such statements are based on current expectations, estimates and projections about the Company's business. Actual results could vary materially from the description contained herein due to many risk factors that affect the industry the Company operates in and other risk factors listed from time to time in the Company's Securities and Exchange Commission (SEC) filings under "risk factors" and elsewhere. The forward-looking statements contained in this press release speak only as of the date on which they are made, and the Company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.

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