Carpathian Gold Inc.

Carpathian Gold Inc.

March 13, 2008 12:17 ET

Carpathian Gold Provides Update on the Acquisition of the Riacho Dos Machados Gold Project, Brazil

TORONTO, ONTARIO--(Marketwire - March 13, 2008) - Carpathian Gold Inc. (TSX:CPN) ("Carpathian" or the "Corporation") wishes to announce that it has concluded a definitive purchase agreement with Zoneplan Limited ("Zoneplan") and Repalla Inc ("Repalla"), as sole beneficial owners of Melbourne Ventures Fund LLC ("Melbourne"), for the acquisition of the Riachos dos Machados gold project ("RDM project") in Brazil, as previously announced on December 7, 2007.

As consideration for the purchase of the RDM project, the Corporation will issue in the aggregate, 75 million Common Shares to Zoneplan and Repalla. The Corporation will also issue 25 million special warrants that will be convertible into an additional 25 million Common Shares subject to additional NI 43-101 compliant resources being defined that total 1.0 million gold ounces, as outlined in our press release of December 7, 2007.

The Corporation's Independent Special Committee which was established to review the transaction has obtained a favourable opinion from Paradigm Capital Inc ("Paradigm") with regard to the valuation and fairness of the transaction and related consideration. According to the Paradigm opinion, dated March 12, 2008 (which is available on SEDAR in its entirety and should be read as a whole) they consider the Fair Market Value of the RDM project to be in the range of $77 to $85 million. Paradigm believes that Carpathian is acquiring the RDM project at a price that ranges from an 11% to 20% discount to its Fair Market Value. In considering the fairness of the Transaction, from a financial point of view, to the Carpathian Shareholders (other than the Vendors), Paradigm principally relied upon the following:

a) a comparison of the Fair Market Values of the RDM Project and Carpathian Gold;

b) terms of the Transaction as described in the Member's Interest Purchase Agreement dated March 12, 2008;

c) a review of Carpathian Gold's share price since the initial announcement of the Transaction;

d) consideration of the additional shares to be issued to the Vendors in connection achieving NI 43-101 Mineral Resource estimate thresholds;

e) the implications of the Vendors becoming a large shareholder of Carpathian Gold;

f) discussions with Carpathian Gold management regarding the development of the RDM Project; and

g) such other information, investigation and analysis considered necessary or appropriate in the circumstances.

Based upon and subject to the foregoing and such other factors as Paradigm considered relevant, Paradigm is of the opinion that, as of the date hereof, the Transaction is fair, from a financial point of view, to the Shareholders of Carpathian (other than the Vendors).

As Zoneplan and parties related thereto beneficially own, as a group, approximately 16% of Carpathian's issued and outstanding common shares, conclusion of the transaction will, in accordance with securities regulatory requirements, be subject to approval by the majority of the Corporation's minority shareholders at a Special Meeting of Shareholders to be held on April 14, 2008. In addition, the transaction is also subject to TSX approval.

It is anticipated that a shareholder circular, detailing all particulars relating to the transaction and incorporating the full text of Paradigm's Valuation and Fairness Opinion, as well as a summary of a recently completed NI 43-101 Technical Report (dated February 29, 2008) on the RDM Project will be sent to all shareholders on or about March 24th. Documentation including the full text of the NI 43-101 Technical Report, on the RDM Project, the Paradigm Valuation and Opinion Letter to The Independent Committee to the Board of Directors, as well as the definitive Members Purchase Agreement will all be available on

The benefits of the Proposed Acquisition to the Corporation are as follows:

- Addition of a second, strong exploration/development platform: Located in the State of Minas Gerais, Brazil, the RDM project is situated on a favourable greenstone belt which hosts gold mineralization associated with shear-zones known to extend regionally for tens of kilometres within similar settings.

- Permitted brownfield project with historic gold production: A high grade gold oxide deposit was previously mined from an open-pit by Companhia Vale do Rio Doce ("CVRD", now Vale) between 1989 and 1997. The historic grade of this oxide zone was 1.89 g Au/t. The surface oxide zone has not been fully exploited and is known to extend immediately to the south of the past mining activities for at least an additional 500 metres. Similar soil geochemical anomalies are known to extend along a 10 kilometre shear zone to the north and have not been evaluated.

- Historical gold resource: Although not yet NI 43-101 compliant, there is a historical resource of 3.77 million tons of gold mineralization at an estimated grade of 4.61 g Au/t calculated by CVRD in 1996, based on CVRD's analysis and experience in mining the project. This is a historical resource estimate only and is indicative of the presence of possible significant gold mineralization but is not being treated by the Corporation as a current mineral resource and as such should not be relied upon. It lies immediately below the previously mined oxide zone with metallurgical test work indicating a recovery rate of +90%. The metallurgical work while considered reliant was not carried out by the Corporation and as such should not be relied upon. This zone was not exploited by CVRD, nor was its full extent defined. It is open at depth as well as along strike and the upside potential is considered good as outlined in the recently completed NI 43-101 Technical Report, dated February 29, 2008, that will be filed on SEDAR. Additional exploration potential from two previously identified nearby targets also remain to be tested and are outlined in detail in the NI 43-101 Technical Report.

- Existing infrastructure: Development of the RDM project will benefit from the extensive existing infrastructure, including: buildings, roads, power, water access and ownership of the surface rights.

-Geographic diversification of the project portfolio: The project is located in a well known, mining friendly area in the state of Minas Gerais, Brazil.

- Increased gold exposure: The combination of this project with Carpathian's existing Rovina License project in Romania provides the Corporation with excellent upside potential from two very large land portfolios with known gold endowment, which enhance the profile of the Corporation.

- Near-term gold production potential: Management believes that it may be possible to commence gold production from the RDM project within the next two years. The proposed acquisition is consistent with the Corporations strategic direction to develop a quality "project pipeline" part of which can generate near-term cash flow to help fund longer term development and exploration and further enhance shareholder value. Gold production from the RDM project is expected from the deepening of the open pit to extract the higher grade un-oxidized mineralization followed by an underground operation either utilizing an existing exploration shaft or ramp access below the open pit.

Mr. Titaro is the qualified person (as defined in NI 43-101) and is responsible for preparing the information contained in this news release.

Forward-Looking Statements: This press release includes certain statements that may be deemed "forward-looking statements". Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" or "will" occur. All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Corporation expects, are forward-looking statements. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurance that forward-looking statements will prove to be accurate, as results and future events could differ materially from those anticipated statements. The Corporation undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.

The TSX does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Carpathian Gold Inc.
    Dino Titaro
    President & CEO
    (416) 368-7744
    (416) 260-2243 (FAX)
    Carpathian Gold Inc.
    Mike O'Brien
    Manager Investor Relations
    (416) 368-7744
    (416) 260-2243 (FAX)
    Eric Leboeuf
    Investor Relations, Montreal
    (514) 341-0408 or 1-866-460-0408
    (514) 341-1527 (FAX)