Castle Gold Corporation
TSX VENTURE : CSG

Castle Gold Corporation

March 02, 2009 09:25 ET

Castle Gold M&A Committee Update and Shareholder Rights Plan

TORONTO, ONTARIO--(Marketwire - March 2, 2009) - CASTLE GOLD CORP. ("Castle Gold", "the Company") (TSX VENTURE:CSG) is pleased to provide an update on the Company's M&A initiatives. On September 25th, 2008 the Board of Directors of Castle Gold ("Board") announced formation of a Merger and Acquisitions Advisory Committee which since has been reconstituted as a special committee of the Board ("M&A Committee"). The M&A Committee's mandate is to conduct a Strategic Alternative Review ("SAR"), to review the terms of any possible transaction and to make recommendations to the Board with respect to any strategic transaction. The Board of Castle Gold has also retained Gryphon Partners as its financial advisor to work with the M&A Committee in advancement of the SAR. The M&A team have been actively engaged in the advancement of the SAR process. This effort will be further enhanced through the addition of Gryphon Partners.

The SAR will assess various alternatives available to the company, including but not limited to, mergers, acquisitions, strategic alliances, and/or other corporate combinations to maximize shareholder value. The ideal criteria for M&A Candidates are:

- Excellent mining and management team;

- Gold producer with annual production ranging from of 50,000 to 250,000+ ounces based in the America's (ideally Mexico) with the potential for expansion;

- An organic growth strategy;

- An acquisition growth strategy; and

- Compelling valuation metrics.

James Mark Plaxton, Chairman of the Board and M&A Committee of Castle Gold Corp., Comments on Castle Gold's approach to an industry that is ripe for consolidation: "The Board realises that an accretive strategic transaction would allow Castle Gold to advance its organic growth strategy in parallel to another company's providing Shareholders of both Companies numerous potential benefits: enhanced gold production (e.g. reaching critical levels of 100,000, 200,000, or 300,000 Oz's p.a.), increase in mineral reserves & resources, diversification of assets, enhanced and expanded mine operations/project development team, potential for increased institutional investor appeal, potential for graduated exchange listing, potential for marginable shares, potential for increased research coverage, potential for reduced cost of capital, potential for increased share trading liquidity, potential for theoretical multiple expansion, and early mover advantage (potentially generating strong relative paper potentially permitting aggressive asset and/or company acquisitions)."

Shareholder Rights Plan Agreement

Effective today, the Board of Directors has implemented a Shareholder Rights Plan Agreement.

The Board of Directors and management believe that given the valuation gap that exists between the Company and many of its peers and in the context of the volatility in share prices in the equity markets over the recent months, it was in the interests of shareholders to ensure that in the event of a future take-over bid for the Company's outstanding common shares, the Rights Plan would provide a mechanism to ensure that shareholders have adequate time to properly evaluate and assess the bid without facing undue pressure or coercion. The Rights Plan also provides the Board with additional time to consider any take-over bid and, if applicable, to explore alternative transactions in order to maximize shareholder value.

The TSX has accepted notice of the Rights Plan, subject to, among other conditions, confirmation of the Rights Plan by the Company's shareholders within six months of the Rights Plan's implementation. The Company intends to offer shareholder's the ability to vote on the transaction at the upcoming Annual General Meeting, currently being planned to be held on an as yet identified date in June 2009. Should the Company receive a take-over bid that failed to meet the Permitted Bid requirements of the Plan, shareholders would have the ability to vote on the Plan which would take immediate effect should a take-over bid occur.

The Rights issued under the Rights Plan will become exercisable only if a person, together with its affiliates, associates and joint actors acquires or announces the intention to acquire beneficial ownership of Castle Gold Corporation's common shares which, when aggregated with its current holdings, total 20% or more of the Company's outstanding common shares, other than a "Permitted Bid" (as defined in the Rights Plan).

In the event a take-over bid does not meet the Permitted Bid requirements of the Rights Plan, the rights issued under the plan will entitle shareholders, other than any shareholder or shareholders involved in the take-over bid, to purchase additional common shares of the Company at a significant discount to the market price of the common shares at that time. The board of directors is not currently aware of any pending or proposed take-over bid for the Company.

Resignation of Director

Mr. Richard Adams has tendered his resignation as a director of the Company to be able to devote more time to his personal and professional commitments and is transitioning into a less involved consulting role with the Company. Mr. Adams will remain with Castle Gold as a consultant providing continuity during the handover of his responsibility as Audit Committee Chairman to Mr. Milton Baehr and to assist in other matters as requested by the Board and Management of Castle Gold.

The Board of Directors would like to thank Mr. Adams for the valuable contributions he made during his lengthy tenure as a Director of the Company. Mr. Adams was a member of the management and boards of both Aurogin Resources Ltd. and Morgain Mineral Inc., respectively, prior to their amalgamation to form Castle Gold. Mr. Adams assisted in the design, financing, permitting, construction, and operation of both of the Company's two producing gold mines and more recently with the corporate restructuring of Castle Gold.

We thank Mr. Adams for all of his very significant contributions over the years which helped form today's Castle Gold and both the Board and Management appreciate that he is remaining with the Company, albeit in a less involved capacity, considering his current personal and professional commitments.

About Castle Gold

Castle Gold Corporation is a growth oriented gold producer with projects focused in the America's. The Company owns a 100% interest in the El Castillo gold mine in Mexico and a 50% interest in the El Sastre gold mine in Guatemala. Castle Gold is also advancing exploration and development work at its La Fortuna gold-silver-copper project in Mexico and at its El Sastre and El Arenal project in Guatemala.



TSX-V Trading Symbol: CSG
Total Shares Outstanding: 75.3MM
Fully Diluted: 81.8MM
52-Week Trading Range: C$0.15 - $0.63


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