Castle Mountain Mining Company Limited
TSX VENTURE : CMM
OTCQX : CTMQF

Castle Mountain Mining Company Limited

April 07, 2015 08:30 ET

Castle Mountain Announces Management and Board Changes and Concurrent Financing

TORONTO, ONTARIO--(Marketwired - April 7, 2015) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Castle Mountain Mining Company Limited ("Castle Mountain" or the "Company" (TSX VENTURE:CMM)(OTCQX:CTMQF) is pleased to announce changes to the management team and to the board of directors, effective immediately, as part of a strategic plan to unlock shareholder value. The Company also intends to complete a non-brokered offering of units ("Units") at $0.35 per Unit for aggregate gross proceeds of up to approximately $2,000,000 ("Offering").

Management Changes

Effective April 7, 2015, David Adamson joins the Company as Chief Executive Officer and as a member of its board of directors. Ian Cunningham-Dunlop joins the Company as Vice President, Exploration.

Concurrently, Fraser Buchan steps down as interim-President and Chief Executive Officer, and will no longer serve as Vice President, Corporate Development of the Company, but remains on the board of directors of the Company.

David Adamson, Ph. D., Chief Executive Officer and member of the Board of Directors

David Adamson is currently the Deputy Chairman at Rubicon Minerals Corporation ("Rubicon") and was Chief Executive Officer up until January 2013, during which time he grew the company from a market capitalization of $9 million to a peak of over $1 billion. David has extensive experience in the public markets and has raised an aggregate of over $500 million for activities ranging from exploration to development. He is the recognized co-discoverer of the significant F2 Gold deposit in Red Lake, Ontario, which is currently being developed by Rubicon.

Ian Cunningham-Dunlop, Vice President, Exploration

Ian Cunningham-Dunlop has extensive experience in successful gold exploration and development, having played a key role in 12 major gold discoveries, including the Long Canyon gold deposit in Nevada, USA (Fronteer Gold Inc., subsequently acquired by Newmont Mining and in development), the Karma Gold Project in Burkina Faso (True Gold Mining Inc., currently at feasibility stage) and significant advanced gold and copper projects in Turkey (Pilot Gold and Fronteer Gold Inc.). Ian's experience with gold deposits similar to the Castle Mountain gold deposit (i.e., low sulphide epithermal) will be invaluable to the Company.

"I am excited to be joining Castle Mountain which, in my view, represents an attractive and unique opportunity," said David Adamson. "It controls an advanced, permitted asset with a significant gold resource in a politically stable environment. Importantly, as disclosed in the Preliminary Economic Assessment, the limits of mineralization are yet to be defined. Recent, positive results point to the potential to expand gold mineralization and also include an intriguing high-grade component. I am also delighted that Ian is joining our team, which will be developing as a priority a new plan designed to build on the solid base established to date by determining the extents of gold mineralization, examining the significance of high-grade gold on the project and continuing other optimization studies. Our vision is to establish Castle Mountain as a leading North American gold developer."

Board Changes

Effective April 7, 2015, David Reid and William Cavalluzzo join the board of directors of the Company.

David Reid

David Reid, LL.B. is a senior partner with Davis LLP with over 30 years of experience in mining and securities law, including corporate finance and M&A transactions. David is recognized by Best Lawyers for Canada in 2015 in the areas of natural resources law and securities law. He has served on the board of several resource companies, including Far West Mining Ltd. (acquired for $710 million by Capstone Mining Corp. in 2011) and Rubicon.

William Cavalluzzo

William (Bill) Cavalluzzo has over 40 years of experience in the mining industry, 25 years of which have been in media relations and investor relations with both major mining companies and junior exploration companies. Most recently, Bill was Vice President-Investor Relations at Rubicon. Prior to that, he provided investor relations services to several companies, including Pangea Goldfields Limited, which was acquired by Barrick Gold Corporation in June 2000. Bill has also served as a director with Sierra Minerals Inc. and Africo Resources Limited and on the Advisory Committee of Orezone Resources Inc. Bill has gained extensive experience in marketing and capital raisings in North American and European capital markets and has been active in raising an aggregate of over $400 million for Rubicon and other companies.

David Adamson said, "David and Bill have strong track records and distinguished careers in both the mining industry and capital markets and have held prominent lead positions within a range of successful companies. I am very pleased that David and Bill have agreed to serve on the board of directors. Their combined experience and expertise will contribute to providing the new management team with invaluable advice, guidance and support."

Private Placement

The Company proposes to complete an Offering of up to 5,714,286 Units at $0.35 per Unit for aggregate gross proceeds of up to approximately $2,000,000. Each Unit will consist of one common share of Castle Mountain ("Common Share") and one half of one Common Share purchase warrant (a "Warrant"). Each Warrant will entitle the holder thereof to acquire one additional Common Share of Castle Mountain for a period of two years from the closing date of the private placement at an exercise price of $0.60 per Common Share.

As part of the Offering, the new management team and incoming board members will subscribe for an aggregate of 2,571,429 Units. In addition, up to 3,142,857 Units will be issued to certain additional subscribers identified by the Company. The proceeds from the Offering will be used to fund ongoing activities and for working capital purposes. It is anticipated that the Offering will close on or around April 17, 2015.

Stock Options

In connection with the management and board appointments, the board of directors of the Company have granted stock options in respect of an aggregate of 2,200,000 Common Shares as follows:

  • David Adamson: options to purchase up to 1,500,000 Common Shares for five years. 500,000 options at a price of $0.40 per Common Share will vest immediately; 500,000 options at a price of $0.50 per Common Share will vest if and when the Common Shares trade at or above $0.70 per Common Share, calculated on a volume weighted average price ("VWAP") basis, over a period of 60 trading days; and 500,000 options at a price of $0.60 per Common Share will vest if and when the Common Shares trade at or above $1.00 per Common Share, calculated on a VWAP basis, over a period of 60 trading days.

  • Ian Cunningham-Dunlop: options to purchase up to 300,000 Common Shares for five years at a price of $0.40 per Common Share. 100,000 options vest immediately; 100,000 options vest rateably over a one-year period starting one year from today; and the remaining 100,000 options vest rateably over a one-year period starting two years from today.

  • David Reid: options to purchase up to 200,000 Common Shares for five years at a price of $0.40 per Common Share. 100,000 options vest immediately; and 100,000 options vest one-year from today.

  • Bill Cavalluzzo: options to purchase up to 200,000 Common Shares for five years at a price of $0.40 per Common Share. 100,000 options vest immediately; and 100,000 options vest one-year from today.

Additionally, as the number of Common Shares reserved for issuance under the options is in excess of the number available under the Company's current rolling stock option plan, the Company has adopted a new fixed stock option plan to provide for the grant of the additional options. 650,000 options were granted under the Company's current rolling stock option plan and in accordance with the policies of the TSX Venture Exchange. The remaining 1,550,000 options were granted under the new fixed option plan that has been approved by the board of directors of the Company but remains subject to TSX Venture Exchange and shareholder approval. The grant of options under the new stock option plan contain provisions prohibiting their exercise until such time as the requisite shareholder and TSX Venture Exchange approval is obtained for the new stock option plan and the grant of option thereunder.

The new fixed option plan provides the Company with the ability to reserve up to 11,640,000 Common Shares for issuance upon the exercise of options, inclusive of any Common Shares reserved for issuance under the rolling stock option plan, which will represent approximately 15% of the Company's issued and outstanding Common Shares following completion of the Offering. No further grants will be made under the rolling stock option plan.

Exchange Approval

The appointment of the new management team, the Offering, the new fixed stock option plan and the grant of the options pursuant thereto are subject to a number of conditions and approvals, including the approval of the TSX Venture Exchange.

About Castle Mountain

Subject to certain obligations, Castle Mountain has 100% of the right, title and beneficial interest in and to the Castle Mountain Venture, a California general partnership, which owns the Castle Mountain property in San Bernardino County, California, (7,458 acres in total). The Castle Mountain heap leach gold mine produced over one million ounces of gold from 1992 to 2001, when mining was suspended due to low gold prices.

A National Instrument 43-101 Technical Report for the initial mineral resource estimate prepared by RPA Inc. was filed on December 11, 2013. The resource estimate is 182 Mt grading 0.6 g/t Au for 3.15 million ounces in the Indicated category and 63.7 Mt grading 0.57 g/t Au for 1.06 million ounces of gold in the Inferred category. Resources were calculated using a cut-off of 0.14 g/t gold. On June 5, 2014, the Technical Report for its Preliminary Economic Assessment, prepared by RPA Inc., was filed. Base case economics, at a gold price of $1,300/oz, show an NPV (5% discount rate) of $352 million and post-tax IRR of 20.1%. Both documents are available on SEDAR at www.sedar.com and on the Company's website at www.castlemountainmining.com.

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.

Forward-Looking Statements

Statements contained in this news release that are not historical facts are "forward-looking information" or "forward-looking statements" (collectively, "Forward-Looking Information") within the meaning of applicable Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. Forward Looking Information includes, but is not limited to, the completion of the Offering, disclosure regarding possible events, conditions or financial performance that is based on assumptions about future economic conditions and courses of action. In certain cases, Forward-Looking Information can be identified by the use of words and phrases such as "plans", "expects" or "does not expect", "is expected", budget", "scheduled", "suggest", "optimize", "estimates", "forecasts", "intends", "anticipates", "potential" or "does not anticipate", believes", "anomalous" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". In making the forward-looking statements in this news release, the Company has applied several material assumptions, including, but not limited to, that the current testing and other objectives concerning the Castle Mountain project can be achieved and that its other corporate activities will proceed as expected; that the current price and demand for gold will be sustained or will improve; that general business and economic conditions will not change in a materially adverse manner and that all necessary governmental approvals for the planned exploration on the Castle Mountain project will be obtained in a timely manner and on acceptable terms; the continuity of the price of gold and other metals, economic and political conditions and operations; and certain regulatory and shareholder approvals being obtained.

Forward-Looking Information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the Forward-Looking Information. Such risks and other factors include, among others, operations and contractual obligations; changes in exploration programs based upon results of exploration; future prices of metals; availability of third party contractors; availability of equipment; failure of equipment to operate as anticipated; accidents, effects of weather and other natural phenomena and other risks associated with the mineral exploration industry; environmental risks, including environmental matters under U.S. federal and California rules and regulations; impact of environmental remediation requirements and the terms of existing and potential consent decrees on the Company's planned exploration on the Castle Mountain project; certainty of mineral title; community relations; delays in obtaining governmental approvals or financing; fluctuations in mineral prices; the Company's dependence on one mineral project; the nature of mineral exploration and mining and the uncertain commercial viability of certain mineral deposits; the Company's lack of operating revenues; governmental regulations and the ability to obtain necessary licenses and permits; risks related to mineral properties being subject to prior unregistered agreements, transfers or claims and other defects in title; currency fluctuations; changes in environmental laws and regulations and changes in the application of standards pursuant to existing laws and regulations which may increase costs of doing business and restrict operations; risks related to dependence on key personnel; and estimates used in financial statements proving to be incorrect; as well as those factors discussed in the Company's public disclosure record. Although the Company has attempted to identify important factors that could affect the Company and may cause actual actions, events or results to differ materially from those described in Forward-Looking Information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. Except as required by law, the Company does not assume any obligation to release publicly any revisions to Forward-Looking Information contained in this news release to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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