SOURCE: Colombia Goldfields Ltd.

February 16, 2006 17:03 ET

Colombia Goldfields Signs Letter of Intent to Acquire Five More Properties in the Marmato Mountain Gold District

MEDELLIN, COLOMBIA -- (MARKET WIRE) -- February 16, 2006 -- Colombia Goldfields Ltd. (OTC BB: CGDF) is pleased to announce the signing of a Letter of Intent ("LOI") with Investcol Limited, ("Investcol"), a private Belize company, whereby Colombia is to acquire an option to purchase a 100% interest in five new mining concessions located in the heart of the Marmato Mountain Gold District. This LOI would significantly expand the company's Caramanta exploration portfolio to a total of eight strategically selected properties on which local artisan miners continue even today to mine for gold.

Under the terms of a previously announced deal, (please see the company's 8K SEC filing dated September 28th, 2006 -- Colombia Goldfields Signs $3 Million Exploration Deal), Colombia entered into a definitive purchase agreement with Investcol to acquire a 100% interest in three large concessions located approximately 7 kilometers from the base of Marmato Mountain and collectively known as the Caramanta Exploration Projects. Specifically, Colombia Goldfields could earn a 100% interest in the projects by spending USD$2.99 million in exploration over a three-year period and by issuing 2,000,000 restricted shares of common stock to Investcol.

Recently the company announced the identification of two large mineralized zones on its Caramanta Exploration Projects with similar geological characteristics to those present at the company's Marmato Mountain Development Project -- where a scoping study completed by a previous operator has indicated a non-qualified gold resource of five million ounces. The company has further announced that assays from the newly discovered Caramanta zones are pending from an internationally recognized assay lab based in the United States. (Please see the company's 8k SEC filing dated January 29th, 2006 -- Caramanta Exploration Update: Colombia Goldfields Identifies Two Large Mineralized Gold Zones).

The five new concessions contemplated in today's non-binding extension to the original Investcol deal sets forth the understandings and intentions of Colombia Goldfields and Investcol with respect to this proposed transaction. Subject to satisfactory due diligence and upon completion of a definitive purchase agreement slated for March 15th, 2006, Colombia Goldfields shall pay Investcol 1,000,000 shares of restricted stock and USD$350,000. The company also agrees to pay Investcol a refundable deposit of USD$100,000 upon signing of this LOI.

Dan Hunter, CEO of Colombia Goldfields Ltd., commented on the deal as follows: "The Marmato Mountain Gold District is truly starting to live up to its reputation as one of Colombia's best places to look for large Marmato-size gold deposits. Today's LOI with Investcol positions us to acquire what we believe to be some of the more significant ground lying in the 7 kilometer zone that stretches from our Marmato Mountain Development Project to our Caramanta Exploration Projects. Based on the geological similarities between Marmato and the Caramanta concessions, we believe the entire district may be part of one continuous system of mineralization."

Mr. Hunter added, "Based on our continuing efforts to evaluate other potential acquisitions in the Marmato Mountain Gold District and the likelihood that our portfolio of Caramanta Exploration Projects will expand, the company intends to seek joint partners for the purposes of exploration and development of this vast and promising region. Such partners shall be evaluated not only for their expertise in these sorts of geological formations but also for their ability to produce the necessary funding in a dependable and efficient manner."

Investcol, the manager of the overall Caramanta Exploration Projects, has over the past 15 years acquired and developed several gold bearing deposits in Latin America. The company has successfully developed many of these projects by conducting detailed exploration and feasibility work, and subsequently raising sufficient capital to build and operate a number of large open-pit gold mines.

For the full terms of the deal, interested investors are encouraged to review the company's upcoming 8-K filing at www.sec.gov and visit our website at www.colombiagoldfields.com.

About Colombia Goldfields

Colombia Goldfields' experienced management team seeks to develop multi-million-ounce gold and silver deposits by applying modern technology to an expanding portfolio of artisan mining properties in the heart of Colombia's historic Marmato Mountain Gold District. Previously, the company acquired an option on three advanced projects located approximately 6 kilometers from the base of Marmato Mountain collectively known as the Caramanta Exploration Projects (see 8K dated September 28, 2005). The company can earn a 100% interest in the projects by spending USD$3 million over a three-year period. Subsequent to the Caramanta exploration deal, the company announced a definitive purchase agreement to acquire a 75% interest, in stages, in the Zona Alta development project located on Marmato Mountain by investing USD$20.2 million and issuing 7 million shares of its common stock (see 8K dated January 13, 2006). The company has the right to acquire the remaining 25% interest in the Marmato Mountain Development Project giving it a 100% interest; however the final purchase price to be paid is unknown at this time and will be based on a fair market valuation once a bankable feasibility study has been completed.

Disclaimer

This release contains forward-looking statements that are based on the beliefs of Colombia Goldfield's management and reflect Colombia Goldfield's current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. When used in this release, the words "estimate," "project," "believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should," "will," "can," the negative of these words, or such other variations thereon, or comparable terminology, are all intended to identify forward-looking statements. Such statements reflect the current views of Colombia Goldfields with respect to future events based on currently available information and are subject to numerous assumptions, risks and uncertainties, including, but not limited to, risks and uncertainties pertaining to development of mining properties, changes in economic conditions and other risks, uncertainties and factors, which may cause the actual results, performance, or achievement expressed or implied by such forward-looking statements to differ materially from the forward-looking statements.

On behalf of the board

Daniel Hunter -- CEO

Contact Information

  • Daniel Hunter -- CEO
    Colombia Goldfields Ltd.
    Carrera 34 No.5G. 86
    Medellin, Colombia

    B: 011-574-268-7515
    F: 011-574-268-7480
    info@colombiagoldfields.com