Creso Exploration Inc.

Creso Exploration Inc.

September 21, 2010 11:48 ET

Creso Exploration Signs $1.5 Million Private Placement Financing With Franco-Nevada

MONTREAL, QUEBEC--(Marketwire - Sept. 21, 2010) - Creso Exploration Inc. ("Creso" or the "Corporation") (TSX VENTURE:CXT) (FRANKFURT:C3X) is very pleased to announce the signing of an agreement to complete a private placement ("Private Placement") with Franco-Nevada Corporation ("Franco") (TSX: FNV). Franco will purchase 1,415,094 common shares of Creso at a price of $1.06 in a non-brokered private placement for an amount of $1,500,000. The purchase price was set at a 15% premium over the 20-day volume weighted-average market price prior to this announcement.

Pierre Gauthier, Creso Chairman, stated that "he and the entire Creso Board of Directors are particularly encouraged by Franco-Nevada's decision to invest at this stage in Creso's development, as it reflects a high level of confidence in the Corporation's Shining Tree Property ("Property") and in Creso management."

As part of the private placement, Franco is granted an option ("Option") to purchase a perpetual 2% Net Smelter Return ("NSR") royalty on gold and other minerals produced from the Property. The Option may be exercised within any or all of three North-South ("N-S") oriented sectors that have been determined to constitute the Property. All current Creso property holdings in the Shining Tree mining camp of Northern Ontario, or any future properties either contiguous with the current holdings or within a 20 km radius of the Minto mine pit, will be considered part of the Property, and will be considered to fall within one of the three Property sectors currently defined, or by extension of the N-S lines that define them. 

The Option may be exercised within sixty days following the date on which (i) a decision is made to construct a mine by Creso and (ii) the planned mine is fully financed either with cash on hand or a firm commitment of bank financing.

The Option may be exercised at a purchase price equal to the after-tax net present value of the royalty revenue calculated using a 6.5% discount rate applied to the base case model assumptions in the feasibility study used to make the decision to construct and finance the mine. Franco has the right to exercise its Option for any mine developed within the Shining Tree area, and subsequently for any mine developed in a different sector.

Creso also wishes to announce that it has repurchased the right of first refusal ("Right of First Refusal") previously granted to Anglo Pacific Group plc ("APG") (LSE: APF.L and TSX: APY), in respect of the grant by the Corporation of any royalties on certain properties in consideration for the issuance to APG of 500,000 common shares of Creso. The Right of First Refusal had been granted to APG as part of a convertible debenture instrument issued in 2007. The repurchase was necessary to facilitate the above mentioned Private Placement and the grant of Option with Franco-Nevada. At present, the outstanding principal amount of $675,000 debenture held by APG is convertible at APG's option into 1,350,000 common shares of the Corporation, or a 2% NSR royalty on the Duggan property located in the Shining Tree area. 

All securities to be issued to Franco and APG are subject to regulatory approval and to a four month hold period from the date of such approval.

About Creso

The Corporation's principal mining exploration holdings are located in the Shining Tree mining camp of Northern Ontario within 100 km of the Timmins and Kirkland mining camps, and additional interests are held in base metal properties in Guatemala. 

About Franco-Nevada Corporation

Franco-Nevada Corporation (TSX: FNV.TO) is a gold-focused royalty company with additional interests in platinum group metals, oil and gas, and other assets. Its portfolio of high-margin cash flow producing assets is located principally in the United States, Canada, and Mexico. The Company also holds a pipeline of potential future cash flowing assets that are being developed, permitted or explored.

This release contains forward-looking statements that are based on beliefs of its management as well as assumptions made by and information currently available to management of the Company. When used in this release, the words "estimate", "believe", "anticipate", "intend", "expect", "plan", "may", "should", "will", and the negative thereof or other variations thereon or comparable terminology are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events based on currently available information and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in this release. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information in this press release is made as of the date of this press release, and Creso disclaims any intention or obligation to update or revise such information, except as required by applicable law.

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.

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