Cronus Resources Ltd.

Cronus Resources Ltd.

November 11, 2009 15:53 ET

Cronus Resources Ltd. Provides Update in Respect of Reverse Take-Over

TORONTO, ONTARIO--(Marketwire - Nov. 11, 2009) - Cronus Resources Ltd. ("Cronus")(TSX VENTURE:CZR) is pleased to announce that further to its press release of October 9, 2009, Cronus has entered into a pre-amalgamation agreement with Continental Gold Limited ("Continental"), an arm's length Bermuda based gold exploration company with a portfolio of properties in Colombia, setting forth the terms on which Cronus and Continental will amalgamate in order to further develop the properties of Cronus and Continental.

Pursuant to the agreement shareholders of Continental will receive common shares in the capital of the amalgamated entity (the "Resulting Issuer") in exchange for their shares of Continental, such that the current shareholders of Cronus will own approximately 13% of the outstanding shares of the Resulting Issuer and shareholders of Continental will own the remaining 87%. This transaction is based on a deemed valuation of the Resulting Issuer of C$75 million at a deemed value of C$1.50 per share. The holders of convertible securities of Cronus and Continental will receive equivalent securities in the Resulting Issuer adjusted, as required, to account for the changes to the share capital resulting from the transaction.

Continental is a privately held, Bermuda-based, gold exploration company formed in May 2007 that has seven 100% owned gold exploration projects on over 100,000 hectares of exploration concessions in some of the most prospective gold districts in Colombia, South America.

Continental's flagship project is Buritica in the Antioquia Department, a 2.5 hour drive from Medellin. Infrastructure is excellent with paved roads, water and power readily available. Exploration began on Buritica in late 2007 and since that time Continental has completed surface and underground mapping and sampling; geophysical studies (magnetics and IP) and 14,000 metres of diamond drilling resulting in several important high grade discoveries including the San Antonio Vein and the Veta Sur vein target.

The Buritica district is underlain by an allochthonous sequence of flysche type sediments, which are cut by tonalitic intrusions and overlain by a mafic volcanic complex. The Tertiary age Buritica sequence of high level intermediate composition intrusions is affected by propylitic through potassic alteration. A late-stage diatreme breccia cuts the higher temperature phases and is characterized by sericitization and intermediate argillic alteration. Gold mineralization is present in several geological settings including replacements at intrusive contacts, disseminations in the breccia pipe bodies and in a series of veins. It is characterized by pyrite-sphalerite with lesser galena and is associated with late, sericitic alteration.

Other properties within the Continental portfolio include two active joint-ventures with AngloGold Ashanti Limited and a group of concessions named Santander, totaling over 5,000 hectares located in the immediate vicinity of Ventana Gold Corp's La Bodega project and Greystar Resources Ltd's Angostura project.

Continental's technical team collectively has over 40 years of Colombia-specific exploration and mine development experience.

Completion of the transaction is conditional upon, among other things, receipt of all required regulatory and shareholder approvals and the completion of a financing to raise gross proceeds of at least C$10 million. Terms of this financing have not yet been determined.

Pursuant to the agreement a convertible loan of between C$2 million and C$3 million will be made available to Continental by a third party lender within 30 days. The loan will bear interest at an annual rate of prime plus 2% calculated and payable monthly. Such loan will automatically convert on closing of the transaction between Continental and Cronus into units ("Units") of the Resulting Issuer at a deemed price of $1.50 per Unit. Each Unit will consist of one common share of the Resulting Issuer and one common share purchase warrant (a "Warrant") of the Resulting Issuer. Each Warrant will be exercisable into one common share in the capital of the Resulting Issuer for a period of two years from the date of issuance and will be exercisable at a price of $1.75. In the event that the closing price of the shares of the Resulting Issuer on the market on which such shares might trade, is in excess of $3.50 for a period of 20 consecutive trading days at any time after the issuance of the Warrants, the Resulting Issuer may, at its option, accelerate the expiry date of the Warrants by giving notice to the holders thereof and in such case the Warrants will expire at 4:00 p.m. (Toronto time) on the date which is the earlier of: (i) 30th day after the date on which such notice is given by the Resulting Issuer and (ii) the two year anniversary of the issuance of the Warrants.

It is anticipated that Ari Sussman will be the Chief Executive Officer of the Resulting Issuer and a member of the board of directors. The Resulting Issuer will have a board of directors comprised of seven members. In addition to Mr. Sussman, one member will be a nominee of Cronus. Continental will choose two nominees, and the remaining three nominees will be jointly agreed upon.

Completion of the transaction is subject to a number of conditions, including Exchange acceptance and shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the transaction, any information released or received with respect to the reverse take-over may not be accurate or complete and should not be relied upon. Trading in the securities of Cronus should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Continental's Vice President of Exploration, Stuart Moller, P.Geo., is a "qualified person" under National Instrument 43-101 and has reviewed the technical information contained in this press release.

About Cronus:

Cronus Resources Ltd. is a publicly traded exploration company guided by an experienced management team with proven track records of financial, business and technical success. With a focus on the acquisition, exploration and development of mineral projects in Latin America, the Company has consolidated a large land package surrounding the historical high-grade San Juan Mine in Baja, Mexico.

Except for historical information, this press release contains forward-looking statements, which reflect Coronus' current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, changing market conditions, and other risks detailed from time-to-time in the Company's ongoing filings. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in this press release might not occur.

Neither 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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