VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 21, 2013) - Duncastle Gold Corp. ("Duncastle") (TSX VENTURE:DUN)(FRANKFURT:5D3) announced today that it has signed a Letter Agreement (the "Agreement") with Armex Mining Corp ("Armex") whereby Duncastle intends to sell 100% of its interest in the Yankee-Dundee Project in Southeast British Columbia to Armex in exchange for advance royalty payments, royalty payments, and production payments.
The Yankee-Dundee Project includes numerous past-producing, high-grade mines including the two largest mines in the Ymir Camp, being the Yankee Girl and the Ymir mines. The Ymir camp produced 883,000 tonnes of ore at an average grade of 10 g/t gold and 60 g/t silver for a gross total production value of over $500 million at today's prices according to historical government records, ranking it as the largest silver producing camp in the British Commonwealth for a period during the 1930s. Duncastle consolidated most of the Ymir camp and completed numerous drill programs, totaling over 7,700 meters in 48 holes and identifying a high-grade extension of the Yankee Girl mine that is near existing mine workings. Duncastle personnel inspected some of the mine workings in 2006 and found them to be in very good condition. Armex plans to use these workings as a basis for underground exploration and mining activities.
Terms of the Agreement with Armex include the following:
- Grant a 2.5% NSR royalty to Duncastle on production from the mine, with Armex holding the right to repurchase the royalty at any time on the basis of $1,000,000 for each 1% NSR;
- Pay Duncastle advance royalty payments as follows:
- $50,000 on or before February 28, 2013, failing which Duncastle will receive 500,000 common shares of a publicly listed company to be identified by Armex ("Pubco");
- $50,000 18 months after a notice of work (permit) is granted; and
- $50,000 on the anniversary of the second payment and annually thereafter until the commencement of commercial production.
- Advance royalty payments under 2b) and 2c) that are not made within 60 days of their respective due dates can be completed by issuing the equivalent number of shares in Pubco to Duncastle, calculated at the prevailing market price at the time of issue.
- Pay Duncastle production and additional payments as follows:
- $250,000 upon the commencement of commercial production;
- $250,000 upon the first anniversary of commencement of commercial production; and
- additional production payments aggregating $1,000,000 payable from 30% of net revenues as defined in the Agreement;
- Armex has the right to satisfy the production and additional payments by paying the aggregate sum of $1,250,000 any time during the first year of commercial production.
- Armex shall assume all of Duncastle's obligations per the existing option agreement between Duncastle and BGM Diversified Energy for those claims subject to that agreement.
All share issuances contemplated by the Agreement are subject to TSX and regulatory approval.
Duncastle President Michael Rowley reported, "We are very pleased to have vended the project to Armex, who have the skill set to advance the project to production, in exchange for a potentially healthy return on our investment in the historic Ymir Camp. The advance royalty payments will make a very real difference to our budget in the short term, and the larger payments from potential production could provide cash flow that is significant to our operating needs."
About Duncastle Gold
Duncastle Gold Corp. is a Vancouver-based gold exploration company with 100% ownership potential on over 510 square kilometers of projects in Ontario and British Columbia, Canada. In addition to three newly acquired gold projects in Ontario and the past-producing Yankee-Dundee Mine in southeast BC, Duncastle controls the highly prospective polymetallic Porphyry Creek project in northwest BC.
As part of the Manex Resource Group, Duncastle benefits from shared expertise in corporate finance, public company administration, investor relations, and technical and geological services provided for seven public companies active in North America. Since its formation in 1997, the Manex Group companies have raised over $350 million in exploration financing.
Rob Macdonald, (P.Geo.), is the Qualified Person responsible for reviewing the technical results in this release.
On behalf of the Board of Directors,
Michael Rowley, President, Director, Duncastle Gold Corp.
For further information, please visit the company's website at duncastlegoldcorp.com.
This News Release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general economic conditions, interest rates, commodity markets, regulatory and governmental approvals for the company's projects, and the availability of financing for the company's development projects on reasonable terms. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, the timing and receipt of government and regulatory approvals, and continued availability of capital and financing and general economic, market or business conditions. Duncastle Gold Corp. does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.
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.