SOURCE: Eastern Goldfields, Inc.

October 15, 2009 15:00 ET

Eastern Goldfields, Inc. Announces the Conversion of the AIMS Loans and Exercise of the AIMS Option

SAN DIEGO, CA--(Marketwire - October 15, 2009) - Eastern Goldfields, Inc. (PINKSHEETS: EGDD) has announced that the Company has received notice that Asian Investment Management Services Limited (AIMS) has elected to convert its existing loans into shares of the common stock of EGSA, the Company's wholly-owned subsidiary.

The conversion of the AIMS loan into the shares of EGSA is being undertaken pursuant to the loan agreement that EGSA and the Company entered into with AIMS of April 30, 2009. The AIMS loan provided the Company with funds to repay the bridging loan that the Company received from Investec Bank.

The AIMS loan, as well as an existing convertible loan provided by AIMS, is convertible within a period of 6 months on condition that the Group is listed on either the Australian Stock Exchange (ASX) or the London Alternative Investment Market (AIM). Upon conversion, AIMS will acquire 40% of EGSA. The agreement also gives AIMS an option to contribute a further US$3.7 million to the Company for an additional 6% of the outstanding common stock of EGSA.

AIMS has now exercised its option to contribute additional funds to the Company for working capital purposes in anticipation that the Company will complete the steps that will allow the restructuring of the ownership of EGSA, to obtain a listing on the Australian Stock Exchange (ASX).

The election by AIMS to convert its loans and to exercise its option is conditional upon a Sale and Purchase Agreement being signed between the Company, EGSA, and a to-be-formed Australian domiciled entity. The Company also plans to have the to-be-formed Australian entity prepare and file a registration statement with the U.S. Securities and Exchange Commission for the spinoff dividend distribution of the common stock of that entity to the stockholders of the Company. Currently, the date of the record date and the payment date for the planned dividend distribution has not been established.

In connection with these plans and on October 14, 2009, the Company filed Form 15 with the U.S. Securities and Exchange Commission to terminate its registration under Section 12(g) of the Securities Exchange Act of 1934. As a result of the Form 15 filing, the Company's Common Stock is expected to be traded on the Pinksheets Market.

"This is the first step towards the full implementation of the AIMS transaction, which is designed to recapitalise Eastern Goldfields and significantly strengthen the Group's balance sheet prior to its listing on the ASX," said Michael McChesney EGI's President and CEO.

FORWARD-LOOKING STATEMENTS

This press release contains 'forward-looking statements.' These are statements concerning plans, objectives, goals, strategies, expectations, estimates, intentions, projections, developments, future events, or performance, underlying (expressed or implied) assumptions and other statements that are other than historical facts. In some cases forward-looking statements can be identified by the use of forward-looking words such as 'believes,' 'expects,' 'may,' 'will,' 'should,' or 'anticipates,' or the negative of these words or other variations of these words or comparable words, or by discussions of plans or strategy that involve risks and uncertainties. Management wishes to caution the reader that these forward-looking statements, including, but not limited to, statements regarding the Company's plans, goals the estimates and assumptions, the planned restructuring of the Company, the plans that the Company has with respect to the spinoff dividend distribution, and the business strategy of the Company and other matters that are not historical facts are only predictions. No assurances can be given that such predictions and the estimates regarding mineral reserves, success of mining plans, the success of the financing plans or other projections will prove correct or that the anticipated future results will be achieved. Actual events or results may differ materially either because one or more predictions or assumptions, prove to be erroneous or as a result of other risks facing the company. Forward-looking statements should be read in light of the cautionary statements and risks that include, but are not limited to, the risks associated with a small company, the likelihood that the assumptions and estimates made, a decline in the price of gold, adverse labour conditions in the mining labour market in South Africa, the intense competition the company faces from others, and technological changes. Any one or more of these or other risks could cause actual results to differ materially from the future results indicated, expressed, or implied in such forward-looking statements. We undertake no obligation to update or revise any forward-looking statement to reflect events, circumstances, or new information after the date of this press release or to reflect the occurrence of unanticipated or other subsequent events.

Contact Information

  • For further information contact:
    Derrick Short
    Eastern Goldfields, Inc.
    1660 Hotel Circle North, Suite 207
    San Diego, California 92108
    TEL: 619-497-2555