Goldsource Mines Inc.

TSX VENTURE : GXS
FRANKFURT : G5M


Goldsource Mines Inc.

March 06, 2014 08:00 ET

Goldsource Mines and Eagle Mountain Execute Amending Agreement with Omai Gold Mines Ltd, a Subsidiary of IAMGOLD Corporation

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 6, 2014) - As a condition to the recent business combination ("Business Combination") of Goldsource Mines Inc. (TSX VENTURE:GXS)(FRANKFURT:G5M) ("Goldsource") and Eagle Mountain Gold Corp. ("Eagle Mountain") (now a wholly owned subsidiary of Goldsource) the parties have executed an Amendment Agreement (the "Amendment Agreement") with Omai Gold Mines Ltd. ("OGML"), a 95% owned subsidiary of IAMGOLD Corporation ("IAMGOLD") with respect to the Eagle Mountain Gold Property (the "Property") in Guyana. Eagle Mountain owns 100% of the Eagle Mountain Gold Property. The Amendment Agreement makes several major changes to the terms of the existing agreement (the "Original Agreement"), dated January 16, 2012. Certain cash and/or common share payments to OGML by Eagle Mountain set out in the Original Agreement and based on effective commencement of commercial production on the Property and the granting of a Mining License by Guyana Geology and Mines Commission ("GGMC") have now been deferred and are triggered by different events as described below.

Summary of Amending Terms

  1. Following the closing of the Business Combination announced on March 3, 2014, Goldsource has agreed to issue to OGML 3,389,279 common shares subject to TSX Venture Exchange approval, resulting in OGML holding 8% of the outstanding shares of Goldsource.
  1. Goldsource shall pay OGML, $3,025,500.94 ("Initial Payment") in cash or, at Goldsource's option in common shares of Goldsource, at a price per share equal to a five percent (5%) discount to the Volume Weighted Average Price ("VWAP") of Goldsource's common shares for the twenty trading days prior to issuance, upon the earlier of:
    1. If average market price of gold is $1,400/oz. or higher upon achieving total production of 40,000 ounces of gold, then the Initial Payment is due 90 days after 40,000 ounces have been produced, otherwise payment to be made 90 days after 50,000 ounces produced from the Property, or
    2. Ninety days after having completed one year of gold production under a large scale Mining License issued by the GGMC, or
    3. Five days after the date on which the 20-day VWAP of Goldsource exceeds $0.75 per share (CAD), provided such date is not earlier than March 1, 2015.
  1. Goldsource shall pay OGML, an additional $5,000,000 ("Final Payment") in cash or at Goldsource's option, $2,500,000 cash and $2,500,000 in common shares of Goldsource, at a price per share equal to a five percent (5%) discount to the 20-day VWAP of Goldsource's common shares. The Final Payment shall be made one year after the earlier of:
    1. One year after the payment set out in (b)(1) above has been made, or
    2. After having completed one year of gold production under a large scale Mining License issued by the GGMC.

On February 28, 2014, Goldsource and Eagle Mountain completed the Business Combination jointly announced on November 26, 2013 and March 3, 2014. As a result, all of the shareholders of Eagle Mountain have become shareholders of Goldsource and Eagle Mountain has become a wholly owned subsidiary of Goldsource. Pursuant to the Business Combination, each common share of Eagle Mountain has been exchanged for 0.52763 of a common share of Goldsource. Eagle Mountain's common shares were delisted from the TSX Venture Exchange on March 5, 2014, as announced in a TSX Venture Exchange Bulletin.

Further information on Goldsource, its business and properties, the Transaction and its Directors and Officers is contained in Eagle Mountain's Information Circular dated January 24, 2014 filed on SEDAR and is available on the Goldsource website: www.goldsourcemines.com.

"Scott Drever" "Ioannis (Yannis) Tsitos"
CEO & Director President & Director

FORWARD-LOOKING STATEMENTS

This news release contains "forward-looking statements" within the meaning of Canadian securities legislation. Such forward-looking statements concern Goldsource's anticipated consolidated results and developments in Goldsource's consolidated operations in future periods, planned exploration and development of the Eagle Mountain Gold Project, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on expectations of future performance, including silver and gold production and planned work programs. Statements derived from mineral resource estimates may also constitute forward--looking statements to the extent that they involve estimates of the mineralization that will be encountered if the Eagle Mountain property is developed.

Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation: risks related to precious and base metal price fluctuations; risks related to fluctuations in the currency markets (particularly the Guyanese dollar, Canadian dollar and United States dollar); risks related to the inherently dangerous activity of mining, including conditions or events beyond control of Goldsource, and operating or technical difficulties in mineral exploration, development and mining activities; uncertainty in the Goldsource's ability to raise financing and fund the development of the Eagle Mountain Gold Project; uncertainty as to actual capital costs, operating costs, production and economic returns, and uncertainty that development activities will result in a profitable mining operation at the Eagle Mountain Gold Project; risks related to mineral resource figures being estimates based on interpretations and assumptions; risks related to governmental regulations and obtaining necessary licenses and permits; risks related to the business being subject to environmental laws and regulations; risks relating to inadequate insurance or inability to obtain insurance; risks related to potential litigation; risks related to the global economy; risks related to the Eagle Mountain Gold Project being located in Guyana, including political, economic, social and regulatory instability. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements. The forward-looking statements are based on beliefs, expectations and opinions of management on the date the statements are made. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

The information provided in this news release is not intended to be a comprehensive review of all matters and developments concerning Goldsource and its business combination with Eagle Mountain. It should be read in conjunction with all other disclosure documents of the two companies. The information contained herein is not a substitute for detailed investigation or analysis.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Goldsource Mines Inc.
    J. Scott Drever
    CEO
    +1 (604) 694-1760 / Toll Free: 1-866-691-1760 (Canada & USA)
    +1 (604) 694-1761 (FAX)

    Goldsource Mines Inc.
    Ioannis (Yannis) Tsitos
    President
    +1 (604) 694-1760 / Toll Free: 1-866-691-1760 (Canada & USA)
    +1 (604) 694-1761 (FAX)

    Goldsource Mines Inc.
    Fred Cooper
    Investor Relations
    +1 (604) 694-1760 / Toll Free: 1-866-691-1760 (Canada & USA)
    +1 (604) 694-1761 (FAX)
    info@goldsourcemines.com
    www.goldsourcemines.com