Grenville Gold Corporation

Grenville Gold Corporation

October 19, 2005 17:52 ET

Grenville Announces Sale of Control Position

TORONTO, ONTARIO--(CCNMatthews - Oct. 19, 2005) - Grenville Gold Corporation ("Grenville") (TSX VENTURE:GVG) announces that it has been advised that on October 19, 2005, Mr. Terry Butchart, acting on behalf of a group of investors (the "Investors"), has conditionally purchased, with a group of investors, 5,300,000 common shares of Grenville at a price of $0.10 per share through private share agreements with John F. O'Donnell, a director of Grenville, and Mr. O'Donnell's holding company, Blue Stack Capital Corp. ("Blue Stack") (the "Transaction"). This Transaction will occur in five (5) tranches or closings. The purchase represents 64.9% of the 8,164,382 issued and outstanding common shares of Grenville. Mr. Butchart will be purchasing 645,750 common shares for his own account and as a result will own 7.9% of Grenville's issued and outstanding shares. Mr. Butchart has advised that, to his knowledge, following completion of the Transaction, no shareholder will own, directly or indirectly, or exercise control or direction over more then 8% of the issued and outstanding shares of Grenville. Mr. Butchart purchased these securities for investment purposes and may increase or reduce his investment in Grenville according to market conditions or other relevant factors. The Transaction is conditional upon receipt of all necessary corporate, regulatory and TSX Venture Exchange approvals.

The completion of this transaction will result in Mr. O'Donnell no longer having control of Grenville which he acquired in conjunction with Blue Stack through private share purchases on August 31, 2005. Mr. Butchart and the Investors have agreed to pay Mr. O'Donnell a fee of $45,000 upon completion of the second closing to compensate him for his time, effort and expenses in concluding the Transaction. It should be noted that this equates to approximately one cent ($0.01) per share being sold. Mr. O'Donnell has agreed to a debt conversion of Grenville's debt owing to him of approximately $150,000. The conversion price to common shares will be set in accordance with TSX Venture Exchange Policies. Mr. O'Donnell has also agreed to grant an option to Mr. Butchart and the Investors or their nominees to acquire any or all of the common shares created by way of the debt conversion for a period of one year at a price per share equivalent to the conversion price.

The timing and structure of the Transaction will have 4,100,000 of the common shares acquired over four (4) closings over a period of up to nine (9) months and is subject to the expiration of a four (4) month hold period with respect to some of the shares. These shares will be held in escrow pending each respective closing. The remaining 1,200,000 common shares (the "Contested Shares") are the subject of a legal action (the "Legal Action") commenced in the Supreme Court of British Columbia by a third party claiming entitlement to the Contested Shares. The completion of Mr. Butchart's and the Investors' purchase of the Contested Shares will take place on or before seven (7) days following the discontinuance or dismissal and related appeals of the Legal Action and shall be completed, if and only if, the Contested Shares can be transferred free and clear of the claims which are subject to the Legal Action. If Mr. Butchart and the Investors do not acquire the Contested Shares, the purchase of the 4,100,000 common shares will represent 50.2% of the issued and outstanding shares of Grenville. Grenville can not comment on the likelihood or the timing of the success or dismissal of the Legal Action at this time.

It is a condition of the Transaction that, concurrent with the first closing of the Transaction, Grenville will create a subsidiary ("Subco") into which Grenville will transfer and assign all of its interest in the Parkman Diamond project. In exchange, the Subco will issue 8,164,382 common shares. Grenville will retain 5,442,922 (66.7%) of the Subco common shares and the remaining 2,721,460 Subco common shares will be distributed to Grenville's existing shareholders as a dividend-in-specie or return of stated or paid up capital. This dividend will be distributed proportional to the holdings of the existing Grenville shareholders as at the close of business on the trading day prior to the first closing. As previously disclosed, Grenville's private arm's length joint venture partner (the "JV Partner") has earned a 50% working interest in the diamond portion of Grenville's interest in the Parkman Property. Grenville will also fund the Subco in an amount of

$50,000 that represents Grenville's 50% share of a proposed $100,000 work program which will consist primarily of drilling possible kimberlite targets (please refer to Grenville's June 14, 2005 announcement for a summary of the Parkman Property project). The JV Partner has already deposited its $50,000 share of the program in trust. Further, until the conclusion of the above mentioned Legal Action, 400,000 of the Subco common shares will be held in escrow representing the allocation of Subco common shares relating to the Contested Shares and will be ultimately distributed to either Mr. Butchart and the Investors or, if the owners of the Contested Shares lose the Legal Action, to the third party who launched the action.

At the initial close of the Transaction, Mr. Timothy J. Beesley will resign as President of Grenville to become President of Subco and Mr. Vern Schwarz will resign from the Board of Directors. Mr. Brad Kitchen will become President of Grenville and fill Mr. Schwarz's vacancy on the Board. Mr. Kitchen's experience and recent success in advising small to medium sized companies on corporate finance issues should provide a strong financial base to assist Grenville realize its operating potential. Mr. Kitchen graduated with an MBA from McGill University in Montreal, Quebec in June of 1987. Prior to receiving his MBA, Mr. Kitchen obtained a B.Ap.Sc. (Civil Engineering) from the University of British Columbia. After graduating from McGill University, Mr. Kitchen became a financial product oriented Investment Banker where he was employed in Toronto, Ontario over an eleven-year period as a Vice-President and Director at CIBC World Markets (formerly CIBC Wood Gundy Securities Inc.) and TD Securities Inc. For the past eight years, Mr. Kitchen has been a Corporate Finance Consultant in Vancouver, British Columbia, Canada. Upon completion of the second closing, two of the remaining current directors will resign and be replaced by Mr. Butchart's and the Investors' nominees until the next Annual General Meeting of Grenville. One of the remaining two current directors will resign on each of the third and fourth closings.

The completion of the above Transaction and related agreements is conditional upon the fulfillment of certain conditions and the receipt of all necessary corporate, regulatory and TSX Venture Exchange approvals.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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