Harmony Gold Corp.

Harmony Gold Corp.

April 07, 2011 13:35 ET

Harmony Enters Into Definitive Option Agreement With ECI Exploration and Mining Inc. and Completes NI 43-101 Report on the Purisima Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 7, 2011) - Harmony Gold Corp. (TSX VENTURE:H) (the "Company") is pleased to announce it has entered into a formal option agreement with ECI Exploration and Mining Inc. ("ECI") to acquire up to a 70% interest (see news release 12-01-10) in the Purisima gold and silver project (the "Purisima Project"), located in the state of Nayarit, in west-central Mexico. ECI's Mexican subsidiary, Minera Electrum, S.A. de C.V., holds options to acquire a 100% registered and beneficial interest in the Purisima Project pursuant to three option agreements with certain property owners in Mexico (the "Underlying Owners"). The Purisima Project covers a total area of 21,515 hectares in 13 concessions including two Exploration and Transfer Promise Agreements, located 30 km north east from the city of Tepic, towards the SW border of the geological Province of Sierra Madre in west central Mexico.

Harmony may exercise the option to acquire an initial 51% undivided interest in the Purisima Project (the "First Option") by by: (a) making a One Hundred Thousand ($100,000) option payment ) within 5 business days of receipt of TSX Venture Exchange ("Exchange") approval of the Transaction (the "Acceptance Date"); (b) incurring $750,000 in exploration expenditures on the Purisima Project, a minimum of 3,000m of drilling on or before 12 months from the Acceptance Date (firm commitment), an additional $1,000,000 in exploration expenditures on or before 24 months from the Acceptance Date, a final $1,500,000 in exploration expenditures on or before 36 months from the Acceptance Date; (c) issuing 1,000,000 common shares in the capital of Harmony ("Harmony Shares") to ECI within 5 business days of the Acceptance Date, issuing 2,000,000 common shares in the capital of Harmony Shares to ECI no later than 24 months from the Acceptance Date, issuing 3,000,000 common shares in the capital of Harmony Shares to ECI no later than 36 months from the Acceptance Date. In addition, Harmony has agreed to pay all underlying property payments to the Underlying Owners.

If Harmony exercises the First Option, it shall have the 90 days in which to notify ECI of its intention to earn an additional 19% in the Purisima Project (for a total of 70% undivided interest) by completing a bankable feasibility study.

ECI shall operate and manage exploration whilst Harmony is exercising the Option terms described above and while ECI maintains at least a 50% interest in the Purisima property. ECI shall be paid a 10% management fee for this service. The parties have agreed to strike a technical committee to approve work programs and budgets on the Purisima Project, comprising one member from each party, with ECI's representative having a casting vote until Harmony exercises the First Option, following which Harmony shall have the casting vote.

Harmony has agreed to pay a Finder's fee to West Isle Ventures Ltd. in the amount of $80,250, to be paid, at the election of the finder, in cash, shares or a combination thereof.

The completion of the Transaction is subject to a number of conditions including, but not limited to, Exchange approval.

Harmony commissioned and has received a National Instrument 43-101 compliant report (the "Report") on the Purisima Project, by Dr. Owen D.W. Miller, Ph.D. dated February 28, 2011, which is being filed with the Exchange and will be posted on SEDAR once it has been cleared by the Exchange. The following is a summary of information contained in the Report.

About The Purisima Project

The Purisima Project is located 40 km on paved road northeast from the city of Tepic, towards the SW border of the geological Province of Sierra Madre in west central Mexico in the mining district of La Purísima. The Purísima district is located in a major mining region hosted in the southernmost sector of the Western Sierra Madre, towards the border of the sub province of the Serranías Sepultadas and shares many of the same tectonic-geologic features of this province. It is also very close to the Tran Mexican Volcanic Belt. There are many mineralized sites in this part of Mexico, including the Mining Region of Hostotipaquillo which is home to a series of historic places i.e. Gran Cabrera, Monte El Favor, San Pedro Analco and Cinco Minas that are notable not only for their size and production but also for their bonanza-type ore grades. Another important project in the region is the Orion project, which is currently at prefeasibility stage.

The Purisima project consists of 21,515 hectares in 13 concessions. Purisima's original discovery dates back to colonial times. Exploration and mining activities on the deposit began in the early 1900's and continued intermittently until the 1960's. Production records are incomplete, but indicate that some of the ore shipped during this period had average grades of 12.9 g/t Au and 296 g/t Ag (these grades are listed as historical figures, and do not meet 43-101 standards).

Although the deposit has a long-lived history, modern exploration of the area has been minimal: Only 40% of the length exhibiting continuous exposure has been partially explored while only 15% of the length has been evaluated in detail. Minera Electrum conducted the most recent exploration program in the area in late 2008 and 2009. Minera Electrum geologists mapped the geology in the immediate area of interest at a scale of 1:2000, collected 668 surface geochemical samples, and generated targets using Aster imagery clay mapping. This work generated three exploration targets. Minera Electrum drill tested only one of these targets with five diamond drill holes totaling 1,348 meters.

The mineral deposits of the Purisima Project are low sulfidation type epithermal quartz-breccia vein deposits with bonanza grade Au-Ag mineralization. Mineralized structures occur along the length of regional scale structures and are associated genetically to the agglutinated rhyolitic dome systems in the region. The main mineralized structure in the area is the Veta Purísima (Purisima Vein) and appears as an extensive outcrop of white quartz, over 5 m wide. Minera Electrum's exploration programs in 2008-2009 and subsequent data compilation confirms a strike length of at least 1.2 km for the structure, but mapping of intermittent outcrops suggest that the vein continues for 4 km along its strike. The primary minerals within the veins include native silver, argentite, native gold, gold-bearing pyrite and traces of galena, chalcopyrite and sphalerite; secondary minerals include malachite and manganese oxides; gangue minerals include quartz, calcite mainly with some content of adularia. Epithermal veins are associated with intense silicification and potassic alteration, moderate argillization and oxidation of the wallrock.

The mineralized shoots in the Veta Purisima zone coincide with areas of structural dilatation. The 2008 drilling on the gold-silver mineralized shoot has demonstrated a strike length of at more than 250 m, and a possible overall strike length of 500 meters in the shoot's main part. True widths of the vein as indicated from the drilling are as much as 14.5 meters. Current drilling indicates that thickness of the vein may increase at-depth. This target remains open to expansion on all ends.

Potential remains for additional discovery of gold-silver mineralization at-depth and laterally along the Veta Purísima structure, particularly in the extreme western sector where assay results have reported up to 25 g/t Au in DDH-EPP-5 (step out diamond drill hole) that indicates the potential of a at-depth connection of these two mineralized areas, potentially expanding the strike length to approximately 600 meters.

Additional potential on the project includes the other targets generated by surface mapping, sampling and the interpretation of mineral alteration via Aster imagery. This work identified a number of other sub-parallel structures (i.e. Veta Agua Zarca) with alteration (alunite and illite) related to rhyolite dikes and areas of silicification suggesting epithermal mineralization similar to the known mineralized zone at Purisima.

In 2008, Minera Electrum completed a five hole diamond drilling program (1,348 meters) that tested two zones of mineralization on the first of three identified exploration targets, near the historical mine workings on the property. The mineralization in this area is characterized by an ore shoot within a mapped zone of dilation along a left-lateral regional structure. The main zone (main mineralized shoot) was tested with 4 drill holes spaced 25 to 75 meters apart. These first four holes successfully tested 300 meters of strike and 150 meters of depth below the historical Purisima Mine workings in the main zone target. The fifth drill hole tested the strike extension of the main zone target below a soil anomaly 285 meters to the southeast of the Purisima mine workings and intercepted mineralization indicating the possibility of economic mineralization along both strike and dip connecting to the main zone.

This drilling program succeeded at confirming continuity of vein-hosted gold and silver mineralization and grades both laterally and at depth consistent with that ore mined historically in mine workings within the primary target. The five holes cover an area 580 meters along strike, and 150 meters along dip of the primary vein.

Significant Gold/Silver Intersections:

Drill Hole EPP-1: This hole targeted the Purisima vein approximately 50 meters below historical mine workings, 100 meters below the surface. The mineralized intercept is 17 meters thick with an esimtated true thickness of 14 meters.

To view the table for Drill Hole EPP-1 please visit the following link: http://media3.marketwire.com/docs/EPP1.pdf

Drill Hole EPP-2: This hole is located 50 meters west along strike from EPP-1. The hole intersects the vein 150 meters below the surface. The mineralized intercept is 17 meters thick with an estimated true thickness of 14.5 meters.

To view the table for Drill Hole EPP-2 please visit the following link: http://media3.marketwire.com/docs/EPP2.pdf

Drill Hole EPP-3: The intercept of the vein in this hole is 50 meters east of the historical mine workings, and 100 meters below the surface. The mineralizaed intercept is 16.1 meters thick with an estimated true thickness of 13 meters.

To view the table for Drill Hole EPP-3 please visit the following link: http://media3.marketwire.com/docs/EPP3.pdf

Drill Hole EPP-4: This hole intersects the Purisima vein 100 meters below the surface, 50 meters east of the historical mine workings. The intercept is 13.25 meters, the true width of the zone is estimated to be 11 meters.

To view the table for Drill Hole EPP-4 please visit the following link: http://media3.marketwire.com/docs/EPP4.pdf

Drill Hole EPP-5: Hole EPP-5 was drilled to test for economic mineralization along the structure east beyond the dilational zone. This hole intersected the vein 80 meters below the surface, 350 meters to the southeast of the historical mine workings. The mineralized drill hole intercept is 2.5 meters, the true width is 2 meters.

To view the table for Drill Hole EPP-5 please visit the following link: http://media3.marketwire.com/docs/EPP5.pdf

Assays, drill logs, photos, databases for this drilling were verified during the 43-101 process. This data has been generated with appropriate procedures, has been accurately recorded and is suitable to be used for evaluation of the deposit.

Mr. William Burnett, CPG, of Yukuskokon Professional Services, LLC., is a qualified person as defined by NI 43-101, and has reviewed and approved the information contained in this release.


Craig Michael Engelsman, President

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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