Harmony Gold Corp.
TSX VENTURE : H

Harmony Gold Corp.

October 01, 2010 10:46 ET

Harmony Gold Corp. Announces Signing of Option Agreement with Scorpio Gold (Canada) Corporation and Appointment of Directors

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 1, 2010) - Harmony Gold Corp. (TSX VENTURE:H) (the "Company") announces that it has entered into a binding preliminary agreement (the "Agreement"), subject to regulatory approval, with Scorpio Gold (Canada) Corporation ("Scorpio") to acquire a 100% interest in and to Scorpio's Caribou Gold Property located in Halifax County, Nova Scotia and to acquire certain equipment and other mining assets (the "Other Assets") held by Scorpio located on the Caribou Gold Property (the "Option"). Scorpio holds an option acquire a 100% registered and beneficial interest in the Caribou Gold Property, comprised of 16 contiguous mineral claims covering approximately 256 hectares, subject to a net smelter return royalty of 2.5% held by the underlying owner John Logan Enterprises Ltd.

Terms of the Option

In consideration for the Company's acquisition of the Option (the "Transaction"), the Company paid Scorpio Twenty Five Thousand Dollars ($25,000), on the execution of the Agreement. In addition, Harmony is required to pay Scorpio a further Two Hundred and Twenty Five Thousand Dollars ($225,000) within 5 business days of receipt of TSX Venture Exchange ("Exchange") approval of the Transaction (the "Acceptance Date") and an additional Two Hundred and Fifty Thousand Dollars ($250,000) within twelve months from the Acceptance Date.

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

Harmony may exercise the Option by: (a) making the option payments described above; (b) incurring not less than an aggregate sum of $1,000,000 in exploration and development costs and expenditures on the Caribou Gold Property no later than 12 months from the Acceptance Date, of which not less than $800,000 must be incurred prior to March 1, 2011; (c) issuing 3,000,000 common shares in the capital of Harmony ("Harmony Shares") to Scorpio within 5 business days of the Acceptance Date; and (c) paying all claim renewals or advance royalty payments to John Logan Enterprises Ltd. in respect of the net smelter return royalty, in particular, a $250,000 advance royalty payment to be made by April 25, 2011.

Harmony has also agreed to: (a) issue to Scorpio an additional 1,000,000 common shares in the capital of Harmony for every 100,000 ounces of additional gold resources defined under National Instrument 43-101 above a base of 100,000 ounces of gold resources; (b) either issue to Scorpio an additional 500,000 Harmony Shares once a mine located on the Caribou Gold Property produces 30,000 ounces of gold or pay to Scorpio a cash amount equivalent to 500,000 Harmony Shares, the value of such 500,000 Harmony Shares to be determined based on the market price of Harmony Shares on the day notice of production of 30,000 ounces of gold is received and accepted by Scorpio; (c) either issue to Scorpio an additional 750,000 Harmony Shares once a mine located on the Caribou Gold Property produces 60,000 ounces of gold or pay to Scorpio an amount equivalent to 750,000 Harmony Shares, the value of such 750,000 Harmony Shares to be determined based on the market price of the Harmony Shares on the day notice of production of 60,000 ounces of gold is received and accepted by Scorpio; and (d) either issue to Scorpio an additional 1,000,000 Harmony Shares once a mine located on the Caribou Gold Property produces 150,000 ounces of gold or pay to Scorpio an amount equivalent to 1,000,000 Harmony Shares, the value of such 1,000,000 Harmony Shares to be determined based on the market price of Harmony Shares on the day notice of production of 150,000 ounces of gold is received and accepted by Scorpio.

The Caribou Gold Property

The Caribou Gold Property is located 80 kilometers northwest of the City of Halifax, Halifax County, Nova Scotia. The Caribou Gold Property is comprised of 16 contiguous claims covering approximately 256 hectares.

Underground production from the Caribou district was first recorded in 1869. Since then approximately 108,250 ounces of historical gold production has been documented from the property in production records and reports. Mining and milling records indicate gold grades as high as 68 g/t locally, and an average mined grade of approximately 12 g/t. These estimates are from historical records, do not meet NI 43-101 standards, and are included here for informational purposes only.

Lode gold mineralization is interpreted to be controlled by a north-northwest striking low angle axial structure that cuts the 35km-long Caribou-Cochrane Hill Anticline. Gold deposits are characterized by pipe shaped deposits of mineralization within bedding parallel quartz veins and quartz stockwork zones and have been described as saddle reefs.

W.G. Shaw and Associates Ltd. completed an independent National Instrument 43-101 compliant Resource Estimation on the Caribou Gold Property in 2006. The Inferred Resource Estimate using uncapped gold assays is 350,305 tonnes grading 8.41 g/t gold, or 94,763 ounces of gold. Using a statistical grade cap for gold of 47 g/t (to compensate for nugget effect) the Inferred Resource for the Caribou Gold Property is 350,305 tonnes grading 5.83 g/t gold, or 67,425 ounces of gold.

A National Instrument 43-101 compliant technical report dated December 30, 2006 on the Caribou Gold Property was prepared by Guy Mac Gillivray, P.Geo. of W.G. Shaw and Associates Limited, and has been filed on SEDAR under Scorpio's profile at www.sedar.com.

Mr. Craig Engelsman, President and CEO of Harmony stated: "The acquisition of an option to earn a 100% interest in the Caribou Gold Property is entirely in keeping with our corporate goal of trying to achieve producer status as soon as possible. Similar to our efforts on the Lucky Shot Property, our goal is to develop the Caribou Gold Property to a production situation as soon as possible. We intend to accomplish this by first conducting an aggressive exploration program to increase the resource estimate by trenching and drill testing extensions of the stock-work zones and the crest of the Caribou anticline for high grade saddle reef style mineralization. Under the terms of the Agreement, we have a short time to conduct due diligence, however we are given to understand that much of the permitting is already in place. This project is a very similar situation to the Lucky Shot opportunity and gives Harmony the chance to expand its property portfolio.

Harmony is pleased the location of the Caribou Mine has power and most infrastructure, drive up access and can be developed year round. The unique style of the Caribou deposit to Nova Scotia's Maguma type deposits in that it has large stockwork gold bearing mineralization in addition to sizable high grade gold veins. The deposit is open at both ends and at depth which offers tremendous upside in expanding the already known Resource. The project is fully permitted for underground development which allows us to begin ground work quickly!"

The Company also announces that at its annual general meeting held on October 28, 2010, Messrs Craig Engelsman, David E. Drips, Jean Bailly, and Jerry Minni were elected to Harmony's Board of Directors. Messrs. Engelsman, Drips and Minni are all former directors of the Company. The Company wishes to welcome Mr. Bailly to the Board. Mr. Bailly has a great deal of experience in mine development, construction and management. His lengthy career started with Denison Mines and Noranda, and he went on to operate large international mining projects from 1986 to 2009. He has been involved in mine development and construction of projects all over the world, including Turkey, Costa Rica, Burkina Fasso, Vietnam and Spain.

Mr Engelsman stated: "I wish to thank Messrs. Alan Carter, Bob Harrington and Jean Mark Staude for their service to the Company over the past year and welcome Jean Bailly and Jerry Minni to the Board. I look forward to their input as we try to move these projects to development."

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.

HARMONY GOLD CORP.

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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