Kinbauri Gold Corp.

Kinbauri Gold Corp.

April 02, 2007 15:52 ET

Kinbauri Espana Acquires Gold Assets in Northern Spain

Kinbauri Completes Financing for Their Acquisition

OTTAWA, ONTARIO, CANADA--(CCNMatthews - April 2, 2007) - Not for distribution to U.S. news wire services, or dissemination in the United States.

Kinbauri Gold Corp. ("Kinbauri") (TSX VENTURE:KNB) is pleased to announce that Kinbauri Espana, S.L., a private Spanish company, ("Kinbauri Espana") has completed the purchase of the El Valle mill, auxiliary facilities, the El Valle and Carles mines and two further exploration properties in northern Spain (the "Assets") from Rio Narcea Gold Mines S.L. ("RNGM") for a total price of US $5,000,000 (the "Acquisition"). Kinbauri Espana S.L. secured bridge financing from a syndicate of three arm's length parties to complete the purchase of the Assets, which closed on March 30, 2007. Under the terms of the bridge financing, US $7,500,000 was advanced to Kinbauri Espana for the purpose of satisfying the US $5,000,000 purchase price and transaction costs, including applicable transfer and VAT taxes. The bridge loan bears interest of 12% per annum, compounded monthly, plus a US $60,000 arrangement fee and upfront and funding fees equal to 4% and 3% respectively of the funds advanced. Kinbauri Espana has provided security over all its assets to the lenders and its shares have been pledged in connection with the bridge loan. Kinbauri has agreed to guarantee the bridge loan and has granted security to the lenders in connection with the guarantee. Kinbauri's shares in Kinbauri Espana are being held in trust for Kinbauri until such time as the Acquisition by Kinbauri itself is approved by the TSXV. M-Partners was paid a finder's fee equal to 2% of the gross proceeds of the bridge loan for introducing the lenders to Kinbauri.

Kinbauri also completed a brokered private placement on March 30th, 2007 for gross proceeds of CDN $9,050,000 through the issuance of 18,100,000 subscription receipts at a price of CDN $0.50 per subscription receipt. Each subscription receipt will automatically convert into a unit ("Unit") of Kinbauri upon receipt of regulatory approval of the Acquisition. Each Unit will be comprised of one common share and one-half common share purchase warrant exercisable for eighteen months at a price of CDN $0.70. M-Partners Inc. and Clarus Securities Inc. (collectively, the "Agents") were engaged as the Agents for the offering. The Agents will be paid a commission totalling 7 percent of the total funds raised and will receive broker warrants to purchase an aggregate of 1,267,000 Units at a price of CDN $0.50. Today's closing represents the first tranche of a larger financing of up to CDN $13,500,000, the balance of which is scheduled to close this week. The securities will be subject to a 4 month hold from the closing dates of the offering.

The proceeds of the offering, including Agents' commissions, have been placed in escrow pending receipt of TSXV approval of the Acquisition. Necessary documentation for TSXV approval is expected to be completed before the end of April, 2007. In the event that Kinbauri does not satisfy the escrow release conditions by July 30, 2007, the proceeds will be returned to the subscribers.

Upon the conversion of the subscription receipts into Units, the net proceeds of the financing will be used toward (a) the costs of the Assets purchased by Kinbauri Espana, (b) exploration and definition drilling at El Valle, (C) determining the feasibility of various underground mining methods at El Valle, (d) maintenance of mill and mine facilities at El Valle and Carles and (e) general working capital purposes. The El Valle/Mill/Mine and Carles Mine were placed on care and maintenance at the end of 2006 after RNGM determined the assets did not fit into their growth strategy.

For further details of the Assets and Work Programs please refer to the press releases of January 16th, 2007 and February 27th, 2007.

Dr. Vern Rampton, Kinbauri's President noted that "the transactions that closed on Friday, including the acquisition of the assets in northern Spain by Kinbauri Espana are transformational. Kinbauri now has the opportunity to become a mid-tier gold producer in the near future. I'm confident that our assembled team can successfully invoke our plan to bring the mine and mill at El Valle into profitable operations in a timely manner. The added cost of the bridge financing to complete the acquisition on March 30th was necessary as no extension of the option to purchase was available and it was clear that our opportunity would be lost if the Acquisition did not close on that date."

Kinbauri is a mineral exploration company focused on the development of mineral properties, primarily precious metal prospects in northwestern Spain, Nevada and Canada. Currently it has 11,429,189 common shares issued and outstanding and 13,524,689 fully diluted.

This press release contains certain forward-looking statements, which are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected. Kinbauri undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change. The reader is cautioned not to place undue reliance on forward-looking statements.


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