Linear Gold Corp.

Linear Gold Corp.

August 20, 2009 16:00 ET

Linear Gold Completes Acquisition of Goldfields Development Project

HALIFAX, NOVA SCOTIA--(Marketwire - Aug. 20, 2009) - Linear Gold Corp. (TSX:LRR) ("Linear") is pleased to announce that it has completed the acquisition from GLR Resources Inc. of all of its interest in the Goldfields Project located near Uranium City, Saskatchewan, Canada. The acquisition of the Goldfields Project, initially announced on May 26, 2009, includes the Box and Athona Deposits.

The Goldfields Project is host to a total resource of over 1,000,000 ounces of gold with gold reserves of 601,007 ounces as stated in a National Instrument 43-101 compliant Technical Report by Bikerman Engineering & Technology Associates, Inc., June 2007, Revision 1-May 12, 2008. The resources and reserves of the Box and Athona Deposits are as follows:

Box Deposit:

- Proven and Probable Reserve - 10.9 million tonnes at 1.70 grams per tonne gold representing 601,007 ounces including:

-- Proven Reserve - 1.7 million tonnes at 2.025 grams per tonne gold representing 109,619 ounces; and

-- Probable Reserve - 9.3 million tonnes at 1.641 grams per tonne gold representing 491,436 ounces.

- Measured and Indicated Resources (includes reserves described above) - 16.9 million tonnes at 1.39 grams per tonne gold representing 753,000 ounces including:

-- Measured Resources - 2.4 million tonnes at 1.68 grams per tonne gold representing 129,000 ounces; and

-- Indicated Resources - 14.5 million tonnes at 1.34 grams per tonne gold representing 623,000 ounces.

- Inferred Resources - 3.7 million tonnes at 0.93 grams per tonne gold representing 111,000 ounces.

Athona Deposit:

- Indicated Resources - 10.9 million tonnes at 0.95 grams per tonne gold representing 333,000 ounces; and

- Inferred Resources - 2.2 million tonnes at 0.83 grams per tonne gold representing 59,000 ounces.

The Goldfields Project is a development ready project with the following highlights:

- Completed 2007 positive feasibility study on the Box Deposit with the following economics:

-- NPV, discounted at 8%, of US$ 50.0 million at US$603.75 per ounce Gold revenues;

-- Internal Rate of Return of 43.4% using US$603.75 per ounce Gold revenues.

- Planned production of 90,000 ounces per year based on a 5,000 tonne per day operation;

- Excellent process recovery of 93% of the contained gold values;

- Updated pre-operating capital expenditures estimated at US$63 million;

- Environmental permit in place - no development delays anticipated;

- Pre-feasibility study has been initiated on the Athona Deposit;

- Both deposits are open pit mineable;

- Both deposits are open at depth;

- Excellent local infrastructure with airport, power, telecommunications, good road system, field office, core shack and living quarters and kitchen facilities for employees; and

- Regional exploration upside including the Golden Pond target where previous drill results were reported as 16.57 grams per tonne of gold over 13.6 metres and 5.07 grams per tonne of gold over 15 metres.

Wade Dawe, President and Chief Executive Officer of Linear, stated, "The Goldfields Project is a tremendous acquisition and an ideal development project for Linear. We look forward to working with the local communities as well as the Saskatchewan Government to advance the development of the project and believe that Canada's political stability represents a strategic advantage for the asset. With manageable capital expenditures of approximately US$63 million and planned low cost production of 90,000 ounces per year, the Goldfields Project will be an excellent platform from which Linear will continue a growth and acquisition strategy. In the short-term, we are updating the engineering documents for the project and in the final stages of appointing a senior operating executive to manage the development and operation of this exciting project. We are confident that based on current gold prices, the economics and overall value of this project is substantially higher than the already robust results returned in the 2007 feasibility study using gold prices that were capped at approximately US$600 per ounce."

Transaction Details

The transaction closed in accordance with the definitive Purchase and Sale Agreement dated May 25, 2009, subject to certain non-material amendments agreed between Linear and GLR. Santa Fe Metals Corp. has released Linear from all claims in connection with Linear's acquisition of the Goldfields Project and Linear has provided a reciprocal release to Santa Fe. All legal issues related to the transaction have been successfully resolved.

At closing, Linear, through its subsidiary 7153945 Canada Inc., paid GLR US$5.0 million in cash and issued 727,273 Linear Gold Corp. shares as consideration for the assets. In addition, within 15 days of closing, Linear will reimburse a supplier $0.2 million of certain costs and interest on behalf of GLR and upon completion and delivery of certain previously contracted equipment, Linear will reimburse GLR for deposits made in connection with the contracted equipment in the amounts of US$1.8 million and CDN$1.0 million.

Linear Highlights Following the Transaction

Upon completion of the Acquisition, Linear will remain a well financed and strategically positioned company with:

- Over CDN$24 million in cash and cash equivalents;

- 33.4 million common shares issued and outstanding, representing an attractive capital structure for continued growth and consolidation;

- Planned annual production of approximately 90,000 ounces of gold following the development of the Box Mine;

- Proven and probable gold mineral reserves estimated to be approximately 600,000 ounces, measured and indicated gold mineral resources estimated to be approximately 1.9 million ounces and inferred gold mineral resources of 0.5 million ounces. See chart at end of release for details;

- Significant potential for growth through exploration outside of the current Box and Athona Deposits and continued exposure to Linear's promising Ixhautan Gold Project in Mexico and Ampliacion Pueblo Viejo, Loma El Mate and Loma Hueca Gold Properties in the Dominican Republic;

- An updated Box Mine technical report, incorporating current economic parameters, in progress and expected to be completed within the next 8-10 weeks;

- The re-initiation of the Athona pre-feasibility technical report that is expected to be completed within the next 8-10 weeks;

- Management and board of directors with experience operating, developing, and financing mining companies;

- A strategic position to leverage planned consolidation within the gold industry.

Peter Dimmell, P.Geo., a director of Linear and a qualified person under National Instrument 43-101, has reviewed and approved the scientific and technical information in this press release based on the 43-101 compliant report by Bikerman Engineering & Technology Associates, Inc., June 2007, Revision 1-May 12, 2008 on the Box Mine - Goldfields Project, Uranium City, Saskatchewan, Canada, a Technical Report filed Pursuant to National Instrument 43-101 of the Canadian Securities Administrators filed on SEDAR by GLR Resources.

Cautionary Note Regarding Forward-Looking Information This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the future financial or operating performance of Linear and the Goldfields Project, statements regarding exploration prospects, statements regarding synergies and financial impact of the proposed transaction, the terms and conditions of the transaction, the benefits of the proposed transaction, the identification of mineral reserves and resources, costs of and capital for exploration and development projects, exploration and development expenditures, timing of future exploration and development activities, expected production, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking information is based on various assumptions and on the best estimates of Linear, as the case may be, as of the date hereof, and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company (and the company resulting from the successful completion of the proposed transaction) to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral prices; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities, and as well as those risks identified under "Risk Factors" disclosure sections in the documents filed under the profile of SEDAR by Linear from time to time. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.


Box Athona Ixhuatan
Deposit(2) Deposit(2) Deposit(3) Total
Mineral Reserves(1)
Tonnes 1,683,717 - - 1,683,717
Grade -
grams/tonne 2.025 0.0 0.0 2.025
---------- ---------- --------- ----------
Ounces 109,619 - - 109,619
---------- ---------- --------- ----------
Tonnes 9,313,283 - - 9,313,283
Grade -
grams/tonne 1.641 - - 1.641
---------- ---------- --------- ----------
Ounces 491,436 - - 491,436
---------- ---------- --------- ----------
Total Proven &
Tonnes 10,997,000 - - 10,997,000
Grade -
grams/tonne 1.700 n/a n/a 1.700
---------- ---------- --------- ----------
Ounces 601,007 - - 601,007
---------- ---------- --------- ----------

Mineral Resources(1)
Tonnes 2,401,000 1,320,000 3,721,000
Grade -
grams/tonne 1.68 n/a 4.80 2.78
---------- ---------- --------- ----------
Ounces 129,000 203,000 332,000
---------- ---------- --------- ----------
Tonnes 14,500,000 10,878,000 8,050,000 33,428,000
Grade -
grams/tonne 1.34 0.95 2.51 1.49
---------- ---------- --------- ----------
Ounces 623,000 333,000 648,000 1,604,000
---------- ---------- --------- ----------
Total Measured &
Tonnes 16,901,000 10,878,000 9,370,000 37,149,000
Grade -
grams/tonne 1.39 0.95 2.82 1.62
---------- ---------- --------- ----------
Ounces 753,000 333,000 852,000 1,938,000
---------- ---------- --------- ----------
Tonnes 3,710,000 2,198,000 7,130,000 13,038,000
Grade -
grams/tonne 0.93 0.83 1.63 1.30
---------- ---------- --------- ----------
Ounces 111,000 59,000 374,000 544,000
---------- ---------- --------- ----------

1. The mineral reserves and resources reported herein are based on the CIM
Definition Standards for Mineral Resources and Mineral Reserves adopted
by the CIM Council on December 11, 2005 ("CIM Standards"). Mineral
Resources that are not mineral reserves do not have demonstrated
economic viability. Mineral resources, as reported, include minable
reserves, i.e. reserves are a subset of resources.

2. Mineral Reserve and Mineral Resource estimates for the Box and Athona
Deposits were prepared by Bikerman Engineering & Technology Associates,
Inc., June 2007. Revision 1-May 12, 2008. Box Mine - Goldfields Project,
Uranium City, Saskatchewan, Canada, Technical Report Pursuant to
National Instrument 43-101 of the Canadian Securities Administrators.
This report has been filed on SEDAR by GLR Resources.

3. The Independent Qualified Person responsible for the Ixhuatan resource
estimates is Gary Giroux, P. Eng. of Giroux Consultants Ltd. A Technical
Report prepared to National Instrument 43-101 requirements has been
filed on SEDAR.

4. Totals may not add up due to rounding.

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