SOURCE: Lone Star Gold, Inc.

February 06, 2012 08:30 ET

Lone Star Gold, Inc. Signs Tailings Project Joint-Venture Agreement and Exercises $300k Draw Down Against $15 Million Line of Equity

ALBUQUERQUE, NM--(Marketwire - Feb 6, 2012) - Lone Star Gold, Inc. (OTCBB: LSTG) ("Lone Star" or "the Company") is pleased to announce that on January 26, 2012, the Company signed a Joint Venture Agreement (the "JV Agreement") with the specially formed Mexican subsidiary company, AMIKO KAY, S de RL de CV, and Miguel Jaramillo to process 1.2 million tons of mine tailings (the "Tailings"), at the San Antonio del Potrero mine tailings project ("Tailings Project). Lone Star acquired an undivided 65% interest in the Tailings Project, which is located in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico.

The development plan and estimated revenues for the Tailings Project include:

  • Revenue generated for Lone Star Gold within 3 months (as detailed below);
  • Planning to ship an initial 100 tons per day (tpd) within a month to a processing plant near the city of Parral (20-minute drive); Lone Star's 65% share is estimated to equal ~$100,000 per calendar month (PCM) clear revenue.
  • In the following 3 to 5 months, shipping planned to increase to 200 to 300 tpd; Lone Star's 65% share is estimated to equal ~$200,000 to ~$300,000 PCM clear revenue.
  • Beyond 6 months, the JV team fully intends to be shipping 400 to 800 tpd; at 800 tpd, Lone Star's share is estimated to equal ~$800,000 PCM clear revenue.
  • Shipping 800 tpd is the JV team's ultimate plan, at this rate the 1.2 million tons of Tailings would be processed in a total of circa 5 years.
  • In addition to shipping Tailings to the processing plant at Parral, the JV team is also planning to build its own processing plant on the property. The onsite processing plant would consist of a heap leach pad and, potentially, a float plant (to be determined within the first 6 months of shipping to Parral). The plant would take between 4-6 months to construct, and would have initial capacity of 200 to 300 tpd, then ramping up production after the first 6 months of operation by adding a second circuit for a total of 600 tpd capacity on the property. The onsite plant is expected to liberate over 85% of the resources in the tailings pile.

Lone Star has also exercised a USD$300,000 Put Notice, which represents the Company's fourth draw down request against the USD$15 million line of equity agreement Lone Star entered into on August 26th, 2011, with Hong Kong based equity investor North American Gold Corp (NAGC). In return, NAGC will be issued 650,000 shares upon Lone Star receiving the funds. The equity financing agreement does not involve any debt. Rather, the terms of the agreement give Lone Star the option to draw down from the $15 million amount as and when needed in the amount of $100,000 or multiples thereof.

Lone Star Gold's President, Daniel Ferris, commented: "Our goal all along has been to rapidly become a mid-tier producer in the short term. And with the upcoming shipments from the Tailings Project, we'll be taking a significant step toward that goal as we move from being an exploration company to a production and exploration company with several years of expected revenues ahead of us and the financing needed to continue to operate and expand."

ADDITIONAL INFORMATION
To learn more about the Tailings Project, the Company, and regular news updates, visit Lone Star Gold's official website: http://www.lonestargold.com.

ABOUT LONE STAR: Lone Star Gold, Inc. is a publicly traded (OTCBB: LSTG) gold exploration and development company based in Albuquerque, New Mexico. The Company's aggressive acquisition and exploration approach is strategically focused on proven, stable precious metal regions in America and Mexico. Currently, Lone Star has a 70% Working Interest in concessions covering 800 hectares in the La Candelaria project in Chihuahua, Mexico, which the Company is evaluating to determine the potential sites that represent the best potential for silver and gold deposits. Lone Star also has an undivided 65% interest in the San Antonio del Potrero mine tailings project in the city of Hidalgo Del Parral in the state of Chihuahua, Mexico.

ON BEHALF OF THE BOARD OF DIRECTORS,

Lone Star Gold, Inc.
Daniel Ferris, Company President

This press release contains statements that are forward-looking and which involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in question are based on Lone Star Gold, Inc.'s current expectations and projections about future events, based on information currently available. The forward-looking statements found in this press release may also include statements relating to Lone Star Gold, Inc.'s anticipated financial performance, business prospects, new developments, strategies, and similar matters. Lone Star Gold, Inc. provides no assurance regarding the actual outcome of the events contemplated by any forward-looking statements included in this release. Lone Star Gold, Inc. disclaims any obligation to update any of its forward-looking statements, except as may be required by law.

Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We may use certain terms in this press release, such as "measured," "indicated," and "inferred" "resources," which the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10-K which may be secured from us, or from our website at http://www.sec.gov/edgar.shtml.

Contact Information

  • Contact:
    Lone Star Gold, Inc.
    6565 Americas Parkway NE, Ste 200
    Albuquerque, New Mexico
    87110
    USA

    INVESTOR RELATIONS
    Toll Free: 1-800-986-9358
    E-mail: ir@lonestargold.com
    Web: www.lonestargold.com

    OTCBB: LSTG.OB