SOURCE: Lone Star Gold, Inc.

May 01, 2012 09:48 ET

Lone Star Gold, Inc. Signs Term Sheet Outlining Common Stock Financing Agreement of Up to $24 Million

ALBUQUERQUE, NM--(Marketwire - May 1, 2012) - Lone Star Gold, Inc. (OTCBB: LSTG) ("Lone Star" or "the Company") is pleased to announce that on April 30, 2012, the Company signed an Investment Agreement with Fairhills Capital Offshore LTD ("the Investor") outlining the terms and conditions under which the Investor has agreed to provide the aggregate amount of up to $24 million to the Company in exchange for the purchase of Lone Star's Common Stock ("the Common Stock").

The Company plans to use the funds for general working capital purposes. In particular, the funds will be used toward Lone Star's current second-year exploration and drilling program at its Mexico-based La Candelaria gold-silver property as well as subsequent project activities. The funds will also be used to help with the Company's involvement in the Mexico-based Tailings Project JV agreement, which currently involves the ongoing construction and planning of on-site Plant Production operations, including a wash plant and the design and development of a Benign nitrogen leaching pile process. In addition, Lone Star's current plans include expanding the Company's market presence in the Mexico area through the acquisition of one or two more properties in the surrounding area.

According to the agreement's Commitment Period will begin on the effective date of the filing of an S-l with the Securities and Exchange Commission, and will end on the earlier of (i) the date in which the Investor has invested an aggregate amount equal to USD$24M, (ii) 36 months from when the S-l becomes effective, or (iii) at such time as the Registration is no longer effective.

Financings will occur when the Company delivers a Capital Request requiring the Investor to send funds to the Company, subject to the terms of the Financing Agreements. Funds will be released to the Company on the day the Investor receives the Common Stock under the Stock Purchase Agreement.

Lone Star Gold's President, Daniel Ferris, commented: "Now that we're into our second year of exploration on the La Candelaria Project, and are investing in on-site processing capacity to increase the productivity of the Tailings Project shipments, working capital is essential to continuing those efforts. The $24 million financing agreement outlined in the Term Sheet would enable us to carry on with our current project activities while taking advantage of opportunities to grow our influence in the surrounding area through further acquisitions."

Fairhills commented: "We are looking forward to being a long term valuable strategic financial partner with Lone Star Gold in helping them achieve their goal and executing their business Plan".

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.

ADDITIONAL INFORMATION
To learn more about the Company, its activities, 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 near 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.

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