Luna Gold Corp. Announces Sale of the Cachoeira Project for Approximately $12 Million

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 11, 2012) - Luna Gold Corp. (TSX VENTURE:LGC)(OTCQX:LGCUF)(LMA:LGC) ("Luna Gold" or the "Company") is pleased to announce that it has entered into a share purchase agreement (the "Share Purchase Agreement") with Brazil Resources Inc. ("BRI"), to sell Luna Gold's wholly-owned subsidiary, Luna Gold (International) Corp. ("Luna BVI") which indirectly owns 100% of the Cachoeira Project, for consideration of $11,998,400 to be satisfied by the issuance of cash and shares of BRI (the "Transaction"). See "The Transaction" for details.

The Company's decision to sell the Cachoeira Project is aligned with the Company's strategy to focus its resources on gold production from the Aurizona Mine and exploration of the Luna Greenfields.

John Blake, President and CEO noted: "Luna Gold has demonstrated over the last year our focus on increasing gold production, increased resource ounces in the Aurizona brownfields area and high potential to unlock more ounces from Luna Greenfields. Luna Gold is on target to produce 60,000 ounces of gold from Aurizona in 2012 and increasing production to 100,000 ounces in 2013.

As the next phase in improving the performance of Luna Gold we have reached agreement with Brazil Resources Inc. on the sale of the Cachoeira project. Luna Gold has achieved two outcomes in this sale; firstly Luna Gold can allocate all management effort to focus increasing resource ounces and gold production and secondly, Luna Gold as a shareholder in BRI will benefit from BRI's focus on advancing Cachoeira into gold production."

The Agreement

Subject to the terms of the Share Purchase Agreement, immediately upon closing of the Transaction, BRI will acquire 100% of the issued and outstanding shares of Luna BVI, which holds an indirect 100% interest in the Cachoeira Project through its subsidiaries. The consideration payable by BRI to Luna Gold under the Agreement will consist of:

1. $500,000 cash and 1,428,000 common shares of BRI ("BRI Shares") upon closing of the transaction;
2. $300,000 cash and 1,214,000 BRI Shares within 12 months of closing the transaction;
3. $300,000 cash and 1,214,000 BRI Shares within 30 days of receipt of approval of a mine development plan by the National Department of Mineral Production (Brazil) (DNPM) and the environmental preliminary licences for a gold mining operation relating to the Cachoeira Project;
4. $2,500,000, payable in cash or BRI Shares, at BRI's sole discretion, upon commencing mine construction at the Cachoeira Project, consisting of completion of $500,000 of expenditures towards such construction; and
5. $3,000,000 payable in cash or BRI Shares, at BRI's sole discretion, one year after achieving commercial production at the Cachoeira Project.

Notwithstanding the foregoing milestones, all of the payments from BRI to Luna Gold will become due and payable four years after the closing date of the Transaction. Any discretionary share-based payments will be valued based on the volume weighted average trading price of the BRI Shares for the 10 days prior to such payment. BRI's payment obligations will be evidenced by a promissory note issued by BRI to Luna Gold, containing customary events of default and acceleration provisions, and will be secured by security interests granted by BRI and its subsidiaries to Luna Gold against, among other things, interests in the Cachoeira Project and the shares of the subsidiaries to be sold under the Agreement.

Completion of the Transaction is conditional upon, among other things, customary closing conditions and the receipt of all required consents and approvals, including the approval of the TSX Venture Exchange and completion of an updated National Instrument 43-101 ("NI 43-101") compliant technical report by BRI.

The Property

The Cachoeira Project is located in the state of Para in northeastern Brazil and consists of a contiguous block of two mine licenses and three exploration licenses totalling 4,742 hectares. The Cachoeira Project contains an NI 43-101 compliant resource estimate containing an Indicated Mineral Resource of 12.5 Mt @ 1.11 g/t Au containing 446,000 oz Au and an Inferred Mineral Resource of 5.4 Mt @ 1.27 g/t Au containing 221,300 oz Au.

About Luna Gold Corp.

Luna is a gold production and exploration company engaged in the operation, exploration and development of gold deposits and advanced stage gold exploration projects in Brazil.

On behalf of the Board of Directors

LUNA GOLD CORP.

John Blake - President and CEO

Regulatory Footnotes

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the United States Securities Act of 1933 and applicable state securities laws or an exemption from such registration is available.

Forward-Looking Statements

This release contains certain "forward looking statements" and certain "forward looking information" as defined under applicable Canadian and U.S. securities laws. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "continue", "plans" or similar terminology. Forward-looking statements include, but are not limited to, statements with respect to future gold production and/or the results of analysis on gold production. Forward-looking statements are based on forecasts of future results, estimates of amounts not yet determinable and assumptions that while believed by management to be reasonable, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements are subject to various risks and uncertainties concerning the specific factors identified in Luna Gold Corp.'s periodic filings with Canadian Securities Regulators. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other exploration data, the potential for delays in exploration or development activities, the geology, grade and continuity of mineral deposits, the possibility that future exploration, development or mining results will not be consistent with the Company's expectations, accidents, equipment breakdowns, title matters, labor disputes or other unanticipated difficulties with or interruptions in production and operations, fluctuating metal prices, unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations, currency fluctuations, regulatory restrictions, including environmental regulatory restrictions and liability, competition, loss of key employees, and other related risks and uncertainties. The Company undertakes no obligation to update forward-looking information except as required by applicable law. Such forward-looking information represents management's best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.