Merrex Gold Inc.
TSX VENTURE : MXI

Merrex Gold Inc.

November 06, 2006 06:00 ET

Merrex Announces $6,000,000 Financing

HALIFAX, NOVA SCOTIA--(CCNMatthews - Nov. 6, 2006) -

This news release is intended for distribution in Canada only and is not intended for distribution to United States news wire services or dissemination in the United States.

Merrex Gold Inc. ("Merrex") (TSX VENTURE:MXI) announces that it has accepted a best efforts brokered private placement offer co-led by Paradigm Capital Inc. ("Paradigm") and Wellington West Capital Markets Inc. (collectively the "Agents") for up to 2,857,143 units (the "Units") at a price of $0.70 per Unit, and up to 5,000,000 flow-through shares (the "Flow-Through Shares") at a price of $0.80 per Flow-Through Share, for total gross proceeds of up to $6,000,000 (the "Offering").

Each Unit shall consist of one common share (the "Common Shares") and one-half of a common share purchase warrant (the "Purchase Warrants"). Each full Purchase Warrant entitles its holder thereof to purchase one additional Common Share at a price of $0.90 for a period of 12 months from closing. If at any time following four months and one day after closing, the weighted average trading price of the common shares of Merrex on the TSX Venture Exchange is greater than $1.50 for any 20 consecutive trading days, Merrex may accelerate the expiry of the Purchase Warrants by issuing a press release to the effect that the Purchase Warrants will expire 30 days following the date of such press release.

The Agents shall have an option to arrange for the sale of up to an additional $1,000,000 of Units exercisable at any time up until 48 hours prior to closing, or such other amount as may be mutually agreed by Merrex and Paradigm, subject to receipt of any required regulatory approval.

As consideration for acting as Agents, Merrex has agreed to pay a cash commission of 7% of the total proceeds raised in the Offering upon closing. In addition, the Agents will receive compensation options (the "Compensation Options") in an amount equal to 7% of the aggregate number of Units and Flow-Through Shares sold pursuant to the Offering. Each Compensation Option is exercisable at $0.70 into one Unit of the Corporation for a period of 12 months from the Offering's closing date.

The Offering is subject to regulatory approval and subject to TSX Venture Exchange acceptance for filing. All securities issued will be subject to a four-month hold period from the Offering's closing date.

The proceeds of this private placement will be used primarily to fund ongoing exploration and development activities at the Merrex Mali and Jubilee projects. Funds raised through the issuance of the Flow-Through Shares shall be used for Canadian Exploration Expenses (within the meaning of the Income Tax Act (Canada) (the "ITA")) which qualify as a "flow-through mining expenditure" for purposes of the ITA and will be renounced for the 2006 taxation year. The proceeds from the Units will be used to pay expenses related to this Offering, fund ongoing exploration at Merrex's properties and for general corporate purposes.

A 5,000 meter diamond drilling program is underway on the Jubilee, Cape Breton property where Merrex owns a 100% interest in 205 claims. Merrex has also recently entered into an option agreement with AUR Resources Inc. to acquire a 100% interest in an additional 23 claims on the Jubilee Zinc Deposit (see press release: September 19, 2006). The drilling program will expand and further define the Jubilee Zinc Deposit with an historical non-compliant (National Instrument 43-101) resource estimation of 1.6 MT grading at 7% Zinc + Lead.

A 40,000 meter rotary air blast ("RAB") drill program is scheduled to begin in early November 2006 on the Merrex Siribaya Gold Project in West Mali. This exploration program will test and confirm the gold discovery of 35 meters of 3.1 g/t Au (see press release: October 16, 2006).

Expenditures will also include exploration work on the Merrex West Voisey's Bay and Red Lake, Ontario properties. Diamond drilling in West Voisey's Bay is testing deep geophysical targets with similarities to Inco's Nickel Deposit.

Merrex is a mineral resource exploration company focused on exploration for gold in Mali, West Africa, zinc in Nova Scotia, nickel in Newfoundland, and gold in Red Lake, Ontario, with a solid organization of people and projects to enable continued aggressive growth strategy.

This news release does not constitute an offer to sell or a solicitation of an offer to buy 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 (the "U.S. Securities Act") 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 U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

This press release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Corporation expects, are forward looking statements. Although the Corporation believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Merrex Gold Inc.
    Greg Isenor
    President & CEO
    (902) 832-5555
    (902) 832-2223 (FAX)
    or
    Merrex Gold Inc.
    Diane Webber
    Senior Geologist/Investor Relations
    (902) 832-5555
    (902) 832-2223 (FAX)
    Email: info@merrexgold.com
    Website: www.merrexgold.com