CALGARY, ALBERTA--(Marketwired - Feb. 13, 2014) - MILL CITY GOLD CORP. ("Mill City" and/or the "Company")(TSX VENTURE:MC)(OTCBB:MCYGF)(FRANKFURT:NJ6) is pleased to announce the signing of a revised Letter of Intent ("LOI") to purchase up to a 75% working interest in the North East Tanjung Block, an onshore Indonesian gas concession and Production Sharing Contract with a 30 year contract term including an initial 6 year exploration period, from PT Trimata Energi Investama ("PTTEI"), an Indonesian company owning 85% of the shares of PT Anugerah Trimata Kaltim Energi ("PTATKE"), that holds a 100% working interest in the project.
"This is an incredible opportunity for Mill City and our shareholders to acquire a majority stake in a high potential gas field, located in a friendly jurisdiction with a shortage of natural gas production," stated James R. Brown, Mill City's Chairman, President and CEO.
The North East Tanjung Block project is located at Kutai Barat regency, East Kalimantan Province, which is approximately 180 km to the north-west of Balikpapan City. The project area covers approximately 5,453.27 square kilometres within the onshore Kutai Basin. Geologically, the project area is situated in the Western Kutai Basin, known as the Upper Kutai Basin, which is one of the most prolific petroleum basins within Indonesia. Moreover, from a previous study on adjacent ground, the gas potential has been proven in the Mendung Well, within the onshore West Kutai.
There are three target "pay zone" formations on the project. Previous work conducted on the project by the Indonesian government indicates that a gas resource is present. The Company intends to complete a NI 51-101 report in due course to verify this resource.
Scheduled Work Program
To confirm the potential of the North East Tanjung Block, the parties plan to conduct exploration activities including drilling 2 exploration wells and 2 delineation wells, and to conduct a 2D seismic survey over a 2 km x 300 km area by the end of 2016. The estimated total cost to complete the exploration program is approximately US$32 million.
To earn an initial 45% working interest in the North East Tanjung Block, Mill City will deposit US$32 million into a mutually acceptable escrow account to provide the working capital to conduct the work program described above and to issue that number of Mill City shares equal to 49% of Mill City's issued and outstanding share capital upon closing of the transaction (inclusive of any shares that may be issued under any concurrent equity financing that may be conducted in connection with the transaction), which shares shall be subject to such resale restrictions and hold periods as may be imposed under applicable securities laws and the policies of the Exchange.
Commencing three years plus one day from the closing of this transaction, for a period of 90 days, Mill City has the right to acquire an additional 30% working interest in the North East Tanjung Block by issuing to PTTEI that number of shares equal to 49% of Mill City's issued and outstanding share capital at that time less the number of shares issued by Mill City to acquire the initial 45% working interest.
The LOI allows for up to ninety (90) days from the signing to complete due diligence and to arrange the required financing.
The foregoing transaction will be considered a "reviewable transaction" under the policies of the TSX Venture Exchange and is subject to certain closing conditions, including but not limited to the approval of the TSX Venture Exchange and the execution of a definitive agreement.
About PT Anugerah Trimata Kaltim Energi
PTATKE is an Indonesian limited liability company engaged in oil and gas exploration and production business. PTATKE was established in 2012, exclusively for the purpose of the exploration and production activities of the North East Tanjung Block. Currently, PTATKE holds a 100% working interest in the North East Tanjung Block.
About PT Trimata Energi Investama
PTTEI is an Indonesian company owning 85% of the shares of PTATKE and controls an 85% working interest in the North East Tanjung Block.
About Mill City Gold Corp.
Mill City Gold Corp. is a TSX Venture listed exploration company that is focused on identifying and acquiring advanced precious metals, uranium and hydrocarbon projects in the most favorable jurisdictions around the world. For further information please visit the Company's website at www.millcitygold.com.
ON BEHALF OF THE BOARD OF DIRECTORS
James R. Brown, Chairman, President & CEO
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Caution Concerning Forward-Looking Statements
This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements relating to the plans for completion of the acquisition of an interest in the North East Tanjung Block project, for entering into a definitive agreement in respect of such acquisition; for conducting exploration activities and completing a NI 51-101 report; and for arranging the required financing in connection therewith; timing, availability and amount of financing; expected use of proceeds; business objectives; and the potential success of the foregoing. Forward looking information includes statements that are not historical facts and are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in such statements, including, without limitation: the risk that the transaction, including any transaction to obtain the requisite financing, will not be approved by the TSX Venture Exchange; risks and uncertainties related to the transaction and any related financing transaction(s) not being completed in the event that the conditions precedent thereto are not satisfied; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms. Forward-looking statements contained in this release are based on the beliefs, estimates, and opinions of management on the date the statements are made. There can be no assurance that such statements will prove accurate. Actual results may differ materially from those anticipated or projected. Mill City undertakes no obligation to update these forward-looking statements if management's beliefs, estimates, opinions, or other factors, should change.