New Guinea Gold Corporation
TSX VENTURE : NGG
FRANKFURT : NG8

New Guinea Gold Corporation

April 02, 2012 18:51 ET

New Guinea Gold Corporation: Important Message to Shareholders

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 2, 2012) - The Board of Directors of New Guinea Gold Corporation (TSX VENTURE:NGG)(FRANKFURT:NG8) ("New Guinea Gold" or the "Company") provides the following important message to its shareholders:

On April 12, 2012, New Guinea Gold Shareholders are faced with a critical decision impacting their investment in the Company.

The Board of Directors of New Guinea Gold reiterates its unanimous recommendation that New Guinea Gold Shareholders vote their New Guinea Gold shares in favour of the Plan of Arrangement with PNG Gold Corporation outlined in New Guinea Gold's Management Information Circular dated March 9, 2012.

Shareholders will recall that the Board advised in the summer of 2011 that the existing operations of the Company were not sustainable and that significant investment in exploration was required to unlock the value of Sinivit. This has been highlighted by the recent difficulties experienced at Sinivit operations which have forced the Company to obtain debt financing to continue operations.

The Plan of Arrangement was announced on November 4, 2011. At that time the exchange ratio was negotiated based on market conditions and external professional valuation of the Company. The Board of Directors of New Guinea Gold considered numerous alternatives and determined that a combination with relatively cash rich PNG Gold was the most advantageous for New Guinea Gold Shareholders.

Subsequent events include the occupation of the Sinivit Mine site by a local landowner group that occurred in December 2011 and forced the shutdown of operations for approximately 2 months. This resulted in a major loss of gold production and significant consumption of the Company's cash. The restart of operations has been slower than anticipated due to damage, equipment failures, and re-staffing of operations. Sinivit became a cash drain on the already depleted reserve of New Guinea Gold.

We continue to believe that Sinivit has excellent exploration potential and could become an important gold producer. Unfortunately, the Company does not have access to sufficient funds to carry out a large systematic exploration program required to discover sufficient additional resources to reopen Sinivit.

The re-processing of the Vat and heap material is being studied, but this has not been shown to be economically feasible and there is no certainty that it will. Similarly, even if the re-processing is shown to be feasible, the likelihood of the Company raising the required capital under current market conditions is low.

The current political and tenure risk associated with the Sinivit Mine have reduced the market value of the Company. Further to the valuation of Sinivit, our Shareholders should appreciate that the Sinivit option granted to PNG Gold under the Credit Agreement is in no way indicative of present value but rather a compromise reached in respect of a security interest for the PNG loan that the Company was reluctant to provide.

In voting on the Plan of Arrangement the NGG Shareholders should also consider that NGG has extremely limited options at this time. The bulk of its PNG Gold shares are in escrow and cannot be liquidated (sold), and the Company's assets are pledged as collateral under the operating loan provided by PNG Gold. The Sinivit Mine in its current form is depleted and requires closing. The other shareholdings held by the Company are relatively illiquid and the market for junior mining stocks is such that they cannot be easily sold to realize their "current market value".

The Board of Directors of New Guinea Gold has considered what it believes to be all potential options available to the Company to fund on-going operations and preserve its interest in the Sinivit Mine and associated exploration prospects. The Plan of Arrangement, including the Credit Agreement with PNG Gold, represents the only viable source of funding available to the Company and the best opportunity for New Guinea Gold Shareholders to realize future economic benefits associated with continued gold exploration, mine development, and restart of operations in Papau New Guinea.

Management of PNG Gold share the Company's view that Sinivit represents a highly prospective exploration property and is willing to invest in exploration as well as redesign and recapitalization of Sinivit to unlock the value of this property.

If New Guinea Gold Shareholders fail to approve the Plan of Arrangement, PNG Gold has the immediate right to demand repayment of monies advanced under the Credit Agreement which may result in the disposition of the Company's Sinivit property, including existing mining operations, at a significantly lower price than that implied in the exchange ratio contained in the Arrangement Agreement with PNG Gold.

ON BEHALF OF THE BOARD

Bryan Nethery, Director

Forward-Looking Statements: Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of NGG, including, but not limited to the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with the uncertainty of resource and reserve estimates, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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