Oro Gold Resources Ltd.

Oro Gold Resources Ltd.

October 26, 2006 14:58 ET

Oro Gold Proposes a Commodity Based Reorganization

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 26, 2006) -


Oro Gold Resources Ltd. ("Oro Gold") (TSX VENTURE:OGR) today announced that it intends to conduct a corporate reorganization, involving wholly-owned subsidiaries, by way of statutory plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia). Through a series of transactions, Oro Gold's silver properties will be spun out in exchange for common shares ("Oro Silver Shares") of Oro Silver Resources Ltd. ("Oro Silver"), one of Oro Gold's wholly-owned subsidiaries. The Oro Silver Shares that are received by Oro Gold will then be distributed to Oro Gold shareholders as a return of capital. The Arrangement is subject, among other things, to approval of the TSX Venture Exchange, the Supreme Court of British Columbia and the shareholders of Oro Gold.

Oro Gold has scheduled a special meeting (the "Meeting") for December 20, 2006 to approve the Arrangement. The notice of meeting, information circular and supporting documents for the Meeting describing the Arrangement will be mailed to the shareholders of Oro Gold.

Plan of Arrangement and Associated Financings

The Arrangement will involve certain exchanges of securities and property resulting in Oro Gold spinning out its silver properties indirectly to Oro Silver. The silver properties comprise of the Mihuatlan and Guasima properties in Mexico. Oro Gold will continue to own its gold properties, including the Ixtapan del Oro, Cimarron, San Isidro and Trinidad properties in Mexico and certain generative properties in Panama.

Shareholders of Oro Gold at the effective date of the Arrangement will be entitled to receive one Oro Silver Share for each four Oro Gold shares held as at the effective date of the Arrangement. Oro Gold shareholders will continue to hold their common shares in Oro Gold.

Oro Gold will subscribe for 1,000,000 Oro Silver Shares at a price of $0.25 per Oro Silver Share for aggregate proceeds for $250,000, pursuant to the Arrangement.

In addition, following the completion of the Arrangement, Oro Silver intends to complete additional brokered and/or non-brokered financings to raise sufficient capital, among other things, for its initial exploration programs. All issuances of securities pursuant to the these financings will be subject to approval of any stock exchange on which Oro Silver seeks a listing. The terms of the financings, including price and other terms, may be revised by the directors of Oro Silver in their sole discretion. While completion of the financings is not a condition of the Arrangement, the directors of Oro Gold and Oro Silver may, in their sole discretion, determine not to proceed with the Arrangement if it does not appear that sufficient funds to meet TSX Venture Exchange listing requirements will be raised pursuant to the financings.


It is expected that the issued capital of Oro Silver will be approximately 5,331,127 Oro Silver Shares, post-Arrangement (based on the current issued capital of Oro Gold and assuming no outstanding Oro Gold options or Oro Gold warrants are exercised prior to the effective date of the Arrangement). Oro Gold shareholders will own approximately 4,331,126 Oro Silver Shares, representing approximately 81% of the outstanding Oro Silver Shares, post-Arrangement. Oro Gold will have acquired 1,000,000 Oro Silver Shares issued pursuant to the Arrangement financing, which together with the one incorporation Oro Silver Share it currently holds will represent approximately 19% of the outstanding Oro Silver Shares, post Arrangement. In addition, Oro Silver intends to complete the additional brokered and/or non-brokered financings following the completion of the Arrangement.

Oro Gold will directly or indirectly hold all of the gold properties and Oro Silver, through a wholly-owned subsidiary, will hold all the silver properties.

Oro Silver will be a reporting issuer in British Columbia and Alberta and it is the intention of Oro Silver to apply for listing of the Oro Silver Shares on the TSX Venture Exchange. There is no assurance that such listing will be obtained.

Gregory Cox, Darren Bahrey, Brian Fowler, Frank Powell and Mark Pryor have been appointed to act as directors of Oro Silver.

Gregory Cox will be the President and Chief Executive Officer, Darren Bahrey will be the Chairman and Brian Fowler will be the Vice President, Corporate Development of Oro Silver. In addition, Oro Silver will be looking to appoint a Chief Financial Officer prior to any listing of its common shares on a stock exchange. Mr. Cox has 33 years of experience in the exploration and mining industry, the last 15 years with Placer Dome Inc. From 1999 to 2006 he was the General Manager of mine-site exploration at Placer Dome's mines in Canada, United States, Chile, Tanzania, Australia and Papua New Guinea with total annual budgets of up to $60,000,000. Mr. Bahrey has 17 years of experience in mineral exploration and is the President, Chief Executive Officer and a director of Oro Gold. Mr. Fowler has 26 years of experience working for junior, mid-tier and major mining companies on a global basis, including his current position as a Vice President and founding director of BCGold Corp. Over the past 15 years, he was a Mining Consultant with Quest Capital Corp.'s management group and Exploration Manager for Quadra Mining Ltd., and also worked in a variety of technical and exploration managerial roles for Placer Dome Inc.

Oro Gold Properties Post-Arrangement

Post-Arrangement, Oro Gold intends to continue exploration programs on its Ixtapan del Oro (with joint venture partner Rockgate Capital Corp.), Cimarron, San Isidro and Trinidad properties in Mexico, with a minimum of 5,000 metres of core drilling expected to commence shortly, and on its generative properties in Panama after mineral title has been officially granted by the government.

Oro Silver Properties Post-Arrangement

Post-Arrangement, Oro Silver intends to conduct an exploration program focused on silver on the Mihuatlan property in Mexico, including:

(a) further detailed mapping, geochemical sampling and test geophysical surveying throughout the property to better delineate the strike extent, geochemical signature and structural controls associated with silver-bearing rock units which have recently been discovered;

(b) ground geophysical test surveys including Induced Polarization and/or various electromagnetic surveys;

(c) diamond drilling to test the grade across width and strike extent of the exposed silver-bearing rock units; and

(d) deep hole diamond drilling to test vein and grade continuity within the basement rocks.

Based on the results, additional work, contingent on success of the exploration, could include: (a) detailed geophysical surveys; (b) detailed geochemical surveying at select portions of the property; (c) additional diamond and/or reverse circulation drilling to potentially define a resource; and possibly (d) further land acquisition.

A National Instrument 43-101 compliant technical report with respect to the Mihuatlan property is expected to be filed on SEDAR in due course.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements are made as of the date of this news release and the companies do not intend, and do not assume any obligation, to update these forward-looking statements.

Forward-looking statements may include, but are not limited to, statements with respect to the timing and amount of exploration activities, requirements for additional capital and future listings and regulatory approvals. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Oro Gold or Oro Silver to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors may include, among others, risks related to the integration of acquisitions; actual results of exploration activities; future metal prices; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental or regulatory approvals or financing or in the completion of development activities. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.


Darren Bahrey, President and Director

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

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