Prize Mining Corporation
TSX VENTURE : PRZ.H
NEX BOARD : PRZ

Prize Mining Corporation

October 03, 2014 09:30 ET

Prize Announces Letter of Intent to Acquire Majority Interest in El Limon Mine, Colombia

CALGARY, ALBERTA--(Marketwired - Oct. 3, 2014) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Prize Mining Corporation (TSX VENTURE:PRZ.H) (the "Corporation" or "Prize") announces it has entered into a binding letter of intent (the "LOI") dated October 1, 2014 with Nicaragua Milling Company Limited ("NMCL"), a private company incorporated under the laws of Belize, for the assignment of certain agreements that will provide Prize with the exclusive right to acquire 61% of the outstanding shares in the capital of Four Points Mining SAS ("Four Points"), a private company incorporated under the laws of Colombia (the "Transaction"). Prize and its directors and officers are at arm's length with NMCL and Four Points. The holders of remaining 39% of the outstanding shares in the capital of Four Points are at arm's length to Prize and its directors and officers.

Four Points currently owns and operates certain mineral licenses and permits to properties located in the Zaragoza mining district of northern Colombia, including the El Limon mine and mill. The Transaction will create a gold production cluster using the existing and established infrastructure in El Limon.

Pursuant to the terms of the LOI, NMCL will assign certain agreements to Prize entitling Prize to acquire 61% of the of the issued and outstanding shares in the capital of Four Points (the "Four Points Shares"). The El Limon mine and mill are located in the Zaragoza mining district. The El Limon mine and mill has over 13 years of established production as a result of infrastructure. In 2013 the El Limon mine produced just over 3,500 ounces of gold. The Zarazoga district also has potential for the installation of additional milling operations. Prize will obtain a technical report prepared with reference to National Instrument 43-101 in respect of the El Limon property and will subsequently issue a comprehensive news release announcing material scientific and technical regarding the El Limon property.

Closing of the Transaction is subject to Prize completing a restructuring of outstanding amounts owed to shareholders of Four Points and the successful completion of financing in the amount of US$6 million, among other conditions customary for transactions of this nature.

Prize will undertake a brokered unit private placement for maximum gross proceeds of CDN$7.0 million and minimum net proceeds of US$6.0 million less commissions and expenses (the "Equity Financing"). The units (each a "Unit") to be sold under the Equity Financing will be issued at the price of CDN$0.15 and will consist of one common share and one half common share purchase warrant issued on a post-Consolidation basis. Please see "Consolidation" below for details regarding a proposed three for one consolidation of the presently outstanding common shares of Prize. Each whole warrant will entitle the holder to purchase an additional common share at an exercise price of CDN$0.60 during a two year period following the initial closing of the Equity Financing. The Equity Financing may be undertaken on a subscription receipt basis and may close in one or more tranches. The net proceeds of the Equity Financing will be used to pay the anticipated cash consideration payable under the agreements pursuant to which Prize would acquire 61% of the outstanding shares of Four Points, to fund a work program on the properties of Four Points and for general working capital.

Jordan Capital Markets Inc. has agreed to act as agent in respect of the Equity Financing on a commercial best efforts basis and will work in coordination with Larrain Vial Servicios Profesionales Limitada of Chile, Kallpa SAB and Seminario SAB of Peru, and Global Securities Group of Colombia to access the capital markets of Chile, Peru and Colombia. Prize will pay the agent a cash commission of 8% of the gross proceeds of the Equity Financing and issue warrants to the agent that will entitle the agent to purchase that number of units equal to 8% of the units sold under the Equity Financing.

The Corporation intends to seek an exemption from the Exchange from any sponsorship requirement that may be imposed in respect of the Transaction. There is no assurance such an exemption will be granted. The completion of the Transaction, the Equity Financing and the Consolidation are subject to the customary regulatory approvals.

Subject to shareholder and other customary approvals, upon successful completion of the Transaction, the Equity Financing and the Consolidation it is intended that Randy Martin will join Feisal Somji, Tim Bergen, Jim Glass and John Bergen on the Board of Directors of the Corporation. Randy Martin, a resident of the United States, is a director, officer and controlling shareholder of NMCL. He developed the Hemco Nicaragua mine, a 1,200 tpd underground and open pit mine, and also constructed and operated other gold mines in Panama, Nicaragua, Honduras and Colombia. Mineros SA, a public Colombia mining company listed on the Colombia stock exchange, purchased a 90% interest in the Hemco Nicaragua mine in 2013 for US$96.8 million.

Further particulars of the Transaction, the El Limon property and mine, the Equity Financing and the members of the Board of Directors and management (and backgrounds) of the Corporation following the Transaction will be disclosed in a future news release.

Consolidation

In connection with the Transaction, Prize intends to complete a consolidation of the issued and outstanding shares of the Corporation (the "Prize Shares") on a three (3) for one (1) basis (the "Consolidation"). The Equity Financing will be completed on a post-Consolidation basis. The Corporation currently has 21,811,351 common shares issued and outstanding and 7,270,450 common shares of the Corporation will be issued and outstanding following the Consolidation and prior to the completion of the Transaction and the Equity Financing. The Corporation will seek shareholder approval for the Consolidation and, if required, for the Transaction at the next annual general and special meeting of the shareholders.

Previously Announced Transaction with 1711935 Alberta Inc.

The proposed transaction with 1711935 Alberta Inc. announced by the Corporation on December 3, 2013 will not proceed at this time. The Corporation may renew discussions in respect of such a transaction following the completion of the Transaction.

Trading

Trading in the common shares of Prize will remain halted pending the satisfaction of conditions of the TSX Venture Exchange for resumption.

About the Corporation

Prize is a Calgary based junior mining issuer incorporated under the laws of Alberta and is listed on the NEX board of the TSX Venture Exchange. Prize is engaged in the acquisition, exploration and development of mining properties in both Canada and in South America.

William Dynes B.Sc. (Hons), P.Geo. a consulting geologist is a Qualified Person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects, and has reviewed and approved the technical disclosure of this news release.

ON BEHALF OF THE BOARD OF PRIZE MINING CORPORATION

"Feisal Somji", President and CEO

Forward Looking Information

This news release may contain certain forward-looking information. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. In particular, this press release contains forward looking information in relation to the completion of the Transaction, the Consolidation, the Equity Financing, and the previously announced transaction with 1711935 Alberta Inc.. There is no certainty that the proposed Transaction, the Consolidation or the Equity Financing will close, that all regulatory and shareholder approvals for the Transaction, the Consolidation or the Equity Financing will be obtained, or that the Transaction, the Consolidation or the Equity Financing will be completed as proposed or at all. In addition, there is no certainty that if the Corporation successfully completed the Consolidation it will be able to raise the funds to successfully complete the Equity Financing. For any forward-looking information given, Management has assumed that the conditions set out in the LOI will be met. There is no certainty the Corporation will renew negotiations in respect of the previously announced transaction with 1711935 Alberta Inc. If the Corporation does renew negotiations, there is no certainty such negotiations will result in a proposed transaction or that any proposed transaction will proceed. A description of additional assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Corporation's disclosure documents on the SEDAR website at www.sedar.com. The Corporation does not undertake to update any forward-looking information except in accordance with applicable securities laws.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities described herein in the United States. These 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.

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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