Riverstone Resources Inc.
TSX VENTURE : RVS

Riverstone Resources Inc.
Blue Gold Mining Inc.
TSX VENTURE : BGX

Blue Gold Mining Inc.

October 18, 2012 08:48 ET

Riverstone Resources to Combine With Blue Gold Mining

Partnership Creates Well-Funded Company With Proven Team to Drive Gold Exploration and Near-Term Production at Properties in West Africa

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 18, 2012) - Riverstone Resources Inc. (TSX VENTURE:RVS) and Blue Gold Mining Inc. (TSX VENTURE:BGX) -

  • Riverstone's successful exploration, engineering and development expertise and exceptional project portfolio complement Blue Gold's technical and exploration experience, broad investment community following and strong cash position
  • Creates a well-funded, growth-oriented gold mining company to aggressively drive development of the flagship Karma Project asset and accelerate future exploration, development and upside opportunities at Riverstone's highly prospective properties
  • Strong balance sheet to fund continued expansion and capital expenditures
  • Management, Board and technical teams offer full range of expertise and experience to become leading explorer/developer in West Africa
  • Unanimous support of the management and Boards of both companies
  • All share transaction with each Blue Gold share exchanged for 0.801 of a Riverstone share

Riverstone Resources Inc. ("Riverstone") (TSX VENTURE:RVS) and Blue Gold Mining Inc. ("Blue Gold") (TSX VENTURE:BGX) announced today they have entered into an arrangement agreement under which Riverstone will acquire 100% of the outstanding common shares of Blue Gold by way of a plan of arrangement.

Under the plan of arrangement, Blue Gold shareholders will receive 0.801 of a Riverstone share for each Blue Gold share. This exchange ratio reflects the market price of the Riverstone shares and the Blue Gold shares based on the volume-weighted average prices of Blue Gold and Riverstone shares on the TSX Venture Exchange ("TSX-V") for the 20 trading days ended on October 17, 2012, resulting in a basic equity value for the transaction of $30.3 million.

On completion of the transaction, Blue Gold shareholders will hold 30% of the pro forma outstanding shares of Riverstone, on a fully-diluted basis. It is estimated that there will be 178.3 million basic shares outstanding upon closing.

Riverstone is currently the owner and operator of the Karma Project, an advanced stage gold development project and three other earlier stage exploration projects collectively covering more than 2,000 km2 of highly prospective ground in Burkina Faso. With this transaction, Riverstone will expand its successful exploration, engineering and development team with Blue Gold's highly regarded technical, exploration and capital markets team to create a strong West African mine developer and explorer with a cash balance of approximately $18 million.

"Our merger with Blue Gold is truly complementary. It creates a well-funded, well-structured company with expanded expertise as we progress our flagship Karma Project through feasibility and launch an aggressive exploration campaign at Liguidi and our other portfolio projects," states Dwayne Melrose, President and CEO of Riverstone. "Our combined entity offers investors and employees a unique opportunity to take part in the growth of a 'best in class' exploration company and the advancement of our promising properties, under the guidance of an experienced, proven leadership team."

"Together, Riverstone and Blue Gold are much stronger than the sum of their parts. Combined, the companies have the expertise and access to capital necessary to accelerate expansion and development of Riverstone's exceptional gold properties in a mining-friendly jurisdiction in West Africa," states Mark O'Dea, President and CEO of Blue Gold. "We examined over 100 projects and companies during the past 18 months looking for opportunities to optimize value for Blue Gold's shareholders. A merger with Riverstone provides our collective shareholders the opportunity to participate in the exploration of an incredible land package in a relatively unexplored jurisdiction with near-term exposure to gold production."

Benefits to Blue Gold Shareholders:

  • Exposure to four exciting gold projects in Burkina Faso, West Africa, including the development stage Karma Project and the exploration stage Liguidi Project

  • Strong upside potential to expand current deposits on Riverstone's Karma Gold Project

  • Exposure to Burkina Faso - a well-established mining region

  • Access to an experienced and successful exploration, development, construction and operating team that perfectly complements the experience, expertise and skills of Blue Gold's team

  • Creates a well-funded company with available liquidity and flexibility to undertake strategic capital expenditures and fund growth

  • All-stock transaction provides opportunity to participate in future growth of combined company

Benefits to Riverstone Shareholders:

  • Access to Blue Gold's proven management team, which has created more than $2.5 billion in shareholder value in the last 10 years, and been instrumental in advancing eight significant deposits through Fronteer Gold. Fronteer Gold was a development-stage gold company sold to Newmont Mining in April 2011 for $2.3 billion

  • Addition of Blue Gold's management team and Board adds additional expertise in creating value with a long track record of financing development projects

  • Immediate increase in the company's cash position, funding the Karma Project feasibility and funding continued exploration of the Liguidi Project and other projects

  • The combined company will be well funded with approximately $18 million in cash

  • All-stock transaction provides opportunity to participate in future growth of combined company

TRANSACTION DETAILS

The transaction will be carried out by way of a court-approved plan of arrangement and will require the approval of at least 2/3 of the votes cast by the shareholders at Blue Gold's annual and special meeting expected to take place mid December 2012. The transaction is also subject to applicable regulatory approvals, including court approval and the approval of the TSX-V, and the satisfaction of certain closing conditions customary in transactions of this nature including that Blue Gold will have uncommitted cash (inclusive of the Loan from Blue Gold to Riverstone described below) of at least $17 million upon closing of the transaction. The terms and conditions of the transaction will be disclosed in more detail in the management information circular which is expected to be filed and mailed to Blue Gold shareholders in November 2012.

Upon completion, Blue Gold shareholders will receive, for each Blue Gold share, 0.801 of a Riverstone share. Any outstanding options and warrants of Blue Gold will be adjusted so that, upon exercise subsequent to completion of the transaction, for each Blue Gold share that would previously have been issued, the optionholder or warrantholder will receive 0.801 of a Riverstone share.

Blue Gold's President, CEO and Chairman, Mark O'Dea, will join Riverstone's Board of Directors immediately upon closing and will assume the role of Executive Chairman. Mr. Michael McInnis of Riverstone will become Vice-Chairman. Mr. Dwayne Melrose will continue in his role as President and CEO of Riverstone. The new Board of Riverstone will consist of three Blue Gold nominees and five Riverstone nominees. In addition, certain officers of Blue Gold will become officers of Riverstone.

The transaction was reviewed and recommended by a special committee of the Riverstone Board of Directors, which received an independent fairness opinion from Capital West Partners and has been unanimously approved by the Board of Riverstone. After taking into consideration, among other things, the verbal opinion of Cormark Securities that the consideration to be received by the Blue Gold shareholders under the transaction is fair from a financial point of view, the Blue Gold directors have determined that the transaction is in the best interests of Blue Gold and is fair to Blue Gold shareholders and have unanimously approved the transaction and recommend that the Blue Gold shareholders vote in favour of the transaction.

Directors and senior officers of Blue Gold, collectively holding approximately 32.64% of the number of Blue Gold shares anticipated to be entitled to vote at the meeting, have entered into voting agreements with Riverstone under which they agree to vote in favour of the transaction. The voting agreements automatically terminate upon termination of the arrangement agreement. Subject to Riverstone's right to match, the Board of Blue Gold may terminate the arrangement agreement in favour of an unsolicited superior proposal upon payment of a $1 million break fee to Riverstone.

Upon approval by the TSX-V, Blue Gold has agreed to lend Riverstone up to $5 million for development of the Karma Project. The loan becomes repayable in cash or shares of Riverstone if the transaction does not close. The loan will be interest bearing and is secured against the assets of Riverstone.

ADVISORS

Riverstone's financial advisor is National Bank Financial Inc. and its legal counsel is DuMoulin Black LLP. Blue Gold's legal counsel is Blake, Cassels & Graydon LLP.

CONFERENCE CALL

Blue Gold Mining Inc. and Riverstone Resources Inc. will hold a conference call for analysts and investors to discuss the transaction on Thursday, October 18, 2012 at 10:30 a.m. (Eastern).

Access to the conference call may be obtained by dialing 1-877-240-9772 (toll-free North America) or 416-340-8527.

An audio replay of the call will be available after the call by dialing 1-800-408-3053 or 905-694-9451 and entering the passcode 2109586.

A copy of the investor presentation will be available on Riverstone's website (www.riverstoneresources.com) and Blue Gold's website (www.bluegoldmining.com).

ABOUT RIVERSTONE

Riverstone is active in Burkina Faso, West Africa, where it holds a portfolio of four high quality exploration projects covering in excess of 2,000 km2. The Company's flagship project is the Karma Gold Project (the "Karma Project"), which comprises a NI 43-101 compliant in-pit Whittle indicated resource of 1.9 million ounces of gold in 56.5 million tonnes grading 1.1 g/t gold and an inferred resource of 0.5 million ounces of gold in 15.4 million tonnes grading 1.0 g/t gold (see Company's news release dated October 3, 2012 filed on SEDAR (www.sedar.com). The results of a Preliminary Economic Assessment ("PEA"), which has recently been released (see Company news release dated August 20, 2012 and NI 43-101 Technical Report titled, "Preliminary Economic Assessment Report for the Karma Project, Burkina Faso, West Africa", with an effective date of August 2, 2012, filed on SEDAR (www.sedar.com) September 17, 2012), highlights the Karma Project to have robust economics. The PEA is based on the Company's previous January 9, 2012 resource estimate. The results of the updated resource estimate announced on October 3, 2012, is expected to further enhance project value as the Karma Project is advanced.

ABOUT BLUE GOLD

Blue Gold is a gold growth company with a single-minded goal - to dream big and deliver big results. Blue Gold's mandate therefore is simple, deliberate, and unambiguous: hold out for truly remarkable opportunities - the type of opportunities which its deep experience and science-based methodologies can identify, transform and grow into remarkable value and profits for our shareholders. For details on Blue Gold's activities, visit www.bluegoldmining.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" as such term is defined in applicable Canadian securities laws (together referred to herein as "forward-looking statements"). Except for statements of historical fact relating to Riverstone or Blue Gold, information contained herein constitutes forward-looking statements. Forward-looking statements are characterized by words such as "plan," "expect", "budget", "target", "project", "intend," "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements in this news release include, but are not limited to, statements relating to completion of the acquisition of Blue Gold by Riverstone; the percentage of Riverstone shares to held by former Blue Gold shareholders upon completion of the acquisition; the cash balance Riverstone will have upon completion of the acquisition; Riverstone's plans to conduct feasibility studies on the Karma Project and exploration programs on the Liguidi property and on other properties; composition of Riverstone's Board of Directors upon completion of the acquisition; and the effect Riverstone's updated resource estimate will have on any economic analysis of the Karma. Forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements.

These factors include (i) that Riverstone and Blue Gold will complete the arrangement transaction described herein, (ii) political developments, whether generally or in respect of the mining industry specifically, in Burkina Faso not consistent with Riverstone and Blue Gold's current expectations, (iii) Riverstone's and Blue Gold's expectations in connection with the projects and exploration programs discussed herein being met, (iv) the accuracy of management's assessment of the effects of the successful completion of the proposed transaction, (v) the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating metal prices and currency exchange rates (such as the West African CFA franc versus the Canadian Dollar), (vi) the viability and development of the Karma project on a basis consistent with Riverstone's and Blue Gold's current expectations, (vii) changes in project parameters as plans continue to be refined, (viii) changes in project development, construction, production and commissioning time frames, risk related to joint venture operations, (ix) the possibility of project cost overruns or unanticipated costs and expenses, (x) higher prices for fuel, steel, power, labour and other consumables contributing to higher costs, (xi) general risks of the mining industry, (xii) failure of plant, equipment or processes to operate as anticipated, (xiii) unanticipated results of future studies, (xiv) costs and timing of the development of new deposits, (xv) success of exploration activities, (xvi) permitting time lines, (xvii) government regulation and the risk of government expropriation or nationalization of mining operations, (xviii) unanticipated environmental risks, (xix) the continued employment of key Riverstone and Blue Gold employees, as well as those risk factors discussed or referred to in Riverstone's and Blue Gold's respective annual Management's Discussion and Analysis and Annual Information Form for their respective most recently completed year ends filed with the applicable securities regulatory authorities and available at www.sedar.com. Although Riverstone and Blue Gold have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended.

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. Neither Riverstone nor Blue Gold undertakes any obligation to update forward-looking statements if circumstances or management's estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding Riverstone's and Blue Gold's expected financial and operational performance and results as at and for the periods ended on the dates presented in their respective plans and objectives and may not be appropriate for other purposes.

This news release may use the terms "measured", "indicated" and "inferred" as these terms are defined under Canada's National Instrument 43-101. U.S. investors are advised that, while such terms are recognized and required by Canadian regulations, they are not recognized by the United States Securities and Exchange Commission ("SEC") and may not be comparable to similar information for United States mining or exploration companies. As such, certain information contained on this news release concerning descriptions of mineralization and resources under Canadian standards is not comparable to similar information made public by United States companies subject to the reporting and disclosure requirements of the SEC. U.S. investors are cautioned not to assume that any part or all of the mineral deposits described in these categories will ever be converted into proven or probable reserves, as defined in the SEC's Industry Guide No. 7.

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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