TORONTO, ONTARIO--(Marketwire - Aug. 13, 2012) - Sage Gold Inc. (TSX VENTURE:SGX) ("Sage" or the "Company") announces it has executed a Joint Venture agreement with St Andrew Goldfields Ltd. (TSX:SAS)(OTCQX:STADF)("SAS"), to earn a 60% interest on the Clavos gold project in Timmins, Ontario and has closed a $1.5 million pre-production financing debt facility ("Debt Financing") with Waterton Global Value, L.P. ("Waterton").
This Debt Financing replaces the previously announced non-binding convertible debt financing (see press release of May 16, 2012) and provides for the issuance of 6.0 million bonus common shares to Waterton. The interest rate is 9.5% per annum, and the term of the loan is for one year. There is a 2% structuring fee payable to Waterton in cash. Sage has received $1 million from this financing and the balance of $500,000 will be advanced to Sage upon completion of a new resource study and acceptable scoping study.
Sage completed the terms of its Option Agreement with SAS dated February 8, 2010 by refunding SAS $300,718 for the Reclamation and Closure bond cost plus accrued interest together with $40,000 in cash and 800,000 Sage Gold common shares. The balance of the proceeds of the financing will be used for preproduction expenses and working capital to advance the Clavos gold project in Timmins, Ontario including the following:
- a new National Instrument 43-101 resource study ("NI43-101")
- a Preliminary Economic Assessment
- a new or updated Closure Plan
- working capital
The Debt Financing is secured by Sage's 60% interest in the Clavos gold project, and all of the Company's other assets. Waterton has been granted a right of first refusal on production financing for Sage's 60% interest in the Clavos gold project and a Gold Supply Agreement ("GSA") pursuant to which Waterton has the option to purchase Sage's share of gold production from the Clavos gold project at a zero discount to prevailing market prices, up to 120,000 ounces, or for the first five years of production, whichever is greater.
Nigel Lees, President and CEO of Sage comments, "We are very pleased to have concluded this first tranche with Waterton for the pre-production costs on the Clavos gold project, especially in a difficult financing environment. We look forward to a mutually beneficial relationship as we work together with Waterton on the future production financing."
Cheryl Brandon, Portfolio Manager at Waterton, stated, "Waterton is pleased to partner with Sage Gold and looks forward to working with the management team to further develop the Clavos gold project. Sage Gold is positioned to benefit from the strengthening precious metals market given the near term production profile of the Clavos gold project and their partnership with a mid-tier gold producer in the region. We look forward to leveraging our technical and financial expertise in the gold mining sector to assist with the build-out of the mine plan and establishing a long term relationship with Sage Gold."
An updated NI43-101 resource study is underway for the Clavos gold deposit and will include historical surface and underground drilling as well as Sage's drilling results.
Sage is a mineral exploration and development company which has primary interests in near-term production and exploration properties in Ontario. Its main properties are the Clavos Gold deposit in Timmins and the Lynx deposit and other exploration properties in the Beardmore-Geraldton Gold Camp. Technical reports and information relating to the properties can be obtained from the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com and www.sagegoldinc.com.
This release was prepared by management of the Company who takes full responsibility for its contents.
This news release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended and "Forward Looking Information" within the meaning of applicable Canadian securities legislation. Some forward looking statements and forward looking information contained in this release are forward-looking and, therefore, involve uncertainties or risks that could cause actual results to differ materially. Such forward-looking statements include comments regarding mining and milling operations, mineral resource statements and exploration program performance. Factors that could cause actual results to differ materially include metal price volatility, economic and political events affecting metal supply and demand, fluctuations in mineralization grade, geological, technical, mining or processing problems, exploration programs and future results of exploration programs, future profitability and production. The Company disclaims any obligation to update 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.