Sunridge Gold Corp.

Sunridge Gold Corp.

September 04, 2009 08:00 ET

Sunridge Gold Announces US$10,000,000 Exploration Funding Agreement and Strategic Alliance Financing With New Partner Antofagasta Minerals S.A.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 4, 2009) - Sunridge Gold Corp. ("Sunridge" or the "Company") (TSX VENTURE:SGC) is pleased to announce that it has signed a memorandum of understanding ("MOU") to enter into a strategic partnership with Antofagasta Minerals S.A. ("Antofagasta") whereby Antofagasta will fund US$10,000,000 of exploration work over a 5-year period to earn a 60% interest in part of the Company's Asmara Project in Eritrea, now known as the Exploration Areas, and will purchase common shares of Sunridge in a non-brokered private placement for proceeds of US$5 million. Antofagasta will become Sunridge's largest shareholder owning an approximate 18% interest in Sunridge.

Michael Hopley, President and CEO of Sunridge, stated: "We are very happy to be forming this strategic alliance with one of the leading copper producers in the world. Having concluded site visits, it is obvious that Antofagasta shares our belief that the Asmara Project has the potential for the discovery of other large base metal deposits - larger even than the Emba Derho deposit. This funding of the work on the Exploration Areas will allow us to drill many of the best targets in those areas. In addition, the corporate financing by Antofagasta will permit us to continue further exploration and development of the four existing deposits, particularly Emba Derho, towards final feasibility and eventual production."


- The exploration agreement with Antofagasta excludes the current existing Development Areas and the four defined deposits outlined to date and will therefore focus on other areas of the Asmara Project, known as the Exploration Areas, which are considered to have the potential for large new discoveries. On the Development Areas, which will remain owned 100% by Sunridge, the Company will commence its own drilling programs with the objective to expand and further develop these resources.

- The combination of the exploration funding agreement and the corporate funding by Antofagasta will allow Sunridge to conduct parallel exploration programs on the Exploration Areas and on the existing deposits within the remaining Development Areas (see map below).

- Combined with its existing cash of approximately $4.5 million, Sunridge will have a stronger cash position of approximately $10.0 million upon closing of the private placement. This will allow Sunridge to aggressively conduct exploration and development programs and advance deposits toward final feasibility studies on the existing resources on the Asmara Project as well as commencing exploration on the Besakoa project in Madagascar.

- Sunridge still retains a 100% interest in the four defined deposits outlined to date on the Asmara Project.

- The alliance between Sunridge and one of the premier copper producers in the world should bring strong benefits to the exploration and potential development of the Asmara Project.


The MOU states that under the exploration agreement to be finalized in October 2009, Antofagasta will have an option to earn a 60% interest in the Asmara Project Exploration Areas (see map below) by spending US$10,000,000 over a maximum 5-year period. The Exploration Areas cover approximately 585 hectares within the Asmara Project, but specifically excludes the four deposits already defined by Sunridge; the large Emba Derho copper-zinc-gold VMS deposit, the Adi Nefas zinc-gold-copper VMS deposit, the Debarwa copper-zinc-gold deposit and the Gupo gold deposit. The Exploration Areas includes many high priority drill targets defined by Sunridge over the past several years through geological mapping and sampling as well as various geophysical methods. The targets of particular interest are Dario Paulus, Kodadu, Adi Rassi, Adi Musa and Adi Lamza. Sunridge believes that these areas have strong potential for new base metals and possibly gold discoveries.

Sunridge will be the operator of the exploration program until a total of US$7,000,000 has been funded by Antofagasta at which time Antofagasta can become operator. The following are the minimum exploration commitments to maintain the option: Year 1: US$1,500,000; Year 2: US$2,000,000; Year 3: US$2,000,000; Year 4: US$2,000,000; Year 5: US$2,500,000. Antofagasta is obligated to spend a minimum of US $2 million in the first two years or pay Sunridge any shortfall. Antofagasta has the right to accelerate the funding.

Upon completion of US$10,000,000 in exploration expenditures, Antofagasta will be entitled to acquire a 60% interest in the Exploration Areas and will have the right to complete a feasibility study on any project on the Exploration Areas to earn an additional 15% for a total of 75% interest in the Exploration Areas.


Under a financing arrangement with Sunridge, Antofagasta will purchase shares in Sunridge equal to US$5.0 million. Antofagasta will subscribe, by way of a non-brokered private placement, for approximately 14,000,000 shares of Sunridge at a price of $0.40 per share for gross proceeds of US$5 million (CDN$5.6 million). Upon completion of the private placement, Antofagasta will own an approximate 18% interest in Sunridge. As part of the financing and exploration agreement, Antofagasta will be entitled to appoint one member to the Sunridge Board of Directors and will have certain rights to participate in future financings to maintain their interest.

The proceeds from the private placement will be for further exploration and development on the four existing deposits within the Asmara Project, for initial exploration work on the Company's projects in Madagascar and for general corporate purposes.

The transaction remains subject to Antofagasta completing its due diligence, completion of formal documentation and regulatory approvals. Closing is expected in October, 2009.


Antofagasta is a wholly owned subsidiary of Antofagasta plc, which is listed on the London Stock Exchange (symbol - ANTO) and is a constituent of the FTSE-100 index, with interests in mining, transport and water distribution. Its Chilean mining operations, which comprise Los Pelambres, El Tesoro and Michilla, are expected to produce approximately 447,000 tonnes of copper in concentrate and cathode and 7,200 tonnes of molybdenum in concentrate in 2009. It is currently carrying out a brownfield expansion at Los Pelambres and developing the greenfield Esperanza project in Chile, which, when operational, are expected to increase total Group copper production to nearly 700,000 tonnes per year from 2011. Antofagasta also has exploration or feasibility programs in Chile, Pakistan, Zambia and Mexico. At 30 June 2009, Antofagasta plc had net cash of US$1.8 billion and it currently has a market capitalization of US$11.3 billion.


Sunridge Gold Corp. is a mineral exploration and development company focused on the acquisition, exploration, discovery and development of base and precious metal projects on the Asmara Project in Eritrea. Recently the Company published a positive Preliminary Economic Assessment Study on the Emba Derho copper-zinc-gold deposit. Prior to the completion of the above private placement, the Company has 62.6 million shares outstanding and approximately $4.5 million in cash. Sunridge Gold Corp. trades on the TSX Venture Exchange under the symbol SGC. For additional information on the company and its projects please view the slide show on our website at or call Don Halliday or Greg Davis at the numbers listed below.


Michael Hopley, President and Chief Executive Officer

This press release contains forward-looking statements about the Company and its business. Forward looking statements are statements that are not historical facts and include resource estimates. The forward-looking statements in this press release are subject to various risks, uncertainties and other factors that could cause the Company's actual results or achievements to differ materially from those expressed in or implied by forward looking statements. These risks, uncertainties and other factors include, without limitation risks related to fluctuations in gold prices; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company's properties; uncertainties involved in the interpretation of drilling results and other tests and the estimation of gold resources; the possibility that required permits may not be obtained on a timely manner or at all; the possibility that capital and operating costs may be higher than currently estimated and may preclude commercial development or render operations uneconomic; the possibility that the estimated recovery rates may not be achieved; risk of accidents, equipment breakdowns and labor disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in the work program; and other factors identified in the Company's SEC filings and its filings with Canadian securities regulatory authorities. Forward-looking statements are based on the beliefs, opinions and expectations of the Company's management at the time they are made, and other than as required by applicable securities laws, the Company does not assume any obligation to update its forward-looking statements if those beliefs, opinions or expectations, or other circumstances, should change.

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Neither the 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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