VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 20, 2012) - True North Gems Inc. (TSX VENTURE:TGX) ("True North" or the "Company") is pleased to announce the signing of a Letter of Intent ("LOI") with Greenland Mining Services A/S ("GMS"). Under this agreement GMS will provide the majority of capital costs to become a 20% shareholder in True North Gems Greenland ("TNGG"), a wholly owned subsidiary of the Company and titleholder of the Aappaluttoq ruby project. GMS is predominantly owned by international arctic contractor Leonhard Nilsen & Sonner A/S (LNS) of Norway. The combined GMS-LNS partnership has 70 years of experience in logistics and mining in arctic environments.
To earn the entire 20% shareholding in TNGG, GMS will be committed to fully engineer, build and fund the complete mine support infrastructure, an estimated investment of US $23 million (approximately 60% of projected capital expenditures). This will include all civil engineering costs, the capital cost of open pit pre-strip, and the construction cost of all mine-related buildings including ore storage, port facilities, mine operations camp, workshop, site roads, power plant, and fuel and explosive storage. The Company will retain responsibility for designing and funding capital costs for the ore processing circuit and building, rough gem sorting and grading facility, and gem marketing and sales.
"This agreement marks a very important milestone in the development of the Aappaluttoq ruby project," stated Nicholas Houghton, President and CEO of True North. "Not only does it provide substantial capital contributions for the construction of the mine, but it also brings in an experienced Greenlandic and Arctic mining operator. This will considerably de-risk the project and act as a growth catalyst for the future Greenlandic mining industry."
Under this agreement and during mine operations, GMS will retain the right to operate the mine site on a cost plus basis, and will be responsible for providing all the necessary mining equipment required throughout the mine life. During mine operations, certain surface infrastructure components will be leased by GMS to TNGG, subject to a buy-out at any time.
"We are delighted to forge a partnership with True North," said Finn Mortensen, Chairman of GMS. "The GMS mining and arctic operating expertise will allow True North to focus on their primary strengths: processing, marketing, branding and the sale of Greenland ruby and pink sapphire."
True North and GMS will develop a mutually agreeable construction plan, timeline and budget that will provide sufficient detail at the full feasibility level to facilitate final schedules, layouts, equipment procurement, and definitive capital cost allocations based on this agreement. This LOI is binding but conditional upon the finalization of the option and shareholders agreement by March 1, 2013, receipt of requisite regulatory approval and the granting of the Exploitation Permit.
GMS is a major supplier of services to the oil, gas and mineral industry in Greenland. The overall LNS Group of 15 companies is a major mining and construction company based in Northern Norway. The LNS group has worked on a variety of projects over the last 50 years and has focused on operations in Svalbard, Spitsbergen, Iceland, Greenland, Russia, Antarctica and throughout Scandinavia.
In connection with this release the Company will hold a conference call on Tuesday, November 20, 2012 at 8:00am PST. To access the call please dial 416-695-7806 (local Toronto and international) or 1-888-789-9572 (North American toll free), and enter passcode 9743014.
This document contains "forward-looking information" and "forward-looking statements" (together, "forward-looking statements") within the meaning of applicable securities legislation, which are made as of the date of this document or the document(s) referred to herein. Statements that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "intends", "strategy", "goals", "objectives" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements. Forward-looking statements include, without limitation, statements with respect to: the amount of mineral reserves and mineral resources; the amount of future production over any period; net present value and internal rates of return of the proposed mining operation; capital costs; operating costs; strip ratios and mining rates; and mine life. The forward-looking statements are made based upon certain assumptions which, if untrue, could cause the actual results, performances or achievements of the Company to be materially different from future results, performances or achievements expressed or implied by the forward-looking statements. These assumptions include, without limitation: the price of gemstone products produced; anticipated costs; the presence of and continuity of gemstones at modeled grades and values; the capacities of various machinery and equipment; the availability of personnel, machinery and equipment at estimated prices; exchange rates; appropriate discount rates; tax rates applicable to the proposed mining operation; financing structure and costs; anticipated mining losses and dilution; gemstone recovery rates; reasonable contingency requirements; and receipt of regulatory approvals on acceptable terms. By their very nature, forward-looking statements involve inherent risks and uncertainties that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements. These include, without limitation: price volatility, discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries, mining operational and development risks, regulatory restrictions (including environmental regulatory restrictions and liability), activities by governmental authorities (including changes in taxation), currency fluctuations, the speculative nature of gemstone exploration, the global economic climate, dilution, share price volatility, competition, loss of key employees; additional funding requirements and defective title to mineral claims or property]. This list is not exhaustive. See also, for example, the risks disclosed in the Company's other disclosure documents filed at www.sedar.com, including, without limitation, those disclosed in the Company's management's discussion & analysis. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, except as otherwise required by applicable securities legislation.
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