Victory Gold Mines Inc.

April 06, 2011 19:07 ET

Victory Gold Mines Inc. Closes on $490,500 Common Share Units and Flow-Through Financing

TORONTO, ONTARIO--(Marketwire - April 6, 2011) - Victory Gold Mines Inc. ("Victory Gold") announces that on March 31, 2011 it closed on the first tranche of 2,600,000 units of a private placement financing at $0.15 per common share unit. Each unit consists of one common share and a half-warrant, with each full warrant being exercisable at $0.25 per share for 18 months from the date of closing. No finders fee was paid.

In addition, Victory Gold closed effective March 31, 2011 on the first tranche of a private placement financing of 670,000 flow-through shares at $0.15 per share. No finders fee was paid.

All securities issued in the private placement are subject to a hold period of four months and one day.

Total proceeds of $490,500 will be used for general overhead expenses and exploration drilling work to earn up to an initial 50% interest in a former producing property located between the Black Fox Mine and the Hislop Mine, both of which are in production situated 60 km to the east of the city of Timmins, Ontario.

"This financing places Victory Gold in position to earn the initial 50% interest in the Gold Pike Mine property situated in the East Timmins Gold Camp," said John Kontak, President of Victory Gold Mines Inc.

Key terms for Victory Gold to earn up to a 70% interest from Matachewan Consolidated Mines, Limited ("MCM") in the Gold Pike Mine property are:

  • earn 50% over three years by making $450,000 in exploration expenditures, $60,000 in cash payments, and 500,000 shares;
  • earn 60% for an additional $1 million in exploration expenditures over 2 years; and
  • earn 70% for an additional $2 million in exploration expenditures over 3 years.

MCM retains a 2% NSR (1% of which can be repurchased for $1 million) and receives an annual advance royalty of $25,000 after Victory Gold's 50% earn in.

A joint venture is established after the 70% Victory Gold earn in. Should Victory Gold provide 100% of mine financing, it recovers 200% of exploration expenditures as a priority on 90% of joint venture profits.

Gold mineralization was outlined on the Gold Pike Mine property by Noranda during the 1980's and Royal Oak Mines initiated production from a small open pit mine in the early 1990's, shipping approximately 100,000 tons grading 3.4 grams per tonne for milling (Source: Resident Geologist) when the gold price averaged $366 per oz. Victory Gold plans to explore and expand the gold mineralized zones along strike and to depth from the previous mining operation.

Please visit www.victorygoldmines.com for additional information.

Certain statements contained in this press release constitute "forward looking statements". These statements are based on current expectations of management, however are subject to known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from the forward- looking statements in this news release. Readers are cautioned not to place undue reliance on these statements. The Company does not undertake any obligation to revise or update any forward-looking statements as a result of new information, future events or otherwise after the date hereof, except as required by securities laws.

Shares Outstanding: 28,408,096

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