VANCOUVER, Sept. 26, 2011 /PRNewswire/ - Goldgroup Mining Inc. (TSX :GGA ) ("Goldgroup" or the "Company") is pleased to announce that it has entered into an agreement with Almaden Minerals Ltd. and its subsidiary (together, "Almaden") to purchase Almaden's 30% interest in the Caballo Blanco project (the "Transaction"). As previously announced, Goldgroup recently completed its earn-in of its 70% interest in the Caballo Blanco gold project. Upon completion of the Transaction, Goldgroup will own 100% of the Caballo Blanco project.
In consideration for acquiring the remaining 30% interest in Caballo Blanco, at closing Goldgroup shall pay to Almaden a cash consideration of US$2,500,000 and issue to Almaden 7,000,000 of its common shares. An additional 7,000,000 of its common shares will be issued to Almaden under the following conditions: 1,000,000 common shares upon commencement of commercial production on the Caballo Blanco project, 2,000,000 common shares upon measured and indicated resources including cumulative production reaching 2,000,000 ounces of gold, 2,000,000 common shares upon measured, indicated and inferred resources including cumulative production reaching 5,000,000 ounces of gold and 2,000,000 common shares upon measured, indicated and inferred resources including cumulative production reaching 10,000,000 ounces of gold. The aforementioned Goldgroup shares to be issued are subject to certain statutory and agreed to hold periods. Goldgroup will also transfer to Almaden its 40% interest in the El Cobre property and grant a 1.5% net smelter royalty interest on the Caballo Blanco project to Almaden.
Goldgroup shall also pay US$650,000 and provide a 0.4% net smelter royalty on the Caballo Blanco project to the original claimholder of the property in settlement of certain rights and subject to certain terms and conditions.
Upon completion of the Transaction, Goldgroup's Caballo Blanco project will be subject to an aggregate 2.95% net smelter return royalty, which includes a prior 1.5% net smelter return royalty over the 70% interest Goldgroup acquired from NGEx Resources Inc. ("NGEx").
The closing of the Transaction is subject to certain conditions, including, but not limited to, the receipt of conditional listing approval for the common shares to be delivered pursuant to the Transaction by the Toronto Stock Exchange.
About Caballo Blanco
The Caballo Blanco project covers an area of approximately 55,000 hectares and is centered next to the Gulf of Mexico, 65 kilometres northwest of the city of Veracruz in the state of Veracruz, Mexico. In November, 2009, Goldgroup acquired from NGEx an option to acquire a 70% interest in the Caballo Blanco project from Almaden. In August, 2011, the Company satisfied its obligations to earn its 70% interest in the Caballo Blanco project. Further information of a technical or scientific nature related to the Caballo Blanco project is available in the technical report entitled "NI 43-101 Technical Report Caballo Blanco Project and a Resource Estimate at the La Paila Zone" dated February 28, 2011, which is available under Goldgroup's profile on SEDAR at www.sedar.com.
Goldgroup is a well-funded Canadian-based gold producer and is focused on the acquisition, exploration and development of advanced stage gold-bearing mineral properties in the Americas. The Company's current gold production and exploration and development related activities are conducted exclusively in Mexico, one of the world's most advantageous mining jurisdictions. Goldgroup owns and operates the Cerro Colorado Mine in Sonora along with a property portfolio that includes its interests in the Caballo Blanco project in Veracruz and the San José de Gracia project in Sinaloa.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain information contained in this news release may be deemed "forward-looking". All statements in this news release, other than statements of historical fact, that address events or developments that Goldgroup expects to occur, are "forward-looking information". These forward-looking statements relate to, among other things, the expectation that the parties will complete the Transaction and other expectations contained in this press release that are not historical fact. The Company's expectations regarding the Transaction depend in part on receiving approval from Toronto Stock Exchange. In some cases forward-looking information can be identified by terminology such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "projects", "potential", "scheduled", "forecast", "budget" or the negative of those terms or other comparable terminology. These statements reflect Goldgroup's current expectations. The statements are subject to a number of risks and uncertainties, including, but not limited to, the failure of the parties to complete the Transaction. In light of the risks and uncertainties surrounding the Transaction, investors should understand that the Company cannot assure investors that the forward-looking statements contained in this press release will be realized. In addition, there are "Risks and Uncertainties" included in the Annual Information Form and MD&A for Goldgroup available at www.sedar.com. Forward-looking information is not a guarantee of future performance and future events could differ materially from those discussed in the forward-looking information. All of the forward-looking information contained in this news release is qualified by these cautionary statements. Although Goldgroup believes that the forward-looking information contained in this news release are based on reasonable assumptions, readers cannot be assured that actual results will be consistent with such statements. Accordingly, readers are cautioned against placing undue reliance on forward-looking information. Goldgroup expressly disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, events or otherwise, except in accordance with applicable securities laws.
This news release and the information contained herein does not constitute an offer of securities for sale in the United States and securities may not be offered or sold in the United States absent registration or exemption from registration
SOURCE Goldgroup Mining Inc.