Kootenay Gold Inc. ("Kootenay") (TSX.V: KTN) is pleased to announce that Union Securities Ltd. (the "Agent") has agreed to act as lead agent in a syndicate that will conduct a brokered private placement to raise gross proceeds to Kootenay of up to $20,000,000 in preparation for Kootenay's bid to acquire the Sunshine Mine pursuant to a bankruptcy auction to be held on April 21, 2010.
- SYNDICATE: Union Securities Ltd., Canaccord Financial Inc., Haywood Securities Inc., Byron Securities Ltd. - OFFERING: Up to 25 million Subscription Receipts on a best efforts basis ($20,000,000) - PRICE: $0.80 per Unit (ea Unit consisting of 1 share & 1/2 warrant (ea whole warrant exercisable into a common share at $1.20 for a period of 12 months, as described herein) - OVER-ALLOTMENT: Additional $3,000,000 or up to 15% - COMMISSION: 7% Cash; 7% Agent's compensation options - QUALIFICATION: Short Form Prospectus to qualify the Units issuable upon exercise of the Subscription Receipts Kootenay CEO, James McDonald commented, "The Sunshine Mine has historically been one of the World's largest producers of Silver by consistently producing 3 to 5 million ounces of Silver per year (7 million ounces in peak years) at a grade of more than 22 ounces per ton. These funds will be used for the proposed acquisition (the "Acquisition") of Sterling Mining Company (Sunshine Mine) in a joint bid (the "Joint Bid") with Alberta Star Development Corp. (TSX.V: ASX) to acquire 100% of the shares of Sterling and its assets, and for working capital and Kootenay's general corporate purposes".
THE SUNSHINE MINE
Sterling's "Sunshine Mine" located near Coeur d'Alene, Idaho, USA, has been one of the world's largest producers of silver, having recorded production of over 360 million ounces of silver since 1904. A 2007 Canadian "National Instrument 43-101 - Standards of Disclosure for Mineral Projects" report by Behre Dolbear & Co. estimated remaining resources as follows:
- Measured and Indicated resources of 31.51 million ounces of silver grading 21.8 ounces per ton in 1.43 million tons (diluted grade). - Inferred resources of 231.5 million ounces of silver grading 101.6 ounces per ton silver in 2.28 million tons (undiluted grade). The report can be found under Sterling's profile with the U.S. Securities and Exchange Commission and available in Canada on SEDAR.
The timing of the bid process and a decision of the U.S. Bankruptcy Court, District of Idaho concerning the successful bid are as follows:
(i) February 15, 2010 - "Deadline of Application and Deposit" to become a qualified bidder; (ii) April 19, 2010 - "Deadline for Submission of Bids" by qualified bidders; (iii) April 21, 2010 - "Auction Date"; (iv) May 3, 2010 - "Confirmation Date" - hearing confirming the successful bidder; and (v) May 14, 2010 - "Bid Closing Date" - closing date of the acquisition of Sterling. Alberta Star announced a US$11.75M offer to acquire Sterling on December 1, 2009. Minco Silver Corporation announced on December 9, 2009 an offer which was filed with the Court to acquire Sterling for US$12.5M. There can be no assurance that the proposed transaction will be completed as proposed or at all. The proposed transaction is an "arm's-length transaction" as defined in TSX Venture Exchange ("TSX-V") Policy 1.1. and remains subject to TSX-V approval.
Each Subscription Receipt will entitle the holder to acquire one unit (each a "Unit") of the Company for no additional consideration upon the earlier of (i) five business days after the date of a receipt for a final short form prospectus; or (ii) four months and one day after the Closing Date. Each Unit will consist of one common share ("Common Share") of Kootenay and one-half of one transferable share purchase warrant ("Warrant"). Each whole Warrant will entitle the holder to acquire one common share of the Company at an exercise price of $1.20 for a period of 12 months from the date of the Court's acceptance of the Joint Bid. In the event that the Joint Bid is successful, and the Company fails to obtain a receipt for a final prospectus within 45 days of the Court's acceptance of the Joint Bid, each Subscription receipt will entitle the holder to acquire 1.10 common shares and 0.55 Warrants. The Offering is scheduled to close on or about April 15, 2010 and is subject to certain conditions including, but not limited to the receipt of all necessary approvals including the approval of the TSX-V.
Upon the closing of the Offering, the gross proceeds of the Offering will be placed into escrow, with an independent escrow agent, pending acceptance of the Joint Bid by the Court. Upon acceptance of the Joint Bid, the net proceeds of the Offering will be released to the Company. In the event that the Joint Bid is unsuccessful, the gross proceeds of the Offering and accrued interest thereon will be returned by the escrow agent to the investors. In the event that the Joint Bid is successful, the completion of the Acquisition is subject to regulatory approval.
As consideration for the services provided to the Company by the Agent under the Offering, Kootenay has agreed to pay to the Agent a cash commission of 7 per cent of the total raised under the Offering, and will issue to the Agent such number of Agent's compensation options as is equal to 7 per cent of the Subscription Receipts issued pursuant to this Offering. Each Agent's compensation option will entitle the Agents to acquire one Unit at an exercise price of $0.80 per Unit expiring 12 months after the date of the Court's acceptance of the Joint Bid. The net proceeds from the Offering will be used for the acquisition of Sterling Mining Company (Sunshine Mine), and for working capital and general corporate purposes of the Company.
The securities to be issued under the Offering will be offered in Canada by way of private placement exemptions, and offshore pursuant to applicable exemptions, and in the United States on a private placement basis pursuant to exemptions from the registration requirements of the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and applicable state securities laws.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
The foregoing geological disclosure has been reviewed and verified by Kootenay's President and Chief Executive Officer, James McDonald, P.Geo (a qualified person for the purpose of National Instrument 43-101, Standards of Disclosure for Mineral Projects). Mr. McDonald is a director of the Company.
In addition to the Sunshine Mine bid, Kootenay is developing the former producing Promontorio Silver Mine in Sonora State, Mexico. Significant intercepts include KP-25 with 386.64 meters of 46.15 g/t silver, 0.44 g/t gold & 1.54% lead/zinc -- including 97.67 meters of 100.4 g/t silver, 0.77 g/t gold & 3.24% lead/zinc. Intercepts encountered in KP 25 are associated with sulfides hosted in breccias and stockwork veining (see new Feb 5, 2009 news release). Since 2006, Kootenay has systematically advanced the Promontorio Silver Project with a 3D Induced Polarization Study, an Electromagnetic Airborne Study, Surface Sampling, Satellite Imagery, Trenching, Sampling, Mapping and more than 20,000 metres of Diamond Core Drilling. In addition, Kootenay has a portfolio of mineral projects in Sonora, Mexico and in British Columbia, Canada.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of this release.
Cautionary Note: The Securities and Exchange Commission's mining guidelines strictly prohibit information of this type in documents filed with the Securities and Exchange Commission. Mineral deposits on adjacent properties are not indicative of mineral deposits on our properties.
This news release may contain forward-looking statements including but not limited to comments regarding the completion of the Offering, the completion of the Acquisition, the filing of a final short form prospectus, the acceptance by regulatory authorities to the Acquisition, the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.
SOURCE: Kootenay Gold Inc.
James McDonald, CEO and President at (403) 238-6986; or Ken Berry, Chairman at (604)601-5652, 1-888-601-5650, www.kootenaygold.ca