Majestic Gold Corp (MJS)

[MisterB]

Majestic Gold Corp.: Convertible $10,000,000 Loan Financing Arranged (ccnm)
VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 26, 2011) -Majestic Gold Corp. (the "Company") (TSX VENTURE:MJS) has arranged a$10,000,000 loan to advance its Song Jiagou project in China. Ninemillion dollars ($9,000,000) from the proceeds from the loan will beused by the Company to in connection with its Song Jiagou project andthe balance of one million dollars ($1,000,000) for general workingcapital purposes.
The loan will have a one year term and loan principalwill be convertible at the option of the lender in whole or in partinto common shares ("Shares") of the Company until twelve months fromthe date of the loan advance at the price of
.205 per Share. The loanwill bear interest at the rate of 7.5% per annum, payable on maturity,and accrued and unpaid interest will be convertible at the option of thelender in whole or in part into shares of the Company until twelvemonths from the date of the loan advance at Market Price at the time ofconversion.
The lender is at arm's length from the Company andwill not become an insider as a result of any conversion of principaland interest. All shares issued on any conversion of loan principal orinterest will be subject to a four month hold period from the date ofadvance of loan proceeds. The loan is subject to acceptance by the TSXVenture Exchange.
As additional consideration for the loan, the Companyhas agreed to forward at least $9 million to Majestic Yantai Gold Ltd.,a British Virgin Islands company owned 94% by the Company to be used tofurther advance its Song Jiagou project.
The Borrower has also agreed to a 90 day period forreciprocal due diligence reviews and discussions for the possiblefurther involvement of the Lender in the Song Jiagou project.
In the event that no further agreement is reachedbetween the Lender and the Company during the 90 day period, then theloan and a minimum of seven (7) months interest will automaticallyconvert to shares in the Company at a price of
.205 per share and theinterest at Market Price respectively.
In addition the Company is pleased to announce thatit has arranged a non-brokered private placement of up to 15,000,000shares to be issued at the price of
.20 per share for gross proceedsof $3,000,000.
Completion of the offering is subject to TSX VentureExchange acceptance. The Company will pay finders' fees in cash and/orsecurities in connection with the offering, in accordance with ExchangePolicy. All securities issued pursuant to the offering will be subjectto a four-month hold period from the closing date. The proceeds from theoffering will be used to finance exploration activities on theCompany's Song Jiagou gold project in China, and for general corporateexpenses.
On behalf of the Board of Directors,
Rod Husband, President & CEO, Majestic Gold Corp.
This news release may contain forward-lookingstatements including but not limited to comments regarding the timingand content of upcoming work programs, geological interpretations,receipt of property titles, potential mineral recovery processes, etc.Forward-looking statements address future events and conditions andtherefore, involve inherent risks and uncertainties. Actual results maydiffer materially from those currently anticipated in such statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations
Majestic Gold Corp.
[phone] or 1-866-282-8398
[phone] (FAX)
[e-mail]
www.majesticgold.net