Blue Gold Reports First-Quarter Financial Results

Marketwired

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov 16, 2012) - Blue Gold Mining Inc. ("Blue Gold" or the "Company") (TSX VENTURE:BGX) reports financial results for the three months ended September 30, 2012 and provides an update on the Company''s corporate activities. All amounts are presented in Canadian dollars unless otherwise stated.

HIGHLIGHTS TO DATE

Business Development Activities

  • On October 18, 2012, Blue Gold and Riverstone Resources Inc. ("Riverstone") announced an agreement (the "Arrangement Agreement") whereby, subject to satisfaction of certain conditions, Riverstone will acquire 100% of the issued and outstanding common shares (the "Blue Gold Shares") of Blue Gold (the "Arrangement").

    The Arrangement is subject to the terms and conditions of the Arrangement Agreement, and will be executed pursuant to a plan of arrangement under the Business Corporations Act (British Columbia). Assuming the Arrangement becomes effective, (i) Blue Gold shareholders (other than Blue Gold shareholders who validly exercise dissent rights) will receive 0.801 of a common share of Riverstone (each whole share, a "Riverstone Share") for each Blue Gold Share held, (ii) holders of Blue Gold options will receive fully vested options to purchase Riverstone Shares, subject to the application of the exchange ratio of 0.801 (as it may be adjusted in accordance with the plan of arrangement), and (iii) holders of Blue Gold warrants, in accordance with the terms of the Blue Gold warrants, upon payment of the exercise price therefor, will receive the number of Riverstone Shares which the holder would have been entitled to receive as a result of the transactions contemplated by the plan of arrangement if, immediately prior to the effective time, such holders were the registered holders of the number of Blue Gold Shares to which the holder was theretofore entitled upon exercise of the Blue Gold warrants.

    On completion of the Arrangement, Blue Gold shareholders will hold 26% of the pro forma outstanding Riverstone Shares, on a fully-diluted basis. It is estimated that there will be 178.3 million basic Riverstone Shares outstanding upon closing. See Blue Gold''s Management Information Circular dated November 9, 2012, available on SEDAR at www.sedar.com, for a detailed discussion of the benefits of the Arrangement to Blue Gold shareholders;
  • In August 2012, Blue Gold acquired 6,054,212 units of Paget Minerals Corp. ("Paget") by way of a private placement at a price of $0.16 per unit for $968,674. Each unit consists of one common share and one half of one common share purchase warrant. Each warrant is exercisable into one common share of Paget at a price of $0.30 per share for a period of 2 years from the date of issuance.

Exploration Activities

  • In September 2012 a $2.65 million exploration program on the Ball Creek project was completed, focusing primarily on testing the Main Target, a 1,400 metre by 500 metre zone of gold-copper mineralization associated with monzonite porphyry bodies. The program included 4,108 metres of diamond core drilling, geophysical surveying (airborne magnetics and ground IP), geological mapping and geochemical sampling. The program yielded results that demonstrate the robust potential of this property and confirms Main Zone mineralization is open to the south and west. Highlights from the drill program include 0.44 g/t gold and 0.15% copper over 307.0 metres including 0.50 g/t gold and 0.24% copper over 102.0 metres in hole BC12-54. The Company will re-evaluate its plans with respect to the Ball Creek project should the Arrangement with Riverstone be completed in December 2012.

SELECTED FINANCIAL DATA

The following selected financial data is derived from Blue Gold''s financial statements for the three month period ended September 30, 2012, as prepared in accordance with International Financial Reporting Standards ("IFRS").

  Three months ended  
  September 30  
  2012   2011  
Loss for the period $ (547,675 ) $ (2,429,858 )
Loss and comprehensive loss for the period $ (554,508 ) $ (2,429,858 )
Loss per share - basic and diluted $ (0.01 ) $ (0.08 )
       
       
    As at  
    September 30     June 30  
    2012     2012  
Cash and short term investments $ 19,504,906   $ 23,277,243  
Working capital $ 19,478,401   $ 23,590,110  
Total assets $ 23,801,359   $ 23,825,859  
Current liabilities $ 679,647   $ 218,496  
Non-current liabilities $ -   $ -  
Shareholders'' equity $ 23,121,712   $ 23,607,363  
  • For the three months ended September 30, 2012, we reported a net loss of $0.5 million or $0.01 per share compared to a net loss of $2.4 million or $0.08 per share for same period in the prior year.

    The most significant contributors to the losses for the three months ended September 30, 2012 were wages and benefits ($0.3 million) property investigation expenses ($0.2 million), office and general expenses ($0.1 million), professional fees ($0.1 million) and stock based compensation expense ($0.1 million). These costs were offset by an income inclusion resultant from interest income earned on cash and short term investments ($0.1 million) and a change in fair value of the Company''s financial instruments ($0.1 million).

    In the comparative period, the most significant contributor to the losses was stock based compensation expense of $2.3 million. Blue Gold did not become active under the current management until September of 2011.
  • Working capital of $19.5 million at September 30, 2012 includes $19.5 million in cash and short term investments and $0.7 million in receivables and prepaid expenses, net of $0.7 million in accounts payable and accrued liabilities.
  • Non-current assets of $3.6 million is comprised of exploration and evaluation assets of $2.3 million, reflecting activity relating to the Company''s Ball Creek project, its investment in Paget of $1.0 million and its long-term deposit with Oxygen Capital Corp., a related party who provides management and technical services to the Company, of $0.3 million.

Details of the Company''s financial results are described in the condensed interim financial statements and corresponding Management''s Discussion and Analysis for the three months ended September 30, 2012. These and further details on Blue Gold''s project and activities can be found on the Company''s website at www.bluegoldmining.com and on SEDAR at www.sedar.com.

All technical information contained in this release has been reviewed and approved by Scott Heffernan, P. Geo., Vice-President - Exploration for Blue Gold and a "qualified person" within the meaning of National Instrument 43-101.

All statements in this press release, other than statements of historical fact, are "forward-looking information" with respect to Blue Gold within the meaning of applicable Canadian securities laws, including statements that address exploration drilling, potential quantity and/or grade of minerals, potential size or location of a mineralized zone, potential expansion of mineralization and the timing of exploration programs and the completion of the Arrangement with Riverstone.

Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "plan", " continue", " planned", "expect", "project", "predict", "potential", "targeting", "intends", "believe", "potential", and similar expressions, or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "should", "could", "would", "might" or "will" be taken, occur or be achieved. These forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation: risks related to fluctuations in metal prices; uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from weather, logistical, technical or other factors; the possibility that results of work will not fulfill expectations and realize the perceived potential of the Company''s property; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of cost overruns or unanticipated expenses in the work program; the risk of environmental contamination or damage resulting from Blue Gold''s operations and other risks and uncertainties, risk of not completing the Arrangement with Riverstone and including those described in Blue Gold''s Annual Information Form for the year ended June 30, 2012.

Forward-looking statements are based on the beliefs, estimates and opinions of Blue Gold''s management on the date the statements are made. Except as required by law, Blue Gold undertakes no obligation to update these forward-looking statements should management''s beliefs, estimates or opinions, or other factors, change.

Contact:
Blue Gold Mining Inc.
Mark O'Dea
Chairman and CEO
604-683-7790
Blue Gold Mining Inc.
Sean Tetzlaff
Chief Financial Officer
604-683-7790
www.bluegoldmining.com

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