QUEBEC CITY, QUEBEC--(Marketwired - May 9, 2013) - Virginia Mines Inc. ("Virginia") (VGQ.TO) is pleased to announce that it has entered into an agreement with TerraX Minerals Inc. ("TerraX") pursuant to which it has the option to purchase, in consideration for an amount of $2,000,000, a 2% net smelter return (NSR) royalty on the Northbelt property located in the area of Yellowknife, Northwest Territories. Virginia issued 20,000 shares at a deemed price of $10.00 per share in favour of TerraX to obtain this option. The Northbelt gold property is located 15 kilometres north of the city of Yellowknife. It consists of 121 mining leases covering an area of 3,562 hectares covering approximately 13 kilometers along the prolific greenstone belt in Yellowknife, host of the Con (5 M oz.) and Giant (7 M oz.) gold deposits.
In connection with this agreement, Virginia has also subscribed by way of private placement for 3,617,085 units of TerraX at a price of $0.20 per unit for gross proceeds of $723,417. Each unit consists of one (1) common share of TerraX and one half of one (1/2) share purchase warrant, each whole warrant entitling the holder to purchase one (1) common share of TerraX at a price of $ 0.30 for a period of 36 months.
Following the private placement, Virginia holds the beneficial ownership and control of approximately 9.86% of the outstanding common shares of TerraX. Assuming the exercise of all warrants, Virginia would hold approximately 14.09% of the common shares issued and outstanding of TerraX. The securities were acquired by Virginia for investment purposes. If TerraX conducts a subsequent private placement of units before May 17, 2013, Virginia has agreed to purchase such a number of additional units allowing it to maintain a holding of 9.9% of the common shares issued and outstanding of TerraX, up to a maximum aggregate amount of $800,000. The securities are subject to a hold period of four months and one day under applicable securities legislation.
(VGQ:TSX) Virginia conducts its exploration activities over the vast, unexplored territories of Northern Quebec in order to create value for its shareholders while protecting the quality of life for both present and future generations. With a working capital position of $40.3 million as at November 30, 2012, and a large area of mining claims in Quebec North, Virginia is among the most active mining exploration companies in Québec. Strengthened by the discovery of the Éléonore project and more than 15 years expertise on the territory, Virginia's exploration team is recognized as one of the best in Canada. Virginia also holds a 2% to 3.5% royalty in the Éléonore property.
This press release may contain forward-looking statements that are subject to known and unknown risks and uncertainties that could cause actual results to vary materially from targeted results. Such risks and uncertainties include those described from time to time in Virginia's Annual Information Form filed with the security commissions of Quebec, Ontario and Alberta, and in the annual report on Form 40-F filed with the U.S. Securities and Exchange Commission. Virginia undertakes no obligation to publicly release the result of any revision of these forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.