VANCOUVER, BRITISH COLUMBIA--(Marketwire -03/29/12)- Columbus Gold Corporation (TSX-V: CGT.V - News) ("Columbus Gold") is pleased to announce that it has entered into a Letter of Intent ("LOI") with Empire Mining Corporation ("Empire"), pursuant to which Columbus Gold can earn a 51% interest in Empire's high-grade copper-gold-silver and molybdenum Demirtepe project located in western Turkey.
In January 2011, Empire announced the results of discovery hole DTH-001 drilled at Demirtepe which intersected significant zones of copper-gold-silver skarn mineralization, including:
-- 2.02% copper, 0.96 g/t gold, 21.64 g/t silver over a sampled width of
47.35 m from 112.2 m to 159.55 m.
The zone includes the following higher grade intercepts:
-- 6.29% copper, 3.1 g/t gold and 66.1 g/t silver over a sampled width of
12.7 m from 140.3 m to 153.0 m; and
-- 9.1% copper, 4.68 g/t gold and 95.3 g/t silver over a sampled width of
8.0 m from 140.3 m to 148.3 m.
In September 2011, Empire announced the final assay results of the complete Phase I drilling program at Demirtepe and reported that drilling consistently intersected significant shallow copper-gold-silver and molybdenum mineralization in the Main Zone in the majority of the holes completed. As reported by Empire, nearly all 21 drill-holes in the Main Zone are mineralized with copper, gold, silver and molybdenum and all the mineralization is hosted by wollastonite (a calcium silicate mineral with several industrial uses), or by a mix of wollastonite and garnet, so that virtually all the material in the Main Zone contains saleable product.
A table of mineralized intercepts in the Main Zone from Empire's Phase I drilling is available at the following link:
In September 2011, Empire also announced that an ongoing sampling program at the newly-identified Southwest Zone of Demirtepe, located approximately 1 km to the southwest of the Main Zone, identified a continuous copper-gold anomalous zone then about 1.8 km long and up to 800 metres wide and still open to the southwest. The sampling returned elevated (from 500 ppm to more than 3,000 ppm) copper levels in soils broadly coincident with elevated gold ranging from 20 ppb to more than 100 ppb. Initial rock sampling results included 4.68% copper, 5.58 gpt gold and 59.3 gpt silver from wollastonite bearing boulders and 3.2% copper in garnet skarn boulders with copper oxide staining.
The Southwest Zone is interpreted by Empire as having formed the basement below the Demirtepe Main Zone deposit which then became detached. This view is supported by signs of epithermal style quartz with chalcopyrite and pyrite, therefore a higher temperature equivalent. The identification of a basal detachment fault at the bottom of the Main Zone led to the discovery of the Southwest Zone.
Various maps of the newly identified Southwest Zone relative to the Main Zone are available at the following link:
Geophysics is planned at Southwest Zone in the spring, with the aim of identifying the possible location of the source porphyry system that is believed to be the driver for the skarn-hosted mineralization at Demirtepe.
THE LETTER OF INTENT
Pursuant to the Letter of Intent ("LOI") with Empire, Columbus Gold can earn a 51% interest in the licences that host the Demirtepe Project by providing a US$2 million deposit (the "Deposit') to Empire and by funding US$3 million in exploration expenditures over three years with Empire acting as operator. Empire is required to use US$1.5 million of the Deposit to complete its acquisition of Demirtepe and the contiguous Karapinar copper porphyry project (together, "Bursa"). Upon Columbus Gold having earned a 51% interest in Demirtepe, a 51/49% joint-venture will be formed, which will be subject to standard dilution provisions.
The parties have agreed to use best efforts to complete a definitive agreement and to close the transaction within three months of the date of the definitive agreement (the "Closing"), failing which Empire will be required to repay the Deposit immediately with simple interest of 6% per annum.
Empire has also provided a right of first refusal ("ROFR") to Columbus Gold on its Karapinar copper porphyry project located approximately six kilometers from Demirtepe, such that in the event that Empire receives an offer from a third-party to acquire an interest in or to Karapinar, it will be required to notify Columbus Gold of such terms and offer same thereto, whereby Columbus Gold will have seven days to match such terms.
At any time prior to the Closing, Empire will have the right to terminate the LOI by returning the deposit with 6% simple interest per annum thereon, paying a $250,000 break-fee, and refunding Columbus Gold's reasonable expenses (in aggregate, the "Break-Fee"). In the event of a third-party offer on Karapinar, Empire however cannot exercise the Break-Fee until Columbus Gold has had the opportunity to consider the third-party terms pursuant to the ROFR.
Robert Giustra, the CEO and a Director of Columbus Gold, is also the Chairman and a Director of Empire. At the outset of Columbus Gold's consideration of the Demirtepe transaction, Mr. Giustra declared this conflict of interest to the Board and removed himself from any discussions pertaining to this matter. The Board was also aware that Empire and Columbus Gold share certain officers in common and thus created a special committee with the authority to consider, negotiate, and if acceptable approve the terms and conditions of the transaction. Columbus Gold understands that Mr. Giustra similarly informed Empire's Board of his conflict, and that Empire pursued a similar path toward the approval of this transaction.
The LOI is subject to TSX Venture Exchange approval, an Independent Fairness Opinion in a form satisfactory to both parties and Empire delivering to Columbus Gold a title opinion.
David C. Cliff, BSc (Hons), MIMMM, C Eng, FGS, Empire's President & CEO, is the Qualified Person under NI 43-101, which has reviewed and approved the technical content of this news release.
ON BEHALF OF THE BOARD,
Robert F. Giustra, Chairman & CEO
This release contains forward-looking information and statements, as defined by law including without limitation Canadian securities laws and the "safe harbor" provisions of the US Private Securities Litigation Reform Act of 1995 ("forward-looking statements"), respecting the ability to complete the transactions underlying the LOI. Forward-looking statements involve risks, uncertainties and other factors that may cause actual results to be materially different from those expressed or implied by the forward-looking statements, including without limitation Empire and Columbus Gold's respective abilities to acquire necessary authorizations including that of the TSX Venture Exchange; the ability of the parties to reach a definitive agreement respecting Demirtepe on terms acceptable to Columbus or at all; Empire's ability to complete its acquisition of Bursa; the possibility of a third party making a superior proposal to Empire, causing it to activate the Break-Fee; that such superior proposal may cause Columbus Gold to activate the ROFR; that, if required to repay the Deposit, Empire's ability to do so; environmental compliance; cost increases; availability of qualified workers; competition for mining properties; risks associated with exploration projects, mineral reserve and resource estimates (including the risk of assumption and methodology errors); dependence on third parties for services; non-performance by contractual counterparties; title risks; and general business and economic conditions. Forward-looking statements are based on a number of assumptions that may prove to be incorrect, including without limitation assumptions: that Empire and Columbus Gold will each be successful in obtaining required authorizations; that Empire will be successful in its acquisition of Bursa; that the parties will be successful in entering an definitive agreement regarding Bursa; that a third party will not cause Empire to activate the Break-Fee; that if required to repay the Deposit Empire will have sufficient capital to do so; general business and economic conditions; the timing and receipt of required approvals; availability of financing; power prices; ability to procure equipment and supplies; and ongoing relations with employees, partners and joint venturers. The foregoing list is not exhaustive and Columbus undertakes no obligation to update any of the foregoing except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.