San Gold to transfer Timmins options to subsidiary SGX
Ticker Symbol: C:SGR
San Gold to transfer Timmins options to subsidiary SGX
San Gold Corp (C:SGR)
Shares Issued 259,422,536
Last Close 10/28/2009 $2.50
Thursday October 29 2009 - News Release
Mr. Dale Ginn reports
SAN GOLD LAUNCHES TIMMINS EXPLORATION SUBSIDIARY
San Gold Corp. intends to transfer to its wholly owned subsidiary, SGX Resources Inc., its interest, subject to receipt of certain consents, in five option agreements relating to mineral properties located in and around Timmins, Ont. The corporation has determined to spin off the properties to SGX in order to form a new company that will explore and develop high grade gold deposits in Canadian mining camps.
San Gold will continue to focus its activities on developing its high grade gold mines, deposits and exploration properties in the Rice Lake belt of Manitoba and on developing advanced stage deposits in other areas as they may be acquired according to a strict internal acquisition protocol. The recently announced Davidson-Tisdale property interest acquisition near Timmins will remain in San Gold since it is an advanced stage development and exploration property.
San Gold shareholders will continue to benefit from any SGX exploration successes indirectly through San Gold's continuing equity investment in SGX. San Gold will not be obligated to enter into any future investments and shall not be responsible for any costs associated with SGX's ongoing exploration activities. However, San Gold has agreed to issue certain shares of San Gold pursuant to the Timmins Option Agreements and San Gold has agreed to remain bound to issues those shares, subject to receipt of compensation from SGX for the issuance of such shares and subject to receipt of applicable regulatory and stock exchange approvals. San Gold will receive aggregate consideration of $2,500,000 in exchange for transferring the Properties to SGX, an amount approximately equal to the funds so far expended on the Properties. Payment to San Gold will be in the form of 19,000,000 common shares of SGX (the "SGX Common Shares"), at a deemed price of $0.1316 per share ($2,500,000) in compensation for cash expended and initial opportunity risk undertaken by San Gold. San Gold currently holds 6,000,000 SGX Common Shares. San Gold shall retain a first right of refusal to purchase any SGX property for a period of five years following the date of the sale and transfer of the Properties.
SGX, currently a private Manitoba incorporated company, shall undertake a private placement offering (the "Offering") of up to 2,400,000 units ("Units") at a price of $2.75 per Unit for gross proceeds of $6,600,000. Each Unit will be comprised of ten SGX Common Shares issued as "flow-through shares" within the meaning of the Income Tax Act (Canada) and one regular SGX Common Share, for an effective cost of $0.25 per share. Each Unit shall carry eleven SGX Common Share purchase warrants ("Warrants"). Each Warrant will entitle the holder thereof to purchase one SGX Common Share at a price of $0.30 per share for a period of 12 months from the date of issuance. San Gold shall not participate in the Offering. Certain insiders of San Gold may participate in the Offering.
Upon completion of the Offering, SGX will no longer be a wholly-owned subsidiary of the Corporation. Assuming full subscription to the Offering, San Gold shall then own 48.6% of SGX on an undiluted basis, and 32.1% on a fully diluted basis in the event that all the Warrants are exercised.
Hugh Wynne, Executive Chairman of San Gold, and Dale Ginn, CEO of San Gold, are the initial directors of SGX. Following the completion of the Offering, Mr. Ginn will resign as a director of SGX in order to completely devote his services to the benefit of San Gold. Mr. Wynne will remain as a Director of SGX in order to maintain continuity with San Gold as SGX's largest initial shareholder. SGX's exploration management team is already in place in Timmins and is currently operating the Properties for San Gold on a consulting basis. W.S. Ferreira, P.Geo., and D. Ginn, P.Geo., are the Qualified Persons for San Gold under National Instrument 43-101.
� 2009 Canjex Publishing Ltd.
