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Riverstone has completed an initial NI43-101 resource estimate on one project with indicated gold resources of 820,500 ounces and a further inferred resource of 320,300 ounces.

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Message: RVS & BGX Combine....

Oct 18, 2012
Riverstone Resources to Combine with Blue Gold Mining
Partnership creates well-funded company with proven team to drive gold exploration and near-term production at properties in West Africa
  • Riverstone's successful exploration, engineering and development expertise and exceptional project portfolio complement Blue Gold's technical and exploration experience, broad investment community following and strong cash position
  • Creates a well-funded, growth-oriented gold mining company to aggressively drive development of the flagship Karma Project asset and accelerate future exploration, development and upside opportunities at Riverstone's highly prospective properties
  • Strong balance sheet to fund continued expansion and capital expenditures
  • Management, Board and technical teams offer full range of expertise and experience to become leading explorer/developer in West Africa
  • Unanimous support of the management and Boards of both companies
  • All share transaction with each Blue Gold share exchanged for 0.801 of a Riverstone share
Vancouver, B.C., October 18, 2012 -- Riverstone Resources Inc. ("Riverstone") (TSX-V:RVS) and Blue Gold Mining Inc. ("Blue Gold") (TSX-V:BGX) announced today they have entered into an arrangement agreement under which Riverstone will acquire 100% of the outstanding common shares of Blue Gold by way of a plan of arrangement.

Under the plan of arrangement, Blue Gold shareholders will receive 0.801 of a Riverstone share for each Blue Gold share. This exchange ratio reflects the market price of the Riverstone shares and the Blue Gold shares based on the volume-weighted average prices of Blue Gold and Riverstone shares on the TSX Venture Exchange ("TSX-V") for the 20 trading days ended on October 17, 2012, resulting in a basic equity value for the transaction of $30.3 million.

On completion of the transaction, Blue Gold shareholders will hold 30% of the pro forma outstanding shares of Riverstone, on a fully-diluted basis. It is estimated that there will be 178.3 million basic shares outstanding upon closing.

Riverstone is currently the owner and operator of the Karma Project, an advanced stage gold development project and three other earlier stage exploration projects collectively covering more than 2,000 km2 of highly prospective ground in Burkina Faso. With this transaction, Riverstone will expand its successful exploration, engineering and development team with Blue Gold's highly regarded technical, exploration and capital markets team to create a strong West African mine developer and explorer with a cash balance of approximately $18 million.

"Our merger with Blue Gold is truly complementary. It creates a well-funded, well-structured company with expanded expertise as we progress our flagship Karma Project through feasibility and launch an aggressive exploration campaign at Liguidi and our other portfolio projects," states Dwayne Melrose, President and CEO of Riverstone. "Our combined entity offers investors and employees a unique opportunity to take part in the growth of a 'best in class' exploration company and the advancement of our promising properties, under the guidance of an experienced, proven leadership team."

"Together, Riverstone and Blue Gold are much stronger than the sum of their parts. Combined, the companies have the expertise and access to capital necessary to accelerate expansion and development of Riverstone's exceptional gold properties in a mining-friendly jurisdiction in West Africa," states Mark O'Dea, President and CEO of Blue Gold. "We examined over 100 projects and companies during the past 18 months looking for opportunities to optimize value for Blue Gold's shareholders. A merger with Riverstone provides our collective shareholders the opportunity to participate in the exploration of an incredible land package in a relatively unexplored jurisdiction with near-term exposure to gold production."


Benefits to Blue Gold Shareholders:
  • Exposure to four exciting gold projects in Burkina Faso, West Africa, including the development stage Karma Project and the exploration stage Liguidi Project
  • Strong upside potential to expand current deposits on Riverstone's Karma Gold Project
  • Exposure to Burkina Faso - a well-established mining region
  • Access to an experienced and successful exploration, development, construction and operating team that perfectly complements the experience, expertise and skills of Blue Gold's team
  • Creates a well-funded company with available liquidity and flexibility to undertake strategic capital expenditures and fund growth
  • All-stock transaction provides opportunity to participate in future growth of combined company
  • Benefits to Riverstone Shareholders:
  • Access to Blue Gold's proven management team, which has created more than $2.5 billion in shareholder value in the last 10 years, and been instrumental in advancing eight significant deposits through Fronteer Gold. Fronteer Gold was a development-stage gold company sold to Newmont Mining in April 2011 for $2.3 billion
  • Addition of Blue Gold's management team and Board adds additional expertise in creating value with a long track record of financing development projects
  • Immediate increase in the company's cash position, funding the Karma Project feasibility and funding continued exploration of the Liguidi Project and other projects
  • The combined company will be well funded with approximately $18 million in cash
  • All-stock transaction provides opportunity to participate in future growth of combined company
  • TRANSACTION DETAILS

    The transaction will be carried out by way of a court-approved plan of arrangement and will require the approval of at least 2/3 of the votes cast by the shareholders at Blue Gold's annual and special meeting expected to take place mid December 2012. The transaction is also subject to applicable regulatory approvals, including court approval and the approval of the TSX-V, and the satisfaction of certain closing conditions customary in transactions of this nature including that Blue Gold will have uncommitted cash (inclusive of the Loan from Blue Gold to Riverstone described below) of at least $17 million upon closing of the transaction. The terms and conditions of the transaction will be disclosed in more detail in the management information circular which is expected to be filed and mailed to Blue Gold shareholders in November 2012.

    Upon completion, Blue Gold shareholders will receive, for each Blue Gold share, 0.801 of a Riverstone share. Any outstanding options and warrants of Blue Gold will be adjusted so that, upon exercise subsequent to completion of the transaction, for each Blue Gold share that would previously have been issued, the optionholder or warrantholder will receive 0.801 of a Riverstone share.

    Blue Gold's President, CEO and Chairman, Mark O'Dea, will join Riverstone's Board of Directors immediately upon closing and will assume the role of Executive Chairman. Mr. Michael McInnis of Riverstone will become Vice-Chairman. Mr. Dwayne Melrose will continue in his role as President and CEO of Riverstone. The new Board of Riverstone will consist of three Blue Gold nominees and five Riverstone nominees. In addition, certain officers of Blue Gold will become officers of Riverstone.

    The transaction was reviewed and recommended by a special committee of the Riverstone Board of Directors, which received an independent fairness opinion from Capital West Partners and has been unanimously approved by the Board of Riverstone. After taking into consideration, among other things, the verbal opinion of Cormark Securities that the consideration to be received by the Blue Gold shareholders under the transaction is fair from a financial point of view, the Blue Gold directors have determined that the transaction is in the best interests of Blue Gold and is fair to Blue Gold shareholders and have unanimously approved the transaction and recommend that the Blue Gold shareholders vote in favour of the transaction.

    Directors and senior officers of Blue Gold, collectively holding approximately 32.64% of the number of Blue Gold shares anticipated to be entitled to vote at the meeting, have entered into voting agreements with Riverstone under which they agree to vote in favour of the transaction. The voting agreements automatically terminate upon termination of the arrangement agreement. Subject to Riverstone's right to match, the Board of Blue Gold may terminate the arrangement agreement in favour of an unsolicited superior proposal upon payment of a $1 million break fee to Riverstone.

    Upon approval by the TSX-V, Blue Gold has agreed to lend Riverstone up to $5 million for development of the Karma Project. The loan becomes repayable in cash or shares of Riverstone if the transaction does not close. The loan will be interest bearing and is secured against the assets of Riverstone.

    ADVISORS

    Riverstone's financial advisor is National Bank Financial Inc. and its legal counsel is DuMoulin Black LLP. Blue Gold's legal counsel is Blake, Cassels & Graydon LLP.

    CONFERENCE CALL

    Blue Gold Mining Inc. and Riverstone Resources Inc. will hold a conference call for analysts and investors to discuss the transaction on Thursday, October 18, 2012 at 10:30 a.m. (Eastern).
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