Mengold to option 50% in Goldcreek to Solomon

2008-09-25 08:43 ET - News Release

See News Release (C-MNI) Mengold Resources Inc

Mr. Joel Scodnick of Mengold reports

MENGOLD SIGNS $5.8 MILLION OPTION AND JV AGREEMENT WITH SOLOMON RESOURCES ON THE GOLDCREEK PROPERTY

Mengold Resources Inc. has entered into a binding letter of intent (LOI) with Solomon Resources Ltd. for an option and joint venture on the Goldcreek property, which is located in Shebandowan, Northwestern Ontario.

Solomon will have the option to earn up to a 50-per-cent interest in the Goldcreek property by incurring exploration expenditures totalling $5.4-million over three years; making a cash payment of $100,000 before Dec. 31, 2008; and issuing $375,000 of Solomon common shares to Mengold over two years. The required exploration expenditure in each of the three years is $1.8-million of which $650,000 is a firm commitment to be spent prior to Dec. 31, 2008.

"I am very excited about partnering with Solomon to rapidly advance the development of the Goldcreek property. Solomon, while making a significant investment in Goldcreek, also brings to the project its valued management team comprising: Randy Rogers, Ron Netolitzky, Larry Nagy, Paul Maarschalk and Dr. William Lindqvist," stated Joel Scodnick, president and chief executive officer of Mengold.

Solomon will be the operator during the earn-in phase and Mengold will act as project manager. Once the joint venture has been formed, Mengold will act as operator. If the project advances to the development and mining stage, then a separate company may be formed managed by both Mengold and Solomon.

Mengold has been conducting extensive exploration programs on the Goldcreek property for the past two years with encouraging results. Goldcreek is prospective for gold, copper, zinc and nickel in a variety of geological settings, including hydrothermally altered rocks and volcanogenic massive sulphide (VMS) mineralization. One of the areas which may hold the key to discovering a VMS deposit is the Centre zone, where Mengold has conducted extensive field programs.