Vangold Announces Letter of Intent With New Guinea Gold & Proposed Distribution
posted on Aug 20, 2009 09:38PM
Internationally diversified resource company.
Vangold Announces Letter of Intent With New Guinea Gold
and Proposed Distribution of Oil and Gas Assets
VANCOUVER, BRITISH COLUMBIA--(Marketwire - 08/20/09) - Vangold Resources Ltd. ("Vangold" or the "Company") (TSX-V:VAN - News) is pleased to announce it has entered into a letter of intent with New Guinea Gold Corporation ("NGG") to acquire certain mineral exploration properties in Papua New Guinea. Vangold announces a proposed spin-off of certain oil and gas assets pursuant to a proposed plan of arrangement.
LETTER OF INTENT WITH NEW GUINEA GOLD CORPORATION ("NGG")
- 30,000,001 common shares of Pacific Kanon Gold Corp. ("PKG"), a private company incorporated in British Columbia;
- Shareholder loans made by NGG to PKG;
- NGG's 20% interest in the Mount Penck Property in Papua New Guinea; and
- a 50% interest in NGG's Feni Island Property in Papua New Guinea.
The purchase price for the acquisition is CDN$3,000,000 consisting of a cash payment of $500,000 and the issuance of Vangold common shares (the "Payment Shares") equal to 19.9% of the then issued and outstanding Vangold common shares. The cash payment will be made within two business days of approval by the TSX Venture Exchange ("TSXV"). If TSXV approval for the $500,000 payment is not received within three business days, Vangold will loan the $500,000 to NGG. The loan will be non-interest bearing and repayable within nine months. The Payment Shares will be issued upon completion of the proposed spin-off and consolidation. If the reorganization does not complete, the Payment Shares will be issued on or before May 19, 2010. In either event NGG will not participate in the proposed reorganization.
Under the letter of intent, Vangold has agreed to provide NGG a carried interest of 10% in the Feni Island Property, 5% in the Mount Penck Property and 5% in the Allemata and Ferguson properties held by PKG. The letter of intent is subject to TSXV approval.
UNBUNDLING OF OIL AND GAS ASSETS
Vangold also announces that pursuant to a plan of arrangement, it proposes to spin-off certain oil and gas properties in Alberta, Kenya and Rwanda (the "Oil and Gas Assets") and common shares of IBC Advanced Alloys Corp. (the "IB Shares") into a newly incorporated public company ("Newco"). Upon completion, Newco will replace Vangold as the owner of the Oil and Gas Assets. It is planned that Vangold's shareholders as of the spin-off record date will receive common shares of Newco, rights to acquire additional Newco and IB Shares. Vangold shareholders will retain their original positions in Vangold after the spin-off. It is planned that Newco would list its common shares on the TSXV.
The proposed spin-off is expected to provide Vangold's shareholders with a number of significant benefits which include:
- a clear mandate for each company to pursue its own business plan and to achieve its own strategic goals;
- anticipated higher capital markets valuations for these two distinct asset bases;
- greater corporate clarity and transparency;
- continued exposure to each company's potential upside and additional growth opportunities; and
- experienced management teams with expertise with each company's asset base.
As part of the reorganization and distribution of the proposed spin-off, Vangold plans to consolidate its issued and outstanding common shares.
The foregoing description is a general outline only. The Company is formulating the precise structure and ratio for the consolidation in conjunction with its professional advisors. The Company will issue a detailed news release when the final structure is approved by its board of directors.
The proposed spin-off and consolidation will be subject to TSXV approval and to the approval of Vangold's shareholders by special resolution.
Dal Brynelsen, President and CEO of Vangold comments: "I am very pleased that Vangold has secured a 100% interest in the Kanon and Feni gold camps. This will allow Vangold to achieve its long sought after goal of creating a viable oil exploration company based in East Africa and an advanced gold exploration company based in Papua New Guinea. In the long term, this should create significant new shareholder value and bring clarity and direction to these world class projects. It is important that New Guinea Gold continues to have direct involvement in these gold properties, providing invaluable technical and administrative expertise and support when called upon. We are pleased to have New Guinea Gold as a major shareholder and value our continued relationship with them."
The Company also announces that it has granted a total of 5,350,000 stock options at an exercise price of $0.15 per share to directors, officers, employees and consultants of the Company. The options carry a ten year term and vest in accordance with the policies of the TSXV, expiring August 11, 2019. The options are being granted pursuant to the terms of the Company's 2008 stock option plan and are subject to TSXV policies and approval.
Caution Regarding Forward-looking Information
Information in this news release respecting the proposed plan of arrangement for the Oil and Gas Assets, the TSXV listing of Newco, the share consolidation of Vangold and potential opportunities constitutes forward-looking information. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results and are believed to be reasonable based on information currently available to the Company.
Forward-looking statements and information are based on assumptions that financing, equipment and personnel will be available when required and on reasonable terms, and all necessary regulatory approvals will be obtained, none of which are assured and are subject to a number of other risks and uncertainties.
There can be no assurance that forward-looking statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Readers should not place undue reliance on forward-looking information.
On Behalf of the Board of VANGOLD RESOURCES LTD.
Dal Brynelsen, President and CEO
Neither 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.
Vangold Resources Ltd.