Vancouver, British Columbia, Canada, August 20, 2012 - Columbus Gold Corporation (CGT: TSX-V - "Columbus Gold")
has tentatively waived its right of first refusal to acquire an option on the Karapinar copper porphyry project located in Western Turkey. Karapinar is adjacent to the Demirtepe high-grade copper-gold-silver-molybdenum skarn project, on which Columbus Gold holds a conditional option via an agreement (the "Empire Agreement"
) with Empire Mining Corporation ("Empire"
) dated March 28, 2012. The Empire Agreement further provides Columbus Gold with the aforementioned right of first refusal respecting transactions involving Karapinar. For additional details on the Empire Agreement, please see Columbus Gold's announcement of March 29, 2012.
Columbus Gold understands that Empire has entered into a conditional option agreement with First Quantum Minerals Ltd. ("FQML"
) over both Karapinar and Demirtepe. Although Columbus Gold has provided a tentative waiver of its right of first refusal respecting Karapinar, due to the inclusion of Demirtepe in the FQML deal, Empire is unable to complete this transaction without first terminating the Empire Agreement with Columbus Gold. This termination is contemplated by the Empire Agreement, and would require Empire to return a $2,000,000 (plus interest) deposit to Columbus Gold, and to pay a break fee.
On April 2nd, 2012 Columbus Gold announced that it had initiated the process of evaluating a number of different options respecting the possible spin-out of its non-core assets, including the option over Demirtepe; on the basis that the non-core assets were not being valued by the market and to allow management of Columbus Gold to focus its attention on French Guiana and the 1.9 million oz. Paul Isnard gold project. Reaching an agreement with Empire on Demirtepe would further those objectives and be a step forward in unlocking value for shareholders.
Empire and Columbus Gold each have a committee of independent directors formed to discuss the aforementioned transactions, and the two companies are presently in talks respecting such termination.
ON BEHALF OF THE BOARD,
Robert F. Giustra
Chairman & CEO
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.
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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 Empire Agreement and Empire's conditional transaction with FQML. 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 that Empire and Columbus Gold may not come to terms respecting termination of the Empire Agreement; that Empire may not be able to consummate its transactions with FQML, thereby eliminating the need for a right of first refusal or termination of Empire Agreement; that the TSX Venture Exchange may not approve any of the transactions contemplated in this news release; that Columbus Gold may or may not decide to provide a final waiver of its right of first refusal; the ability to acquire necessary permits and other authorizations; cost increases; 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 about: that Empire and FQML will consummate their transactions; that Columbus Gold and Empire will come to terms respecting the right of first refusal and the termination of the Empire Agreement; that Empire will have sufficient funds to make any required payments to Columbus Gold in connection with the foregoing; that the TSX Venture Exchange will approve all of the foregoing transactions; general business and economic conditions; the timing and receipt of required approvals; availability of financing; power prices; ability to procure equipment and supplies including without limitation drill rigs; and ongoing relations with employees, partners and joint venturers. The foregoing list is not exhaustive and Columbus Gold undertakes no obligation to update any of the foregoing except as required by law.