Lexam Explorations investing $3-million in VG Gold
2009-07-21 20:09 ET - News Release
See News Release (C-LEX) Lexam Explorations Inc
Mr. Ian Ball of Lexam reports
LEXAM ANNOUNCES C$3 MILLION INVESTMENT IN VG GOLD
Lexam Explorations Inc. has agreed to make a $3-million strategic investment in VG Gold Corp. for an aggregate subscription of 37.5 million units issued by way of a private placement. Each unit is priced at eight cents and includes one common share and one common share purchase warrant exercisable at 15 cents per share for a period of 18 months. The private placement will be completed in two tranches. Upon closing of both tranches Lexam will own approximately 27 per cent of VG Gold's outstanding shares and 42 per cent on a partially diluted basis. The first tranche consisting of 12,594,814 units closed on July 21. Lexam is now VG Gold's largest shareholder.
"VG Gold's properties are situated in the heart of the Timmins gold camp where 67 million ounces of gold have been produced. The company's drill results have encountered attractive grades and good widths. Companies such as West Timmins Mining and Lake Shore Gold are proving there is much more gold to be found in this historic camp," stated Rob McEwen, chairman and chief executive officer of Lexam.
Details of Lexam investment
The private placement will be completed in two tranches and consist of 37.5 million units. Each unit comprises one share and one common share purchase warrant of VG Gold. One common share purchase warrant entitles Lexam to purchase one additional common share at an exercise price of 15 cents per share over a period of 18 months from closing. Securities issued are subject to a four-month hold period. The first tranche consisting of 12,594,814 units for gross proceeds of $1,007,585 was closed on July 21, giving Lexam an ownership position of approximately 11 per cent of VG Gold's outstanding shares and 20 per cent on a partially diluted basis. The second tranche of the private placement is subject to receiving all necessary regulatory and shareholder approvals and is expected to close in early September.
Under the terms of the arrangement Lexam will have the right to nominate a director and a right to participate pro rata in future VG Gold financings, provided Lexam's aggregate interest remains above 10 per cent of common shares outstanding.
Lexam may increase or reduce its investment in VG Gold according to market conditions or other relevant factors.
Investment rationale
Potential to discover additional high-grade gold mineralization in one of Canada's most prolific gold camps. Gold production in the Timmins area totals over 67 million ounces since 1910, making it one of the largest gold-producing areas in the world. Recent discoveries by West Timmins Mining and Lake Shore Gold have clearly demonstrated that the area is still highly prospective for large, high-grade gold discoveries. VG Gold's key assets are located adjacent to Goldcorp's Porcupine gold mines.
Paymaster West drill program
The majority of the proceeds provided by Lexam will be used for drilling on VG Gold's Paymaster West property in order to earn a 60-per-cent interest from Goldcorp.
The Paymaster property, which produced 1.19 million ounces of gold from 1915 to 1966, is located on the east-west trending Porcupine Syncline geological structure that is host to several current and former producing gold mines in Timmins, Ont. For a list of selective historic drill holes and for cross sections, visit VG Gold's website.
Davidson Tisdale project
Davidson Tisdale is 68.5 per cent owned by VG Gold and located approximately three kilometres northeast along strike from other major mines in the Timmins camp. Between 2003 and 2006 VG Gold conducted an extensive drill program returning significant drill results. These drill results are very encouraging and possibly indicative of what could be found at depth. Lexam's management is excited about the future exploration potential of this property. Drilling is expected to commence once VG Gold has fulfilled it option on the Paymaster West property. For a list of previous holes completed by VG Gold, please visit the company's website.
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