Klondike Gold Makes Lonestar Exempt Take Over Bid

Klondike Gold Makes Lonestar Exempt Take Over Bid

Vancouver, British Columbia CANADA, October 19, 2011 /FSC/ - Klondike Gold Corp.  (KG - TSX Venture), ("KG" or the "Company") is pleased to announce that it proposes to offer to acquire by way of an exempt take-over bid a majority equity interest in the common voting shares of Lonestar Gold Inc. ("Lonestar"), a privately held British Columbia company.  KG will invite the shareholders of Lonestar to exchange their common shares (the "Lonestar Shares") for newly issued KG common shares, on the basis of three (3) common shares of KG for each (1) Lonestar Share tendered and accepted by KG.  The offer is subject to the tender of a sufficient number of Lonestar Shares to increase KG's shareholdings in Lonestar to a minimum of 51% of the total issued shares of Lonestar, and will be limited to the purchase of sufficient Lonestar Shares to increase its holding to approximately 75% of the total issued shares of Lonestar.


Lonestar has approximately 10,900,000 common shares issued and outstanding, of which KG currently holds 1,800,000 shares.  Accordingly, KG will be seeking to acquire a minimum of approximately 3,657,000, and up to a maximum of approximately 6,300,000 Lonestar Shares.  This would mean the issuance of a minimum of 10,971,000, and up to a maximum of 18,900,000 common shares of KG.  Should more than 6,300,000 Lonestar Shares be tendered by shareholders of Lonestar, KG will prorate its acceptance of the tenders received.  The acquisition of the additional equity interest in Lonestar is also subject to acceptance for filing by the TSX Venture Exchange (the "Exchange").  There will be no change in effective control, or change in control of KG as a result of the share exchange, and no new control person will be created by this transaction.


Lonestar's principal assets are the option to acquire the Eldorado/Lonestar Property near Dawson City, Yukon Territory, entered into with KG and Klondike Star Mineral Corporation earlier this year (see our news release dated June 12, 2011), and approximately $1,000,000 in cash raised in a recent private placement of its shares at a price of $0.30 per share.  In addition, the management of Lonestar, Erich Rauguth, President and CEO, and Manfred Peschke, CFO, has extensive experience in mineral exploration and development, including many years of invaluable experience conducting work in the Yukon Territory.  Should KG's offer to acquire a majority interest in Lonestar be successful, KG has requested and Mr. Rauguth and Mr. Peschke have agreed to continue in the management of Lonestar.


Lonestar is currently engaged in reviewing the exploration data from the 2005, 2006 and 2007 exploration seasons carried out by the previous operator and compiling it with the information that is obtained from its 2011 exploration program and the data generated by the various Universities during their studies on the Eldorado/ Lone Star Property.  Research teams from the University of Leeds, led by Dr. Robert Chapman of the United Kingdom, the University of British Columbia, led by Dr. James Mortenson and the University of Ortega, Australia, led by Dr. Doug McKenzie, have spent several exploration seasons examining the Klondike Gold Fields. The multi-disciplinary research teams have published a considerable volume of information that is directly related to the Eldorado/Lone Star Property. Lonestar is incorporating this information in to its updated database.  Lonestar's 2012 exploration program will, amongst other activities, focus on developing a NI 43-101 compliant resource calculation for the Eldorado/Lonestar project.  Lonestar intends to extend the exploration threshold from a depth of 175 meters to a depth of 400 meters and will also investigate any new targets identified from the compilation of the data being carried out and further investigate several other areas on the 130 square km property for indications of the source of the potential gold mineralization.


The Eldorado/Lonestar Property is famous from the Klondike Gold Rush of 1898.  This transaction will consolidate exploration efforts and increase the Company's interest in the property and long-term commitment to develop the Klondike gold fields.


As part of its proposed acquisition of a majority equity interest in Lonestar, and in order to have the necessary funds to finance the ongoing work commitments and any additional exploration recommended to be carried out by Lonestar, the Company announces that it has agreed to a non-brokered private placement of up to $2,750,000 of its securities, consisting of the sale of 27,500,000 flow-through and/or non-flow-through common shares at a price of $0.10 per share.  The proceeds of the private placement will be used for exploration of the Eldorado/Lonestar Property and for general working capital.  Finder's fees in cash and/or shares, in accordance with the policies of the Exchange, may be payable on a portion of the private placement.

Contact Info:
Alan Campbell
Klondike Gold Corp.
Phone: (604) 685-2222
Email: info@klondikegoldcorp.com

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

The statements made in this Press Release may contain forward-looking statements that may involve a number of risks and uncertainties.  Actual events or results could differ materially from the Company's expectations and projections.


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Source: Klondike Gold Corp. (KG - TSX-V) http://www.klondikegoldcorp.com
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