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Vancouver, British Columbia, Canada - November 22, 2011 - Canada Gold Corporation (TSX-V: CI, Frankfurt: T9N, OTC-BB: CNGZF) ("Canada Gold" or the "Company") is pleased to announce that it has entered into a Letter of Intent ("LOI") to acquire a 100% interest in 7 prospecting licenses, potentially hosting gold and other minerals, totaling approximately 1,107 square kilometers in North-Eastern Tanzania, from Falco Goldfields Limited ("Falco") of Tanzania.
The prospecting licenses, collectively called Handeni/Sindeni Project #2, are located 400 km Northwest of Dar es Salaam, 150 km West of Tanga city and approcimately 40 km West of Korogwe district at a centre village called Mamisu. The site is easily accessible year round through a well-maintained gravel road, and is 82 km west of Tanga harbor and Tanga Airstrip and 106 km Northwest of Pangani Airstrip which can handle several domestic flights and cargo ships.
The Handeni/Sindeni Project #2, contiguous with Sindeni Project #1, which has obtained conditional TSX-V approval (see news release dated October 12, 2011), will provide the Company with a combined total of over 1,800 square kilometers of highly prospective land within the Mozambique Geological Belt, located approximately 40 kilometers from the northeastern boundary of Canaco Resources Inc. (TSX-V: CAN), Magambazi Property, in the Handeni district in the Tanga region, northeastern Tanzania.
The Mozambique Belt is highly deformed with shear zones developed on a north-eastern and mostly west north-western trend. Folding is present at both regional and local scale. These structures are an important target area for gold mineralization within the fold hinge zones, while erosion of the latter results in numerous small-scale alluvial workings within the Handeni District. The Canaco Magambazi Property is located on a northwest-southeast trending structure with artisanal gold workings nearby. The properties have similar northwest-southeast trending structures, with artisanal gold workings within the claims, and reportedly contain gold mineralization; however this mineralization has not yet been independently verified. Please click here to view the claims locations of the Tanzania Projects in East Africa.
Pursuant to the LOI, the consideration for the acquisition of the Handeni/Sindeni Project #2 consists of cash payments of US $750,000, and the issuance of 3,500,000 common shares from treasury over a 37 month period. The optionor retains a 2.5% net smelter return royalty of which, 1.5% can be purchased for US $2,000,000 at any time, prior to commercial production.
---------------------------------------------------------------------- |Payment Date |US Cash | |Shares | |--------------------------------------------------------------------| |Within 5 business days of LOI signing* |$ 50,000 | |- | |--------------------------------------------------------------------| |Within 10 business days of TSX-V conditional|$ 50,000 | |- | |approval** | | | | |--------------------------------------------------------------------| |Within 10 business days of TSX-V |$ 50,000 | |1,000,000 | |final approval | | | | |--------------------------------------------------------------------| |Within 10 business days of the 13th month |$ 150,000| |1,000,000 | |anniversary | | | | |--------------------------------------------------------------------| |Within 10 business days of the 25th month |$ 200,000| |750,000 | |anniversary | | | | |--------------------------------------------------------------------| |Within 10 business days of the 37th month |$ 250,000| |750,000 | |anniversary | | | | |--------------------------------------------------------------------| |Total |$ 750,000| |**3,500,000| ----------------------------------------------------------------------
*Non-refundable unless licenses are invalid, under dispute or not as represented
** All shares issued are subject to a minimum 4 month hold from the date of issuance or as directed by the TSX-V
There is no work commitment within the 37 month time frame, and the Company retains the right to be the sole operator of the Handeni/Sindeni Project #2 after the 13th month anniversary of TSX-V final approval.
The option to acquire a 100% interest in the Handeni/Sindeni Project #2 is subject to an independent legal opinion on the validity of the licenses and subject to an independent technical report (NI 43-101). The Company will contract an independent Qualified Person under National Instrument 43-101, pursuant to the requirements under the TSX-V regulations for an acquisition of this nature.
The acquisition of the above prospecting licenses and the consideration payable are subject to the TSX-V and regulatory approvals, with a formal agreement to act as part of the final regulatory filing. Paul Lemmon, P.Geo, FGS, Pri.Sci.Nat., Chief Geologist of the Company, is a Qualified Person under NI 43-101 has reviewed and approved the technical content of this news release.
The Company also announces that it will proceed with a non-brokered private placement (the "Offering") of up to 7.5 million units at a price of $0.20 per unit, for gross proceeds of up to $1,500,000, subject to TSX-V approval. Each unit will consist of one common share and one half of one share purchase warrant (the "Warrants"), each full Warrant entitling the holder to purchase one additional common share of Canada Gold at a price of $0.35 for a period of two years from the date of closing.
Finder's fees may be payable in connection with the Offering. The proceeds of the Offering will be used to conduct exploration activities on the Company's Sindeni Project #1, to complete the requisite due diligence on Handeni/Sindeni Project #2, and for general working capital.
For more information, please contact the office or visit www.canadagold.com.
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.
On behalf of the Board,
"Dave McMillan"
Dave McMillan
President & CEO
Cautionary Note Regarding Forward-Looking Statements: Certain disclosure in this release, including statements regarding the Company's plans for and intentions with respect to exploration of the Sideni Project #1, Handeni/Sindeni Project #2, the possible completion of a private placement, and the intended use of proceeds constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. In making the forward-looking statements in this release, the Company has applied certain factors and assumptions that the Company believes are reasonable, including that the Company is able to obtain any required government or other regulatory approvals and any required financing to complete the Company's planned exploration activities, that the Company is able to procure equipment and supplies in sufficient quantities and on a timely basis, that actual results of exploration activities are consistent with management's expectations, and general risks associated with business and the timing and success in the completion of private placements. However, the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors relating to Canada Gold's operation as a mineral exploration company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such uncertainties and risks may include, among others, actual results of the Company's exploration activities being different than those expected by management, uncertainties involved in the interpretation of drilling results and geological tests, delays in obtaining required government or other regulatory approvals or financing, inability to procure equipment and supplies in sufficient quantities and on a timely basis, equipment breakdowns and bad weather. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on forward-looking statements. Canada Gold does not intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
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