NR - Golden Phoenix Signs Definitive Acquisition AGolden Phoenix Signs Definitive Acquisition Agreement for Santa Rosa Gold Mine, Panama; Creates New Joint Venture Company
SPARKS, NV, Sep 19, 2011 --Golden Phoenix Minerals, Inc. (the "Company") (OTCBB: GPXM) is pleasedto announce the signing of a Definitive Acquisition Agreement (the"Definitive Agreement") to acquire a 60% interest, with an option to buyan additional 20% interest, in the Santa Rosa gold mine ("Santa Rosa"or "Mina Santa Rosa") located in Panama and owned by Silver Global,S.A., a Panamanian corporation ("Silver Global"). Santa Rosa producedover 100,000 ounces of gold from 1996 to 1998 and was closed down duein part to low gold prices.
Golden Phoenix intends to acquire its initial 60% interest inSanta Rosa by acquiring 60% of the share capital of a recently createdcompany under the name Golden Phoenix Panama S.A. (the "JV Company")formed with the specific purpose of holding, operating, running andmining the exploration, extraction, transport and benefit concessions(the "Concessions") that encompass Mina Santa Rosa.
Tom Klein, CEO of Golden Phoenix, comments: "The completion ofour Definitive Agreement establishes a solid framework from which wecan begin the process of advancing Mina Santa Rosa to production-readystatus."
Tony Bonilla, President of Silver Global, comments: "We haveworked closely with Golden Phoenix the past 45 days to prepare astrong foundation for the redevelopment and planned reopening of MinaSanta Rosa."
Upon signing the Definitive Agreement, Silver Global shallstart the process of transferring ownership of the Concessions as wellas all rights, permits, licenses, environmental impact study,insurance, bonds, surveys, documents, among other assets belonging toSilver Global in connection with Mina Santa Rosa to the JV Company.
Under the terms of the Definitive Agreement, Golden Phoenixshall earn-in to a 60% interest in Santa Rosa with an option toacquire an additional 20% interest after achieving certain milestones,in consideration for $20,500,000 in cash over a period ofapproximately 12 to 15 months (with the final earn-in to occur uponachieving commercial production, anticipated to be within 18 to 24months) and $4,500,000 in shares of Golden Phoenix common stock (at adeemed value of
.18 per share, a premium to the current marketprice), as well as certain preferential payments from cash flow out ofgold production. These payments are less those amounts previouslypaid by Golden Phoenix to Silver Global ($500,000 in cash and $500,000in capital stock of Golden Phoenix) in consideration for the 45-daysecondary due diligence review period, which concluded on September17th, 2011.
The JV Company will operate according to the terms of a JointVenture Operating Agreement ("JV Agreement") that Golden Phoenix andSilver Global have agreed to enter into on or before October 15, 2011,at which time the Definitive Agreement shall be merged with andincorporated into the JV Agreement.
The payments and earn-in will occur upon successful completionof certain milestones, ensuring the project moves forward tocommercial production in the near term, as follows:
-- $250,000 on signing the Definitive Agreement;
-- $3,750,000 on signing the JV Agreement + $4,000,000 in Golden Phoenix
common stock = 15% interest in JV Company.
-- $3,000,000 on successful completion of Environmental Impact Study
(required for the JV Company to commence exploration operations) =
Additional 10% interest in JV Company.
-- $5,000,000 on successful completion of NI-43-101 Report providing
resource estimate of at least "measured and indicated" category =
Additional 10% interest in JV Company.
-- $3,000,000 on successful completion of a Bankable Feasibility Study
(to be defined within the JV Agreement) = Additional 10% interest in
JV Company.
-- $5,000,000 on securing complete project financing necessary to bring
the property to commercial production = Additional 4%interest in JV
Company.
-- On achieving commercial production = Additional 11% interest in JV
Company (for Total of 60%).
Of the $3,750,000 payment due on signing the JV Agreement,$2,000,000 will be deposited into the business account of the JVCompany in the form of a loan from Silver Global to the JV Company forfunding a preliminary 43-101 report of at least the "inferred"category. This loan will be repaid to Silver Global by Golden Phoenixover 4 equal monthly payments, to commence 30 days following enteringinto the JV Agreement. Further, Golden Phoenix may, at its solediscretion, elect to make any payment before such payment is due,which will have the effect of accelerating the term under which GoldenPhoenix earns its ownership interest in the Concessions.
$50,000,000 (Preferential Payment): Upon achieving ProfitableCommercial Production, Silver Global shall be entitled to apreferential payment of Fifty Million Dollars (US $50,000,000) to bepaid by the JV Company to Silver Global, as owner of 100% of thepreferred share capital of the JV Company, from gold production at arate of 70% of the net distributable cash flow (after all expensesincurred, including debt service, working capital, capital reserves,among others). Profitable Commercial Production for the purpose of theDefinitive Agreement shall mean four (4) consecutive quarters ofestimated plant capacity of 4,000 ounces of gold per month, or four (4)consecutive quarters of profitable commercial operations.
Option to Earn Additional 20% Interest: Upon completion of thepayments, including completion of the Preferential Payment, GoldenPhoenix shall have the option to acquire an additional twenty percent(20%) interest in the Concessions, via acquiring a further 20% of theoutstanding share capital of the JV Company from Silver Global (out ofits 40% interest), for a total aggregate ownership by Golden Phoenixof eighty percent (80%). In consideration for the additional 20%interest, Golden Phoenix will pay Silver Global a purchase price equalto the net asset value of the property comprising the Concessionsmultiplied by 20%. Net asset value will be determined at the time ofGolden Phoenix's exercise of its option, by an independent mining,financial and valuation expert selected by the mutual agreement of theparties, acting reasonably, using a 10% discount.
Please visit the Golden Phoenix website at: www.goldenphoenix.us.
About Golden Phoenix: Golden Phoenix Minerals, Inc. is aNevada-based mining company whose focus is Royalty Mining in theAmericas. Golden Phoenix is committed to delivering shareholder valueby identifying, acquiring, developing and joint venturing gold, silverand strategic metal deposits throughout North, South and CentralAmerica. Golden Phoenix owns, has an interest in, or has entered intoagreements with respect to mineral properties located in the UnitedStates, Canada, Panama and Peru including its 30% interest in theMineral Ridge gold project near Silver Peak, Nevada.
About Silver Global: Silver Global is a Panama-based miningcompany whose focus is to identify and develop mining opportunities inthe Republic of Panama. Silver Global is committed to deliveringshareholder value by identifying, acquiring, developing and jointventuring gold, silver and strategic metal deposits throughout Panama.Silver Global is the sole owner of Mina Santa Rosa Panama and and hasjust signed a definitive joint venture agreement with Golden Phoenixfor the development of Mina Santa Rosa Panama.
Forward-Looking Statements: Information contained hereinregarding optimism related to the business, expanding exploration,development activities and other such statements are "forward-lookingstatements" within the meaning of the Private Securities LitigationReform Act of 1995 and are subject to the safe harbors createdthereby. While Golden Phoenix believes such statements are reasonable,they are based on current expectations, estimates and projectionsabout the Company's business and are not guarantees of futureperformance and involve certain risks and uncertainties that aredifficult to predict. Actual results could vary materially from thedescription contained herein due to many factors including continuedmarket prices for the Company's mineral products, domestic andinternational business and economic conditions, and other risk factorslisted in the Company's Securities and Exchange Commission (SEC)filings under "risk factors" and elsewhere. The Company does notundertake any obligation to update any forward-looking statement toreflect events or circumstances after the date of this press release.
For More Information Contact: Robert Ian Director of Corporate Communications (702) 983-0469 investor@goldenphoenix.us
www.goldenphoenix.us