GUM closes first tranche $4.28MVANCOUVER, Oct. 27, 2011 /CNW/ - Gold Mountain Mining Corporation ("Gold Mountain" or the "Company") is pleased to announce that it has closed $4.28 million (the "First Tranche") of a $6 million flow-through private placement (the "Offering") entered into with Industrial Alliance Securities Inc. as lead agent on behalf of a syndicate of agents including Canaccord Genuity Corp. and Sprott Private Wealth LP (collectively, the "Agents"). Gold Mountain issued an aggregate of 3,722,572 common shares, intended to qualify as flow-through shares under the Income Tax Act ("Flow-Through Shares"), to subscribers in the First Tranche at a price of $1.15 per Flow-Through Share, to raise aggregate gross proceeds of $4,280,957. In consideration for the services of the Agents in connection with the First Tranche, the Company paid the Agents a cash commission equal to 5% of the gross proceeds raised in the First Tranche and issued the Agents common share purchase options, exercisable to acquire up to 186,129 non-flow-through common shares of the Company for a period of 12 months from the closing of the First Tranche at an exercise price of $1.15 per share. The proceeds of the Offering will be used to fund exploration activities on Gold Mountain's Elk property. All securities issued in the First Tranche will be subject to a hold period under applicable securities laws which expires on February 27, 2012.
Elk Property
The Elk property is located in southern British Columbia, Canada roughly 325 km northeast of Vancouver and has an existing half million ounce gold resource (see press release dated August 4, 2011). The property is within the Similkameen Mining District and consists of 27 contiguous mineral claims and one mining lease covering approximately 16,700 hectares. Gold Mountain acquired the Elk Gold Project in July 2011 from Almaden Minerals Ltd. The Elk property has had a Preliminary Economic Assessment ("PEA") completed that demonstrates the potential that a viable open pit gold mining project could be launched. The PEA results, which are filed on Sedar.com, for the base case at US$1,000 per troy ounce indicate a potential mining project with a 7 year mine life producing 139,000 ounces of gold at estimated cash operating costs of C$528 per troy ounce, initial capital expenditures of C$9.91 million, pre-tax Internal Rate of Return (IRR) of 51%, payback of 1.85 years and Net Present Value (NPV) of $C28.7 million, using a discount rate of 8%. The results for a US$1,200 per troy ounce case indicate a mining project with a 9 year mine life producing 297,000 ounces of gold at estimated cash costs of C$652 per ounce, initial capital expenditures of C$17.5 million, pre-tax IRR of 39%, payback of 3.3 years and NPV of C$67.9 million using an 8% discount rate. The PEA did not consider the underground potential of the resource but only the portion of the current resource amenable to open pit mining. The PEA and associated Mineral Resource Estimate does not include the results of the 2010 or 2011 drilling programs. The Company plans to incorporate those drill results into an updated mineral resource estimate for the purposes of more advanced studies. Peter Thiersch, M.Sc., P.Geo., is the Company's Vice President of Exploration and the Company's Qualified Person as defined by National Policy Instrument 43-101 and has approved the above technical information.
About Gold Mountain Mining Corporation
Gold Mountain is a new public resource company managed by an experienced team of professionals with a solid track record of exploration and development success. The Company owns 100% of the 16,700 hectare Elk Gold property, which the Company intends to develop into a precious metal producer within the next two years. Additional information is available on Sedar.com or on the Company's new website aumtn.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has reviewed or accepts responsibility for the adequacy or accuracy of this Release.
ON BEHALF OF THE BOARD
"Rod Shier" (signed)
Rod Shier, Chief Financial Officer