newsScorpio Gold Corporation signs letter of intent with Cincoro Capital Corp. for qualifying transaction
08:00 EDT Wednesday, August 06, 2008
TSX:SPM
VANCOUVER, Aug. 6/CNW/ - Scorpio Mining Corporation ("Scorpio Mining"),(TSX:SPM) ispleased to announce that Scorpio Gold Corporation ("Scorpio Gold") a93.5% owned private subsidiary of Scorpio Mining, which holds certaingold assets in Nova Scotia andQuebec ,has signed a Letter of Intent ("LOI") with Cincoro Gold Corp.("Cincoro", TSX.V: FIV.P), a capital pool company listed on the TSXVVenture Exchange, whereby Cincoro has agreed to purchase (the"Acquisition") all of the issued and outstanding common shares ofScorpio Gold or otherwise complete a business combination with Cincoro.The Acquisition, if completed, will constitute Cincoro's "qualifyingtransaction" under the policies of the Exchange. The transaction withCincoro will see Scorpio Mining become the controlling shareholder inCincoro.
Pursuant to the LOI, Cincoro has agreed prior to the completion ofthe Transaction, subject to shareholder and regulatory acceptance, toconsolidate its shares on a 3 to 1 basis (three pre-consolidated sharesfor each one post-consolidated share). Subject to the execution of adefinitive agreement and regulatory acceptance to the Acquisition,Cincoro will acquire all of the issued and outstanding common shares ofScorpio Gold in exchange for the issuance of common shares of Cincoroon the basis of one post-consolidated common share of Cincoro for eachone Scorpio Gold common share outstanding. Upon completion of theAcquisition, Scorpio Gold will become a wholly-owned subsidiary ofCincoro. The signing of a definitive agreement will be preceded by a 25day due diligence period. The Transaction is expected to close duringOctober 2008, and is subject to customary conditions, including definitivedocumentation, receipt of all requisite regulatory approvals, includingthe approval of the Exchange and theToronto Stock Exchange and approval by the shareholders of Scorpio Gold.
The resulting company, to be called Scorpio Gold Corporation, willhave a public trading platform and greater access to financial marketsto advance Scorpio Gold's portfolio of advanced stage developmentproperties in Nova Scotia andQuebec, and will be able to call on Scorpio Mining's expertise in Mexico for acquiring, developing, or operating complementary projects in Mexico.
Commenting on the proposed Transaction, Peter J. Hawley, Chairmanand CEO of Scorpio Mining Corporation and CEO of Scorpio GoldCorporation said, "With the strength and experience of the resultingcompany board of directors, the strong advanced gold asset base and theexciting gold projects in the pipe line presently being evaluated wefeel that the resulting company will be well positioned to advancerapidly into a new dynamic gold company with a Board with vision. Weall are very excited about the potential for the resulting company."
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The proposed management of the resulting company is as follows:
Peter J. Hawley, CEO
Gilbert Comtois, Chief Financial Officer
Janet Horbulyk, Corporate Secretary.
The proposed Board of Directors of the resulting company is as follows:
Peter J. Hawley
Andrew Lee Smith
David Smalley
Brian Lock
Luc Pelchat
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The Scorpio Assets
Caribou Gold Property: Located 80 km north of Halifax,Nova Scotia. Scorpio Gold has the right to earn a 100% interest in thispast-producing high grade gold mine, considered to have potential toexpand and upgrade the current NI 43-101 inferred resources of 350,305tonnes grading 8.41 g/t gold, uncut (containing an estimated 94,763ounces of gold). An exploration and development plan has begun thatincludes surface diamond drilling, dewatering of the old mine shaft,erection of a head frame, a hoist system, supporting surfaceinfrastructure, underground mapping and diamond drilling. Completion ofthis program will require additional financing. Upon completion of theAcquisition, and completion of the Private Placement, the fundsreceived from the issuance of the Flow-Through Shares will be spent onthe first phase of the diamond drilling program. A bulk sample decisionwill be made based on the results of this program.
During the summer of 2007 Scorpio Gold, holding a first right ofrefusal to acquire the Caribou Gold property from Scorpio Mining, beganevaluation work on the property. The work comprised of brush clearingthe main shaft area, refurbishment of the previous grid base lines,surveying the placement of buildings - electrical lines - shafts andtrenches with respect to the existing base lines. Work also includedthe inspection of the existing shaft collar on the No. 3 shaft andchecking the bedrock conditions of a proposed area for a possible hoistsystem.
In addition from July 9 - 26, 2007 ScorpioGold drilled 8 HQ sized surface diamond drill holes which comprised atotal of 698 meters in length. The drilling was to target near surfacestockwork style quartz veins and to test exploration models. Three ofthe 8 holes targeted the North Limb of the anticline, one was a nearvertical hole testing the anticlinal axis which may have hosted asaddle reef type vein and four targeted the previously identified B/CZone on the south limb. Five of the eight holes appear to haveintersected the targets. At the time of the Caribou Report the drillholes had not been assayed for their mineral content. Results remainpending. No further exploration work has been conducted on thisproperty to date.
Four major diamond drill programs have targeted gold mineralizationon the Caribou property. Holes include approximately 165 surface holesand 206 underground holes, which test auriferous zones. Holes havetested the auriferous zone over a strike length of 800 meters and to anaverage depth of 240 meters.
Cochrane Hill Property: 100% owned, located in Guysborough County,Nova Scotia. Recently, this advanced property was optioned to AtlanticGold Mines NL ("Atlantic Gold") ofAustralia. The current NI 43-101 resource estimate calculated by Scorpio MiningCorporation in 2004 indicates a total indicated gold resource estimatedat 588,794 tons grading 0.191 oz/ton gold (112,460 contained ounces ofgold) and an inferred gold resource estimate of 29,422 tons grading0.165 oz/ton gold. Atlantic Gold is working to increase this resourcethrough a planned$4,750,000 exploration program and will also make $100,000in cash payments over a four year period to earn a 60% interest in theproject. Atlantic Gold's main focus is examining the economic viabilityof an open pit mining operation. Atlantic Gold is the operator of theCochrane Hill property.
Lac Arseneault Property: Located in the Gaspé region of eastern Quebec,the property is a mid-stage exploration project in which Scorpio Goldhas a 100% interest. High-grade gold-silver-zinc-lead mineralization ishosted in an extensive system of quartz veins and breccia zones.Previous work includes mapping, geophysics, trenching and diamonddrilling.
The Qualified Person, as defined under National Instrument 43-101 for Scorpio Gold's projects is Mr. Peter Hawley, the Chairman and Chief Executive Officer of Scorpio Mining and the President of Scorpio Gold. Mr. Hawleyis responsible for the preparation of all technical informationprovided in this news release and has reviewed and approved thecontents of this news release.
Further information on the Company is available on the Scorpio Mining web site at: www.scorpiomining.com.
ON BEHALF OF SCORPIO MINING CORPORATION
Peter J. Hawley
Chairman & CEO
This news release includes certain statements that may be deemed"forward-looking statements". All statements in this news release,other than statements of historical facts, that address futureexploration drilling, exploration activities and events or developmentsthat the Company expects, are forward looking statements. Although theCompany believes the expectations expressed in such forward-lookingstatements are based on reasonable assumptions, such statements are notguarantees of future performance and actual results or developments maydiffer materially from those in forward-looking statements. Factorsthat could cause actual results to differ materially from those inforward-looking statements include metal prices, exploration success,continued availability of capital and financing, and general economic,market or business conditions.
For further information: contact: Glenn Little, Jackson LittleHoldings Ltd: (604) 930-4375, 1-888-930-4375, Email:jlconsulting@telus.net; Rich Kaiser, YES International: 1-800-631-8127,001-757-306-6090 (outside North America), Email:yes@yesinternational.com