TORONTO, ONTARIO--(Marketwire - Dec. 16, 2010) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
Galway Resources Ltd. (TSX VENTURE:GWY) ("Galway" or "the Company") is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by GMP Securities L.P. (the "Lead Underwriter") and including Wellington West Capital Markets Inc. and MGI Securities Inc. (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a bought deal private placement basis, 25,000,000 units of the Company (the "Units"), at a price of C$1.00 per Unit (the "Offering Price") for aggregate gross proceeds to Galway of C$25,000,000 (the "Offering"). Each Unit will consist of one common share in the capital of the Company (each a "Common Share") and one-half of one common share purchase warrant (each whole common share purchase warrant, a "Warrant"). Each Warrant will entitle the holder thereof to purchase one Common Share (a "Warrant Share") at a price of $1.50 per Warrant Share (the "Exercise Price") for a period of two years following the closing of the Offering, except that if over a period of 20 consecutive trading days the daily volume weighted average trading price of the Common Shares on the TSX Venture Exchange exceeds the Exercise Price by 25% on each of those days, the Company will have the right to give notice in writing to the Lead Underwriter and to the holders of Warrants within 30 days of such an occurrence that the Warrants shall expire at 4:00 p.m. (Toronto time) on the 45h day following the giving of such notice unless exercised by the holders thereof prior to such date.
The Offering is expected to close on or about January 13, 2011 and is subject to the receipt of all necessary regulatory and stock exchange approvals, including the approval of the TSX Venture Exchange and applicable securities regulatory authorities.
The net proceeds are intended to be used by the Company to advance its California and Vetas gold projects located in Colombia and for general working capital and corporate purposes.
Vetas Spin-Out:
The Company is also pleased to announce its intention to spin-out its Vetas gold project into a newly incorporated, wholly-owned subsidiary to be distributed to its shareholders. Galway Resources believes the Spin-Out Transaction will help maximize shareholder value allowing the Company to focus on the California projects while shareholders enjoy growth opportunities in the development of the Vetas gold project. Upon completion of the transfer of the Vetas gold project and a portion of the proceeds from the Offering as working capital for the subsidiary, Galway intends to distribute common shares of the subsidiary to its shareholders on a pro rata basis (the "Spin-Out Transaction").
It is anticipated that the Spin-Out Transaction will be completed pursuant to a plan of arrangement or other suitable transaction and will be subject to TSX Venture Exchange, regulatory and court approval, as well as shareholder approval. Further details of the Spin-Out Transaction will be announced.
In January 2010, Galway announced that it had entered into a binding agreement to acquire a 100% interest in the Reina de Oro and Coloro properties in the center of the historic Vetas Gold Mining District in Colombia. The properties are mostly contiguous and collectively comprise 542 hectares (1,339 acres). The Reina de Oro property's main asset at present, the El Volcan Mine, has been the site of gold mining since the 1590's and has produced among the most gold of any in the historic California-Vetas gold mining district. The town of Vetas is located approximately 8 kilometers southeast of California, the sight of the Company's on-going gold exploration program, on strike with Ventana's and Greystar's major gold discoveries. Drilling is expected to commence in the first quarter of 2011.
Grades returned from our channel sampling program include 104.8 grams per tonne (g/t) gold (Au) over a strike length of 70.1 meters (0.8 m true width), and 317.6 g/t Au over a strike length of 25 meters (0.8m true width) including 1,374.8 g/t Au over a strike length of 5.0 meters from two different veins. Results from over 1,400 samples have been reported on. Visit Galway's website at www.galwayresources.com for additional information.
Review by Qualified Person, Quality Control and Reports
In compliance with National Instrument 43-101, Mr. Mike Sutton P.Geo., is the Qualified Person responsible for the accuracy of this news release. All samples were assayed for Metallic Screen test by ALS Chemex (Prepared in Bogota, tested in Peru). The Company's QA/QC program includes the regular insertion of blanks and standards into the sample shipments. All widths are true widths.
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