TomaGold to put Gold Reef mine into production

  • TomaGold invests US$750,000 as secured loan to put the Gold Reef Mine into production
  • Receipt of 25% of the cash flow generated from the Gold Reef Mmine
  • Agreement also includes an option to acquire a 50% interest in the Gold Reef Mine for US$2 million in capital expenditures
  • The partner Gold Reef has a 3,000 t/month purchase contract with Freeport-McMoRan Miami Inc.
  • US$4 million financing commitment from a Hong Kong-based group of investors for this transaction and future acquisitions

Montreal, Quebec, September 30, 2014 – TomaGold Corporation (TSXV: LOT) (“TomaGold” or the “Company”) is pleased to announce the signing of an agreement with Gold Reef Mining LLC, Arizona, whereby TomaGold will provide at the closing a secured loan (the “Loan”) for the exploitation of the Gold Reef mine (the “Mine”). Having a term of one year and bearing interest at 10% per year, this transaction will allow having a carried interest of 25% of the cash flow generated by the Mine. The carried interest will remain after the Loan has been reimbursed, namely for the full duration of the Mine.

Following the Closing of the proposed transaction, TomaGold will hold an irrevocable and absolute option to acquire 50% of the ownership property of the Mine for US $2 million in capital expenditures on the project. TomaGold may exercise its option in the interest within 48 months following the full reimbursement of the Loan.

Gold Reef Mine
The Gold Reef Mine consists of two major patented mineral claims and six BLM (Bureau of Land Management) lode claims covering approximately 160 acres. This Mine is located 36 miles northeast of Phoenix, Maricopa County, Arizona. The property consists of a 200-foot-wide gold-bearing quartz vein system that extends 3,000 feet laterally and is up to 300 feet deep. The gold flux mineralization ranges in grade from 0.15 to 0.69 ounces of gold per ton. A 20-ton bulk sample returned an average grade of 0.19 ounces of gold per ton.

The operator expect that production will take place from the surface on the patented ground in the first two years of production and along strike onto the BLM ground as the project advances. An underground operation is planned to minimize surface disruption and BLM bond/permitting issues. Expedited permitting is expected, as no ore processing will take place on site.

The operator of the Mine, Gold Reef Mining LLC, Arizona currently has a 3,000-ton/month purchase contract with Freeport-McMoRan Miami Inc.

US$4 Million Financing Commitment
Concurrently with the Gold Reef transaction, TomaGold has received a financing offer of US$4 million from a group of investors based in Hong Kong (the “Investors”), whereby the Company intends to issue up to a maximum 13.7 million units. Each unit (the “Units”) will comprise one preferred share and one common share purchase warrant (the “Warrants”).

The Preferred Shares, redeemable after five years, will have no voting right and will be entitled to a dividend equal to 50% of the cash flow generated by the projects that the Company intends to finance with the private placement of Units. The Preferred Shares will not be listed on the TSX Venture Exchange.

The Warrant included in the Unit will allow the Investors to purchase one Common Share of TomaGold at an exercise price $0.12 at any time for a period of five years from the closing date. The Warrants issued will be subject to a holding period of four (4) months and one (1) day.

“This is a major step forward for TomaGold, both bringing us closer to achieving our goal of becoming a gold producer and bringing strong financial partners into the fold,” said David Grondin, President and Chief Executive Officer of TomaGold. “The Gold Reef project will enable us to generate cash flow in the coming year, and the US$4 million financing will allow us to finance this first transaction along with other similar transactions that the management of the Company has been working on over the last year, with minimal dilution for our shareholders. With gold assets at their lowest valuation, we believe this is a great time to acquire high quality gold assets.”

The technical content of this press release has been reviewed and approved by Andr├ę Jean, Eng., a qualified person under National Instrument 43-101.

The transaction with Gold Reef Mining LLC and the private financing are subject to due diligence of the Gold Reef mine and are expected to close within the next 45 days.

Those transactions are subject to regulatory approvals.


Cautionary and forward-looking statements
The Company is not basing its production decision on a feasibility study of mineral reserves demonstrating economic and technical viability and, as a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially mineable deposit. Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that production will begin as anticipated or at all or that anticipated production costs will be achieved. Failure to commence production would have a material adverse impact on the Company’s ability to generate revenue and cash flow to fund operations. Failure to achieve the anticipated production costs would have a material adverse impact on the Company’s cash flow and future profitability.


About TomaGold Corporation
TomaGold Corporation is a Canadian-based mining exploration company whose primary mission is the acquisition, exploration and development of gold projects in Canada and abroad.


TomaGold Corporation
David Grondin
President and Chief Executive Officer
(514) 206-7727

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