Klondike Gold Makes Lonestar Exempt Take over Bid
Klondike Gold Corp. (TSX-V: KG) ('KG? or the 'Company?) is
pleased to announce that it proposes to offer to acquire by way of an
exempt take-over bid a majority equity interest in the common voting
shares of Lonestar Gold Inc. ('Lonestar'), a privately held British
Columbia company. KG will invite the shareholders of Lonestar to
exchange their common shares (the 'Lonestar Shares?) for newly issued KG
common shares, on the basis of three (3) common shares of KG for each
(1) Lonestar Share tendered and accepted by KG. The offer is subject to
the tender of a sufficient number of Lonestar Shares to increase KG's
shareholdings in Lonestar to a minimum of 51% of the total issued shares
of Lonestar, and will be limited to the purchase of sufficient Lonestar
Shares to increase its holding to approximately 75% of the total issued
shares of Lonestar.
Lonestar has approximately 10,900,000 common shares issued and
outstanding, of which KG currently holds 1,800,000 shares. Accordingly,
KG will be seeking to acquire a minimum of approximately 3,657,000, and
up to a maximum of approximately 6,300,000 Lonestar Shares. This would
mean the issuance of a minimum of 10,971,000, and up to a maximum of
18,900,000 common shares of KG. Should more than 6,300,000 Lonestar
Shares be tendered by shareholders of Lonestar, KG will prorate its
acceptance of the tenders received. The acquisition of the additional
equity interest in Lonestar is also subject to acceptance for filing by
the TSX Venture Exchange (the 'Exchange'). There will be no change in
effective control, or change in control of KG as a result of the share
exchange, and no new control person will be created by this transaction.
Lonestar's principal assets are the option to acquire the
Eldorado/Lonestar Property near Dawson City, Yukon Territory, entered
into with KG and Klondike Star Mineral Corporation earlier this year
(see our news release dated June 12, 2011), and approximately $1,000,000
in cash raised in a recent private placement of its shares at a price of
$0.30 per share. In addition, the management of Lonestar, Erich Rauguth,
President and CEO, and Manfred Peschke, CFO, has extensive experience in
mineral exploration and development, including many years of invaluable
experience conducting work in the Yukon Territory. Should KG's offer to
acquire a majority interest in Lonestar be successful, KG has requested
and Mr. Rauguth and Mr. Peschke have agreed to continue in the
management of Lonestar.
Lonestar is currently engaged in reviewing the exploration data from the
2005, 2006 and 2007 exploration seasons carried out by the previous
operator and compiling it with the information that is obtained from its
2011 exploration program and the data generated by the various
Universities during their studies on the Eldorado/ Lone Star Property.
Research teams from the University of Leeds, led by Dr. Robert Chapman
of the United Kingdom, the University of British Columbia, led by Dr.
James Mortenson and the University of Ortega, Australia, led by Dr. Doug
McKenzie, have spent several exploration seasons examining the Klondike
Gold Fields. The multi-disciplinary research teams have published a
considerable volume of information that is directly related to the
Eldorado/Lone Star Property. Lonestar is incorporating this information
in to its updated database. Lonestar's 2012 exploration program will,
amongst other activities, focus on developing a NI 43-101 compliant
resource calculation for the Eldorado/Lonestar project. Lonestar intends
to extend the exploration threshold from a depth of 175 meters to a
depth of 400 meters and will also investigate any new targets identified
from the compilation of the data being carried out and further
investigate several other areas on the 130 square km property for
indications of the source of the potential gold mineralization.
The Eldorado/Lonestar Property is famous from the Klondike Gold Rush of
1898. This transaction will consolidate exploration efforts and increase
the Company′s interest in the property and long-term commitment to
develop the Klondike gold fields.
As part of its proposed acquisition of a majority equity interest in
Lonestar, and in order to have the necessary funds to finance the
ongoing work commitments and any additional exploration recommended to
be carried out by Lonestar, the Company announces that it has agreed to
a non-brokered private placement of up to $2,750,000 of its securities,
consisting of the sale of 27,500,000 flow-through and/or
non-flow-through common shares at a price of $0.10 per share. The
proceeds of the private placement will be used for exploration of the
Eldorado/Lonestar Property and for general working capital. Finder's
fees in cash and/or shares, in accordance with the policies of the
Exchange, may be payable on a portion of the private placement.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this news release.
The statements made in this Press Release may contain forward-looking
statements that may involve a number of risks and uncertainties.Actual
events or results could differ materially from the Company's
expectations and projections.
Klondike Gold Corp.
Alan Campbell, 604-685-2222
info@klondikegoldcorp.com
