Brazil Resources Completes Acquisition of Brazilian Gold Corporation

Highlights

• Brazil Resources has acquired 100% of the outstanding Brazilian Gold Corporation (BGC) shares, for consideration consisting of 0.172 Brazil Resources shares for each BGC share;
• Total consideration under the transaction was approximately $13.5 million; and
• The acquisition significantly expands Brazil Resources' footprint in Brazil, including the addition of BGC's flagship São Jorge Project.
  
  

VANCOUVER, Nov. 22, 2013 /CNW/ - Brazil Resources Inc. ("Brazil Resources" or the "Company") (TSX-V: BRI; OTCQX: BRIZF) is pleased to announce the completion of its acquisition of Brazilian Gold Corporation ("BGC") (TSX-V: BGC) pursuant to the previously announced plan of arrangement between the parties (the "Arrangement"). The Arrangement was approved by shareholders of BGC on November 20, 2013 and the Supreme Court of British Columbia on November 21, 2013. Under the Arrangement, the Company acquired all of the 103,608,796 issued and outstanding common shares of BGC (the "BGC Shares") for consideration consisting of 0.172 common shares of Brazil Resources (the "BRI Shares") per BGC Share. Total consideration under the transaction was approximately $13.5 million.

Amir Adnani, Chairman of Brazil Resources, stated: "The directors and management of Brazil Resources are very pleased to announce the completion of this transaction. The acquisition of BGC has expanded our project base in the region and represents a significant milestone in our strategy to build shareholder value through targeted accretive acquisitions. On behalf of the Company, we welcome BGC's shareholders and look forward to progressing the combined companies' projects."

As previously disclosed, BGC's directors and senior officers have entered into lock-up agreements with Brazil Resources respecting BRI Shares received in exchange for their BGC Shares under the Arrangement.

Brazil Resources has significantly expanded its project base in Brazil as a result of acquiring BGC and its projects, which include, among others, the following projects.

São Jorge Project

The São Jorge Gold Project, located 82km north from the city of Novo Progresso and 30km south of Morais de Almeida, is accessible by the mostly paved highway BR 163, which also provides access to the newly developed Santarem port in Pará State. In addition, electricity is available on site and the Jamanxim River, located 9km west of São Jorge, will supply sufficient water to the project.

BGC completed a National Instrument 43-101 ("NI 43-101") resource estimate for the São Jorge Gold Project in December 2012. The resource estimate was authored by Coffey Mining Pty Ltd. ("Coffey") and provided the following estimates for the project (oxide and primary mineralization) at various cut-off grades (the oxide resource comprises a small part (9%) of this overall resource):

Coffey classified the resource estimate as an indicated or inferred mineral resource based upon the confidence of the input data, geological interpretation and grade estimation. Indicated and Inferred Mineral Resources are reported at a cut-off grade of 0.3 g/t Au, which was estimated by Coffey based upon economic estimates, process recovery, government taxes, other expenses and a gold price of US$1,300/oz. The São Jorge resource estimate was based on 37,154 m (145 holes) of diamond drilling completed by previous operators, including 14,708 m (37 holes) of diamond drilling completed by BGC since late 2010. Gold assays (19,590) were composited at 1 m lengths and interpolated into the block model using multiple indicator kriging. A three dimensional solid model of the primary and oxide mineralization was constructed to constrain the resource estimate. The block model was comprised of individual blocks measuring 5 m by 5 m by 5 m and grade was interpolated into these blocks using multiple indicator kriging.

For further information respecting the above resource estimate for the São Jorge Gold Project, please refer to the technical report by Curtis Clarke, Dan Peldiak, Reinis Sipols, Porfirio Rodriguez and Hebert Oliveira with an effective date of January 31, 2013 and titled "São Jorge Gold Project - Preliminary Economic Assessment" (the "São Jorge Report"), a copy of which is filed under BGC's profile on SEDAR at www.sedar.com. To the best of Company's knowledge, information and belief there is no new material scientific or technical information that would make the above disclosure of mineral resources for the São Jorge Gold Project inaccurate or misleading. Readers are cautioned that the Company is in the process of reviewing the preliminary economic assessment contained in the São Jorge Report, and such assessment should not be relied upon at this stage as it may no longer be current.

As a result of the Arrangement, Brazil Resources is the indirect holder of eleven gold exploration concessions and applications in the São Jorge area for a total landholding of 58,500 ha. Two of these concessions are under appeal, awaiting decisions by the Departamento Nacional de Producão Mineral ("DNPM"), however these areas are covered by newer concessions, which have first priority with the DNPM.

In addition to government royalties, the São Jorge Gold Project is subject to: (i) a 1.0% net smelter royalty ("NSR") on production payable to a prior owner on 10 concessions; (ii) a royalty of 1.0% of proven mineral reserves on concession 850.275 as demonstrated by a feasibility study, which royalty can be repurchased for US$2.5 million; and (iii) a 2.0% NSR on concession 850.627, 75% of which can be repurchased for US$500,000. The agreement for the purchase of the São Jorge Gold Project provides for land access to the area for a monthly fee of BRL$10,000. The surface rights may be purchased from the owner for US$750,000.

Surubim Group

The Surubim Group includes the Patoa, Tucunare, Colonia and Jau targets. The Surubim Group includes eleven concessions, applications and bids that cover an area of approximately 63,701 ha. The Jau target is located in the eastern part of the group and is underlain by granitic and felsic volcanic rocks. On June 5, 2012, BGC announced an independent NI 43-101 resource estimate on the Jau deposit with an inferred mineral resource of 19.44 Mt grading 0.81 g/t gold (503,000 ounces gold) at a cut-off grade of 0.3 g/t gold.

The foregoing resource estimate was completed by BGC, is historical in nature and is not being treated as a current resource estimate by Brazil Resources as a qualified person has not done sufficient work on behalf of the Company to classify the historical estimate as a current mineral resource. While the historical resource estimate should not be relied upon, the Company believes the historical estimate provides an indication of the potential of the property and is relevant to ongoing exploration. However, additional evaluation and other work, including a detailed review of the assumptions and models used in the estimate and underlying exploration work, needs to be completed by Brazil Resources in order to treat the resource estimate as current.

The historical estimate for the Jau target was based on a total of 20 drill holes containing 2,978 gold assays. Gold assay were composited at 2.5 m lengths and interpolated into the block model using ordinary kriging. A three dimensional solid model of the mineralization was constructed to constrain the resource estimate. The block model is comprised of individual blocks measuring 20 m by 20 m by 5 m with the long dimensions of the block orientated east-west and north-south. No economic studies have been completed on this property and, as a result, the economic cut-off is unknown. A gold cut-off of 0.3 g/t was highlighted in the estimate as a possible open pit cut-off.

The above historical resource estimate for the Jau target is based on a technical report completed for BGC by Jim Cuttle, P.Geo. and Gary Giroux, P. Eng. titled "NI 43-101 Technical Report on the Rio Novo Gold Project and Resource Estimate on the Jau Prospect" with an effective date of April 15, 2012.

Boa Vista Gold Project

The Boa Vista Project has extensive historic alluvial and lateritic workings that were largely unexplored until 2010 when BGC and their joint venture partners started systematic exploration programs across the property. The exploration programs quickly outlined a number of prospective targets (Jair, Ze do Leicha, Almir, Planalto and Pistinha) and the discovery of the VG1 deposit.

On August 9, 2012, BGC announced an independent NI 43-101 inferred resource of 8.47 Mt grading 1.23 g/t gold (336,000 ounces) at a 0.5 g/t cut-off for the VG1 deposit.

The foregoing resource estimate was completed by BGC, is historical in nature and is not being treated as a current resource estimate by Brazil Resources as a qualified person has not done sufficient work on behalf of Brazil Resources to classify the historical estimate as a current mineral resource. While the historical resource estimate should not be relied upon, the Company believes the historical estimate provides an indication of the potential of the property and is relevant to ongoing exploration. However, additional evaluation and other work, including a detailed review of the assumptions and models used in the estimate and underlying exploration work, needs to be completed by Brazil Resources in order to treat the resource estimate as current.

The VG1 deposit had been tested by 15 diamond drill holes (3,007 m) and 14 trenches (2,299 m) containing 3,399 assays. The drill holes intersected a west-northwest striking, steeply dipping mineralized zone that is up to 85 m in thickness and extends at least 150 m below surface based on existing drilling. The mineralized zone consists of quartz-pyrite stockwork and silicified zone(s) that are hosted within a foliated, mixed mafic volcanic and intrusive unit at or adjacent to granite rocks. Gold assays were composited at 5 m lengths and interpolated into the block model using ordinary kriging. A three dimensional solid model of the primary and oxide mineralization was constructed to constrain the resource estimate. 12 of the 15 diamond drill holes and 6 of the 14 trenches penetrated these solids over a strike length of 500 m and were used in the resource estimate. The block model is comprised of individual blocks measuring 20 m by 20 m by 5 m with the long dimensions of the block orientated east-west and down dip.

The above historical resource estimate for the VG1 deposit is based on a technical report completed for BGC by Jim Cuttle, P.Geo., Giroux Consultants Ltd. and Michael Schmulian, FAusIMM with an effective date of July 8, 2012 and titled "Boa Vista Gold Project and Resource Estimate on the VG1 Prospect".

As a result of completing the Arrangement, Brazil Resources indirectly owns an 84.05% interest in Boa Vista Gold Inc., which indirectly holds a 100% interest in the Boa Vista Project, subject to a 1.5% Net Smelter Return Royalty. In connection with the Arrangement and pursuant to an amendment agreement dated November 8, 2013, Brazil Resources has agreed to issue 193,500 BRI Shares in the place of 1,125,000 BGC shares that were issuable to D'Gold Mineral Ltda. by BGC. Of these BRI Shares, 64,500 will be issued today.

A report requesting a second three-year term be applied to mineral concession 850.643 was submitted to the DNPM in May 2011. Concession 850.643 covers the Almir and Pistinha targets of the Boa Vista Project, as well as a number of alluvial workings. The DNPM provided notification on August 14, 2013 that it had denied the second three year term citing that insufficient work had been completed on the concession. An appeal was submitted to the DNPM by BGC's legal counsel on August 26, 2013.

Additional Information for BGC Shareholders

Former shareholders of BGC who held their shares through a broker, investment dealer, bank, trust company or other nominee or intermediary, should follow the instructions provided by such nominee or intermediary. Former shareholders of BGC who were registered shareholders must complete and sign the letter of transmittal and deliver it and the other documents required by it to Computershare Investor Services Inc., as depositary, in order to receive their BRI Shares. A letter of transmittal was mailed to registered shareholders in mid-October, 2013. Details of the required process are set forth in BGC's management information circular dated October 22, 2013, a copy of which is available under BGC's profile on SEDAR at www.sedar.com.

Sangra Moller LLP acted as legal counsel for Brazil Resources and Gowling Lafleur Henderson LLP acted as legal counsel for BGC in connection with the Arrangement. Clarus Securities Inc. acted as financial advisor to the board of directors of BGC and its independent special committee.

About Brazil Resources Inc.

Brazil Resources is a public mineral exploration company with a focus on the acquisition and development of projects in emerging producing gold districts in Brazil, Paraguay and other parts of South America. Currently, Brazil Resources is advancing its Cachoeira and São Jorge Gold Projects located in the State of Pará, northeastern Brazil.

Technical Information

Paulo Pereira, Brazil Resources' Vice President of Exploration has supervised the preparation of the technical information contained in this news release, reviewed the São Jorge Report on behalf of Brazil Resources. Mr. Pereira holds a Bachelor degree in Geology from Universidade do Amazonas in Brazil, is a qualified person as defined in NI 43-101 and is a member of the Association of Professional Geoscientists of Ontario.

Cautionary Note

Investors are cautioned not to assume that any part or all of mineral deposits in the "indicated" and "Inferred" categories will ever be converted into mineral reserves with demonstrated economic viability or that inferred mineral resources will be converted to the measured and/or indicated categories through further drilling. In addition, the estimation of inferred resources involves far greater uncertainty as to their existence and economic viability than the estimation of other categories of resources.

Forward Looking Statements

This document contains certain forward-looking statements that reflect the current views and/or expectations of Brazil Resources with respect to its business and future events, including statements regarding future exploration plans and resource estimates. Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about the business and the markets in which Brazil Resources operates. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including: the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other exploration data, the uncertainties respecting historical resource estimates, the potential for delays in exploration or development activities, the geology, grade and continuity of mineral deposits, the possibility that future exploration, development or mining results will not be consistent with Brazil Resources' expectations, accidents, equipment breakdowns, title and permitting matters, labour disputes or other unanticipated difficulties with or interruptions in operations, fluctuating metal prices, unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, commodity price fluctuations, regulatory restrictions, including environmental regulatory restrictions, or any failure to integrate acquired companies and projects into the Company's existing business as planned. These risks, as well as others, including those set forth in Brazil Resources' filings with Canadian securities regulators, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward looking information, will prove to be accurate. Brazil Resources does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Brazil Resources Inc.
Stephen Swatton, Chief Executive Officer
Patrick Obara, Chief Financial Officer
Telephone: (855) 630-1001

SOURCE Brazil Resources Inc.