Carpathian temporarily suspends construction of RDM gold project in Brazil and amends terms of “bought deal” financing
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Toronto, Ontario, October 18, 2011. CPN-TSX. Carpathian Gold Inc. (“Carpathian” or the “Corporation”) wishes to report that it has been advised of a decision by COPAM, one of the Brazilian environmental authorities having jurisdiction over its RDM gold project situated in Minas Gerais State, Brazil (the “Project”), to attach a condition to the recently granted Ad Referendum License to Install (“AR LI”) to the effect that the Corporation’s wholly owned subsidiary, Mineração Riacho dos Machados Ltda. (“MRDM”), should not start any installation work on the Project until the AR LI is ratified by COPAM, pending their further review of technical documents.
On September 16, 2011, the Corporation announced that it had received the AR LI thereby allowing MRDM to proceed with the overall construction on site. This requirement to delay construction pending an additional technical review was unexpected. While the AR LI has not been revoked, and the recent condition placed on it by COPAM is unusual, the Corporation is diligently working with COPAM and various government authorities in order to determine the revised timeline for the resumption of construction on the Project.
On October 13 2011, the Corporation had announced a “bought deal” equity offering of 80,000,000 common shares of the Corporation at a price of $0.50 per common share underwritten by a syndicate of investment dealers co-led by Cormark Securities Inc., Macquarie Capital Markets Canada Ltd., Canaccord Genuity Corp., and including Haywood Securities Inc., Jennings Capital Inc. and Stonecap Securities Inc. (collectively, the “Underwriters”). In light of the above development, the Corporation and the Underwriters have agreed to amend the terms of the “bought deal” to provide for an offering of 100,000,000 subscription receipts (“Subscription Receipts”). Each Subscription Receipt will be automatically exchanged, without payment of any additional consideration and subject to adjustment, for one common share of the Corporation. The issue price of the Subscription Receipts will be $0.40 per Subscription Receipt (the “Offering Price”), for aggregate gross proceeds of $40.0 million (the “Offering”). In addition, the Corporation has granted to the Underwriters an option to purchase up to an additional 15,000,000 Subscription Receipts (representing 15% of the base offering) at the Offering Price exercisable within 30 days after the closing of the Offering for additional gross proceeds in the amount of up to approximately $6.0 million.
The gross proceeds of the Offering (the “Escrowed Funds”) will be held in escrow and released to the Corporation when the Release Conditions (defined below) have been satisfied. If the Release Conditions have not been satisfied on or before 5:00 p.m. (Toronto time) on December 21, 2011, holders of the Subscription Receipts will be entitled to a full refund of the subscription price for their Subscription Receipts. The Release Conditions include the ratification of the AR LI by COPAM on substantially the same terms and conditions as the current AR LI.
The Offering is scheduled to close on or about November 3, 2011 and is subject to certain conditions, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange and applicable securities regulatory authorities.
The net proceeds of the Offering will be used for construction and development of the RDM project (Brazil) and for general corporate purposes.
These securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
This press release shall not constitute an offer to sell or solicitation of an offer to buy the securities in any jurisdiction. The Subscription Receipts and the common shares underlying the common shares will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements.
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For more information please contact:
Dino Titaro President and CEO Tel. +1(416) 368-7744 Fax. +1(416) 260-2243 e-mail: [email protected]
Forward-Looking Statements: This press release includes certain statements that may be deemed "forward‐looking statements". Forward‐looking statements are frequently characterized by words such as “plan”, “expect”, “Project”, “intend”, “believe”, “anticipate”, “estimate”, and other similar words, or statements that certain events or conditions “may” or “will” occur. All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Corporation expects, are forward‐looking statements. Although the Corporation believes the expectations expressed in such forward‐looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward‐looking statements. Factors that could cause actual results to differ materially from those in forward‐looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurance that forward‐looking statements will prove to be accurate, as results and future events could differ materially from those anticipated statements. The Corporation undertakes no obligation to update forward‐looking statements if circumstances or management’s estimates or opinions should change, except as required by law. The reader is cautioned not to place undue reliance on forward‐looking statements.