Press Release Regarding Reverse Takeover
The following news release is to provide an update of the activities of Amarillo Gold Corp. (the “Company”) and the status of its Reverse Takeover.
The Company has agreed to a private placement of 4,500,000 units at $0.25 per unit, each unit consisting of one common share and one half of one non-transferable share purchase warrant, each whole warrant entitling the holder thereof to purchase one additional common share of the Company for an 18 month period at a price of $0.35 per share. The Company will close this private placement in conjunction with the completion of the Reverse Takeover and the move to Tier 2 of the TSX Venture Exchange. The completion of this private placement will provide the Company with sufficient funds to meet the listing requirements of the Exchange with respect to Tier II issuers. A fee or commission will be payable in a cash amount equal to 8% of the proceeds raised and the issuance of warrants to purchase an amount of units equal to 10% of the units sold.
The Company has entered into an agreement dated October 22, 2003 as amended on April 20, 2004, to purchase the Mara Rosa Gold project in Brazil from De Re Holdings Inc. a subsidiary of Metallica Resources Inc. of Toronto, Ontario (Metallica). Metallica is an arm’s length public company which has its shares trade on the TSX and AMEX. The agreement is for the purchase of its wholly owned Brazilian subsidiary (Metallica Brasil Ltda.), which primary asset is the Mara Rosa Gold project located in Goias State in central Brazil. The project encompasses 28,567 hectares within 3 mining leases, 19 exploration permits and 1 exploration application. Local infrastructure is excellent with paved road access to the national capital of Brasilia (350 km) and the state capital, Goiania (300km). A finder’s fee of US$40,000 is payable by the Company in connection with the acquisition, such payment to be made half in cash and half in shares of the Company.
The closing of the transaction is subject to Exchange and shareholder acceptance. Upon completion of the Reverse Takeover the Company will be a resource issuer with a focus on gold in Brazil.
The Company has also announced the acquisition of an option to acquire up to a 100% interest in the San Antonio property located in Goias, Brazil. The Company is pleased to announce that Patrick Power has agreed to join the board of directors. Mr. Power has extensive experience in the mining exploration business and is currently the president of Arctic Star Diamond Corp., an Exchange listed company.
The Company previously announced a private placement of 1,000,000 units at $0.20 per unit, each unit consisting of one common share and one non-transferable share purchase warrant, each warrant entitling the holder thereof to purchase one additional common share of the Company for a one year period at a price of $0.40 per share. The Company has agreed to increase the number of units to 1,025,000 and reduce the price of the warrants to $0.25. The term of the warrants will remain at one year.
The Company has been on the NEX board since August of 2003 and has made application to the Exchange to be moved to Tier II of the NEX. Included as part of the Reverse Takeover will be an information circular which will be delivered to shareholders as part of the Special Meeting materials. The Special Meeting of shareholders is expected to be held in December of 2004. At the Meeting, shareholders will be asked to approve the above transactions, including the completion of the acquisition of Metallica Brasil Ltda.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and disinterested shareholder approval. The transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, any information released or received with respect to the Reverse Takeover may not be accurate or complete and should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.
Canaccord Capital Corporation, subject to completion of satisfactory due diligence, has agreed to act as sponsor to the Company in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.