Brigus Gold to Eliminate 100% of Gold Hedge Commitments and Sells Gold Stream for US$56.3 Million
Brigus Gold Corp. ('Brigus Gold? or the 'Company?) (TSX: BRD) (NYSE
Amex: BRD) announces that it intends to eliminate 100% of its forward
gold sales contract obligations ('hedge?) effective January 2011 and
will benefit from selling 100% of its Black Fox Mine gold production at
spot prices going forward.
Brigus Gold also announces that it has entered into a gold stream
agreement with Sandstorm Resources Ltd. ('Sandstorm?) pursuant to which
Sandstorm has agreed to purchase 12% of the gold production from the
Black Fox Mine beginning in January 2011 and 10% of future production
from the Black Fox Extension covering a portion of the adjoining Pike
River property (the 'Gold Stream?). Sandstorm will make an upfront
payment of US$56.3 million which Brigus will unwind the balance of its
forward gold sales contracts totaling terminating the obligation to
deliver 99,409 ounces from October 2011 to March 2013 and as a result
Brigus will become an unhedged gold producer. Sandstorm will also pay
Brigus ongoing per ounce payments of US$500 subject to an inflationary
adjustment beginning in 2013, not to exceed 2% per annum.
Brigus Gold has the option, for a 24 month period, to reduce the Gold
Stream to 6% of production from the Black Fox Mine and 4.5% of
production from the Black Fox Extension for a payment of US$36.6 million.
The Black Fox Mine is located in Matheson, Ontario, Canada, in the
Timmins Gold District and has been in commercial production since May
2009. Brigus Gold has operated Black Fox as an open pit mine since
commencement of production and in mid 2010, began development of the
underground portion of the mine.
In the 3rd quarter of 2010, the Black Fox Mine produced 21,526 ounces of
gold, an increase of 19 percent over the 2nd quarter. Cash
costs for the full year 2010 are expected to be within a range of $500
and $550 per ounce in line with projections.
During the current quarter (4th quarter) Brigus will be
focused on construction and development to commission the underground
portion of Black Fox Mine early in 2011. Mine development, including
construction of the new vent raise and relocation of the underground
ramp and portal, is in progress. Logistical issues related to
construction and relocation of the new portal to the pit floor have
resulted in a delay of approximately one month. As a result of these
issues, production from the open pit will be reduced during the quarter.
During this period of reduced pit production, some ores will be drawn
from low grade ore stockpiles, resulting in projected 4th
quarter production of between 16,000 and 19,000 ounces of gold.
Brigus Gold′s Chairman, Chief Executive Officer and President Wade K.
Dawe commented, 'In the four months following completion of the merger
to form Brigus Gold, corporate debt has been reduced by 70 percent and
the gold hedge book will be eliminated, thus increasing the Company′s
leverage to the current gold market. With the restructuring of Brigus
Gold′s balance sheet and with Black Fox′s higher grade production from
the underground operations ramping up, we are now focused on production
growth and profitability.?
He continued, 'The Sandstorm deal implies a value of approximately
US$475 million exclusively for the Black Fox Mine. This transactional
value excludes giving any value to our Grey Fox property, the Goldfields
development project, and Mexican and Dominican Republic exploration
assets, yet represents an over 50% increase from our market
capitalization of US$305.8 million.
'This is a very significant and transformative deal for Sandstorm,?
stated Nolan Watson, President and Chief Executive Officer of Sandstorm.
'The Black Fox Mine will provide us with immediate cash flow from gold
sales but we are really committing to an asset that we believe has
superior growth prospects on the exploration front. Brigus Gold has
assembled an excellent operating team and is in a position to grow the
project effectively.?
About Brigus Gold
Brigus Gold is a growing gold producer committed to maximizing
shareholder value through a strategy of efficient production, targeted
exploration and select acquisitions. The Company operates the wholly
owned Black Fox Mine in the Timmins Gold District of Ontario, Canada.
The Black Fox Mine is located in the Township of Black River-Matheson,
Ontario, Canada. Brigus Gold is also advancing the Goldfields Project
located near Uranium City, Saskatchewan, Canada, which hosts the Box and
Athona gold deposits. In Mexico, Brigus Gold holds a 100 percent
interest in the Ixhuatan Property located in the state of Chiapas, and
an 80 percent interest in the Huizopa Joint Venture, an early stage,
gold-silver exploration joint venture located in the State of Chihuahua.
In the Dominican Republic, Brigus Gold also has a joint venture covering
three mineral exploration projects.
About Sandstorm Resources
Sandstorm Resources Ltd. is a growth focused resource based company that
seeks to complete transactions with companies that have advanced stage
development projects or operating mines. By making upfront payments to
its partners, Sandstorm receives gold purchase agreements (i.e. metal
stream deals). Sandstorm helps other companies in the resource industry
grow their businesses, while acquiring attractive assets in the process.
Sandstorm is focused on low cost operations with excellent exploration
potential and strong management teams. Sandstorm has completed gold
purchase agreements with Luna Gold Corp., SilverCrest Mines Inc., Santa
Fe Gold Corporation, Rambler Metals and Mining plc and Brigus Gold Corp.
For more information visit: www.sandstormresources.com.
Cautionary and Forward-Looking Statements
Statements contained in this news release which are not historical facts
are forward-looking statements that involve risk, uncertainties and
other factors that could cause actual results to differ materially from
those expressed or implied by such forward-looking statements. All
statements regarding the ability of the Company to further eliminate its
forward gold sales contracts, to exercise the option to reduce the Gold
Stream, to maintain cash costs within a projected range of $500 and $550
per ounce of gold, to resolve logistical issues related to the
construction of the underground portion of the Black Fox Mine, and to
deliver future growth and profitability, and the continuation of a
rising gold price are forward-looking statements and estimates that
involve various risks and uncertainties. This forward-looking
information includes, or may be based upon, estimates, forecasts, and
statements as to management's expectations with respect to, among other
things, the outcome of legal proceedings, the issue of permits, the size
and quality of the company's mineral resources, progress in development
of mineral properties, future production and sales volumes, capital and
mine production costs, demand and market outlook for metals, future
metal prices and treatment and refining charges, and the financial
results of the Company.
Important factors that could cause actual results to differ materially
from these forward-looking statements include environmental risks and
other factors disclosed under the heading 'Risk Factors? in Brigus
Gold′s most recent annual report on Form 10-K filed with the United
States Securities and Exchange Commission and elsewhere in Brigus Gold′s
documents filed from time to time with the Toronto Stock Exchange, the
NYSE Amex Equities, the United States Securities and Exchange Commission
and other regulatory authorities. All forward-looking statements
included in this news release are based on information available to the
Company on the date hereof. The Company assumes no obligation to update
any forward-looking statements, except as required by applicable
securities laws.
Brigus Gold
Wendy Yang, Vice President of Investor Relations
303-524-3203
ir@brigusgold.com
or
Sean
Tufford, Director of Investor Relations
902-422-1421
Toll
Free: 1-866-785-0456
stufford@brigusgold.com
www.brigusgold.com