Gold Mountain Mining (TSXV: GUM) announces $6 million private placement flow-through financing for expanded exploration program
VANCOUVER, Oct. 12, 2011 – Gold Mountain Mining Corporation (“Gold Mountain” or the “Company”) is pleased to announce that it entered into an agreement on a best efforts agency basis with Industrial Alliance Securities as lead agent on behalf of a syndicate of agents including Canaccord Genuity Corp and Sprott Private Wealth LP (the “Agents”), for the issuance of up to $6 million of Flow-Through Shares at a price of $1.15 per share. The Agents also have an over-allotment option whereby they can increase the size of the Offering by up to 15%. Net proceeds from the offering will be used for further exploration programs on the recently acquired Elk property, located in southern British Columbia, Canada. The Agents will receive a cash commission equal to 5% of the gross proceeds, plus a 5% compensation option exercisable for a period of 12 months at an exercise price of $1.15 per share.
The Elk property is located in southern British Columbia, Canada roughly 325 km northeast of Vancouver and has an existing 0.50 million ounce gold resource on the property. The property is within the Similkameen Mining District and consists of 27 contiguous mineral claims and one mining lease covering approximately 16,700 hectares. Gold Mountain acquired the Elk Gold Project in July 2011 from Almaden Minerals Ltd. The Elk property has had a Preliminary Economic Assessment (‘PEA”) completed that demonstrates the potential that a viable open pit gold mining project could be launched. The PEA results for the base case at US$1,000 per troy ounce indicate a potential mining project with a 7 year mine life producing 139,000 ounces of gold at estimated cash operating costs of C$528 per troy ounce, initial capital expenditures of C$9.91 million, pre-tax Internal Rate of Return (IRR) of 51%, payback of 1.85 years and Net Present Value (NPV) of $C28.7 million, using a discount rate of 8%. The results for a US$1,200 per troy ounce case indicate a mining project with a 9 year mine life producing 297,000 ounces of gold at estimated cash costs of C$652 per ounce, initial capital expenditures of C$17.5 million, pre-tax IRR of 39%, payback of 3.3 years and NPV of C$67.9 million using an 8% discount rate.
The PEA did not consider the underground potential of the resource but only the portion of the current resource amenable to open pit mining. The PEA and associated Mineral Resource Estimate does not include the results of the 2010 or 2011 drilling programs. The Company plans to incorporate those drill results into an updated mineral resource estimate for the purposes of more advanced studies.
About Gold Mountain Mining Corporation
Gold Mountain is a new public resource company managed by an experienced team of professionals with a solid track record of exploration and development success. The Company owns 100% of the 16,700 hectare Elk Gold property, which the Company intends to develop into a precious metal producer within the next two years. Additional information is available on Sedar and a company web site will be available soon.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has reviewed or accepts responsibility for the adequacy or accuracy of this Release.
Chief Executive Officer and Chairman or Rod Shier
Chief Financial Officer of Gold Mountain Mining Corporation
at 604 558-4653