Vancouver, Canada – April 2, 2012 – SAVARY CAPITAL CORP. (“Savary”) (TSX-V: SCA) is pleased to announce that it has entered into a Letter of Intent dated March 26, 2012 outlining the general terms and conditions with respect to the acquisition (the "Acquisition") by Savary of all the issued and outstanding share capital of Burkina Gold Corporation ("Burkina").
Burkina is incorporated under the laws of Ontario and is a private, non-reporting company. Burkina is party to a letter of intent with Avion Gold Corporation (TSX: AVR) (“Avion”) pursuant to which Burkina has an option (the “Option”) to acquire from Avion, the South Block of Avion’s Houndé Property in Burkina Faso, Africa.
The South Block of the Houndé Property comprises 2 exploration licenses (Diosso and Mandiasso) covering a total 375 km2, and an additional 125 km2 of concessions which have been applied for by Avion, which would result in a total area under license of 500 km2 (the "Property").
The Property lies within an emerging gold camp and is approximately 130 kilometres southwest of SEMAFO's Mana Mine and 60 kilometres south of Avion’s Vindaloo zone. According to SEMAFO's annual information form dated March 13, 2012, the Mana Mine hosts proven and probable reserves totalling 2,159,700 million ounces of gold, measured and indicated mineral resources totalling 1,126,000 ounces of gold, and inferred mineral resources totalling 2,678,000 million ounces of gold. The Property lies approximately 300 km southwest of Ouagadougou, the capital of Burkina Faso. Access to the Property is provided by highway to the northern part of the property and then by a network of roads and trails upgraded or built by Avion.
The Diosso South zone returned intercepts, from 2010 drilling, of up to 2.18 g/t Au over 8.5 metres. The Diosso South zone lies near the south central part of the southern block of the Houndé concessions. Previous drill holes intersected the Diosso South zone for 500 metres along strike to approximately 140 metres depth. Highlights of the seven historic holes that intersected the Diosso south zone include 3.27 g/t Au over 16.0 metres and 2.72 g/t Au over 20.0 metres. The Diosso South zone is hosted by sericitized and quartz veined mafic volcanic rocks and appears to be part of the same shear zone system that hosts the Kueredougou zone located approximately 7 kilometres to the north-northeast. Holes that tested the Kueredougou zone returned up to 101.81 g/t over 4.0 metres.
A geological report (the "Report") in accordance with National Instrument 43-101 in respect of the Property is currently being prepared for filing with the TSX Venture Exchange (the "Exchange"). Further information will be announced once the Report has received regulatory approval and has been filed on SEDAR.
In order to exercise the Option, Savary must incur exploration expenditures of US$3,000,000 within 24 months following the date a definitive agreement is signed, of which US$1,500,000 is to be spent within the first 12 months. Upon satisfying the exploration commitments, Savary may elect to exercise the Option and complete the acquisition of 100% of the Property by issuing to Avion that number of common shares that will result in Avion holding 20% of the issued and outstanding share capital of Savary immediately following the exercise of the Option.
Following exercise of the Option, and for so long as Avion continues to hold not less than 15% of Savary's outstanding shares, Avion shall have the right to: (i) nominate two persons for election to Savary's board of directors; (ii) nominate one observer to Savary's exploration committee; and (iii) participate proportionately in any subsequent equity financing of Savary.
In connection with the proposed Acquisition, Burkina and Savary have engaged BayFront Capital Partners Ltd. ("BayFront") as financial advisor. BayFront is to receive 120,000 common shares of Savary on completion of the transaction, and additional shares equal to 2% of the shares to be received by Avion if the Option is exercised.
In addition, BayFront has agreed to assist Burkina in the completion of a financing of not less than $2,000,000 by way of private placement of subscription receipts (each, a "Subscription Receipt"), at a price of $0.25 per Subscription Receipt. On completion of the Acquisition, each Subscription Receipt will automatically convert into one common share of Savary. In the event that the Acquisition is terminated or not completed, each Subscription Receipt will automatically convert into one common share of Burkina. No further consideration will be payable to Burkina or its current shareholders in connection with the Acquisition. In connection with the financing, BayFront will be entitled to receive a cash commission of 7% of the gross proceeds. In addition, BayFront will be granted warrants to acquire such numbers of shares of Burkina as is equal to 7% of the aggregate number of Subscription Receipts sold by BayFront under the financing. These warrants are exercisable at $0.25 each for a period of 12 months from the closing of the financing and will convert to warrants of Savary on completion of the Acquisition.
Burkina has agreed to advance to Avion, on or before April 23, 2012, not less than US$500,000, which shall be used by Avion to fund an agreed exploration program on the Property. Such advance will be credited against the year one exploration commitments of Savary.
The parties to the Acquisition are at Arm's Length. The Acquisition will constitute Savary's Qualifying Transaction under the policies of the Exchange. Assuming completion of the Acquisition, it is anticipated that Savary will graduate to Tier 2 of the Exchange as a Mining Issuer.
Subject to completion of satisfactory due diligence, PI Financial Corp. has agreed to act as sponsor to Savary in connection with the Qualifying 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.
Completion of the Acquisition is subject to a number of conditions, including Exchange acceptance and, if required by the Exchange, disinterested shareholder approval. The transaction cannot close until the required approvals are 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 disclosure document to be prepared in connection with the transaction, any information released or received with respect to the Qualifying Transaction or the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of Savary should be considered highly speculative. Trading in the common shares of Savary will remain halted pending further filings with the Exchange.
Technical aspects of this news release have been reviewed and approved by Eugene Puritch, P.Eng., President of P & E Mining Consultants Inc., as a qualified person on behalf of Savary under National Instrument 43-101. P & E Mining Consultants has been engaged by Savary in connection with the preparation and filing of the Report.
The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
For more information, contact Scott Ackerman at (778) 331-8505.
On behalf of the Board of Directors of
SAVARY CAPITAL CORP.
President, CEO, and Corporate Secretary
Neither 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 release.
This new release may contain forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed in the management discussion and analysis section of our interim and most recent annual financial statement or other reports and filings with the TSX Venture Exchange and applicable Canadian securities regulations. We do not assume any obligation to update any forward-looking statements except in accordance with the applicable securities laws.