Brazilian Gold Acquires São Jorge Gold Project

VANCOUVER, June 15 /CNW/ - Brazilian Gold Corporation ("Brazilian Gold" or "Company") is pleased to announce they have signed an Option Agreement ("Agreement") to acquire a 100% interest in the São Jorge Gold Project ("Project") from Talon Metals Corp. ("Talon"). The São Jorge Gold Project is host to an NI43-101 compliant indicated resource of 8,334,000 tonnes grading 1.3 grams/tonne gold (343,000 ounces) and an inferred resource of 12,576,000 tonnes grading 1.1 grams/ tonne gold (458,000 ounces) using a 0.5 gram/tonne gold cutoff. The terms of the Agreement require Brazilian Gold to pay Talon a total of C$2,250,000 in cash and C$2,250,000 in Brazilian Gold shares to acquire a 100% interest in the Project. Talon is divesting its interest in the São Jorge Project as part of a strategic decision to focus their efforts on other exploration projects and will retain a 1% net smelter return royalty on the Project.

São Jorge Gold Project

The São Jorge Gold Project is located approximately 238 kilometres southeast of Itaituba, the main regional city in western Para State, Brazil. Access to the Project from Itaituba is via 320 kilometres of un-paved roads or by a 1 hour flight in a light aircraft to a landing strip on the property. The Project consists of 10 exploration licenses for a total area of 57,420 hectares.

The Project occurs within the eastern part of the Tapajos Mineral Province (TMP), which was the focus of a gold rush from the 1970's through the 1990's, where unofficial gold production primarily from alluvial deposits is estimated to be 30 million ounces. Rio Tinto Desenvolvimento Minerals Ltda., a subsidiary of Rio Tinto Plc was the first company to complete systematic exploration work over the São Jorge garimpo from 1993 to 1998. Rio Tinto drilled 26 diamond drill holes (4,390 m), as well as completing geochemistry, geophysics, geological mapping, trenching and auger drilling. In 1997, as part of an internal scoping study, Rio Tinto completed a non NI43-101 compliant resource estimate and scoping study for the São Jorge deposit, but decided the Project did not meet their economic threshold and dropped the property in 2003.

Talon acquired the Project in 2004 and completed additional diamond drilling (18,056 m in 82 holes) in 2005 and 2006 as well as geophysical and geochemical surveys, and preliminary metallurgical testwork. In September 2008, Talon published an independent NI43-101 compliant resource estimate for the São Jorge deposit; the classified resource estimate at various cutoff grades is shown below (Table 1).

Table 1: São Jorge Resource Estimate at various cutoff grades(1).

    Classification   Cutoff Grade    Million   Average Grade  Contained Gold
                       (g/t Au)       Tonnes     (g/t Au)         (Kozs)
                          0.3         11,365         1.0            379
    Indicated             0.5          8,344         1.3            343
                          0.7          6,232         1.5            303
                          0.3         20,673         0.8            558
    Inferred              0.5         12,576         1.1            458
                          0.7          7,861         1.5            369
    (1) Mineral resource estimate was prepared by Coffey Mining (Coffey), an
        international consulting firm and in Coffey's opinion the estimate is
        compliant with the Canadian Securities Administrators National
        Instrument 43-101 Standards of Disclosure for Mineral Projects and
        was filed by Talon on SEDAR on October 17, 2008.

The Project is underlain by an intrusive complex that trends AZ290degrees and is sub-parallel to the strike of the regional Cuiú-Cuiú - Tocantinzinho shear zone, which also hosts several important gold deposits including the Palito Mine, Tocantinzinho deposit, Cuiú-Cuiú, Bom Jardim and Batalha gold prospects. Gold mineralization at São Jorge is hosted in a massive, feldspar and quartz porphyritic monzonite stock that is approximately 1.2 kilometres in diameter. Mineralization consists of a structurally controlled quartz-sulphide stockwork system that is approximately 700 metres long by 60 metres wide and has been traced down dip to depths of 200 metres below surface by diamond drilling. The stockwork system is steeply dipping and has an orientation of AZ290degrees similar to the regional trend and is open at depth and potentially to the northwest and southeast. Gold mineralization has a strong correlation with quartz-sulphide vein frequency; sulphides are mainly pyrite with minor chalcopyrite. Alteration is zoned laterally outwards from strong potassic alteration associated with the most intense quartz veining and silica flooding through quartz-sericite and propylitic alteration where the quartz vein density is lower.

Preliminary metallurgical testwork commissioned by Talon indicates the mineralization responds well to conventional gold recovery processes with overall recoveries of 91 to 98% by gravity separation and Carbon in Leach (CIL) processing. Cyanide consumption was low at 0.1 to 0.3 kilograms/tonne.

Exploration programs by previous operators have focused on the São Jorge deposit with limited work completed outside of the immediate deposit area. Brazilian Gold plans an extensive exploration program that will focus on expanding the existing resource at São Jorge as well as exploring the remaining property to identify potential new resources. The program will include step out drilling at the São Jorge deposit, as well as geochemistry and geophysics over the remaining property. Brazilian Gold is targeting large, bulk mineable gold deposits in their exploration program.

Agreement Terms

Brazilian Gold has an option to acquire a 100% interest in the São Jorge Gold Project by paying Talon Metals C$2,250,000 in cash and C$2,250,000 in Brazilian shares according to the following schedule (Table 2) and granting Talon a 1% net smelter return royalty.

Table 2: São Jorge Payment Schedule

                                                  Cash           Shares(2)
    First Payment    Initial Closing Date     C$1,000,000     C$500,000/VWAP
    Second Payment   270 days after Initial
                      Closing Date              C$500,000   C$1,000,000/VWAP
    Final Payment    540 days after Initial
                      Closing Date              C$750,000     C$750,000/VWAP
    (2) Means the number of Brazilian Gold shares equal to the dollar amount
        divided by the twenty day volume-weighted average trading price
        (expressed in Canadian Dollars) of Brazilian Gold shares on the
        Toronto Stock Exchange's Venture Exchange.

The above Agreement is subject to a 1% net smelter return ("NSR") royalty payable to Talon upon commencement of commercial production. Commercial production is deemed to have commenced on the first day following the thirtieth (30th) day during which product has been produced from the properties at fifty percent (50%) or greater of run-of-mine capacity. The initial closing date, which the parties shall endeavor to satisfy on or before August 31, 2010, or such other date that is mutually acceptable to Talon and Brazilian Gold. The agreement is subject to customary closing conditions, including but not limited to, TSX Venture Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.

Garnet Dawson, M.Sc., P.Geo. (British Columbia), Vice President, Exploration for the Company and a Qualified Person, as defined by National Instrument 43-101, has reviewed and approved the technical disclosure contained in this News Release.

About Brazilian Gold Corporation

Brazilian Gold Corporation is a Canadian based public company with a focus on acquisition, exploration and development of mineral properties in the Tapajos region of Northern Brazil. The Company has approximately Cdn$10 million in cash and the São Jorge Gold Project is the third (3rd) gold project of Brazilian Gold in the region.

Some statements in this news release contain forward-looking information, including without limitation statements as to planned expenditures and exploration programs. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include without limitation the completion of planned expenditures, the ability to complete exploration programs on schedule and the success of exploration programs.

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 the accuracy of this news release.

SOURCE Brazilian Gold Corporation

For further information: For further information: Brazilian Gold Corporation: Alvin Jackson, Chairman and Chief Executive Officer, Tel: +1 604 602-8188; Investor Relations: Tom Hart, Tel: +1 403 701-4278

Organization Profile

Brazilian Gold Corporation

More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890