Luna Gold announces private placement of C$2 million and reorganization and cost cutting measures

    VANCOUVER, Oct. 31 /CNW/ - Luna Gold Corp. (TSXV-LGC) ("Luna" or the
"Company") announces the following:

    Non-Brokered Private Placement

    The Company has arranged a non-brokered private placement of Units at a
price of $0.10 per Unit for gross proceeds of up to $2,000,000, subject to the
approval of the TSX Venture Exchange. Each Unit consists of one common share
and one-half of one share purchase warrant. Each whole warrant entitles the
holder to purchase one common share at a price of $0.25 for a period of 24
months from closing.
    The Company has agreed to pay a finder's fee in cash equal to 7% of the
gross proceeds and to issue broker's warrants equal to 7% of the number of
Units sold to arm's length parties. Each broker's warrant will entitle the
holder to purchase one common share at a price of $0.10 for a period of 12
months from closing.
    If the closing market price of the Company's common shares is $0.40 or
higher over a period of 15 consecutive trading days at any time after four
months following the closing of the private placement, the Company will be
entitled to accelerate the term of the warrants and broker's warrants, which
will expire on the 15th business day after the date of the notice unless
exercised by the holder prior to that date.
    The net proceeds of the private placement will be used to reduce current
accounts payable and for working capital purposes.

    Corporate Restructuring

    Effective immediately, the Company will close its Toronto office and
centralize its administration in Vancouver. In furtherance of the Toronto
office closure, Tim Searcy, President and CEO, and Martin Reid, CFO will be
stepping down effective today. Tim Searcy will remain a Director of the
Company and will continue to assist Luna in that role.
    James Bahan, the Company's current COO has been appointed the Chief
Executive Officer and Marcel de Groot, recently appointed Chairman of the
Board of Luna, has been appointed interim Chief Financial Officer.
    "The Board would like to thank Mr. Searcy and Mr. Reid for their service
and support to the Company and its development," said Mr. Bahan. "We wish them
all the best in their future endeavours."
    In addition, Mr. Bahan has been appointed as a Director of the Company to
replace Carl Hering who has resigned as a non-executive director of the
Company. The Company would also like to thank Mr. Hering for his contribution
to the Company during his tenure as a Director. The Company's Board of
Directors now consists of James Bahan, Marcel de Groot, Thomas O'Neil, Nolan
Watson, and Tim Searcy.
    Subject to regulatory approval and upon availability under the Company's
Stock Option Plan, the Company has granted 2,000,000 stock options to
James Bahan in his capacity as the new CEO. The options vest over a period of
2 years. In addition, the Company has granted 150,000 stock options to an
officer of the Company. All of the options are exercisable over a period 5
years at an exercise price of $0.135.

    The Aurizona and Cachoeira Projects

    As a consequence of the current market conditions, the Company will be
deferring any further development of the Aurizona project for the time being.
Accordingly, the Aurizona project team is also being scaled back. Drilling and
other technical work carried out since the feasibility study, as well as the
current weakness in the Brazilian Real, indicate the potential for substantial
improvements in the Aurizona project life, project size and return on
    Additionally, the Cachoeira exploration project has been put on care and
maintenance until the Board of Directors considers it appropriate to
recommence its exploration activities on the project.
    "Current market conditions have dictated that the prudent course of
action is to preserve cash and re-start development at Aurizona at a future
date," stated Mr. Bahan. "With activity dramatically reduced at the Aurizona
and Cachoeira Projects, Luna will be exploring new strategic relationships and
partnerships concerning the projects," continued Mr. Bahan. "We consider both
projects to be of extremely high quality and see them as continuing to be
attractive investment opportunities."

    About Luna Gold Corp

    Luna is a mining exploration company focused on the acquisition,
exploration, and development of gold resources and advanced stage gold
exploration projects in northeastern Brazil.

    On behalf of the Board of Directors


    Marcel de Groot, Chairman


    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this press release.

    Regulatory Footnotes

    This news release does not constitute an offer to sell or a solicitation
of an offer to sell any of the securities in the United States. The securities
have not been and will not be registered under the United States Securities
Act of 1933, as amended or any state securities laws and may not be offered or
sold within the United States or to U.S. persons unless registered under the
United States Securities Act of 1933 and applicable state securities laws or
an exemption from such registration is available.

    Forward-Looking Statements:

    Statements in this release that are forward-looking statements are
subject to various risks and uncertainties concerning the specific factors
identified in Luna Gold Corp.'s periodic filings with Canadian Securities
Regulators. These factors include the inherent risks involved in the
exploration and development of mineral properties, the uncertainties involved
in interpreting drill results and other exploration data, fluctuating metal
prices, the possibility of project cost overruns or unanticipated costs and
expenses, uncertainties relating to the availability and costs of financing
needed in the future. The Company undertakes no obligation to update
forward-looking information except as required by applicable law. Such
forward-looking information represents management's best judgment based on
information currently available. No forward-looking statement can be
guaranteed and actual future results may vary materially.

For further information:

For further information: Investor Relations at (604) 689-7317 or toll
free at 1-866-689-7317

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