StrataGold announces business combination with Victoria Gold Corp.

    VANCOUVER, Feb. 11 /CNW/ - StrataGold Corporation (SGV-TSX)
("StrataGold") and Victoria Gold Corp. ("Victoria") (VIT-TSX.V) are pleased to
announce that their respective boards of directors have approved a letter of
agreement in respect of a proposed friendly transaction (the "Transaction") to
combine the companies through an all share transaction.

    Financial Terms of the Transaction

    Victoria has agreed to offer StrataGold shareholders 0.1249 of a Victoria
common share for each StrataGold common share held. Based on the 60 day volume
weighted average trading price of StrataGold, the Victoria share consideration
represents a 38.1% premium to the shareholders of StrataGold and a 18.7%
premium as at the close of market on February 10, 2009. All outstanding
StrataGold options and warrants will be exchanged for equivalent value options
and warrants of Victoria on similar terms.
    StrataGold's Executive Chairman, Mr. Roman Friedrich, stated "This
proposed transaction is a strategic one for both companies and brings to
StrataGold Victoria's northern project development expertise to advance our
Dublin Gulch Project. Kinross Gold Corporation, which is a significant
shareholder of Victoria, operates the Fort Knox mine in Alaska, which
StrataGold and Victoria believe is geologically analogous to Dublin Gulch. The
combination of the two companies provides Victoria with two additional
advanced projects to add to its impressive pipeline of projects."
    Chad Williams, President and CEO of Victoria Gold Corp said "This
Transaction increases Victoria's total NI 43-101 compliant gold resources from
1,2 million ounces to approximately 4.3 million ounces with just 17% equity
dilution. The rationale for our acquisition is StrataGold's Dublin Gulch Eagle
Zone Deposit, but we have yet to assess the full development potential of
their assets in Guyana and there has been significant interest in the
Mar-Tungsten Deposit by Chinese interests."

    Further Details Regarding the Transaction

    It is envisaged that the transaction will be structured as an acquisition
of all of the outstanding shares of StrataGold by Victoria completed by way of
a plan of arrangement. The parties have agreed to work towards entering into a
definitive agreement as soon as possible and in any event by March 12, 2009.
    As a result of the Transaction, all existing warrants, options and other
rights to acquire common shares of StrataGold will be deemed to represent
comparable securities of Victoria adjusted on the same share exchange ratio
basis. In their approval of this transaction, the board of StrataGold
considered a fairness opinion from StrataGold's independent financial advisor,
Paradigm Capital Inc., indicating the agreed share exchange ratio is fair from
a financial point of view, its assessment of the recent trading activity, the
relative asset contributions of Victoria and StrataGold, input from
StrataGold's special committee of independent directors, the current financial
condition of StrataGold and takes into account the Bridge Loan that Victoria
has agreed to provide to StrataGold as described below.
    Completion of the transaction is conditional upon: the StrataGold
shareholders having approved the transaction by a 66 2/3% majority; receipt of
all necessary regulatory approvals, the absence of a material adverse change
with respect to each party; and certain other customary conditions.
    The letter of agreement includes a commitment by StrataGold not to
solicit alternative transactions. In addition, Victoria has agreed to pay
StrataGold, in certain circumstances, a fee of $250,000 if the proposed
transaction is not completed and StrataGold has agreed to pay Victoria, in
certain circumstances, a fee of $300,000 if the proposed transaction is not
    Upon completion of the transaction the current President and CEO of
Victoria, Mr. Chad Williams, will remain the President & CEO of the combined
company which will retain the name "Victoria Gold Corp." A current director of
the StrataGold board of directors will be a director of the combined company
until at least the first meeting of the shareholders of the combined company.
    If this transaction is completed Victoria will have approximately
157,200,000 common shares issued and outstanding on a fully diluted basis, of
which current Victoria shareholders will own approximately 85.4% and former
StrataGold shareholders will own approximately 14.6%.

    The Bridge Loan

    In connection with the Transaction, Victoria has agreed to extend to
StrataGold an initial $350,000 bridge facility and a further irrevocable line
of credit in the amount of $400,000 (together, the "Bridge Loan"). The Bridge
Loan bears annual interest at a rate of 15% payable monthly, matures on
September 30, 2009 (the "Maturity Date") and will be secured by a first charge
over all of the assets of StrataGold relating to its Dublin Gulch property.
Concurrent with the initial advancement of funds by Victoria to StrataGold,
StrataGold will issue to Victoria 5,000,000 common share purchase warrants of
StrataGold (the "Initial Warrants"), with each Initial Warrant entitling
Victoria to acquire one common share of StrataGold at a price of $0.06 for a
period of two years. The Bridge Loan is repayable in whole, but not in part,
prior to the Maturity Date, but in the event of such prepayment, StrataGold is
required to issue to Victoria 5,000,000 common share purchase warrants of
StrataGold (the "Repayment Warrants"), with each Repayment Warrant entitling
Victoria to acquire one common share of StrataGold for a period of two years
after the date of issue thereof, pricing subject to Exchange approval.
StrataGold did not draw down on an alternate credit facility.
    Paradigm Capital Inc. is acting as financial advisor to StrataGold and
has provided an opinion to StrataGold that, subject to certain assumptions and
limitations set out therein, the proposed Transaction is fair, from a
financial point of view, to shareholders of StrataGold. Fraser Milner Casgrain
LLP is acting as legal counsel to Victoria and Davis LLP is acting as legal
counsel to StrataGold.

    Conference Call

    A joint conference call will be hosted by Chad Williams, President and
CEO of Victoria Gold Corp. and Terry Tucker, President and CEO of StrataGold
Corporation at 4:00 pm (EST) February 11, 2009, to discuss this transaction.
Details of the conference call will follow in a subsequent advisory.

    About StrataGold

    StrataGold is a TSX Exchange listed and Vancouver-based mineral
exploration company which conducts gold and tungsten exploration at its
projects in the Yukon and Guyana. StrataGold's main projects are Dublin Gulch,
including the Eagle Zone and Mar-Tungsten Deposits, located along the Tintina
Gold Belt in central Yukon and the Tassawini Project and the BRL Venture
located in Guyana. The resources at Dublin Gulch are comprised of the Eagle
Zone Deposit that contains a NI 43-101 Indicated Resource containing 2.69
million ounces of gold averaging 0.849 g/t gold (see news release dated
January 14, 2009), and the Mar-Tungsten Deposit that contains a NI 43-101
Indicated Resource containing 86.2 million pounds of tungsten averaging 0.31%
WO? and has a positive NI 43-101 Preliminary Economic Assessment (see news
release dated December 1, 2008). The Tassawini Project includes the Tassawini
Deposit that contains a NI 43-101 Indicated Resource of 436,600 ounces of gold
averaging 1.3 g/t gold (see news release dated June 10, 2008). Newmont Mining
Corporation of Canada Limited is the major shareholder of StrataGold, holding
approximately 14.9% of the common shares outstanding, and Newmont Overseas
Exploration Limited, a subsidiary of Newmont Mining Corporation, is
StrataGold's joint venture partner on the BRL Venture.

    About Victoria

    Victoria aims to be a high growth, lower risk company focused on gold.
The Company's strategy is to add value per share through efficient
exploration, accretive acquisitions and effective marketing. Maintaining a low
risk profile through project diversification, sound financial management, and
operating in secure jurisdictions are key priorities for Victoria's management
team. The Toronto-based gold exploration Company is listed on the TSX Venture
Exchange and has 17 advanced quality gold projects in Nevada for a total land
position of 50,000 hectares. On December 18, 2008, Victoria closed the
purchase of Gateway Gold Corp., acquiring the Big Springs property that
contains a NI 43-101 compliant Inferred Resource of 15.4 million tons
containing 1.2 million ounces of gold with an average grade of 2.67 g/t gold.
Kinross Gold Corporation, together with its subsidiary EastWest Gold, holds
28% of Victoria.

    Statement Regarding Forward Looking Statements

    This news release of StrataGold Corporation (the "Company") contains
statements that constitute "forward-looking statements." Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance or achievements, or
developments in our industry, to differ materially from the anticipated
results, performance or achievements expressed or implied by such
forward-looking statements. Forward looking statements are statements that are
not historical facts and are generally, but not always, identified by the
words "expects," "aims," "plans," "anticipates," "believes," "intends,"
"estimates," "projects," "potential" and similar expressions, or that events
or conditions "will," "would," "may," "could" or "should" occur. Information
inferred from the interpretation of drilling results and information
concerning mineral resource estimates may also be deemed to be forward looking
statements, as such information constitutes a prediction of what might be
found to be present when and if a project is actually developed.
Forward-looking statements in this document include statements regarding: the
Company's expectations regarding drilling and exploration activities on
properties in which the Company has an interest and the Company's estimates of
resources on properties in which the Company has an interest. There can be no
assurance that such statements will prove to be accurate. Actual results and
future events could differ materially from those anticipated in such
statements, and readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of their respective dates.
Important factors that could cause actual results to differ materially from
the Company's expectations include among others, risks related to fluctuations
in mineral prices; uncertainties related to raising sufficient financing to
fund planned work in a timely manner and on acceptable terms; changes in
planned work resulting from weather, logistical, technical or other factors;
the possibility that results of work will not fulfill expectations and realize
the perceived potential of the Company's properties; uncertainties involved in
the estimation of resources; the possibility that required permits may not be
obtained on a timely manner or at all; the possibility that capital and
operating costs may be higher than currently estimated and may preclude
commercial development or render operations uneconomic; the possibility that
the estimated recovery rates may not be achieved; risk of accidents, equipment
breakdowns and labour disputes or other unanticipated difficulties or
interruptions; the possibility of cost overruns or unanticipated expenses in
work programs; the risk of environmental contamination or damage resulting
from the Company's operations; risks associated with title to mineral
properties; and other risks and uncertainties discussed under the heading
"Risk Factors" in Section 5 of the Company's Annual Information Form filed on
SEDAR and elsewhere in the Company's documents filed from time to time with
the Toronto Stock Exchange and Canadian securities regulators. These
statements are based on a number of assumptions, including assumptions
regarding general market conditions, the availability of financing for
proposed transactions and programs on reasonable terms, and the ability of
outside service providers to deliver services in a satisfactory and timely
manner. Forward-looking statements are based on the beliefs, estimates and
opinions of the Company's management on the date the statements are made.
Except as expressly required by applicable securities laws, the Company
undertakes no obligation to update these forward-looking statements in the
event that management's beliefs, estimates or opinions, or other factors,
should change.
    This news release uses the terms "Inferred Resource", "Indicated
Resource" and "Mineral Resource". The Company advises readers that although
these terms are recognized and required by Canadian securities regulations
(under National Instrument 43-101 "Standards of Disclosure for Mineral
Projects"), the US Securities and Exchange Commission does not recognize these
terms. Readers are cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into reserves. In
addition, "Inferred Resources" have a great amount of uncertainty as to their
existence, and economic and legal feasibility. It cannot be assumed that any
part of an Indicated or Inferred Mineral Resource will ever be upgraded to a
higher category. Under Canadian rules, estimates of Inferred Mineral Resources
may not form the basis of feasibility or pre-feasibility studies, or economic
studies except for a Preliminary Assessment as defined and permitted under
National Instrument 43-101. Readers are cautioned not to assume that part or
all of an inferred resource exists, or is economically or legally mineable.
The Mineral Resources stated in this news release are not mineral reserves
and, in the absence of a current feasibility study, do not demonstrate
economic viability. The determination of mineral reserves can be affected by
various factors including environmental, permitting, legal, title, taxation,
socio-political, and marketing issues.

For further information:

For further information: Roman Friedrich, Executive Chairman, StrataGold
Corporation, Tel: (604) 633-9295,; Terry Tucker,
President and CEO, StrataGold Corporation, Tel: (604) 696-6602,; Vanessa Pickering, Manager, Investor
Communications, StrataGold Corporation, Tel: (604) 696-6601,; Chad Williams, President & CEO, Victoria Gold
Corp., Tel: (416) 866-8800 ext 230,; Linda
Dorrington, Director Public & Corporate Affairs, Victoria Gold Corp., Tel:
(416) 866-8800 ext 226,

Organization Profile


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