Constitution Mining Signs Option To Acquire Large Land Position In The Gold Sands District of Northeastern Peru
Tempe, Arizona - October 1, 2008 - Constitution Mining Corp. (CMIN.OB) announces that the company has entered into a Mineral Rights Option Agreement to acquire 382 km2 of strategically positioned mining properties in the developing Gold Sands district of northeastern Peru.
Constitution Mining CEO, Dr. Willem Fuchter commented, "We believe that the Gold Sands district in northeastern Peru offers the potential for large-scale, low-cost production of gold. Potential, if the indicated gold mineralization in the Gold Sands continues to expand, that may be realized by employing modern dredging and processing methods that do not use cyanide, mercury, or any other disruptive chemical processes."
Dr. Fuchter continued, "Until fairly recently, open-pit mining has dominated the mining industry as the preferred low-cost means of extracting gold. And over the past 25 years many of the world's leachable deposits have been tapped, leaving the industry in search of newer and more environmentally sound methods of extracting gold. The Gold Sands potential is on a scale that is comparable to the prolific tar sands of Alberta. The key question now, and what we intend to discover, is whether or not a new paradigm in gold production is about to unfold."
Terms of the Gold Sands deal...
On September 30, 2008, the Effective Date, the company entered into a Mineral Rights Option Agreement with Temasek Investments Inc. Pursuant to this Agreement, we acquired four separate options from Temasek, each providing for the acquisition of a twenty-five percent (25%) interest in 41 mineral properties in the Gold Sands district as described in Annex 1 of the Agreement, thus potentially resulting in our acquisition of 100% of the Mineral Rights. The Mineral Rights are owned by Compania Minera Maranon S.A.C. ("Minera Maranon"). Bacon Hill Invest Inc. ("Bacon Hill"), a corporation incorporated under the laws of Panama and a wholly-owned subsidiary of Temasek, owns 999 shares of the 1,000 shares of Minera Maranon that are issued and outstanding. Temasek owns the single remaining share of Minera Maranon. The acquisition of each 25% interest in the Mineral Rights will occur through the transfer to us of 25% of the outstanding shares of Bacon Hill.
Constitution Mining may exercise the initial option to acquire a 25% interest in the Mineral Rights by paying US$375,000 to Temasek and issuing 2,000,000 shares of common stock to Temasek within five (5) business days from the Effective Date of this agreement. The company must also pay an additional US$375,000 to Temasek within ninety (90) days of the Effective Date.
The company may exercise the second twenty-five percent (25%) option resulting in its acquisition of a 50% interest in the Mineral Rights within 6 months of the Effective Date by paying an additional US$1,250,000 to Temasek and issuing 2,000,000 additional shares of common stock to Temasek.
The company may exercise the third twenty-five percent (25%) option resulting in the acquisition of a 75% interest in the Mineral Rights within 12 months of the Effective Date buy paying an additional US$3,000,000 to Temasek, and issuing 2,000,000 additional shares of common stock to Temasek.
The company may exercise the fourth twenty-five percent (25%) option resulting in the acquisition of a 100% interest in the Mineral Rights within 18 months of the Effective Date by paying an additional US$5,000,000 to Temasek and issuing 4,000,000 additional shares of common stock to Temasek.
Upon the company's acquisition of a 100% interest in the Mineral Rights, Temasek will hold its single share of Minera Maranon in trust for the company's sole benefit and hold the share strictly in accordance with the company's instructions. Also upon the company's acquisition of a 100% interest in the Mineral Rights, Temasek is entitled to an annual 2.5% net returns royalty. However, if the company pays Temasek US$2,000,000 within ninety (90) days of our acquisition of a 100% interest in the Mineral Rights, Temasek will only be entitled to an annual 1.5% net returns royalty.
If the company exercises the second twenty-five percent (25%) option, resulting in the acquisition of a 50% interest in the Mineral Rights, and fails to acquire a 100% interest in the Mineral Rights, the company and Temasek will form a joint venture in which both parties will be wholly responsible for developing a feasible mining project and all necessary facilities and Temasek shall retain a carried free interest in the mining rights. If the company does not develop a feasible mining project within three years of the Effective Date, the company will be responsible to pay Temasek an advance minimum mining royalty of $500,000 per year, which will be deducted from Temasek's net return royalty. For the full terms of the deal, interested investors are encouraged to review the company's recent 8-K filing.
About Constitution Mining Corp. Our goal is to continuously increase the amount of gold underlying each of our outstanding shares. To build such value, we are focusing on the rapidly developing Gold Sands region of Peru, where we have optioned 382 square kilometers (147.5 square miles) of mining properties - the largest such block in the district.
The Gold Sands of Peru were laid down by eons of alluvial erosion. For millions of years, the waters of the Santiago and the Marañón rivers have been carving their way through the gold-rich mountain canyons of the Andes, carrying off vast amounts of gold and depositing much of the treasure in loose gravels and sands - Gold Sands - below the Manseriche gorge in Northeastern Peru. There the rivers reach a broad flood plain, slow to a crawl and release their cargo.
Drilling results from more than 500 test holes in a 'proof of concept' zone located on Constitution Mining's properties indicate the presence of tens of millions of ounces of alluvial gold in the region. We intend to capture the profit potential of that gold by applying recently enhanced mining technologies that are especially well suited to low-density, near-surface deposits. These green-mining technologies are energy-efficient and environmentally friendly -- features that support their profitable use.
Disclaimer This release contains forward-looking statements that are based on the beliefs of Constitution Mining Corp. management and reflect Constitution Mining Corp. current expectations as contemplated under section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. When used in this release, the words "estimate, "project," "believe," "anticipate," "intend," "expect," "plan," "predict," "may," "should," "will," "can," the negative of these words, or such other variations thereon, or comparable terminology, are all intended to identify forward-looking statements. Such statements reflect the current views of Constitution Mining Corp. with respect to future events based on currently available information and are subject to numerous assumptions, risks and uncertainties, including, but not limited to, risks and uncertainties pertaining to development of mining properties, changes in economic conditions and other risks, uncertainties and factors, which may cause the actual results, performance, or achievement expressed or implied by such forward looking statements to differ materially from the forward looking statements. The information contained in this press release is historical in nature, has not been updated, and is current only to the date indicated in this press release. This information may no longer be accurate and therefore you should not rely on the information contained in this press release. To the extent permitted by law, Constitution Mining Corp. and its employees, agents and consultants exclude all liability for any loss or damage arising from the use of, or reliance on, any such information, whether or not caused by any negligent act or omission.