FOR: PURE GOLD RESOURCES INC.
TSE SYMBOL: PUG
SEPTEMBER 2, 1997
Pure Gold Doubles Alberta Land Position; Pure Gold to
Acquire Cayo Resources Inc. by Amalgamation
VANCOUVER, BRITISH COLUMBIA--Pure Gold Resources Inc. announced
today that it has agreed to acquire Cayo Resources Inc., an
Alberta reporting issuer at arm's length to Pure Gold, by way of
amalgamation. Pure Gold and Cayo both have interests in areas
adjacent to Ashton Mining's recent diamond discoveries in Alberta,
as well as in other areas of Alberta. The amalgamation will more
than double Pure Gold's net beneficial acreage in Alberta from
approximately 16 million to over 31 million acres.
Each five issued and outstanding Pure Gold Shares will be
exchanged for one share of the amalgamated company, and each five
issued and outstanding Cayo Shares will be exchanged for three
shares of the amalgamated company. This ratio, verified by an
independent fairness opinion, will result in an
effectively-consolidated amalgamated company with approximately 24
million outstanding shares, of which approximately 19 million
shares, or 79.5 percent, will represent former Pure Gold shares,
and approximately 5 million shares, or 20.5 percent, will
represent former Cayo shares. The amalgamated company is to be
named "Pure Gold Minerals Inc." Shareholders of both companies
will vote on the amalgamation at Extraordinary General Meetings to
be held in early October, 1997.
Shareholders of Pure Gold and Cayo will also be asked to approve a
Rights Offering to be conducted immediately following completion
of the amalgamation. Details of the Rights Offering proposal will
be included in the Information Circular to be mailed to
shareholders of both companies and will be announced when pricing
has been determined.
The amalgamated company's Board of Directors will be comprised
primarily of Pure Gold's existing Board and Management, with the
addition of Wilfred D. Jones, formerly Diamond Consultant with
Ashton Mining of Australia and previously with Selection Trust of
London, as Chief Geologist.
The amalgamated company will represent the combined interests of
Pure Gold and Cayo which, in addition to Pure Gold's Northwest
Territories holdings, will include the following:
- 15 percent interest in the Buffalo Hills Property, site of the
discovery of 16 kimberlite bodies to date, and subject to a joint
venture with Ashton Mining and Alberta Energy (42.5 percent
interest each), comprising 1.5 million acres;
- 15 percent interest in the Birch Mountain Property, subject to a
joint venture with Ashton Mining and Alberta Energy (42.5 percent
interest each), comprising 4.4 million acres;
- 49 percent interest in the Caribou Hills Property, surrounding
the Birch Mountain and Buffalo Hills properties, subject to a
joint venture with Ashton Mining and Alberta Energy (25.5 percent
interest each), comprising 22.8 million acres;
- 100 percent interest in the Edmonton Property straddling the
North Saskatchewan River from approximately lake Wabamun to the
Saskatchewan border, site of the discovery in 1993 of a 0.392
carat diamond in river gravels, but otherwise unexplored for
diamonds, comprising 9.3 million acres;
- 75 percent interest in the Lethbridge Property, previously
unexplored for diamonds, comprising 10.1 million acres.
The Boards of Directors of Pure Gold and Cayo have unanimously
approved the proposed Amalgamation for the following reasons:
- The interests of the amalgamated company in the Alberta diamond
play will be much larger than those of the individual companies
with combined interests in the Caribou Hills, Lethbridge, and
Edmonton properties of 49 percent, 75 percent and 100 percent
respectively;
- Pure Gold will more than double its net beneficial acreage in
diamond exploration properties in Alberta;
- Pure Gold will increase its net interest in the Caribou Hills
property, which surrounds the Buffalo Head diamond discovery, from
9 percent to 49 percent.
All of the foregoing transactions are subject to Pure Gold's
receipt of a letter of no objection from each of Ashton Mining and
Alberta Energy, regulatory acceptance including the approval of
The Toronto Stock Exchange, and shareholder approval.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Pure Gold Resources Inc.
Donald R. Sheldon
President
or
Carina Bittel
Shareholder Services
1-800-667-1660
(604) 682-1240 (Vancouver Local)
INDUSTRY: PCS
SUBJECT: TMN
-0-
...
They form a new company so they can dilute the hell out of the new company. It has less shares issued..
Have fun.....
Bob
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