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PAMLICO GOLD CORP. Suite 406 - 535 Howe Street Vancouver, British Columbia V6C 2Z4 Telephone: (604) 688-9517 Fax: (604) 688-9726 E-mail: info@pamlicoresources.com January 12, 1997 Trading Symbol: PGP NEWS RELEASE PAMLICO GOLD CORP. (the “Company”) announces that it has entered into an agreement for the acquisition of The Northern Mining Company (“Northern Mining”). Northern Mining is the 100% owner of a license issued by the Ministry of Natural Resources of the Russian Federation for the exploration and exploitation of approximately 1,630 square kilometres in the Belozerskaya area of the Arkhangelesk Region of the Russian Federation (the “Property”). The Company will pay a purchase price of $50 million (U.S.) to be paid by the issue of convertible promissory notes to the shareholders of Northern Mining. The promissory notes will be convertible at a price of $4.50 per share and will automatically convert upon the price of the Company's shares reaching a price of $4.50 per share. The promissory notes will bear interest at a rate of 5% per annum and will be repayable upon demand after the expiry of the five year period from closing, in the event that the promissory notes are not converted. The acquisition is subject to the approval of the Vancouver Stock Exchange, to the receipt of any required approvals from Russian authorities, and to the delivery on closing of legal opinions as to the corporate ownership of Northern Mining, and the ownership by Northern Mining of the License. The License owned by Northern Mining is a combination license valid for 25 years. The License includes the right to conduct prospecting and exploration for diamonds on the Property. Upon the discovery of diamonds on the Property, the License includes the right to mine the Property for diamonds for a 20 year period. The Company has reviewed a geological report and valuation of the Property prepared by Southampton Associates Inc. (the “Report”) which establishes a valuation of the License held by Northern Mining of $50 million (U.S.). The Property is located within the Archean Kuloi II craton approximately 100 kilometres southwest of the diamondiferous Lomonosova and Verkhotina 441 pipes. The Property has been explored intermittently for over 50 years. Limited core drilling has confirmed the existence of 35 explosive breccia pipes of the Nenoksa Field on the Property. Microdiamonds have been reported as having been recovered from three of these pipes based on limited processing of small samples of drill core. The Report attributed a value of $8 million (U.S.) to prior exploration work. It is Southampton's opinion that the diamond resource potential of the Property is excellent and that an exploration program and budget of $24 million (U.S.) is reasonable and warranted. The Southampton project team included Mr. David Wahl, P. Eng., President, Dr. John Wahl, Senior Geological Associate, and Mr. J. Gregory Davison M. Sc., Senior Geological Associate. The Company also announces a private placement with institutional investors including Canadian mutual funds of 4,000,000 units at a price of $2.00 per unit. Each unit will consist of one common share of the Company and one share purchase warrant. Each share purchase warrant will entitle the holder to purchase one common share of the Company at a price of $2.60 per share for a one year period. The proceeds of the financing will be used by the Company to fund the exploration work on the Property, as recommended by the Report. The private placement is subject to the approval of the Vancouver Stock Exchange and will be conditional upon completion of the acquisition of Northern Mining. PAMLICO GOLD CORP. “Terence A. Steel” Terence A. Steel President The Vancouver Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. | ||||||||||||||
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