December 15, 2010
Sanatana Announces Entering Into a Letter of Intent with Augen Gold and Private Placement for Gross Proceeds of up to $2 Million
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Vancouver, British Columbia, Canada, December 15, 2010 - Sanatana Diamonds Inc., ("Sanatana" or the "Company", TSX-V: STA) is pleased to announce that it has entered into a letter of intent dated effective December 14, 2010 (the "LOI") with Augen Gold Corp. ("Augen"), a company listed on the TSX Venture Exchange (the "Exchange") under the trading symbol GLD, for a proposed agreement whereby the Company will be granted an option to acquire up to 51% undivided interest in the rights to 46 mineral concessions in Ontario (the "Claims") owned by Augen along with a right of first refusal to acquire 9 mineral concessions in Ontario (the "ROFR Claims") owned by Augen (together, the "Proposed Transaction"). Closing of the Proposed Transaction is subject to, amongst other things, the completion by the Company of a satisfactory due diligence review of the Claims and the ROFR Claims, the negotiation and execution of a definitive agreement, corporate approval by the board of directors of Augen and Sanatana and the approval of the Exchange (collectively the "Conditions Precedent").
Pursuant to the terms of the LOI, the parties have agreed, subject to the completion of the Company's due diligence investigations, to negotiate the terms and conditions and execute a definitive agreement with respect to the Proposed Transaction on or before February 15, 2011. The Proposed Transaction is an arm's length transaction and shareholder approval for the Transaction is not expected to be required by the Exchange. Pursuant to the terms of the LOI, and subject to the parties satisfying the Conditions Precedent, Sanatana will have an option to earn a 50% undivided interest in the Claims (the "50% Interest") by:
- on or before the dates indicated below, making the following cash option payment and share issuances:
- paying to Augen $150,000 promptly upon acceptance of applicable regulatory approval for the Definitive Agreement (the "Effective Date"),
- allotting and issuing to Augen 2,000,000 shares in the capital of Sanatana, as fully paid and non-assessable, promptly upon the Effective Date,
- allotting and issuing to Augen a further 1,500,000 shares in the capital of Sanatana, as fully paid and non-assessable, on or before the first anniversary of the Effective Date,
- allotting and issuing to Augen a further 1,500,000 shares in the capital of Sanatana, as fully paid and non-assessable, on or before the second anniversary of the Effective Date; and
- on or before the dates indicated below, making the following exploration expenditures on the Claims (collectively, the "Expenditures"):
- $1,000,000 in exploration expenditures on or before the first anniversary of the Effective Date,
- a further $1,500,000 in exploration expenditures on or before the second anniversary of the Effective Date, and
- a further $2,500,000 in explorations expenditures on of before the third anniversary of the Effective Date.
Pursuant to the terms of the LOI, and subject to the parties satisfying the Conditions Precedent, if Sanatana earns the 50% Interest in accordance with the provisions set forth above the parties will enter into a joint venture agreement with respect to the Claims and Sanatana will have the right to earn a further one percent (1%) interest (for a total interest of 51%) (the "51% Interest") in the Claims by completing and delivering to Augen a pre-feasibility study on or before the fifth anniversary of the Effective Date. It is also a term of the LOI that for as long as Sanatana and Augen are parties to an option or joint venture with respect to the Claims or the ROFR Claims that Augen will have the option to purchase up to 10% of any securities issued in any future equity offerings by Sanatana, on the same terms and conditions of such offering.
The Company also announces that it will proceed with a private placement of up to 8,823,529 common shares in the capital of the Company which will be designated as a flow-through share (a "FT Share") pursuant to the Income Tax Act (Canada) at the price of $0.17 per FT Share and up to 3,333,333 Units (the "Units") at the price of $0.15 per Unit for gross proceeds of up to $2,000,000 (the "Offering"). Each unit will consist of one common share in the capital of the Company (a "Share") and one half of a share purchase warrant (a "Warrant"). Each whole Warrant will entitle the holder to purchase one Share at a price of $0.25 per Share for a period of one year from the closing of the Offering.
The Company may pay a finder's fee on the Offering within the maximum amount permitted by the policies of the Exchange. Closing of the Offering is subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, including the Exchange. All securities issued in connection with the Offering will be subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities legislation. The net proceeds from the FT Shares will be used by the Company for exploration work on its properties in the Northwest Territories or the Yukon and the net proceeds from the Units will be used for general corporate purposes and a reserve for asset acquisition investigations. If the Proposed Transaction closes the Company reserves the right to use the net proceeds from the FT Shares for exploration work on the mineral concessions contemplated in the Proposed Transaction.
About the Company
Sanatana Diamonds Inc. is an exploration stage company seeking new projects to complement its existing properties in the Northwest Territories and Yukon. With an experienced management team and board of directors, Sanatana has the skills required to identify, develop and fund economic mineral properties. Sanatana is based in Vancouver and listed on the TSX Venture Exchange (TSX-V: STA).
SANATANA DIAMONDS INC.
President and Chief Executive Officer
For additional information on the Company, please contact:
Mr. Peter Miles, President and Chief Executive Officer
at 604-408-6680 or email firstname.lastname@example.org
This news release does not constitute an offer to sell or a solicitation of an offer to buy 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 (the "U.S. Securities Act") 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 U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
Cautionary Statement Regarding "Forward-Looking" Information
Some of the statements contained in this press release are forward-looking statements and information within the meaning of applicable securities laws. Forward-looking statements and information can be identified by the use of words such as "expects", "intends", "is expected", "potential", "suggests" or variations of such words or phrases, or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements and information are not historical facts and are subject to a number of risks and uncertainties beyond Sanatana's control. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except as may be required by law.
Neither TSX Venture Exchange nor its Regulations Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.