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Lone Star Gold, Inc. Announces $15M Investment Agreement Now Effective and Plans to Commence On-Site Processing Plant Construction
By: Marketwired .
Jan. 7, 2013 11:25 AM
ALBUQUERQUE, NM -- (Marketwire) -- 01/07/13 -- Lone Star Gold, Inc. (OTCBB: LSTG) ("Lone Star" or "the Company") is pleased to announce the effectiveness of its Form S-1 dated December 20, 2012, which outlines the details of the Company's $15 million common-stock-purchase investment agreement with Deer Valley Management, LLC (see more details about the "Deer Valley Investment Agreement" further below).
Lone Star intends to raise capital through the Deer Valley Investment Agreement commencing January 2013. In particular, the Company will commence construction as soon as possible on its own on-site processing plant at its Tailings Project near the city of Hidalgo Del Parral in the state of Chihuahua, Mexico. The processing plant will further enhance Lone Star's ability to maximize the silver and gold content per ton of shipment from the project's 1.2 million tons of mine tailings. The plant will use the relatively new benign nitrogen leaching pile process. In Q3 2012, the Company's team in Mexico completed a preliminary leach plant development plan, which includes a processing capacity of 1,000 tons per day (tpd) while avoiding the use of cyanide and having minimal environmental impact. Leach testing has also been completed, which determined that no additional crushing of the tailings material is required and that expected recovery will be between the 88-90% range.
The Company expects the on-site processing plant to be operational within 3-4 months following access to the necessary funding through the Deer Valley Investment Agreement.
Lone Star's President, Daniel Ferris, commented: "We want to thank Deer Valley in bringing the $15 million Deer Valley Investment Agreement. We are now looking forward to a very active first few months of 2013 culminating in concentrate sales possibly commencing in April 2013."
DEER VALLEY INVESTMENT AGREEMENT DETAILS
By way of background, on April 30, 2012, Lone Star entered into an investment agreement with Fairhills Capital Offshore Ltd. ("Fairhills"). Under the agreement, Fairhills committed to purchase up to $15,000,000 of Lone Star's common stock over a period of up to 36 months. From time to time during the 36 months period, Lone Star may deliver a put notice to Fairhills, stating the dollar amount it intends to sell to Fairhills on a date specified in the put notice.
On November 12, 2012, Fairhills entered into an assignment and assumption agreement with Deer Valley Management, LLC ("Deer Valley"), pursuant to which Fairhills transferred and assigned all rights and obligations under the investment agreement to Deer Valley (the "Deer Valley Investment Agreement"). Fairhills and Deer Valley have common ownership and management. As outlined in Lone Star's Form S-1 filing, the Company may raise capital through the Deer Valley Investment Agreement as needed for current running costs, general operating expenses and capital expenditures related to Lone Star's Tailings Property and Candelaria Project, and, in particular, the construction of the nitrogen leach plant on Lone Star's Tailings Property. Further details of the Deer Valley Investment Agreement are available in Lone Star's Form S-1 filing from December 20, 2012.
Cautionary Note to U.S. Investors -The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We may use certain terms in this press release, such as "measured," "indicated," and "inferred" "resources," which the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10-K which may be secured from us, or from our website at http://www.lonestargold.com.
ABOUT LONE STAR: Lone Star Gold, Inc. is a publicly traded (OTCBB: LSTG) gold exploration and development company based in Albuquerque, New Mexico. The Company's aggressive acquisition and exploration approach is strategically focused on proven, stable precious metal regions in America and Mexico. Currently, Lone Star has a 70% Working Interest in concessions covering 800 hectares in the La Candelaria project in Chihuahua, Mexico, which the Company is evaluating to determine the potential sites that represent the best potential for silver and gold deposits. Lone Star also has an undivided 65% interest in the San Antonio del Potrero mine tailings project near the city of Hidalgo Del Parral in the state of Chihuahua, Mexico.
ON BEHALF OF THE BOARD OF DIRECTORS,
Lone Star Gold, Inc.
This press release contains statements that are forward-looking and which involve a number of risks and uncertainties. Such forward-looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in question are based on Lone Star Gold, Inc.'s current expectations and projections about future events, based on information currently available. The forward-looking statements found in this press release may also include statements relating to Lone Star Gold, Inc.'s anticipated financial performance, business prospects, new developments, strategies, and similar matters. Lone Star Gold, Inc. provides no assurance regarding the actual outcome of the events contemplated by any forward-looking statements included in this release. Lone Star Gold, Inc. disclaims any obligation to update any of its forward-looking statements, except as may be required by law.
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