CGA Mining and Ratel Gold to acquire 60% stake in 21m ounce gold King-king Project

Ratel Gold (TSX: RTL) has entered an alliance with CGA Mining (TSX: CGA, ASX: CGX) to acquire a 60% interest in the 21 million ounce undeveloped gold resource at the King-king Copper-Gold Project in the Philippines, one of the largest undeveloped copper-gold deposits in the world.

The proposed consideration is an issue of 80 million new shares in Ratel, together with a further 75 million Ratel shares on the completion of a feasibility study on the project or any subsequent change in control of the Ratel Board.

The King-king deposit is a gold rich, copper-gold porphyry deposit located in the south east of the Philippine Island of Mindanao, located 92kms NW of Davao City and 13 kms from the coast.

The project is listed as one of the top priority projects by the Philippine Mines and Geosciences Bureau and the project has a low strip ratio (0.8:1 compared to an industry average of 2.5:1).

There is significant unexplored upside potential to the deposit. Drilling was open at depth and is undrilled to the north east end of the deposit, which has a number of high grade epithermal gold targets.

King-king has a measured and indicated equivalent copper-gold resource of 791.5 Mt at 0.815 g/t equivalent gold for 20.7M equivalent gold ounces (0.279% Cu for 4.9B lbs of Cu and 0.371 g/t Au for 9.4M ounces of contained Au) and a further 2.75M equivalent gold ounces in inferred resources (125.5Mt at 0.237% Cu lbs and 0.308 g/t Au).

A NI 43-101 compliant report is being prepared by Independent Mining Consultants, Inc. (IMC) and will be released by Ratel on sedar.com within 45 days.

The RMMI Group entered into an agreement (the Memorandum of Understanding) with Philippine based Nationwide Development Corporation (Nadecor), the current MPSA licence holder.

RMMI had the right to earn a 60% interest in the project in exchange for funding and preparing a feasibility study on the development of the project (estimated in the Memorandum of Understanding at US$43.5m), and make payments to Nadecor of US$7.5m and fund the first US$12.8m of Nadecor’s ultimate 40% contribution to development capital.

The RMMI Group has significantly advanced the project over the last 14 months, engaging IMC in the development of a mine plan and resource validation and assessment to NI 43-101 and JORC standards and AATA International, Inc. in the environmental assessment, as well as assisting Nadecor in the filing of he required Exploration and Environmental Work Programs.

Bromius Capital has acted as their exclusive financial advisor in this process.

The RMMI Group, in coordination with Nadecor, has entered into a heads of terms agreement with the previous operating partner, Benguet Corporation (“Benguet”) (Philippine Exchange Symbol - BC), providing for a settlement of all previous claims of interest in the project.

It is anticipated that completion of the settlement will occur shortly and the loan facility described below will be used to fund the initial settlement payments to Benguet that will be due under the settlement agreement.

The proposed acquisition of the King-king Interests is conditional on Ratel first completing a C$25m capital raising at C$0.30 and securing all necessary consents and approvals, including shareholder and Toronto Stock Exchange (TSX) approval of amongst other things, the acquisition, the issue of shares to the RMMI Group and the Ratel Placement.

CGA, in line with its existing strategic alliance with Ratel and the RMMI Group has agreed to subscribe for additional shares in the Ratel Placement, to increase its interest to approximately 27%. As part of this strategic alliance, CGA is well positioned to assist with operating in the Philippines.

CGA’s participation in the Ratel Placement is also subject to the approval of Ratel’s shareholders and the TSX.

CGA has agreed to provide the initial funding (upto US$14.9m) under a loan facility to the RMMI Group to fund the initial settlement payments to Benguet and debtholders of Benguet together with working capital, which will be fully secured against the King-king Interests and will be repaid on completion of the proposed acquisition from the Ratel Placement proceeds.

Repayment of the loan by CGA is also subject to the approval of the TSX and Ratel’s shareholders.

The RMMI management team are US based and will assume Board control of Ratel on successful completion of the proposed acquisition of the King-king Interests.

Ratel also plans to undertake a spin-off of the existing African assets of the company, by way of an entitlement issue back to shareholders, with the entitlement date to be established prior to completion of the abovementioned transactions.

It is currently planned that a meeting of shareholders of Ratel will be held in late November and detailed meeting documentation, including an overview of the King-king project will be dispatched to shareholders as soon as available.

Completion of the proposed acquisition of the King-king interests and the Ratel placement is planned after  all necessary consents are secured.