2010-12-31 16:57 ET - News Release

Also News Release (C-ARC) Auric Development Corp

Mr. Robert Findlay reports

FIRST MEXICAN CLOSES QUALIFYING TRANSACTION AND FINANCING

First Mexican Gold Corp., formerly Auric Development Corp., has closed its qualifying transaction and concurrent financings.

Resumption of trading

The company anticipates that its common shares will resume trading on the TSX Venture Exchange on or about Jan. 5, 2011, under the symbol FMG.

The qualifying transaction

Auric has acquired 100 per cent of the issued and outstanding securities of First Mexican in exchange for consolidating its common stock on the basis of 1.1376 old shares for every new share issued, changing its name from Auric Development Corp. to First Mexican Gold Corp., issuing one postconsolidation share for every common share of First Mexican tendered, issuing six million special warrants to First Mexican shareholders on a pro rata basis and exchanging all of the outstanding warrants of First Mexcian for warrants of Auric on the same terms and conditions. The transaction was not a non-arm's-length transaction. The transaction was subject to sponsorship, and Canaccord Genuity Corp. was retained to act as sponsor.

Prior to closing of the transaction, Auric had 7,165,000 common shares issued and outstanding. After giving effect to the consolidation, Auric had 6,298,797 common shares issued and outstanding.

Pursuant to the terms of a share exchange agreement dated Sept. 22, 2010, between Auric, First Mexcian and the shareholders of First Mexican, Auric issued 18,151,140 common shares for all of the issued and outstanding common shares of First Mexican. Auric also issued 1,223,639 share purchase warrants to First Mexican warrantholders. Auric also issued the special warrants. At closing of the qualifying transaction, Auric issued 800,000 shares to Minegate Resource Capital Group as a finder's fee and cancelled the 495,000 incentive stock options outstanding.

Upon close of the transaction and the concurrent financings, as described herein, the company has 31,534,901 shares issued and outstanding, 5,801,439 share purchase warrants and six million special warrants outstanding. The company is now a resource issuer listed on Tier 2 of the exchange.

The company now has a wholly owned subsidiary, FMR. FMR holds an option to acquire an 80-per-cent interest in the Hilda 30, Hilda 31/32 and Hilda 37/38 properties. FMR will carry out exploration on the Hilda properties.

Concurrent financings

Concurrent with the closing of the transaction, the company completed two concurrent financings through its agent, Canaccord. The first was a brokered private placement of 1.86 million units at a price of 35 cents per offered unit for gross proceeds of $651,000, and the second was an offering by way of short form offering document of 4.3 million units at a price of 35 cents per SFOD unit for gross proceeds of $1,505,000. Each offered unit was composed of one postconsolidation common share and one warrant. Each SFOD unit was composed of one share and one-half of one warrant. Each warrant is exercisable into a share at a price of 50 cents per share until Dec. 29, 2012, at 4:30 p.m. (Pacific Time). The securities comprising the offered units are subject to a hold period expiring April 30, 2011. The proceeds from the financings will be used to finance exploration work and drilling activities contemplated on the Hilda 30 property, option costs and for general working capital.

As compensation for acting as agent for the financings, Canaccord was paid a cash commission and was issued 430,100 options. Each agent's option is exercisable into a share at a price of 35 cents per share until Dec. 29, 2012, at 4:30 p.m. (Pacific Time). In addition, Canaccord was paid an administration fee, a corporate finance fee (composed of a cash amount and the issuance of 75,000 units) and its reasonable legal fees (plus disbursements and taxes) and any other reasonable expenses connected with the financings. The corporate finance fee units are composed of one share and one warrant. The agent's warrants, and any shares issued upon exercise thereon, and the corporate finance fee units (and any common shares issued upon exercise of the warrants) are subject to a hold period expiring on April 30, 2011.

Sponsorship

As compensation for acting as sponsor on the transaction, Canaccord was paid a fee composed of a cash fee and the issuance of 50,000 shares. The sponsorship shares are subject to a hold period that expires April 30, 2011.

Board of directors and management

Concurrently with closing of the transaction, the board of directors of the company was restructured. Chris Verrico and Casey Forward resigned from the board of directors of the company. The company would like to thank Mr. Verrico and Mr. Forward for their respective contributions to the company.

The board of directors of First Mexican is now composed of Jim Voisin, Michel Roy, Gregory Roberts and Robert Findlay. Mr. Voisin was appointed to act as president and chief executive officer of the company, and Nicole Wood was appointed to act as chief financial officer and corporate secretary of the company.

The board of directors of FMR, First Mexican's wholly owned subsidiary, is composed of Mr. Voisin, Mr. Roberts and Mr. Roy. Mr. Voisin will continue to act as president and CEO, and Ms. Wood will continue to act as CFO.

Description of the property

The company has the right to earn up to an 80-per-cent interest in the contiguous Hilda 30, Hilda 31/32 and Hilda 37/38 concessions, a gold/silver project with a total area of 1,350 hectares, situated in the southeast of Sonora state, Mexico, about 190 kilometres east-southeast of the state capital Hermosillo and approximately 50 km west from the town of Yecora. A paved highway passes within 15 km from the property.

An updated NI 43-101 technical report on the Hilda 30 concession was commissioned in support of the approval process for the qualifying transaction and co-authored by James G. Burns, who carried out the original technical report from 2007; and John Archibald, who was engaged to carry out and oversee the reserve circulation drilling program on the property in the fall of 2009. This technical report contemplates all work carried out through to the end of 2009 -- that is, extensive surface sampling, three diamond drill holes and seven reverse circulation holes. The company has filed this report on SEDAR.

Key highlights from the report are as follows:

• Diamond drill hole H30-03-09 was mineralized from surface to a depth of 37.8 metres with a best intercept over a 16.9-metre section (from 12.2 to 29.1 metres) grading 10.6 grams per tonne gold and 1,416 g/t silver.

• The property (Hilda 30) is underexplored and has substantial merit as a potential setting for multiple epithermal gold-silver deposits.

• There is a very high degree of potential of finding a significant epithermal gold-silver deposit(s) along strike to the known mineralized (Karen) zone.

• The breccia zone/quartz stockwork is exposed over a 46-metre section where 25 samples averaged 3.07 g/t gold and 155 g/t silver; while higher grades from samples at the earlier workings -- that is, shafts and adits -- approximately 500 metres away and 50 metres lower in elevation and on trend support the potential for bonanza-grade zones.

• The property is underlain by favourable Cretaceous-Tertiary andesite-rhyolite volcanic stratigraphy, which is the known host to numerous and large gold-silver deposits within the Sierra Madre occidental province of Northern Mexico (2.0-million-ounce deposit being mined within 50 kilometres in nearby Mulatos district).

• Numerous structural features, faults and lineaments have been mapped regionally that relate to the emplacement of a Tertiary-age monzonite pluton adjacent to the property.

• Numerous gold-silver mineral occurrences are known in the immediate area, where silver appears equally as important as gold and also appears spatially related to the monzonite pluton.

• The property hosts one confirmed mineral occurrence with possible others.

Mr. Voisin, president and chief executive officer of First Mexican, remarks: "We're very pleased to have finally reached this milestone. I would like to personally thank our many shareholders for their support and patience. I have mobilized a drilling contractor (major drilling) to drill the next eight to 10 holes, which we have already designed and targeted for both the Karen zone (six holes) as well as two known prospects (two to four holes). We look forward to sharing these results in a timely manner and will endeavour to provide our shareholders a comprehensive and up-to-date website to keep them informed of our activities."