Linear Gold to acquire Goldfields project

2009-05-26 12:20 ET - News Release

Mr. Wade Dawe reports

LINEAR GOLD ACQUIRES GOLDFIELDS DEVELOPMENT PROJECT

Linear Gold Corp. has signed a definitive purchase and sale agreement with GLR Resources Inc., whereby Linear will acquire a 100-per-cent interest in the Goldfields Project located near Uranium City, Saskatchewan, Canada. The acquisition of the Goldfields Project includes the Box and Athona deposits with the following highlights:

- A total resource of over 1 million ounces with reserves of 601,007 ounces of gold stated in a National Instrument 43-101 compliant Technical Report by Bikerman Engineering & Technology Associates, Inc., June 2007, Revision 1-May 12, 2008. The resources and reserves are as follows:

Box Deposit:

- Proven and Probable Reserve - 10.9 million tonnes at 1.70 grams per tonne gold representing 601,007 ounces including:

-- Proven Reserve - 1.7 million tonnes at 2.025 grams per tonne gold representing 109,619 ounces; and

-- Probable Reserve - 9.3 million tonnes at 1.641 grams per tonne gold representing 491,436 ounces.

- Measured and Indicated Resources (includes reserves described above) - 16.9 million tonnes at 1.39 grams per tonne gold representing 753,000 ounces including:

-- Measured Resources - 2.4 million tonnes at 1.68 grams per tonne gold representing 129,000 ounces; and

-- Indicated Resources - 14.5 million tonnes at 1.34 grams per tonne gold representing 623,000 ounces.

- Inferred Resources - 3.7 million tonnes at 0.93 grams per tonne gold representing 111,000 ounces.

Athona Deposit:

- Indicated Resources - 10.9 million tonnes at 0.95 grams per tonne gold representing 333,000 ounces; and

- Inferred Resources - 2.2 million tonnes at 0.83 grams per tonne gold representing 59,000 ounces.

- Completed 2007 positive feasibility study on the Box Deposit with the following economics:

-- NPV, discounted at 8%, of US$50.0 million at US$603.75 per ounce Gold revenues;

-- Internal Rate of Return of 43.4% using US$603.75 per ounce Gold revenues

- Planned production of 90,000 ounces per year based on a 5,000 tonne per day operation;

- Excellent process recovery of 93% of the contained gold values;

- Updated pre-operating capital expenditures estimated at US$63 million;

- Environmental permit in place - no development delays anticipated;

- Pre-feasibility study has been initiated on the Athona Deposit;

- Both deposits are open pit mineable;

- Both deposits are open at depth;

- Excellent local infrastructure with airport, power, telecommunications, good road system, field office, core shack and living quarters and kitchen facilities for employees; and

- Regional exploration upside including the Golden Pond target where previous drill results were reported as 16.57 grams per tonne of gold over 13.6 metres and 5.07 grams per tonne of gold over 15 metres.

Wade Dawe, President and Chief Executive Officer of Linear, stated, "The Goldfields Project represents an exciting acquisition and an ideal initial development project for Linear. We look forward to working with thelocal communities as well as the Saskatchewan Government to advance the development of the project and believe that Canada's political stability represents a tremendous strategic advantage for the asset. With manageable remaining capital expenditures of approximately US$63 million and planned low cost production of 90,000 ounces per year, the Goldfields Project is expected to be an excellent platform from which Linear will be able to execute an aggressive growth strategy. In the short-term, we plan to update the engineering documents for the project, complete final permitting applications and recruit a senior operating executive to manage the development and operation of this exciting project. We are confident that based on current gold prices, the economics and overall value of this project is substantially higher than the already robust results returned in the 2007 feasibility study using gold prices that were capped at approximately US$600 per ounce."

Transaction Details

The Transaction is expected to be completed following receipt of court approval, which GLR has undertaken to seek on an expedited basis. Upon closing, Linear will pay GLR US$5.0 million in cash and issue 727,273 Linear Gold Corp. shares with a deemed value of CDN$800,000. In addition, upon completion and delivery of certain previously contracted equipment, Linear will reimburse GLR for deposits made in connection with the equipment contracts in the amounts of US$3.0 million and CDN$1.2 million.

Linear Highlights Following the Transaction

Upon completion of the Acquisition, Linear will remain a well financed and strategically positioned company with:

- Over CDN$24 million in cash and cash equivalents;

- 33.4 million common shares issued and outstanding, representing an attractive capital structure for continued growth and consolidation;

- Planned annual production of approximately 90,000 ounces of gold following the development of the Box Mine;

- Proven and probable gold mineral reserves estimated to be approximately 600,000 ounces, measured and indicated gold mineral resources estimated to be approximately 1.9 million ounces and inferred gold mineral resources of 0.5 million ounces. See chart at end of release for details;

- Significant potential for growth through exploration outside of the current Box and Athona Deposits and continued exposure to Linear's promising Ixhautan Gold Project in Mexico and Ampliacion Pueblo Viejo, Loma El Mate and Loma Hueca Gold Properties in the Dominican Republic;

- Management and board of directors with experience operating, developing, and financing mining companies;

- Strategic position to leverage planned consolidation within the gold industry.

The successful completion of the transaction would resolve the pending injunction proceedings.

Peter Dimmell, P.Geo., a director of Linear and a qualified person under National Instrument 43-101, has reviewed and approved the scientific and technical information in this press release based on the 43-101 compliant report by Bikerman Engineering & Technology Associates, Inc., June 2007, Revision 1-May 12, 2008 on the Box Mine - Goldfields Project, Uranium City, Saskatchewan, Canada, a Technical Report filed Pursuant to National Instrument 43-101 of the Canadian Securities Administrators filed on SEDAR by GLR Resources.