Evolving Gold Announces the Spin Out of its Interest in the Kiyuk Property - A Dividend-In-Kind Transaction

Evolving Gold Announces the Spin Out of its Interest in the Kiyuk Property - A Dividend-In-Kind Transaction

Thu Dec 09 09:00:00 2010
EST
VANCOUVER, Dec 09, 2010 /PRNewswire via COMTEX News Network/ --
Evolving Gold Corp. (TSX: EVG) (FSE: EV7) (the "Company" or "Evolving
Gold") is pleased to announce a proposed dividend-in-kind spin out
transaction (the "Spin Out") involving the transfer of the Company's
option to acquire the mineral claims forming the Kiyuk Lake gold
property in southern Nunavut (the "Kiyuk Property") to a new company,
Prosperity Goldfields Corp. ("Prosperity"). Evolving Gold will
distribute common shares of Prosperity (the "Prosperity Shares") to
Evolving Gold shareholders by way of a dividend-in-kind, subject to
applicable securities laws and receipt of securities regulatory
approval, with a proposed basis of one Prosperity Share for every ten
Evolving Gold shares.
Prosperity is currently a wholly-owned subsidiary of the Company, and
upon completion of the Spin Out, the Company expects Prosperity to
become a publicly traded company. The Company believes that the
creation of Prosperity will provide a mechanism for Evolving Gold
shareholders to realize the full market value of the Kiyuk Property.
"Evolving Gold management is always looking for ways to increase
shareholder value, and the Kiyuk Property has been an undervalued
company asset for some time," comments Robert Barker, CEO of Evolving
Gold. "Evolving Gold's primary focus is and has been on its major gold
projects in the United States, Rattlesnake Hills in Wyoming,
Carlin/Humboldt in the southern Carlin Trend of Nevada, and Jake Creek,
also in northern Nevada. As a result, the Kiyuk Property, the Company's
only Canadian property, has not received the attention it deserves. The
Spin Out should facilitate independent financing and proper exploration
strategies that are needed to advance the Kiyuk Property in an
effective manner."
In connection with the Spin Out, the Company has transferred to
Prosperity its interest in the option to acquire the Kiyuk Property in
exchange for Prosperity Shares. Prosperity also completed a $1.5
million private placement with Evolving Gold pursuant to which
Prosperity issued 10,000,000 units to Evolving Gold at a deemed price
of $0.15 per unit, each unit consisting of one Prosperity Share and one
half of one share purchase warrant. Pursuant to the terms of a funding
agreement, all transaction costs related to the Spin Out up to a
maximum of $300,000 have been and will be paid by Evolving Gold. 
Prosperity has agreed to reimburse Evolving Gold for the payment of the
transaction costs through the issuance of Prosperity Shares to Evolving
Gold at a deemed price of $0.15 per Prosperity Share.  Assuming the
maximum of $300,000 of transaction costs are incurred in connection
with the Spin Out, Prosperity expects to issue up to 2,000,000
Prosperity Shares to Evolving Gold pursuant to the terms of the funding
agreement.
Under the proposed dividend-in-kind, it is contemplated that each
Evolving Gold shareholder will receive one Prosperity Share for every
ten Evolving Gold shares held on the record date, and the number of
Prosperity Shares to be issued will be rounded down to the nearest
whole number of Prosperity Shares. Upon completion of the Spin Out and
the receipt of Prosperity Shares for the reimbursement of transaction
costs, Evolving Gold expects to hold approximately 48.5% of the
outstanding Prosperity Shares.
Prosperity has filed a preliminary prospectus in all provinces and
territories of Canada and this preliminary prospectus is available on
SEDAR under Prosperity's profile.  When the final prospectus has been
accepted for filing, a record date will be set for the distribution of
the dividend-in-kind.  The preliminary prospectus contains important
information relating to the transactions described in this news
release. Evolving Gold's shareholders are urged to read the preliminary
prospectus.
As described in further detail in the preliminary prospectus, no
Prosperity Shares will be issued to shareholders who are (or are deemed
to be) non-residents of Canada. Rather, such Prosperity Shares will be
delivered to a trustee for sale in the open market following the
dividend-in-kind and the net proceeds will be delivered to non-resident
shareholders, net of any withholding taxes. Shareholders who fail to provide a
declaration of Canadian residency in
the form that will be provided will be deemed to be a non-resident for
these purposes. Canadian shareholders who hold their shares in Evolving
Gold through a brokerage or other account are therefore urged to
contact their brokers to avoid being deemed a non-resident.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy securities in any jurisdiction. The
Prosperity Shares to be distributed have not been approved or
disapproved by any Canadian or U.S. regulatory authority nor has any
such authority passed upon the accuracy or adequacy of the preliminary
prospectus.  The Prosperity Shares will not be distributed in any state
or jurisdiction, including the United States, in an offer, solicitation
or sale of the Prosperity Shares would be unlawful prior to
registration or qualification under the securities laws of any such
state or jurisdiction.  Any public offering of securities to be made in
the United States can only be made pursuant to an effective
registration statement.  The Prosperity Shares have not been registered
under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act"), or any state securities laws, and the Company has no
intention of filing such a registration statement in connection with
the dividend-in-kind of the Prosperity Shares.  Accordingly,
shareholders of the Company who are resident in the United States or
who are U.S. persons (as defined in Rule 902 of Regulation S under the
U.S. Securities Act) will not be entitled to participate in the
dividend-in-kind of the Prosperity Shares, except as set out above and
in the preliminary prospectus of Prosperity.
On Behalf of the Board of Directors
EVOLVING GOLD CORP. 
"Robert Barker"
Robert Barker
CEO and Director
FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements
which address
future events and conditions, which are subject to various risks and
uncertainties. Such statements include those related to the timing and
benefits of the proposed Spin Out.  The Company's actual results and
financial position could differ materially from those anticipated in
such forward-looking statements as a result of numerous factors, some
of which may be beyond the Company's control. These factors include:
results of exploration activities and development of mineral
properties; fluctuations in the marketplace for the sale of minerals;
the inability to implement corporate strategies; the ability to obtain
financing; currency fluctuations; general market and industry
conditions; securities regulatory review of the preliminary prospectus
and other risks disclosed in the Company's filings with Canadian
Securities Regulators.
Forward-looking statements are based on the expectations and opinions of
the Company's management on the date the statements are made. The
assumptions used in the preparation of such statements, although
considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on
forward-looking statements. Such assumptions include assumptions
related to the receipt of securities regulatory approval of the
Prosperity prospectus and the expected benefits of the Spin Out for
Evolving Gold shareholders.  The Company expressly disclaims any
intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required by law.
SOURCE Evolving Gold Corporation


Copyright (C) 2010 PR Newswire. All rights reserved

EVG-TC, EVOGF,

Evolving-Gold-Kiyuk, BUSINESS, CANADA, csta+stories, FINANCE, financenews, financenews+select, hedge+funds,
prn, PUBCO+CANADA, PUBCO+SELECT, PUBLIC+COMPANIES, WALL+STREET,

This content is for use with Interactive Data products by authorized persons only. Any reference, link,
frame, or other use of this material without the explicit permission of Interactive Data is prohibited.