TRUE NORTH GEMS SECURES $11 MILLION FINANCE PACKAGE FOR THE AAPPALUTTOQ RUBY PROJECT IN SW GREENLAND

True North Gems Inc. has signed an agreement with Leonhard Nilsen & Sonner AS (LNS Group) and LNS Greenland AS (LNSG), under which the combined LNS entities will provide over $11-million in financing to the company and the company's operating subsidiary in Greenland, True North Gems (Greenland) AS (TNGG).

"This agreement and reinforcing of the joint partnership will provide True North the additional resources to transition quickly into the construction phase of the Aappaluttoq ruby project," said Nicholas Houghton, president and chief executive officer. "The combined financing package will allow the company to restructure its share of capital expenses, reducing our immediate requirements and, in particular, minimizing dilution to current shareholders. With this funding arrangement, the company will be able to deliver on its vision of becoming one of the world's leading coloured gemstone production and exploration companies."

Under the letter agreement, the LNS Group and LNSG have agreed to provide financing to True North and TNGG as follows:

• LNS Group will invest $3-million in True North through the purchase of 28,571,428 Class A common shares of the company at a price of 10.5 cents per share;
• LNSG will purchase an additional 7 per cent of TNGG for $3-million (U.S.), increasing its ultimate joint venture interest in TNGG to 27 per cent;
• LNSG will contribute an additional amount of up to $5-million (U.S.) of the construction costs relating to True North's capital expenses at the Aappaluttoq project through a capital loan over the term of the initial mine life.

"Obviously, we have followed the project closely, and when the prospect arose to increase our percentage ownership of the Aappaluttoq mine and also invest in the parent company, it was opportunity we realized made sound business sense for LNS," stated Frode Nilsen, head of the LNS Group.

On Nov. 20, 2012, the company summarized the initial $23-million earn-in agreement with LNSG (formally Greenland Mining Services), outlining LNSG's commitment to complete planning, civil engineering and investing of infrastructure capital to earn a 20-per-cent joint venture interest in the Aappaluttoq ruby project. This new agreement amends and favourably complements that relationship and, upon completion of the earn-in by LNSG, will result in LNSG holding a 27-per-cent ownership interest in TNGG and in a significant shareholding by the LNS Group in True North.

The company intends to use the net proceeds of the financing transaction toward the company's share for the development of the project whilst working with LNSG to initiate construction. The company will also commence processing the remaining material extracted from the initial bulk sampling and upon completion; the liberated rubies and pink sapphires will provide an arm's-length pricing for the project and become an immediate source of revenue.

The transaction is subject to TSX Venture Exchange approval.

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