Victoria Gold Corp. and StrataGold Corporation Announce Business Combination

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TORONTO, ONTARIO--(Marketwire - Feb. 11, 2009) - Victoria Gold Corp. (TSX VENTURE:VIT) ("Victoria") and StrataGold Corporation ("StrataGold") are pleased to announce that their respective boards of directors have approved a letter of agreement in respect of a proposed friendly transaction (the "Transaction") to combine the companies through an all share transaction.


Financial Terms of the Transaction


Victoria has agreed to offer StrataGold shareholders 0.1249 of a Victoria common share for each StrataGold common share held which represents a 18.7% premium to the shareholders of StrataGold as at the close of market on February 10, 2009. All outstanding StrataGold options and warrants will be exchanged for options and warrants of Victoria on similar terms.


Highlights of the Transaction


- This transaction is consistent with Victoria's dynamic strategy of increasing its gold assets per share both through value-adding exploration work on existing properties and through accretive and prudent acquisitions in low risk areas.


- Victoria selected StrataGold from amongst numerous carefully reviewed opportunities principally because its management believes that the large 2.69 million ounce Dublin Gulch project is well advanced and it may be suitable for low cost heap leach gold processing. The management of Victoria believes that the Dublin Gulch Eagle deposit has many similarities to Kinross' Fort Knox deposit where Kinross is currently constructing an "in valley" heap leach pad to recover gold from low-grade stockpiles.


- This acquisition provides Victoria with a strong core project in Canada, a secure and proven mining jurisdiction, at a time when management notes that the Canadian dollar gold price has hit fresh all-time highs.


- This transaction will also allow for the application of Victoria's innovative exploration techniques on StrataGold's advanced exploration gold properties.


Chad Williams, President and CEO of Victoria Gold Corp said "This Transaction increases Victoria's total NI 43-101 compliant gold resources from 1.2 million ounces to approximately 4.3 million ounces with just 17% equity dilution. The rationale for our acquisition is StrataGold's Dublin Gulch Eagle Zone Deposit, but we have yet to assess the full development potential of their assets in Guyana and there has been significant interest in the Mar-Tungsten Deposit by Chinese interests."


StrataGold's Executive Chairman, Mr. Roman Friedrich, stated "This proposed transaction is a strategic one for both companies and brings to StrataGold Victoria's northern project development expertise to advance our Dublin Gulch Project. Kinross Gold Corporation, which is a significant shareholder, operates the Fort Knox mine in Alaska, which StrataGold and Victoria believe is geologically analogous to Dublin Gulch. The combination of the two companies provides Victoria with two additional advanced projects to add to its impressive pipeline of projects."


Further Detail Regarding the Transaction


It is envisaged that the transaction will be structured as an acquisition of all of the outstanding shares of StrataGold by Victoria completed by way of a plan of arrangement. The parties have agreed to work towards entering into a definitive agreement by March 12, 2009.


As a result of the Transaction, all existing warrants, options and other rights to acquire common shares of StrataGold will be deemed to represent comparable securities of Victoria adjusted on the same share exchange ratio basis. The agreed share exchange ratio is based upon an assessment of the recent trading activity and assets of both Victoria and StrataGold and input from StrataGold's special committee of directors and takes into account the Bridge Loan that Victoria has agreed to provide to StrataGold as described below.


Completion of the transaction is conditional upon:


1. the StrataGold shareholders having approved the transaction by 66 2/3% majority;


2. completion of legal and financial due diligence by each of the parties;


3. receipt of all necessary regulatory approvals;


4. the absence of a material adverse change with respect to each party; and


5. certain other customary conditions.


The letter of agreement includes a commitment by StrataGold not to solicit alternative transactions. In addition, Victoria has agreed to pay StrataGold, in certain circumstances, a fee of $250,000 if the proposed transaction is not completed and StrataGold has agreed to pay Victoria, in certain circumstances, a fee of $300,000 if the proposed transaction is not completed.


Upon completion of the transaction the current President and CEO of Victoria, Mr. Chad Williams, will remain the President & CEO of the combined company which will retain the name "Victoria Gold Corp." A current director of the StrataGold board of directors will be a director of the combined company until at least the first meeting of the shareholders of the combined company.


If this transaction is completed Victoria will have approximately 157,200,000 common shares issued and outstanding, of which current Victoria shareholders will own approximately 85.4% and former StrataGold shareholders will own approximately 14.6%.


The Bridge Loan


In connection with the Transaction, Victoria has agreed to extend to StrataGold an initial $350,000 bridge facility and a further line of credit in the amount of $400,000 (together, the "Bridge Loan"). The Bridge Loan will bear interest at an annual rate of 15% payable monthly, and will mature on September 30, 2009 (the "Maturity Date") and will be secured by a first charge over all of the assets of StrataGold relating to its Dublin Gulch property. Concurrent with the initial advancement of funds by Victoria to StrataGold, StrataGold will issue to Victoria 5,000,000 common share purchase warrants of StrataGold (the "Initial Warrants"), with each Initial Warrant entitling Victoria to acquire one common share of StrataGold at a price of $0.06 for a period of two years. The Bridge Loan is repayable in whole, but not in part, prior to the Maturity Date, but in the event of such prepayment, StrataGold is required to issue to Victoria an additional 5,000,000 common share purchase warrants of StrataGold (the "Repayment Warrants"), with each Repayment Warrant entitling Victoria to acquire one common share of StrataGold for a period of two years after the date of issue thereof, pricing subject to Exchange approval. StrataGold did not draw down on an alternate credit facility.


Paradigm Capital Inc. is acting as financial advisor to StrataGold and has provided an opinion to StrataGold that, subject to certain assumptions and limitations set out therein, the proposed Transaction is fair, from a financial point of view, to shareholders of StrataGold. Fraser Milner Casgrain LLP is acting as legal counsel to Victoria and Davis LLP is acting as legal counsel to StrataGold.


Conference Call


Chad Williams, President and CEO of Victoria Gold Corp. and Terry Tucker, President and CEO of StrataGold Corporation will host a joint conference call at 4:00 pm (EST) February 11, 2009, to discuss this transaction. Details of the conference call will follow in a subsequent advisory.