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June 22, 2011

Sutter Gold Announces Positive Production Decision for the Lincoln Mine Gold Project and Agrees to a US$ 20 Million Prepaid Gold Project Finance Facility

Vancouver, British Columbia (June 22, 2011) - Sutter Gold Mining Inc. (SGM:TSX-V) ("Sutter" or the "Company") is pleased to announce its Board of Directors has made a positive production decision to commence construction and development for mining and milling activities at the Lincoln Project. This decision follows the completion of a Canadian National Instrument 43-101 compliant independent technical report "Preliminary Economic Assessment Lincoln Mine Gold Project Technical Report" ("PEA") filed on SEDAR on June 16, 2011, for the Lincoln Mine project (the "Project") located near Sutter Creek, California, USA.

Full and complete disclosure of the PEA is available on the Company's website at www.suttergoldmining.com and at www.SEDAR.com. The PEA, authored by Mine Development Associates of Reno, Nevada, USA, indicated positive economics for the development, mining and milling of the Lincoln-Comet portion of the Company's California mineral resource. The PEA utilized a base price of gold at $1,100 per ounce. Details of the total Company resource estimate can be found in the National Instrument 43-101 report "Mineral Resource Estimate, Sutter Gold Project, Amador County, California", filed on SEDAR on February 11, 2008. A feasibility study has not been completed and there is no certainty the proposed operation will be economically viable.

Project Finance Secured

After evaluation of multiple financing proposals from various lenders and recommendation of the Board's Special Committee, the Board has chosen to proceed with an agreement with RMB Australia Holdings ("RMBAH") wherein RMBAH will provide a secured prepaid gold facility to Sutter in the amount of US$20 million.

Financing Terms Highlights

  • The lender will be RMB Australia Holdings Limited ("RMBAH");
  • The Project finance facility will be a secured prepaid gold facility in the amount of US$20 million;
  • Proceeds will be used to repay the existing RMBAH facility in the approximate amount of US$6.5 million and provide approximately 70% of the budgeted funding required for the development and construction of the Lincoln Project;
  • The facility amount will be drawn down monthly by Sutter during the construction and development period;
  • Sutter will deliver 50% of monthly gold production subject to a minimum 900 ounces per month beginning at the end of the 13th month from the first draw down, coinciding with the first full month of production in accordance with the Project development schedule;
  • Sutter will receive from RMBAH a Delivery Price of approximately US$950 per ounce delivered with the final Delivery Price to be determined based on spot gold prices at the time of closing;
  • Total gold production deliverable to RMBAH is limited to 53,027 ounces;
  • Sutter has the option of pre delivering against the facility at its discretion.

Sutter's Chief Financial Officer Bob Hutmacher, commented, "The RMBAH prepaid gold facility is the most attractive of the project finance proposals the Company received. Under the facility, Sutter will commit a maximum of 50% of the minable resources presented in the PEA to repay its existing debt and provide for the bulk of the Lincoln Project's development cost, leaving the considerable resource upside inherent on the Company's controlled position on the Mother Lode to Sutter's shareholders and providing the option to pre deliver against the facility at the Company's discretion. The prepaid gold facility represents an upfront payment of $377 per ounce and an expected delivery price to be received of approximately $950 per ounce, for total consideration of approximately $1,327 per ounce, meaningfully better than similar recent gold stream financings that have occurred in the market. Importantly, the expected $950 delivery price assures an attractive cash margin on committed ounces in relation to the total operating cost estimated in the PEA. Uncommitted gold production will be sold at spot gold prices. The ability to use the facility funding upfront will allow Sutter to significantly minimize the Project development risk prior to securing the remaining funding required to achieve commercial production."

Completion of Financing

The closing of the prepaid gold facility is expected to occur on or about July 1, 2011 and remains subject to the approval of the TSX Venture Exchange.

About Sutter

Sutter is a growth-oriented exploration and development company preparing to become a North American gold producer. The Company has two projects: the Lincoln Project located in the Mother Lode Gold Belt of California and the Santa Theresa Project located in the Northern Baja region of Mexico. Currently, the Company's primary focus is the evaluation and development of the Lincoln Project, beginning with the shallow portion of the Lincoln-Comet ore zone of the Lincoln Project, located on the California Mother Lode Gold Belt in Amador County. The Lincoln-Comet and Keystone zones have a NI 43-101 compliant Indicated Resource estimate (completed in February 2008) of 612,400 tonnes (673,600 tons) grading 11.3 g/t Au (0.33 oz/ton) containing 223,000 ounces of gold and Inferred Resources of 2,161,700 tonnes (2,377,900 tons) grading 6.6 g/t Au (0.19 oz/ton) containing 458,900 ounces of gold.

Sutter currently controls approximately 3.6 miles of the Mother Lode of Amador County, with 90% of the property still unexplored. Potential exists both at depth and along strike of the known mineralized zones on both the footwall and hanging wall. The 120-mile long Mother Lode Gold Belt produced over 13 million ounces of gold historically with 7.9 million ounces originating from the 10-mile long segment between Jackson and Plymouth where the Lincoln Project is strategically located. Properties under the Company's control include seven historic mines with significant historic gold production totaling over 3.5 million ounces or 27% of the historic gold production from the Mother Lode. Historic mines located north and south of the Lincoln Project in the Jackson to Plymouth segment of the Mother Lode success fully mined gold to depths of 4,500 and 6,300 feet, respectively.

In Mexico, Sutter holds the rights to the geologically similar, high-grade El Alamo district of northern Baja, where historic mining to the water table produced mined grades of 30 to 60 g/t gold. Initial exploration with its joint-venture partner, Premier Gold, has demonstrated the extension of high-grade veins.

ON BEHALF OF THE BOARD OF DIRECTORS:
James Crombie, President, CEO & Director
Sutter Gold Mining Inc.

For further information please contact:

Robert Hutmacher, Chief Financial Officer at 303 238 1438 ext. 22
Email: bhutmacher@suttergoldmining.com
Website at www.suttergoldmining.com

Forward-Looking Statements
This news release contains "forward-looking information" under Canadian securities law. Any information that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words such as "expect", "anticipate", "believe", "plans", "estimate", "scheduling", "projected" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking information. Forward-looking information relates to, among other things: the price of silver and gold; the accuracy of mineral resource and mineral reserve estimates; the ability of the Company to finance its operations and capital expenditures; future financial and operating performance including estimates of the Company's revenues and capital expenditures and estimated production.

Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those reflected in the forward-looking information, including, without limitation, risks relating to: fluctuating commodity prices; calculation of resources, reserves and mineralization and precious and base metal recovery; interpretations and assumptions of mineral resource and mineral reserve estimates; exploration and development programs; feasibility and engineering reports; permits and licenses; title to properties; recent market events and conditions; economic factors affecting the Company; timing, estimated amount, capital and operating expenditures and economic returns of future production; operations and political conditions; environmental risks; and risks and hazards of mining operations. This list is not exhaustive of the factors that may affect any of the Company's forward-looking information. Forward-looking information about the future is inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Accordingly, readers should not place undue reliance on forward-looking statements or information. The Company's forward-looking information is based on the assumptions, beliefs, expectations and opinions of management as of the date of this press release, and other than as required by applicable securities laws, the Company does not assume any obligation to update forward-looking statements and information if circumstances or management's assumptions, beliefs, expectations or opinions should change, or changes in any other events affecting such statements or information. For the reasons set forth above, investors should not place undue reliance on forward-looking information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 
 

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