Goldgroup sells El Porvenir for US$25 Million
Vancouver, British Columbia (July 12, 2010) -- Goldgroup Mining Inc., TSX:GGA, ("Goldgroup" or the "Company") is pleased to announce the sale of its 100% owned El Porvenir gold project in Aguascalientes, Mexico to the Frisco Group for US$25.0 million. Of the US$25.0 million sale proceeds, the sum of US$1.7 million has been applied to discharge a royalty interest on the El Porvenir property held by a third party. The Frisco Group is the mining division of Grupo Carso, a Latin American conglomerate. The cash payment has been received and represents a net increase to the Company's cash balances of $0.27 per share based on 84,992,434 shares outstanding.
The proceeds will be used primarily to fund development of Goldgroup's advanced stage properties, namely its flagship gold property, Caballo Blanco, in Veracruz Mexico and the San José de Gracia high-grade gold project in Sinaloa, Mexico.
This is the third significant business deal accomplished by the Company's current management team in the past seven months; the first being the acquisition of Caballo Blanco from NGEx Resources Inc. and the second being the closing of the business combination between the Company and Goldgroup Resources Inc.
From a financing point of view, the El Porvenir divestiture is extremely significant, as it means the Company is no longer contemplating a $20.0 million equity financing, which was to be lead by GMP Securities LP, as announced in a news release January 29, 2010.
Keith Piggott, Goldgroup's CEO stated, "This transaction provides Goldgroup with a large non-dilutive financing capable of accelerating the Company's pursuit of its targeted growth strategy of producing 200,000 ounces of gold annually within three years."
Goldgroup is also pleased to announce the election of two new board members, Francisco ("Paco") Escandon and Robert M. Byford at the Company's annual general meeting which was held in Montreal on June 30, 2010. Julian Kemp did not stand for re-election and the board wishes to thank him for his years of dedicated service. Grant Thornton LLP was appointed auditors for the ensuing year.
Mr. Escandon was the Director in charge of the Consejo de Recursos Minerales, Mexico's national mining bureau for six years. His many years of exploration and mining experience will assist Goldgroup in fast-tracking its properties to production. Mr. Escandon is the Director of Operations for the Caballo Blanco project.
Mr. Byford is a former partner of KPMG LLP and was a Senior Vice President and Director of KPMG Corporate Finance. He brings a wide range of experience to our board in finance, acquisition and divestiture transactions across many industry sectors. He was also an elected Governor of the Vancouver Stock Exchange, a predecessor to the TSX Venture Exchange.
Goldgroup is a Canadian-based gold production and exploration company focused exclusively in Mexico, targeting growth in gold production, mineral resources, profitability and cash flow from a portfolio of production, development and exploration stage projects. The Company owns and operates the Cerro Colorado Gold Mine in Sonora, Mexico. All gold production is un-hedged and the Company expects to produce approximately 25,000 to 30,000 ounces of gold in 2010. The Company's property portfolio includes the Caballo Blanco project in Veracruz, and the San José de Gracia high-grade gold project in Sinaloa.
Goldgroup is led by a team of highly successful and seasoned individuals with extensive expertise in exploration, corporate finance and mine development in Mexico.
For further information on Goldgroup, please visit www.goldgroupmining.com or contact:
Keith Piggott, CEO
David Fry, Corporate Development
TF: 1-877-655-ozAu (6928)