Vancouver, BC / January 4 2018 / TheNewswire / Emgold Mining Corporation (TSX-V: EMR) ("Emgold" or the "Company"): is pleased to announce that it has executed an amended non-binding letter of intent dated December 27, 2017 (the "Amended LOI") with Nevada Sunrise Gold Corporation ("Nevada Sunrise"; TSX-V: NEV). The Amended LOI replaces a prior non-binding letter of intent dated July 17, 2017 with Nevada Sunrise (the "Original LOI") and provides for the acquisition by Emgold of an immediate 51 percent interest in the Golden Arrow gold-silver property in Nevada (the "Golden Arrow Property"); together with a first option to acquire an additional 29% interest followed by a second option to acquire the final 20% interest in the Golden Arrow Property by making the exploration expenditures and cash payments as outlined below (the "Transaction").
Golden Arrow Property Details
The Golden Arrow Property is located approximately 40 miles east of Tonopah in Nye County, Nevada. The property consists of 357 unpatented and 17 patented lode mineral claims covering an area of approximately 7,030 acres (2,845 hectares). It is an advanced-stage exploration property with a comprehensive exploration database including geochemical sampling, geophysics, and over 200,000 feet of reverse circulation and diamond core drilling. Emgold is in the process of completing an updated National Instrument 43-101 technical report on the property.
To date, two main exploration targets have been drilled on the Golden Arrow Property focusing on bulk disseminated mineralization - the Gold Coin and Hidden Hill deposits. Numerous other targets have been identified for exploration. Emgold's management believes there is potential to expand both the Hidden Hill and Gold Coin resources and for discovery of other bulk disseminated mineralization on the Golden Arrow Property. In addition, historic underground mine workings lie along the Page Fault and other structures on the Golden Arrow Property indicating potential for vein style mineralization that has been subject to limited modern exploration, if any, to evaluate its potential.
Golden Arrow Sale and Option Terms
The terms of the Amended LOI provide that, subject to the satisfaction of certain conditions, including TSX-V acceptance, the entry into a definitive sale and option agreement with Nevada Sunrise and Emgold completing a financing in an amount necessary to pay (i) related fees and expenses of the Transaction; (ii) the remaining third property payment of $215,000; (iii) general corporate overhead for 6 months; and (iv) the first 12 months of minimum exploration expenditures on the property in the amount of $250,000, Emgold (or a wholly-owned subsidiary of Emgold) would acquire a 51 percent interest in the Golden Arrow Property by (i) making cash payments to Nevada Sunrise in the aggregate amount of $282,000; and (ii) issuing to Nevada Sunrise 2,500,000 common shares in the capital of Emgold, as shown in Table 1 below (all cash amounts in this news release are stated in Canadian dollars):
Table 1
Initial Acquisition by Emgold of 51 Percent Interest in the Golden Arrow Property
| Date | CashPayment ($CDN) |
Exploration Expenditure to be Incurred ($CDN) |
Emgold Shares | Percentage Interest |
| Execution and delivery of the Original LOI | $35,000 (already paid) | -- | -- | 0% |
| Execution and delivery of the Amended LOI | $32,000 (already paid) | -- | -- | 0% |
| Within 5 business days of final acceptance by the TSX-V of the Transaction (the "Closing Date") | $215,000 | -- | 2,500,000 | 51% |
| Sub-Total: | $282,000 | -- | 2,500,000 | 51% |
The Amended LOI further provides that Nevada Sunrise would grant to Emgold (or a wholly-owned subsidiary of Emgold) the sole and exclusive right and option (the "First Option") to acquire an undivided additional 29 percent (for a total of 80 percent) interest in the property, which would be exercisable by Emgold for a period of 36 months from the Closing Date (the "Option Period") by Emgold (i) incurring exploration expenditures in the aggregate amount of $2,750,000; and (ii) issuing to Nevada Sunrise an additional 2,500,000 common shares in the capital of Emgold, as shown in Table 2 below:
Table 2
Emgold's First Option to Acquire Additional 29 Percent Interest in the Golden Arrow Property
| Date | CashPayment ($CDN) |
Additional Exploration Expenditure to be Incurred ($CDN) |
Emgold Shares | Percentage Interest |
| On or before 12 months from Closing Date | -- | $250,000 | 51% | |
| On or before 18 months from Closing Date | -- | -- | 625,000 | 51% |
| On or before 24 months from Closing Date | -- | $1,250,000 | 625,000 | 51% |
| On or before 30 months from Closing Date | -- | -- | 625,000 | 51% |
| On or before 36 months from Closing Date | -- | $1,250,000 | 625,000 | 80% |
| Sub-Total: | -- | $2,750,000 | 2,500,000 | 80% |
| TOTAL: | $282,000 | $2,750,000 | 5,000,000 | 80% |
Upon Emgold completing the First Option, the Parties would be deemed to have formed a Nevada joint venture (the "Joint Venture"). The Joint Venture would be established as a separate company or using an existing subsidiary of Emgold or Nevada Sunrise, with 80 percent of the shares owned by Emgold and 20 percent of the shares owned by Nevada Sunrise.
After the completion of the exercise of the First Option, and within 12 months of a formal production decision for the property or at any time prior to that date, and provided that Emgold has at least a 75 percent interest in the Joint Venture, Emgold would have the further option (the "Second Option") of purchasing Nevada Sunrise's interest in the Joint Venture based on Nevada Sunrise's percentage interest (rounded to the nearest whole number) in the Joint Venture at the time the Second Option is exercised, as outlined in Table 3 below:
Table 3
Emgold's Second Option to Acquire Final 20 Percent
Interest in the Golden Arrow Property
| Nevada Sunrise % Interest in the Joint Venture | Buyout Amount ($CDN) |
| 25 | 10,000,000 |
| 24 | 9,500,000 |
| 23 | 9,000,000 |
| 22 | 8,500,000 |
| 21 | 8,000,000 |
| 20 | 7,500,000 |
| 19 | 6,850,000 |
| 18 | 6,200,000 |
| 17 | 5,550,000 |
| 16 | 4,900,000 |
| 15 | 4,250,000 |
| 14 | 3,600,000 |
| 13 | 2,950,000 |
| 12 | 2,300,000 |
| 11 | 1,650,000 |
| 10% or Less | 1,000,000 |
Nevada Sunrise would not be required to contribute to the Joint Venture until Emgold completes or terminates the First Option. Thereafter, the parties would be required to contribute to the Joint Venture based on their ownership percentages of the Joint Venture, or their interests therein would be diluted in proportion to their contributions to the Joint Venture. If a diluted party's interest falls below 10% at any time, the other party would have the option of purchasing the diluted party's interest in the Joint Venture for $1.0 million.
The scientific and technical information that forms the basis for portions of this news release was reviewed and approved by Robert Pease, PG, CPG, who is a qualified person as defined by National Instrument 43-101.
