BUFFALO SIGNS M.O.U. FOR INITIAL CDN$13M INVESTMENT DEAL
Vancouver, B.C., October 22, 2008 – Brian McEwen, President and CEO of Buffalo Gold Ltd. (TSX-V: BUF; OTC\BB: BYBUF; FWB: B4K) is pleased to announce that the Company has signed a Memorandum of Understanding (M.O.U.) with China Railway Resources Co. LTD. (“CRRC”), a wholly owned subsidiary of China Railway Group Limited (“CREC”) (www.crec.cn ) to invest directly into the Company as well as finance the Mt Kare project in Papua New Guinea and the grassroots projects in Australia. “CREC” is a public company registered in the People’s Republic of China and one of the largest civil construction companies in the world. From January 2008 to June 2008 CREC reported profit attributable to the equity holders of the Company of RMB1.906 billion ($332,000,000 CDN), representing a year-on-year growth of 190%. CREC has created a Resource Development Branch to invest in overseas mineral development projects.
Buffalo Gold’s CEO, Brian McEwen commented, “We are very excited to have signed this MOU with CREC. Raising money for early stage projects is extremely difficult in the current market, and as such our Australian properties and even the Mt Kare project have been underexplored for the past year. Buffalo now has a partner with the financial backing to complete exploration and evaluation at Mt Kare and our portfolio of grass roots projects in Australia. This allows us to focus on completing the underground feasibility study at our Furtei operation in Sardinia so that we can increase our revenues from that project.” Under the terms of the M.O.U., CRRC intends to:
Make an equity investment into Buffalo of $3,000,000 CDN at $0.10 for each unit. Each
unit contains one common share and one half share warrant at $0.30 per share for one
year from date of closing
•
Make a project investment $7,500,000 CDN into Buffalo’s Mt Kare JV with Madison
Minerals within 24 months of signing to earn 54% of the project.
•
Earn up to 72% in the project by making a cash payment of $5,000,000 CDN to the Mt
Kare JV and completing a feasibility study on the project. CRRC will earn 82% with a
total project investment of at least $40,000,000 CDN.
24
TH
Floor - 1111 W. Georgia St.
Vancouver, BC, Canada V6E 4M3
Phone: 604.685.5492
Fax: 604.685.2536
www.buffalogold.ca
Trading Symbol: TSXV – BUF
OTC\BB – BYBUF
FWB – B4K
2000 – 1055 West Hastings St.
Vancouver, BC, Canada V6E 2E9
Phone: 604.331.8772
Fax: 604.331.8773
www.madisonminerals.com
Trading Symbol: TSXV – MMR
OTC.BB - MMRSF
Page 2
•
Make a total project investment into Buffalo’s Australian portfolio of $2,500,000 CDN to
earn 60%. CRRC can earn up to 80% in any of the projects by advancing to the stage of
resources as defined in NI 43-101.
The M.O.U. is contingent on CRRC completing due diligence on Buffalo and its assets and
receiving all approvals, including approval from the TSX Venture Exchange.
Time is of the essence and the proposed schedule is for CRRC to begin due diligence and site
visits and within two weeks of signing and if satisfied with the due diligence to finalize terms and
conditions within eight weeks of signing.
Madison-Buffalo joint venture
The interests of Buffalo Gold and Madison Minerals in the Mt. Kare project are currently held via
a joint venture agreement dated June 25, 2007 by which Buffalo has a 60% interest and
Madison a 40% interest, which is subject to dilution in certain circumstances. Completion of the
transactions set out in the M.O.U. would result in the replacement of that joint venture
agreement with a new agreement, providing for, among other matters:
•
Fixing Madison’s interest in the project at 40% of the total retained Madison-Buffalo
interest at all stages going forward, not subject to dilution.
•
A cash payment from Buffalo to Madison of $352,165 CDN on regulatory acceptance of
an agreement in respect of the matters set out in the M.O.U.
•
Receipt by Madison of 40% of the $5,000,000 USD cash payment to the JV as set out
above.
•
Retention by Madison of 3.2% interest in the project at the point of CREC’s earning its
82% interest.
•
Relief from a requirement that Madison fund a portion of the JV’s expenditures on the
Mt. Kare project since July 14, 2008 or, in the alternative, face dilution of its interest to
an amount less than 40%.
Madison confirms that it is the owner of 3,521,648 shares of Buffalo Gold Ltd.
About CREC
China Railway Group Ltd. (“CREC”) is one of the largest civil construction companies in the
world and the largest railway, road, bridge and tunnel construction company in Asia. The
Company’s current ranking in Fortune 500, as published in the US Fortune magazine in 2008, is
341; rank 332 in the ‘‘Top 500 Brands in the World’’ list prepared by World Brand Laboratory in
2008; and rank 433 in the ‘‘Global 500’’ published in the Financial Times.
About Buffalo Gold
Buffalo’s vision is to build shareholder value by growing a gold mining company through a
combination of exploration and acquisition. The Company became a gold producer in November
2007 with the acquisition of the Furtei mine, and is exploring projects in Sardinia, Papua New
Guinea and Australia.
To find out more about Buffalo Gold Ltd. (TSX-V: BUF), please visit the company website at
www.buffalogold.ca. To find out more about Madison Minerals Inc. (TSX-V: MMR) please visit
the company website at www.madisonminerals.com.
Page 3
Brian McEwen is the Qualified Person for Buffalo and has read and approved the contents of
this news release.
On behalf of the Board of Directors of
On behalf of the Board of Directors of
BUFFALO GOLD LTD.
MADISON MINERALS INC.
“Brian McEwen”
“Chet Idziszek”
_______________________________
Brian McEwen,
Chet Idziszek,
President and Chief Executive Officer
President and Chief Executive Officer
For further information please contact:
For further information please contact:
Julie Hajduk, Investor Relations
David Scott, Investor Relations
E-mail: julie@buffalogold.ca
E-mail: dscott@mine-tech.com
Phone: 604.685.5492 or T.F.1.888.685.5492
Phone: 604.331.8772 or T.F.1.877.529.8475
THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE
ACCURACY OF THIS PRESS RELEASE
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SUBJECT TO A VARIETY OF RISKS AND UNCERTAINTIES AND OTHER FACTORS THAT COULD CAUSE
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Posted by D.Stewart Armstrong in Articles