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Firstgold Satisfies Working Capital Financing Condition

^{Published on 2009-12-01 10:05:43 - Market Wire}
 

TORONTO--(Marketwire - December 1, 2009) - Firstgold Corp. (TSX: [ FGD ]) (PINKSHEETS: [ FGOC ]) ("Firstgold" or "the Company") previously announced on November 23rd it had signed an agreement with its secured lenders and Northwest Non Ferrous International Investment Company Ltd. ("Northwest") to extend the closing date for the sale of the secured lenders debt to Northwest. This investment in the secured debt is part of a restructuring transaction pursuant to which Northwest has already advanced Firstgold $500,000 and has agreed to advance an additional $5.5 million dollars by way of a three year loan at 10% and make a total equity investment of $9,500,000 in return for 51% of the then outstanding Firstgold stock at closing subject to customary terms and conditions. This agreement also provides that the secured lenders, who have already received $500,000 from Northwest, will receive a final payment from Northwest for $11,000,000 on closing on December 30, 2009 and a supplemental payment of $220,000 at closing from Firstgold. The amended warrant currently held by the secured lenders is exchangeable, at their option, for a convertible note in the amount of $3,000,000 from Firstgold. Subject to regulatory approvals the convertible note, if issued, would automatically convert after closing of the Northwest transaction into 9.9 % of the then outstanding shares of Firstgold. When and if the convertible note is issued the 15,000,000 share warrants previously issued will be returned by the secured lenders and cancelled.

As a condition of this extension Firstgold needed to obtain additional funding of at least $300,000 in order to fund working capital requirements until closing. Firstgold has obtained $350,000 from existing shareholders and a commitment for an additional $150,000 and has thus satisfied this condition. The money was advanced to Firstgold in the form of convertible promissory notes, with a 12% interest rate, repayable on demand or subject to regulatory approval the notes would be convertible at 5 cents (USD) per share. In addition the note holders were offered as a further incentive an option to buy up to 2500 ounces of gold at $500 per ounce from any future production by Firstgold (this assumes the full $500,000 is obtained). If and when gold production is realized, gold would be delivered to note holders' only after all existing creditors have been repaid.

The extension was required to give Firstgold time to have The Committee on Foreign Investment in the United States ("CFIUS") review the transaction and the proposed Northwest investment. The review is a national security protocol to ensure any investment does not adversely affect the national security of the United States. The review period has an initial review of 30 days and can be extended one time for an additional 45 days if the review is not completed. We have been advised that that CFIUS requires additional time to complete their review and has therefore extended the review period to December 21, 2009.

Terry Lynch, Firstgold CEO, commented, "This has been a very long and costly process for our company. Our shareholders, debt holders, suppliers and employees have had to deal with a lot of adversity. However we are confident that on or before December 21st we will obtain clearance from CFIUS because we do not believe this transaction to buy a small gold mine in one of Nevada's most depressed economic areas is contrary to the national security or other interests of the United States. We remain hopeful that sometime between now and December21, 2009 we will get our clearance and the Northwest Investment in Firstgold can close."

Mr. Lynch stated, "With this final piece of the puzzle in place we will look to file our Proxy Statement with the SEC as part of the process that will ultimately see Firstgold seek our shareholder's approval of the Northwest Investment. We believe firmly this transaction, while difficult to conclude, will provide our shareholders an opportunity to benefit from the development of Relief Canyon into a producing mine, the strong gold market and the significant geotechnical and financial strengths our proposed new majority shareholder Northwest."

Firstgold has spent $16 million over the last 24 months developing a processing facility at Relief Canyon, located outside Lovelock Nevada, on the site of the previously producing Pegasus Gold Mine. Additional information about Firstgold Corp. can be found by visiting its web site at[ www.firstgoldcorp.com ]

Northwest Nonferrous International Investment Company Ltd. is 100% owned by the Northwest Mining and Geological Exploration Group Co. for Nonferrous Metals (NWME) and is based in Xi'an city of Shaanxi province, China. NWME has more than 6,000 employees including 800 geologists, technologists, and engineers.

NWME is one of the top five exploration and mining Bureaus in China amongst around 100 provincial Bureaus in terms of revenue and technical capacity. NWME was one of the first Bureaus in China to conduct exploration projects in partnership with overseas companies. In 2008, NWME, in partnership with Jinduicheng Molybdenum Group Co., Ltd., acquired Yukon Zinc Corporation.

Safe Harbor Statement

The matters discussed in this release contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended that involve risks and uncertainties. Although Firstgold Corp. believes that the expectations reflected in such forward-looking statements are reasonable, the forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from those projected. Firstgold Corp. cautions investors that any forward-looking statements made by Firstgold Corp. are not guarantees of future performance and that actual results may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those reflected in forward-looking statements include, but are not limited to, risks and uncertainties regarding the actual mineralization of Firstgold Corp.'s mining properties, the unproven nature of and potential changes to Firstgold Corp.'s business model, the risk that the capital and other resources that Firstgold Corp. will need to exploit its business model will not be available, and the risks discussed in Firstgold Corp.'s Form 10-K and in Firstgold Corp.'s 10-Qs and in Firstgold Corp.'s other filings with the Securities and Exchange Commission.

Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms on this website (or press releases), such as "measured," "indicated," and "inferred" "resources," which the SEC guidelines strictly prohibit U.S. registered companies from including in their filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our reports filed with the SEC which may be secured from the SEC, or from their website at http://www.sec.gov/edgar.html.