Golden Band Resources selling $30 million gold-based debenture to fund production start on La Ronge Gold Project

    
    
    GBN: TSX Venture Exchange
    

SASKATOON, July 2 /CNW/ - Golden Band Resources Inc. (GBN: TSXV) announced today that to finance the start of gold production on its La Ronge Gold Project, it is selling a gold-linked convertible debenture as a private placement. The company is seeking to raise gross proceeds of a minimum of $15 million up to a maximum of $30 million, with repayment of the interest-bearing debenture over a three-year period with cash, physical gold, or shares in the company. Blackmont Capital Inc. (the "Agent") will act on a commercially reasonable efforts basis as the lead agent.

A minimum of 15,000 Units up to a maximum of 30,000 Units will be offered as a private placement at a price of $1,000 per Unit. Each Unit is comprised of a convertible secured gold linked debenture with a face value of $1,000 and 400 detachable warrants. Each warrant is exercisable for one common share at any time prior to the January 1, 2013 (the "Maturity Date") at an exercise price of $0.75 per share if exercised prior to January 1, 2012, or $1.00 per share if exercised from January 1, 2012 to January 1, 2013. Interest at 7% per annum will be payable semi-annually in arrears, with the first payment due on June 30, 2010. Subject to completion of filing requirements it is anticipated that the debentures will be listed on the TSX Venture Exchange.

The debentures shall be due on January 1, 2013 (unless accelerated) and are repayable or convertible at the debenture holder's option, as follows: in cash at the face value; or convertible into 1.1 troy ounce of gold; or convertible into the Canadian dollar equivalent of 1.1 troy ounces of gold based on the closing price of gold on December 31, 2012; or convertible into 1,333 freely traded common shares of the company if the debenture holder exercises the option prior to January 1, 2012, or otherwise into 1,000 freely traded common shares at the Maturity Date.

At any time that is one year after the closing date, provided the company has escrowed 33,000 ounces of gold and the price of gold has traded at a minimum of US$1,250 per ounce for five consecutive business days, the company may, at its option, accelerate the maturity date of the debentures on giving not more than 60 days nor less than 30 days' prior notice to the debenture holders.

An estimated $26 million of the net proceeds of the offering (assuming the maximum amount) will be used for the pre-production capital to develop the La Ronge Gold Project, as described in the company's Pre-Feasibility Study (see news release of January 26, 2009), with the balance for working capital purposes. This financing structure will allow Golden Band to secure project capital requirements by committing just a small percentage of the gold that will be mined in the first three years of production from the La Ronge Gold Project. This gold-based financing will also eliminate the significant dilution of the company's shares. The Pre-Feasibility Study also found that with gold priced at US$825 for years one and two and US$775 in years three and four, the project would have a 2-year payback. The Company's objective is annual production of at least 75,000 ounces of gold over a ten-year project life.

The company will be obligated to escrow a minimum of 20% of its annual gold production to meet its obligation to deliver troy ounces of gold upon conversion. The debentures will be direct obligations of the company and will rank as a senior obligation secured by the assets of the La Ronge Gold Project and subordinated only to foreign exchange and gold hedging facilities which will be limited to a maximum of 40,000 ounces in the first year of production and 20,000 ounces in years two and three. The company will be restricted from incurring additional indebtedness on the La Ronge Gold Project (except for a pre-defined basket) or from mortgaging, pledging, or charging the assets of the La Ronge Gold Project to secure any indebtedness of the company while the debentures remain outstanding. On a change of control (greater than 50%), the company may redeem all the debentures, and the holders may require the company to purchase any or all of the debentures at a price equal to 115% of the original purchase price.

The offering is subject to delivery of standard documentation; receipt of all necessary regulatory and TSX-V approvals; the Agent being satisfied with the results of their due diligence; and, prior to closing, that the company will arrange for a minimum of $25,000,000 in financing including the debenture private placement. The Agent will not release any funds from the debenture private placement until this $25,000,000 minimum amount of financing is in place.

This offer will be available for sale in British Columbia, Alberta, Saskatchewan, Ontario, and such other jurisdictions outside of Canada as may be agreed to by the company. The offering will be made in Canada using these terms and will not be available in the United States except under applicable registration exemptions under the United States Securities Act of 1933.

The Units will be sold in the selling jurisdictions on a private placement basis pursuant to the "accredited investor" exemption under National Instrument 45-106 and certain other available and agreed upon exemptions without the preparation or filing of an offering memorandum or similar disclosure document. The Units will be eligible for RRSPs, RRIFs, RESPs, DPSPs, and TFSAs.

Blackmont Capital Inc., as lead agent, may invite additional registrants, as mutually agreed upon with the company, to participate in the offering. Blackmont will receive a corporate finance fee, expenses, and a cash commission of 6% of the gross proceeds of the private placement and an option to acquire 80 Warrants (defined above) per Unit sold under the private placement.

About Golden Band

Golden Band Resources, already Saskatchewan's leading gold explorer, is now poised to also become a gold producer. Golden Band is a well-financed, Saskatchewan-based, publicly listed company (GBN: TSXV) whose focus is the long-term, systematic exploration and development of its 100%-owned La Ronge Gold Belt properties. Since 1994, Golden Band has assembled through staking and strategic acquisition a land package of more than 750 km(2), including 12 known gold deposits, five former producing mines, and a licensed gold mill. Golden Band's key value drivers are the methodical and systematic targeting of primary to advanced-stage exploration while progressing along a parallel path to becoming a sustainable gold producer. The Company is aggressively pursuing its near-term goal of commercial production of its Bingo, Komis, and EP deposits with processing at the 100%-owned Jolu mill. The Company's objective, supported by a positive Pre-Feasibility Study completed in January 2009, is the annual production of at least 75,000 ounces of gold over a ten-year project life. Other longer-term objectives include the continuation of its highly successful exploration and acquisition strategy.

    
    On behalf of the Board of Directors of Golden Band Resources Inc.,

    "Rodney G. Orr"
    Rodney G. Orr, P.Geo.,
    President & CEO
    

All of Golden Band's exploration programs and pertinent disclosure of a scientific nature are prepared and/or designed and carried out under the supervision of Frank Hrdy, P.Geo., Golden Band's VP Exploration, who serves as the qualified person (QP) under the definitions of National Instrument 43-101. All of Golden Band's development-related programs and pertinent disclosure of a development nature are prepared and/or designed and carried out under the supervision of Gary Haywood, P.Eng., Golden Band's VP of Operations and COO, who serves as the qualified person (QP) under the definitions of National Instrument 43-101.

Cautionary Statements on Forward-Looking Information: The statements made in this News Release may contain certain forward-looking information. Actual results may differ materially from those currently anticipated in such statements. Certain risk factors may also materially affect the actual results achieved by the Company. Potential and current shareholders are cautioned not to place undue reliance on forward-looking information. The Company disclaims any intent and undertakes no obligation to update publicly or otherwise revise any forward-looking information whether as a result of new information, future events, or other such factors that may affect this information, except as required by law.

    
    Neither 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.
    

Contacts

Golden Band Resources Inc.
Rodney Orr
President & CEO
Phone: (306) 955-0787 x7123
Fax: (306) 955-0788
Email: rodney.orr@goldenbandresources.com

Wani Capital Corp.: Raju Wani
(403) 240-0555
Email: info@goldenbandresources.com
www.goldenbandresources.com