Rio Grande Enters into Letter of Intent with Snowcap Energy and Segwun Energy to Fund West African Oil and Gas Initiative
Vancouver, BC, August 21, 2012: Rio Grande Mining Corp. (RGV - TSX-V) (the “Company”) announces that it entered into a binding Letter of Intent (“LOI”) with Snowcap Energy Inc. (“Snowcap”) of Calgary, Alberta and Segwun Energy Inc. (“Segwun”) of Toronto, Ontario under which the Company has agreed to advance certain funds to Snowcap in exchange for an option (the “Option”) to acquire a 100% interest, directly or indirectly, in certain resource projects that Snowcap and Segwun (together the “JV Partners”) are in the process of acquiring in West Africa. The JV Partners have potential acquisition projects in Equatorial Guinea, including the possible acquisition of a working interest in certain offshore oil and gas blocks for exploration, and are also investigating other acquisition targets in West Africa.
The Company has agreed to advance Snowcap in aggregate the sum of $200,000 as a secured refundable loan on or before September 30, 2012, of which $100,000 has been advanced as of the execution of the LOI.
Provided the JV Partners are successful in negotiating the acquisition of the target assets in Equatorial Guinea, they intend to incorporate an operating subsidiary owned as to a 50% interest by each of the JV Partners, and, subject to formal due diligence and the entry into of a definitive agreement between the Company and the JV Partners, the Company has been granted the Option to acquire a 100% interest in the operating subsidiary by:
• Issuing up to 20 million common shares in aggregate to the JV Partners upon acceptance of the definitive agreement by the TSX Venture Exchange;
• Reimbursing the JV Partners for their costs and expenses incurred to the date of the definitive agreement;
• Paying any signing bonuses and other fees payable as part of the award of the target projects to the operating subsidiary.
The JV Partners have agreed to provide the Company with all required documentation to seek TSX Venture Exchange acceptance to the transaction, including a National Instrument 51-101 technical report on the target assets. There is no assurance that the JV Partners will ultimately be successful in acquiring the target assets.
Mr. John Bevilacqua, President and Chief Executive Officer of the Company stated: “We are pleased to enter into this LOI with Snowcap and Segwun. This is part of the Company’s strategy to diversify into different resource opportunities, with minimal initial capital outlay. This strategy includes the recently approved option of the Golden Shrew property in British Columbia. We have decided not to continue pursuing the acquisition of Tru-Vision Corp. as the capital required for that transaction is not readily available in the current market situation. The advances made to Tru Vision Corp. will be written down. Furthermore we have decided to drop the Sedex claims located in the Ominica mining division, British Columbia and have terminated the option with Megastar Development Corp. in respect of same.
The management teams of Snowcap and Segwun are very experienced and have an excellent track record in Africa. Snowcap’s founder and CEO, Calgary-based David R. Robinson, has been active in the international upstream oil and gas sector for over 23 years, including extensive experience in Tunisia, Sudan, Egypt, Oman, Turkmenistan, Kazakhstan, and Colombia. Mr. Robinson holds a BSc in Geology from the University of British Columbia, and an MBA from Queen’s University.
Tony Lucas is Snowcap’s Exploration Manager. Mr. Lucas has over 34 years’ of continuous oil and gas experience with a focus on West Africa. He has worked with companies such as Shell Algeria, Tullow, Amoco, and Maersk, which has included working on a number of African projects in Nigeria, Ghana, Cote d’Ivoire, Cameroon and Angola. Mr. Lucas received a BSc in Geology from Manchester (1977), and also an MBA in Project Management (1994), and remains actively involved in a number of associations including the Nigerian Association of Petroleum Engineers.
Key people at Segwun include the company’s founder and Chairman, William Deluce, who has over 45 years’ of experience in the aviation, resource and consulting industry, 20 years of which have been focused on Africa. Currently, Mr. Deluce is CEO of GMC Mining, which operates in the Democratic Republic of Congo. He is the former CEO and founder of South African Express (sold to South African Airways), Global Airlift (Kenya), and Air Service Gabon.
Segwun’s Chief Geologist is Houston-based Arnold Milton, who brings over 47 years’ of experience in the oil and gas industry, specializing in international exploration and development. Previously, Mr. Milton has held a range of positions for companies including Texaco, Caltex, Tenneco, British Gas, and Unocal. Mr. Milton’s experience includes projects in the US, Libya, China, Azerbaijan, Turkey, Oman, Eritrea, Egypt, Iraq, Iran and Malaysia.
Commented David R. Robinson, the CEO of Snowcap Energy, “Through the considerable work done over the past few years, our teams at Snowcap and Segwun have established strong networks in West Africa, and we are confident of being in a position to acquire certain targeted assets shortly. We look forward to working with the Company to successfully acquire and develop key upstream oil and assets in West Africa, both onshore and offshore.”
On behalf of the Board of Directors,
President & CEO
Rio Grande Mining Corp.
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.