TORONTO, ONTARIO--(Marketwire - Jan. 20, 2011) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
African Gold Group, Inc. (TSX VENTURE:AGG) ("AGG" or the "Company") announces that it has loaned two directors of the Company an aggregate of $295,000 in order to enable them to exercise 1,966,667 share purchase warrants of the Company (the "Warrants") at $0.15 per share prior to their expiry on January 23, 2011 and January 29, 2011.
Pursuant to the Company's recently completed $12M financing that closed on December 17, 2010, the directors provided lock-up undertakings in favour of TD Securities Inc. and GMP Securities L.P. (collectively, the "Underwriters") that they will not, without the prior written consent of the Underwriters, sell any securities owned by them in the Company until after April 17, 2011. As a result of having to provide the lock-up undertakings the directors' ability to generate liquidity for the exercise of the Warrants has been restricted and as such the Company has agreed to loan the directors the funds required to exercise the Warrants. The Corporation expects $250,000 advanced by the Corporation will be substantially repaid by one of the directors within the next two weeks upon securing a loan with a Canadian chartered bank.
The loans are repayable no later than May 17, 2011, bear interest at the rate of 5.0% per annum and are secured against the shares (the "Shares") received pursuant to the exercise of the Warrants. The loans also provide that any proceeds from the sale of the Shares will first be applied to repayment of the loans.
The loans were considered and approved by the Board of Directors of the Company with the two directors receiving the loans abstaining. There was no materially contrary view or abstention by any director approving the loan. The related party transactions are exempt from the formal valuation requirement and shareholder approval requirement of Multilateral Instrument 61-101 Takeover Bids and Special Transactions ("MI-61-101") because the fair market value of the loans and the fair market value of the Shares does not exceed 25% of the Company's market capitalization. The filing of a material change report under MI 61-101 less than 21 days before the loans to the directors was necessary in order to complete the exercise of the Warrants prior to their expiry.
About African Gold Group, Inc.
African Gold Group, Inc., based in Toronto, Canada, is engaged in the identification, acquisition and exploration of prospective gold projects that are situated along significant gold trends within West Africa. To date, the Company controls a total of eleven gold concessions that are consolidated in five distinct standalone exploration projects, of which three projects are located in Ghana and the remaining two are located in Mali, West Africa.Neither the 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.