ECR Minerals Regulatory News (ECR)

8 Jul 2010 15:14

MERCATOR GOLD plc

("Mercator Gold", "Mercator" or "the Company")

AIM: MCR

US OTC: MTGDY

Update on THEMAC Resources Group

London 8 July 2010

Mercator Gold plc is pleased to announce an update on the Sale ("the Sale") of its exclusive option to acquire a 100% interest in the Copper Flat copper-molybdenum-gold-silver project ("Copper Flat") to THEMAC Resources Group Limited ("THEMAC").

Highlights

- THEMAC shares are to recommence trading on the TSX Venture Exchange (ticker MAC.H) today

- THEMAC requested the suspension of its shares on 15 March 2010 in connection with the announcement of the heads of agreement with Mercator regarding the Sale

- Closing of the Sale is conditional, inter alia, on the completion by THEMAC of a minimum C$5 million equity financing ("the Financing"); regulatory and shareholder approval (Marley Holdings Pty Limited, holder of approximately 70% of THEMAC's outstanding shares, has approved the Sale); and completion of a preliminary economic assessment ("PEA") compliant with Canadian National Instrument 43-101

- THEMAC will seek to raise up to a maximum of C$20 million in the Financing, and will place securities at no less than C$0.50 per security in accordance with the terms of the definitive agreement for the Sale

- The Financing is intended to provide funds for the exercise of THEMAC's option over Copper Flat following the closing of the Sale, along with advancement of the project through pre-feasibility and working capital

- After closing of the Sale, Mercator expects to hold the equivalent of approximately a 50% interest in the THEMAC's issued shares before taking account of the Financing

- Results of the PEA being completed by SRK Consulting (US), Inc. are expected to be released shortly

- A comprehensive announcement made by THEMAC on 6 July 2010 may be viewed on SEDAR (www.sedar.com)

About the Sale

Copper Flat is a former producing mine with substantial infrastructure still in place. Following the closing of the Sale it is the intention of THEMAC to exercise its option over Copper Flat and to return the project to production, subject to the necessary feasibility, financing and permitting steps.

As a result of the Sale Mercator will acquire a substantial interest in THEMAC and will therefore retain a substantial interest in Copper Flat's future development.

In consideration for the Sale, THEMAC will issue to Mercator 10.5 million common shares and 10.5 million common share purchase warrants. Each warrant will entitle the holder to acquire an additional common share for a period of five years after closing of the Sale at a price of C$0.28 per share.

As announced on May 10 2010, Mercator has additionally acquired four million subscription receipts of THEMAC, which will convert to four million common shares and four million common share purchase warrants. Each warrant issued in connection with the subscription receipts will entitle the holder to acquire an additional common share until 4 May 2011 at a price of C$0.28 per share.

Therefore, after the closing of the Sale, Mercator's total shareholding in THEMAC will be 14.5 million shares, equivalent to approximately 50% of THEMAC's issued shares before taking account of the Financing. Mercator will also hold a total of 14.5 million common share purchase warrants of THEMAC.

About Mercator

Mercator is a diversified mineral development company creating value for its shareholders through a process of finding value, adding value and realising value.

Mercator has an experienced management team with expertise in the structuring and execution of value accretive transactions.

For further information please contact:

This announcement may contain "forward-looking statements", which are subject to various risks and uncertainties that could cause actual results and future events to differ materially from those expressed or implied by such statements. Investors are cautioned that such statements are not guarantees of future performance and results. Risks and uncertainties about the Company's business are more fully discussed in the Company's disclosure documents filed from time to time with the relevant UK authorities.

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