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Luiri Gold Limited: Luiri Gold Receives Major Cash Injection From Lachlan Star

^{Published on 2009-06-08 06:39:55, Last Modified on 2009-06-08 06:41:53 - Market Wire}
 

TORONTO, CANADA--(Marketwire - June 8, 2009) - Luiri Gold Limited (TSX VENTURE:LGL) and Lachlan Star Limited (ASX:LSA) are pleased to announce that they have entered into an Agreement whereby Lachlan Star will invest A$3 million in Luiri Gold through an initial loan of A$300,000 via a convertible note (immediately) and a two phase placement in Luiri Gold, the first taking their holding to 20%, and the second, subject to Luiri Gold shareholder approval to the full outstanding amount of A$2.7million. The placement and convertible note will be at a share price of C$0.12, a premium of 20% to the current trading price of Luiri Gold. On receiving shareholder approval for the second placement, Lachlan Star plans to convert the A$300,000 loan to shares which will result in Lachlin Star holding approximately 30% of the issued shares of Luiri Gold.

"The support that Lachlan Star and its associated investors in Australia bring to Luiri Gold is a major boost to Luiri Gold especially in the current market conditions. Their investment will put us in an excellent position where we can focus on expanding the resource base at our Luiri Hill gold project in Zambia, and rapidly advance our feasibility work," commented Mike Sperinck, President and CEO of Luiri Gold. "Furthermore, the listing on the ASX will increase our investor base and improve the liquidity in our stock".

On completion of the Lachlan Star investment, Luiri Gold will then proceed with a dual listing on the ASX where Lachlan Star will arrange an additional funding of A$2 million by third parties in Luiri Gold on a best endeavors basis.

Investment

The main points of the binding agreement are as follows:

- Lachlan Star will loan Luiri Gold A$300,000 immediately through a convertible note with a conversion price at C$0.12 using a conversion rate of Australian Dollars to Canadian Dollars of 0.8757 which was the closing rate on June 1, 2009.

- Lachlan Star will invest via a A$2.7 million placement in Luiri Gold at a price of C$0.12. The placement will be in two tranches, the first tranche to be completed on acceptance by the TSX Venture Exchange, with the second tranche to be completed following receipt of Luiri Gold shareholder approval. The first tranche will be for that number of shares which results in Lachlan holding 20% of the issued shares of Luiri Gold (approximately 12.4 million shares).

- Luiri Gold will undertake a dual listing on the ASX in as short a time as possible, but in any event within six months, subject to exchange approvals.

- Lachlan Star will, on a best endeavors' basis, arrange additional funding by third parties of A$2 million in Luiri Gold on the listing of that entity on the ASX.

- Lachlan Star will appoint two directors to the Luiri Gold board and one of the current Luiri Gold directors will resign.

- The Luiri board will provide warranties normal to this type of transaction, including but not limited to, no material adverse change, tenements in good standing and no litigation.

- All funds raised will be used for advancing Luiri Gold's projects in Zambia and for general working capital purposes.

Convertible Note

The A$300,000 Note carries interest at two percent (2%) per annum, calculated semi-annually. The principal amount of the Note, together with accrued interest, will become due and payable in six months. Subject to the acceptance of the TSX Venture Exchange, the principal amount of the Note is convertible, at the election of Lachlan, into 2,189,250 common shares in the capital stock of Luiri Gold as constituted at the date hereof of Luiri Gold. Interest on the principal amount of the Note shall be payable to Lachlan in cash.

About Luiri Gold

Luiri Gold is a gold focused company with a strategy of creating shareholder value through expanding into a geographically diversified gold resource company with assets potentially ranging from producing mines and near term production to exploration properties in Africa. The current focus is at Luiri Gold's wholly-owned Zambian subsidiary, Luiri Gold Mines Limited, which holds mineral tenements within southern-central Zambia covering approximately 1,200km2 of highly prospective exploration ground focused on the Dunrobin and Matala gold deposits. The Luiri Hill Project is situated approximately 120km west-northwest of the Zambian capital of Lusaka in Zambia's Central Province. Access to the Project area is by a newly-upgraded paved road from Lusaka.

The current Mineral Resource at the Luiri Hill Project includes 656,000 ounces gold contained in 7.1 million tonnes at 2.9g/t for the Inferred category and 144,000 ounces gold contained in 2.2 million tonnes at 2.1g/t for the Indicated category (reported in Press Release April 15, 2008).

In addition to the substantial gold resources on the properties controlled by Luiri, the properties also host the large, prominently outcropping hematitic Nambala iron deposit. A review by Coffey Mining indicated that on part of the mineralized body there exists the 'mineral potential' of between 100 and 300 million tonnes of iron at grades of 55-60% Fe. Interpretation of the regional geology indicates that the iron contained in this deposit could be several times larger than this figure. However, there are a number of logistical issues relating to the distance from the project to the coast. Note that the potential quantity and grade is conceptual in nature, and there is insufficient exploration to define a mineral resource and therefore it is uncertain if further exploration will result in the target being delineated as a mineral resource.

The Luiri Gold exploration programs and resource calculations are carried out under the supervision of Mr. Michael Sperinck, Member of AUSMIM. Mr. Sperinck is a qualified person (as defined by National Instrument 43-101) with more than 25 years of experience in the mining industry.

About Lachlan Star

Lachlan Star Limited is an emerging minerals exploration and development company headquartered in Perth, Western Australia. The company is focused on acquiring and developing assets within the gold, copper and bulk commodities sectors within Australia and overseas. The company has a board of directors and management team with an impressive track record of advancing resource projects through to production. Lachlan Star's current projects are in Australia and include the Bushranger copper and gold project in New South Wales and the Princhester magnesite deposit in Queensland.

ON BEHALF OF THE BOARD OF DIRECTORS OF LUIRI GOLD LIMITED

Michael Sperinck, President and CEO

Ted Grobicki, Chairman

This press release contains forward-looking information which involves risks and uncertainties. Forward looking information represents management's current views and these may change significantly as new information comes to hand.

THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.