May 05, 2010


Edgewater Exploration Acquires Option on Red Back Mining's Enchi Gold Project, Ghana


Red Back to Purchase 8.0% Equity Interest in Edgewater

VANCOUVER, BRITISH COLUMBIA - Mr. Edward Farrauto, President and CEO of Edgewater Exploration Ltd. ("Edgewater" or the "Company") (TSX VENTURE:EDW) is pleased to announce that the Company has entered into a Option Agreement (the "Agreement") with Red Back Mining Inc. ("Red Back") (TSX:RBI), pursuant to which Edgewater will acquire an option (the "Option") to earn an undivided 51% interest in Red Back's legal and beneficial ownership in the Enchi Gold Project, Ghana, West Africa (the "Project"), representing a 45.9% direct interest in the Project taking into account the 10% project interest held by the Government of Ghana.

Option Terms

To earn 51% of Red Back's ownership in the Enchi Project licences (45.9% direct interest in the Project) Edgewater is required to spend a total of C$5.0 million on work expenditures on the Enchi Gold Project within 26 months of the closing of the transaction ("Closing") with C$2.0 million required to be spent within 14 months of Closing. Once Edgewater has completed a total of C$5.0 million in work expenditures on the Project within 26 months, Edgewater will have earned and vested in a 51% interest in Red Back's ownership of the Project and a joint venture company ("JVCO") will be formed. The initial share ownership in JVCO will be as follows:

Edgewater 45.9%
Red Back 44.1%
Ghana Government 10.0%

Once the JVCO is formed, Red Back and Edgewater will share all future exploration and development expenditures pro-rata. Edgewater will be Operator of the Project during the Option period. Once a joint venture is formed, Edgewater will continue to be the Operator as long as the Company holds the largest equity stake in JVCO.

The Option Agreement is subject to the approval of the Minister of Mines of Ghana and TSX Venture Exchange acceptance.

Bonus Warrants

As additional consideration for the Option, Edgewater will issue to Red Back 2,500,000 common share purchase warrants exercisable at $0.50 per common share and 2,500,000 common share purchase warrants (collectively the "Warrants") exercisable at $1.00 per common share. The Warrants will all be exercisable for five years and will only be exercisable by Red Back if Edgewater is able to delineate at least 3.0 million National Instrument 43-101 compliant ounces of gold in the Measured and Indicated resource categories on the Project.

A Finders Fee of 565,000 common shares will be issued to Featherstone Capital Advisors Inc. ("Featherstone") in connection with the Option agreement with Red Back. The common shares to be issued as the finder's fee will be released to Featherstone as exploration work is completed on the Project. Featherstone is engaged as financial and capital markets advisers to Edgewater.

Financing

In order to finance the initial exploration work on the Project the Company will complete a non-brokered, private placement financing consisting of 6.0 million units at a price of $0.50 per unit for gross proceeds of $3,000,000. Each unit will consist of one common share and one-half of a common share purchase warrant. Each whole warrant will allow the holder to purchase one common share in Edgewater for a period of 12 months from Closing at a price of $0.76 per share. Red Back will participate in the financing with the purchase of 2.0 million units for $1,000,000 which represents an 8.0% equity interest in the Company on an issued an outstanding basis post closing of the private placement. Edgewater will have a Right of First Refusal with-respect-to the sale of any or all Edgewater shares held by Red Back. A cash finder's fee of 5.0% of the gross proceeds will be paid to Cormark Securities Inc. on the financing. The private placement is subject to regulatory approval. The proceeds of the private placement will be used by the Company for expenditures on the Project and for general working capital. Post closing of the private placement financing outlined above Edgewater will have 25.9 million common shares issued and outstanding.

Enchi Gold Project, Ghana

The Enchi Gold Project located in South-west Ghana, West Africa covers a 40 kilometre strike length of the Bibiani Shear Zone ("BMZ") that hosts a number of major gold mines and deposits including Red Back's Chirano Gold Mine located 70 km north-east of the Project and the Bibiani Gold Deposit located 90 km north-east of the Project. Ghana is the second largest gold producer in Africa with 2009 production totalling 2.9 million ozs. The Enchi Gold Project is comprised of eight licenses totalling 568 km2 and is located 290 km west of the capital city Accra. Access to the Project is on sealed roads via the regional port city of Takoradi or the mining centre of Tarkwa and then on gravel roads to Enchi (population 9,270). Access throughout the Project licenses is via earthen roads.

To date, Red Back and previous workers have discovered and identified 16 separate gold mineralized zones on the Enchi Project that have the characteristics of epigenetic mesothermal quartz vein style gold deposits. This style of gold mineralization is the most important type of gold occurrence in West Africa and is commonly referred to as the Ashanti-type.

Boin Gold Zone

On the Enchi Project, the Boin Zone gold mineralization has been traced for over 10 km along strike and is located on a parallel structure to the Bibiani Shear Zone. Gold mineralization is defined by the presence of disseminated pyrite in quartz-carbonate (ankerite) zones that are characterised by massive 20-30 m wide zones of intensive quartz veining cut and fractured by late, graphitic faults. Red Back has completed 26 trenches totalling 3,945 m, 275 RAB drill holes totalling 9,341 m, 112 RC drill holes totalling 13,033 m and 3 diamond drill holes totalling 129 m on the Boin system. The 112 RC drill holes completed by Red Back generated a total of 80 separate drill hole intercepts that assayed greater than 1.0 g/t Au. Selected RC drilling results greater than 1.0 g/t Au from the Boin Zone are summarized in Table 1. All 80 RC drilling gold intercepts greater than 1.0 g/t Au from the Boin Zone will be posted on the Company's website.
Table 1
Boin Gold Zone
Selected RC Drilling Results


Hole      From (m)  To (m)    Intercept (m)  Au (g/t)
-------   -------   -----     ------------   -------
KBRC001        29      49               20      1.57
KBRC005        94      99                5      1.41
KBRC007        84      96               12      1.75
KBRC011       105     126               21      2.56
KBRC023        41      51               10      1.08
KBRC035        12      24               12      1.61
KBRC041        26      38               12      1.39
KBRC062        98     104                6      2.13
KBRC074        24      32                8      2.53
KBRC079        44      48                4      1.55
KBRC081       139     147                8      4.61
KBRC083        41      45                4      2.99
KBRC088         4      11                7      1.06
KBRC100        19      32               13      4.11
KBRC108        34      39                5      2.85
KBRC110        70      73                3      1.51


1. All reported drill intercepts are 'core length' and true widths are estimated at 80% of core length.

Nyamebekyere Gold Zone

The Nyamebekyere gold zone strikes over a distance of 1,600 m and is located 200 to 300 m west of the Nyamebekyere Shear Zone. Nyamebekyere mineralization is part of a continuous 15 km strike length of gold prospects on the Enchi Project from Nyamebekyere southwest through Kojina Hill to Sewum Hill in the south. RC drilling has been conducted to a depth of approximately 80 m along the entire strike length of the zone. RC drilling results greater than 1.0 g/t Au from the Nyamebekyere Gold Zone are summarized in Table 2.
Table 2
Nyamebekyere Gold Zone
RC Drilling Results


Hole      From (m)      To (m)  Intercept (m)   Au (g/t)
------    -------       -----   ------------    -------
KRC021         29          43             14       1.57
KRC024         10          16              6       3.90
KRC027          3          14             11       3.60
KRC032         69          85             16       1.83
KRC033         54          62              8       2.94
KRC043         42          51              9       3.07
KRC061         76          83              7       2.08
KRC064          7          13              6       2.18
KRC064         22          30              8       1.51
KRC065         15          24              9       1.92
KRC065         29          39             10       1.75
KRC075         12          28             16       1.66
KRC087         24          34             10       1.49
KRC095         21          25              4       5.19
KRC096         21          30              9       1.90
KRC097          7          16              9       2.77


1. All reported drill intercepts are 'core length' and true widths are estimated at 80% of core length.

Sewum Village Prospect

The Sewum Village Prospect includes several gold mineralized quartz veins hosted in a sequence of phyllite and volcaniclastic rocks which are exposed in pits, trenches and adits which coincide with a Landsat anomaly. Chip sampling by Red Back revealed gold mineralization from a 200 m long northeast trending series of pits exposing folded quartz veins. No drilling has been conducted on this prospect to date. Trenching results greater than 1.0 g/t Au from the Sewum Village Zone is summarized in Table 3.
Table 3
Sewum Village Prospect
Trench Results


Trench      Intersection (m)   Au (g/t)
--------    ---------------    -------
SWTR029                 9.7       1.40
SWTR034                10.5       1.84
SWTR038                24.2       1.14
SWTR038                 7.0       1.19
SWTR039B                7.0       1.08
SWTR045                11.0       2.35
SWTR035                 3.3       2.00


1. True widths are estimated at 70% of trench length.

Eradi Prospect

During 2004 and 2005 Red Back completed an extensive soil sampling program in the Eradi area in the northern portion of the Enchi Property on 400 m by 50 m spacings and locally 100 m by 50 m sample spacings. Three parallel gold in soil anomalies were defined (Eradi East, Eradi Central and Eradi West), with each gold in soil anomaly measuring up to 3.2 km in strike length and up to 200 m in width. Only two trenches totalling 435.5 m were completed on the Eradi Central soil anomaly where 256 continuous rock samples were collected from the trenches. No trenching was completed on the Eradi West or Eradi East gold in soil anomalies. The Obuasi-Enchi lineament, a major east-west crustal scale feature deflects the Bibiani Shear Zone at the north end of the Enchi concessions in the vicinity of the Eradi Prospect. This lineament is associated with the major (40 million oz) Ashanti and (3 million oz) Akyem gold deposits in the Ashanti Belt 100 to 200 km east of the Enchi Project. No drilling has been completed at the Eradi Prospect. Table 4 summarizes the significant trench results from the two completed trenches in the Eradi Central anomaly.
Table 4
Eradi Prospect
Central Gold Soil Anomaly Trench Results


Trench     Intersection (m)   Au (g/t)
------     ---------------    -------
ERT001                 5.0       0.63
ERT002                36.9       1.47

1. True widths are estimated at 70% of trench length.

Wardrop Engineering Inc. ("Wardrop") has completed a National Instrument 43-101 technical report for Edgewater entitled: "Technical Report on the Enchi Gold Project, Ghana" dated May 5, 2010. Wardrop has recommended the following exploration programs on the Enchi Gold Project:

Boin and Nyamebekyere Resource Delineation

Extensive RC drilling has been conducted at both the Boin (13,033 m in 112 holes) and Nyamebekyere (4,658 m in 71 drill holes) prospects in the past. In order to upgrade the Boin and Nyamebekyere gold zones to allow for the generation of a NI 43-101 compliant resource statement, a delineation diamond drilling and RC program is proposed. At present, gold mineralization of greater than 1.0 g/t Au is open along strike and down dip of the current drilling at both the Boin and Nyamebekyere prospects. The RC drilling programs are designed to extend the potential resource of both zones along strike while the diamond drill programs are used to validate the existing RC drilling results and to provide geological and structural data. The proposed program includes a total of 6,850 m of RC drilling in 55 drill holes and 5,400 m of diamond drilling in 30 holes on the two zones. The proposed budget for the drilling program is US$1.74 million.

Enchi Regional Exploration and Target Generation

Wardrop has recommended a program of soil sampling and geological mapping on the Enchi Project that has a budget of US$0.26 million.

Malpica-Tuy Gold Project, Spain

Edgewater has also been assigned all of the rights and obligations under a previously executed Letter of Intent ("LOI") dated March 1, 2010 with Lundin Mining Corporation ("Lundin", TSX:LUN, OMX:LUMI) pursuant to which Edgewater has the right to purchase all of the outstanding shares of Rio Narcea Gold Mines S.L ("Rio Narcea") a wholly-owned subsidiary of Lundin. Rio Narcea owns a 100% interest in the Malpica-Tuy Gold Project including the Corcoesto Gold Deposit in north-west Spain as well as an additional 7 gold and gold-copper projects totalling 50,013 ha in south-west Spain. The all-cash purchase terms are as follows:
On Closing:                        US$1,000,000
Six (6) Months from Closing:       US$4,000,000
Twelve (12) Months from Closing:   US$3,000,000
Total:                             US$8,000,000

Lundin will retain a 1.5% Net Smelter Return ("NSR") Royalty upon the commencement of commercial production from the Corcoesto Gold Property subject to Edgewater having the right to re-purchase 1.0% of the royalty at any time after Closing for US$1,500,000.

The Corcoesto Gold Property (the "Property") is a late-stage exploration gold project located near tidewater in northwest Spain approximately 36 km west-southwest of the port city of La Coruna in the Galician Autonomous Community. The project has excellent infrastructure including paved road access and power is available from a 22 Kv power-line that crosses the property. The Corcoesto property consists of three Exploitation Concessions totalling 774 ha. Rio Narcea acquired the property in 1996 and completed an extensive program of soil sampling, trenching, diamond drilling and resource delineation.

Gold mineralization at the Corcoesto deposit consists of sheeted quartz veins, quartz breccias and silicification that is related to extensional zones within the north-east trending Malpica-Noia Shear Zone. The quartz veins and breccias are hosted in potassically altered orthogneiss, biotitic gneiss and schists.

The Corcoesto gold deposit is composed of seven major vein systems all of which trend in a north-easterly direction. From 2005 to 2008 Kinbauri Gold Corp. ("Kinbauri") obtained an option on the Property from Rio Narcea and completed a NI 43-101 technical report entitled, "Technical Report for the Coroesoto Gold Deposit, Galcia, Spain" (the "Report") dated August 22nd, 2006 by Alan Noble, P.E. of Ore Reserves Engineering. This Report calculates the mineral resources for the three Southern Vein Systems at the Corcoesto deposit that may be amenable to open pit mine development. The Report estimates a Measured and Indicated resource at a 0.65 g/t Au cutoff of 7,057,000 tonnes grading 1.43 g/t Au and containing 323,300 ozs of gold. Table 5 summarizes the Southern Vein Systems Mineral Resources from the Report.
Table 5
Corceosto Gold Deposit
Southern Vein Systems - Mineral Resource Summary


Resource Class          Cutoff   Tonnes  g/t Au  Contained Gold
--------------          ------   ------  ------  --------------
                       (g/t Au)  (x1000)              (x1000 oz)


Measured                  0.65    3,648    1.46           171.0
Indicated                 0.65    3,409    1.39           152.3
Measured + Indicated      0.65    7,057    1.43           323.3
Inferred                  0.65      851    1.40            38.4


1. CIM definition standards were followed for the resource estimate
2. The 2006 resource estimate was based on a 2003 resource model
   which used an inverse-distance-power estimation within a
   three-dimensional block model with mineralized zones defined by
   wirefreamed solids.
3. A total of 443 drill holes and trenches were used in the resource
   estimate totalling 43,018 m with sample spacings that were less
   than 25 m for Measured resource and less than 55 metres for
   Indicated resources.
4. Mineralized zones were modelled with dilution and, on average,
   gold grades have decreased by 20% and the width of the zones has
   increased by 29%.
5. Mineral Resources that are not mineral reserves do not have
   economic viability.

From 2005 through 2007 Kinbauri completed a total of 57 diamond drill holes on the Corcoesto deposit with the following focus: infill and step-out drilling on the three Southern Vein Systems, drilling of the four Northern Vein Systems and drilling to determine the potential for developing higher-grade underground resources. Sparse deep drilling on the Southern Vein Systems indicates the potential for establishing underground resources at depth on the Property with the 2006 Report identifying a deep Inferred resource in two of the Southern Vein Systems of 27,400 ounces gold (0.128 Mt grading 6.65 g/t Au) at a 5.0 g/t Au cutoff.

Ore Reserves Engineering has been contracted by Edgewater to complete a revised NI 43-101 resource estimate for the Corcoesto Gold Deposit that will include all of the 2005-2007 Kinbauri drill data including the data from the four Northern Vein Systems. Additional delineation drilling will be required in order to define the ultimate resource potential on the Property and the deep gold resource potential remains largely untested.

Edgewater is currently completing due diligence on the Malpica-Tuy Gold Project as well as drafting a definitive Purchase and Sale Agreement. At this time there can be no assurance that Edgewater will successfully close the acquisition of the Rio Narcea subsidiary from Lundin on the terms in the LOI or at all. Should Edgewater execute definitive agreements on the purchase of Rio Narcea, the purchase will be subject to Regulatory Approval.

Director Appointment

The Company is pleased to announce the appointment of Mr. George Salamis as a director of the Company. Mr. Salamis has over 20 years experience in mineral exploration, mine development and mine operations and is currently President of Rusoro Mining Limited, a TSX Venture-listed junior gold producer. Mr. Salamis has previously held senior management positions with a number of mining companies including Placer Dome Inc. and Cameco Corporation. Mr. Salamis has been granted 1,300,000 stock options exercisable at $0.61 per common share for a period of five years. The stock options are subject to regulatory and shareholder approval.

The technical content in this news release pertaining to the Enchi Gold Project was read and approved by Todd McCracken, P.Geo. of Wardrop Engineering Inc., a professional geologist registered in the province of Ontario and is a Qualified Person ("QP") as defined by National Instrument 43-101.

The technical content in this news release pertaining to the Malpica-Tuy Gold Project and the Corcoesto Gold Deposit was read and approved by Alan Noble, P.E. of Ore Reserves Engineering Inc., a professional mining engineer registered in the State of Colorado, USA and is a Qualified Person ("QP") as defined by National Instrument 43-101.

On behalf of the board of EDGEWATER EXPLORATION LTD.

Edward Farrauto, CGA, President and CEO

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

For more information, please contact
Edgewater Exploration Ltd.
Ryan King
Vice President
(778) 998-3700
rking@edgewaterexploration.ca
 
 

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