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KLM: TSX-V
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News

Jun 19, 2013

Kermode Secures $2.45 Million Financing for Eastgate Gold Project

Kermode Resources Ltd. is pleased to announce that the Company has secured financing to advance its Eastgate Gold Project. Kermode has entered into an agreement with Demerara Gold Corp. for a total investment of up to $2.45 Million. The financing will consist of (1) a series of staggered financings, set at a significant premium to current market, as follows: $350,000 at $0.05 per share, $1,000,000 at $0.125 per share, and two tranches of $225,000 at $0.30 per share totalling $450,000; and (2) a cash payment of $650,000. This will provide sufficient funding to carry out a $1 Million exploration program at Eastgate, cover property payments due to Blue Ridge Gold LLC pursuant to the Underlying Agreement between Kermode and Blue Ridge (see Kermode's News Release dated May 10, 2012 for details of the Underlying Agreement), and supply working capital for Kermode. The end result will see Demerara become a major shareholder of Kermode and a partner going forward on Eastgate. Further terms of the agreement are described below, and are subject to TSX-V acceptance. Demerara is a non-reporting British Columbia company.

The May 15, 2013 property payment due to Blue Ridge, of $200,000 cash and 500,000 shares has been met, and arrangements for an initial exploration program at Eastgate are now underway.

A finder's fee will be paid to Asia Asset Management as per TSX-V guidelines, for helping to facilitate the transaction.

Kermode-Demerara Terms:

Kermode will grant Demerara the option to acquire up to a 76% interest in the Eastgate Property, exercisable as follows:

In order to acquire an initial 21% interest in the Property, Demerara shall have completed financings in Kermode for a total of $1,800,000, and paid Kermode $650,000 in cash as follows:
  • 7,000,000 shares @ $0.05 per share for gross proceeds of $350,000, on or before 5 days following exchange approval
  • 750,000 shares @ $0.30 per share for gross proceeds of $225,00, on or before April 1, 2014
  • 8,000,000 shares @ $0.125 for gross proceeds of $1,000,00 on or before May 15, 2014
  • 750,000 shares @ $0.30 per share for gross proceeds of $225,000 on or before April 1, 2015
  • cash payment of $650,000 to Kermode on or before May 15, 2015
In order to acquire an additional 30% interest in the Property, thereby increasing its interest to 51%, Demerara must make the following cash payments to Blue Ridge on behalf of Kermode pursuant to the Underlying Agreement:
  • $200,000 on or before April 1, 2016
  • $200,000 on or before April 1, 2017
Thereafter, if pursuant to the Underlying Agreement Blue Ridge elects to grant Kermode the option to increase its interest in the Property from 75% to 100%, then Kermode shall grant Demerara the right to acquire the remaining 25% in the Property through the payment of $200,000 or 200,000 shares of Kermode (at the election of Blue Ridge) for each additional 5% interest, exercisable over 5 years, in accordance with the Underlying Agreement.

Alternatively, if pursuant to the Underlying Agreement Blue Ridge elects not to grant Kermode the option to increase its interest in the Property from 75% to 100%, then Blue Ridge, Kermode and Demerara shall commence a joint venture such that their initial interests shall be 25%, 24% and 51% respectively.

The Opportunity:

Epithermal gold targets, particularly when located in prolific jurisdictions such as Nevada, can yield great rewards. This deal with Demerara will afford Kermode an excellent opportunity to uncover Eastgate's remarkable potential.

Further information is available at www.kermode.com

ON BEHALF OF THE BOARD

"Adrian O'Brien"

ADRIAN O'BRIEN

PRESIDENT and DIRECTOR

Forward-Looking Statements: This Kermode Resources Ltd. news release may contain certain "forward-looking" statements and information relating to Kermode which are based on the beliefs of Kermode management, as well as assumptions made by and information currently available to Kermode management. Such statements reflect the current risks, uncertainties and assumptions related to certain factors including, without limitations, exploration and development risks, expenditure and financing requirements, title matters, operating hazards, metal prices, political and economic factors, competitive factors, general economic conditions, relationships with vendors and strategic partners, governmental regulation and supervision, seasonality, technological change, industry practices, and one-time events. Should any one or more of these risks or uncertainties materialize or change, or should any underlying assumptions prove incorrect, actual results and forward-looking statements may vary materially from those described herein.