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La Ronge Signs Definitive Agreement to Acquire a Producing Frac Sand Asset in Western Canada Sedimentary Basin

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/05/14 -- La Ronge Gold Corp. ("La Ronge" or the "Company") (TSX VENTURE: LAR) is pleased to announce that it has signed a definitive agreement to acquire the assets and business of Canfrac Sands Ltd., a private company producing and selling frac sand in the Western Canada Sedimentary Basin. Frac sands are a proppant used in hydraulic fracturing (fracking/fracing) of oil- and gas-hosting rock to keep fractures open (or "propped") after hydraulic pressure has broken the host rock to release the oil and gas. Canfrac, whose operations are located near Lloydminster, Saskatchewan, currently supplies frac sand to a number of nearby oil-field services companies.

The acquisition is at arm's length and is expected to constitute a fundamental acquisition. The agreement contemplates a cash purchase price of $4,500,000, subject to standard industry adjustments, plus re-imbursement of up to $1,000,000 in certain pre-approved capital expenditures made by Canfrac prior to the closing to improve the purchased assets for the benefit of La Ronge. Pursuant to the Agreement, La Ronge will deliver a $1,000,000 deposit into trust with Canfrac's lawyers. If La Ronge terminates the transaction, the deposit will be treated as a break fee payable to Canfrac in exchange for equity in the amount of 22% of Canfrac's issued common shares and a nominee to Canfrac's Board of Directors. If Canfrac terminates the transaction, the deposit will be returned to La Ronge. In the event that the acquisition is completed, the deposit will be applied to reimburse Canfrac in the amount of any pre-approved capital expenditures referred to above, with any excess returned to La Ronge. Completion of the transaction, expected on or before June 19, 2014, remains subject to a number of conditions, including the completion of financing and the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange.

Pursuant to the acquisition, La Ronge will conduct a brokered private placement in two tranches to raise gross proceeds of up to $7,000,000, with an overallotment option for gross proceeds of up to an additional $1,000,000. The first tranche will consist of 4,000,000 common shares at a price of $0.25 per common share to raise gross proceeds of $1,000,000, which will be used to fund the $1,000,000 deposit payable under the acquisition.

The second tranche will consist of up to 24,000,000 subscription receipts at a price of $0.25 per subscription receipt to raise gross proceeds of up to $6,000,000, with an overallotment option for an additional 4,000,000 subscription receipts for gross proceeds of up to an additional $1,000,000. Each subscription receipt will, concurrently with the completion of the acquisition, automatically convert into a common share of La Ronge. The gross proceeds of the subscription receipts will be placed into escrow, for release to La Ronge upon the satisfaction of such condition and resulting conversion of subscription receipts into common shares. The proceeds from the subscription receipts will be used by La Ronge to pay the $4,500,000 acquisition price, to fund further capital expenditures, and for general working capital.

Canaccord Genuity Corp. has agreed to act as lead agent for the private placement on a commercially reasonable efforts basis. The securities issued will be subject to a 4-month hold period from the date of issue of the subscription receipts. The completion of the private placement and payment of any commission and fees remain subject to the receipt of all necessary approvals, including the approval of the Exchange.

About Canfrac

The Canfrac operation is located approximately 30 km to the northeast of the town of Lloydminster, Saskatchewan, and 4.8 km east and 3 km north of Hillmond, SK, in the rural municipality of Britannia Number 502. The area is highly developed by both the agriculture and oil industries.

Canfrac currently holds a total of eight quarrying leases with local freehold landowners, covering an aggregate of 1,440 acres, granting exclusive rights to explore for and extract frac sands or sand and gravel deposits on the leased lands. The current quarrying operations are restricted to one lease known as the "Thompson lease," although Canfrac's leased properties extend up to 20 km to the north and east. The property is located on a well-maintained gravel road and is mostly accessible via paved roads. Power to the site is currently sourced from the SaskPower electrical grid, and natural gas is provided to site by the SaskEnergy distribution pipeline. Water for processing operations is sourced from an adjacent slough located and supplemented by a water well on site.

The deposit is described as a glacial till consisting of poorly sorted silts, very fine to very coarse grain sands, gravels, clay and silt.

Various types of proppants can be used in hydraulic fracturing, depending on site-specific conditions. Current products range from raw natural sand and coated sand to man-made ceramic products. The criteria for assessing the suitability of natural sand for use in hydraulic fracturing operations is set out in the American Petroleum Institute's Recommended Practice 19C and ISO13503-2:2006. Both standards provide recommended specifications that consider particle distribution, roundness and sphericity, turbidity, acid solubility, and crush resistance when assessing a sands potential for use as a proppant.

Exploration for frac sand began on the property in 2005 by Green Tree Engineering, a geological consulting company contracted by Canfrac. The focus of the program at that time was on identifying sources of -20/+40 mesh sand and resulted in Canfrac signing two lease agreements. A drill program was carried out on one of the leases, the Thompson lease, between June 23 and June 25, 2005. The purpose of the program was to determine the lateral continuity between the sand observed in trench. In total, 8 bore holes were drilled and spaced between 60 to 100 metres.

Based on favourable results from the 2005 program, Canfrac constructed a quarry operation on the Thompson lease. The quarry began producing a 20/40 mesh frac sand product in 2006. To date, Canfrac estimates that approximately 458,000 tonnes (of gross wet product) has been produced. The processing plant is now capable of producing over 100,000 tonnes/year of a wet gross product comprised of 16/30, 20/40, 30/50 and 40/70 mesh products, with sales to both large and small oil-field services companies in the Viking Oil Field in Alberta and Saskatchewan. Audited financial information for Canfrac's financial year ended December 31, 2013, indicates gross sales of $3.28 million on the sale of 32,990 tonnes of frac sand.

Canfrac has developed a two-staged approach to mining and processing the deposit. Stage one includes the mining and wet processing of the raw material to take place from late spring to early fall. Once the material has undergone wet processing, it is stockpiled according to size fraction. The second stage involves dry processing, final size refinement, and shipping to take place in the winter months using the wet stockpiles collected over the summer months. The limits of the sand deposit currently being exploited on the Thompson lease have not been fully defined from previous exploration programs. Potential exists for the deposit to extend to the northwest and to the south under the area of the existing processing plant. In addition, only limited prospecting and sampling work has been done on the other quarrying leases in the region.

Readers are cautioned that, although the Thomson lease is in production, there is no established mineral resource or mineral reserve for the property, or feasibility study demonstrating economic and technical viability.

Frac Sand Market

The Freedonia Group Inc. (Freedonia) completed a detailed market study in 2013 on proppant demand across Canada. Freedonia is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. Their industry analysis provides an unbiased outlook and a reliable assessment of an industry.

Freedonia indicates that the North American Proppant (frac sand) demand has risen sharply since 2002, rising from $250 million to nearly $5 billion in total sales in 2012. This is attributed largely to the fact that proppants (frac sand) have been critical to development of unconventional resources such as shale oil and gas in North America, which has set off a chain of events that is revitalizing the region's chemical processing and other industries. Although proppants have been used in oil and gas production for more than 60 years, the advent of horizontal drilling technology coupled with multistage hydraulic fracturing created new opportunities for growth starting around the mid-2000s. Freedonia expects that overall demand for proppants will reach over 100 billion lbs (45 million tonnes (mmt)) in 2017, with an estimated value of $9.4 billion (USD), at a selling price of $0.09/lb. The majority of proppant demand for North America is concentrated in the United States of America, with demand in 2017 estimated to be approximately 90 billion pounds (40.9 mmt). Freedonia estimates that proppant demand for Canada in 2017 will be about 12 billion pounds (5.44 mmt).

About La Ronge Gold Corp.

La Ronge is actively engaged in diversifying its mining assets portfolio into sectors other than precious metals. The intent of this strategy is to identify and acquire strategic investments that have the capability to generate cash flow with low capital expenditure costs. This mining asset diversification strategy is limited geographically to Canada at the present time. La Ronge is a Vancouver-based resource growth and development company. The Company owns high-grade gold deposits in one of Canada's emerging gold producing regions, the La Ronge Gold Belt, northern Saskatchewan. La Ronge also holds other gold projects located in Ontario and Saskatchewan.

For more information about La Ronge Gold Corp., please go to www.larongegold.com.

Cameron Bartsch, M.Sc., P.Geo., of Tetra Tech EBA, a Qualified Person as defined by National Instrument 43-101, has reviewed the scientific and technical information disclosed in this News Release and has approved its dissemination.

Neither 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.


This News Release includes forward-looking information and statements, which may include, but are not limited to, information and statements regarding or inferring the future business, operations, financial performance, prospects, and other plans, intentions, expectations, estimates, and beliefs of the Company. Information and statements which are not purely historical fact are forward-looking statements. Forward-looking information and statements involve and are subject to assumptions and known and unknown risks, uncertainties, and other factors which may cause actual events, results, performance, or achievements of the Company to be materially different from future events, results, performance, and achievements expressed or implied by forward-looking information and statements herein. Although the Company believes that any forward-looking information and statements herein are reasonable, in light of the use of assumptions and the significant risks and uncertainties inherent in such information and statements, there can be no assurance that any such forward-looking information and statements will prove to be accurate, and accordingly readers are advised to rely on their own evaluation of such risks and uncertainties and should not place undue reliance upon such forward-looking information and statements. Any forward-looking information and statements herein are made as of the date hereof, and except as required by applicable laws, the Company assumes no obligation and disclaims any intention to update or revise any forward-looking information and statements herein or to update the reasons that actual events or results could or do differ from those projected in any forward-looking information and statements herein, whether as a result of new information, future events or results, or otherwise, except as required by applicable laws.

La Ronge Gold Corp.
Rasool Mohammad, B.Sc. (Mining)
President & CEO
604 639-4533
604 685-3765 (FAX)

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