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AM Gold Provides Update on Rokmaster Default

November 13, 2014

AM GOLD INC. (TSX-V: AMG; Frankfurt: AMX) (“AM Gold” or the “Company”) announces that on advice of legal counsel its nominee on the board of directors of Rokmaster Resources Corp. (“Rokmaster”) resigned from Rokmaster on November 12, 2014. Subsequent to AM Gold’s director nominee resigning from Rokmaster, Rokmaster notified AM Gold, and AM Gold’s Peruvian subsidiary, of Rokmaster’s initiation of the process to arbitrate (the “Arbitration”) with respect to AM Gold’s challenge of the validity of Rokmaster’s declaration of force majeure (the “Force Majeure”) along with AM Gold’s subsequent notice of default to Rokmaster (the “Notice of Default”).

The legal defects in Rokmaster’s declaration of Force Majeure along with AM Gold’s subsequent issuance of the Notice of Default are well documented (see AM Gold’s news releases dated September 23, 2014, September 25, 2014 and October 17, 2014). In sum, if Rokmaster believed that the Force Majeure was triggered, it should have declared a force majeure prior to the required option payment due date and if it had done so, AM Gold may have considered the assertion of force majeure in the context of the applicable option payment. In any event, even if a Force Majeure did exist, a failure to make a payment or incur expenditures due to lack of funds does not constitute a Force Majeure under the terms of the Option and Joint Agreement (the “Option and JV Agreement”) dated effective July 16, 2012, as amended, among AM Gold, AM Gold’s Peruvian subsidiary, and Rokmaster.

In AM Gold’s view, the declaration of Force Majeure and the initiation of the Arbitration are flawed tactical threats intended to avoid obligations under the Option and JV Agreement by trying to coerce AM Gold into a business combination pursuant to terms dictated by Rokmaster that are unfavourable to AM Gold. AM Gold will not entertain a business combination on such terms.

With respect to the Arbitration, Rokmaster demanded the proceedings with respect to the Force Majeure and the Notice of Default but to AM Gold’s knowledge Rokmaster has not actually commenced the arbitration by filing the applicable documents and submitting the applicable filing fee with the British Columbia International Commercial Arbitration Centre (the “BCICAC”). The Arbitration procedures are set out in the Option and JV and require:

  • The appointing authority will be the BCICAC;
  • The case will be administered by the British Columbia International Commercial Arbitration Centre in accordance with its “Procedures for Cases under the BCICAC Rules;
  • The place of arbitration will be Vancouver, British Columbia;
  • The number of arbitrators will be three;
  • The language used in the arbitral proceedings will be English;
  • The award of the arbitrator will be final and binding on the parties who will abide by the award; and
  • The arbitrators fees will be paid by both parties in equal parts during the course of the arbitration but upon final decision of the dispute, the defeated party will pay all costs and reimburse all arbitration costs, including the amounts paid by the prevailing party, subject to the contrary decision of the arbitrators.

If Rokmaster actually files the Arbitration with the BCICAC then AM Gold expects to defend the same and to hold Rokmaster accountable for the significant costs of the Arbitration.

Rokmaster had until October 24, 2014, to cure the defaults under the Option and JV Agreement, or to enter into alternative arrangements that are acceptable to AM Gold. To date Rokmaster has not cured the defaults nor has it suggested alternative arrangement that are acceptable to AM Gold. AM Gold is considering which of the rights available to it shall be exercised including but not limited to, terminating the Option and JV Agreement.

AM Gold will issue a further news release when updates on this matter are available.

About AM Gold Inc.

AM Gold Inc. is a publicly held resource company based in Vancouver, Canada. The Company is listed on the TSX Venture Exchange under the symbol “AMG” and is quoted on the Frankfurt Exchange under the symbol “AMX”. The Company is focused on creating shareholder value through the development of the Company’s gold and gold-copper projects in the Yukon and Peru while building a portfolio of quality pipeline projects in North and South America. The Company’s Red Mountain gold property is located in central Yukon Territory approximately 55 kilometres northwest of the community of Mayo in the Tintina Gold Belt. The Company’s Red Mountain gold property consists of approximately 3,600 hectares of contiguous quartz claims. 52 of such quartz claims (1,168 hectares) are held 100% by AM Gold subject to a net smelter returns royalty. AM Gold may reduce the NSR payable on the 52 quartz claims from 2% to 0.5% by agreeing to pay $1,000,000 for the first 1% of the NSR and $750,000 for the second 0.5% of the NSR at any time, at AM Gold's discretion. An additional 131 quartz claims (2,430 hectares) are held 100% by the Company with no NSR. AM Gold’s Pinaya gold-copper project is located approximately 775 kilometres southeast of the city of Lima, Peru in the Tintaya Gold Belt. Subject to the option agreement between the Company and Rokmaster Resources Corp., the Company maintains 100% ownership of 35 mining concessions covering the 19,200 hectare Pinaya land position. AM Gold’s corporate offices are located Suite 605 – 369 Terminal Avenue, Vancouver, British Columbia, V6A 4C4 (phone: 604-646-0067).

ON BEHALF OF AM GOLD INC.

/s/ “John Fiorino”           

John Fiorino
Chief Executive Officer

For further information on AM Gold, please contact Murray Caruth at 1-604-646-0067 or by email at [email protected], or visit AM Gold’s website at: http://amgold.ca.

Cautionary Statement Regarding “Forward-Looking” Information

Some of the statements contained in this press release are forward-looking statements and information within the meaning of applicable securities laws. Forward-looking statements and information can be identified by the use of words such as “expects”, “intends”, “is expected”, “potential”, “suggests” or variations of such words or phrases, or statements that certain actions, events or results “may”, “could”, “should”, “would”, “might” or “will” be taken, occur or be achieved.  Forward-looking statements and information are not historical facts and are subject to a number of risks and uncertainties beyond the Company’s control.  Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this news release. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements, except as may be required by law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
 
     
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