Premier Gold Mines (PG.TSX) announced that it has entered into a purchase agreement with Aberdeen International Inc. pursuant to which its wholly-owned subsidiary, Premier Royalty Corporation will purchase from Aberdeen a 1% net smelter return royalty on gold produced from Village Main Reef Limited’s Buffelsfontein Mine and First Uranium Corporation’s Mine Waste Solutions tailings recovery project in the Republic of South Africa.  Premier Gold Mines noted that the acquisition is expected to close on or about May 31, 2012 and is subject to closing conditions typical for a transaction of this nature, including the receipt of all necessary regulatory and third-party approvals.

Highlights:

*Under the terms of the transaction, Premier Royalty has agreed to purchase the Royalty in consideration for an aggregate purchase price of $20.9 million, which shall consist of a cash payment of $11.5 million and the issuance by Premier Royalty of a convertible debenture payable to Aberdeen in the amount of $9.4 million

* The unpaid amounts owing under the Convertible Debenture shall accrue interest at a rate of 8% per annum and upon Premier Royalty completing a public offering, or any other comparable going public transaction, the Convertible Debenture shall automatically convert into that number of common shares of Premier Royalty equal to the principal amount and accrued interest divided by the amount equal to the offering price or deemed price in connection with the Going Public Transaction less a 10% discount

* Further, in the event Premier Royalty completes a Going Public Transaction, Premier Royalty shall issue to Aberdeen that number of warrants of Premier Royalty equal to 0.5 multiplied by the number of common shares of Premier Royalty issued under the Convertible Debenture

* Each Warrant shall entitle Aberdeen to acquire one common share of Premier Royalty at a price which represents a 25% premium to the price per Premier Royalty common share issued in connection with a Going Public Transaction for a period of two years from the closing date of the Going Public Transaction

Abraham Drost, Chairman of Premier Royalty Corporation:

“We recognize that royalty companies have outperformed bullion and other mining sector companies for some time. The acquisition of two high quality, cash-flowing, royalty assets, Premier’s existing royalty portfolio, and the potential acquisition of additional cash flowing assets is consistent with Premier’s objective to establish a new public royalty company with the potential to add considerable value for its shareholders. The Aberdeen gold royalties at Buffelsfontein and Mine Waste Solutions generated more than $2.4 million in free cash flow in 2011 and are large, long life operations in the hands of capable operators. We are very pleased that subject to closing of the acquisition and a future going public transaction, Aberdeen International Inc. will become a significant shareholder of the company.”

Paul Huet, Chief Operating Officer of Premier Gold Mines:

“This is a very exciting time to be involved in gold, and more importantly, with Premier Gold Mines…Premier’s management team has an outstanding track record of delivering growth and value to shareholders.”