Brazilian Gold Signs Letter of Intent on the Ouro Mil Gold Project

VANCOUVER, June 21 /CNW/ - Brazilian Gold Corporation ("Brazilian Gold" or "Company") is pleased to announce they have signed a Letter of Intent ("LOI") with Dourave Exploration and Mining Inc. ("Dourave") whereby Brazilian Gold has the option to earn up to a 70% interest in the Ouro Mil Gold Project ("Ouro Mil" or "Project") by making staged cash payments and project expenditures over a four year period. The cash payments to Dourave in the first year of the option agreement are US$150,000 on signing and US$100,000 on the first anniversary, and US$500,000 in project expenditures. The transaction is subject to satisfactory due diligence by the Company, execution of a Definitive Agreement, Toronto Venture Stock Exchange and any other regulatory approvals. Ouro Mil is located within the Tapajos Mineral Province (TMP) of northern Brazil where Brazilian Gold is exploring a number of grassroots to advance stage gold projects.

Ouro Mil Gold Project

The Ouro Mil Gold Project is located approximately 290 kilometres due south of the city of Itaituba in southern Para state. Access to the property from Itaituba is by light aircraft to a small airstrip on the property or by road via Federal BR163 Highway and Transgarimpeiro Highway to the village of Patrocinio and then a further 15 kilometres on a single track road. The Project comprises 82 mineral concessions for a total area of 13,444 hectares.

The Ouro Mil Gold Project covers a historic garimpo (artisanal mine) that was in operation for over 20 years. The garimpo is centered on a small hill where both the overlying lateritic soils and the streams (alluvial deposits) draining the hill have been processed for their gold. It is coincident with a coarse grained granitic stock, a mobile metal ion (MMI) anomaly and a magnetic high. The gold MMI anomaly is approximately 1.4 kilometres long by 1 kilometres wide and is elongated in a west to northwest direction similar to the regional structures in the region and is surrounded by base metal and uranium MMI anomalies. The coarse grained granite hosts quartz veins and stockwork zones associated with varying degrees of hydrothermal alteration with assemblages that include silica, sericite, chlorite and sulphides. The property has the potential to host gold mineralization in an epithermal to porphyry environment as well as in shear veins.

Dourave and previous operators have completed geological mapping, soil and MMI sampling (850 samples) and airborne electromagnetic-magnetic surveys over the northern part of the property. Brazilian Gold and Dourave plan an exploration program that will include an induced polarization (IP) survey over the anomaly described above, and reconnaissance mapping and geochemistry across the southern part of the property. Anomalies identified from this work will be prioritized for diamond drilling sometime late in 2010 or early 2011.

Alvin Jackson, Chairman and CEO of Brazilian Gold commented, "We are delighted to be working with Dourave on this exciting gold prospect in the TMP. Ouro Mil combined with the Company's other nearby projects are located adjacent to the Transgarimpeiro and Federal BR163 Highways, which will allow for more cost effective exploration and development should an economic gold deposit be discovered". The TMP was the focus of a gold rush in the later part of the twenty century with unofficial gold production of over 30 million ounces largely from alluvial deposits. Mining companies have been exploring the region since the 1990's for the primary source of these secondary deposits with a number of deposits discovered to date.

Option Agreement

Brazilian Gold has the option to earn up to a 70% interest in the Ouro Mil Gold Project by paying Dourave US$150,000 on signing and making staged cash payments and project expenditures over a four year period (Table 1). Cash payments are due on the anniversary date of each year after signing.

Table 1: Schedule of cash payments and work expenditures.

    
    -------------------------------------------------------------------------
                                              Cash Payment  Work Expenditure
                                       Year      (US$)           (US$)
    -------------------------------------------------------------------------
                                     Year 1     $100,000         $500,000
    First Option (55% interest)  --------------------------------------------
                                     Year 2     $100,000       $1,000,000
    -------------------------------------------------------------------------
                                     Year 3     $150,000       $1,500,000
    Second Option (70% interest) --------------------------------------------
                                     Year 4     $200,000       $2,000,000
    -------------------------------------------------------------------------
    

Brazilian Gold on fulfilling the terms of the First Option has 90 days to notify Dourave in writing on whether it elects to exercise the Second Option and earn an additional 15% in the Project for a total interest of 70% or to immediately form a Joint Venture. If Brazilian Gold elects to form a Joint Venture after fulfilling the terms of the First Option or after fulfilling the terms of the Second Option, Project expenditures going forward will be shared between Brazilian Gold and Dourave based on their pro-rata share ownership in the Joint Venture.

About Brazilian Gold Corporation

Brazilian Gold Corporation is a Canadian based public company with a focus on acquisition, exploration and development of mineral properties in the Tapajos region of Northern Brazil. The Company has approximately Cdn$10 million in cash, which will be used to explore their six gold projects (Maues, Boa Vista, Sao Jorge, Jamanxim, Peixoto and Ouro Mil) in Brazil and their gold-copper project (Vallenar) in Chile. Brazilian Gold also owns a 75% interest in the Rea Uranium Project in northeastern Alberta, which is currently being explored by AREVA.

Some statements in this news release contain forward-looking information, including without limitation statements as to planned expenditures and exploration programs. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include without limitation the completion of planned expenditures, the ability to complete exploration programs on schedule and the success of exploration programs.

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

For further information: Brazilian Gold Corporation, Alvin Jackson, Chairman and Chief Executive Officer, Tel: [phone]; Investor Relations, Tom Hart, Tel: [phone]