Claude Resources to Acquire St. Eugene Mining

Claude Resources

and St. Eugene Mining Corporation jointly announce that they have entered into a definitive agreement pursuant to which Claude will acquire, by way of a court-approved plan of arrangement, all of the shares of St. Eugene that it does not already own. The consideration for the purchase of 100% of the fully diluted in the money shares of St. Eugene is approximately $19 million plus Spinco, which will hold the Tartan Lake Gold Mine Project. The Share Consideration, based upon the 20 day volume weighted average price of the common shares of Claude on the TSX on October 24, 2011 represents $0.145 per St. Eugene common share, a 28% premium to the 20 day VWAP of the common shares of St. Eugene on the TSXV on October 24, 2011 and a 53% premium to the 20 day VWAP of the common shares of St. Eugene on the TSXV on July 8, 2011. Under the terms of the transaction, each shareholder of St. Eugene will receive 0.0789 of a Claude share per St. Eugene share. Additionally, at closing, each St. Eugene shareholder will receive 0.25 common shares of a newly formed, wholly-owned, subsidiary of St. Eugene in respect of each St. Eugene share. Spinco will be transferred St. Eugene's interests in the Tartan Lake Gold Mine Project and approximately $800,000 in cash. Claude will maintain its pro-rata stake in Spinco. In addition, Claude will reduce its existing net smelter return royalty on the Tartan Lake Gold Mine Project from a sliding scale to 2%. The net smelter return royalty can be repurchased at any time by Spinco for $1 million per each 1%. It is anticipated that the current members of the board of directors of St. Eugene will sit as board members of Spinco.