Mr. Robert Eadie of Starcore reports

STARCORE & CORTEZ GOLD TO AMALGAMATE

Starcore International Mines Ltd. has signed a letter of intent with Cortez Gold Corp. that would see Starcore acquire all of the outstanding securities of Cortez in an all-share transaction to be completed pursuant to a court approved plan of arrangement under the Business Corporations Act (British Columbia). Under the terms of the planned acquisition, each Cortez Gold shareholder would receive three Starcore common shares for every one Cortez Gold common share held.

Cortez owns the Altiplano gold and silver processing plant in Matehuala, Mexico.

Highlights of the acquisition

• The proposed transaction will enable the two companies to realize synergies between their operations.
• Cortez Gold's mineral processing business owned by its wholly owned Mexican subsidiary will expand Starcore's business in Mexico, giving Starcore a turnkey processing plant designed to process lead and copper concentrates along with extracting gold and silver.
• With the amalgamation, Cortez Gold broadens its range of potential financial partners as it avails itself of Starcore's credit history and performance. Cortez Gold's processing business requires financial backing in order to grow.
• Cortez Gold's processing plant will provide Starcore with a steady source of revenue.

In addition, Cortez Gold's shareholders will be able to participate in all of Starcore's properties and business. Starcore is larger and well capitalized with cash holdings of approximately $5.3-million.

Acquisition terms

The LOI provides that Cortez Gold shareholders will be entitled to receive three common shares of Starcore for one common share of Cortez Gold held by such Cortez Gold shareholders, subject to adjustment, pursuant to a plan of arrangement under the Business Corporations Act (British Columbia). In addition, each holder of the outstanding common share purchase warrants of Cortez Gold will receive such number of replacement warrants of Starcore based upon the exchange ratio, and the exercise price of the replacement Starcore warrants will be adjusted based upon the exchange ratio.

Currently, there are 9,555,850 Cortez Gold shares and 3,415,250 Cortez Gold warrants outstanding. In connection with the transaction, Starcore will issue approximately 28,667,550 Starcore shares and 10,245,750 common share purchase warrants exercisable at 13 cents and 25 cents, and expiring in January, February and March of 2016.

Following completion of the transaction, former Cortez Gold shareholders would hold approximately 15.87 per cent of the outstanding Starcore shares.

The transaction is subject to the execution of a definitive arrangement agreement. The definitive agreement will include covenants, representations and warranties customary for transactions such as the transaction, as well as deal protection measures and provisions for exclusive dealing similar to those contained in the LOI. Cortez Gold expects to execute a definitive agreement in respect of the transaction within 30 days.

Approvals required

The transaction will be subject to the approval of the Supreme Court of British Columbia, the TSX and the TSX Venture Exchange. Completion of the transaction is further subject to the approval of at least two-thirds of the votes cast by the holders of Cortez Gold shares and Cortez Gold warrants voting together as a class and who are present and voting at a special meeting of Cortez Gold securityholders to be called to consider the transaction.

Deal protection measures

The letter of intent includes deal-protection provisions in favour of Starcore, including a non-solicitation covenant from Cortez Gold (except for certain unsolicited approaches) and a break fee upon signing the definitive agreement of $250,000 if, following an unsolicited superior proposal, Cortez Gold wishes to pursue that proposal.

If the definitive agreement is terminated by Starcore, a break fee will be due to Cortez Gold in the form of Starcore completing a $250,000 private placement for common shares of Cortez Gold at the minimum subscription price allowed by TSX Venture Exchange policies.

Voting lock-up agreements

Pursuant to the letter of intent, Cortez Gold has agreed to seek voting agreements from directors, officers and shareholders holding in total a minimum of 25 per cent of the outstanding shares of Cortez Gold as a condition to the execution of the definitive arrangement agreement.

Board approvals

The board of directors of each company has approved the terms of the transaction. Of the six current directors of Cortez Gold, three are also directors of Starcore (being each of Robert Eadie, Gary Arca and Federico Villasenor). Cortez Gold has established a special committee comprising three independent directors.

We seek Safe Harbor.