President and CEO Thomas Meredith at PDAC 2011

The company was formed by the recent merger of Lexam Explorations and VG Gold. The two companies had signed a definitive arrangement agreement in November 2010, which set out the terms for the amalgamation and had the unanimous approval of both company’s boards. As part of the deal, Lexam’s Chairman and CEO, Rob McEwen, agreed to invest $5 million in the business to strengthen the treasury of the new company.

The result of the merger, according to President and CEO Thomas Meredith, is a stable business that is well set to move forward: “We completed our merger effective January 1st to become Lexam VG Gold and this gives us a well funded company. At the beginning of the year, we started with about $16 million in the bank.”

Aggressive Exploration Program

Around $10 million of the money is due to be spent on an aggressive exploration program over the next twelve months, with the aim of increasing the company’s gold resource and building shareholder value. The company has four very attractive gold properties in the world class Timmins gold camp. “They’re all former producers that produced in the first half of the last century,” comments Thomas. “Now we’re going back in and looking at these mine deposits and we’re drilling them off exploration.”

VG Gold Surrounded By Major Goldcorp Mines

The Timmins area is in northern Ontario and is one of the most productive gold camps anywhere. It has been home to more than fifty operating mines since 1910 and has produced almost 70 million ounces of gold. The Hollinger Mine has produced more gold than any other mining operation in Canada while the Dome has over 100 years of continuous production and is North America’s longest operating mine.

Three of the four properties in Timmins are quite advanced in the sense that the company has been exploring them for a number of years. These are the Fuller, Buffalo Ankerite and Davidson Tisdale deposits, which are all developed mine deposits.

The Fuller property is 100% owned by Lexam VG Gold and is next to the past producing Paymaster Mine. Davidson Tisdale is a joint venture with San Gold Corporation where Lexam VG Gold has a 68.5% share. It comprises ten claims and is five kilometers along strike from three mines, Hollinger, McIntyre and Conarium, which have produced over 31 million ounces of gold between them. Buffalo Ankerite is part of the prolific Porcupine Gold Camp and is 100% owned. It has measured and indicated resources of 220,000 ounces gold and inferred resources of 270,000 ounces gold.

Excellent Exploration Potential to 6,000 feet in the Heart of the Timmins Gold Camp

Thomas describes the current stage of development: “We are exploring these deposits to a greater depth. Our resources on these deposits are between 1000 feet and 1500 feet deep and we’re just continuing to go further to depth. The neighboring mines are in the range of 5-7000 feet deep. Our total resource now is almost 1.5 million ounces, so if we continue to explore our ground, we could have a potential that would be over 5 million ounces.”

Advanced Exploration Deposits

The fourth of the Timmins properties is Paymaster West, which has also been mined in the past. It is actually part of the original Paymaster Mine, which is located next to Goldcorp’s Dome Mine. Lexam VG Gold entered into a joint venture with Goldcorp in 2008 and has the right to earn 60% of the project through a minimum of 10,000 meters of drilling and the expenditure of $6 million by 2012.

Thomas says: “We’ve just put out a resource of 350,000 ounces on it in January. So that one is not quite as far along as the other three. But they’re all advanced exploration deposits with considerable additional exploration potential.”

Lexam VG Gold has had the industry renowned Rob McEwen as its Chairman since the merger took place on 1st January. The company is headquartered in Toronto and has offices in the Timmins camp, where an exploration manager and a team of around six geologists are based to carry out further exploration work.

Capital Structure

The company has 225 million shares outstanding that have been trading at around $1 for the last two months or so, giving it a market cap of $225 million. Based on known resources, this gives a market value of about $150 an ounce of resource. This, in Thomas’s opinion, doesn’t give full value to the company: “We have a number of peers who have developed projects like ours, companies like Rubicon, San Gold and Premier Gold Mines. Their valuation tends to range from around $300 plus per ounce. So, what we’re looking to do over the coming year is to close the gap with our peers and doing that will double our share value.

“Plus, we’re going to add more assets, which will give more value. That’s our game plan over the coming year. In terms of the share structure, Rob McEwen owns about 28% of the company and we’re well funded, so we don’t need to raise money for the next couple of years. We have very little dilution outstanding so the share structure in terms of the ownership is well held.”

Ideal Location

Lexam VG Gold is an attractive proposition for investors, partly because of the strength of its leadership and team, due to it being considered undervalued compared to its peers and also because it operates in Ontario, which has good jurisdiction and low political risk. But the main reason is that its properties are all in the Timmins area.

Lexam VG Gold Potential :Timmins Neighbors ‐ 55 MM oz Au Production to Date

There is a view that, if you want to find a gold mine, the best place to look is next to an existing mine. The company’s properties are surrounded by some of the biggest producing mines, namely the Dome, Hollinger, McIntyre and Aunor mines, which have produced 50 million ounces between them. “We have proven gold deposits next to some of the largest mines in Canada,” says Thomas, “and they have lots of additional exploration potential. We actually have gold mines, we’re just making them bigger.”

For more information:

http://www.lexamvggold.com

Lexam VG Gold Inc.

99 George St. 3rd Floor

Toronto, Ontario

Canada M5A 2N4

Tel: 647-258-0395

Fax: 647-258-0408

Thomas Meredith, President

647-258-0395 - Ext 310

Investor Relations

Canada / USA

David Black, Investor Relations

tel: 416-368-0099 - Ext 4050

Email: info@lexamvggold.com

Europe

Höwler International Investor Relations

and Consulting

Finanzkommunikation und IFRS-Beratung

Inh. Dipl.-Kfm. Maurice Höwler

Tel: (+49) 40 55 44 6945

Email: mhoewler@vggoldcorp.com