11:02:34 EDT Thu 17 Oct 2019
Enter Symbol
or Name

European Uranium Resources Ltd
Symbol C : EUU
Shares Issued 65,942,653
Close 2015-02-27 C$ 0.015
Recent Sedar Documents

European Uranium to acquire 4 properties, change name

2015-03-02 07:36 ET - News Release

Mr. Dorian Nicol reports


On Feb. 27, 2015, European Uranium Resources Ltd. signed a purchase and sale agreement with Miranda Gold Corp. to purchase a 100-per-cent interest in Miranda's Mustang, Iron Point and Kibby Flat projects and arrange the assignment and assumption of Miranda's mining lease on the Red Hill project, all located in Nevada.

In connection with the transaction, EUU intends to consolidate its shares on an up to 1:4 basis and change its name to Reyes Resources Inc. Immediately after the shares are consolidated, EUU intends to concurrently settle certain debts with shares or units, close a non-brokered part-and-parcel private placement financing to raise a minimum of $1-million and up to $2-million, and concurrently close the transaction.

Dorian Nicol, president and chief executive officer of EUU, said: "This acquisition and concurrent private placement will allow the company to proceed with exploration, including at least one drill program, on exciting new exploration gold projects in a favourable mining jurisdiction. The highest-priority property is Mustang -- which has drill-ready targets and gold in outcrop samples up to 29.7 grams per tonne Au. Past drill results on the Mustang project, combined with geochemical anomalies, provide an ideal geological setting for the potential discovery of a large high-sulphidation epithermal gold deposit. Mustang is located 15 kilometres from the Paradise Peak mine, which produced over 1.5 million ounces of gold from a similar geologic setting.

"The Iron Point project is within 45 kilometres of the Fortitude/Phoenix gold complex (over 8.5 million ounces of Au) and shares a similar geologic setting. Red Hill is located within the prolific Cortez trend and is within 24 kilometres of the 8.5-million-ounce Cortez Hills sediment-hosted gold deposit. Prior drilling at Red Hill has documented the presence of sediment-hosted gold mineralization in a similar geologic setting. Kibby Flat is a high-sulphidation epithermal gold target in western Nevada near the town of Tonopah. Geologic mapping and sampling have disclosed several areas at Kibby Flat prospective for bonanza-grade gold and silver mineralization.

"The initial focus will be on drilling the defined targets at Mustang and Iron Point; Kibby Flat and Red Hill will be advanced as funds allow. Expenditures on the company's 50-per-cent interest in the Kuriskova uranium project in Slovakia are carried for the next 10 years, which allows the company to maintain its exposure to the upside potential of the price of uranium."

The transaction terms

On Feb. 27, 2015, the company signed a purchase and sale agreement with Miranda, with closing subject to closing the ancillary transactions. The acquisition is arm's length and there is no finder's fee. The transaction has been classified as a fundamental acquisition under the rules of the TSX Venture Exchange, and trading in the company's shares will be halted until exchange requirements are met. Upon acceptance of all the documentation filed with the exchange, the exchange will allow the company's shares to resume trading.

To support the application for approval with the exchange, the company has commissioned work to begin on an independently prepared geological report on the Mustang project. It is expected that this report will recommend a first-phase drill program at the Mustang project with an estimated budget of $150,000 (U.S.). On closing the agreement, EUU will issue to Miranda 8 per cent of the then-issued-and-outstanding shares of the company after that issue and following the closing of the ancillary transactions.

On closing the agreement, Miranda will transfer the properties to EUU and execute the assumption and assignment of the lease to EUU. Miranda will retain a 2-per-cent net-smelter-returns royalty on each of the Mustang, Iron Point and Kibby Flat projects and a 1-per-cent NSR on the Red Hill project. The Mustang project is currently subject to an underlying 1-per-cent NSR to Teslin River Resources Ltd. On closing the company will be responsible for payment of the underlying advance minimum royalty payment of $60,000 (U.S.) pursuant to the lease. The Red Hill property is subject to a sliding production NSR to the lessors of between 2.5 per cent and 5 per cent, depending on the price of gold, and, subject to certain buy-down provisions, to 2 per cent. Pursuant to the agreement, EUU will be obligated to complete a drill program on one of the four properties within the first agreement year at a cost of not less than $150,000 (U.S.).

The consolidation and name change

The board of directors plan to change the name of the company to Reyes Resources Inc. and to consolidate the company's shares on a one-new-for-up-to-four-old basis.

Management of the company believes that the share consolidation is necessary and integral to implement its plans pursuant to the transactions outlined. There are currently 65,942,653 shares, and if the maximum consolidation of one new for four old is completed, there would be 16,485,663 common shares outstanding before closing of the transaction or ancillary transactions.

The debt settlement

The company has reached agreement with certain current and past related parties to settle an aggregate of up to $240,500 debt recorded in the books of the company by the issue of up to 4.81 million postconsolidated common shares to settle this debt.

The private placement

To finance the transaction and the anticipated exploration programs, the company will undertake a non-brokered private placement of a minimum of 20 million units and up to 40 million units at five cents per unit postconsolidation. Each unit will comprise one postconsolidated common share and one common share purchase warrant. Each warrant will entitle the holder to purchase one additional postconsolidated common share of the company at a price of 15 cents for a period of five years from the closing of the private placement. In the event that the volume-weighted average trading price of the common shares of the company is at or above 30 cents per share for 15 consecutive trading days, in the period commencing four months after the closing date, the company will have the right to accelerate the expiry date of the warrants to a date that is 30 days after notice is given to the holders of the warrants of the accelerated expiry date. The private placement is subject to compliance with applicable securities laws and to receipt of regulatory approval.

The company reserves the right to modify the type, nature and/or price of the units for any reason, subject to exchange acceptance.

The company may pay finder's fees within the allowable limits of the policies of the exchange.

It is intended that the proceeds of the private placement will demonstrate that the company will have, on closing the transaction, the financial resources to close the transaction and finance the property payment obligations of the properties and lease for a minimum of six months, and to finance the first stage of the recommended work program.

Conditions of closing

The parties' obligations to complete the transactions are subject to exchange approval of all elements of these transactions on terms acceptable to the parties and settlement of formal documentation. The closing of all of the transactions is each conditional on the closing of the other.

The properties being acquired

Mustang project

Mustang is located in southwestern Nevada, 15 kilometres from the past-producing plus-1.5-million-ounce Au Paradise Peak gold-silver mine. Like Paradise Peak, Mustang is a high-sulphidation epithermal target with potential for bonanza grades. The mineralization at the Paradise Peak property is not necessarily indicative of the mineralization on the Mustang property. Surface samples from volcanic rocks at Mustang have assayed up to 29.7 grams per tonne of gold. Multielement geochemical anomalies typical of epithermal gold deposits occur throughout the project area. Two holes drilled on the property by a previous operator gave encouraging results: 9.1 metres of 0.866 gram per tonne gold in one drill hole (from 102.1 metres to 111.2 metres, including 4.6 metres of 1.565 grams per tonne gold) and 12.2 metres of 1.17 grams per tonne gold (from 54.9 metres to 67.1 metres, including 7.6 metres of 2.6 grams per tonne gold). These intercepts are comparable with the early discovery holes reported at Paradise Peak. The mineralization identified in these drill holes is open to depth and laterally, and testing for extensions will be the focus of the initial drill program. In addition to the volcanic-hosted epithermal potential on the property, there is the potential for sediment-hosted (Carlin-type) gold mineralization in the sediments underlying the volcanic rocks.

There are multiple geochemical anomalies throughout the property associated with hydrothermal alteration typical of high-sulphidation gold deposits. Further mapping and sampling will undoubtedly lead to the generation of additional drill targets.

The first-year evaluation program and budget includes approximately 5,000 feet of reverse circulation drilling in five holes at an estimated all-in cost of $150,000 (U.S.).

Iron Point

Iron Point is a distal skarn gold target at the intersection of the Battle Mountain and Getchell gold trends in Nevada. The target analogue is the plus-8.5-million-gold-ounce Fortitude/Phoenix gold system of deposits, 45 kilometres away. The mineralization at the Fortitude/Phoenix property is not necessarily indicative of the mineralization on the Iron Point property.

The Iron Point area hosts numerous clusters of geochemical anomalies (gold and pathfinder elements) and geophysical (magnetic) anomalies consistent with the target concept: an intrusion-centred gold-copper skarn or distal skarn system. Rock chip samples have run up to 73.4 g/t Au and soil samples up to 1.846 g/t Au.

Drilling on the project to date has focused on exploration for sediment-hosted Carlin-style deposits in the eastern portion of the project area. The area is considered prospective for the large skarn target that has barely been tested. The best gold intercept to date -- in a hole that did not reach the target stratigraphy -- was 10.7 metres (from 1.5 metres to 12.2 metres) of 7.5 g/t Au.

Further work will comprise data compilation and some further mapping and sampling, and possible ground magnetics, to define drill targets focusing on a gold-copper Fortitude-type deposit.

Red Hill

Red Hill is a sediment-hosted gold target on the Cortez trend in central Nevada, one of the most prolific of the Nevada gold belts. Red Hill is located 24 kilometres southeast of the Cortez Hills gold deposit, a plus-8.5-million-ounce sediment-hosted gold deposit operated by Barrick. The plus-20-million-ounce Pipeline deposit is also located on the Cortez trend. The same sedimentary formations that host these massive deposits host identified gold mineralization at Red Hill. The mineralization at the Cortez Hills or Pipeline properties is not necessarily indicative of the mineralization on the Red Hill property.

In 2006, Barrick Gold Exploration Inc. became Miranda's joint venture partner at Red Hill. Barrick, as operator, completed 3,006 metres of drilling at the project. One drill hole intersected 24.4 metres of 4.987 g/t Au from 585.4 m to 609.8 m, including 13.7 m of 8.1 g/t Au from 585.4 m to 599.1 m. Mineralization is hosted by lower-plate carbonate rocks typical of Carlin-type gold deposits and is associated with altered igneous dikes and high levels of arsenic, antimony, mercury and thallium. These features indicate that a Carlin-style gold system is present at Red Hill. Two offset holes intersected the target stratigraphy and were geochemically anomalous in pathfinder elements but did not intersect significant gold mineralization.

Further exploration at Red Hill will require extensive deep (and therefore expensive) drilling, but has the potential to lead to the discovery of a large new Carlin-style gold orebody. Due to the expense, this work will be of lower priority than that at Mustang.

Kibby Flat

Kibby Flat is also a high-sulphidation epithermal target in western Nevada, in the Monte Cristo Range, near the town of Tonopah.

Hydrothermal alteration of volcanic rocks on the property is consistent with high-sulphidation epithermal systems and is associated with an apparent caldera margin. Rock chip samples contain up to 0.621 g/t Au. Rock chip samples anomalous in gold tend to cluster in two areas on the property. Soil samples contain up to 39.9 parts per billion Au. There is a coherent zone of anomalous gold in soil about 590 metres by 200 metres adjacent to the hydrothermally altered area.

Additional geologic mapping and sampling on the property will likely lead to the definition of additional target areas.

A previous operator drilled 22 holes on the property. There were several intercepts of geochemically anomalous gold and pathfinder elements and one significant intersection of 7.05 g/t Au in a 1.5-metre structure. The historic drilling has only partially tested the potential target zones, and in this type of system, the geochemically anomalous results obtained to date are cause for encouragement.

It is thought that the target here is likely structurally controlled, and additional geologic mapping and sampling (and possibly geophysics) will be required to identify and prioritize drilling targets.

Qualified person

The technical information in this news release was reviewed by Dorian Nicol, the company's president, chief executive officer and a qualified person as defined in National Instrument 43-101.

We seek Safe Harbor.

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