European Uranium – Signs Agreement to Acquire Four Gold Properties Located in Nevada
Vancouver, British Columbia (FSCwire) - European Uranium Resources Ltd. ("EUU" or the “Company”) (TSXV: EUU) has on February 27, 2015, signed a purchase and sale agreement (the “Agreement”) with Miranda Gold Corp. (“Miranda”) to purchase a 100% interest in Miranda’s Mustang, Iron Point and Kibby Flat projects (the “Properties”) and the assignment and assumption of Miranda’s mining lease on the Red Hill project (the “Lease”), all located in Nevada (the “Transaction”).
In connection with the Transaction, EUU intends to consolidate its shares on an up to 4:1 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 $1,000,000 and up to $2,000,000 (the “Ancillary Transactions”) and concurrently close the Transaction.
Dorian (“Dusty”) Nicol, President and CEO 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 kilometers 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 kilometers 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 kilometers 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% interest in the Kuriskova uranium project in Slovakia are carried for the next ten years, which allows the Company to maintain its exposure to the upside potential of the price of uranium.”
The Transaction Terms
On February 27, 2015, the Company signed a purchase and sale agreement (the “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 (the “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 US$150,000.
On closing the Agreement, EUU will issue to Miranda 8% 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% net smelter returns royalty (“NSR”) on each of the Mustang, Iron Point and Kibby Flat projects and a 1% NSR on the Red Hill project. The Mustang project is currently subject to an underlying 1% NSR to Teslin River Resources Ltd. On closing the Company will be responsible for payment of the underlying advance minimum royalty payment of US$60,000 pursuant to the Lease. The Red Hill property is subject to a sliding production NSR to the Lessors of between 2.5% and 5% depending on the price of gold, and subject to certain buy-down provisions to 2%. 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 US$150,000.
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 1 new for up to 4 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 and if the maximum consolidation of 1 new for 4 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 4,810,000 post-consolidated common shares to settle this debt.
The Private Placement
To fund the Transaction and the anticipated exploration programs, the Company will undertake a non-brokered private placement of a minimum of 20,000,000 units and up to 40,000,000 units (a “Unit”) at $0.05 per Unit post-consolidation. Each Unit will comprise one post-consolidated common share and one common share purchase warrant (a “Warrant”). Each Warrant will entitle the holder to purchase one additional post-consolidated common share of the Company at a price of $0.15 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 $0.30 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 which 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 fund the property payment obligations of the Properties and Lease for a minimum of six months and to fund 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 kilometers from the past-producing +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 (gpt Au). Multi-element 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 meters of 0.866 gpt Au in one drill hole (from 102.1 to 111.2 meters, including 4.6 meters of 1.565 gpt Au) and 12.2 meters of 1.17 gpt Au (from 54.9 to 67.1 meters, including 7.6 meters of 2.6 gpt Au). These intercepts are comparable to 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 5 holes at an estimated “all-in” cost of US$150,000.
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 +8.5 million Au ounces Fortitude / Phoenix gold system of deposits, 45 kilometers 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-centered gold-copper skarn or distal skarn system. Rock chip samples have run up to 73.4 gpt Au and soil samples up to 1.846 gpt 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 which did not reach the target stratigraphy – was 10.7 meters (from 1.5 to 12.2 meters) of 7.5 gpt 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 kilometers southeast of the Cortez Hills gold deposit, a +8.5 million ounce sediment-hosted gold deposit operated by Barrick. The +20 million ounce Pipeline deposit is also located on the Cortez Trend. The same sedimentary formations which 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 meters of drilling at the project. One drill hole intersected 24.4 meters of 4.987 gpt Au from 585.4 to 609.8m, including 13.7m of 8.1 gpt Au from 585.4 to 599.1 meters. 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 gpt Au. Rock chip samples anomalous in gold tend to cluster in two areas on the property. Soil samples contain up to 39.9 ppb Au. There is a coherent zone of anomalous gold in soil about 590 meters x 200 meters 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 gpt Au in a 1.5 meter 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 (Dusty) Nicol, the Company’s President and CEO and a Qualified Person as defined in NI 43-101.
About European Uranium Resources Ltd.
With the pending acquisition of gold exploration properties from Miranda, the Company will be diversifying both geographically, Slovakia and Nevada and by commodity uranium and gold. On August 29, 2014, the Company signed an agreement with Forte Energy NL to allow Forte to earn a 50% interest in the Company’s Ludovika Energy and Ludovika Mining, which hold the mineral licenses comprising the Kuriskova and Novoveska Huta uranium projects. To retain its 50% interest, Forte must sole fund a minimum of $350,000 a year on the Ludovika entities over the next ten years with the first year’s expenditure of $350,000 being an obligation.
EUROPEAN URANIUM RESOURCES LTD.
"Dusty Nicol"
Dorian L. (Dusty) Nicol, President and CEO
For further information please contact: Dorian (Dusty) Nicol, at (604) 536-2711, or visit www.euresources.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statement:
This news release contains forward-looking statements that are based on the Corporation's current expectations and estimates. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "suggest", "indicate" and other similar words or statements that certain events or conditions "may" or "will" occur. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results implied or expressed in such forward-looking statements. Such factors include, among others: the actual results of current exploration activities; conclusions of economic evaluations; changes in project parameters as plans to continue to be refined; possible variations in ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing; and fluctuations in metal prices. There may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Any forward-looking statement speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Corporation disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise. Forward-looking statements are not guarantees of future performance and accordingly undue reliance should not be put on such statements due to the inherent uncertainty therein.
To view this press release as a PDF file, click onto the following link:
public://news_release_pdf/europeanuranium03022015.pdfSource: European Uranium Resources Ltd. (TSX Venture:EUU) www.euresources.com
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