Kinross,
TORONTO, ONTARIO--
INVESTMENT BY KINROSS GOLD
Bill Myckatyn, President and CEO of Dayton Mining Corporation announces that
Dayton has entered into agreements to acquire a 49% interest in the
Denton-Rawhide Mine in Fallon, Nevada and to acquire 100% of Mirage Resource
Corporation of Vancouver, British Columbia.
Dayton has entered into a letter of intent with Kinross Gold Corporation to
purchase its 49% interest in the Denton-Rawhide Mine for a total of
144,710,000 Dayton common shares.
Dayton has entered into a letter of intent with Mirage under which Dayton
will acquire all of the common shares of Mirage pursuant to an amalgamation
between Mirage and a wholly-owned subsidiary of Dayton. Each Mirage common
share will be exchanged for 0..667 of a Dayton common share. This exchange
ratio represents a purchase price of $0.075 per Mirage common share which is
a 14% premium to the price of Mirage common shares based upon a 30 day
average trading price of $0.066 for the Mirage common shares and $0.113 for
the Dayton common shares.
Kinross holds approximately 14 million Mirage common shares representing a
53.8% interest. Dayton has entered into a letter of intent with Kinross
under which Kinross has agreed to vote its Mirage common shares in favour of
the amalgamation. In the event the amalgamation is not approved by a
special resolution of shareholders of Mirage, Dayton has agreed to purchase
Kinross' Mirage common shares at the lesser of $0.075 and 115% of the market
price of the Mirage shares. This purchase price will be paid in common
shares of Dayton. In addition, in the event the amalgamation is completed
or Dayton acquires the common shares of Mirage held by Kinross, Dayton has
agreed to acquire from Kinross all shareholder loans made by Kinross to
Mirage in exchange for common shares of Dayton. Based upon shareholder
loans estimated at closing, this will result in Dayton issuing to Kinross a
total of approximately 24.3 million common shares of Dayton. This
acquisition of Mirage's debt and equity will result in the issuance of a
total of approximately 42 million Dayton common shares.
The combined transactions, based on the 30 day average trading prices of
Dayton and Mirage, are valued at approximately C$21 million. Upon closing
of the transactions, Dayton will have approximately 538 million shares
outstanding. Dayton will issue approximately 178 million common shares to
Kinross which will result in Kinross owning 33% of the equity of Dayton.
Dayton is proposing that a share consolidation of 20:1 be effected upon
closing of the transactions, subject to applicable shareholder and
regulatory approval.
Upon closing of the transaction, Dayton Mining will have:
- A diversified production base from interests in the Denton-Rawhide
gold-silver mine in Nevada and Dayton's 100% owned and operated Andacollo
Gold Mine in Chile;
- Increased cash flow from estimated proforma annual production in 2000 of
approximately 170,000 ounces of gold equivalent from the Andacollo Gold Mine
and the Denton-Rawhide gold-silver mine (49%) with a combined average cash
cost of US$230 per gold equivalent ounce;
- Total mineable reserves of 33.4 million tonnes grading an average of 0.798
grams of gold per tonne and 5.46 grams of silver per tonne or approximately
953,000 ounces of gold equivalent; and
- Near-term potential development of Mirage's El Dorado project in El
Salvador plus grassroots exploration upside at the Denton-Rawhide mine.
In addition, Bob Buchan, Chairman and CEO of Kinross and John Ivany,
President and CEO of Mirage and Executive Vice President of Kinross, will
join Dayton's board of directors, bringing the total to eight.
Bill Myckatyn, Chairman, President and CEO of Dayton stated "Dayton's
objective is to become a 400,000 ounce gold producer within three years.
The proposed acquisition of the 49% interest in the Denton-Rawhide mine and
the proposed acquisition of Mirage Resources Corporation provide Dayton with
a solid platform for growth from which to acquire further gold producing
assets to achieve that goal and build a strong mid-cap gold company."
Bob Buchan, Chairman and CEO of Kinross Gold Corporation commented, "We have
made an investment in a management team that has demonstrated an ability to
successfully develop and operate gold projects. We are pleased to be
associated with Dayton and intend to be a long-term sponsor to Dayton
providing capital support for the acquisition of new projects and the
development of new properties as required."
John Ivany, President and CEO of Mirage Resources said, "Dayton's offer
provides Mirage with the opportunity to advance the development of the
company's primary asset, the El Dorado property, with greater certainty."
The Denton-Rawhide mine is an open-pit, gold-silver heap leach operation
located near Fallon, Nevada. Kennecott Minerals Company is the operator of
the mine owning 51%. Gold production in 1999 was approximately 128,000 gold
equivalent ounces (100%) at a cash cost of approximately US$243 per gold
equivalent ounce.
At December 31, 1999, the reported reserves (100%) at the Denton-Rawhide
mine were 31.9 million metric tonnes grading 0.705 gpt gold and 11.68 gpt
silver. These reserves were estimated using a gold price of US$325 per
ounce. Exploration potential in the vicinity of the mine site has not been
fully tested to date.
The primary asset of Mirage Resources is the El Dorado gold property located
near San Salvador, El Salvador. The property is a high-grade banded quartz
system. More than 42,000 metres have been drilled on the property since
1993. Geological resources of 4.2 million metric tonnes grading 6.64 g/t
gold and 48.4 g/t silver have been delineated by Mirage which includes 1.3
million metric tonnes grading 11 g/t gold and 74.6 g/t silver. This total
reported resource represents 892,000 ounces of contained gold and 6.5
million ounces of contained silver. Dayton plans to begin a feasibility
study on the property this year.
The completion of the Mirage amalgamation is conditional upon satisfaction
of a number of conditions including agreement being reached on definitive
agreements, receipt by an independent committee of the board of directors of
Mirage of a satisfactory fairness opinion, receipt by the board of directors
of Dayton of a satisfactory fairness opinion, approval of the amalgamation
by a special resolution of Mirage shareholders, approval of the amalgamation
by the Supreme Court of British Columbia, approval of the issuance of shares
by Dayton by an ordinary resolution of Dayton shareholders, approval of the
proposed 20:1 share consolidation by a special resolution of Dayton
shareholders, completion of the acquisition by Dayton of a 49% interest in
the Denton-Rawhide mine and receipt of all applicable regulatory approvals.
The completion of the Denton-Rawhide acquisition is also subject to
satisfaction of a number of conditions including agreement being reached on
definitive agreements, approval of the issuance of Dayton shares by an
ordinary resolution of Dayton shareholders, approval of the proposed 20:1
share consolidation by a special resolution of Dayton shareholders, and
receipt of all applicable regulatory approvals. Each of Dayton and Mirage
anticipate holding an extraordinary general meeting of shareholders on or
about March 29, 2000 to consider the foregoing matters. Closing is
anticipated to occur on or about April 6, 2000.
Further detailed information regarding the assets to be acquired by Dayton
will be included in subsequent shareholder material.
ANDACOLLO RESERVE UPDATE
Dayton announces that the mineable reserve estimate at US$325 per ounce for
the Andacollo Gold Mine in Chile was audited by the Winters Company of
Tucson, Arizona and is as follows:
/T/
Reserves (at US$325):
---------------------------------------------------------------------
Year Tonnes Grade Contained Strip
(000's) (G/T) Ounces Ratio
---------------------------------------------------------------------
31 Dec 1999 17,797 0.88 502,000 1.79
---------------------------------------------------------------------
/T/
The reduction in mineable reserves compared to year end 1998 is due to
additional drill information, the implementation of new modeling
methodology, and the mining of 189,000 ounces in 1999.
The reserves for the Tres Perlas deposit, which has not been mined since
1997, were re-modeled at year end 1999. A more conservative modeling
technique was used. This resulted in a decrease of reserve ounces and fewer
production ounces in the final year of operation from this deposit.
Production and cost estimates at Andacollo for 2000 and 2001 are not
affected by the reduction in reserve ounces at Tres Perlas.
Dayton has budgeted approximately US$800,000 for exploration drilling in
2000. Four target areas have been identified which consist of infill, step
out and exploration drilling. Dayton has also been having discussions with
regard to acquiring small land packages near its mine site.
Production estimate for the Andacollo Gold Mine in 2000 is 125,000 ounces of
gold at cash operating costs of US$229 per ounce.
- 30 -
FOR FURTHER INFORMATION PLEASE CONTACT :
Dayton Mining Corporation
Bill Myckatyn
Chairman
604 662 8383
604 684 1329
or
Dayton Mining Corporation
Diane Thomas Garrett
VP Corporate Development & Investor Relations
604 662 8383
604 684 1329
or
Kinross Gold Corporation
Bob Buchan
Chairman and CEO
416 365 5650
416 363 6622
or
Mirage Resource Corporation
John Ivany
President and CEO
416 365 7885
416 363 6622
INDUSTRY : PCS
SUBJECT : NWS |
