Here it is:
Montello quarterly review
Montello Resources Ltd MEO
Shares issued 38,674,936 Jan 14 close $0.25
Mon 17 Jan 2000 Company Review
An anonymous director reviews the company
In January and February, 1997, the company acquired by staking
approximately four million acres of mineral exploration permits in the
Buffalo Hills area of Alberta.
On May 7, 1997, the company and Redwood Resources Ltd., an Alberta Stock
Exchange-listed company, entered into an agreement for a private placement
and option and subsequent joint venture on certain of the company's
properties located in the Buffalo Hills area of Alberta. Redwood has earned
a 30-per-cent interest in the above-noted properties.
On Oct. 31, 1997, New Claymore Resources, the company and Troymin Resources
announced a joint venture agreement with a private Alberta oil and gas
corporation whereby the various companies were allowed to view certain
geophysical data which could assist the joint venture in identifying
kimberlite pipes. This data pertains to the block of mineral permits
located near Hinton, Alta. Pursuant to the terms of the agreement, the
companies agreed to access and inspect the geophysical data and
interpretation thereof. Upon notification the companies agreed to issue
collectively $150,000 of their shares pro rata and finance a $250,000
exploration program. The companies used the data to conduct field
exploration and determined that the data had no value. The private Alberta
oil and gas corporation has commenced a lawsuit for damages. The companies
have all defended the claim.
The winter drill program of seven drill holes on the Jazz block was
completed in March of 1998 and was not successful in finding kimberlite.
The magnetics on the Jazz block have been modelled based on known
kimberlites in the area and have identified 13 drill targets for a
continued drill program.
The 1.5-million acre Legend property (70 per cent the company -- 30 per
cent Redwood) was flown with an aerial magnetic survey in June and July of
1998. On July 27, 1998, the company and Redwood agreed to enter into an
option agreement with Kennecott Canada Exploration whereby Kennecott would
earn a 60-per-cent interest in the Legend property. The terms of the option
were that Kennecott must make private placements in the company and Redwood
of the cumulative amount of $275,000 ($192,500 as to the company and
$82,500 as to Redwood) on closing, a subsequent private placement of
$175,000 ($122,500 as to the company and $52,500 as to Redwood) on or
before Jan. 15, 1999, and a $600,000 ($420,000 as to the company and
$180,000 as to Redwood) private placement upon the commencement of a
one-ton bulk sample on any kimberlite pipe on the property. Each private
placement shall consist of a common share and a share purchase warrant
exercisable at a price equal to 200 per cent (first private placement) and
150 per cent (second and third private placements) of the private placement
price for two years from the date of the private placement. Kennecott must
make all expenditures required to bring the project to mutual decision to
mine or by making exploration expenditures totalling $30-million over seven
years. Kennecott shall expend $500,000 prior to May 30, 1999, (completed)
and an additional $4.5-million on or before Aug. 31, 2003. Upon the
commencement of commercial production from a mine located within the
property boundaries, Kennecott shall pay the additional sum of $2-million
($1.4-million to the company and $600,000 to Redwood).
On Sept. 28, 1998, the company completed the first of the private
placements, issuing 256,667 shares to Kennecott for cash of $192,500. In
addition, the company issued warrants to Kennecott to purchase up to an
additional 256,667 shares at $1.50 per share to Aug. 31, 2000.
On Jan. 15, 1999, Kennecott completed the second private placement of
$122,500 and the company issued 326,667 units to Kennecott at a deemed
price of 37.5 cents per unit. Each unit consisted of one common share and
one share purchase warrant to purchase an additional common share at any
time to Jan. 15, 2001, at a price of 45 cents per share.
The formal option agreement was signed on Sept. 8, 1998, and drilling
commenced in late September, 1998. Kimberlite was intercepted on seven of
the targets drilled to date. Caustic fusion results of the kimberlites have
recovered five diamonds from 380 kilograms of drill core on the Phoenix
kimberlite, however, none of the other kimberlites contained diamonds.
On Jan. 14, 1999, the company entered into an agreement with Edward
Kruchkowski, an arm's-length party, for the acquisition of a 50-per-cent
interest in the 742,000-acre Jackfish property in the Calling Lake area of
Alberta. The interest will be earned by paying Mr. Kruchkowski $35,000 upon
signing (paid), $190,000 over two years and issuing 100,000 common shares
to Kruchkowski (issued).
The same date, the company also entered into an agreement with Everest
Mines and Minerals, a non-arm's-length party, for a further 10-per-cent
interest in the Jackfish property, along with a 50-per-cent interest in the
one million-acre acre Tyrell property near Drumheller, Alta., in
consideration of the payment of $50,000 (paid) and a $200,000 work
commitment.
On Feb. 5, 1999, the company agreed to sell to Abaddon Resources, an
arm's-length party, 50 per cent of the company's interest in the Jackfish
property and a 60-per-cent interest in the Tyrell property. The
consideration is the payment of $42,500 and 50,000 shares on signing, and
an additional $95,000 on or before Jan. 12, 2001. This transaction did not
complete.
The company has entered into an agreement with Kennecott Canada for a joint
venture over prospective properties in the province of Manitoba. The
participating interests of the company and Kennecott shall be Kennecott 60
per cent and the company 40 per cent. The company's portion of the 1999
budget for the joint venture was $135,000. The work program for 1999
consisted of geochemical ground sampling over prospective areas. The work
program has been completed and the results are being assessed.
In February of 1999, the company closed a private placement of 2,376,700
units from the announced offering of three million units at 25 cents per
unit. Each unit consisted of one common share and one warrant to purchase
an additional common share at a price of 30 cents per share to Dec. 31,
2000. One million two hundred sixty thousand of the units were issued on a
flow-through basis, both as to the share and the warrant. A commission of
52,700 units, on the same terms as the private placement units, and a cash
commission of $13,175 was paid to Golden Capital Securities for its
services in connection with the offering.
The company has entered into a letter of intent dated May 18, 1999, (the
letter agreement) with AVL Information Systems (AVLIS) for the formation of
a joint venture marketing corporation to sell and promote the OVT (on-line
vehicle tracking system) developed by the research and development
department of AVLIS. The letter of intent states that AVLIS will vend its
entire product line into the joint venture corporation and will become the
manufacturing and research and development provider for the new corporation
with a focus on affordable Internet location monitoring. The company will
acquire an initial 15-per-cent interest in the joint venture corporation
for $250,000 (U.S.) and an option to acquire an additional 35-per-cent
interest for an additional $750,000 (U.S.). Two hundred fifty thousand
dollars (U.S.) has been paid to date however, despite demand, AVLIS has not
formalized the structure of the new corporation nor has it provided details
of the product line being vended into the new corporation.
In August, 1999, the company closed a brokered private placement consisting
of 2,266,500 shares for cash of $307,546 (net of commissions and issue
costs of $32,429). In addition, the investors received warrants to purchase
an additional 2,266,500 shares at 17 cents per share until Aug. 16, 2001.
Included in this private placement are 857,000 flow-through shares issued
for cash of $128,550. Additional commissions were paid in the form of
400,000 agent's warrants entitling the agent to purchase up to 400,000
shares at 17 cents per share until Aug. 16, 2001.
In October, 1999, the company completed the balance of the above brokered
private placement by issuing 1,610,500 shares for cash of $209,540 (net of
commissions and issue costs of $32,035). In addition, the investors
received warrants to purchase an additional 1,610,500 shares at 17 cents
per share until Oct. 4, 2001. Included in this private placement are
743,000 flow-through shares issued for cash of $111,450.
The flow-through portion of the proceeds have been used for work programs
on the properties of the company located in Alberta and Manitoba. The
non-flow-through portion of the proceeds have been used to make the payment
due to AVLIS.
In December, 1999, the company entered into an agreement to acquire a
100-per-cent interest in a petroleum and natural gas lease in the Sturgeon
Lake area, Alta. Consideration for the acquisition will be the issuance of
2.25 million shares. Patrick Power, president of the company, has a
15-per-cent interest in the lease. All other parties are at arm's length.
Evaluation of extensive geological and geophysical data has identified
several drill targets. Drilling targets include a D3 Leduc pinnacle reef
buildup and a Beaverhill Lake/Swan Hills barrier reef. The Beaverhill
Lake/Swan Hills barrier reef target is approximately two-thirds of a mile
from a Swan Hills discovery well with about 600,000 barrels of recoverable
oil reserves. The acquisition is subject to regulatory approval.
The company has a consulting agreement with Brahma Communications for the
provision of general office administration services, which includes
investor relations services. The agreement with Brahma provides that Brahma
is paid $6,000 per month. The principal of Brahma is Thomas Yingling.
During the fiscal quarter there were no variations in operating results.
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