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Re: News Release - Thursday, February 17, 2000
Redhawk & Zincox To Advance High-Grade Remac Zinc-Oxide Project
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Redhawk is pleased to announce the signing of an Option to Purchase
agreement for land and mineral titles adjoining the Company's Redbird
property from Reeves MacDonald Mines Limited ("Reeves") and the signing of
a Letter of Understanding with ZincOx Resources BV to explore and develop
zinc oxide deposits on the Company's Redbird and adjoining optioned Reeves
property (collectively the "Remac" project). Both transactions are subject
to the approval of the Canadian Venture Exchange (CDNX) and the
Redhawk/ZincOx agreement is also subject to the approval of the Boards of
Directors of Redhawk and ZincOx.
The Reeves property is located 35 kilometers southeast of Cominco's zinc
lead smelter complex at Trail in southeast British Columbia and consists of
approximately 315 hectares of crown granted mineral rights and crown
granted and fee simple land. The option to purchase agreement allows
Redhawk to consolidate a package of mineral claims covering approximately
4430 hectares or 17 square miles.
Zincox and Redhawk see the zinc oxide project at Remac as a potential
source of low cost zinc metal due to recent metallurgical advances.
Redhawk-Reeves Agreement
Redhawk and Reeves have reached an agreement where Redhawk has a four year
option to purchase the Reeves property for $1,950,000. Under the terms of
the agreement Redhawk has made a $1,000 irrevocable option payment to
Reeves. Redhawk has 60 days from signing to get regulatory approval for the
deal and to then make a $149,000 option payment to Reeves. The option can
be extended on a yearly basis for an option payment of $20,000 to Reeves
until the purchase price is due.
As part of this agreement Reeves will subscribe for a $100,000 "part and
parcel" private placement of 250,000 common shares of Redhawk at $0.40 per
share. These shares will be subject to a one-year hold.
Redhawk-ZincOx Agreement
Coincidental with this announcement Redhawk also announces an agreement
with ZincOx Resources BV to fund the exploration and development of the
Remac zinc oxide project.
The agreement calls for ZincOx to spend an optional $3,000,000 over four
years to earn a 50 per cent interest in the zinc oxide project. The first
year's programme, of which Redhawk will be the operator, calls for a
$400,000 expenditure. Following ZincOx's earn-in the project costs will be
split 50/50 with a standard dilution clause for non-contribution.
As part of this agreement ZincOx will subscribe for a $200,000 "part and
parcel" private placement consisting of 500,000 units at $0.40 per unit.
Each unit consists of one common share and one share purchase warrant. Each
share purchase warrant entitles ZincOx to purchase an additional share at
$0.50 for the first year and $0.60 for the second year. The money from this
private placement and the Reeves private placement is for the general
corporate purposes of Redhawk. Subject to regulatory approval a finder's
fee of 25,000 treasury shares is payable on this private placement.
Prior to the private placement described above ZincOx owns 600,000 Redhawk
shares and has a warrant to increase their holdings to 1,200,000 shares.
Project Summary
The Remac zinc oxide project sits on and adjoins the site of a successful
zinc sulphide mine that operated for 25 years before closing in 1975. The
overlying zinc oxide zones were not mined, as the necessary skills were not
available to recover the zinc in its oxide form.
We have a high degree of confidence of the integrity of these zones through
projections of underlying previously mined sulphide zones, geological
projections, and surface and underground sampling. Management also feels
there is room within the overall oxidized envelope to locate additional
zones. As well considerable potential exists to expand the size of these
zones by including their hanging wall portions which were often mined in
the sulphide mine. An example of this potential is shown by the 1998
trenching of the Beer Bottle Zone. This showing was trenched with a backhoe
and channel sampled by Mr. G. H. Klein, P.Eng., and gave the following
results in the totally oxidized zone:
1. A footwall section grading 21.93% zinc, 3.10% lead, and 0.78 ounces per
ton silver over 33.1 feet (estimated true thickness 21.5 feet).
2. An immediately overlying hangingwall section grading 5.77% zinc, 1.77%
lead, and 0.11 ounces per ton silver over 25.4 feet (estimated true
thickness 16.5 feet)
Taken together these sections would grade 14.93% zinc, 2.52% lead and 0.49
ounces per ton silver over an estimated true thickness of 38.0 feet.
In the Redbird zone underground development conducted in the early 1960's
by Cominco while searching for a deeper sulphide section of the zone
reportedly outlined by drifting an oxidized zone lying beneath the oxidized
surface showings. Sample plans show this zone grading 18.5% zinc and 6.5%
lead along a length of 600 feet and across a thickness of 20 feet.
Redhawk will initially attempt to upgrade these and the other indicated
steeply dipping zones to resource and reserve status by trenching and
drilling. An ongoing programme of metallurgical testing will begin under
the direction of Mr. Noel Masson of ZincOx following the commencement of
the trenching and drilling programme.
The most recent advances in commercial zinc oxide benefication came at
Reunion Mining's Skorpion project in Namibia under the direction of Mr.
Masson. Skorpion is situated in a remote location in Namibia and contains a
fully diluted proven and probable reserve of 19.5 million metric tonnes
grading 10.1% zinc. At Skorpion London Special High Grade zinc metal is
expected to be produced for $U.S. 0.24 cents per pound.
In May, 1999 Reunion was taken over by Anglo American plc (following the
completion of a detailed feasibility study by Reunion) to acquire the 60%
portion of the Skorpion zinc oxide project owned by Reunion. Mr. Michael
Foster, who was the Managing Director of Reunion, has recently joined the
Board of Directors of Redhawk as the representative of ZincOx Resources BV.
The significance of the new zinc oxide benefication technology is that,
unlike with sulphide production, it allows pure zinc metal to be produced
without the need to send a concentrate to a conventional smelter. Although
much detailed testing will be necessary to ensure success, preliminary
metallurgical testing is encouraging and indicates the material should be
amenable to benefication. At Remac we have the benefit of being located
close to all necessary infrastructure for an operation of this kind, adding
significantly to the potential value of our project.
On behalf of the Board of Directors
(signed) Kristian Ross, President |
