CIBC takes major stake in the QUEEN...
QRL was halted today.
CIBC paying 18.5 cents, and QRL taking over company.
Hopefully we have scrapped the bottom prices now.
Queenstake acquires Incanore Gold Mines and arranges C$1 million financing
VANCOUVER, BRITISH COLUMBIA--Queenstake Resources Ltd. (QRL-TSE) has reached agreement with the shareholders of Incanore Gold Mines Ltd. (``Incanore''), a private Canadian company, to acquire all of the issued and outstanding shares of Incanore for the issue of 7,600,000 shares of Queenstake. Concurrent with the acquisition, Canadian Imperial Bank of Commerce (NYSE:BCM - news; ``CIBC'') has undertaken to provide $1 million in equity financing to Queenstake. Both transactions are subject to regulatory approval and other customary closing conditions.
Incanore is an exploration company active in Burkina Faso, West Africa. Incanore's assets include an 18.5% interest in the Taparko gold property, its partners being High River Gold Mines Ltd. (``High River''), which holds a 61.5% interest and is operator and the Burkina Faso government which holds a 15% carried interest and a 5% interest that will become participating after a bankable feasibility study is completed. Incanore also controls a number of gold, base metal and diamond exploration properties in Burkina Faso, some the subject of other joint ventures.
CIBC is currently a significant shareholder of Incanore. Pursuant to the acquisition by Queenstake, CIBC will be issued 3,192,000 Queenstake common shares and the other Incanore shareholders will be issued 4,408,000 Queenstake common shares. Pursuant to the acquisition agreement, CIBC has agreed that it will not sell such 3,192,000 common shares without Queenstake's consent during 24 months following the closing date. The other Incanore shareholders have agreed to a 12 month hold period in respect of the Queenstake shares issuable to them. After expiry of the 24 and 12 month hold periods, shares will be saleable as to 20% at the end of the 12 and 24 months respectively and 20% each 3 months thereafter.
The related equity financing provided by CIBC will be in the form of a Private Placement. Under the private placement, CIBC will subscribe for 5,405,405 units, with each unit being comprised of one Queenstake common share and one common share purchase warrant. Each warrant will entitle CIBC to purchase one additional common share of Queenstake for $0.185 per share for a period of 18 months. The common shares will be subject to a 12-month hold period.
Upon completion of this transaction and assuming exercise of the warrants CIBC will own 29% of Queenstake based on Queenstake's current issued shares of 30,032,864. CIBC is acquiring the shares in Queenstake for investment purposes only and may increase or decrease its interest in Queenstake as market circumstances dictate.
Queenstake will use approximately 20% of the private placement proceeds to fund Incanore's ongoing activities in Burkina Faso with the balance being available for Queenstake's general corporate purposes.
The Taparko gold property, some 200 kilometers north east of Ouagadougou, the capital of Burkina Faso, was first explored by BUMIGEB, the exploration division of the Department of Energy and Mines during the 1980's. The 1200 square kilometer Taparko mining concession was subsequently the object of a joint venture between Incanore and High River, who have been operators of the project since 1997; High River is a publicly traded mining company. In 1998, High River had an independent feasibility study conducted on the project and in July 1999 announced a geologic resource estimate of 17.37 million tonnes at a grade of 2.07 grams of gold per tonne and containing 1.15 million ounces of gold.
High River reports that Zones 3 and 5 of Taparko are continuous over a strike length of 1.1 kilometers and contain approximately 63% of the total contained gold in the resource estimate. Zones 3 and 5 remain open at depth below the deepest drill holes, which intersected mineralization approximately 100 meters below surface. Ongoing feasibility study work will evaluate the optimal pit technologies and identify the mining parameters to enable the definition of a mining reserve. High River reports that significant potential exists for adding additional resources within the Taparko concession. High River reports the identification of a number of additional gold zones along the Taparko structure and several anomalous areas outside the main structure.
Incanore is current with cash calls made to date by High River pursuant to the Taparko joint venture agreement. Until completion of a bankable feasibility study, Incanore's participating interest is subject to immediate conversion to a 0.5% net smelter return royalty if it fails to meet its funding obligations to High River on a timely basis.
Incanore's wholly owned properties in Burkina Faso include the Rambo, Titao, Bounga and Tiebele properties, totaling over 1000 square kilometers, together with over 10,000 square kilometers of diamond prospecting licenses. The Tiebele property, which is being explored for base metals, is subject to an option to joint venture agreement with a subsidiary of Anglo American Corporation. Additionally, Incanore has a 77% interest in the 338 square kilometer Pem property with the balance held by Kinbauri Gold Corp.
Queenstake's president Chris Davie commented: ``The acquisition of Incanore represents the addition of value to Queenstake in the form of over 200,000 ounces of attributable gold resources together with substantial exploration potential; it is complementary to Queenstake's current focus on the Magistral Project in Mexico in that it is anticipated that the development of Incanore's assets will naturally follow the development of Magistral without diverting management effort. We look forward to working with High River on the eventual development of Taparko.''
After closing of this transaction together with the previously announced C$1.5 million financing, Queenstake will have approximately C$3 million in cash. Following the receipt of a positive feasibility study in June, the permitting process for the Magistral project is now under way and Queenstake is in discussion with a number of financial institutions regarding project finance
The statements in this news release contain forward-looking statements within the meaning of the Private Securities Litigation Reform act of 1995. Actual results may differ materially from those currently anticipated in such statements. The TSE has neither reviewed nor accepts responsibility for the adequacy or accuracy of this release.
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Contact:
Queenstake Resources Ltd.
Chris Davie
President and Chief Executive Officer
(303) 297-1557
Email: info@queenstake.com
Website: www.queenstake.com
or
Queenstake Resources Ltd.
Doris Meyer
Vice President Finance and Chief Financial Officer
(604) 516-0566 |
