Crown Resources Acquires 100% Interest in Crown Jewel Gold Deposit [CWQ--5% of a portion]
DENVER--(BUSINESS WIRE)--July 24, 2001--Crown Resources Corporation today announced that it has signed an agreement with Battle Mountain Gold Company, a wholly owned subsidiary of Newmont Mining Corporation, which converts Battle Mountain's right to earn a 54% participating interest in the Crown Jewel gold deposit to a net smelter return royalty. Crown is now the Manager of the project and will retain its 100% interest in the 1.4 million-ounce gold deposit located in Washington state.
In March of 1990, Crown signed a joint venture agreement with Battle Mountain Gold Company, allowing Battle Mountain to earn a majority interest in the Crown Jewel gold project. In January of this year, Newmont, the second-largest gold producer in the world, acquired Battle Mountain. Under the terms of the Crown Jewel agreement, Battle Mountain is entitled to receive a net smelter return production royalty based on the prevailing price of gold. The royalty schedule is as follows:
Gold Price/oz NSR Royalty
-------------------------------------
under $280 0.5%
$280 - $320 1.0%
$320 - $360 2.0%
$360 - $400 3.0%
over $400 4.0%
This royalty terminates after the first million ounces of production. Crown also has the right to buy out the entire royalty at any time within the next five years for $2.0 million in cash.
Christopher E. Herald, President and CEO of Crown, stated: ``As a result of the Battle Mountain-Newmont merger, the Crown Jewel deposit simply did not meet the size criteria for Newmont, which produces 5.5 million ounces of gold per year. With the comprehensive engineering and environmental work completed by Battle Mountain, we believe Crown is in a good position to move the permitting forward with a predominantly underground mining plan that significantly reduces environmental impacts. We are excited to be in control of the Crown Jewel project.
``Battle Mountain has spent significant sums on exploration, engineering and permitting since 1990. Battle Mountain's Plan of Operations proposed a large open pit mining operation that moved over 105 million tons of material, including processing 8.5 million tons of ore, over an eight-year mine life. Crown's underground proposal, still in the planning stages, moves less than 10% of the material compared with Battle Mountain's plan.''
Crown estimates the Crown Jewel deposit contains approximately 1.4 million ounces of gold at a grade of 0.364 ounces of gold per ton. With this agreement, Crown can now initiate a more detailed mining plan and continue the permitting process associated with that plan.
Mr. Herald further stated: ``Although we have completed a significant amount of preliminary engineering work concerning our predominantly underground mining plan, we are still in the planning stages. We believe our plan substantially reduces most environmental impacts, but we will be soliciting input from all interested parties to see if additional environmental improvements can be achieved. Currently, we are working on restructuring Crown's $15 million convertible debenture due in late August 2001 and completing a new secured note financing that will enable the Company to move the Crown Jewel project forward. Progress has been made on these financing issues; however, there is no assurance of a favorable outcome.'' |
