Exall Resources Ltd - News Release
Int'l Pursuit to acquire Glimmer mine
Exall Resources Ltd EXL
Shares issued 44,599,886 May 29 2002 close $.240
Thursday May 30 2002 News Release
Mr. Stephen Dattels of Int'l Pursuit reports
International Pursuit has entered into an agreement to buy a 100-per-cent interest in the Glimmer mine from Exall Resources and Glimmer Resources. The mine is owned by a joint venture, 52 per cent owned by Exall and 48 per cent by Glimmer, with the operator being Exall. The Glimmer mine is located approximately 80 kilometres east of Timmins, Ont., and eight kilometres east of Matheson, Ont., in the Porcupine camp. Large producing mines along this 150-kilometre-long prolific gold trend are mines such as the Hollinger, Dome and Pamour mines on the west end and the Barrick's Holt McDermott and Newmont's Holloway mines to the east. The Glimmer mine is located approximately midway between these famous producers and has similar geology, geologic structure and gold mineralization.
The Glimmer mine is currently on a standby -- care-and-maintenance basis, and is a former gold producer which suspended operations in May, 2001, due to low gold price levels. Gold production in the four-month period in 2001 was 11,895 ounces, 46,418 ounces for the year 2000, 48,266 ounces for the year 1999, 64,319 ounces for the year 1998 and 39,884 ounces for the year 1997. Commercial production at the mine commenced Jan. 1, 1998. The mine currently has reported resources and reserves of approximately 430,000 ounces of contained gold. Minable reserves are reported to be approximately 778,000 tonnes at a grade of 8.91 grams per tonne, for approximately 223,000 ounces of contained gold. In addition, resources are estimated to be 1.2 million tonnes grading 5.36 g/t. This resource figure does not include the reserve figure stated above.
The purchase agreement calls for Pursuit to pay $3.16-million (Canadian) and two million shares of the new Apollo Gold Corporation (defined later) on closing, with an additional cash payment of $3-million (Canadian) at the time that the mine reaches commercial production, which, in the purchase agreement, is defined to be commercial production averaging 500 tonnes per day (or greater) over a 30-day period. Closing of this purchase is subject to the satisfaction of contractual conditions. The valuation of the transaction when it was negotiated in principle was approximately $8.2-million (Canadian) which has since fluctuated with the increase in Pursuit's share price.
The parties plan to close this purchase and sale transaction within 30 days after Pursuit's plan of arrangement is completed with Nevoro Gold Corporation to create Apollo Gold Corporation, which plan of arrangement is scheduled to close by June 30, 2002.
Pursuit announced earlier this year that it plans to merge with Nevoro Gold Corporation, a private Canadian corporation which owns two producing gold mines in the United States. Upon receipt of all shareholder and regulatory approval, the merged entity will be called Apollo Gold Corporation.
After closing of the Glimmer mine purchase, Apollo Gold intends to embark on a drilling program designed to delineate new resources and reserves. The exploration program will review targets along strike and down dip from the current underground workings. The program envisaged will be a phased approach to exploration, with the first phase consisting of surface exploration drilling and the second phase consisting of underground drilling. The planned underground redevelopment program is designed to bring the Glimmer mine back into commercial production at a rate of up to 1,000 tonnes per day and is expected to take approximately 18 months to complete.
Apollo Gold acquisition and operational update
Nevoro Gold acquired Apollo Gold on March 26, 2002, whose primary assets are the Florida Canyon mine located near Winnemucca, Nev., and the Montana Tunnels mine located near Helena, Mont. The Diamond Hill underground mine was also acquired with the transaction. The Diamond Hill mine had been previously placed on care and maintenance while gold prices stayed below $300 per ounce. Gold production at the two open-pit mine operations account for approximately 200,000 ounces produced per year. During the first month of ownership by Apollo Gold, production at both the Florida Canyon and Montana Tunnels continued according to plan. For the month of April, production at Florida Canyon was 14,389 ounces and 5,238 ounces for Montana Tunnels, for a total of 19,627 ounces. Additional production at Montana Tunnels was 51,000 ounces of silver, 700 tons of lead and 2,000 tons of zinc.
Prestripping of the Montana Tunnels open pit began in May, 2002. The prestripping will be continuing through October, 2002. Approximately 15 million tons of waste will be moved initially to re-expose the ore zones. Current milling operations will be temporarily suspended, as planned, in June, 2002, while prestripping is conducted. The mill is expected to restart again in October, 2002, after sufficient ore has been exposed within the pit area to sustain mill throughput at a steady state of 16,000 tons per day.
Exploration drilling was initiated at the Florida Canyon mine within the Central Pit area during May, 2002. The drill target area is the extension of mineralization along a shear structure feature within the pit. Exploration drilling to the south of Florida Canyon, within the Standard mine area commenced during May. The drilling scope will be to convert previously drilled resources to a reserve category and then complete the permitting and feasibility study for the mine.
Due to the recent increase in the price of gold to the $325-per-ounce range, the Diamond Hill underground mine located 45 miles to the east of the Montana Tunnels mine, is being reviewed for additional exploration drilling and a possible reopening of the mine. Previous mine operations saw production levels of approximately 500 tons per day at 0.30 of an ounce per ton for yearly production of approximately 50,000 ounces.
Gold hedge position
Apollo Gold has no gold hedging position in place.
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