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Haddington Resources Ltd.
Silverstone Resources Ltd.
(the "Companies")
Property Summary
The Companies jointly hold 88 claim units over 1,408 hectares in a property
that straddles the boundaries of Sheraton, Timmins, Egan and McEvay
Townships located 50 kilometres southeast of Timmins, Ontario. The property
is situated 5 kilometres southeast of Cross Lake Minerals' recent massive
sulphide discovery.
In its first phase of work, the Companies have performed mapping, IP surveys
and diamond drilling with encouraging results. The IP survey identified a
high chargeability IP anomaly along a strike length of 1100 metres. To test
the anomaly, the Companies drilled five holes over a 1 kilometre strike
length. Each hole intersected the same host rocks (pyritic felsic volcanics)
as Cross Lake Minerals' discovery, indicating excellent potential for zinc,
lead, and copper. An estimated 3.5 kilometres of strike remains to be
tested. The Companies are planning a second phase of work that will include
additional IP surveys, electromagnetic surveys and diamond drilling.
Additionally, the property appears to be prospective for gold. Previous
work identified gold occurrences at the "Main" and "Shaft" showings. Grab
and channel samples assayed up to 52.4 g/t gold. An independent Engineering
Report concluded that the property has a geological environment similar to
some large tonnage gold-bearing base metal deposits.
The property is composed of four separate options, as follows.
Kaltwasser Option
The Companies have an option to earn a 100% interest in 13 mineral claims
(the "Kaltwasser claims") comprising 14 units located in the Sheraton and
Timmins Townships, Ontario. Future obligations to earn this interest include:
* $30,000 on or before January 25, 1998 and incur exploration expenditures
of $100,000;
* 4% net smelter return royalty on gold production, which can be reduced to
2% by paying $2,000,000;
* 10% net profits royalty on base metal production;
* issue an additional 100,000 common shares upon regulatory acceptance of a
positive feasibility report in respect of the Kaltwasser claims.
Timmins Option
The Companies have an option to earn a 100% interest in 6 mineral claims
("Timmins claims") comprising 56 units located in the Timmins and Egan
Townships, Ontario. Future obligations to earn this interest include:
* $60,000 on or before January 25, 1998 and incur $100,000 of exploration
expenditures;
* issue 50,000 shares upon completion of Phase II work and regulatory
approval of Phase III work;
* issue 50,000 shares upon completion of Phase III work and regulatory
approval of Phase IV work;
* 3% net smelter return royalty on gold production, which can be reduced to
1.5% by paying $1,000,000;
* 10% net profits royalty on base metal production;
* issue an additional 100,000 common shares upon regulatory acceptance of a
positive feasibility report in respect of the Timmins claims.
Lavigne Option
The Companies have an option to earn a 100% interest in 2 mineral claims
("Lavigne claims") located in the Porcupine Mining Division, Timmins
Township, Ontario. Future obligations to earn this interest include:
* $5,000 by October 6, 1998;
* incur $80,000 in exploration expenditures by October 6, 1999.
McEvay Option
The Companies can earn a 100% interest in 16 claim units ("McEvay claims")
located in the McEvay Township, Ontario. Future obligations to earn this
interest include:
* $26,000 over 3 years;
* issue 12,500 shares of the Companies over 18 months;
* 2% net smelter return royalty, which can be reduced to 1% by paying
$1,000,000.
Capitalization
The current capitalization of the two companies are:
Haddington Silverstone
Resources Ltd. Resources Ltd.
Number of shares outstanding 8,364,416 7,857,007
Options outstanding 683,000 548,000
Warrants outstanding, expiring:
Jan 22/98 ($0.48) 700,000
Mar 15/98 ($0.64) 700,000
Oct 17/99 ($0.20) 400,000
10,147,416 9,105,007
Budget
The Companies' budget for its planned second phase of exploration work and
various corporate commitments is:
Exploration expenditures $285,000
Property payments 90,000
Working capital 125,000
$500,000
Financing Proposal
The Companies propose two financing alternatives. If the Companies raise
only the minimum $500,000, the financing would be structured as a simple
private placement, each unit of which subject to a one year hold period.
Alternatively, if the Companies can raise a minimum of $1,000,000, the
financing could be structured as a special warrant financing with a
following prospectus to qualify the shares. Any lesser amount would not
justify the additional costs associated with this alternative. In either
case, $285,000 of the financing would qualify as flow-through expenditure
and could be financed accordingly. |
