Highway 50 Gold (HWY-V) and Regulus Resources (REG-V) have reached an agreement whereby the company will grant to Regulus an option to earn a 50-per-cent interest in the company's Golden Brew property. In addition, as an integral part of the grant of the option, Regulus has agreed to purchase, on a non-brokered private-placement basis, units in the company for gross proceeds of $900,000. In order to exercise the option, Regulus must, among other things, spend $5-million (U.S.) on exploration expenditures on the project over five years, and assume the underlying third party lease payments and claimholding costs. Exploration expenditures of $500,000 (U.S.) in the first year is a firm commitment. Upon earn-in, the parties will form a joint venture on a 50/50 basis. The private placement will consist of two million units at a purchase price of 45 cents per unit. Each unit will consist of one common share of the company and one-half transferable share purchase warrant. Each warrant will entitle the holder thereof to purchase one common share of the company at an exercise price of 60 cents per warrant share for a period of 24 months following the closing of the offering.
The grant of the option and the offering are subject to the approval of the TSX Venture Exchange. All securities issued in connection with the offering will be subject to a hold period expiring four months and one day following the closing date. At closing, it is anticipated that Regulus will own approximately 9.3 per cent of the company's issued and outstanding common shares on an undiluted basis. The company has agreed to grant Regulus a standard pre-emptive right for as long as Regulus maintains ownership of at least 5 per cent of the company's issued and outstanding common shares. The proposed transaction is considered to be non-arm's length under the rules of the TSX Venture Exchange by virtue of the fact that two of the directors of Regulus, John Leask and Gordon Leask, are also directors of Highway 50. This transaction was unanimously approved by the three other Regulus board members, all of whom are independent of Highway 50, with John Leask and Gordon Leask both abstaining.
The net proceeds from the offering will be primarily used by Highway 50 for the further development of its Porter Canyon project and for general working capital purposes.
About Golden Brew
Golden Brew comprises 153 claims which cover a large Carlin-style gold-arsenic-antimony system located at the base of the Toiyabe Range, 25 kilometres south of Austin, Nev. To date, mineralization consists of a zone of gold-bearing jasperoid measuring 800 metres long and up to 70 metres wide, hosted in thin-bedded, platey, Cambrian-aged silty carbonates. The jasperoid is anomalous in Carlin-type pathfinder elements of arsenic, antimony and mercury, with gold values ranging from 0.1 gram per tonne Au to four g/t Au. West of the range, CSMAT (controlled-source audio magnetotelluric) and gravity surveys indicated an uplifted horst block under pediment cover. Follow-up drilling confirmed a 300-metre uplift and intersected Carlin-type mineralization in one hole (GB-3). Assays returned up to 28 parts per billion gold, 290 parts per million arsenic and 30 ppm antimony in a 50-metre-thick zone within thin-bedded silty carbonates. The aforementioned levels are higher then those peripheral to the auriferous jasperoid 2,500 metres to the east and confirm the extension of the mineralized system in the horst block. This horst block is coincident with the projected intersection of a set of crustal-scale structures and a strong magnetic low. The magnetic low may reflect magnetic destruction to alteration related to the mineralized system. Initial drill targets will focus on the northeastern and southeastern structural corners of the horst block, both areas of gravity lows within the gravity high (horst block). Gravity lows in this setting may be a function of alteration (decalcification) with related Carlin-type mineralization. The company is currently in the process of permitting 10 new drill sites at the project.
This news release has been reviewed by Gordon P. Leask, PEng, president and chief executive officer of Highway 50 Gold, a qualified person as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.
News Release - Dec 20, 2013 |
