Newfoundland JV
Major General Resources Ltd
MGJ
Shares issued 35,650,047
1998-07-22 close $0.34
Thursday Jul 23 1998
See McWatters Mining Inc (MCW) News Release
Mr. Donald Brisebois of McWatters reports
McWatters Mining has signed a letter of agreement with Major General Resources for the acquisition of
a 50 per cent joint venture interest in the Hammerdown property, 14km north of Springdale,
Newfoundland. An indicated resource of 396,000 gold ounces (614,400 tonnes at 18.01 g/t Au with a
cut-off grade of 5 g/t) has been delineated between the surface and a depth of 250m on the property.
According to a prefeasibility study completed by Fluor Daniel Wright for Major General, the
development of the Hammerdown property would allow McWatters to increase its annual production
from 180,000 to 220,000 ounces of gold, an increase of 22 per cent and would lower the operating
costs of approximately 10 per cent to $225 (U.S.) per ounce. This acquisition is in line with McWatters'
growth strategy which is to become one of the most important and profitable Canadian gold producers.
To acquire this 50 per cent interest, McWatters must pay $1-million ($500,000 cash and $500,000 in
shares) in two payments and complete a bankable feasibility study within 12 months of signing the
agreement. The first payment of $500,000 ($250,000 cash and $250,000 in shares) will be paid upon
signing of the joint venture agreement. The second will be done within 12 months of the signing if
McWatters decides to proceed with the joint venture. McWatters will act as mining manager whereas
Major General will act as exploration manager.
After the acquisition of its joint venture interest, McWatters will have 12 months to begin commercial
production. In the event of non-compliance with this schedule, McWatters will have to pay Major
General $250,000 per year of delay up to a maximum of $1-million. When the property enters into
commercial production, Major General shall receive $250,000 per quarter, before profit sharing, until a
total of $3-million has been paid.
During commercial production, at least $500,000 per year will be spent by the joint venture for
exploration on the property outside the areas of active mining. The property has an excellent potential for
the discovery of similar deposits.
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