July 27, 1998
JOINT NEWS RELEASE
Legend Block Option Agreement with Kennecott
Montello Resources Ltd. ("Montello") and Redwood Resources Ltd. ("Redwood") have entered into a letter of intent to enter into an option agreement whereby Kennecott Canada Exploration, Inc. ("Kennecott") would earn a 60% interest in the Legend property (70% Montello/30% Redwood) located in the province of Alberta. The Legend Property consists of approximately 1.5 million acres and is located 50 km to the northeast of the AEC/Ashton/Pure Gold discovery block. All payments and private placements shall be divided 70% to Montello and 30% to Redwood. Redwood has waived the right to earn an additional 20% interest in the Legend Property.
Pursuant to the terms of the proposed option agreement, Kennecott must make private placements in Montello and Redwood of the cumulative amount of $275,000 on closing. The initial private placement of $275,000 shall be for 256,666 units of Montello at a deemed price of CDN$0.75 per unit and 55,000 units of Redwood at a deemed price of $1.50 per unit. The warrants attached to the units shall be exercisable at $1.50 for Montello and $3.00 for Redwood at any time prior to July 21, 2000. A subsequent firm private placement of $175,000 must be made on or before January 15, 1999 and a $600,000 private placement must be made upon commencement of the first 10 tonne bulk sample on any kimberlite pipe on the property. The pricing of the $175,000 private placement and the $600,000 private placement shall be the 10 day trading average immediately preceding that date plus 25%. Each private placement shall consist of a common share and a share purchase warrant exercisable at a price equal to 150% of the private placement price for two years from the date of the private placement.
Kennecott shall solely make all expenditures required to bring the project to a mutual decision to mine or by making exploration expenditures totaling $30 Million over seven years, whichever shall occur first. Kennecott shall expend $500,000 prior to May 30, 1999 and an additional $4,500,000 on or before May 30, 2003.
Upon the commencement of commercial production from a mine located within the Property boundaries, Kennecott shall pay the additional sum of $2,000,000.
Kennecott has recently reviewed the high resolution airborne survey data on the Legend Property and conducted ground geophysical surveying on a number of airborne targets which show kimberlite pipe-like characteristics on the Property. Drilling is expected to be underway by late August or early September.
All transactions are subject to regulatory approval.
ON BEHALF OF THE BOARD OF DIRECTORS
MONTELLO RESOURCES LTD. REDWOOD RESOURCES LTD.
Patrick Power Gary Korzenowski
PATRICK POWER, President GARY KORZENOWSKI, President
The Alberta Stock Exchange has neither approved nor disapproved the information contained herein.
MONTELLO RESOURCES LTD.
Suite 1473 - 595 Burrard Street
P.O. Box 49057 - Three Bentall Centre
Vancouver, B.C. Canada
V7X 1C4
Tel: (604) 689-1799
Fax: (604) 689-8199
Toll Free: 1-800-268-2636
E-mail: ppower@montello.com
Website: montello.com |
