PMD and LLL merger
Lyon Lake Mines Acquires Cerro Crucitas From Placer Dome
and Merges With Palmer Resources
MONTREAL, QUEBEC--Lyon Lake Mines Ltd. and Palmer Resources Ltd.
are very pleased to announce that Lyon Lake Mines Ltd. has agreed
to the acquisition of 100 percent of the shares of Placer Dome de
Costa Rica as well as the signature of a letter of intent for the
merger of Lyon Lake Mines and Palmer Resources (Newco).
Placer Dome de Costa Rica's main asset is the Cerro Crucitas
property, comprising nine mining concessions in northern Costa
Rica. Placer Dome has actively explored the property since 1993.
As reported in their press release dated February 18, 1998, Placer
Dome estimates the current measured and indicated resources at
Cerro Crucitas to be 2.2 million ounces of gold. In addition, the
resources at the neighboring Conchudita deposit has been estimated
at 470,000 ounces and has the potential to increase to 1 million
ounces of resources.
/T/
Geological resources on the Cerro Crucitas project
Concession Cut-off Measured and Indicated Inferred Total gold
(20 sq.km/ea) grade (ounces)
(Au g/t)
________________________________________________________________
Mt Au g/t Ag g/t Mt Au g/t Ag
g/t
________________________________________________________________
Cerro
Crucitas 0.6 58.878 1.19 3.45 14.482 1.04 3.45 2,736,910
1.0 44.625 1.77 3.69 5.012 1.71 4.04 1,676,905
Conchudita 1.75 --- --- --- 3.210 4.56 --- 470,805
Palmito Drilling to date confirms a potential of at least
100,000 ounces of gold
San Antonio Very strong geochemical anomaly measuring 1.5
kilometre by 200 metres
________________________________________________________________
/T/
The terms of the agreements are as follows:
- To acquire a 100 percent interest in the Cerro Crucitas
property, Newco must pay US$3,000,000 to two individuals of which
US $1,000,000 was paid on signature of the agreement, US$1,000,000
to be paid on February 16, 1999 and US$1,000,000 to be paid upon
issuance of the mining permit for the Cerro Crucitas concession.
Newco will also issue 500,000 shares of its capital stock and
grant a 1 percent Net Smelter Royalty (NSR) for a maximum of
US$3,000,000 (the first royalty).
- Once Newco has completed a feasibility study, Placer Dome will
have the right, for a 60-day period, to obtain a 50 percent
interest in the Cerro Crucitas project by agreeing to contribute
its share of expenses required to put the project into commercial
production. Newco will be the joint-venture operator. If Placer
Dome does not exercise this right, it will receive a 1 percent to
3 percent NSR, based on the price of gold and payable at a minimum
gold price of US$325, to a maximum royalty value of US$20 million.
The Placer Dome royalty is payable only after the first royalty
has been paid in its entirety.
Currently, Lyon Lake Mines and Palmer Resources have executed a
letter of intent providing for the merger of the two companies
under which two shares of Lyon Lake Mines will be exchanged for
one share of Newco and one share of Palmer Resources will be
exchanged for one share of Newco. Lyon Lake Mines and Palmer
Resources have 42,9 million shares and 17,2 million shares
oustanding, respectively.
Newco's assets will consist of the Cerro Crucitas and Esperanza
properties as well as the Beta Vargas mine in Costa Rica, the Bac
Giang property in Vietnam, the Cibaliung gold property in
Indonesia, the Breccia-Dyke project in Myanmar, the Odon property
in Canada and a working capital of about $7 million. Newco's
objective will be to put the Cerro Crucitas property into
commercial production.
Mr. Guy Hebert will become Director, President and Chief Executive
Officer and Mr. Jerry G. Pogue will become Director and will be in
charge of investors relations for Newco. Mr. Hebert brought three
mines into production including the Beta Vargas mine in Costa
Rica.
These agreements are subject to, among other things, the approval
of regulatory authorities and the shareholders of Lyon Lake Mines
and Palmer Resources.
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