Montello Resources Ltd. (“Montello”) and Redwood Resources Ltd. (“Redwood”)
are pleased to announce that they have received the following report from Kennecott Canada Exploration Inc. (“Kennecott”) today. The following is a verbatim copy of that report made by Mr. Buddy Doyle, Exploration Manager North American Diamonds:
“Kennecott Canada Exploration Inc. (“Kennecott”) is pleased to inform you that work has recommenced on the Legend property in NE Alberta. The winter drill program has started with the Medusa target to be the first of several drilled. An extensive geophysics program is also underway to confirm several more targets for drilling.
Kimberlites Discovered and Diamond Results
Target *Depth to Kimberlite (metres) *End of Hole (metres) *Diamonds Phoenix *102.5 *225.9 *Yes 5/380kg
Roc *120.42 *177.1 *Results Awaited (1999)
Dragon *121.9 *193.9 *Results Awaited (1999)
Valkerie *129.2 *201 *Results Awaited (1999)
Pegasus *83.0 *200.0 *Results awaited (1999)
Xena *85.8 *181.5 *Results awaited (1999)
Legend *12.2 *228.6 *Results awaited (1999)
The table shown above lists the kimberlite discovered to date, their depth below surface and the caustic fusion diamond results. Results for the Phoenix kimberlite were reported earlier. The Kennecott Thunder Bay laboratory was shut down over the Christmas period to allow for an expansion of the facilities. Work will resume around January 20. The Montello Alberta kimberlite will have top priority, with Legend being processed first. In the meantime nine 10kg samples have been sent to an independent laboratory for caustic fusion to obtain a preliminary look at their diamond content. These samples will also be used as check assays against our process.”
The Company has completed the first closing of the private placement of 3,000,000 units at a price of $0.25 per unit announced November 17, 1998 and amended by the Company's news release dated December18, 1998. Pursuant to the first closing, the Company has issued 2,376,700 units for proceeds of $578,375. Each unit consists of one common share without par value in the capital stock of the Company and one non-transferable share purchase warrant, each warrant entitling the holder thereof to purchase an additional common share in the capital stock of the Company for a period of two years at a price of $0.30 per share. 1,260,000 of the units are flow-through units, both as to the shares and the warrants.
In addition, the Company has agreed to pay a commission to Golden Capital Securities Ltd.Golden Capital Securities Ltd. of 52,700 units and $13,175 cash, the units to be on the same terms as the units issued under this private placement.
The common shares forming part of the units, as well as the common shares which may be issued upon exercise of the warrants and the units issued to Golden Capital Securities Ltd. are subject to a hold period which will expire at 12:00 midnight on April 30, 1999.
The proceeds from the private placement of $578,375 will be used as to the flow-through portion for exploration on the properties of the Company located in Alberta, with the non flow-through portion to be used for general working capital purposes.
Kennecott has now completed a $122,500 private placement at $0.375. In addition to the share, Kennecott acquired a two year warrant at $0.45. The share and warrant are subject to a 12 month hold period which expires at midnight, January 15, 2000.
Redwood Resources Ltd. has advised the Company that it will not be
increasing its interest beyond 30% in the Buffalo Hills Properties under option from the Company. Redwood and the Company will now enter into a joint venture agreement on the Nina, Jazz, and Swan Properties with the initial interests of the parties being 70% Montello and 30% Redwood. The joint venture agreement is in standard terms. The Legend Property was initially subject to the joint venture, however it is now under option to Kennecott Canada Exploration Inc.
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