Regal Goldfields Limited - Agreement To Earn 75.5 Percent Interest In Gold
Resources
TORONTO, ONTARIO--Regal Goldfields Limited announces that it has
issued 1,242,957 shares to Moose River Resources Inc. under the
terms of its letter agreement with Moose River whereby Regal can
earn a 75.5 percent effective interest in the Touquoy Gold Project
located 60 km northeast of Halifax.
TOUQUOY GOLD PROJECT
Work to date on the Project has defined Indicated Resources
totalling 3.8 million tonnes at a grade of 2.22 grams of
gold/tonne (274,000 contained ounces of gold) and Inferred
Resources of 1.9 million tonnes at a grade of 2.15 grams of
gold/tonne (131,000 contained ounces of gold). These Resources
were calculated by Watts, Griffis and McOuat Limited ("WGM"),
internationally recognized Consulting Geologists and Engineers.
Regal believes that there is excellent potential over the 8 km
length of the property to more than double these Resources.
Prior to the late 1980's exploration and small scale mining on the
Touquoy property was focused on narrow high-grade quartz-vein
hosted gold mineralization. In the late 1980's drilling by others
and subsequently by Moose River discovered the presence of wide
zones of disseminated gold mineralization hosted within a 150
metre thick stratigraphic interval. The mineralization occurs
largely as native gold within argillite host rocks.
WGM have indicated that there is a high degree of probability that
with the expenditure of $325,000 the grade of the above mentioned
Resources can be increased by 20 percent and up-graded to a drill
proven and probable reserve. Once this is accomplished a detailed
feasibility study would be carried out. A preliminary economic
evaluation carried out by WGM indicated that if the aforementioned
program is successful a low stripping ratio open pit operation
appears to be economically very attractive at a gold price of U.S.
$300 per ounce.
AGREEMENT WITH MOOSE RIVER
Under the terms of Regal's agreement with Moose River, Regal has
the exclusive right until June 30, 1999 to raise the necessary
funding to commence an exploration and development program (the
"Program") by completing the following:
- the payment of $40,000 to Moose River which funds will be used
to make the final option payment due on the property. These funds
have been paid;
- the issuance of 1,242,957 treasury shares of Regal or cash
equivalent to Moose River on or before February 28, 1999. These
shares have now been issued.
- if Regal had not commenced the Program by February 28, 1999, the
number of shares to be issued, subject to regulatory approval, or
cash equivalent to Moose River would increase by 5 percent each
month to June 30, 1999. The program has not yet commenced.
The agreement with Moose River provides for a two stage
transaction.
On closing of the transaction (June 30, 1999 or earlier) Regal
would purchase 500,000 units of Moose River at $0.20 per unit for
proceeds of $100,000. Each unit would consist of one treasury
share and one warrant to purchase an additional share for 3 years
at $0.30 per share.
/T/
Regal would make the following annual work expenditures on the
Property:
By the end of Year 1 $ 325,000
By the end of Year 2 500,000
By the end of Year 3 575,000
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$ 1,400,000
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/T/
The foregoing expenditures are optional with the exception of the
first year. It is contemplated that the first year expenditures
will be spent in accordance with that recommended by WGM. By
making these expenditures Regal will have earned a 25 percent
interest in this property at the end of Year 1, 50 percent at the
end of Year 2 and 70 percent by the end of Year 3.
At the end of the three year period a joint venture would be
formed with Regal having a 70 percent interest and Moose River a
30 percent interest which together with its ownership of Moose
River shares would give Regal a 75.5 percent effective interest in
the Property. Regal will be the project operator. Upon
completion of the Year 2 work commitments and providing that Regal
decides to proceed with the future development of the Property, it
will make an offer to the shareholders of Moose River to merge
with Regal, the terms and conditions of the offer to be negotiated
at that time.
EXCELLON RESOURCES INC.
On June 12, 1998, Regal announced that it had agreed to purchase
$500,000 of a private placement of convertible debentures of
Excellon Resources Inc. subject to, amongst other things,
finalization of financing arrangements. Financing arrangements
were not completed and this proposed purchase did not close.
CAPITALIZATION
Regal presently has 15,633,011 common shares and 2,625,000 special
warrants outstanding. Of the special warrants, 2,000,000 are
exercisable into common shares and 1,000,000 common share purchase
warrants within six business days after a receipt is issued by the
Ontario Securities Commission for a final prospectus qualifying
such common shares and warrants, or on June 23, 1999, whichever is
earlier. Each of these common share purchase warrants entitles
the holder to acquire one common share in the capital of Regal at
an exercise price of $0.20 per common share at any time on or
before December 23, 1999.
The balance of the special warrants are exchangeable for 625,000
common shares and 625,000 common share purchase warrants any time
up to June 30, 2001. Each of these common share purchase warrants
is exercisable into one common share at an exercise price of $0.25
per common share any time on or before July 23, 2001.
SUMMARY
Regal is currently engaged in exploration for an development of
mineral properties in Canada. It currently has active exploration
programs in northern Labrador, northwestern Cape Breton Island,
Nova Scotia and in Kidd Township near Timmins, Ontario.
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FOR FURTHER INFORMATION PLEASE CONTACT:
Regal Goldfields Limited
Richard W. Brissenden
President
(416) 364-1130
(416) 364-6745 (FAX)
Email: regalgld@interlog.com
Internet: www.regalgoldfields.com
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