Big Valley to acquire QR gold mine from Kinross Gold
Big Valley Resources Inc BV
Shares issued 19,174,310 May 14 close $0.43
Wed 19 May 99 News Release
Mr. Lloyd Tattersall reports:
Mine Acquisition Agreement
Big Valley Resources has entered into an agreement with Kinross Gold Corp.,
under which Big Valley will acquire a 100 per cent interest in the QR gold
mine and related assets. The QR gold mine is 58 kilometres southeast of
Quesnel, British Columbia and was operated by Kinross from June 1995 to
April 1998. Prior to the commencement of commercial production in 1995,
mineable reserves were 1.3 million tonnes grading 4.77 grams per tonne
gold. During almost three years of production, approximately 128,000 ounces
of gold was recovered from 1,063,000 tonnes of ore. Existing proven and
probable reserves for the property stand at 320,000 tonnes at an average
grade of 5.08 grams per tonne.
In April of 1998 mining operations were shut down and the mine was placed
on care and maintenance due to low gold prices. On June 1, 1998, Kinross
completed a merger with Amax Gold Inc., and Kinross became the fifth
largest gold producer in North America. The focus of the new company was
directed toward its world class mining assets and the decision was made to
either sell or decommission the QR mine.
Under the terms of the purchase agreement, Big Valley will pay Kinross
$3-million (Canadian) for a 100 per cent interest in and to all mining
leases, mineral claims, open pit and underground mine workings and
excavations, the existing mill complex and all related property and assets.
The purchase price will be paid in cash and will not involve the issuance
of any Big Valley securities to Kinross.
All production and reclamation permits are in good standing and the current
mining lease covering 130 claim units is valid until the year 2024. The 800
tonne per day mill remains on site along with general offices, assay lab
and mechanical shops. The initial costs to Kinross to construct the mill
and place the QR mine into production were approximately $26-million
(Canadian).
In addition to the $3-million cash payment, Big Valley will assume all
costs and liabilities associated with environmental monitoring,
rehabilitation and reclamation. Initial due diligence indicates that
current monitoring and reclamation costs would be between $1-million and
$2-million (Canadian). However, this figure will change as Big Valley
completes additional exploration and mining activities prior to the
expiration of the mining lease in 2024.
Big Valley's acquisition of the QR property is expected to close on or
before Oct. 30, 1999, and is conditional upon:
1. Big Valley securing a $3-million financing by June 15, 1999;
2. Big Valley completing satisfactory due diligence including asset
valuations and environmental assessments by June 15, 1999;
3. Alberta Stock Exchange and Big Valley shareholder approval of the
acquisition; and
4. approval by all appropriate regulatory bodies to the assignment of the
mining and environmental permits to Big Valley and the corresponding
assumption by Big Valley of the related liabilities.
Big Valley management considers the acquisition of the QR property to be an
excellent mining and exploration opportunity for the company. The QR mining
lease is adjoined to the south, east and west by mineral claims held by Big
Valley. A number of good gold prospects have been identified on these
claims. Management also believes that there is excellent potential to add
to existing ore reserves on the QR property through additional exploration
on the current mining lease.
Further drilling will also be carried out on the company's Lloyd-Nordik
deposit. To date, Big Valley has outlined a measured and indicated
geological resource of 2,196,000 tonnes grading 0.559 per cent copper and
0.390 grams per tonne gold at the Lloyd-Nordik zone. This deposit remains
open in two directions and has the potential to be an additional source of
ore for the QR mill. Although the copper-gold ore from the Lloyd-Nordik
deposit differs from the gold ore at the QR mine, the existing mill can be
modified to process the copper-gold ore. Such modifications would not
require a significant expenditure by the company.
Upon the completion of the acquisition, Big Valley will begin exploration
work on both its existing claims and the mining lease. Mining operations
will not resume until the company has expanded ore reserves and the price
of gold has increased. In the interim, all of the assets at the QR property
will remain on the current care and maintenance status.
Private Placement
Big Valley also announces that subject to Alberta Stock Exchange approval,
it will carry out a non-brokered private placement of up to 875,000 units.
The purchase price of the units will be 40 cents and each unit will consist
of one common share and one share purchase warrant. Each warrant will
entitle the holder to purchase one additional common share at a price of 50
cents within a two-year period. The $350,000 proceeds from the sale of the
units will be used as general working capital and to finance the due
diligence related to the company's acquisition of the QR gold mine.
Repricing of Stock Options
Big Valley has applied to the Alberta Stock Exchange for approval to amend
the exercise price of 1,665,000 outstanding incentive stock options. The
original exercise price of 1,615,000 of the options was $1. Fifty thousand
options were exercisable at $1.05. All outstanding stock options were
issued pursuant to the company's existing stock option plan. If approved,
the exercise price of all stock options will be 40 cents.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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