Wednesday, May 26, 1999 7:31 PM
Int'l Pursuit enters into agreement with Regeena Resources
International Pursuit Corporation IPJ
Shares issued 34,012,695 May 26 close $0.34
Wed 26 May 99 News Release
Mr. Harvey Lawson and Mr. G.E. Creber report
Regeena Resources Inc., and International Pursuit have entered into an
agreement for Regeena to acquire the Hinoba-an copper porphyry deposit in
the Philippines from Pursuit. The terms of this agreement call for Regeena
to proceed to undertake a feasibility study for development of this project
following Pursuit's recently completed scoping study. Upon favourable
completion of the feasibility study, the agreement provides Regeena with
the right to complete the purchase of the project and place the property
into production.
International Pursuit has undertaken extensive drilling and metallurgical
work in defining the project for the scoping study, having spent more than
$10-million on the project. This expenditure is in addition to the
considerable work undertaken by Lepanto Consolidated Mining Co., which
completed a feasibility study in 1983 prepared by Pincock, Allen and Holt,
based on an ore reserve of 100 million tonnes. Pursuit's activities have
enhanced the project through further exploration; their scoping study
estimates ore reserves at over 250 million tonnes.
The company has undertaken certain due diligence on this project including
meeting with various government and industry representatives in the
Philippines and a visit to site on the island of Negros. It has been most
encouraged by the substantial degree of governmental and local support
evidenced for the project. The Philippines is recovering from the effects
of the Asian financial crisis and is committed to the promotion of mining
development, with responsible environmental safeguards, as a means of
strengthening the economy and providing employment.
The scoping study estimates ore reserves to be over 250 million tonnes of
copper ore grading 0.456 per cent copper; this study is based on an
open-pit design with a low stripping ratio of 1:1. The project is close to
the coast and has good site access with adequate power, water and labour
supply. The proposed mine plan in the scoping study provides for an initial
ore throughput of 50,000 tonnes per day and recovery of approximately two
billion pounds of copper over the mine life. The capital cost for
development of the project, using reconditioned plant and equipment as
appropriate, is currently estimated to be of the order of $150-million
(U.S.).
The agreement provides for the payment by Regeena to Pursuit of an initial
amount of $2.75-million (U.S.), payable as to $250,000 (U.S.) on completion
of the fund raising, with two further payments of $250,000 (U.S.) each at
six-month intervals and a final payment of $2-million (U.S.) on completion
of the feasibility study. Regeena is also required to pay $9-million (U.S.)
in cash to Pursuit within six months of commencement of commercial
production and up to a further $10-million (U.S.) from a progressive
royalty, dependent on copper prices. the underlying 2 per cent net smelter
royalty obligation to the claim owners may be purchased by Regeena for
$6-million (U.S.). In terms of the agreement, Regeena will be required to
raise not less than $2-million (U.S.) to finance the required feasibility
study.
The government of the Philippines provides an attractive tax regime for the
development of new mining projects of this nature which allows for a tax
holiday of up to eight years from commencement of production. Further tax
concessions may be available including the exemption of the project from
import duties and value-added tax. These aspects have been well considered
during the due diligence investigation and provide enhanced project
economics.
Regeena also announces that it has entered into a finder's fee agreement in
relation to its acquisition of the project which agreement provides for the
payment of $238,750 (Canadian) on the closing of the transaction, of which
$163,750 (Canadian) is payable in stock of Regeena to be issued at the
minimum price permitted by the Vancouver Stock Exchange, and the balance is
payable in cash by Pursuit.
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