Not a bad press release. We were diluted by 5M shares but we got some cash in return plus some promising properties.
May see a small rise tomorrow.
Wednesday September 8, 4:19 pm Eastern Time
Company Press Release
Diadem To Acquire Important Portfolio Of Mexican Base Metal-Silver Projects
TORONTO, ONTARIO--Diadem Resources Ltd. (DIR-ME) is pleased to announce the completion of an agreement relating to the acquisition of an important portfolio of privately held base metal and silver projects in the State of Zacatecas, Mexico. While the parties have agreed upon the fundamental business terms of the acquisition, completion of the transaction will be subject to satisfactory completion of due diligence and receipt by Diadem of all necessary approvals.
Diadem will indirectly acquire from Portree Inc. (``Portree') and others a 98 percent interest in some 70 mineral claims covering more than 57,000 hectares through the purchase of several holding and operating companies located in the Cayman Islands and Mexico. These 70 claims are spread over three project areas that are adjacent to recent copper-zinc discoveries by Western Copper at their San Nicholas joint venture with Teck Corporation, and adjoining joint ventures by Cominco, Kennecott and Noranda for similar massive sulphide targets. Portree has spent more than US$2,250,000 on these properties. One of the projects to be acquired is under joint venture with Cyprus Amax in which Diadem will retain an 18.75 percent working interest or 7.5 percent Net Profit Interest.
The agreement contemplates that Diadem will acquire all of the shares of the various companies that hold these property interests. The companies will be free of liabilities and will have cash assets of approximately CDN$500,000 at the closing of the transaction. In exchange for these interests Diadem will issue an aggregate of 5,000,000 common shares and 2,500,000 warrants to purchase Diadem common shares. The warrants will have a term of two years from closing and will have an exercise price of $0.25 per share. Diadem will also assign to Portree the right to receive the certain cash payments payable by Cyprus Amex described below. In addition to a 6.25 percent carried interest or 2.5 percent Net Profit Interest to be retained by Portree in the Cyprus Amex project, Portree will be granted a 10 percent Net Profit Interest in each of the other properties. Some of the properties are subject to net smelter royalties at a rate of between 1.5 percent and 2 percent. A nominee of Por! tree will also be invited to join the Diadem Board of Directors.
Following the acquisition, Diadem intends to continue with the exploration of the properties, initially with the proceeds available in the companies to be acquired, and initiate efforts to enter into additional joint venture relationships to further explore these exciting properties which include:
1. El Morro Claims - 34 contiguous claims covering an area of approximately 48,846 hectares, located just west of the town of Panfilo Natera about 60 kilometers south-east of the city of Zacatecas. In February 1999, Portree signed a joint venture agreement with Cyprus Amax Minerals Company (NYSE:CYM - news; ``Cyprus') whereby Cyprus can earn a 75 percent interest in the claim group by making cash payments of US$ 1,400,000 and exploration expenditures of US$ 2,500,000 over a period of five years. Once Cyprus has earned the 75 percent interest, Diadem will be carried for a further US$10 million in expenditures. Once the US$ 10 million is spent, Diadem will have a choice of taking a 25 percent working interest or a 10 percent net profits interest royalty. The Diadem-Portree agreement provides that Portree will hold a 25 percent interest in Diadem's interest. Cyprus began their exploration program in March 1999 with a comprehensive airborne geophysical survey over the entire joint venture area. Re! sults are expected shortly.
2. Bilbao Claims - 11 claims covering an area of approximately 3,956 hectares located adjacent to the El Morro claim group on its eastern side and straddles the town of Panfilo Natera. A pre-feasibility study by Kilborn Inc. in May of 1995 and updated in August 1997 of an oxide zone concluded that the property would have positive economics if exploited as a bulk open pit/vat leaching SXEW operation at 250,000 tonnes ore/year. This was based on various ore reserve scenarios which range from 3.2 million tonnes at 3.94 percent Zn equivalent using a 0.0 percent cutoff grade to 0.234 million tonnes at 14.31 percent Zn equivalent using a 10.0 percent cutoff grade. Additionally, the Bilbao claim group has four untested exploration targets identified by a ground magnetic and gravity survey completed in the summer of 1998 covering an area of approximately twenty-four square kilometers centered on the original mine.
3. Zacatecas Claims - Consists of five sub groups of claims, covering a combined area of approximately 3,573 hectares in the immediate vicinity of the city of Zacatecas. Three have been unexplored, but overlay favorable geology, while two have been previously mined for their oxide ores and are located on very high grade and well-documented poly-metallic structures on the edge of the Zacatecas caldera. To-date, no drilling has been performed on these properties to test the sulphide potential at depths below 50 meters. A report prepared by A.C. A. Howe International Limited in 1995 outlined resources on the Magistral vein located on the Parroquia sub-group as 194,500 tonnes measured and indicated grading 213g/t Ag, 2.75 percent Cu, 5.90 percent Zn, 0.20 percent Pb, 1.5g/t Au. An additional 1,394,000 tonnes at similar grade are inferred to a depth of 320 metres. On the Zamora sub-group, E. Rocca, reported in 1991 that the San Martin Vein had an inferred resource of 1,243,200 to! nnes at 0.95g/t Au, 100g/t Ag, 2.33 percent Pb, and 4.65 percent Zn down to a 200 metre depth. E. Rocca also reported in 1991 that the Se Los Dije Vein System on the Zamora property (two parallel veins 2 metres wide) had an inferred resource of 1,100,000 tonnes at 1.46g/t Au, 359g/t Ag, 1.27 percent Pb, 2.7 percent Zn.
Diadem Resources Ltd. is a Toronto-based mineral exploration company with interests in a diamond discovery in California, an advanced zinc project in Indonesia; zinc, copper-nickel-cobalt properties in Quebec; and gold properties in Nicaragua.
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