I'm surprised there hasn't been more market interest in the following NR. This move coupled with progress on metallurgy should open the door for Finlayson District and Atna. That's $US1.672 billion dollars metal value for the Wolverine with Atna owning 40 percent. Atna still has $12 million Cdn. in the bank.
On another note, heard at Atna's PDAC booth today that we'll have indicated drilling results from the Dominican Republic within a couple weeks. They'll either make or break the project in D.R.
_________________________________________________________
Atna Resources Ltd -
Expatriate acquires Kudz Ze Kayah
Atna Resources Ltd ATN
Shares issued 20,450,595 2000-02-29 close $0.65
Wednesday Mar 1 2000
See Expatriate Resources Ltd (EXR) News Release
Dr. Harlan Meade reports
Expatriate Resources has reached an agreement in principle to acquire 100 per cent of Cominco Ltd.'s interest in approximately 2,800 mineral claims in the Finlayson district including Kudz Ze Kayah and a satellite (GP4F) deposit. In addition to these claims, the Finlayson assets include Cominco's water licence for development of Kudz Ze Kayah, the access road surface rights lease, and its socio-economic agreement with Ross River Kaska Dena First Nation.
Expatriate owns a 60-per-cent interest in the Wolverine joint venture and the Wolverine deposit, one of the highest grade undeveloped massive sulphide deposits in the world. Expatriate also has approximately 4,500 wholly owned mineral claims in the Finlayson district. This acquisition expands Expatriate's mineral interests in this important new massive sulphide district to 8,500 mineral claims and makes it the only significant claim holder in the district. Consolidation of the district and combination of Wolverine and Kudz Ze Kayah deposits will create one of the largest new zinc-silver exploration and development projects in the world.
Expatriate will offer the Finlayson assets acquired from Cominco for inclusion in the Wolverine joint venture. Atna Resources Ltd., Expatriate's co-venturer in the Wolverine joint venture, shall have 60 days to elect to have the Finlayson assets included in the Wolverine joint venture and pay its 40-per-cent share of the acquisition costs and obligations under the purchase agreement. This acquisition is subject to regulatory acceptance and approval of the board of Expatriate and Cominco Ltd. Completion of the formal purchase agreement and transfer of the Finlayson assets is expected to take several months to effect.
The Finlayson project
The combined new Finlayson project will consist of more than 19 million tonnes of resources averaging 8.15 per cent zinc, 1.64 per cent lead, 0.98 per cent copper, 207.6 grams/tonne silver and 1.5 grams/tonne gold in three deposits as follows:
Grade
Tonnes Zinc Lead Copper Silver
(%) (%) (%) (g/t)
Wolverine(1)
6,237,000 12.66 1.55 1.33 370.9
KZK(2)
11,300,000 5.90 1.50 0.90 133.0
GP4F(3)
1,500,000 6.40 3.10 0.10 90.0
Aggregate
Resource
19,037,000 8.15 1.64 0.98 207.6
Gross
GMV(4)/ Metal
Tonne Value(4)
Tonnes Gold (US$) (US$
(g/t) billion)
Wolverine(1)
6,237,000 1.76 $268 $1.672
KZK(2)
11,300,000 1.3 $132 $1.489
GP4F(3)
1,500,000 2.0 $132 $0.197
Aggregate
Resource
19,037,000 1.5 $176 $3.358
(1) Wolverine Geological Resource (measured, indicated, inferred) estimated by Westmin Resources Limited, Jan. 15, 1998.
(2) Kudz Ze Kayah Minable (in-pit) Resource (indicated), Cominco Ltd., 1998 annual report.
(3) GP4F Geological Resource (inferred), Cominco Ltd., 1998 annual report.
(4) Calculated using metal prices: 55 cents per pound zinc, 80 cents per pound copper, 25 cents per pound lead; $5.50 per ounce silver, $300 per ounce gold.
The Kudz Ze Kayah deposit occurs as a gentle to flat-dipping tabular massive sulphide body with many mineralogical similarities to Wolverine, including being enriched in selenium. In its water licence application, Cominco proposed to mine the above geological resource by open pit at a rate of 2,950 tonnes per day. Additional resources outside the pit are less well-defined and have potential to be mined by underground methods.
The GP4F deposit is located six kilometres southeast of Kudz Ze Kayah and consists of two lenses of moderately north-dipping massive sulphides. The mineralization differs from Kudz Ze Kayah and Wolverine because it is relatively copper poor and does not appear to have significant selenium.
Kudz Ze Kayah was discovered in 1993, Wolverine in 1995 and the GP4F deposit in 1998. All three deposits may be open to extension. Further to the north, Expatriate found the ice copper-gold massive sulphide deposit in 1996. Numerous other mineralized targets have been identified on the consolidated exploration lands. The Finlayson massive sulphide district has potential for many more deposits and Expatriate is committed to undertaking the exploration to discover them.
Terms of acquisition
Expatriate's agreement with Cominco Ltd. provides for it to pay Cominco $1-million on closing and issue a convertible debenture for $10-million. The debenture is to be repaid over a four-year term with $1-million payable on each of the first, second and third anniversaries, and the balance on the fourth anniversary. The debenture will be repayable at any time and shall bear interest after the second anniversary at a rate of 8 per cent per year. Expatriate may extend the final payment an additional 180 days at a rate of 12 per cent per year interest during the period of extension. The debenture will provide that Cominco may at its election, at any time after the second anniversary, convert up to 70 per cent of any outstanding indebtedness thereunder into common shares of Expatriate, or Expatriate and Atna if the Finlayson assets are included in the Wolverine joint venture. The conversion price shall be 115 per cent of the average closing share price in the 10 days prior to such notice to convert.
Cominco will also receive an additional $2-million on the commencement of production from any of the properties included in Cominco's Finlayson assets and a net smelter return royalty on all production therefrom. The NSR royalty shall be 1 per cent during the first four years of production. After the four years, the NSR royalty shall range from 2 per cent to 3.5 per cent based on the price of zinc. The royalty shall be 2 per cent when the price of zinc is less than 55 U.S. cents per pound, increasing to 2.5 per cent when the price is 55 U.S. cents to 60 U.S. cents per pound, 3 per cent when the price is between 60 U.S. cents and 65 U.S. cents per pound, and 3.5 per cent when the price is greater than 65 U.S. cents per pound. Expatriate shall have a right of first offer to purchase the NSR royalty should Cominco wish to divest of it.
Cominco will receive a right of first offer to purchase all or part of the products from the Finlayson assets or any processing facility thereon or any processing facility treating ores from the Finlayson assets. Under certain circumstances Cominco will have access to the infrastructure related to the Finlayson assets to process ores from mineral rights which Cominco may acquire in the vicinity.
Expatriate shall also grant Cominco a warrant to purchase up to 2.5 million of its, or Expatriate's and Atna's common shares on a pro rata basis if the Finlayson assets are acquired by the Wolverine joint venture. The price for Expatriate shall be $1 per share. The warrant price is based on 152 per cent of the weighted average market price of the companies in the 20 days prior to the announcement of the Finlayson assets acquisition. The warrant shall expire on March 1, 2007. Expatriate will have a first right to purchase any common shares of Expatriate that Cominco may purchase pursuant to the exercise of the warrant or conversion of the convertible debenture amounts, and wishes to sell.
Expatriate shall replace Cominco's letters of credit for security bonds related to the surface rights lease and water licence, estimated at $450,000. In addition, Expatriate will provide Cominco with a $100,000 environmental bond related to its activities on the Finlayson assets. There are also numerous obligations and future expenditure requirements related to the socio-economic agreement, licences and permits.
Expatriate will have a right of first offer to acquire Cominco's 50-per-cent interest in the Toe-On joint venture that holds 133 claims located 6.7 kilometres to the east of Kudz Ze Kayah deposit. This right of first offer shall be subordinate to the right of first refusal of Boliden Limited and Atna pursuant to the Toe-On joint venture agreement.
Overview and future activity
William Fisher, vice-president exploration for Boliden Limited, which owns 42 per cent of Expatriate's common shares, welcomed today's announcement. "Consolidation of Wolverine and Kudz Ze Kayah constitutes a logical step in the development of the Finlayson district. Boliden is encouraged by the progress made by Expatriate to date and will be following with interest the company's year 2000 exploration and development activities."
The combination of the Kudz Ze Kayah and Wolverine deposits will provide significant synergies of metallurgy and economies of scale. Ores at Kudz Ze Kayah are also enriched in selenium; however, massive sulphides in the GP4F deposit appear to have more normal amounts of selenium. The larger resource base favours secondary treatment of concentrates on-site and also provides an opportunity to reassess the development plan and optimize it to extract greater value from the deposits.
The work plan for 2000 is expected to include significant fill-in drilling of the Wolverine and Kudz Ze Kayah deposits to better define the resources. Expatriate plans to commence drilling in late spring to test the down-dip extension of Wolverine deposit along the 800-metre-long boundary with the Wolverine claims. These claims are part of the claims being purchased from Cominco. Follow-up drilling is also planned on the GP4F and Sable zone discoveries along with the drilling of other targets on Expatriate's wholly owned claims. Additional metallurgical testing and process development, engineering and mine planning, and permitting of Wolverine and amendment of the Kudz Ze Kayah water licence are contemplated to provide for the joint development of the two deposits.
The size and schedule of the work programs will be determined over the next few months as Expatriate's financing plan is implemented and Atna communicates its decision of whether to have the Finlayson assets included in the Wolverine joint venture.
Expatriate's working capital position is approximately $2.2-million and it had no debt prior to this acquisition. The company expects to undertake a series of private placements with institutions and brokered financings during the year to provide the finances necessary to advance the project to final feasibility over the next two years.
Expatriate looks forward to working with Atna Resources Ltd., its joint venture partner, and the people and governments of the Yukon to advance this project to production in a prudent and expeditious manner. The consolidation of the Finlayson district provides great promise for the development of these deposits and resumption of base metal mining in the Yukon.
WARNING: The company relies on litigation protection for "forward-looking" statements.
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