Revolution Resources (RV-T) April 15, '14 has signed an option agreement with Seabridge Gold Inc. to acquire a 100-per-cent interest in the high-grade Red Mountain gold project located near Stewart, B.C.
"It has been my ambition over the past 20 years to return to explore the Red Mountain project near my hometown of Stewart, where I first started my career as an exploration geologist in 1993," said Robert McLeod, president and chief executive officer of Revolution. "In addition to the high-grade resource already outlined, the property hosts significant exploration potential."
"Our objective is to advance Red Mountain to a positive production decision in the near term," said Michael McPhie, newly appointed executive chairman of Revolution and the managing director of JDS Gold Ltd. "The 2014 work program will include detailed engineering and delineation drilling with the objective of upgrading the existing resource and moving the project down the path to development."
The Red Mountain project is a high-grade underground gold project with a history of past exploration and development activities. The property has a current measured and indicated resource prepared in accordance with National Instrument 43-101 of 435,395 ounces of gold at a grade of 8.4 grams per tonne gold, plus inferred resources of 140,122 ounces of gold at a grade of 5.4 grams per tonne gold. Significant exploration upside exists on the property and will be a focus of Revolution concurrent with plans to move the Red Mountain project toward development.
Transaction terms
Under the terms of the option agreement, Revolution can earn a 100-per-cent interest in the Red Mountain project, subject to certain underlying royalties, by issuing to Seabridge 29,733,000 shares of Revolution, paying to Seabridge $2-million cash in staged payments ($1-million payable within 90 days, $1-million within 1.5 years) and incurring $7.5-million in exploration and development expenditures over three years ($2.5-million per year). Revolution has the right to extend the deadline for expenditure of the final $2.5-million by one year upon payment to Seabridge of $250,000. Upon the commencement of commercial production, Revolution will make an additional one-time $1.5-million cash payment to Seabridge, and Seabridge will also retain a gold metal stream on the Red Mountain project to acquire 10 per cent of the annual gold production from the property at a cost of $1,000 (U.S.) per ounce up to a maximum of 500,000 ounces produced (50,000 ounces to Seabridge). Alternatively, Seabridge may elect to receive a one-time cash payment of $4-million at the commencement of production in exchange for the buyback of the gold metal stream.
Concurrent rollback and name change
Revolution will implement a one-for-six consolidation of its common shares, as well a name change to IDM Mining Ltd., subject to regulatory approval.
Financing
Revolution also wishes to announce the terms of a concurrent private placement financing of up to $5,031,000 to be led by Haywood Securities Inc., subject to exchange approval. The financing will consist of up to 8.1 million postrollback flow-through units to be issued at a postrollback price of 31 cents per flow-through unit, as well as up to 10.5 million postrollback common units to be issued at a postrollback price of 24 cents per common unit. Each unit will consist of one common share and one-half of one common share purchase warrant, with each warrant exercisable for a period of 15 months at a postrollback exercise price of 36 cents per share. In addition, the company has granted Haywood an overallotment option exercisable at any time up to the closing date to sell up to an additional 3,144,375 common units, which, if exercised in full, would result in additional gross proceeds of $754,650.
In the event that the company's common shares trade at a closing price greater than 55 cents per share on a postrollback basis for a period of 20 consecutive trading days at any time following the date that is four months after the closing date of the financing, the company may accelerate the expiry date of the warrants by giving notice via press release to the holders thereof. In such case, the warrants will expire on the 30th day after the date on which notice is given by the company.
The company has agreed to pay a cash fee up to 6 per cent of the gross proceeds from the offering and to issue agent warrants having the same terms as the warrants and equal in number to up to 4 per cent of the number of units sold under the offering.
Net proceeds of the financing will be used to finance the initial $1-million cash payment to Seabridge, exploration and development activities at the Red Mountain project, and for working capital purposes.
Red Mountain project summary
The 17,125-hectare Red Mountain project is located in northwestern British Columbia, 15 kilometres northeast of the town of Stewart. Discovered in 1989, the property was explored extensively until 1996 by Lac Minerals Ltd. and Royal Oak Mines Inc., with 466 diamond drill holes and over 2,000 metres of underground development completed, along with extensive engineering and environmental baseline work. Additional studies were completed over the past 12 years by Seabridge, North American Metals Corp. and Banks Island Gold Ltd.
An NI 43-101 technical report, titled "Technical Report and Preliminary Economic Assessment on the Red Mountain Gold Property," prepared by Robert Baldwin, PEng, for Banks Island Gold, dated Feb. 1, 2013, outlined a resource estimate for four mineralized zones at the Red Mountain project, as shown in the attached table.
Measured
| Indicated
| Inferred
| Zone
| Au grade
| Ag grade
| Au grade
| Ag grade
| Au grade
| Ag grade
| Tonnes
| g/t
| g/t
| Tonnes
| g/t
| g/t
| Tonnes
| g/t
| g/t
| MARC
| 737,000
| 9.2
| 36
| 123,000
| 8.3
| 35
| 3,000
| 8.1
| 32
| AV
| 326,000
| 8
| 23
| 250,000
| 8.1
| 23
| 175,000
| 8.4
| 24
| JW
| 75,000
| 6.2
| 10
| 100,000
| 6
| 7
| 315,000
| 5.4
| 5
| 141
| 314,000
| 3.8
| 8
| Total
| 1,138,000
| 8.7
| 31
| 473,000
| 7.7
| 23
| 807,000
| 5.4
| 10
|
To the best of the company's knowledge, information and belief, there is no new material scientific or technical information that would make the disclosure of these mineral resources inaccurate or misleading.
Red Mountain is a 14-square-kilometre hydrothermal system within the Stikine terrain. Gold mineralization is associated with and partially hosted within an early to mid-Jurassic multiphase intrusive complex, with associated volcanic and volcaniclastic rocks and sediments. Many gold mineralized zones occur on the property, including four mineralized zones with established resource estimates. Three of the four mineralized zones have been folded and are separated by dip-slip fault zones: the Marc, AV and JW zones. These mineralized zones are moderate to steeply dipping, roughly tabular and vary in widths from one to 40 metres, averaging about 15 metres in thickness. Gold and silver tellurides, and free milling mineralization are associated with stockworks, dissemination and patches of coarse-grained pyrite. Alteration facies includes strong quartz-sericite alteration.
Throughout the property, multiple high-grade areas have been identified through surface sampling and local drilling by previous explorers. Of particular significance, since the vast majority of exploration work was completed on the property during 1996, and prior glacial retreat surrounding known mineralized areas has been very extensive, with up to a kilometre at the south end of the property. Glacial retreat over the past couple of decades has resulted in discoveries of additional mineralized zones at Seabridge's KSM project and Pretivm's Valley of the Kings deposit.
Advisers
Revolution has engaged Haywood Securities as its financial adviser and DuMoulin Black LLP as its legal adviser in respect of the transaction.
Statement from qualified person
The technical information in this document has been approved, and the technical report has been reviewed, by Robert McLeod, PGeo, the president and chief executive officer and a director of Revolution, and a qualified person as defined by NI 43-101. Mr. McLeod has reviewed, but has not verified, the data from the technical report disclosed in this release, due to the technical report having been prepared on behalf of Banks Island Gold, another issuer that previously held an interest in the property. A copy of the technical report can be viewed at SEDAR. |
