Pioneer And Cameco Sign Option Agreement On Riou Lake Uranium Project
VANCOUVER, Feb. 12 /CNW/ - Pioneer Metals Corporation (''Pioneer'') is
pleased to announce an agreement with Cameco Corporation (''Cameco'') whereby
Cameco will option the PM claims, a six-claim block within Pioneer's 100%
owned Riou Lake Uranium Project (the ''Project''). The Project, consisting of
approximately 54,715 hectares (136,787 acres) held in 19 claims, is located in
the Athabasca Basin of northern Saskatchewan, Canada and has been explored by
Pioneer since 1997.
The PM claims consist of 14,853 hectares (37,132 acres) in the southeast
portion of the Project. As announced on February 2, 1999, a $800,000 winter
exploration program initiated by Pioneer is currently underway on the Project.
Within the Project, approximately $500,000 will be spent by Cameco, on the PM
claims which includes geophysics and three diamond drill holes. Pioneer will
maintain a 100% interest in the remaining 39,862 hectares (99,655 acres) of
the Project and will spend approximately $300,000 of its own funds on
geophysics and three diamond drill holes as part of this winter's program.
Daniel Faure, Patrick McGowan and Dr. Paul Ramaekers will jointly direct all
exploration within the Project.
Cameco is the world's largest uranium producer, accounting for
approximately one-third of world uranium production. In 1998, total revenues
were $719 million. Its shares trade on the Toronto, Montreal and New York
stock exchanges and have a current market capitalization in excess of $2
billion (CDN).
In the Athabasca Basin, Cameco owns and operates the Key Lake and Rabbit
Lake uranium mines. Cameco holds interests in the world's two largest,
high-grade uranium deposits -- McArthur River (reserve and resource 483
million lbs U3O8, average grade 15%) and Cigar Lake (reserve 353 million
pounds U3O8, average grade 13.6%). Cameco also holds a 20% interest in the
Midwest uranium deposit.
The Option Agreement
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Cameco will be granted a 60% interest in the PM claims upon spending a
total of $6,500,000 by December 31, 2004, according to the following schedule
of expenditures:
Phase I: Year 1 (1999) $ 600,000
Year 2 (2000) $ 750,000
Year 3 (2001) $ 900,000
Phase II: Years 4 to 6: (2002 - 2004) $ 4,250,000
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Total Expenditures $ 6,500,000
Expenditures in Phase I are considered minimum expenditures to keep the
option in good standing and Cameco is obligated to spend $1.35 million in the
first two years. Pioneer will be the operator of the Project for Phase I and
Cameco will have the right to assume operatorship at the commencement of Phase
II.
During Phase II, a minimum of $1,000,000 must be spent on an annual
basis. If Cameco does not propose an exploration program in any year of Phase
II, it may elect to extend the Phase II period by one year for a cash payment
to Pioneer of $1,000,000.
Cameco is not entitled to earn any portion of its 60% interest until the
entire $6,500,000 of expenditures have been incurred.
The Joint Venture
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Also included in the letter of intent are general terms for the joint
venture which will commence following completion of the option agreement.
Joint venture costs will be shared in proportion to the participating
interests, of 60% Cameco and 40% Pioneer. Cameco will be operator, however
Pioneer may assume operatorship if Cameco does not propose an annual budget of
at least $400,000.
If a development decision is made, Cameco will provide a bankable
feasibility study to facilitate Pioneer's share of development costs, and will
also, if necessary following initial financing, provide additional development
funding to Pioneer as required. Repayment to Cameco of this additional
financing will be through an increased share of mine production.
Pioneer is committed to uranium exploration in the Athabasca Basin and
has the technical team and financial resources to explore for and discover
world-class unconformity-type uranium deposits.
ON BEHALF OF THE BOARD OF DIRECTORS
OF
PIONEER METALS CORPORATION
''signed''
Stephen H. Sorensen
President & C.E.O.
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