🕐23.12.10 - 16:54 Uhr
ARMISTICE RESOURCES SIGNS DEFINITIVE OPTION AGREEMENT TO ACQUIRE FORMER KERR-ADDISON MINE PROPERTY
* PRESS RELEASE For Immediate Release*
*Armistice Resources Signs Definitive Option Agreement to Acquire Former
Kerr-Addison Mine Property*
**
* Kerr-Addison mine produced more than 11 million ounces of gold
from 1938 to 1996
* Kerr-Addison property adjoins Armistices McGarry Mine gold
project on which it is about to commence work to prepare for
production in late 2011
* Significant mineralized inventory identified on Kerr-Addison
property in 1996 report (not compliant with current NI 43-101
requirements)
Toronto, Ontario, December 23, 2010 Armistice Resources Corp.
(Armistice) (TSX: AZ), which expects to begin production in 2011 from
its McGarry Mine gold project in the Kirkland Lake area of northeastern
Ontario, today announced that it has signed a definitive five-year
option agreement for the purchase of up to 100 percent of the mineral
rights of the former Kerr-Addison mine property.
The Kerr-Addison property adjoins on the east the McGarry Mine gold
project on which Armistice is about to commence work to prepare for
production.
Some of the underground workings from the Kerr-Addison Mine
extend onto the McGarry property.
The Kerr-Addison property covers
approximately four miles of strike straddling the heart of the Larder
Lake Cadillac Break (the Break).
The Break is a major crustal feature
with which all the gold deposits from Val dOr to Kirkland Lake are
directly or indirectly associated.
Total gold production from mines
along the Break exceeds 95 million ounces.
Mines along the Break
continue to be prolific gold producers.
The full length of the Break
continues to be the focus of intense gold exploration and new mine
development.
Armistice Resources had previously signed a Letter of Intent with a
group of private investors to provide the company one year to complete
due diligence and an additional 6 months to sign a definitive option
agreement for the purchase of up to 100 percent of the ownership of the
former Kerr-Addison Mine workings and related mineral properties
totalling in excess of 2,000 acres.
During the past year, we have been carrying out our due diligence
process, including a review of the vast historical geological data
available on the Kerr-Addison property, said Todd J.
Morgan,
Armistices President and Chief Executive Officer.
While we have a
great deal of additional work to do in examining the wealth of data
available, we feel even more excited and positive about the potential of
this option to acquire than we did when we announced last January that
we had signed the intent letter.
We have been particularly interested in the potential for resource
definition outside the immediate area of the previous workings at the
Kerr property.
Our review so far has focused on near-surface targets
along strike and across strike from the previous production stopes.
In
particular, we have identified priority targets for drill testing in the
Mill Zone, south of the former production areas, the Chesterville East
Zone, to the east, the Green Giant Zone to the north, and the area
between the Kerr and McGarry properties.
The financings that we recently announced will provide us the funding
needed in 2011 to undertake further exploration, including drilling
programs, on the Kerr-Addison property, Mr.
Morgan said.
With this
option to acquire and the progress that we are making on bringing the
McGarry Mine gold project into production, Armistice Resources is taking
significant steps forward in building our company.
Our strategy
continues to be to build a portfolio of mineral resource properties that
provide synergies that will enable us to create long-term and
sustainable value for our shareholders.
Terms of the Transaction
As previously announced, on signing the Letter of Intent, Armistice
Resources paid $100,000 to the group of private investors.
With the
signing of the definitive five-year option agreement, Armistice
Resources will make the first of five annual payments of $500,000 on or
before January 14, 2011 to the private investors for a total of $2.5
million, and will issue 2,000,000 common shares to the group in due
course.
Armistice Resources also will be required to pay a 2% royalty on
gold production, except for an area identified in an internal report
prepared by AJ Perron Gold Corp.
dated October 21, 1996, as containing
proven and probable reserves (not compliant with national instrument
43-101) which, are subject instead to a 3% royalty.
The Kerr-Addison Property
The former Kerr-Addison Mine was one of the biggest gold producers in
North America, producing more than 11 million ounces of gold from 41
million tons of ore during its 58-year history from 1938 to 1996.
The
mine closed in 1996 during a period of pronounced low gold prices even
though gold-bearing mineral resources of more than five million tons
grading an average of about 0.14 oz per ton were reported in internal
documentation.
As noted in Armistices January 8, 2010 news release, after the shutdown
of production in 1996, AJ Perron Gold Corp.
completed an internal
inventory of mineral resources for the Kerr-Addison Mine dated October
21, 1996 and authored by Chief Geologist M.
Hasan, M.Sc., FGAC and
General Mine Superintendent R.R.
Gagnon, P.Eng.
(the Kerr Report).
The
review in the Kerr Report was not compliant with the current National
Instrument 43-101 or CIM Mineral Resource standards and therefore cannot
be relied upon.
A qualified person has not done sufficient work to
classify the historical estimate as current mineral resources.
In addition, the review for the Kerr Report was made at a time when the
surface and underground infrastructure was still in place and
serviceable.
This is no longer the case since all surface structures,
including the hoisting plant and mill, have been demolished and the mine
workings are flooded.
Therefore, Armistice Resources does not consider
the mineral resources data to be current.
The historical mineral
resources in the Kerr Report were summarized as:
Proven + Probable Reserves 771,000 tons @ 0.110 oz Au / ton 84,500 oz Au
Possible Reserves 1,299,000 tons @ 0.124 oz Au / ton 161,800 oz Au
Additional Mineral Inventory 3,051,000 tons @ 0.150 oz Au / ton 457,600
oz Au
*The categories "proven and probable reserves" and "possible reserves"
are NOT the same categories used in sections 1.2 and 1.3 of National
Instrument 43-101.
This information is not current or reliable until
further work is completed and reviewed by a qualified person.*
The authors of the Kerr Report state that the "parameters and formulas
used for ore reserve calculations have been historically established and
are: calculated on longitudinal sections using a tonnage factor of 12
cubic feet per ton; applying a minimum dilution of 15 percent at nil
grade; applying a cut-off grade of 0.06 ounces gold per ton; and cutting
high values to 0.72 ounces gold per ton in the carbonate ore and 3.00
ounces gold per ton in the flow ore."
The eastern two-thirds of the property has received very little
exploration work since the property was not consolidated under a single
owner until the early 1990s, reports Erik Andersen, P.
Eng.,
Armistices Vice-President and Chief Operating Officer.
Aside from a
few very old drill holes in this region, only 10 drill holes with wedges
have been drilled over this 2.5 mile strike extent of the Break.
These
drill sections were at 1,000-foot spacings and many did not reach their
intended target.
Armistice considers the eastern two-thirds of the property to be
virtually unexplored.
For example, underground exploration drifts on the
1,600 and 2,650 foot Levels east of the former producing areas
discovered the Chesterville East Zone in which the historical record
reports drill intersections of 1.4 oz/t over 9.5 ft, 0.16 oz/t over 20.0
ft, and 0.42 oz/t over 14.0 ft amongst about two dozen holes with gold
zone intersections, confirming the potential for the discovery of new
ore zones to the east of previous production areas, said Mr.
Andersen.
*Qualified Person*
Erik Andersen, P.Eng., Vice-President and Chief Operating Officer of
Armistice Resources and a Qualified Person as defined by National
Instrument 43-101, has reviewed and approved this news release.
***About Armistice Resources Corp.*
Armistice Resources, a Canadian-based exploration and development
company, expects to begin gold production in 2011 from its McGarry Mine
in the Kirkland Lake area of northeastern Ontario.
The McGarry Mine gold
project is located in Virginiatown on the prolific Larder Lake-Cadillac
Break that extends 200 km east-west straddling the Ontario and Quebec
border and that has produced 95 million ounces of gold.
The McGarry Mine
is adjacent to the former Kerr-Addison Gold Mine that has produced more
than 11 million ounces of gold.
The McGarry Mine gold project consists
of 33 contiguous patented mining claims, including three licenses of
occupation, totaling 484 hectares.
The McGarry Mine gold project is
fully permitted and all equipment and systems at the site have been
brought up to standards, including its installed mining plant.
Armistice
Resources is listed on the Toronto Stock Exchange (Symbol: AZ) and
currently has 86,836,899 common shares issued and outstanding.
To find
out more about Armistice Resources, please visit the companys website
at www.armistice.ca.
*Forward-Looking Statements*
This news release contains forward-looking statements, including
completion of the equity offering, the bridge loan and the project loan
facility, current expectations on the timing of the commencement of
production, and the execution of an option agreement with respect to the
Kerr-Addison property.
These forward-looking statements entail various
risks and uncertainties that could cause actual results to differ
materially from those reflected in these forward-looking statements.
Such statements are based on current expectations, are subject to a
number of uncertainties and risks, and actual results may differ
materially from those contained in such statements.
These uncertainties
and risks include, but are not limited to, the strength of the Canadian
economy; the price of gold; operational, funding, and liquidity risks;
the degree to which mineral resource estimates are reflective of actual
mineral resources; the degree to which a pre-feasibility study gives
sufficient grounds for classifying the indicated mineral resources as
probable reserves; and the degree to which factors which would make a
mineral deposit commercially viable are present; the risks and hazards
associated with underground operations.
Risks and uncertainties about
Armistice Resources business are more fully discussed in the companys
disclosure materials, including its annual information form and MD&A,
filed with the securities regulatory authorities in Canada and available
at www.sedar.com and readers are urged to read these materials.
Armistice Resources assumes no obligation to update any forward-looking
statement or to update the reasons why actual results could differ from
such statements unless required by law.
//
For further information:
Investor and Media Relations
Richard W.
Wertheim
Wertheim + Company Inc.
Email:
416-594-1600 ext.
223
416-518-8479 (cell)