Continent Resources Signs Letter Agreement to Acquire Copper Properties in Arizona and New Mexico and Announces $1.5 M Non-Brokered Private Placement


    VANCOUVER, May 30 /CNW/ - Continent Resources Inc. (CNQ: CORE) is pleased
to announce the signing of a Letter of Intent ("LOI") with Southwest
Exploration Group LLC ("Southwest") to acquire an undivided 100% interest in
certain mineral claims containing known copper mineralization in the prolific
SW United States porphyry copper district in Arizona and New Mexico.
    Continent Resources CEO Robert Bick comments: "With the proposed
acquisition of this very high quality portfolio of copper properties, located
in one of the world's most prolific copper-producing regions, Continent will
become a significant copper explorer. Several of the properties have seen
valuable past drilling programs with the discovery of important copper
    "The Southwest Exploration Group (Thornwell Rogers, Daniel Laux, and
Michael Pawlowski) have spent the majority of their careers exploring and
developing copper deposits, for Phelps Dodge and other copper companies. They
will take an active role in the company with Michael Pawlowski serving as
President, Daniel Laux as VP Exploration and Thornwell Rogers as a
    "The acquisition of these properties gives Continent a huge head start in
copper exploration. We are currently planning drilling on the "flagship" Lone
Mountain property where we will grid drill the surface-exposed oxide
mineralization and probe the deeper, higher-grade skarn-hosted copper-zinc
mineralization at depth."

    The Properties

    The package of properties (the "Properties") acquired from Southwest
includes the Lone Mountain and Mimbres prospects in New Mexico and the West
Safford, Teague, Twin Peaks, and West Jerome prospects in Arizona.

    1. Lone Mountain, New Mexico

    The Lone Mountain porphyry copper system is located near Silver City, New
Mexico, and is within sight of the large Tyrone and Chino porphyry copper
deposits owned by Freeport-McMoran. Land holdings consist of two New Mexico
State mineral leases and 40 unpatented federal mining claims. At Lone
Mountain, two distinct targets are present; a near-surface zone of oxide
mineralization which will be the first target for Continent's drilling; and
deeper, sandstone and carbonate-related copper-zinc-silver skarn
mineralization which can attain much higher grades over significant widths.
Oxide mineralization begins approximately 60 meters below surface and
continues to over 250 meters below surface. The lower parts of the oxide zone
become chalcocite-dominant. Historical data shows that the skarn
mineralization, which can attain multiple percent grades of copper and zinc
over significant (tens of meters) true widths, will be the focus of a second
phase of drilling which will involve the deepening of certain holes targeting
the shallower oxide-dominant mineralization. A review of existing drill data
show that the lower skarn horizons radiate outwards from a central intrusive
stock as relatively flat-lying beds.
    Lone Mountain represents a poorly-explored, (current drill hole spacing
is approximately 250 meters) well-mineralized porphyry-skarn system with
multiple, stacked mineralized targets, and will therefore form the first
target to be tested by Continent. Drill testing the entire system will
represent a major exploration effort for the Company. The results are
anticipated to provide the earlier identification of significant
copper-zinc-silver mineralization at depth. In addition the drilling will test
the presence of shallow, open-ended copper oxide-chalcocite mineralization
near surface which has never been systematically tested.

    2. Mimbres, New Mexico

    The Mimbres Property consists of 45 unpatented lode claims and
2,040 acres of New Mexico State Mining Leases over a porphyry
copper-molybdenum deposit and higher-grade copper-zinc-gold-silver-bearing
skarns. Bear Creek Exploration drilled 18 holes up to 1,000 meters deep with
assays up to 1.0% copper. Assays typical of skarn intersections include 22
metres grading 0.50% Cu; 15 metres grading 0.60% Cu; and 12.5 metres grading
1.0% Cu. As is the case at the nearby Lone Mountain project, drill spacings
were very far apart, and the alteration and mineralized zones remain open in
several directions. Continent considers the earlier work to have identified a
mineralized system, which now must be explored in a detailed, systematic
manner to identify an ore resource. As at Lone Mountain, no importance was
given to the oxide mineralization which overlies the deposit, and this will
form one of the first exploration priorities for Continent.

    3. West Safford, Arizona

    The Safford property consists of approximately 2,860 acres of claims, and
a 640 acre Arizona State Mineral Exploration lease. The target at West Safford
is a large tonnage "Resolution-type" porphyry copper target, buried beneath
younger alluvium, in the Safford Mining District. The extrapolation of known,
ore controlling structures has formed an important exploration criteria in the
acquisition of the West Safford ground. Further target definition has included
the use of biogeochemistry, ground magnetics (carried out by Bear Creek
Exploration), and a large IP survey.
    Phelps Dodge completed two drill holes that encountered a quartz-pyrite
zone. Continent interprets the earlier two drill holes to have intersected the
"pyrite shell" within a much larger system, as evidenced by the size of the IP
anomaly. The system remains, essentially, untested.

    4. Teague Springs, Arizona

    The Teague Springs Property consists of 1,920 acres of claims located
west of Dos Pobres in the Safford Mining District. The target is a large
tonnage, buried Laramide porphyry copper-molybdenum-silver-gold system
associated with a large, untested IP anomaly and a Mo-Cu-Zn biogeochemical
anomaly. The target area is covered by shallow pediment gravels based on past
gravity surveys, and has never been drilled. IP, magnetic, gravity, and
biogeochemical surveys have all proved successful in discovering world class
porphyry copper systems at the nearby Morenci and Safford mining districts.

    5. Twin Peaks, Arizona

    The Twin Peaks property is a partially drilled, copper oxide target that
has excellent infrastructure and potential for a large open-pit copper oxide
body with very low strip ratio. A surface area measuring 750 metres by 520
metres exhibits veins, veinlets, and stockworks of chrysocolla and secondary
malachite, tenorite, and cuprite and chalcocite hosted by a pyrite-poor,
Laramide-age, quartz monzonite. Only six drill holes have tested this target,
each with highly encouraging results, including one hole with 86.9m grading
0.37% total Copper starting at surface. The copper oxide zone is open and
untested under alluvial cover to the north, west, and south.

    6. West Jerome, Arizona (a Volcanic Massive Sulphide target)

    The West Jerome property is considered by Continent management to
represent a highly-potential massive sulphide target in the western Jerome
Mining District, Arizona. The property consists of approximately five square
kilometres of claims on the west side of Freeport McMoran (previously Phelps
Dodge) patented lands.
    The United Verde and United Verde Extension mines, proximal to the West
Jerome property, have produced over 98% of the past production from the famous
Jerome mining district. Phelps Dodge production records from 1889-1974 for the
United Verde mine show production of 32.99 million tons grading 4.36% copper,
1.53 oz/ton silver, and 0.042 oz/ton gold. The United Verde Extension mine
began production in 1938 and produced a total of 3.9 million tons grading
10.23% copper, 1.71 oz/ton silver, and 0.039 oz/ton gold. As such, the
combined deposits at Jerome rank as a giant, world-class massive sulphide
    The West Jerome prospect offers an opportunity to explore for similar,
very large massive sulphide deposits with high grades of copper and zinc. The
West Jerome prospect has favourable features similar to the nearby United
Verde mine including similar stratigraphy which makes it a high quality drill

    Near-Term Exploration Plans

    Continent will begin exploring at Lone Mountain as a first priority, with
the objective of producing a geological resource of the near-surface oxide
copper mineralization, while lengthening a percentage of the holes to
intersect the deeper, higher-grade copper-zinc-bearing skarn mineralization
which was discovered in earlier drilling. The Twin Peaks copper oxide prospect
is considered drill-ready and will represent a second near-term exploration
    Meanwhile, surface mapping, geochemical sampling, and geophysical studies
will be carried out on the remainder of the prospects to ready them for

    Terms of the LOI with Southwest

    As consideration for Continent's proposed acquisition of an undivided
100% interest in the Properties from the Southwest, the terms of payment and
share issuances by Continent to Southwest shall be as follows:

    1.  Continent shall pay to Southwest an amount equal to USD$150,000
        payable in cash, no later than five (5) business days after the
        closing of the acquisition, provided that all of the applicable
        regulatory approvals required in connection with the transaction have
        been obtained by Continent.
    2.  Upon the first anniversary of the closing, and subject to Continent
        maintaining its stated commitments to Southwest, Continent shall pay
        to Southwest USD$150,000 in cash.
    3.  After the closing and upon completion of the first financing, which
        shall amount to at least USD$1,000,000 by way of a public offering or
        private placement, Continent shall pay to Southwest a further
        USD$150,000 payable in cash.
    4.  Upon completion of the closing, Continent shall grant 9,000,000
        options (the "Options") to the Southwest, subject to a vesting
        schedule extending over a period of 42 months. Each Option shall
        entitle the holders to purchase one common share from Continent at a
        price of $0.25 per share for a period of ten (10) years from the date
        the Options are granted subject to applicable securities rules and
    5.  Continent shall pay to Southwest a royalty equal to 2.0% of the net
        smelter return ("NSR") on minerals from each of the individual
        Properties. Continent may purchase one half of one percent (0.5%) of
        the NSR on production from each of the individual Properties from
        Southwest at any time for a total purchase price of $1,000,000.

    A finder's fee of $150,000, payable in cash or shares, will be paid upon
closing of the acquisition.

    Conditions of the Closing

    The closing of the transaction is subject to the satisfaction or waiver
of the following conditions:

    1.  Approval of Continent's board of directors to the transaction;
    2.  Completion of due diligence regarding claims ownership and geological
        data validation by Continent to its sole satisfaction;
    3.  All applicable regulatory approvals with respect to the transaction
        having been obtained; and
    4.  The signing of the definitive agreement which will supersede the LOI.

    Non Brokered Private Placement

    To finance the initial drilling program and as an integral part of the
acquisition of the Properties, Continent Resources has negotiated, subject to
regulatory approval, a private placement of up to 6,000,000 units at a price
of $0.25 per unit (the "Unit"), for gross proceeds of up to $1,500,000. Each
Unit will consist of one common share of the Company (the "Share") and one
half of one Share purchase warrant (the "Warrant"). Each whole Warrant will
entitle the holder thereof to purchase one additional Share (a "Warrant
Share") of the Company at a price of $0.35 per Warrant Share for a period of
two years from the date of issuance (the "Private Placement").
    Finder's fees, payable in cash and/or shares, will be paid in the amount
of up to 10% of the proceeds of the Private Placement.
    Shares issued pursuant to this Private Placement, as well as any Shares
issued pursuant to the exercise of the Warrants and the finder's fees, are
subject to a four-month hold period from the date of issuance.
    Proceeds from the Private Placement will be used to carry out geological,
geochemical and geophysical studies on the Properties, the initial phase of
drilling on the Lone Mountain property and for general working capital.
Drilling will initially focus on the near-surface oxide mineralization with
specific holes deepened to probe the underlying, higher-grade
copper-zinc-silver skarn mineralization discovered during previous, historical
drilling campaigns.

    About Continent Resources Inc.

    Continent Resources Inc. is a mineral exploration company focusing on the
discovery of copper resources in copper-rich districts in Arizona and New
Mexico. The Company intends to maintain this commodity and geographic focus.
In addition to the high-quality portfolio that the Company plans to acquire
through its involvement with the Southwest Group, Continent continues to seek
out advanced copper exploration opportunities.
    In compliance with National Instrument 43-101, Lawrence A Dick, Ph.D.,
P.Geo., a director of Continent Resources, is the Qualified Person who
prepared or supervised the preparation of the information that forms the basis
for this news release.

    On behalf of Continent Resources Inc.


    Lawrence A Dick, Ph.D., P.Geo

    FORWARD LOOKING STATEMENTS: This document includes forward-looking
statements as well as historical information. Forward-looking statements
include, but are not limited to the continued advancement of Continent's
general business development, research development and/or Continent's
development of mineral exploration projects. When used in this document, the
words "anticipate", "believe", "estimate", "expect", "intent", "may",
"project", "plan", "should" and similar expressions are intended to be among
the statements that identify forward-looking statements. Although Continent
Resources Inc. believes that their expectations reflected in these forward
looking statements are reasonable, such statements involve risks and
uncertainties and no assurance can be given that actual results will be
consistent with these forward-looking statements. Important factors that could
cause actual results to differ from these forward-looking statements include
the potential that Continent's mineral deposit(s), fluctuations in the
marketplace for the sale of minerals, the inability to implement corporate
strategies, the ability to obtain financing and other risks disclosed in our
filings made with the British Columbia Securities Commission.

    This news release does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities in the United States. The securities
have not been and will not be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act") or any state securities
laws and may not be offered or sold within the United States or to U.S.
Persons unless registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is available.

For further information:

For further information: Continent Resources Inc., Robert Bick,
CEO/President,, (604) 639-0430

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