VANCOUVER, Nov. 30 /CNW/ - Red Dragon Resources Corp. ("Red Dragon" or the "Company") is pleased to announce that it has signed a Letter Agreement ("Agreement") with Golden Tapajos Mineraçao Ltda. ("Golden Tapajos") on November 23, 2009 to acquire up to a 70% undivided interest in the Boa Vista Gold Property ("Property"). Golden Tapajos Ltda. is a company controlled by Octa Mineraçao Ltda., which in turn is owned by Majestic Diamonds & Metals, Inc. The Property is located in southern Para near the border with Mato Grosso and consists of two exploration concessions covering an area of 12,536 hectares. The Property is situated approximately 280 kilometres southeast of the Company's recently acquired properties in Amazonas that were described in News Release dated September 24, 2009.
The Property occurs near the southern border of the Tapajos Mineral Province ("TMP"), which encompasses the Tapajos River and its drainages. The TMP underwent wide spread alluvial gold mining by local miners (garimpeiros) in the last 40 years resulting in the largest gold rush in the world in the latter part of the twentieth century. Many of the alluvial deposits are nearly exhausted, however since the early 1990's the primary source of these deposits have been explored by junior and senior mining companies. Exploration to date has identified a number of 1 million ounce or greater gold deposits that are amenable to low cost, bulk mineable open pit extraction.
The Property covers a number of historic alluvial deposits (garimpos) that have been partially explored by Golden Tapajos. Exploration work to date includes mapping, soil and rock geochemistry and a geophysical survey (induced polarization) over selected garimpos (Jair and Almir). The Jair target coincides with a northwest trending drainage along which alluvial gold has been mined over a distance of 4 kilometres. Bed rock exposed in pits along this structure consists of quartz+/-sulphide veins and stockworks hosted in sericite+pyrite altered granite. Sulphides are predominantly pyrite with minor amounts of chalcopyrite, galena and sphalerite. Grab samples of the vein material reportedly grade several grams per tonne gold, whereas altered wall rock with disseminated sulphides commonly grade less than 2 grams per tonne gold. A soil survey over the northern part of this target has identified a gold in soil anomaly that trends northwest and is 1.6 kilometres long by 400 metres wide; the anomaly is open along strike to the northwest and southeast. The Almir target is located approximately 4 kilometres east of the Jair target. The target consists of a northwest trending gold in soil anomaly that is 1 kilometre long by up to 400 metres wide that is coincident with a number of garimpo pits and alluvial workings. Mineralization is reported to be similar to that exposed at Jair.
The Company intends to undertake a systematic exploration program over the entire Property, which will include detailed geological mapping, and geochemical and geophysical surveys. A drill program will initially focus on the Jair and Almir targets and later extended to other targets as results are received, interpreted and prioritized.
The terms of the Agreement require Red Dragon to undertake the following:
- Pay to Golden Tapajos the amount of US$600,000 on signing of the
- First Option - incur US$3,000,000 in exploration expenses on or
before the second anniversary date of signing the Definitive
Agreement to earn an 51% interest,
- Upon fulfilling the First Option, Golden Tapajos must notify Red
Dragon whether it wants to form a Joint Venture or grant Red
Dragon a Second Option to earn an additional 19% interest in the
- If Golden Tapajos elects to grant Red Dragon a Second Option, Red
Dragon must pay US$1,000,000 within 10 business days and incur US
$3,000,000 in exploration expenses on or before the fourth
anniversary date of signing the Definitive Agreement bringing its
interest in the property to 70%.
Each party of the Joint Venture that ensues will be responsible for funding exploration and development costs on a pro-rata basis or be diluted accordingly. Should any party's percentage ownership interest in the Joint Venture be reduced to less than 10%, or if a party fails to contribute its full pro-rata share for a work program that such party agreed to contribute to under the Joint Venture and does not cure such failure within 30 days, will have deemed to have forfeited its percentage ownership Interest to the other Joint Venture party and, in exchange will receive a 1.5% net smelter returns royalty. Red Dragon has the first right of refusal in the event that Golden Tapajos decides to sell, assign or dispose of their interest in the Joint Venture.
A finder's fee of US$50,000 was paid to a certain individual in connection with this transaction.
Red Dragon has a 30 day exclusive due diligence period commencing on the first day of signing the Agreement. The transaction is subject to customary closing conditions, including but not limited to, TSX Venture Exchange acceptance. There can be no assurance that the transaction will completed as proposed or at all.
Garnet Dawson, M.Sc., P.Geo. (British Columbia), Vice President, Exploration for the Company and a Qualified Person, as defined by National Instrument 43-101, has reviewed and approved the technical disclosure contained in this News Release.
About Red Dragon Resources Corp.
Red Dragon Resources Corp. is a Canadian based company with a focus on acquisition, exploration and development of mineral properties. The Company has a balance sheet of Cdn$9 million in cash and cash equivalents of Cdn$9.1 million in investments as of September 30, 2009.
Some statements in this news release contain forward-looking information, including without limitation statements as to planned expenditures and exploration programs. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include without limitation the completion of planned expenditures, the ability to complete exploration programs on schedule and the success of exploration programs.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this news release.
SOURCE Brazilian Gold Corporation
For further information: For further information: Red Dragon Resources Corp., Alvin Jackson, Chairman and Chief Executive Officer, Tel: (604) 602-8188; Harbour Financial Inc., Brian N. Barbour, Tel: (403) 813-5832