TORONTO, May 11 /CNW/ - Wesdome Gold Mines Ltd. ("Wesdome") and Windarra
Minerals Ltd. ("Windarra") are pleased to announce that they have executed a
letter of intent pursuant to which Wesdome intends, provided certain
conditions are met, to acquire from Windarra and Windarra intends to sell or
grant to Wesdome: (a) Windarra's interest, being approximately 22.72%, in the
patented claims/leases referred to as the Magnacon Property (the "Magnacon
Acquisition"); and (b) an option (the "Pukaskwa Option") to earn-in up to a
60% undivided working interest (the "60% Interest") in certain mining claims
owned by Windarra and referred to as the Pukaskwa Claims.
The consideration payable by Wesdome for the Magnacon Property shall be:
(a) $750,000, which shall be paid in cash on closing; and (b) a 1% net smelter
royalty in standard industry form in favour of Windarra. In addition, Windarra
shall be entitled to have Wesdome mill up to a maximum of 50,000 metric tonnes
of ore per year from properties owned by Windarra at a cost equal to the
production cost of such milling plus $2.00 per tonne of ore milled. If the
Magnacon Acquisition is completed, Wesdome shall own 100% of the Magnacon
Property, subject to a pre-existing 1.5% net smelter royalty in favour of
Energold Minerals Inc. and the aforementioned 1% net smelter royalty in favour
of Windarra. In addition, the joint venture agreement between Wesdome,
Windarra and Westward Explorations Ltd. dated March 3, 2000 (the "Magnacon
JV"), which applied to the Magnacon Property and the East Property (as defined
therein), shall cease to apply to the Magnacon Property, however, shall
continue to apply to the East Property.
Wesdome shall be granted the right to the 60% Interest free and clear of
all liens, charges, encumbrances, security interests and adverse claims, by
making: (a) an initial cash payment to Windarra of $25,000; and (b) expending
or causing to be expended an aggregate of $3,000,000 in exploration and
development expenses (the "Expenditures") on the Pukaskwa Claims by certain
dates over the period commencing on the date of execution of the option
agreement and continuing until June 30, 2014 (the "Option Period").
Upon making or causing to be made Expenditures totalling $1,500,000,
Wesdome shall have earned-in a 30% undivided working interest (the "30%
Interest") in the Pukaskwa Claims and upon making or causing to be made
Expenditures totalling $3,000,000, Wesdome shall have earned-in a further 30%
interest in the Pukaskwa Claims such that Wesdome shall have earned-in the 60%
interest in such claims. Provided that the Pukaskwa Option remains in good
standing, Wesdome shall be the operator with respect thereto.
If Wesdome provides a withdrawal notice (the "Withdrawal Notice") to
Windarra after earning-in the 30% Interest or fails to earn-in the 60%
Interest in the Pukaskwa Claims, Windarra shall be entitled to dilute
Wesdome's interest in the Pukaskwa Claims by making Expenditures of its own
related thereto. If Windarra makes Expenditures on the Pukaskwa Claims, each
$100,000 of Expenditures made by Windarra, will reduce Wesdome's interest in
the Pukaskwa Claims by 1%.
If Wesdome does not provide the Withdrawal Notice to Windarra, but fails
to make any Expenditures related to the Pukaskwa Claims prior to June 30,
2013, Windarra shall have the right to acquire the 30% Interest in the
Pukaskwa Claims from Wesdome for a purchase price of $200,000 at anytime until
the expiry of the Option Period.
Upon Wesdome earning-in the 60% Interest, Wesdome and Windarra shall be
deemed to have formed a joint venture and shall forthwith enter into a joint
venture agreement (the "Pukaskwa JV Agreement"), which agreement shall be
similar to the Magnacon JV Agreement and shall include a provision stating
Wesdome has the exclusive right to process the ore arising from the Pukaskwa
Conditions and Closing
Each of the Magnacon Acquisition and the grant of the Pukaskwa Option is
conditional upon, among other things, the completion of the other, the
execution of definitive agreements, the completion of due diligence to the
satisfaction of Wesdome, receipt of all necessary corporate and regulatory
approvals (including the approval of the TSX Venture Exchange), and other
standard conditions of transactions of like nature.
It is expected that the Magnacon Acquisition will be completed and that
the Pukaskwa Claims will be optioned to Wesdome by May 29, 2009, which date is
subject to change by mutual agreement of Wesdome and Windarra.
The proposed transactions are believed by both companies to be mutually
beneficial for the following reasons:
1) they will clarify ownership of strategically located properties with
respect to Wesdome's existing mining and milling infrastructure;
2) they will provide Windarra with a non-dilutive means of financing
exploration on its wholly-owned properties of merit in the area; and
3) they will accelerate the evaluation of the prospective Pukaskwa
Views on exploration potential, prospective potential and merit of the
Pukaskwa Claims are those of George Mannard, P.Geo. and Vice President,
Exploration, Wesdome, and "Qualified Person" as per NI 43-101.
Wesdome Gold Mines Ltd. is an established Canadian gold producer with
mining operations and development projects in Wawa, Ontario and Val d'Or,
Quebec. It has 99.7 million shares issued and outstanding and trades on the
Toronto Stock Exchange under the symbol "WDO".
Windarra Minerals Ltd. is an established Canadian exploration company. It
has actively been involved in exploration and development projects in the
Mishibishu Greenstone belt for 20 years, and holds a further 100% interest in
the two Mishi mining leases consisting of approximately 705 hectares in the
Mishibishu Lake township and a 25% interest in the Magnacon East property. It
has 30.7 million shares outstanding and trades on the TSX Venture Exchange
under the symbol "WRA".
This news release contains "forward-looking information" which may
include, but is not limited to, statements with respect to the future
financial or operating performance of the companies and their projects. Often,
but not always, forward-looking statements can be identified by the use of
words such as "plans", "expects", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates", or "believes" or
variations (including negative variations) of such words and phrases, or state
that certain actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved. Forward-looking statements involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the companies to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. Forward-looking statements
contained herein are made as of the date of this press release and the
companies disclaim any obligation to update any forward-looking statements,
whether as a result of new information, future events or results or otherwise.
There can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from
those anticipated in such statements. The companies undertake no obligation to
update forward-looking statements if circumstances, management's estimates or
opinions should change, except as required by securities legislation.
Accordingly, the reader is cautioned not to place undue reliance on
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 accuracy of this release.
For further information:
For further information: Rowland Uloth, President, or Donovan Pollitt,
P.Eng., VP Corporate Development, 8 King St. East, Suite 1305, Toronto, ON,
M5C 1B5, Toll Free: 1-866-4-WDO-TSX, Phone: (416) 360-3743, Fax: (416)
360-7620, Email: firstname.lastname@example.org, Website: www.wesdome.com