Meadow Bay Capital to Acquire Desert Hawk Resources With Interest in the Atlanta Mine in Nevada and Launches US$10 Million Equit
January 21 2011 - 3:47PM
Marketwired
Meadow Bay Capital Corporation ("Meadow Bay") (TSX VENTURE: MAY)
announced on January 20, 2011 that it has entered into an arm's
length Letter of Intent dated January 20, 2011 to acquire all of
the issued and outstanding common stock of Desert Hawk Resources
Inc. ("Desert Hawk"), a private Delaware corporation. The purpose
of this news release is to provide additional facts which were not
disclosed in the January 20th news release and for this purpose the
additional information has been included hereunder. Desert Hawk is
a mining and exploration company with three gold projects in Nevada
including an option on the former producing Atlanta Gold and Silver
Mine, the Colorback Gold Project and the Spruce Mountain
Molybdenum, Copper, Silver Project. On closing and subject to a
definitive agreement and other customary conditions, including but
not limited to, TSX Venture Exchange ("TSXV") approval, Meadow Bay
will issue 7.5 million common shares to the shareholders of Desert
Hawk. Meadow Bay will pay a US$100,000 non-refundable deposit to
Desert Hawk and upon closing make a further US$237,500 payment.
Meadow Bay has engaged Casimir Capital Ltd. as a placement agent
in connection with a US$10 million brokered equity financing to be
priced in the context of the market. US$6 million of the proceeds
of the financing will be used to exercise the purchase of the
Atlanta Mine and the balance retained for working capital to fund
ongoing exploration and mine development. The business plan will
include the reinstatement of production at the Atlanta Mine. The
Atlanta Mine produced 1.5 million tons of ore containing 0.09
ounces gold/ton and 1.25 ounces silver/ton and recovered 121,000
ounces of gold and 800,000 ounces of silver during the period 1975
to 1985 based on historic production records from the Bobcat
Properties Inc.-Standard Slag Production Joint Venture. The
remaining indicated resource of 338,520 ounces gold (6.21 million
tons grading 0.054 oz/ton Au) and inferred resource of 125,960
ounces of gold (3.07 million tons grading 0.041 oz/ton Au) and
indicated resource of 3.1 ounces of silver (6.21 million tons
grading 0.506 oz/ton Ag) and an inferred resource of 0.7 million
ounces of silver (3.07 million tons grading 0.236 oz/ton Ag) has
been estimated by previous workers which is not compliant with
standards as set out in National Instrument 43-101. This historical
resource is based upon an internal study completed by Kinross Gold
U.S.A. Inc. during the period of 1997-1998. Kinross performed
extensive field mapping and sampling plus along with drilling of
approximately 80 RC holes for a total of 54,255 feet. This drilling
combined with the prior drilling by Gold Fields with 11 core holes
(9,286 feet) and 71 reverse circulation holes (46,735 feet) and the
drill program by Standard Slag provides the database for the
internal resource estimate. Block models were prepared and
resources calculated based upon various cut-off grades. The
reported historical resources were calculated at a cut-off grade of
0.2 oz/ton Au.
As above is a pre-2001 historical resource estimate, readers are
cautioned that a Qualified Person has not done sufficient work to
classify the historical estimate as current mineral resources and
the issuer is not treating the historical estimate as current
mineral resources and the historical estimate should not be relied
upon.
The mine development plan will include substantial pit expansion
and capital expenditures to refurbish the mining equipment and near
term production potential. In addition to the excellent near-term
development aspect of the project, Meadow Bay considers the Atlanta
Mine to offer excellent exploration and development upside by
drilling extensions to the known mineralization and larger scale
production than previous mining through both pit-extension and
possibly underground mining. As a feasibility study has not been
completed there is no certainty the proposed operation will be
economically viable. Closing of the equity financing is subject to,
among other things, TSXV approval.
The Colorback Gold Project is on the Battle Mountain trend 12
miles north of Pipeline. The property is host to both surface gold
targets and a lower-plate Carlin-Style gold system. Previous
surface sampling contains gold values as high as 1 ounce per ton
and near surface intercepts in upper plate chart considered leakage
from the deeper system.
Tim Master is the qualified person under National Instrument
43-101 and has reviewed the contents of this news release. Mr.
Master is not independent of Meadow Bay as he is the President and
Chief Operating Officer of Desert Hawk.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities of Meadow Bay or any
other entity, nor shall there be any sale of these securities in
any state or jurisdiction of the United States in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction. The securities described herein have not been and
will not be registered under the United States Securities Act of
1933, as amended, and may not be offered or sold in the United
States or to a U.S. person absent an exemption from the
registration requirements of such Act.
This press release includes certain "forward-looking statements"
within the meaning of the United States Private Securities
Litigation Reform Act of 1995 and "forward looking information"
within the meaning of Canadian securities laws. There can be no
assurance that such statements will prove to be accurate, and
actual results and future events could differ materially from those
anticipated in such statements. Important factors that could cause
actual events and results to differ materially from Meadow Bay's
expectations include the need to satisfy the conditions set forth
in any agreement entered into in connection with the Desert Hawk
transaction and the equity financing; the need to satisfy
regulatory and legal requirements with respect to the Desert Hawk
transaction and the equity financing; risks related to the
exploration stage of Meadow Bay's projects; market fluctuations in
prices for securities of exploration stage companies; and
uncertainties about the availability of additional financing.
Trading in the securities of Meadow Bay should be considered highly
speculative. Meadow Bay does not intend, and does not assume any
obligation, to update any forward-looking statements, other than as
required by applicable law.
The press release makes reference to historical estimates. The
historical estimates are by definition herein not NI 43-101
compliant and are included herein in for historic context and
completeness. There can be no assurances that any of the historical
estimates will be able to be categorized as a NI 43-101 compliant
resource or reserve category or demonstrate any economic viability.
Investors are cautioned not to rely on the historical estimates
when making their investment decisions.
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 press release.
Contacts: Meadow Bay Capital Corporation Robert Dinning Chairman
and CEO 604-682-2928 604-685-6905 (FAX) Launch IR Matthew
Harrington 613-882-7467
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