Meadow Bay Acquires Atlanta Gold Mine in Nevada, Appoints Bill Reed to Board and Closes on US$9.25M Equity Financing
March 07 2011 - 1:46PM
Marketwired
Meadow Bay Capital Corporation (the "Company") (TSX VENTURE:
MAY)(FRANKFURT: 20M)(WKN: A1C3DN) is pleased to announce that
further to its news release of January 21, 2011, it has acquired
all of the issued and outstanding common stock of Desert Hawk
Resources Inc. ("Desert Hawk") and the former producing Atlanta
Gold and Silver Mine (the "Atlanta Mine") in Nevada, USA.
The Company also announces the closing of the first tranche of
its brokered private placement (the "Offering") with a syndicate of
agents led by Casimir Capital Ltd. (the "Agent") for gross proceeds
of US$9,253,750 and the appointment of Charles (Bill) Reed to its
board of directors.
Acquisition of Desert Hawk and the Atlanta Gold Mine
Desert Hawk, a private Delaware corporation, is a mining and
exploration company with three gold projects in Nevada including
the former producing Atlanta Mine, the Colorback gold project and
the Spruce Mountain molybdenum, copper, silver Project. For further
details see the company website at www.deserthawk.ca. The Company
acquired all of the issued and outstanding common stock of Desert
Hawk by issuing 7.5 million common shares of the Company. US$5
million of the proceeds of the Offering was used by the Company to
exercise the purchase of the Atlanta Mine. On February 9, 2011 the
Company advanced Desert Hawk, the sum of US$700,000 to secure an
extension by which Desert Hawk could exercise the option on the
Atlanta Mine, such advance reducing the exercise price on the
Atlanta Mine to US$5M.
The Company intends to reinstate 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.
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, the Company 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.
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. The Company intends to prepare and file a
NI 43-101 Technical Report on the Colorback Gold Project as soon as
possible.
Readers are cautioned that the historical estimates are not NI
43-101 compliant and should not be relied upon. A Qualified Person
has not done sufficient work to classify the historical estimate as
current mineral resources or mineral reserves. Consequently, their
reliability and relevance should be regarded as suspect. The
Company is not treating the historical estimate as current mineral
resources or mineral reserves as defined by NI 43-101. The
Company's technical report with respect to the Atlanta Mine project
may be viewed on the Company's profile on www.sedar.com. Meadow Bay
Capital Corporation intends to change its name to Desert Hawk Gold
at the next practicably possible opportunity subject to
approval.
The Offering
The Offering involved the issuance of 9,253,750 shares at a
price of US$1.00 per share. In consideration of the Agent's
services, the Company paid the Agent a cash commission of 7% of the
gross proceeds of the Offering. The Agent was also issued broker
warrants (the "Broker Warrants") equal to 7% of the shares sold
pursuant to the Offering. Each Broker Warrant entitles the holder
to acquire one common share of the Company at a price of $1.00
until December 31, 2012.
In addition to the purchase of the Atlanta Mine, the net
proceeds from the Offering will be used for ongoing exploration and
mine development, retirement of debt obligations of Desert Hawk and
the balance retained for working capital purposes. The securities
issued in the Offering are subject to a four month hold period. The
Company expects to close the remainder of the Offering in March
2011.
Appointment of Charles (Bill) Reed to the Board of Directors
The Company is pleased to announce that Bill Reed has been
appointed as a director of the Company. Mr. Reed is a professional
geologist with 40 years in the business and was the Chief Geologist
and Co-founder of Paramount Gold and Silver Corp. (TSX: PZG)(NYSE:
PZG) and is credited with discovering the San Miguel project in
Mexico amongst others. Mr. Reed was previously the chief geologist
for Hecla Mining. Mr. Reed has also worked extensively in the
United States.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy 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 or for the account
or benefit of U.S. Persons unless an exemption from such
registration is available.
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 Company's plans to reinstate production at
the Atlanta Mine and the use of proceeds from the Offering; risks
related to the exploration stage of the Company'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 the Company should be
considered highly speculative. The Company 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 CEO
604-682-2928 604-685-6905 (FAX) Launch IR Matthew Harrington
613-882-7467
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