Combined Company will have strong portfolio of Newfoundland and Labrador based
gold projects ranging from early stage exploration to production
HALIFAX, Nova Scotia–(Business Wire)–
Mountain Lake Resources Inc. (TSX-V: MOA) (“Mountain Lake”) and New Island
Resources Inc. (TSX-V: NIS) (“New Island”) are pleased to announce that they
have entered into a Letter of Intent (the “Agreement”) whereby Mountain Lake
proposes to acquire New Island by way of a corporate arrangement (the
“Arrangement”). The Arrangement will effectively combine the assets and
liabilities of both issuers on a consolidated basis, with New Island becoming a
wholly-owned subsidiary of Mountain Lake.
By the Agreement dated June 2, 2010, it is proposed that all of the shareholders
of New Island will exchange their issued common shares of New Island for new
common shares of Mountain Lake, on the basis of every five and one-half (5.5)
shares of New Island for one (1) new share of Mountain Lake, provided that such
proposed exchange ratio is non-binding and specifically subject to the
completion of all due diligence investigations, confirmation by independent
fairness opinions, any further negotiations based on the relative market values
of Mountain Lake and New Island, and such other factors as management may
consider appropriate. All convertible securities of New Island will be exchanged
for convertible securities of Mountain Lake on the same basis, adjusted
accordingly to reflect the final agreed share exchange ratio.
Management of each company believes that combining the assets of New Island with
Mountain Lake`s will strengthen both of their financial and management
capabilities, and accelerate the exploration and development of all of their
properties by combining their mutual mineral property interests in Atlantic
Canada. Mountain Lake will acquire New Island`s highly prospective mineral
properties (more particularly described below), including its interests in the
advanced stage Pine Cove property. New Island`s shareholders will benefit from
the greater depth of the Mountain Lake team`s geological and mining engineering
expertise, as well as an interest in Mountain Lake`s mineral exploration
projects. The proposed Arrangement will also facilitate financing and further
exploration and development of these projects.
“Mountain Lake`s goal is to enhance shareholder value through strategic
acquisitions and this merger has the potential for us to take a significant step
towards achieving that goal,” commented Gary Woods, President and CEO of
Mountain Lake. “Shareholders of both companies will benefit from the combination
of assets that each company brings to the other.”
Harold Wareham, President and CEO of New Island, stated: “The synergies created
by the combination of the assets and strengths of both companies will enhance
shareholder value.”
The combined company will have a strong portfolio of Newfoundland and Labrador
based gold properties at various stages, ranging from early stage exploration
all the way to production in one of the most mining friendly jurisdictions in
the world (ranked 8th in the Fraser Institute`s 2010 Survey). Projects will
include:
Pine Cove Gold Project:
A 70% interest in the Pine Cove Gold Deposit, which will be reduced to 40% once
certain production criteria are met by Anaconda Mining Inc., who are operators
of the project. Pine Cove, which is due to commence production in June, 2010,
has probable mineral reserves of 2,332,676 tonnes grading 2.76 grams per tonne
(g/t) gold (Au) (see resource estimate performed by Eugene Puritch P.Eng. of P &
E Mining Consultants Inc. and presented in the NI 43-101 Pine Cove Project
Technical Report and Feasibility Study dated March 18, 2005), which is planned
to be mined at a rate of 1,000 tonnes per day. The Pine Cove Property also has
additional exploration potential on which to expand the current reserves.
Valentine Lake Gold Project:
A gold exploration and development project that is controlled by Mountain Lake
and will be 50% owned by Mountain Lake upon completion of the sub-option
agreement with Marathon PGM Corp. The Valentine Lake Property is over 30
kilometres (km) long and to date the Leprechaun Deposit (at ~km 3 going
northeast along strike) is the first defined gold resource within the highly
prospective Property. The Leprechaun Deposit, has a NI 43-101 compliant
underground inferred mineral resource of 1,314,780 tonnes grading 10.50 g/t gold
using a 5 g/t gold minimum cut-off and a 3 m minimum width for a total estimated
mineral resource of 443,000 ounces of gold (see resource estimate performed by
Larry Pilgrim, P. Geo., Qualified Person, and presented in the NI 43-101
Valentine Lake Technical Report dated January 12, 2005). Currently, and as
follow-up to the successful winter 2010 drill program, an 8,000 metre (m)
spring/summer drill program is underway that will focus on advancing the
Leprechaun Deposit towards an open pit resource and exploring the multiple gold
occurrences identified along the Property`s 30 km strike length.
Glover Island Gold Property:
A gold exploration property 100% owned by New Island that is situated roughly 70
km from Mountain Lake`s Valentine Lake gold project, and is host to several
significant gold prospects over an 11 km strike length. Significant drill
intercepts on the Glover Island Property include 16.7 m of 5.31 g/t Au at the
LPSE prospect, 10.0 m of 4.93 g/t Au at Kettle Pond South, and 8.0 m of 10.18
g/t Au at the Lucky Smoke deposit. Non NI 43-101 compliant resources have been
calculated at the LPSE and Kettle Pond South prospects, and Mountain Lake
believes that these could be upgraded to NI 43-101 disclosure standards, once
data verification and quality control measures are completed.
At the closing of the Arrangement, the current directors of New Island will
resign, and new directors will be nominated and appointed by Mountain Lake. New
Island has the right to nominate one director to the Board of Mountain Lake.
The completion of the Arrangement is subject to the fulfilment of a number of
prior conditions, including the completion of the parties` due diligence
investigations, final agreement as to the share exchange ratio, the acceptance
of the TSX Venture Exchange to the Arrangement, the approval of the Arrangement
by the shareholders of New Island by a special resolution of at least 2/3rds of
the shares voted in person or by proxy at a general meeting of New Island held
to consider the Arrangement, and the approval of the Supreme Court of
Newfoundland and Labrador. The Arrangement cannot close until all of these
conditions precedent and others are met. There can be no assurance that the
Arrangement will be completed as proposed or at all. Investors are cautioned
that except as disclosed in New Island`s Information Circular to be prepared in
connection with the Arrangement, any information released or received with
respect to the Arrangement may not be accurate or complete and should not be
relied upon. Trading in the securities of both Mountain Lake and New Island
should be considered highly speculative.
After entering into a definitive agreement, and under certain circumstances, if
the Arrangement fails to complete, then the non-completing party shall pay to
the other a break-up fee equal to the greater of: (a) 5.0% of the value of any
alternative acquisition proposal from a third party, and (b) $300,000.
It is anticipated that the special general meeting of the shareholders of New
Island to approve the Arrangement will be held at a date to be announced in July
2010. New Island shareholders will receive an Information Circular setting out
further details of the proposed transaction, and this Information Circular will
also be filed and made available on SEDAR (www.sedar.com) under New Island`s
public profile.
Gary Woods, P.Geo., is the Mountain Lake`s Qualified Person on the New Island
acquisition and has reviewed and verified the contents of this news release.
About New Island Resources Inc.
New Island Resources Inc. (TSX-V:NIS) (New Island) is a diversified junior
exploration company holding gold and base metal properties in the province of
Newfoundland and Labrador. Its main projects include: a 70% interest in the Pine
Cove gold property, which is on option to Anaconda Mining Inc. (Anaconda)
whereby Anaconda can earn a 60% interest and operator status by bringing the
property into commercial production, where production is expected to commence in
June 2010; a 100% interest in the large Glover Island property having
significant gold showings covered by a mining lease; and a 17% shareholding in
Prominex Resources Inc. which holds the advanced Tulks Hill base metal deposit
south of Buchans. For more information visit: www.newislandresources.com
About Mountain Lake Resources Inc.
Mountain Lake Resources Inc. (TSX-V: MOA) is a diversified junior exploration
company, whose corporate strategy is to build shareholder value through the
exploration and development of economically viable mineral properties. Mountain
Lake`s current projects include: a 30% interest in the Valentine Lake gold
property (Newfoundland) with an option to acquire the remaining 70% interest
from Richmont Mines Inc. (and a subsequent sub-option and joint venture
agreement whereby Marathon PGM Corp. can earn a 50% in the property; a 100%
interest in the Bobby`s Pond base metals property (Newfoundland); an option to
earn a 100% interest in the Little River gold exploration property
(Newfoundland); and a 2,350,000 share (~6.5%) stake in Etruscan Diamonds Ltd.,
an alluvial diamond project (South Africa). For more information visit:
www.mountain-lake.com
ON BEHALF OF THE BOARD OF DIRECTORS
s/”Gary Woods”
President & CEO
NEITHER THE TSX VENTURE EXCHANGE, NOR ITS REGULATION SERVICES PROVIDER (AS THAT
TERM IS DEFINED UNDER THE POLICIES OF THE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.
Lytle & Associates
Greg Lytle
Corporate Communications
North America toll-free: 866-285-5817
International & Vancouver: 604-839-6946
info@mountain-lake.com
Copyright Business Wire 2010
