Eureka Announces Option Earn-in with Canarc on the FG Property and Private Placement
VANCOUVER, Aug. 25, 2016 /CNW/ - Eureka Resources Inc. ("Eureka" or the "Company") (TSXV: EUK) is pleased to announce that it has entered into an option agreement dated August 24, 2016 (the "Agreement") with Canarc Resource Corp. ("Canarc") which provides Canarc the ability to earn up to a 75% interest in the Company's FG Property (the "Property"). The Agreement is subject to the approval of the TSX Venture Exchange (the "TSXV").
Michael Sweatman, CEO of Eureka, stated, "We are extremely happy to have attracted a group with the financial resources and technical expertise of Canarc. Brad Cooke, Chairman of Canarc, and his team are industry leaders with a long track record of success. Canarc will advance the FG Property, bringing value to Eureka without further dilution of the company."
Upon receipt of the approval of the TSXV, Canarc will issue Eureka 250,000 common shares in the capital of Canarc, and purchase 750,000 units of Eureka under the Offering (as defined below).
In order to earn an initial 51% interest in the Property, Canarc is required to:
| (a) | incur aggregate exploration expenditures of $1,500,000 on the Property, of which: | |
| (i) | at least $500,000 is to be incurred in 2017, | |
| (ii) | at least $500,000 is to be incurred in 2018, and | |
| (iii) | the balance of the $1,500,000 is to be incurred in 2019; and | |
| (b) | make the following cash payments and issue the following Canarc Shares to Eureka: | |
| Payment Date | Cash Payment Amount | Number of Canarc |
| First Anniversary | 50% of the British Columbia Mineral | 250,000 |
| Second Anniversary | 50% of the METC | 250,000 |
| Third Anniversary | 50% of the METC | 250,000 |
In order for Canarc to earn an additional 24% interest in the Property (total – 75%), Canarc is required to:
| (a) | incur exploration expenditures of $1,500,000 on the Property between the third anniversary and the fifth anniversary of the date of grant of the option; and |
| (b) | make the following cash payments and issue the following Canarc Shares to Eureka: |
| Payment Date | Cash Payment Amount | Number of Canarc |
| Fourth Anniversary | The greater of: (i) $75,000 or (ii) | 750,000 |
| Fifth Anniversary | The greater of: (i) $75,000 or (ii) | 750,000 |
Upon exercise of the option by Canarc, the parties will form a joint venture. During the option period and joint venture, Canarc will be operator.
Private Placement Offering
The Company also announces that it plans to raise up to $420,000 by offering 3,000,000 units of the Company at a price of $0.14 per unit (the "Offering"). Each unit will consist of one common share of Eureka and one warrant, each warrant entitles the holder to acquire an additional half common share at $0.20 per share for two years from the closing of the Offering. All warrants issued under the Offering will be subject to an acceleration clause.
The proceeds of the Offering will be used for working capital and for exploration on the Company's Gemini property ("Gemini"), The exploration program is estimated to cost US$500,000. Eureka is required to contribute 50% of these costs (US$250,000) to maintain its 50% interest.
All securities issued under the Offering will be subject to a four-month hold period, during which time the securities may not be traded. The Offering is subject regulatory approval, including the approval of the TSX-V.
How to participate in the Offering
To participate in the Offering, interested investors must complete the applicable subscription agreement and return the completed subscription agreement along with a certified cheque or bank draft for the total purchase price payable to Eureka Resources Inc., at Suite 1100-1111 Melville Street, Vancouver, B.C., V6E 3V6. A subscription agreement may be obtained by contacting the Company directly at (604) 449-2273 or by e-mailing info@eurekaresourcesinc.com. Participation is subject to available space and is at the discretion of the Company. Interested investors are encouraged to return completed subscription agreements promptly using commercial couriers or priority post. For additional information, please contact the Company directly at (604) 449-2273.
FG Project
Eureka has held the FG Property (formerly called Frasergold) since 1982. To date, over $15.0 million of exploratory work has been completed by the Company, ASARCO, AMOCO and Hawthorne Gold Corp. The historical exploration has established a Measured and Indicated (376,000 ounces) gold resource at an average grade of 0.776 g/t gold, using a cut-off grade of 0.5 g/t, and an Inferred gold resource (634,900 ounces) at an average grade of 0.718 g/t gold, using a cut-off grade of 0.5 g/t. Mineralization has been outlined over a strike length of 3 kilometres, and has the potential for additional mineralization that could extend along an interpreted strike length of over 10 kilometres. Details of the gold resource can be found in "NI 43-101 Technical Report, Frasergold Exploration Project, Cariboo Mining Division, dated July 27, 2015" available on SEDAR or at the Company's website.
Gemini Lithium Project
Eureka owns a 50% participating interest in the Gemini lithium brine project, located in the western Lida Valley, located in Esmeralda County in south central Nevada, approximately 40 kilometres (26 miles) from North America's only producing lithium mine at Silver Peak. The Lida Valley is a flat, desert basin hosting two interpreted sub-basins and with a similar geological setting to the Clayton Valley. Gemini currently consists of 247 placer claims totaling 4,940 acres (2,000 hectares).
John R. Kerr, P.Eng., is the Company's designated Qualified Person for this news release within the meaning of NI 43-101 and has reviewed and approved the technical information described in this news release.
Neither the 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 news release.
Cautionary Statement Regarding Forward-Looking Information
This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements with respect to the Company's proposed financings, objectives, goals or future exploration plans at the FG Project and the Gemini Project, including the grant of the option on the FG Property to Canarc, the proposed Offering and the business and operations of the Company. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: failure to obtain the approval of the TSXV for the Canarc option and/or the Offering; general business, economic and social uncertainties; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; delay or failure to receive board or regulatory approvals; those additional risks set out in the Company's public documents filed on SEDAR at www.sedar.com; and other matters discussed in this news release. Although the Company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
SOURCE Eureka Resources Inc.
Contact
on Eureka can be found on the Company's website at www.eurekaresourcesinc.com and at www.sedar.com, or by contacting Michael Sweatman, President and CEO, or Bob Ferguson by email at info@eurekaresourcesinc.com or by telephone at (604) 449-2273.