Homestake Resource Corporation Enters Into Property Option and Share Purchase Agreement with Agnico-Eagle Mines Limited
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 09/04/12 -- Homestake Resource Corporation (TSX VENTURE: HSR)(FRANKFURT: B6IH) has entered into a property option agreement with Agnico-Eagle Mines Limited (Agnico-Eagle) for the continued exploration and development of the Homestake Ridge Project in northwest British Columbia. Under the terms of the agreement, Agnico-Eagle has the option to earn up to 65% interest in the Homestake Ridge Project with the staged expenditure of $25.3 million over 5 years.
Agnico-Eagle can spend $10.3 million by December 31, 2014 to earn a 51% interest in the Homestake Ridge Project, including $1.8 million of expenditures as a firm commitment to be spent by December 31, 2012. Agnico-Eagle can elect to earn an additional 14% by expending a further $15 million or producing a Feasibility Study by December 31, 2016 resulting in transfer of a 65% ownership in the project. Agnico-Eagle will have the additional option to further increase its ownership interest by an additional 5% by arranging Homestake's proportionate share of production financing. Agnico-Eagle expenditures can be in the form of exploration expenditures or in direct payments to Homestake.
Agnico-Eagle has purchased 2 million common shares of Homestake at $0.35 per common share for proceeds of $700,000 which will be added to working capital. The securities issued pursuant to the private placement carry a legend restricting trading of the securities until January 1, 2013. The private placement is subject to regulatory approval.
Homestake Chairman, Lawrence Page, Q. C., said, "The opportunity to enter into an agreement with a seasoned and respected Canadian mining company for the further development of the Homestake Ridge property is a significant milestone for Homestake, which has been successful with the discovery of three gold/silver mineral deposits with significant potential to increase the resource substantially through further exploration and development within the next five years. Purchase of common shares of the Company at a premium to market price should demonstrate to present and prospective shareholders the potential for appreciation in share value through development of the Company's principal property. In addition to being a financially strong partner, Agnico-Eagle brings a great deal of exploration, engineering, and metallurgical expertise to the Homestake Ridge project. This agreement allows us to concentrate our exploration efforts on other parts of this exciting district, specifically our Kinskuch property."
Homestake Ridge Project Update
Crews started drilling on the property August 5th, and five core holes have been completed to date for a total of 1248 metres in the South Reef deposit. Logging and sampling of the core is proceeding and samples have been submitted for assay. These initial five drill holes are part of an overall 5,000 metre, $2.5 million exploration program budgeted for the 2012 season.
The holes offset three holes from the 2011 program that tested a 75 metre strike-length of the mineralized trend to depths of 260 metres and intersected +30g/t gold in each hole, including a 3.1m interval averaging 30.8g/t Au and 3.3g/t silver within a 8.7 metre interval averaging 11.3g/t gold and 1.6g/t silver from drill hole HR11-232.
Alteration encountered in the 2012 holes includes thick intervals of silicification, possible potassium flooding, and quartz veining that is consistent with previous drilling in the South Reef deposit. The veins are variably associated with strong chlorite alteration, pyrite and some base metal sulphides interspersed with intervals of sericite + pyrite alteration.
Drilling has now tested a +150 metre strike-length of the target to depths of approximately 260 metres. Drilling for the remainder of the 2012 season will continue to be operated by Homestake Resource Corporation under the direction of Agnico-Eagle.
Kinskuch Project Update
The Kinskuch project is a relatively new acquisition totaling 623 square km that ties up for the Company a majority of this highly prospective district. The property is directly east of Homestake Ridge and extends south approximately 30km to tidewater at Alice Arm/Kitsault. The potential to add significant resources at Kinskuch is considered excellent as there are 37 historic mineral occurrences documented on the property and limited modern exploration. The Company contracted airborne geophysics over about 60% of the property in 2011 and began field checking several of the mineral occurrences. Mineralization similar to that discovered by the Company at Homestake Ridge is hosted by the same geologic rock package at several showing on Kinskuch. The company drill tested its first target in 2011, along the Illiance River trend, late in the year. Extremely encouraging results were recorded, including KN11-02 that intersected several mineralized zones with the strongest being 2.8m of 318 g/t Ag, 2.2% lead and 6.5% zinc. A 500 metre offset with KN11-03 also encountered multiple intercepts including 3.9m of 267 g/t Ag, 1.3% lead and 6.5% zinc. 2012 exploration will follow-up drilling on the 2.5km Illiance trend strike length and continue systematic surface evaluation of the numerous epithermal vein and massive sulphide showings, as well as numerous anomalies identified by airborne geophysics in order to develop new targets for drill testing in 2013.
About Homestake
Homestake owns a 100 percent interest in the Homestake Ridge project, which is located in a prolific mineral belt in northwestern British Columbia. The project is being advanced as a potential high-grade underground mining operation with a current NI43-101 compliant Indicated Resource, at a 3.0g/t AuEq cut-off, of 191,000 oz gold and 1,350,000 oz silver (215,500 oz AuEq) plus an Inferred Resource of 530,000 oz gold and 13,470,000 oz silver (775,900 oz AuEq)(1). Two deposits have been delineated to date, with a third, South Reef, discovered late in 2011. Multiple exploration targets remain to be tested on the large 2585 hectare property. Homestake also holds an option to acquire the 623-square-kilometre Kinskuch project located adjacent to, and to the southeast of, Homestake's Homestake Ridge project. Homestake holds a 9.76 percent interest in Bravada Gold Corporation (TSX VENTURE: BVA) which is exploring 20 projects in Nevada.
ON BEHALF OF THE BOARD
Joseph A. Kizis Jr., President
1. The current estimate was prepared by Roscoe Postle Associates Inc.
(RPA). Mineral Resources on the Main Homestake deposit were estimated
previously in 2010 using a block model constrained by 3D wireframes of
the mineralized zones. Mineral Resources on the Homestake Silver deposit
were estimated in 2011 using a block model constrained by pierce points
projected to 2D surfaces. The Main Homestake block model comprised an
array of blocks measuring 5 m x 5 m x 5 m, with grades for Au, Ag, and
Cu interpolated using ID3 weighting. The Homestake Silver block model
comprised an array of blocks measuring 10 m x 10 m. At a 3.0g/t AuEq
cut-off, the models identified an indicated resource of 888,000 tonnes
averaging 6.7g/t Au, 47.2g/t Ag and 0.15% Cu and a cumulative inferred
resource of 4,060,000 tonnes averaging 4.3g/t Au, 158g/t Ag.
This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general economic conditions, interest rates, commodity markets, regulatory and governmental approvals for the company's projects, and the availability of financing for the company's development projects on reasonable terms. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, the timing and receipt of government and regulatory approvals, and continued availability of capital and financing and general economic, market or business conditions. Homestake Resource Corporation does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.
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.
Contacts:
Homestake Resource Corporation
Liana Shahinian
1-888-456-1112 or 604-641-2773
liana@mnxltd.com
www.homestakeresource.com