VANCOUVER, March 23 /CNW/ - Calico Resources Corp. (formerly Cobre Exploration Corp.) (TSX-V: CKB) (the "Company" or "Calico") announces that it has entered into a non-binding, exclusive Letter of Intent with Seabridge Gold Inc. ("Seabridge") pursuant to which Seabridge has agreed, subject to the settlement and execution of a definitive option agreement, to grant to Calico an option to acquire a 100% interest (subject to certain royalties) in the Grassy Mountain Project (the "Project") from Seabridge. A prior National Instrument 43-101 ("NI 43-101") compliant report prepared by Resource Modeling Inc. dated April 27, 2007 estimates open pit Indicated resources for the Project of 924,000 ounces Au averaging 1.54 g/t (0.05 opt) at a 0.55 g/t (0.018 opt) cutoff and Inferred resources of 61,000 ounces Au averaging 1.10 g/t (0.035 opt) at a 0.55 g/t (0.018 opt) cutoff.
A historical Pre-Feasibility Study (not NI 43-101 compliant) in respect of the Project was completed by Kilborn International in January 1993. The study identified a high grade underground "indicated and inferred reserve with an associate 414,600 ounces of gold" using a 0.1 opt (3.1 g/t) cutoff grade. The study was based on a 1,000 ton per day underground and mill processing operation. Average diluted feed grade was projected at 0.265 opt (8.2 g/t). Kilborn used metallurgical testing which indicated a 94% Au recovery yielding an estimated annual production of 85,000 ounces Au.
Note that NI 43-101 does not use the terms "indicated and inferred reserve" or "an associate" and, accordingly, those terms are not NI 43-101 compliant. The Kilborn study pre-dates NI 43-101 and used various terminologies in describing the resource but given the detail of analysis, cost estimates and other references in the report it appears that the report was referring to proven and probable reserves. Calico believes that the Kilborn estimate was accurate and reliable at the time of its completion and many of the conclusions remain relevant today. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves. The Company is not treating the historical estimate as current mineral resources or mineral reserves and the historical estimate should not be relied upon.
The entire 2007 NI 43-101 resource is on Patented Mining Claims within the larger 3,600 acre project area claim package located in Malheur County, Oregon, which is approximately 70 miles west of Boise, Idaho and 22 miles south of Vale, Oregon.
"The acquisition of the Grassy Mountain Project fits our strategy of acquiring a project with near term production potential in excess of 50,000 ounces per year which also contains significant exploration upside," said Bill Wagener, President & CEO of Calico.
"Seabridge is enthusiastic about Calico's proposed acquisition of the Project and believes that Calico's management team has the skill set, commitment and knowledge to both grow the resource through exploration and progress the identified resource to production. It is for these reasons that Seabridge will accept payment in shares, as it wishes to be a partner in the development and not just a vendor of an asset.," said Rudi Fronk, President of Seabridge.
The Project contains significant exploration equity with over 400 holes drilled in the identified targets, 192 of which were drilled in the main discovery. In addition to the main discovery, 17 targets have been identified on the 3,600 acre project area. Drill testing, as well as soil sampling, mapping and rock chip samples were used to identify the 17 targets.
In order to acquire 100% of the Project, subject to certain royalties, Calico has agreed in principle to issue 2,000,000 shares following execution of a definitive option agreement and receipt of TSX Venture Exchange approval, 4,000,000 shares on the first anniversary of the execution of the option agreement and 8,000,000 shares when the Project has received the permits and bonding necessary for the construction and operation of a mine. In addition, after the delivery of a NI 43-101 compliant Feasibility Study on the Project, Seabridge, has the right to elect to receive either an ongoing 10% Net Profits Interest royalty or a one-time payment of $10 million after receipt of the permits and bonding necessary for the construction and operation of a mine.
The transaction is subject to completion of definitive agreements, board approval and approval by the TSX-V.
Calico is a well-structured, debt free company committed to operating in a manner consistent with "sustainable development" principles. The Company is executing a plan to deliver on a strategy designed to increase shareholder value and is confident that in so doing, it will benefit the employees, communities and other stakeholders in the areas in which it operates.
Qualified Person
Vance V. Thornsberry, P. Geol., Vice President of Exploration of Calico, is a non-independent "qualified person" as that term is defined in NI 43-101, and has reviewed and approved the technical disclosure in this news release. William Wagener, President & CEO, is a non-independent "qualified person" as that term is defined in NI 43-101, and is responsible for verifying that the information presented in this news release is an accurate representation of the prior (2007) NI 43-101 resource estimate and the historic (non NI 43-101 compliant) Pre-Feasibility resource estimate for the Project.
On behalf of the Board,
William S. Wagener
President & CEO
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.
Cautionary Statement Regarding Forward-looking Information
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, the execution of an option agreement with Seabridge and the completion of the transactions contemplated thereby, statements regarding Calico's business strategy and plans for the Project and other expectations and intentions contained in this press release that are not historical fact. The Company's expectations regarding the option and the Project depend in part upon the Company's ability to successfully negotiate, settle and enter into an option agreement with Seabridge and obtain all necessary regulatory and other approvals. When used in this press release, the words "plan", "expect", "believe", and similar expressions generally identify forward-looking statements. These statements reflect the Company's current expectations. They are subject to a number of risks and uncertainties, including, but not limited to, the failure of the parties to agree to the terms of a definitive option agreement. In light of the risks and uncertainties surrounding the option, investors should understand that the Company cannot assure investors that the forward-looking statements contained in this press release will be realized.
