Mantra Mining Inc. (TSX VENTURE: MAN) ("Mantra" or the "Company")
is pleased to announce that it has entered into two separate
agreements dated August 27, 2008 with affiliates of Rio Tinto PLC
("Rio Tinto") and NovaGold Resources Inc. ("NovaGold") and an
affiliate of NovaGold, to purchase a 100% interest in mineral
claims comprising over 485,000 acres in Alaska, including the
undeveloped world class Arctic polymetallic deposit and several
early stage base and precious metal exploration properties
(collectively, the "Acquisition"). Upon completion of the
Acquisition, Mantra will be one of the significant mineral property
holders in Alaska.
Overview of Acquisition
Mantra has agreed to purchase the interests of Rio Tinto and
NovaGold in the Ambler Project which consists an area of about
87,972 acres consisting of 1,138 State of Alaska claims as well as
17 patented (privately owned) mining claims comprising about 35,000
acres, covering a major portion of the precious-metal-rich Ambler
volcanogenic massive sulfide ("VMS") belt.
In addition, Mantra has agreed to purchase 100% of NovaGold's
interest in five other properties located in Alaska comprising
about 397,560 acres that are either held directly or under option
by an affiliate of NovaGold, as follows:
- Baird Project located in northwest Alaska (80,560 acres)
- Colorado Creek Property located in central Alaska (27,040
acres)
- Kugruk Prospect located in the Seward Peninsula (177,000
acres)
- Omalik Property located in the eastern Seward Peninsula
(19,680 acres)
- Tintina Properties located in southwest Alaska (93,280
acres)
More detailed information concerning the properties being
acquired by Mantra can be found below under the headings "Ambler
Project" and "Geological and Other Information on the Properties"
and on the Company's website: www.mantramining.com.
The consideration payable by Mantra for the mineral properties
consists of $29 million payable to Rio Tinto in cash and common
shares of Mantra over a 24 month period from the initial closing
and $20 million payable to NovaGold in common shares of Mantra over
a 15 month period from the initial closing. See "Terms of
Acquisition".
The initial closing of the Acquisition will occur following
receipt of all necessary regulatory approvals, including the
approval of the TSX Venture Exchange, and Mantra being in a
position to complete, concurrently with the initial closing, a
private placement for gross proceeds of a minimum of $C3
million.
Rick Van Nieuwenhuyse is a director of Mantra and a director and
officer of NovaGold.
Ambler Project
The Ambler Project includes the Arctic deposit located in the
southern Brooks Range of NW Alaska approximately 290 kilometers
(180 miles) southeast of Red Dog mine, the world's largest zinc
mine, and approximately 45 kilometers (30 miles) north of the small
village of Kobuk. The Arctic deposit is one of several VMS deposits
known in the Ambler Schist sequence of the southern Brooks
Range.
NovaGold has reported that, based on the NI43-101 Technical
Report dated February 12, 2008 prepared by SRK Consulting (US),
Inc. ("SRK") for NovaGold, the Ambler Project has resources of 16.8
Million tonnes (Mt) of Indicated and 11.9 Mt of Inferred as
outlined in the table below:
Indicated and Inferred Resources - Ambler Project
-------------------------------------------------
--------------------------------------------------------------------
Metal 16.8 M Tonnes Indicated 11.9 M Tonnes Inferred
--------------------------------------------------------------------
Contained metal Grade Contained metal Grade
--------------------------------------------------------------------
Copper (Cu) 1.5B lbs 4.14% 0.9B lbs 3.56%
--------------------------------------------------------------------
Zinc (Zn) 2.2B lbs 6.03% 1.3B lbs 4.99%
--------------------------------------------------------------------
Lead (Pb) 350M lbs 0.94% 210M lbs 0.80%
--------------------------------------------------------------------
Gold (Au) 0.5M ozs 0.83 gpt 0.3M ozs 0.67 gpt
--------------------------------------------------------------------
Silver (Ag) 32.3M ozs 59.6 gpt 18.6M ozs 48.4 gpt
--------------------------------------------------------------------
Note: B equals Billion, M equals Million, lbs equals pounds, gpt
equals grams per tonne and ozs equals ounces
For supporting information and additional information, refer to
the SRK Technical Report which is available on www.sedar.com under
NovaGold's profile. SRK is currently updating the Report for
Mantra. The Report will be filed by Mantra prior to the initial
closing of the Acquisition.
Mr. Chowdhry, the President of Mantra stated, "The Ambler
Project ranks as one of the largest and richest undeveloped VMS
deposits in the world based on the SRK resource estimate on the
Arctic deposit. The purchase of a 100% interest in the Ambler
Project will allow the Company's experienced management team to
advance this extraordinary asset towards production and establish
the Company as one of the newest players in the copper sector
capable of delivering excellent value to our shareholders."
NovaGold's exploration team has completed nearly 3,000 meters of
core drilling in five holes at Ambler in the most recent 2007
exploration program. Two of the exploration holes identified the
existence of a deeper fold structure containing the same
stratigraphy as the Arctic massive sulfide deposit. These drill
results outline an area of approximately 4.5 square kilometers of
productive stratigraphy within drill depth below and adjacent to
the Arctic deposit, indicating that significant exploration
potential remains for further expansion. The Arctic deposit is
undeveloped and has not been proven to be economic. Further studies
will be undertaken to demonstrate its viability.
Terms of Acquisition
Rio Tinto is the owner of the claims comprising the Ambler
Project, subject to an option agreement (the "Ambler Option
Agreement") with NovaGold under which NovaGold has the right to
acquire a 51% interest in the Ambler Project by completing
approximately US$7 million in remaining earn-in expenditures on the
Project by 2016. Rio Tinto has a back-in right to acquire 2% of
NovaGold's interest at the joint venture stage.
Mantra has agreed to acquire Rio Tinto's interest in the Ambler
Project in consideration for $29 million, payable as follows:
(a) 3,125,000 common shares of Mantra, having a resale
restriction for a period of 12 months following the initial closing
date, at a deemed price of $1.60 per share having an aggregate
value of C$5 million to be issued to Rio Tinto on the initial
closing of the Acquisition;
(b) US$12 million is payable in cash on or before the date that
is 15 months from the date of the initial closing of the
Acquisition (the "First Cash Payment"); and
(c) US$12 million is payable in cash on or before the date that
is 24 months from the date of the initial closing of the
Acquisition (the "Second Cash Payment").
In the event that Mantra fails to make the First Cash Payment to
Rio Tinto, Rio Tinto may elect to either terminate Mantra's right
to acquire the Ambler Project under its agreement with Rio Tinto
and under the Ambler Option Agreement or require Mantra to pay
interest on the outstanding principal amount of the First Cash
Payment at the Royal Bank of Canada Prime Rate plus 4% until the
First Cash Payment is paid in full. In the event that Mantra fails
to make the Second Cash Payment, Mantra will retain its rights
under the Ambler Option Agreement, but Rio Tinto may elect to
either terminate Mantra's right to acquire the Ambler Project under
its agreement with Rio Tinto or require Mantra to pay interest on
the outstanding principal amount of the Second Cash Payment at the
Royal Bank of Canada Prime Rate plus 4% until the Second Cash
Payment is paid in full.
Mantra has also agreed to grant Rio Tinto a 1% net smelter
returns royalty in respect of minerals produced from the Ambler
Project, subject to Mantra's right to purchase such royalty at any
time for US$10 million.
In addition, Mantra has agreed to acquire NovaGold's interest in
the Ambler Option Agreement in consideration for US$15 million,
payable as follows:
(a) 3,125,000 common shares of Mantra having a resale
restriction for a period of 12 months following the initial closing
date, at a deemed price of $1.60 per share having an aggregate
value of C$5 million to be issued to NovaGold on the initial
closing of the Acquisition; and
(b) 6,250,000 common shares of Mantra at a deemed price of $1.60
per share having an aggregate value of C$10 million to be issued to
NovaGold on or before the date that is 15 months from the date of
the initial closing of the Acquisition in accordance with a
subscription receipt to be issued to NovaGold by Mantra on the
initial closing.
Mantra has also agreed to reimburse NovaGold for all direct
expenditures incurred by it or its affiliate on account of the
Ambler Project from June 1, 2008 up to the date of the initial
closing of the Acquisition. The reimbursement is limited to a
maximum of $2 million and must be made within 30 days of the
initial closing.
In addition, Mantra has agreed to concurrently acquire
NovaGold's interest in the five other Alaskan properties referred
to above for C$5 million payable on the initial closing of the
Acquisition by issuing to NovaGold an aggregate of 3,125,000 common
shares of Mantra, having a resale restriction for a period of 12
months following the initial closing date, at a deemed price of
$1.60 per share.
Mantra will acquire 100% of NovaGold's interest in the Ambler
Option Agreement and the five other Alaskan properties on the date
of the initial closing.
Conditions to Initial Closing
Completion of the initial closing of the Acquisition is subject
to a number of conditions including, but not limited to, the
completion of satisfactory due diligence, Manta being in a position
to complete, concurrently with the initial closing, a private
placement for gross proceeds of a minimum of $C3 million, the
approval of the TSX Venture Exchange and other necessary regulatory
and stock exchange approvals. The agreement with Rio Tinto is
subject to completion of the acquisition by Mantra of NovaGold's
interest in the Ambler Option Agreement. There can be no assurance
that the Acquisition will be completed as proposed or at all.
Mantra will not be required to obtain shareholder approval under
TSX Venture Exchange policies.
Capitalization of Mantra on Initial Closing
Mantra currently has 45,839,801 common shares issued and
outstanding. In addition, there are 1,325,000 stock options
outstanding under its stock option plan and 281,312 common share
purchase warrants outstanding.
Upon completion of the initial closing of the Acquisition,
Mantra expects its non-diluted capitalization to be approximately
as follows (assuming no stock options or common share purchase
warrants are exercised prior to the initial closing of the
Acquisition and excluding common shares issued in a private
placement expected to be completed prior to the initial
closing):
--------------------------------------------------------------------------
Number of
Capitalization Shares Percentage
--------------------------------------------------------------------------
Currently issued and outstanding common shares 45,839,801 83.02%
--------------------------------------------------------------------------
Common shares issuable to Rio Tinto on initial 3,125,000 5.66%
closing of the Acquisition
--------------------------------------------------------------------------
Common shares issuable to NovaGold on initial 6,250,000 11.32%
closing of the Acquisition(1)
--------------------------------------------------------------------------
Total(1) 55,214,801 100.00%
--------------------------------------------------------------------------
(1) These figures do not include the issuance to NovaGold of an additional
6,250,000 common shares on or before the date that is 15 months from
the date of initial closing of the Acquisition.
NovaGold will become an insider of Mantra on the initial closing
of the Acquisition. Assuming the capitalization described in the
table above, NovaGold will hold approximately 11.32% of the issued
and outstanding common shares of Mantra on the initial closing of
the Acquisition. In addition, Mantra has agreed to issue to
NovaGold an additional 6,250,000 common shares on or before the
date that is 15 months from the date of initial closing of the
Acquisition in respect of the acquisition of NovaGold's interest in
the Ambler Option Agreement.
Management Changes
Mantra does not expect any changes to its board of directors or
management team on the initial closing of the Acquisition. Raj
Chowdhry said: "Mantra's Board of Directors has significant
experience working in Alaska. Our ability to partner with local
communities and Alaskan Native Corporations will greatly assist in
advancing the Ambler Project to a production decision."
Under the agreement with NovaGold, Mantra will grant NovaGold
the right to nominate one director for election at each
shareholders meeting following the completion of the Acquisition so
long as NovaGold and its Affiliates collectively beneficially own
10% or more of the issued shares of Mantra as of the date that
Mantra gives notice of a meeting of its shareholders at which
directors will be elected.
Proposed Work Program
In the SRK Technical Report, additional activities in support of
a pre-feasibility assessment having aggregate indicative costs of
US$3,100,000 were recommended, consisting of:
Environmental Assessment US $500,000
Exploration and Drilling US$2,000,000
Metallurgical Test work US $400,000
Pre-feasibility Report US $200,000
Mantra intends to complete further in-fill drilling to improve
resource definition (upgrade Inferred resources to Measured and
Indicated resources) as well carry out further exploration drilling
to expand the known resource. In addition, Mantra intends to
undertake engineering and metallurgical studies and environmental
baseline work in order to scope out a development plan and
Preliminary Economic Assessment report.
Geological and Other Information on the Properties
Ambler Project
The Ambler district occurs within an east-west trending zone of
Devonian to Jurassic submarine rocks. VMS deposits and prospects
are hosted in the Middle Devonian to Early Mississippian Ambler
Schist Belt, a sequence of metamorphosed bimodal volcanic and
volcanoclastic rocks interbedded with tuffaceous, graphitic and
calcareous metasedimentary rocks. VMS mineralization can be found
along the entire 110 km (68 miles) strike length of the
district.
The Arctic deposit is one of several polymetallic VMS deposits
known in the Ambler Schist Belt. The deposits include the Sun,
Smucker, Sunshine, Picnic Creek and Dead Creek deposits.
Within the Arctic deposit area, five main lithologic suites are
recognized and include:
1. Overlying sandstones, siltstones and greywacke
2. Porphyroblastic quartz feldspar schist dubbed the "Button
Schist" a key stratigraphic marker
3. Quartz mica schist, graphitic schist and base-metal
sulfide-bearing schist (productive "ore horizon")
4. Mafic greenstones
5. Calcareous schist
Mineralization at Arctic is dominated by chalcopyrite, pyrite,
sphalerite and lesser galena often with minor barite which occur as
stratiform semi-massive to massive sulfide horizons up to 20+
meters in thickness. Footwall alteration is characterized by
Mg-chlorite and locally talc, while hanging-wall alteration is
characterized by sericite and paragonite.
The mineralization at Arctic occurs as a series massive to
semi-massive sulfide lenses on the limb of an overturned isoclinal
fold lying roughly 200 meters or less below surface and dipping
moderately to the west. Detailed stratigraphic and structural
interpretation shows that the lower limb is overturned and that
potential exists to expand the deposit along the lower upright limb
of the fold structure.
Baird Project - NW Alaska
The Baird Mtns project consist of 502 state of Alaska mining
claims covering 80,560 acres in the Baird Mountains 35 miles north
of Kiana, Alaska, in the south part of the western Brooks Range.
NovaGold owns 442 of the state claims and has the option to acquire
a 60% to 100% interest in the remaining 60 state claims
constituting the Omar property owned by Teck-Cominco. The property
covers rolling to mountainous terrain in the southern Brooks Range
along the Squirrel River. Exploration is helicopter-supported
either from Kiana a small native village along the Kobuk River
which drains into Kotzebue Sound or from seasonal camps established
on the property.
The project area contains a folded and faulted sequence of
Paleozoic age limestone and dolomite (Baird Group) which host
strong concentrations of copper and zinc. Mineralization in the
Baird Mountains shares a Cu-Zn-Pb-Ba-Co-Ge-F geochemical signature
with the large Ruby Creek deposit and other showings at Bornite 100
miles to the east. Important mineral occurrences which cover a
roughly 20 by 12 kilometer area are the Omar prospect (on the
optioned Teck Cominco property); and the Frost, Deadfall,
Powdermilk and Peak prospects on NovaGold ground.
Colorado Creek Property - Central Alaska
The Colorado Creek project area is located approximately 70 km
northwest of McGrath, and 410 km northwest of Anchorage in low
rolling hills roughly midway between the Kuskokwim and Yukon
Rivers. The Colorado Creek claim group consists of 274 Alaska state
claims owned by Rosander Mining Company and leased by NovaGold
covering 27,040 acres. The project is located in and around the
historical and ongoing placer mining operations at Colorado Creek.
Some camp facilities exist on the property and an airstrip
serviceable by Hercules aircraft support exploration on the
property.
Rocks in the Colorado Creek project area include the Upper
Cretaceous Cripple Creek Mountains (CCM) volcanic-plutonic complex,
and a series of slightly younger felsic rhyodacite dikes, all of
which intruded the Cretaceous Kuskokwim Group, a thick sequence of
shale, greywacke, and minor conglomerate.
The Colorado Creek property shows similar geologic and
geochemical relationships to the +30 million ounce Donlin Creek
gold deposit located 100 kilometers (65 miles) to the south where
mineralization are associated with the felsic porphyry rhyodacite
dikes and sills. These rhyodacite intrusives are distinctive
magnetic lows in comparison with the volcano-plutonic complexes
which are distinctive magnetic highs. Much of the mineralization in
the Colorado Creek area is related to dikes and sills in and around
the NE-trending Ermine fault zone along the northwest side of the
Cripple Creek Mountains.
Known mineral prospects occur along a roughly 7-8 km trend and
include Porphyry Knob, Eldorado Creek, Moose Jaw Mountain, Hill
2110, Montana Prospect, and the Wyoming Lode.
Kugruk Prospect - Seward Peninsula, Alaska
The Kugruk prospect lies 70 miles north of Nome in the northern
Seward Peninsula and consists of 1113 Alaska state claims and 4
leased claims covering over 177,000 acres. The property covers low
tundra-covered hills and broad valleys along the Kugruk River which
runs south to north through the claim block. Only very limited rock
exposure is present. Exploration is helicopter supported from the
historic Independence mining camp located roughly in the center of
the property and approximately 20 miles from the coast and Kotzebue
Sound.
The Kugruk area consists of Late Proterozoic and Paleozoic
schists, quartzites, and carbonate cut by a major NNW trending
structure called the Kugruk Fault. On the west of the fault, late
Cretaceous granitoid rocks intrude the metasedimentary sequence and
include the Kugruk Pluton dated at 94.9 Ma. The area is best known
for placer gold occurrences which occur in many of the tributaries
of both the Kugruk River and the Kiwalik River to the east.
Omalik Property - Eastern Seward Peninsula, Alaska
The Omalik prospect lies 90 miles northeast of Nome on the west
flank of the Darby Mountains, and 30 miles north-northeast of
Golovin Bay. The property consists of 123 Alaska state mining
claims totaling 19,680 acres.
The Omalik prospect lies moderately close to the Kugruk property
and contains high grade Ag-Pb-Zn mineralization within marbles of
the Nome group Paleozoic sediments. Several occurrences of this
mineralization are found scattered in a 5.5 by 4.5 mile area trend.
Other parties control two of the high grade showings.
Tintina Properties - Southwest Alaska
The Tintina prospects consist of several claim blocks staked on
reconnaissance geochemistry and geophysics in the Kuskokwim region
of southwest Alaska south of the small community of Aniak. Four
individual claims blocks are part of the project and include the
Ash, Timber, Kipchuk and Cone claims totaling 583 Alaska state
mining claims covering 93,280 acres. The claims roughly lie 20 to
40 miles south of Aniak in low rolling hills flanking the Aniak
River. Exploration is helicopter supported and staged from Aniak
where a jet accessible airstrip and local accommodations are
available.
The properties cover a series of upper Cretaceous felsic
rhyodacite dikes intruding the Kuskokwim Group sediments and are
analogous with the Donlin Creek deposit further north in the same
geologic setting.
Qualified Person
Robert McLeod, is a Qualified Person for the purposes of
National Instrument 43-101 and has reviewed and approved the
information of a scientific or technical nature contained in this
news release.
ON BEHALF OF THE BOARD OF DIRECTORS
Raj Chowdhry, C.A., President & CEO
Cautionary Notice: This release may contain forward-looking
statements regarding the Company's business or financial condition.
Actual results could differ materially from those described in this
news release as a result of factors, including, but not limited to
the following: additional drilling, sampling and resource
valuations, engineering and construction timetables, financial
arrangements, developments in world resource markets, political
developments in Alaska, the timing of regulatory and environmental
approval and other factors. With respect to additional exploration,
actual events may differ from current expectations of the Company
or its joint-venture partners and other factors. The Company
cautions that these and similar statements involve risk and
uncertainties and are qualified by important factors, including
competitive pressures, unfavorable changes in regulatory
structures, and general risks associated with business, which could
cause actual results to differ materially from those in the forward
looking statement. Forward-looking statements are made in the
context of information available as of the date stated. The Company
undertakes no obligations to update or revise such statements to
reflect new circumstances or unanticipated events as they occur,
unless required by applicable law.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.
Contacts: Mantra Mining Inc. Raj Chowdhry, C.A. President &
CEO (604) 628-1179 (604) 628-1163 (FAX) Email:
rchowdhry@mantramining.com Website: www.mantramining.com
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