Red Kite Agrees to Transfer Debt to Gullewa as ATW puts Burnakura Back on Care and Maintenance
October 7, 2009
ATW Gold Corp (ATW: TSX-V), (“ATW” or “the Company”), has determined that given its options regarding Gullewa and Burnakura, the Company will focus its resources toward placing the Gullewa gold-copper project into production. The Gullewa scoping study is well under way and ATW is excited about the upside in the current drill program commencing October 11, 2009. The Burnakura Gold Mine is being put on care and maintenance.
ATW has reached an agreement in principle with Red Kite Explorer Fund Ltd., part of the Red Kite family of funds, pursuant to which Red Kite will transfer the remaining debt from its previously announced Gold Loan at Burnakura (the “Burnakura Gold Loan”) into a 2 year term note (the "Note") secured by the Gullewa Project. At this time, the parties have not agreed as to the final terms of the Note. However, Red Kite has agreed that the loan to Gullewa will not include a gold loan or similar payment-in-kind feature. The Company will announce the final terms of the Note when they have been negotiated.
Gullewa is located 450 kilometers north of Perth, in the Yalgoo mineral fields of Western Australia. Gullewa is a 550 sq kilometer property that hosts several gold deposits of various size and grade, the most significant being the Deflector gold-copper deposit which contains a measured and indicated resource of 369,000 ounces at 6.75 grams per tonne (g/t) gold equivalent (“AuEq”) of and an inferred resource of 400,000 ounces at 7.71 g/t AuEq (gold equivalent ounces, AuEq, are calculated using the ratio: 1% copper = 2.5 g/t gold and a cut-off grade of 1.0 g/t AuEq). Mining infrastructure assets at Gullewa include a 800 tonne per day CIL plant, a licensed tailings disposal facility, a 50-person camp, offices, and workshops.
The ATW Board is disappointed to make the decision to place Burnakura back on temporary care and maintenance status but feels that shareholders interests are best served focusing on Gullewa. ATW will be looking at all avenues to restart production at Burnakura. These include, but are not limited to, investigation of the oxide heap leach potential, continued extensive regional exploration, and/or toll milling.
The General Manager and his Technical team have completed an operational review at Burnakura and have submitted their findings on Oct 2, 2009. The Board convened on October 6, 2009 to review the recommendations. In summary, the new block model developed from recent structural mapping and core drill data is materially different from the block model created during December 2008. The December 2008 model interpreted a single, continuous vein set rather than a series of erratic vein sets with structural offsets. As a result, the new model dramatically changed the mine plan indicating a major increase in higher cost air leg mining and an overall reduction in the mineral inventory. These changes impact heavily on cash flow, to the point where the mine is unprofitable, and the current mine life is limited.
Brent Butler, Chief Executive Officer and President, commented, “We are disappointed at the outcome of the new block model and mine plan. As a result of the operational overview submitted by our technical team, we have decided to place Burnakura on temporary care and maintenance while we focus on getting Gullewa, our flagship project, into production. We are appreciative of the support offered by Red Kite and their commitment to restructure the current gold loan.”
Brent Butler, President and CEO of ATW Gold Corp. is the qualified person under National Instrument 43-101 and has reviewed the contents of this news release.
