Brazil Resources Inc. Completes Acquisition of the Cachoeira Project from Luna Gold Corp. and Reports NI 43-101 Resource Esti...
Date : 09/25/2012 @ 8:00AM
Source : PR Newswire
Stock : Brazil Resources Inc. (QX) (BRIZF)
Quote : 1.174 0.0 (0.00%) @ 8:15AM
Brazil Resources Inc. (the "Company" or "Brazil Resources") (TSX-V: BRI) (OTCQX: BRIZF) is pleased to announce that, further to its news release dated July 11, 2012, the Company has completed the acquisition of a 100% interest of the Cachoeira gold project (the "Cachoeira Project"), located in Pará State, Brazil, from Luna Gold Corp. ("Luna"). The transaction was completed under the terms of the previously announced share purchase agreement dated July 10, 2012 between Brazil Resources and Luna (the "Agreement"), pursuant to which Brazil Resources has acquired all of the issued and outstanding shares of Luna Gold (International) Corp., a wholly-owned subsidiary of Luna, which owns an indirect 100% interest in the Cachoeira Project.
Amir Adnani, Chairman, stated: "The acquisition of the Cachoeira Project is a significant milestone in the Company's growth. We are eager to continue the development of the Cachoeira Project, building upon the exploration and development work previously completed by Luna and its predecessors. We continue to assess other potential opportunities in the prolific Gurupi Gold Belt, with a view towards adding to the Company's four current projects here."
Steve Swatton, President and CEO, added: "This acquisition furthers our previously stated expansion goals. Our geological team is excited to commence work directly at the project site. Moving forward, Brazil Resources plans to coordinate with the local community and commence a work program on the property that will include, among other things, additional drilling at the Cachoeira Project with the goal of expanding and further defining the current resources, and completing additional studies and reports in connection with fulfilling license requirements."
The Transaction
Brazil Resources acquired 100% of the issued and outstanding shares of Luna Gold (International) Corp., which holds an indirect 100% interest in the Cachoeira Project through its subsidiaries. Brazil Resources paid $500,000 cash and issued 1,428,000 common shares (the "BRI Shares") to Luna at closing. Pursuant to the Agreement, the following additional payments are to be made by the Company to Luna:
(i) $300,000 cash and 1,214,000 BRI Shares within 12 months of closing the transaction;
(ii) $300,000 cash and 1,214,000 BRI Shares within 30 days of receipt of approval of a mine development plan by the DNPM and the environmental preliminary licenses for a gold mining operation relating to the Cachoeira Project;
(iii) $2,500,000, payable in cash or BRI Shares, at Brazil Resources' sole discretion, upon commencing mine construction at the Cachoeira Project, consisting of completion of $500,000 of expenditures towards such construction; and
(iv) $3,000,000, payable in cash or BRI Shares, at Brazil Resources' sole discretion, one year after achieving commercial production at the Cachoeira Project.
The total consideration under the transaction amounts to approximately $12.0 million based on a deemed issue price of $1.40 per BRI Share utilized by the parties. Notwithstanding the foregoing milestones, all of the payments from Brazil Resources to Luna will become due and payable four years after the closing date of the transaction. Any discretionary share-based payments will be valued based on the volume weighted average trading price of the BRI Shares for the 10 days prior to such payment. Brazil Resources' payment obligations are evidenced by a promissory note issued by the Company to Luna, containing customary events of default and acceleration provisions, and are secured by security interests granted by the Company and its subsidiaries to Luna against, among other things, interests in the Cachoeira Project and the shares of the subsidiaries to be acquired under the Agreement.
Resource Estimate
Roscoe Postle Associates Inc. prepared a National Instrument 43-101 ("NI 43-101") technical report on the Cachoeira Project (the "Technical Report") for Brazil Resources dated July 19, 2012 and titled "Technical Report on the Cachoeira Project, Pará State, Brazil". The Technical Report provides the following current mineral resource estimate for Tucano, Arara and Coruja deposits of the Cachoeira Project:
Classification Location Tonnes ('000s) Grade (g/t Au) Ounces ('000s)
Indicated Tucano 10,077 1.14 371
Arara 2,104 0.92 62
Coruja 352 1.16 13
Total Indicated 12,533 1.11 446
Inferred Tucano 5,344 1.28 219.1
Arara 38 0.72 0.9
Coruja 47 0.90 1.3
Total Inferred 5,429 1.27 221.3
Notes:
CIM definitions were followed for Mineral Resources.
Mineral resources are estimated at a pit discard cut-off grade of 0.32 g/t Au for Tucano and 0.35 g/t for Arara and Coruja. Preliminary open pit shells were used to constrain the resources.
The Tucano database consists of 86 diamond holes (DH), 78 reverse circulation (RC) holes, 6 combined RC/DH holes and 221 auger drill holes in addition to 70 surface channels and 32 underground channels.
The Arara database consists of 64 diamond drill holes, 101 auger drill holes, and 8 surface channels.
The Coruja database consists of 33 diamond drill holes, 14 RC holes, 2 combined RC/DH holes, 166 auger drill holes, and 86 surface channels.
High assays were capped at 30 g/t Au at Tucano and 10 g/t Au at Arara and Coruja.
Tucano, Arara, and Coruja block dimensions: 10 m E x 10 m N x 5 m high.
Mineral resources are estimated using a gold price of US$1,238 per ounce.
Bulk densities used were 2.70 t/m3 to 2.75 t/m3 in rock, 2.17 t/m3 to 2.40 t/m3 in the transition zone, and 1.72 t/m3 to 1.89 t/m3 in saprolite.
Numbers may not add due to rounding.
The effective date of the estimate is December 22, 2010.
In addition, the Technical Report states that good potential exists for continuation of mineralization at depth and between the three deposits following the major structural corridor. A complete copy of the Technical Report is available for review under the Company's profile on SEDAR at www.sedar.com.
The Cachoeira Project
The Cachoeira Project is located on the Gurupi Gold Belt, approximately 220 kilometres southeast of the Pará State capital of Belém and about 270 kilometres northwest of the port city of São Luis, Maranhão State. The Cachoeira Project comprises one contiguous block consisting of two mining and three exploration licenses covering approximately 4,742 hectares. Between 1985 and 2008, Luna and prior operators, completed drilling programs at the Cachoeira Project consisting of 183 diamond core holes (23,263 m), 94 RC holes (6,732 m), eight combined diamond/RC holes (1,307 m), and 488 auger holes (5,798 m) for a total of 773 holes drilled (37,100 m).
In addition to governmental royalties, the Cachoeira Project is subject to a 4.0% net profits royalty payable to prior owners. Up to one-half of such royalty interest may be re-acquired prior to the first anniversary of commercial production at the Cachoeira Project by paying the holders US$1,000,000 for each 0.5% increment of the royalty interest. If production is not achieved at the Cachoeira Project by March 10, 2014, a US$300,000 per year payment in lieu of the royalty will be payable to the royalty holders.
The Company's initial priority is to engage the local community surrounding the Cachoeira Project to form a project development plan. The Company's geological team will also conduct a review of prior work directly on-site, with plans to commence an in-fill drilling program, initiate follow-up geological work on geochemical anomalies not drilled or not adequately drilled previously, and to start an environmental baseline study in the near-term.
Brazil Resources is a publicly listed mineral exploration company with a focus on the acquisition and development of projects in emerging producing gold districts in Brazil and other parts of South America. Currently, the Company is advancing its newly acquired Cachoeira Project along with its Montes Áureos, Trinta and Maua Gold Projects located in the Gurupi Gold Belt in the state of Maranhão in northeastern Brazil, and its Artulândia Copper-Gold Project in Goias State, in central Brazil. Brazil Resources is also seeking to acquire and develop additional gold properties in Brazil and other locations in South America.
Technical Information
Patti Nakai-Lajoie, P.Geo., of Scott Wilson RPA is a Qualified Person as defined under National Instrument 43-101. Ms. Nakai-Lajoie was responsible for the preparation of the above resource estimate on the Cachoeira Project and is independent of the Company in accordance with NI 43-101.
Paulo Pereira, the Company's Vice President of Exploration has supervised the preparation of the technical information contained in this news release and reviewed the Report on behalf of the Company. Mr. Pereira holds a Bachelor degree in Geology from Universidade do Amazonas in Brazil, is a qualified person as defined in NI 43-101 and is a member of the Association of Professional Geoscientists of Ontario.
AI
