Acquisition of Gold-Copper Property in USA

RNS Number : 1903Z

Galileo Resources PLC

04 February 2014

 



4 February 2014

This press release, provided pursuant to applicable regulatory requirements, is not for distribution to U.S. news services or for dissemination in the United States, and does not constitute an offer of the securities described herein.  These securities have not been registered under the United States Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States or to U.S. persons absent registration or applicable exemption from registration requirements.

Galileo Resources Plc

("Galileo" or the "Company")

Galileo Proposed Acquisition of Gold-Copper Property in Nevada USA

The Board of Galileo, (AIM:GLR) the emerging Rare Earth exploration company, is pleased to announce that the Company has agreed to acquire (the "Acquisition") the entire issued share capital of Toronto (Ontario) incorporated St. Vincent Minerals Inc. ("SVM"), whose assets include the resource-estimate level Gabbs gold-copper property ("Gabbs Property") located in Nye County, Nevada, USA. The Acquisition is by way of a share exchange, pursuant to a Business Combination Agreement ("Business Combination") signed on 28 January 2014 between Galileo, its special purpose wholly-owned Canadian subsidiary 2404119 Ontario Inc. ("Subco") and SVM including an Amalgamation Agreement ("Amalgamation') between SVM and Subco under the Ontario Business Corporations Act.   

Highlights of the Proposed Acquisition  

·     Galileo will, on closure, issue 21,650,000 new Galileo ordinary shares of 5p ("Galileo Shares") in exchange for the entire issued share capital of SVM and SVM shareholders will hold approximately 19% of the enlarged issued share capital of Galileo following closure of the Acquisition. The agreed transactional value is CDN$ 4.3 million

·     The Galileo shares will have an 8-months lock-up period, during which the Galileo shares may not be disposed of without the prior written consent of Galileo (not to be unreasonably withheld or delayed)

·     The Gabbs Property in Nevada is an inferred resource-estimate level project

·     The NI-43-101 compliant inferred resource ^a is estimated at 1.61 million gold (Au) equivalent ounces in 57 million tonnes deposit grading 0.56g/t Au (1.029 million ounces) and 0.234% Cu

·     The Gabbs Property contains at least three separate mineralised Au-Cu porphyries and one epithermal gold prospect

·     Interpretation of extensive geophysical surveys over the Gabbs property postulates the potential for a major porphyry feeder source at depth for these separate mineralised zones

·     The Company proposes to appoint SVM's CEO, Brian Gavin, to the board as CEO of Galileo. Brian is a professional geologist who will bring more than 30 years exploration and corporate experience in the mineral resource sector ^b.  Further details will be announced in due course 

·     The Company intends to relinquish its greenfield exploration projects, including the Nkombwa Hill rare earth project

 ^a A copy of the independent N_43-101 F1 Technical Report  and Resource Estimate on the Gabbs Gold-Copper Property (dated 1 December 2011) will be available on the Company's website www.galileoresources.com.

^b   Brian Gavin's  current exploration successes include the producing San José gold/silver mine and the newly discovered, billion tonne Los Azules porphyry copper deposit, both in Argentina and both arising out of previous TSX Listed Minera Andes Inc. of which he was a co founder.  

Colin Bird, Chairman and CEO, said: "It is well reported in the resource sector that financial markets have been and continue to be extremely difficult for junior companies to finance their operations.   These difficulties have presented asset acquisition opportunities at prices unprecedented in previous years. Recognising this, Galileo has been extremely proactive in seeking opportunities, which present significant potential upside for shareholders. The SVM asset portfolio and its underlying fundamentals presented the most compelling scenario for acquisition. This acquisition is being made entirely by share exchange with minimal dilution and maximum value add for the future of the Company.  We remain committed to the Glenover rare earth project and look to advancing the SVM asset to a similar technical and financial level of assessment. The copper and gold content identified in the Gabbs property is already significant and we look forward to adding further value to the project.  The Company commences 2014 with a multi-commodity portfolio of advanced projects with excellent prospects."

The Acquisition is subject to conditions including, inter alia, the following:

The Galileo shares having been admitted to trading on the  AIM market operated by the London Stock Exchange;

All regulatory approvals, consents, waivers, permits, orders or exemptions from any Government Authority having jurisdiction or authority over any party or the subsidiary of any party, which is required or advisable to be obtained in order to permit the Acquisition to be effected;

SVM shareholders adopting SVM's consent resolution approving the Acquisition;

SVM converting its debt (currently approximately CDN$1.85 million) into SVM Shares prior to closure of the Acquisition; and

SVM shareholders entering into a Lock-Up Letter Agreement, pursuant to which SVM shareholders agree not to, directly or indirectly, offer, sell, contract to sell, lend, swap or enter into any other agreement to transfer the economic consequences of, other otherwise dispose of or deal with, or publicly announce any intention to offer, sell, grant or sell any option to purchase, make any short sale, hypothecate, pledge, transfer, assign, purchase any option to contract to sell, lend, swap or enter into any other agreement to transfer the economic consequences of, or otherwise dispose of or deal with, whether through the facilities of a stock exchange, by private placement or otherwise, any Galileo share to be issued to the SVM shareholders in connection with the Acquisition, without, in each case, the prior written consent of Galileo, which will not be unreasonably withheld or delayed, until eight months after the closure of the Acquisition and Amalgamation.

On Going Strategy

The ongoing strategy will include exploring the significant potential at Gabbs and other properties held by SVM in Nevada and progressing Glenover to full feasibility.

In making the SVM acquisition, the board was mindful of the quest for new large copper resources in favourable political jurisdictions. After a lengthy search, the Nevada properties were identified fitting all of the Company's criteria and being close to financial study.

It remains the opinion of the board that the Glenover rare earth project has advanced to the point where strategic partners can be identified. The project is robust and ranks high against its peers.

In order to focus and commit resources on these advanced projects, the board has decided to relinquish its interest in all its greenfield projects including the Nkombwa Hill rare earth project.

The Property

The Gabbs Property is located in the Fairplay Mining District, on the southwest flank of the Paradise Range, about 9 km (5.6 mi) south-southwest of the town of Gabbs, Nye County, Nevada.

The Gabbs Property consists of 355 unpatented lode claims and 1 patented lode claim which constitute a 28-square kilometre contiguous claim block.

The Gabbs Property is underlain by a stratigraphic sequence of intermediate volcanic rocks and shallow marine sediments that are intruded by a large mafic to ultramafic igneous gabbroic complex. 

Monzonite bodies intrude the Triassic units and gabbroic complex. These intrusive bodies are extremely significant as they host porphyry style Au-Cu mineralization found at the Sullivan, Lucky Strike and Gold Ledge mineralized areas on the property. The Car Body prospect by comparison is classified as an epithermal gold system.

Overlying the pre-Tertiary (Triassic) rocks are thick sequences of Tertiary intermediate and felsic volcanic rocks.

Drilling

SVM completed a 2,400 metre (7,875 feet) drilling programme consisting of 10 reverse circulation (RC) holes in March-April of 2011. The goal of this drilling was to expand the area of known mineralization at the Lucky Strike area (6 holes) and test geophysic IP (induced polarisation) anomalies (4 holes) identified by previous owner, Newcrest.  Gold mineralization was encountered in 7 of 10 holes. Highlights of the three most interesting holes include extension of the mineralization 2,000 feet (610 metres) at Lucky Strike and encountering mineralization in a new area identified by an IP anomaly south of the Sullivan mineralized zone.

Resource

The independently prepared Inferred Mineral Resource estimate is based on 494 drillhole records, consisting of 397 ―historical drillholes, 87 drillholes completed by Newcrest and ten RC drillholes recently completed by St. Vincent. The historical drillholes do not meet NI 43-101 and CIM guidelines for the public reporting of a mineral resource. Historical drillholes were therefore used only to define the extent of the mineralized deposits, and historical assay grades were not incorporated into the mineral resource estimate. The Mineral Resource estimate for the Gabbs Property is reported at a cut-off grade of 0.40 g/t Au for the oxide deposits and 0.30 g/t Au for the non-oxide deposits (Table 1). A summary of the mineral resource sensitivity is presented in Table 2.

Table 1 SUMMARY OF IN-PIT INFERRED MINERAL RESOURCES  (1-11)
Deposit	Au Cut-off	1000 t	Au g/t	Au 1000 oz	Cu ppm	AuEq g/t	AuEq 1000 oz
Sullivan Oxide	0.40 g/t	9,935	0.80	254.5	2,463	0.80	254.5
Sullivan Non-Oxide	0.30 g/t	10,782	0.47	161.6	2,185	0.83	288.1
Car Body Oxide	0.40 g/t	836.5	1.44	38.6	----	1.44	38.6
Car Body Non-Oxide	0.30 g/t	44.4	0.78	1.1	----	0.78	1.1
Gold Ledge Oxide	0.40 g/t	108.2	0.47	1.6	2,691	0.47	1.6
Gold Ledge Non-Oxide	0.30 g/t	760.6	0.61	15.0	1,800	0.91	22.3
Lucky Strike Oxide	0.40 g/t	243.5	0.52	4.1	2,479	0.52	4.1
Lucky Strike Non-Oxide	0.30 g/t	34,489	0.50	552.6	2,427	0.90	1,002
Total	---	57,199	0.56	1,029	2,342	0.88	1,612

(1) Mineral Resources, which are not mineral reserves, do not have demonstrated economic viability. Environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues may materially affect the estimate of Mineral Resources.

(2) The quantity and grade of reported Inferred Mineral Resources are uncertain in nature and there has been insufficient exploration to define these Inferred Mineral Resources as an Indicated or Measured Mineral P&E Mining Consultants Inc. iii St. Vincent Minerals Inc. Gabbs Au-Cu Property Report No. 220 Resource, and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category.

(3) Mineral Resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM"), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council

(4) Mineral Resources are reported within a conceptual pit shell.

(5) Inverse distance weighting of capped composite grades within grade envelopes was used for estimation.

(6) Composite grade capping of 5.00 g/t Au and 9000 ppm Cu was implemented prior to estimation.

(7) A bulk density of 2.70 t/m3 was used for tonnage calculations.

(8) A two-year, November 30, 2011 trailing average copper price of US$3.70/lb and a gold price of $1,350.00/oz were used along with an oxide process cost of $6.50/tonne, a sulphide process cost of $9.50/tonne and G&A costs of $2.25/tonne.

(9) An oxide Au recover of 50% and a sulphide Au recovery of 90% were used

(10) Resources were estimated within an optimized pit shell utilizing pit slopes of 45 degrees and mining costs of $1.50/tonne of rock.

(11) The conversion factor for AuEq is: AuEq=Au+Cu*1.67/10,000.

Table 2 IN-PIT SENSITIVITY TO RESOURCE ESTIMATE

Grade Sensitivity Matrix, Gabbs, Nevada
Cut-off Au g/t Oxide/Non-oxide	Tonnage (1,000 t)	Au (g/t)	Au (1,000 oz)	Cu (ppm)	AuEq (g/t)	AuEq (1,000 oz)
0.60 / 0.50	20,132	0.82	532	2740	1.17	756
0.50 / 0.40	38,528	0.65	806	2443	0.97	1,208
0.40 / 0.30	57,199	0.56	1,029	2,342	0.88	1,612
0.30 / 0.20	85,014	0.46	1,262	2253	0.77	2,117
0.20 / 0.10	167,942	0.37	1,977	2213	0.74	3,972

For the year ended 30 June 2013, SVM reported an unaudited total comprehensive loss for the period of CDN$282,883. The gross  assets based upon the latest unaudited balance sheet of SVM as at 31 December 2013 were CDN$1,240,642.  

A copy of this announcement will be available on the Company's website www.galileoresources.com 

Technical Sign-Off

Andrew Sarosi, Director of Galileo, who holds a B.Sc. Metallurgy  and M.Sc. Engineering, University of Witwatersrand and is a member of the Institute of Materials, Minerals and Mining, is a "qualified person" as defined under the AIM Rules for Companies and a competent person under the reporting standards. The technical parts of this announcement have been prepared under Andrew's supervision and he has approved the release of this announcement.

For further information, please contact:

Colin Bird Chairman & CEO	Tel [phone]
Andrew Sarosi Technical Director	Tel [phone]
Beaumont Cornish Limited Nominated Advisor and Broker Roland Cornish	Tel [phone]
Gable Communications Justine James	Tel [phone] M  [phone]

Glossary

feldspar	a rock forming silicate mineral
epithermal	adjective describing deposits of minerals formed from warm water at shallow depth
g/t	gram per tonne
igneous	formed through the cooling and solidification of magma (mixture of molten/semi-molten rock)  or lava
mafic	adjective describing a silicate mineral or rock that is rich in magnesium and iron
Monzonite	an igneous intrusive rock comprising approximately equal amounts of plagioclase and alkali feldspar,
plagioclase	a silicate mineral within the feldspar family
porphyry	a variety of igneous rock consisting of large-grained crystals such as feldspar and quartz in a fine-grained rock matrix
Tertiary	geologic period from 65 million to 1.806 million years ago
Triassic	a geologic period and system that from about 250 to 200 million years ago
tonne	1000 kilograms
ultramafic	darker coloured mafic rock

 

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