Castillian to acquire Maximus's option in Las Aguillas
2007-03-06 09:15 ET - News Release
See News Release (C-CT) Castillian Resources Corp
Mr. David Gower of Castillian reports
CASTILLIAN ANNOUNCES ACQUISITION OF 100% OF MAXIMUS RESOURCES LTD.'S OPTION/JV RIGHTS TO ACQUIRE AN INTEREST IN THE LAS AGUILAS NICKEL COPPER-PGM PROPERTY, ARGENTINA FROM MARIFIL MINES LTD.
Castillian Resources Corp. has reached an agreement with Maximus Resources Ltd., whereby it will acquire 100 per cent of Maximus's rights to acquire an interest in the Las Aguillas nickel-copper-PGM (platinum group metal) project from Marifil Mines Ltd. David Gower, president of Castillian, states: "This is an important acquisition for Castillian as it adds an additional advanced nickel sulphide exploration project within a highly prospective belt-scale property to the company's project portfolio. The property is in an excellent mining jurisdiction with good access which will allow work to proceed efficiently. Advanced nickel sulphide properties such as Las Aguilas are rare in the current market."
The Las Aguilas project is located in San Luis province, Argentina, 250 kilometres east of Mendoza. It has good infrastructure, being 40 kilometres by paved road from the city of San Luis (population 200,000). Mining is an important contributor to the local economy in San Luis province. The project covers a large land position, which includes the prospective mafic/ultramafic rocks along an 80-kilometre-long belt. Previous work has outlined a near-surface resource of 2.2 million tonnes grading 0.52 per cent nickel, 0.50 per cent copper and 0.04 per cent cobalt, primarily based on drilling between 19701984 by Fabricaciones Militaires (Argentina Government Survey). The resource estimate has not been verified by Castillian and predates the establishment of National Instrument 43-101 standards and as such should not be relied upon by investors. It is provided as information for the purpose of illustrating that a significant quantity of disseminated to semi-massive nickel-copper-PGM-rich sulphides are present and represent an excellent exploration target. Previous operators did not analyze for platinum group metals (PGM), and subsequently, significant PGM values have been identified in reanalyses of drill core from the resource area. For example quarter core assays show an intercept in hole LA-5-3 of 42 metres grading 0.91 gram per tonne platinum and 0.11 gram per tonne palladium, including three metres grading 9.1 grams per tonne platinum and 0.45 gram per tonne palladium. Drill hole LA-6-4 intersected 28 metres grading 0.74 gram per tonne PGM.
In order to acquire Maximus's interest, Castillian agrees to pay Maximus $250,000 (U.S.) in cash on signing and issue 200,000 shares of Castillian. The initial cash payment includes reimbursement of funds Maximus has paid to Marifil with respect to obligations in the underlying agreement between Maximus and Marifil. In order acquire 100 per cent of Maximus's interest, Castillian will also pay Maximus $100,000 (U.S.) and issue 200,000 shares to Maximus on each of the first and second anniversaries of the agreement.
Castillian agrees to acquire all of Maximus's rights and obligations in the underlying agreement with Marifil such that Castillian will have the option to earn up to a 65-per-cent interest in the Las Aguilas project as follows:
Castillian may earn a 50-per-cent interest by incurring expenditures totalling $3-million (U.S.) in accordance with the following schedule:
* $400,000 (U.S.) on or before Dec. 11, 2007;
* $600,000 (U.S.) additional on or before Dec. 11, 2008;
* $1-million (U.S.) additional on or before Dec. 11, 2009; and
* $1-million (U.S.) additional on or before Dec. 11, 2010.
Castillian will have the right to accelerate the earn-in.
In addition the underlying agreement requires periodic payments totalling $490,000 (U.S.) over four years to Marifil in accordance with the following schedule:
1. $15,000 (U.S.) within 30 days for due diligence period (payment already made by Maximus);
2. $100,000 (U.S.) on or before Feb. 11, 2007, corresponding with the end of the due diligence period (payment already made by Maximus);
3. $125,000 (U.S.) on or before Dec. 11, 2007;
4. $125,000 (U.S.) on or before Dec. 11, 2008; and
5. $125,000 (U.S.) on or before Dec. 11, 2009.
Marifil may elect to have 50 per cent of its periodic payments paid by an equivalent value of common stock based on the average 10-day trading price prior to the date that payment is made.
Upon vesting its 50-per cent interest Castillian will have the option to increase its interest to 60 per cent by completing an additional $2-million (U.S.) in expenditures and delivering a feasibility study.
At Marifil's option, Castillian may be granted the right to increase its interest in the property to 65 per cent by arranging financing for the property. The financing would become a joint venture obligation and is subject to the parties agreeing to the terms of the financing including payback provisions. This option expires 60 days following Castillian's decision to bring the property into commercial production and Marifil shall be entitled to $75,000 from the annual cash flow of the project until payback is achieved should they opt for this option.
Joel Hrominchuk, MSc, PGeo, exploration manager for Castillian, has reviewed the project, including an on-site review and has verified the technical information included in this release.
We seek Safe Harbor.
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