Vista Gold Corp. Announces Agreement for Canyon Resources Option to Purchase Hycroft Mine
24 Janvier 2005 - 3:00PM
PR Newswire (US)
Vista Gold Corp. Announces Agreement for Canyon Resources Option to
Purchase Hycroft Mine DENVER, Jan. 24 /PRNewswire-FirstCall/ --
Vista Gold Corp. (Amex: VGZ; TSX: VGZ), is pleased to announce that
it has signed a binding letter of intent agreement with Canyon
Resources Corporation of Golden, Colorado (AMEX:CAU) to grant
Canyon a six-month option to purchase the Hycroft mine in Nevada
for an aggregate amount of US$10 million consisting of a
combination of US$4 million in cash and US$6 million in equity
units. Completion of the transaction is subject to the negotiation
and execution of a definitive option and purchase agreement and
regulatory approval. The agreement provides for Canyon to expend
US$500,000 on a program of development and exploration drilling and
mine engineering. The objectives of this program are to evaluate
and expand the oxide reserves of Hycroft and to provide design
information for the restart of oxide leaching operations. At any
time during the six-month period, Canyon may exercise its option to
purchase Hycroft for an aggregate amount of US$10 million
consisting of a combination of US$4 million in cash and US$6
million in units, with each unit consisting of one share of Canyon
common stock and a warrant to purchase one half share of Canyon
common stock. The number of units would be calculated by dividing
US$6 million by the average closing price of Canyon common stock
for the 20 trading days prior to the exercise of the option. The
exercise price of each warrant would be equal to 130% of the
average share price, as calculated above, upon exercise of the
option and the warrants would have a term of three years from date
of issue. Canyon will arrange to register the stock acquired by
Vista as part of this transaction. In addition, Canyon would have
the choice either to arrange new reclamation bonding for Hycroft or
assume the existing bond (subject to bonding company approval). If
Canyon assumes the existing bond, Canyon would pay Vista the
difference, over a number of years, between the bond amount
(approximately US$6.8 million) and the bonding company's accepted
cost estimate of reclamation (approximately US$4.2 million), or
approximately US$2.6 million. If Canyon fails to complete
significant physical development activities directed toward
recommencing gold production from oxide ore leaching during the 12
months following Canyon's purchase, then Canyon commits to spend
$500,000 on exploration for high-grade gold deposits on the
property in each of the two following 12-month periods. The
agreement would provide that Vista will have the right to nominate
a new Director for Canyon's Board of Directors upon completion of
the purchase, with such nomination subject to approval by Canyon's
shareholders and its existing Board. Vista and predecessor
companies operated the Hycroft mine from 1983 to 1999, and during
that period, the mine produced over 1 million ounces of gold. The
mine produced 112,685 gold ounces in 1998 prior to temporary
suspension of mining operations due to low gold prices at the end
of 1998. In 2004, Mine Development Associates of Reno, Nevada,
completed a Canadian National Instrument 43-101 compliant update of
the feasibility of restarting operations, as previously reported.
In the study, it was estimated that the proven and probable
reserves in a defined open-pit were 32.4 million tons of ore
grading 0.0175 gold ounces per ton containing 566,500 ounces of
gold. The pit containing these reserves also contained an
additional approximately 5 million tons of inferred resources(1)
containing about 144,000 gold ounces. Mike Richings, Vista
President and CEO, stated, "The deal with Canyon represents a
significant step forward in Vista's strategy. We have held the
Hycroft mine during a period of low gold prices during which we
improved the value through continued exploration and engineering
studies. We look forward to the eventual sale of this mine to
Canyon, an experienced operating company, which we believe can put
the gold mine back into production and achieve significant returns.
Vista would, through its substantial ownership of Canyon, benefit
from this and continue to provide its shareholders with exposure to
the upside of future exploration and development success. The funds
from the sale will allow Vista to advance and add value to the
significantly larger Paredones Amarillos and Awak Mas projects, and
to continue to acquire additional gold resources. We expect higher
gold prices in the future, but we believe it is better to take this
timely offer from Canyon rather than waiting and incurring the
continued burden of the holding costs." Vista Gold Corp., based in
Littleton, Colorado, evaluates and acquires gold projects with
defined gold resources. Additional exploration and technical
studies are undertaken to maximize the value of the projects for
eventual development. The Corporation's holdings include the
Maverick Springs, Mountain View, Hasbrouck, Three Hills, Wildcat
projects and Hycroft mine, all in Nevada, the Long Valley project
in California, the Yellow Pine project in Idaho, the Paredones
Amarillos and Guadalupe de los Reyes projects in Mexico, and the
Awak Mas project in Sulawesi in Indonesia. (1) Cautionary Note to
U.S. Investors concerning estimates of Inferred Resources: This
press release uses the term "inferred resources." We advise U.S.
investors that while this term is recognized and required by
Canadian regulations, the U.S. Securities and Exchange Commission
does not recognize it. "Inferred resources" have a great amount of
uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all
or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of a feasibility study or
other economic study. U.S. investors are cautioned not to assume
that any part or all of an inferred resource exists or is
economically or legally minable. The statements that are not
historical facts are forward-looking statements involving known and
unknown risks and uncertainties that could cause actual results to
vary materially from targeted results. Such risks and uncertainties
include those described from time to time in the Corporation's
periodic reports, including the annual report on Form 10-K filed
with the U.S. Securities and Exchange Commission. The Corporation
assumes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events
or otherwise. For further information, please contact Greg Marlier
at (720) 981-1185, or visit the Vista Gold Corp. website at
http://www.vistagold.com/ DATASOURCE: Vista Gold Corp. CONTACT:
Greg Marlier of Vista Gold Corp., +1-720-981-1185 Web site:
http://www.vistagold.com/
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