Mr. George Salamis, President and CEO of Edgewater Exploration Ltd. ("Edgewater"
or the "Company") (TSX VENTURE:EDW)(OTCQX:EDWZF) is pleased to announce an
executed Letter of Intent with Pinecrest Resources Ltd. ("Pinecrest")(TSX
VENTURE:PCR) regarding the Enchi Gold Project ("the Project"). The transaction
will have Edgewater sell its 100% interest in Cape Coast Resource Ltd. (the
Company's Ghanaian subsidiary) that holds a 51% interest in the Enchi Gold
Project through a joint venture agreement with Red Back Mining Ghana Limited
(wholly owned by Kinross Gold Corporation) in exchange for shares of Pinecrest
Resources Ltd. Edgewater will distribute the Pinecrest shares pro-rata to the
shareholders of Edgewater in accordance with their share ownership of Edgewater
as a return of capital.
Transaction Terms with Edgewater
Pinecrest has entered into a Letter of Intent ("Edgewater LOI") to acquire
Edgewater's 51% interest(i) in the Enchi Gold Project through the purchase of
Cape Coast Resources Ltd. Details of the terms include;
-- Upon closing of the Transaction, Edgewater will receive one Pinecrest
post-consolidated common share (the "Acquisition Shares") for every five
common shares of Edgewater issued and outstanding on the Closing, which
will represent approximately 40% of the issued common shares of
Pinecrest post-closing of the Transaction. All shares issued to
Edgewater will be subject to resale restrictions as follows; 25% to be
free trading six months and nine months from closing and the remaining
50% twelve months from closing;
-- Edgewater will agree to distribute the Acquisition Shares pro-rata to
its shareholders as soon as reasonably practicable after the closing of
the Transaction;
-- Pinecrest will pay to Edgewater a cash payment of Cdn$150,000
-- The completion of the transactions contemplated by the Edgewater LOI are
subject to the execution of a definitive agreement with Pinecrest and
the concurrent completion of the transactions contemplated by the Red
Back LOI
Additionally, Pinecrest will be acquiring the remaining 49% interest from Red
Back Mining Ghana Limited ("Red Back") a wholly owned subsidiary of Kinross Gold
Corporation ("Kinross"). Pursuant to the completion of the transaction with
Edgewater and Kinross, Pinecrest will own 100% of the Enchi Gold Project and be
a West African precious metals focused exploration and development company.
Transaction Terms with Red Back
Pinecrest has entered into a Letter of Intent ("Red Back LOI") to acquire Red
Back's 49% interest(i) in the Enchi Gold Project. Details of the terms include;
-- Red Back will receive 19.9% of the issued and outstanding common shares
of Pinecrest post-closing of the transaction;
-- Red Back will receive a 2% NSR on the Project with an option for
Pinecrest to acquire 1% of the NSR at any time for US$3.5 Million;
-- Red Back will receive $10/oz on any new NI 43-101 Measured and Indicated
Resource Estimate or any ounce of gold mined whichever occurs first.
Such amount shall be payable in cash or, if agreeable to Pinecrest,
common shares of Pinecrest, at Pinecrest's sole discretion, provided
that, Pinecrest shall not be entitled to elect to pay in common shares
if such issuance would result in Red Back holding more than 20% of the
issued and outstanding shares of Pinecrest;
-- Red Back will have first right to process ore from the Project at its
Chirano Mill if toll processing is considered.
-- Red Back will receive 5,000,000 share purchase warrants priced at
$0.40/warrant exercisable for a five year term from closing of the
Transaction.
(i) The Government of Ghana can exercise the right to own a 10% direct carried
interest in the Project, If this right were exercised it would result in
Pinecrest owning a 90% direct interest in the Project.
The agreements are subject to Pinecrest shareholder approval and TSX Venture
Exchange acceptance.
President and CEO, George Salamis, stated; "We believe this transaction with
Pinecrest is a catalyst to unlocking the value of the Enchi gold project for
Edgewater shareholders. We aim to achieve this through the creation of a
separately listed public company, the majority of which will be owned by
Edgewater shareholders and Red Back, with Pinecrest owning an effective 100%
interest in the Project. The goal of this Transaction is to create a singularly
focused and separately funded West African advanced-stage gold company,
leveraging off of the previous exploration successes of the Edgewater team in
one of the most prolific gold districts in the world. This transaction will
allow Edgewater to focus on our 100% owned Corcoesto gold project in Spain as
well as have the Enchi project funded and advanced without further equity
dilution to our shareholders. Edgewater recently announced an updated NI 43-101
Inferred Resource demonstrating over one million ounces of shallow gold
resources (at a cut-off of 0.5 g/t gold). Our team is of the view that some of
the gold resources defined within the near-surface oxidized portions are
potentially amenable to heap-leaching and lower cost open pit mining. As such,
with 100% ownership, Pinecrest's near-term value proposition is linked to
completing a Preliminary Economic Assessment focused on the potential economics
of heap-leaching at Enchi, while also testing the upside potential of the
currently open-ended gold resources."
Summary of the Enchi Gold Project
The Enchi Gold Project located in south-west Ghana, West Africa covers a 50
kilometre strike length of the Bibiani Shear Zone a regional scale structure
that hosts a number of major gold mines and deposits including Kinross' Chirano
Gold Mine located 70 km north-east of the Project and the Bibiani Gold Deposit
located 90 km north-east of the Project. The Enchi Gold Project is comprised of
ten licenses totalling 696 km2 located 290 km west of the capital city of Accra.
Access to the Project is on sealed roads via the regional port city of Takoradi
or the mining centre of Tarkwa and then on gravel roads to Enchi (population
9,270). Good road access exists throughout the project licenses.
May 12, 2014 Edgewater Exploration announced an updated NI 43-101 Inferred
Resource Estimate at a cut-off grade of 0.7 g/t Gold as follows:
Enchi Gold Project, Ghana
2014 Inferred Mineral Resource Summary
============================================================================
Cut-off Zone Tonnes Grade Contained Gold
Au (g/t) Au (g/t) (ounces)
============================================================================
0.7 Boin 9,551,000 1.20 368,500
0.7 Nyam 3,716,000 1.13 135,000
0.7 Sewum 7,549,000 1.09 264,500
------------------------------------------------------
TOTAL 20,816,000 1.15 768,000
============================================================================
1. CIM definition standards were followed for the resource estimate.
2. The 2014 resource models used ordinary kriging (OK) grade estimation
within a three-dimensional block model with mineralized zones defined by
wireframed solids.
3. A base cut-off grade of 0.7 g/t Au was used for reporting resources with
a capping of gold grades at 18 g/t.
4. A US$1,300/ounce gold price, open pit with heap leach operation was used
to determine the cut-off grade.
5. A density of 2.45 g/cm3was applied.
6. Numbers may not add exactly due to rounding.
7. Mineral Resources that are not mineral reserves do not have economic
viability
A technical report is being prepared by independent qualified person Todd
McCracken, P. Geo. of WSP Canada Inc. ("WSP") and will be filed within 45 days
of the announcement in the Edgewater Exploration Ltd. news release dated May 12,
2014.
The resource estimate also evaluated the Enchi Project at a range of cut off
grades between 0.3 and 2.0 g/t Au. Results are as follows;
============================================================================
Cut-off Tonnes Au g/t Ounces
============================================================================
0.3 72,611,000 0.65 1,526,065
0.4 53,366,000 0.76 1,304,918
0.5 37,357,000 0.90 1,078,702
0.7 20,816,000 1.15 767,988
0.9 12,993,000 1.36 569,879
1.0 10,127,000 1.49 484,388
1.2 6,446,000 1.70 352,779
1.5 3,011,000 2.11 204,549
1.7 2,041,000 2.36 154,976
1.9 1,554,000 2.54 126,727
2.0 1,174,000 2.73 102,909
============================================================================
The 2014 Mineral Resource estimate was based on 52,385 metres of diamond and RC
drilling in 646 holes as well as data from 13,799 metres in 102 surface
trenches. The drilling is generally spaced at 25 to 50 metre intervals.
A two phase success contingent work program has been recommended by WSP. The
first phase consists of metallurgical testing, and the completion of a
Preliminary Economic Assessment ("PEA"). The second phase, contingent on the
success of phase one, consists of additional drilling, detailed metallurgical
testing, further technical studies and a pre-feasibility study.
The three gold zones in the inferred resource estimate, Boin, Nyam and Sewum
have been drilled to an approximate vertical depth of 75-100m and approximately
60-70% of the inferred resource consists of oxide mineralization. Pinecrest
Resources sees opportunities to expand resources at all zones both laterally and
to depth.
Edgewater, Red Back and previous operators have discovered and identified
numerous gold mineralized zones on the Enchi Project characterised as
structurally-controlled, mesothermal quartz vein style gold deposits. This style
of gold mineralization is the most common type of gold occurrence in West
Africa.
Further potential on the Enchi Project is evidenced by results of a regional
airborne study consisting of a heliborne VTEM, magnetics and radiometric survey
which was flown over the Enchi Project. A total of 2,084 line km at 200m spacing
were flown covering an area of 568 square kilometres. The airborne geophysical
survey at Enchi indicated that; 1) Several structures correlate to known
mineralization, while many other similar structures remain untested and 2)
Interpretation work pin pointed several additional drill targets and combined
with soil geochemistry this data is a strong tool for identification of new
discoveries
Additional zones exists within the Enchi Project including several with
successful first pass drilling but not part of the current resource including;
Eradi; 27m grading 0.60 g/t Au including 10m grading 1.3 g/t Au, Kojina Hill; 68
m grading 1.14 g/t Au, 59m grading 0.77 g/t Au including 28m grading 1.22 g/t
Au, and Boin NW; 7.0m grading 0.95 g/t Au and 3.0m grading 0.67 g/t Au.
Further high priority targets which warrant additional detailed exploration have
been defined by trenching and auger drilling in 2012 and 2013 including; Boin
Northwest; 10m grading 1.64 g/t and 2m grading 2.74 g/t Au, Sewum-Tokosea Trend;
31m grading 0.31 g/t Au and 5m grading 0.68 g/t Au, and Achimfo; 24m grading
0.84 g/t Au and 22m grading 0.62 g/t Au.
Sample analyses have been conducted at independent commercial facilities SGS and
Intertek Labs in Tarkwa Ghana. All sample analyses was completed using industry
standard geochemical and fire assay practices and included a rigorous Quality
Assurance / Quality Control (QA/QC) program consisting of the insertion of
standards, blanks and duplicate samples randomly into the sample stream. A
review of the QA/QC results shows no significant bias and all results are
considered highly reliable.
Mr. Gregory Smith, P.Geo, the Vice-President of Exploration of the Company, is
the Qualified Person as defined by NI 43-101 and has prepared and approved the
technical data and information in this news release.
Financing
Pinecrest will complete a non-brokered private placement (the "Private
Placement") financing, issuing 15 million subscription receipts (each a
"Subscription Receipt") at a purchase price of CDN$0.20 per Subscription Receipt
to raise aggregate gross proceeds of CDN$3,000,000. Each Subscription Receipt
will entitle the holder to acquire one post-consolidated unit (each a "Unit") of
Pinecrest for no additional consideration upon the closing of the Transaction.
Each Unit will consist of one post-consolidated common share ("Common Share") in
the capital of Pinecrest and one post-consolidated common share purchase warrant
(each whole warrant a "Warrant"). Each Warrant will entitle the holder to
acquire one post-consolidated common share of Pinecrest at a post-consolidated
exercise price of CDN$0.30 for a period of 24 months from the completion of the
Private Placement.
None of the securities sold in connection with the Private Placement will be
registered under the U.S. Securities Act of 1993, as amended, and may not be
offered or sold in the United States absent registration or an applicable
exemption from the registration requirements. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
A Finder's Fee of 6.0% of the gross proceeds raised under the Private Placement
will be paid in cash or at the election of the Finder in post-consolidated
common shares of Pinecrest on the closing of the Transaction.
All securities issued in connection with the Private Placement will be subject
to a statutory hold period of four months plus one day from the closing date of
the Private Placement. The Private Placement is subject to Exchange acceptance.
The offer and sale of the securities offered in the Private Placement has not
been and will not be registered under the U.S. Securities Act of 1933, as
amended, or any state securities laws, and such securities may not be offered or
sold in the United States absent registration or an applicable exemption from
such registration requirements. This press release shall not constitute an offer
to sell or the solicitation of an offer to buy the securities in the United
States or in any jurisdiction in which such offer, sale or solicitation would be
unlawful.
Post-Transaction Capital Structure
On completion of the Consolidation, the Private Placement and the closing of the
Transaction, Pinecrest will have approximately 51,163,887 common shares issued
and outstanding and 74,906,387 shares common on a fully diluted basis. The
proposed equity ownership of Pinecrest is anticipated to be as outlined below:
Holder Percentage Ownership
Red Back 19.9%
Edgewater 39.6%(i)
Original Pinecrest shareholders 11.2%
New Capital (Private Placement) 29.3%
----------------------------------------------------------------------------
100.0%
(i) The Acquisition Shares are to be distributed by Edgewater to its
shareholders on a pro rata basis as soon as reasonably practicable after the
closing of the Transaction.
Resale Restrictions for Pinecrest Shares Issued to Edgewater Shareholders
The Pinecrest common shares issued to Edgewater shareholders will be subject to
resale restrictions and will be released according to the following schedule
from the closing date of the Transaction:
6 months 25% release
9 months 25% release
12 months 50% release
Further updates on the status of the Transaction will be provided by future
press releases as matters progress.
The closing of the transactions contemplated by the Red Back LOI and the
Edgewater LOI are subject to a number of conditions, including but not limited
to the execution of separate definitive agreements; normal conditions precedent
for transactions such as these, including the delivery of title and corporate
opinions and the completion of satisfactory due diligence, approval of the
shareholders of Pinecrest to the proposed change of control of Pinecrest, the
acceptance of the Exchange, the completion of a consolidation of the common
shares of Pinecrest, as described below, and the completion by Pinecrest of a
financing to raise not less than CDN$3,000,000. There can be no assurance that
the Transaction will be completed as proposed or at all.
About Edgewater Exploration Ltd.
Edgewater is a mineral development and exploration company focused on the
development of precious metal properties. Edgewater has an experienced mine
building and operating team with a track record of success. The Company is
currently developing the Corcoesto Gold Project in northwest Spain.
On behalf of the board of
EDGEWATER EXPLORATION LTD.
George Salamis, President and CEO
This news release contains certain forward-looking statements, including
statements regarding the proposed transactions with Pinecrest, the proposed
Private Placement and Consolidation of the Pinecrest share capital and the
closing of the transactions contemplated thereby, the use of net proceeds of the
Private Placement, future plans and objectives of the Company and the business
of the Company.
Any statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or phrases such as
"expects" or "does not expect", "is expected", anticipates" or "does not
anticipate" "plans", "estimates" or "intends" or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be taken, occur or
be achieved) are not statements of historical fact and may be "forward-looking
statements". Forward-looking statements are subject to a variety of risks and
uncertainties which could cause actual events or results to materially differ
from those reflected in the forward-looking statements.
Safe Harbor Statement under the United States Private Securities Litigation
Reform Act of 1995: Except for the statements of historical fact contained
herein, the information presented constitutes "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements including but not limited to those with respect to
the price of gold, potential mineralization, reserve and resource determination,
exploration results, and future plans and objectives of the Company involve
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievement of Atlas to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. There can be no assurance that such statements
will prove to be accurate as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, readers
should not place undue reliance on forward-looking statements.
"Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release."
FOR FURTHER INFORMATION PLEASE CONTACT:
Edgewater Exploration Ltd.
Ryan King
Vice President
(604) 628-1012
rking@edgewaterx.com
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