| Solomon Options 20 Gold and Base Metal Projects in Mongolia |
|
Vancouver, Canada, March 1, 2005 - Solomon Resources Ltd (SRB:TSX-V) today announced that it has signed a Memorandum of Agreement (MOA) with Gallant Minerals Ltd. (Gallant) to acquire up to an 80% interest in each of 20 gold and base metal projects in Mongolia. Gallant Minerals Ltd. is a mineral exploration company founded in 1997 and controlled by Mr. Mohamed Al Fayed, owner of the Harrods Group of businesses of London, England. Since incorporation, Gallants investment in exploration activity has been funded entirely from Mr. Al Fayeds personal resources. Gallant has been successful in identifying and acquiring a number of early stage discoveries in Mongolia which it is now offering to experienced and capable partners for further exploration and development. Solomon is pleased to have the option to acquire a major interest in one or more of 20 quality, exploration projects in Mongolia including all of Gallants most advanced gold properties. Gallant owns and manages 38 exploration licenses covering 188,000 hectares (Ha) of land in Mongolia. The portfolio is divided into three major groups, based on the types of commodities sought and the level of exploration. The following table is a summary of the Gallant properties in Mongolia subject to the MOA.
Property Summaries The highlights of the properties under option pursuant to the MOA include: Bayantsagaan Gold Project The Bayantsagaan Gold Project is located in the North Khentii gold belt, 80 kilometres (km) northwest of Ulaanbaatar. It is centered over a kilometric-scale alteration zone with coincident geochemical and geophysical anomalies. The project is located 35 km southwest of the new Boroo gold mine (10.2 M metric tonnes at 3.5 grams per tonne (g/t) gold, or 36 tonnes of gold) and has excellent infrastructure. Gold mineralization was identified at Bayantsagaan during exploration carried out by a joint Mongolian-Hungarian expedition. The central target area contains an east-west trending ridge, which is flanked to the north and south by alluvium-filled drainages containing small gold placer deposits. Gold mineralization, exposed on the ridge, is hosted by granitic rocks with silica-sericite-sulfide alteration. Surface rock chip sampling by Gallant has identified values up to 24 g/t gold. An induced polarization (IP) geophysical survey identified a chargeability anomaly, reflecting >1% disseminated sulphide, which coincides with the strong geochemical anomalies, and persists to the south and west beneath alluvial cover. Historic drilling along the crest of the ridgeline showed alteration and mineralization from surface to the ends of the holes at 100 to 200 meter (m) depth. Assays were highly anomalous in gold but require confirmation. Historic drilling was completed in the north end of the main anomaly which is about 600 m by 1000 m in size. Future exploration should focus on the coincident anomalies and the continuation of the IP chargeability anomaly beneath alluvial cover. Bayantsagaan is a high priority drill target, with multi-million ounce potential, located close to a new mining operation, with excellent infrastructure. Nurag Uul Gold Project The Nurag Uul Project is located 100 km west of Dalandzadgad, the aimag capital, and 700 km south of Ulaanbaatar. Access to the property takes about 2½ hours by gravel road, from Dalandzadgad, which has regular air service to Ulaanbaatar. Gold mineralization was discovered by generative exploration programs in year 2000 and subsequent work identified multi-gram gold values at surface, including a 6 m channel sample that assayed 52 g/t gold. Mineralization and alteration are exposed within an east-west trending zone that is roughly 100 m wide and has been mapped over a 3,000 m strike length. Gold mineralization occurs with silicified breccias and quartz vein systems that are exposed in a small range of hills, protruding through regionally extensive Cretaceous alluvial sediments. The gold zone trends directly under cover on the southwestern edge of the Paleozoic bedrock. Initial drilling, completed in July 2003, intercepted anomalous gold mineralization, in all holes, over a strike length of 430 meters. Multiple zones of gold mineralization (at a cutoff of 0.1 g/t) were encountered in each of 11 holes, completed along six close-spaced fences Gold mineralization is continuous for 430 meters along strike and remains open at both ends and at depth, below 140 m. Less than 30% of the systems known strike length has been tested. The system disappears under shallow alluvial cover 100 m west of the drilling and becomes progressively less exposed east of the drilling. The logical next exploration step to advance this project would be a comprehensive IP survey along the entire gold system and its possible concealed extensions followed by another round of drilling to test all significant chargeability and resistivity targets. Zos Uul Gold Project The Zos Uul project is a grassroots discovery of sediment-hosted gold mineralization, located approximately 100 km north of the Bayan Obo rare-earth (IOCG) mine in China and 700 km southeast of Ulaanbaatar. Gold mineralization is present in many areas, with the highest value of 5.5 g/t over 1 meter from outcrop samples. The project area contains a northeast-trending horst block with folded and highly faulted sedimentary rocks, intruded byfelsic to intermediate intrusives. Gold mineralization occurs with jasperoid, silicified breccias, and structures in calcareous siltstone, and alteration is accompanied by elevated concentrations of typical Carlin-suite trace elements. Systematic programs led to the targeting and completion of 11 trenches and nine drill holes. Drilling has intercepted widespread, sub-economic gold values. Recent ground magnetics surveys have confirmed the presence of prospective alteration zones, adjacent to known mineralization and extending under cover. Drill targets have been identified and are ready for testing. The Gallant portfolio also includes six exploration projects that target copper-gold-molybdenum (Cu-Au-Mo) porphyry systems, held within 12 exploration licenses. The projects, at variable stages ranging from projects that have received phase I drilling to early stage reconnaissance projects are listed below.
Tsakhir Copper-Gold-Molybdenum Project The Tsakhir Project is located in Omnogobi aimag in south central Mongolia, approximately 600 km southwest of Ulaanbaatar and about 125 km from the aimag capital of Dalandzadgad. Tsakhir contains over 18 square km of hydrothermal alteration, including a four square km area containing strong sericite with local quartz-veinlet stockwork, iron-oxide filled stockworks, and elevated copper and molybdenum values within a poly-phase breccia. Tsakhir contains a well developed leached cap within a porphyry system. Leached outcrops of breccia are exposed on the east side of a covered valley, and contain elevated copper (>100 parts per million (ppm)) and molybdenum (>300 ppm). GMML completed one stratigraphic test-hole within the breccia to examine the continuity of alteration and geology of the host rocks. Strong alteration was intersected from surface to the end of the hole at 141 m, with elevated copper, including up to 4 m at 0.12%. The Tsakhir project lies within the South Gobi arc terrane that hosts the giant Oyu Tolgoi Copper-Gold deposit, located 300 km to the east. The Tsakhir project contains a well defined coppergold porphyry target, which has good potential for supergene enrichment. Toste T1 Copper-Gold Project The Toste project is located approximately 140 km north of the rail head at Ejin Qi, China, and 300 km southwest of Dalanzadgad, the aimag capital. The project contains a 20 square km area of porphyry and high-sulphidation style alteration, which surrounds a two square km leached cap. Initial exploration targeting gold within quartz-alunite alteration and incorporated systematic programs leading to the targeting and completion of 14 drill holes within the high-sulphidation assemblages. Drill results identified extensive low-grade copper and molybdenum in the Downs Dome area, and the initial hole in the Alunite Dome area ended in 12 m of 0.50 % oxide copper, beneath a leached high-sulphidation alteration zone. Subsequent work has identified an outcropping coppergold porphyry target within an exposed leached cap at the Stockwork Zone. The logical next step for this program is the completion of an IP survey, to identify drill targets. The Gallant Portfolio also includes 8 early stage gold and base metal projects that have received initial prospecting and require additional follow-up work to properly access their potential. These 8 projects are listed below:
Agreement Summary Payments by Solomon Pursuant to the MOA Solomon shall pay Gallant: a. the sum of US$50,000 as a "good faith payment" (paid on the date of signing); and
b. if Closing (signing of a formal definitive agreement) does not take place by 31 March 2005, a further sum as a good faith payment equal to the land payments due on the Properties between 1 April 2005 and the date of Closing, not to exceed US$25,000, to be paid on the later of the date of Closing or 30 April, 2005; and c. if the parties agree to extend the Closing Date by up to 30 days to no later than May 30, 2005 a further sum as a good faith payment equal to the land payments due on the Properties between 1 May 2005 and the date of Closing, not to exceed US$40,000 to be paid on the later of the date of Closing or 30 May 2005. which payments shall be non-refundable unless Solomon terminates the MOA because the representations and warranties made by Gallant are not true and accurate in all material respects. Solomons Option and Financial Obligations a. on the Closing Date, Solomon shall deliver to Gallant:
i. 1,000,000 common shares of Solomon, listed for trading on the TSX Venture Exchange, which shares shall be subject to any hold period imposed by applicable securities regulatory authorities; and ii. US$100,000;
b. on or before the first anniversary of the Closing Date, Solomon shall complete US$1,000,000 of work expenditures on the Properties or pay any remaining balance to Gallant;
c. on or before the first anniversary of the Closing Date, Solomon shall deliver to Gallant: i. common shares of Solomon, calculated in value as worth the Canadian dollar equivalent of US$200,000 based on the nominal rate of exchange for US to Canadian dollars posted on the website of the Bank of Canada and the average closing price of the shares over the 10 days of trading immediately preceding the fifth trading day prior to the anniversary date, listed for trading on the TSX Venture Exchange and legended as to any hold period required by securities regulatory authorities; and ii. US$200,000; d. on or before the second anniversary of the Closing Date, Solomon shall expend an aggregate of US$3,000,000 of work expenditures (including expenditures spent during the first year after the Closing Date) on the Properties or pay any remaining balance to Gallant; e. on or before the second anniversary of the Closing Date, Solomon shall deliver to Gallant:
i. common shares of Solomon, calculated in value as worth the Canadian dollar equivalent of
US$450,000 based on the nominal rate of exchange for US to Canadian dollars posted on the website of the Bank of Canada and the average closing price of the shares over the 10 days of trading immediately preceding the fifth trading day prior to the anniversary date, listed for trading on the TSX Venture Exchange and legended as to the applicable hold period required by securities regulatory authorities; and
ii. US$300,000;
d. on or before the third anniversary of the Closing Date, Solomon shall expend an aggregate of US$6,000,000 of
Work Expenditures (including expenditures spent during the first and second years after the Closing Date) on the Properties or pay any remaining balance to Gallant; and e. on or before the third anniversary of the Closing Date, Solomon shall deliver to Gallant US$400,000.
Further option On the Closing Date Gallant will grant to Solomon a second option, subject to Solomon making all payments and exercising its option to acquire 60% of the shares of the holding company, to acquire an additional 20% interest in any Property on which Solomon commits to spend, and then does spend, a further $1,000,000 on Work Expenditures on or before the fourth anniversary of the Closing Date. Gallants Option to participate or Dilute or Convert to NSR Royalty For any Property on which Solomon has earned an additional 20% interest, taking its total direct and indirect interest in that Property to 80%, Gallant may at its sole discretion then elect either to: a. participate in all future expenditure on that Property pro rata to its remaining 20% interest or accept dilution on
industry standard terms (such that the Property shall be valued at 125% of Solomons cash payments and share issuances to earn such 80% interest and each of Solomon and Gallant shall be deemed to have, at any time, that percentage interest in the Property equal to its actual and deemed expenditures divided by the total actual and deemed expenditures of both of them and should a partys interest be reduced to 5% or less that party shall exchange such interest for an NSR Royalty equal to 50% of the royalty described in paragraph 16), or
b. convert its 20% interest to an NSR Royalty.
The transaction is subject to the satisfactory completion of due diligence investigations by Solomon, execution of definitive formal agreements and approval by all applicable regulatory authorities.
The parties anticipate the closing of this transaction will take place before March 31, 2005. Qualified Person under National Instrument 43-101 Solomons President, Lawrence J. Nagy, P.Geol., a qualified person for the purposes of National Instrument 43-101, has reviewed the information contained in and supervised the preparation of this news release, however, such information has been acquired from Gallant and has not verified by him or any independent qualified person. Forward Looking Statements Certain information regarding the Company contained herein may constitute forward-looking statements with the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company cautions that actual performance will be affected by a number of factors, many of which are beyond the Companys control, and that future events and results may vary substantially from what the Company currently foresees. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration results, continued availability of capital and financing and general economic, market or business conditions. The Companys forward-looking statements are expressly qualified in their entirety by this cautionary statement. About Solomon Resources Ltd. Solomon Resources Ltd. is a Canadian public company focused on the acquisition, exploration and development of gold mineral properties world wide. The Company is managed by a proven team of explorationists credited with the discovery of a number of significant deposits in the world, including the SNIP Gold Mine and the Eskay Creek Mine in British Columbia and the Brewery Creek Mine in Yukon and the Segala Gold Deposit in Mali, West Africa. Solomons shares trade under the banner SRB on the TSX Venture Exchange (TSX-V). Solomons current, active mineral properties include three large contiguous projects located in the highly productive Eastern Goldfields of Western Australia: the former producing Kalgoorlie Southeast Project (KSP), the Newcrest-KSP J/V and the Harmony- Glandore J/V. The Kalgoorlie properties of Solomon have been the Companys primary focus since August 1999, where expenditures to date exceed A $5 million. For additional information visit Solomons website at www.solomonresources.ca. On Behalf of the Board of Directors of SOLOMON RESOURCES LIMITED Lawrence J. Nagy President & CEO Contact Information Toll Free Phone: 1-866-831-6666 Phone: 604-669-6656 Fax: 604-684-9877 Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
|