Gold Hawk Resources Inc.
TSX VENTURE : GHK

Gold Hawk Resources Inc.

August 17, 2010 12:10 ET

Gold Hawk Signs Letter of Intent to Acquire the Oracle Ridge Copper Mine

Management to Return Historic Copper-Gold-Silver Mine Near Tucson, Arizona to Production

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 17, 2010) - Gold Hawk Resources Inc. ("Gold Hawk" or the "Company") (TSX VENTURE:GHK) is pleased to announce that it has signed a Letter of Intent to purchase 100% of the shares of 0830438 B.C. Ltd. ("Oracle Ridge"). Oracle Ridge's wholly owned US subsidiary, Oracle Ridge Mining LLC, owns the subsurface mining rights through an option to purchase and is leasing the surface mining rights necessary to explore, rebuild and operate the past producing Oracle Ridge Copper Mine located near Tucson, Arizona.

Pursuant to the Letter of Intent dated August 16, 2010 among the Company and Oracle Ridge, Gold Hawk will purchase all of the issued and outstanding shares of Oracle Ridge by issuing an aggregate of 11,200,000 common shares in the capital of the Company to the shareholders of Oracle Ridge at the deemed price of $1.50 per common share plus $700,000 cash (the "Proposed Transaction"). The nominal purchase price for all of the shares in the capital of Oracle Ridge is $17,500,000. Upon completion of the Proposed Transaction, Oracle Ridge will be a wholly owned subsidiary of Gold Hawk, and the former shareholders of Oracle Ridge will be shareholders of Gold Hawk.

The Oracle Ridge Copper Mine, an underground operation from 1991 to 1996, operated at a rate of approximately 1,000 tons per day. The mine closed in 1996 due to operating difficulties and low copper prices and there has been no mining or exploration activity on the property since 1996. Immediately prior to the mine closing, a feasibility study was completed to increase production to 2,000 tons per day.

The project hosts multiple zones of primary copper skarn mineralization with gold and silver by-product credits. Copper grades in excess of 15% have been reported. Gold and silver have historically been recovered in the copper concentrate and would be more significant today given current metal prices

"The acquisition of the Oracle Ridge Copper Mine will deliver improved asset value and shareholder value in the short- and long-term," said Kevin Drover, Gold Hawk's President and CEO. "The Proposed Transaction fits the strategy set out by Gold Hawk's Board and management, to complete an accretive transaction and to acquire a proven operation that can be returned into production. We are excited about this opportunity and believe that the Oracle Ridge Mine has significant upside potential to our shareholders."

Historically there have been a number of resource and reserve estimates available that were made by reliable, knowledgeable professionals. In 1994, Mintec Inc. were contracted to complete a reserve estimate as part of a feasibility study for increasing the mine and processing plants capacity to 2,000 tons per day. At a 1.5% copper cut-off grade, the Mintec Inc. model estimated 8.14 million tons of proven and probable ore at a grade of 2.33% copper containing 379,000,000 lbs of copper and an additional possible or inferred resource of 16.57 million tons at 2.33% copper containing an additional 772,000,000 lbs of copper. No allowance is made for dilution, mine loss or pillars and gold and silver grades were not estimated. The data base for these estimates included 534 drill holes totalling 163,622 feet. The foregoing estimate is not in compliance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") and is cited for historical purposes only and should not be relied upon until further work is carried out.

Much of the historic mine infrastructure remains in place. The underground mine consisted of three access levels containing an estimated 11 miles of underground workings. Ground conditions were reported to be competent at mine closure and subsequent due diligence visits by Gold Hawk personnel and consultants have confirmed this. A maintenance shop is present and in good repair and although the flotation mill was removed, the site and attendant earth works remain. There is no known outstanding environmental liability and the previous operators cleaned the mine site. Neither the tailings nor the rock dumps are acid-generating as the rock types are mostly carbonates.

Following shareholder approval for the acquisition of the Oracle Ridge project, the Company intends to complete a program designed to validate the existing database and produce a NI 43-101 compliant resource study. This program will consist of re-sampling and assaying the existing core, drilling of confirmation holes, surveying the underground workings, confirming drill hole collar locations and underground mapping and sampling.

In addition, a significant portion of the property has not been drill tested. The proposed exploration program will also include an underground core drilling program to locate additional potential areas of mineralization. While this work is underway the Company will commence collecting the data required to obtain the permits necessary to re-start the operation and complete a proposed feasibility study. With approximately $19 million of cash and investments, the Company will be able to fund the capital requirements to complete all of these programs.

The Proposed Transaction will create a well-funded, low-cost, growth-oriented metals company with near-term copper production. Returning the Oracle Ridge Mine into production is the first step in a strategy to aggressively expand Gold Hawk into a multi-project company.

Details of the Proposed Transaction will be stipulated in a share purchase agreement between the Company and each of the shareholders of Oracle Ridge (the "Share Purchase Agreement").

Gold Hawk has completed its technical due diligence and is near completion of its legal and financial due diligence in preparation for signing the Share Purchase Agreement. The Company's financial advisors have provided the Board of Directors with a verbal presentation and the Company intends to obtain a written Fairness Opinion for the Board of Directors to review prior to a shareholder vote on the Proposed Transaction.

Transaction Rationale

The Proposed Transaction provides the platform to develop an aggressive, growth-oriented company initially focused on maximizing the value of the existing high grade Oracle Ridge copper mine.

Gold Hawk believes that the Proposed Transaction will realize significant benefits for Gold Hawk shareholders, including:

  • Retaining more than 50% of the shares outstanding with minimal impact on the Company's cash holdings;
  • Acquiring a near-term copper producing asset with excellent exploration upside;
  • The Oracle Ridge Copper Mine is a high-grade copper asset with below average risk;
  • The Oracle Ridge Copper Mine is located in mining friendly Arizona, the largest copper-producing state in the USA; 
  • Improved valuation and increased market capitalization that should also improve trading liquidity for shareholders; and
  • Maintaining a strong balance sheet to support exploration, development and acquisition strategies.

Gold Hawk believes that its shareholders will benefit from the cash-preservation method of the combination of Gold Hawk and Oracle Ridge, coupled with upside from the significantly enhanced business platform.

The Gold Hawk Board of Directors has unanimously approved the terms of the Proposed Transaction.

Full details of the Proposed Transaction will be included in the Share Purchase Agreement and management information circular to be filed with the regulatory authorities and mailed to Gold Hawk shareholders in accordance with applicable securities laws. The transaction is expected to close before the end of October 2010 and is subject to certain customary conditions, including receipt of all necessary TSX Venture Exchange and shareholder approvals.

Gold Hawk has retained Dundee Securities Corporation as financial advisors related to this Transaction and Fraser Milner Casgrain LLP as legal advisors.

The reader is cautioned that Gold Hawk has not verified the above-mentioned historical resources under National Instrument 43-101 reporting standards. Gold Hawk Resources Inc. has not independently analyzed the results of the previous exploration therefore the historical results should not be relied upon. Resource estimates prepared under reporting codes other than National Instrument 43-101 should not be relied upon to conform to current standards and definitions. Gold Hawk believes, however, that the historical resource estimates reported above are material and should be disclosed. Gold Hawk believes these historical results provide an indication of the potential of the property and are relevant to future exploration.

Glenn R. Clark, P.Eng. of Glenn R. Clark & Associates Limited, a consultant for Gold Hawk, and a Qualified Person under NI 43-101, has reviewed this media release and is responsible for the technical information reported herein.

About Gold Hawk Resources Inc.

Gold Hawk (TSX VENTURE:GHK) is a Vancouver, Canada-based company actively exploring business opportunities in the mining sector. The Company has no debt, approximately $19 million in working capital and holds mining concessions at the Barry-Souart property northeast of Val-d'Or, Quebec – a gold mining area with existing mining operations nearby. Gold Hawk is operated by an experienced management team with significant operating experience.

This document may contain "forward-looking statements" within the meaning of Canadian securities legislation. These forward-looking statements are made as of the date of this document and Gold Hawk Resources Inc. (hereinafter referred to as the "Company") do not intend, and do not assume any obligation, to update these forward-looking statements. Forward-looking statements relate to future events or future performance and reflect management of the Company's expectations or beliefs regarding future events and include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, success of mining operations, commodity prices, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative of these terms or comparable terminology. By their very nature forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of resources; possible variations in ore reserves, grade or recovery rates; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors detailed from time to time in the Company's interim and annual financial statements and management's discussion and analysis of those statements, all of which are filed and available for review on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking 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.

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