Barkerville Gold Mines Ltd.

Barkerville Gold Mines Ltd.

February 02, 2010 03:00 ET

Barkerville Closes Acquisition of QR Mine & Mill-Gold Mining Operations Have Commenced

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 2, 2010) - Barkerville Gold Mines Ltd. (TSX VENTURE:BGM) reports that it has closed the acquisition of the QR Mine, Mill and its associated assets under the terms as set out on Dec 16th 2009 (News Release 09-36), and accordingly, the funds escrowed from the recently closed financing ($12,109,200 of total $13,647,000 raised) have been released to the Company. The Company also wishes to announce that it has commenced gold mining operations at the QR Mine today.

The Company has budgeted an initial $6,000,000 to begin mining and milling operations at QR, covering initial capex, start-up and operating costs. A further $4,000,000 has been budgeted for exploration, development activities and working capital. The Company plans to begin extensive drill campaigns on Barkerville Mountain (Bonanza Ledge), Cow Mountain (Cariboo Gold Quartz Mine), Island Mountain, and at the QR Mine in the near future. Each drill program will be news released when they are finalized and permitted.

Highlights of the QR Mine and Mill include:

  • Located 110 km by highway and all-weather road from Bonanza Ledge
  • Permitted 900 tonne/day CIP mill capable of producing up to 70,000 ounces of gold per year at that location
  • Permitted and developed West Zone
  • 43-101 Pre Feasibility received January 2010
  • The North Zone – the largest zone of gold mineralization known at the QR Mine with a drill indicated strike length of approximately 1 km located below the previously mined Main Zone Pit.

Further, with the move into gold production, the Company wishes to announce Procon Mining and Tunnelling as mining contractor on an ongoing basis, who will be responsible for the development, construction, production, operation and maintenance activities at the Company's mines and mills. In conjunction with Company management and project supervisor, Procon will also be providing facility management, engineering, permitting functions for the Company's various projects.

Company President and CEO, J. Frank Callaghan states, "We are very proud to make this the first of hopefully many projects, that advance into a gold production reality. As our Company enters into a new phase of its operations we are pleased to welcome the new members to the Barkerville Gold team. The Board of Directors feels that the Company is privileged to be partnered with Procon, Canada's preeminent mining contractor. We welcome their expertise, experience and economies of scale which will readily allow the Company to run operations optimally. The Company is aiming to initially produce from QR and Bonanza Ledge (permitting in progress) 50,000 ounces of gold in its first year of production".

"With roughly half of the proceeds of the over-subscribed financing going towards the start up of gold production, we intend to begin work immediately with moneys raised. Combining this with cash flow from gold production, the Company will work to expand gold resources in and around the three current 43-101 compliant gold deposits, as well as begin exploring further along the entire 60 km gold belt that the Company owns".

Procon Mining and Tunnelling President, Ed Yurkowski states, "We at Procon are not only excited to be involved in bringing British Columbia's next gold mine into production, we are pleased to be partnered with the Barkerville Gold team who over 15 years, has amassed a large land position and developed gold resources in the area. We look forward to working along side Barkerville Gold team for many years as they further expand their current resources and develop new ones in this gold belt".

About Procon Mining and Tunnelling

Procon is a full service mining contractor, providing a comprehensive range of expertise to meet the ever growing needs of the mining and civil industries.

Using proven methods, years of experience, and one of the largest underground production fleets of any underground contractor, Procon can develop and operate a mine from start-up through to closure and decommissioning.

Since 1992 Procon has ranked as one of the leading mining contractors in North America and one of the top thirty general contractors in Canada. Procon is well respected in the industry, with an impressive performance record in both safety and operations.

Some of Procon's current mining projects include:

  • Wolverine Project, Yukon Zinc Corporation, Yukon (March 2005 – present)
  • Ekati Diamond Mine, BHP Biliton Diamonds Inc., Northwest Territories (September 2000 – present)
  • Snap Lake Diamond Mine, De Beers Canada Mining Inc., Northwest Territories (February 2000 – present)
  • Bellekeno Mine, Alexco Resources Corp., Yukon (May 2008)
  • Bingo mine, Golden Band Resources Inc., Saskatchewan (October 2007)

Acquisition of QR Mine & Mill and Equity Financing

The Company and 0373849 BC Ltd. (formerly Cross Lake Minerals) entered into a Share Purchase Agreement whereby the Company purchased all the issued and outstanding shares of a subsidiary of Cross Lake which owns the QR Mine and Mill located 58 km southeast of Quesnel, British Columbia. The Company issued a total of 2,000,000 shares and 500,000 share purchase warrants exercisable at a price of $1.00 for a two year period. These securities are subject to a hold period expiring June 2, 2010. The Company and Procon Mining Partnership will enter into a definitive mining and milling services contract containing the principle terms as set out in a news release on December 16th 2009 (News Release 09-36).

In conjunction with the completion of the Acquisition of the QR Mine & Mill, the subscription receipts issued as part of the previously completed financing were converted into 15,062,500 common shares and 7,531,250 share purchase warrants. Each share purchase warrant will be exercisable into one additional common share at a price of $1.00 per common share for a period of 18 months. The share purchase warrants are subject to an acceleration clause where in the event that the common shares trade on the TSX Venture Exchange at a volume weighted average price of $1.50 or more for a period of at least twenty (20) consecutive trading days following the closing of the Offering, the Company shall have the option to require the earlier exercise of the share purchase warrants within thirty (30) days of formal notice from the Company, at which time the share purchase warrants will expire without further notice. 

In total the Company issued 17,587,750 common shares and 8,529,375 share purchase warrants for gross proceeds of $13,647,000. The Company issued 1,178,363 Broker's Warrants. Each Broker Warrant provides for the purchase of a Unit of the Company at an exercise price of $0.80 per Unit. Each Unit shall be comprised of one common share and one-half of one share purchase warrant. Each whole warrant shall entitle the holder to purchase one common share of the Company on or before the applicable expiry day at a price of $1.00 per share. All of the securities issued will be subject to the applicable hold periods; 4,301,000 shares, 2,150,500 share purchase warrants and 301,070 Broker's Warrants will be subject to a hold period expiring April 24, 2010; 11,891,500 shares, 5,945,750 share purchase warrants and 827,155 Broker's Warrants will be subject to a hold period expiring May 23, 2010 and 866,250 shares, 433,125 share purchase warrants and 50,138 Broker's Warrants will be subject to a hold period expiring May 29, 2010.

About Barkerville Gold Mines Ltd.

The Company has been developing its Cariboo Gold Project in Barkerville, B.C., which encompasses (from northwest to south east) the former producing Hardscrabble Tungsten Mine, Mosquito Creek Gold Mine (now on care and maintenance), Aurum Mine, Island Mountain Mine, Cariboo Gold Quartz Mine, Bonanza Ledge (proposed mine), the Cariboo Thompson Gold & Silver Mine and the Cariboo Hudson Mine. The Company commenced operations in the Cariboo District in 1994 and since that time has focused on the exploration and development of its gold properties. Mineral tenures in the Historic Cariboo Goldfields encompass approximately 1,065 square km (106,484 hectares) over a 60 km long by 20 km wide belt. In the Barkerville Gold Camp, 101 creeks have reported placer gold production. Recorded gold production from the area totals more than 3.8 million ounces, including an estimated 2.64 million ounces from placer mining and 1.23 million ounces from lode mining. 

The technical information in this News Release has been reviewed and approved by Chief Geologist Jim Yin, PhD, P.Geo, a qualified person as defined in National Instrument 43-101.

On Behalf of the Board of Directors

J. Frank Callaghan, President and CEO

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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