Caldera Resources Inc.
TSX : CDR

Caldera Resources Inc.

June 06, 2006 10:41 ET

Caldera Resources Inc.: New Ellendale Project Joint Venture Agreements

SOUTH PERTH, WESTERN AUSTRALIA--(CCNMatthews - June 6, 2006) - Caldera Resources Inc. (TSX:CDR) -

HIGHLIGHTS

- New Joint venture agreements for Ellendale East and Ellendale South projects with Kimberley Diamond Company Limited associate company Namakwa Diamond Company NL to advance the next stage of exploration of a significant new diamond discovery within Australia's Ellendale Diamond Field.

- Caldera's equity participation in each project remains unchanged - joint venture partner exploration expenditure is now increased by A$3.5million to A$6.5 million over the next 3 years

- Kimberley Diamond group mining infrastructure, equipment and field personnel available to fast track project exploration with two operating diamond mines in close proximity to the Caldera Project.

- Mr Ron Winston, of New York's Harry Winston Inc, to sell his rights, title and interest in the Ellendale Projects in exchange for 3 million Caldera common shares plus shares in Namakwa and Blina Diamonds Ltd.

- Namakwa to take a $250,000 placement of shares and be issued warrants in Caldera amounting to an aggregate 19.9% fully diluted stake in Caldera, with the right to maintain its interest by participating in future equity issues.

Caldera Resources Inc. today announced that it has agreed to restructure the existing ownership of Caldera's Ellendale East and Ellendale South projects and to establish new joint ventures with Namakwa Diamond Company NL (Namakwa).

Namakwa, listed on the Australian Stock Exchange (ASX:NDC),is together with its major shareholder, Blina Diamonds Ltd (Blina) (ASX:BDI) part of the Kimberley Diamond Company Limited (Kimberley) (ASX:KDC) group.

Kimberley currently operates the Ellendale 4 and 9 Mines, where production is currently being increased to a level of 600,000-700,000 carats per annum from next financial year. Blina holds the surrounding exploration ground and is conducting intensive exploration and mine development programs at Ellendale, which is currently regarded as one of the most sought-after regions in the world for diamond exploration. The Ellendale 4 Mine is approximately 25 kilometres north-west and along strike from Caldera's Ellendale East project targets.

Under the agreement, Mr Ron Winston will sell all his rights and title to the Ellendale East and Ellendale South Projects. Mr Winston's position will be taken by Namakwa on terms that are beneficial to Caldera. New Joint Venture Agreements are being entered into between Namakwa and Caldera.

It is envisaged that Blina will carry out all exploration and bulk sampling under the new joint ventures, utilising its existing exploration team, infrastructure and bulk sampling facilities at the Kimberley Ellendale mines and such services will be provided on commercial terms.

Ellendale East Project

In February this year, Caldera announced the discovery of volcanoclastic quartz tuff at six magnetic targets within the Ellendale East Project, which is located some 25km along strike from the Ellendale 4 Mine. One large target, in excess of 200 hectares, has similar dimensions to those of the Ellendale 4 and 9 pipes currently being mined by Kimberley. Geophysical modelling of this target indicates a body with large depth extent.

The identification of volcanoclastic quartz tuff, which is one of the predominant diamond bearing rocks in the Ellendale Lamproite Field demonstrates a significant southern extension of the known Ellendale Field, to now include the Ellendale East Project as a potential diamond bearing entity in its own right.

Micro-diamonds have been identified in drill chip thin sections from the large Caldera target. One 170 micron diamond fragment from a larger stone was recovered from a 19.8 kilogram caustic fusion sample in the +100 -300 sieve fraction. Chrome spinel chemistry indicates potential for an additional two pipes to be diamondiferous.

In April 2006, Caldera announced the recovery of a clear miro-diamond from a 10.8kg + 100 - 300 fraction from a caustic fused sample, and also a yellow micro-diamond from a 3.6kg + 100 -300 sample.

There is also excellent potential for the discovery of additional pipes in the southern part of the same Exploration Licence. Further drilling with large diameter holes is required to determine the areal and depth extent of the bodies and to undertake a bulk sampling program.

The Ellendale Lamproite Field is the locality for the Ellendale 9 Mine operated by Kimberley Diamond Company. On 12 August 2005, Kimberley announced that approval had been granted for mining of the Ellendale 4 Pipe, which is situated 25 kilometres north-west of the Caldera targets. This expansion project will increase the processing capacity at Ellendale from 2.2 Mtpa to 7.2 Mtpa and will result in an annual increase of production from 120,000 carats to 600,000-700,000 carats per annum.

Namakwa consider this an "..opportunity to participate in the exploration and potential development of one of the most significant recent diamond discoveries in Australia's Ellendale Diamond Field."

Restructure of Project Ownership

Under the Heads of Agreement entered into between Namakwa and Caldera, the existing ownership structure of the Ellendale East and Ellendale South Projects will be restructured as a condition of the proposed new Joint Venture Agreements. The Ellendale East Project is subject to a farm-in joint venture between Caldera and Mr Ron Winston, Chairman of long-established New York-based Harry Winston Inc, under which Mr Winston can earn a 50% interest in the project by funding the next A$3 million in exploration expenditure. Mr Winston has recently paid Caldera A$400,000 as part of his obligations under this joint venture.

In addition Mr Winston and Caldera are joint 50% contributing partners in the Ellendale South project.

Mr Winston stated earlier this year that: "I consider that the Ellendale drill results are one of the more significant developments in my diamond exploration career."

Subject to the grant of shareholder and other regulatory approvals, Caldera will issue 3 million common Caldera shares to Mr Winston or his nominee in return for Mr Winston selling all rights and interests held in the Ellendale East and Ellendale South projects. In addition Mr Winston will be issued 5 million fully paid Namakwa shares and 500,000 fully-paid Blina shares. The issue of Namakwa and Blina shares to Mr Winston is a strong indication of the significant potential the Kimberly group ascribe to Caldera's Ellendale projects.

Joint Venture Agreements

Subject to shareholder and regulatory approvals, Caldera and Namakwa will enter into two joint venture agreements, respectively covering the Ellendale East and Ellendale South projects, giving Namakwa the right to earn a 51% interest in each project under different commercial terms and conditions.

At Ellendale East, Namakwa will have the right to earn a 51% interest by:

- spending A$5 million on exploration over a 3-year period, of which at least A$1.5 million is intended to be expended during the 2006 and 2007 field seasons, including large-diameter drilling utilising a Bauer BG 20 rig; or

- in lieu of this, paying to Caldera 49% of that portion of its earn-in exploration commitment not yet spent on the tenements at the time.

At Ellendale South, Namakwa will have the right to earn a 51% interest by:

- spending A$1.5 million on exploration over a 3-year period from the date on which the tenements were granted; or

- in lieu of this, paying to Caldera 49% of that portion of its earn-in exploration commitment not yet spent on the tenements at the time.

The result of these 2 new joint venture agreements is that Caldera has effectively maintained its equity position in these projects while increasing the exploration expenditure incurred on the Ellendale East and South projects by a further $2 million and $1.5 million respectively

Namakwa will have the right to relinquish its rights in relation to both projects at any stage during the earn-in period, in which case the joint ventures will terminate and all data accumulated will be handed back to Caldera. Namakwa will manage and be responsible for the development of all work programs on behalf of each joint venture and for the funding of all joint venture expenditure until it has earned its 51% interest.

Mr Ron Winston will have the right to buy, at fair market value, 30% of all run-of-mine production of diamonds produced by both joint ventures from the Ellendale East and Ellendale South tenements, being 15% from Namakwa's 51% interest and 15% from Caldera's 49% interest.

Namakwa intends to procure the agreement of its major shareholder, Blina, to conduct all exploration, drilling and any processing of samples for both joint ventures at cost plus 8% during the earn-in period, leveraging off Blina's established exploration team, infrastructure and processing facilities in the Ellendale Field.

Blina has intensive ongoing exploration and mine development programs underway within its 1,800 sq km tenement package surrounding the Ellendale Mining Lease, including a proposed mine development at the Ellendale 9 North area and extensive exploration within the Terrace 5 palaeo-channel. Blina also has an existing DMS diamond processing facility which is currently being upgraded to 500,000tpa capacity.

Placement in Caldera Resources

As part of the broader agreement announced today, Namakwa will also subscribe for a placement of 2.5 million fully-paid Caldera shares at a price of C$0.10 each, representing a total investment of C$250,000.

In addition, Caldera will, subject to shareholder approval, issue 19.7 million new warrants to Namakwa exercisable and convertible into common Caldera shares such that the aggregate of the placement shares and warrants would give Namakwa a stake of 19.9% of the entire issued capital of Caldera on completion of that exercise or conversion, as applicable. The new warrants will each be exercisable into one fully paid common share in the issued capital of Caldera Inc. on payment of C$0.15 each. This warrant exercise price is a 76% premium to the last trading price for Caldera prior to this release.

As well, Caldera will, subject to shareholder approval, issue a further 4.47 million warrants to Namakwa exercisable and convertible into common Caldera shares to give Namakwa 19.9% of the current issued and outstanding stock options and warrants of Caldera, on a diluted basis, which will only be exerciseable in proportion to the exercise of existing options or warrants to allow Namakwa to maintain its 19.9% interest. These warrants will also be exercisable into one fully paid common share in the issued capital of Caldera Inc. on payment of C$0.15 each

The new warrants shall be held in escrow and released to Namakwa at the rate of one million new warrants for each A$100,000 spent by Namakwa on the Ellendale East and/or South projects. When an aggregate of A$1,500,000 has been expended on the Ellendale projects, the balance of the new warrants shall be released from escrow.

Namakwa will have the right to participate in any future equity issues by Caldera to maintain its 19.9% interest. The placement and issue of warrants, including the right for Namakwa to maintain its equity interest, are all subject to relevant shareholder and regulatory approvals and the relevant listing rules and regulations of the Toronto Stock Exchange.

Summary

The Directors of Caldera believe that the agreement with Namakwa and the proposed transactions outlined above represent a significant step forward in accelerating the advancement of the Ellendale projects.

Commenting today Caldera President and CEO Mr Chris Reindler stated that "The existing infrastructure, qualified personnel and exploration and mining experience within the Kimberly group will fast track the development of these projects. The Namakwa expenditure of A$5 million dollars over 3 years would probably be the equivalent of Caldera spending A$8 million but over 5 years. The Kimberly Diamond group have demonstrated an ability to bring diamond projects into production quickly and cost effectively."

Mr Winston also agrees with the new joint venture arrangement and stated that, "The Kimberley Group's track record at the Ellendale Field of bringing two mines into production is highly commendable."

This new arrangement will free up Caldera's limited human and capital resources to focus on its other priority projects, particularly the Runton and Cromer Cone Projects, where the company's technical staff believe the potential is extremely high.

Dr. Greg Pooley, a member of the Aus. I.M.M. is the qualified person responsible for the technical information in this news release.

Other Activities

Caldera is engaged in diamond exploration in Australia through five projects. Two projects are located in the Pilbara region of northern Western Australia, one of which is joint ventured with Mr. Ronald Winston of Harry Winston Inc. The Company also has two projects located adjacent to the Ellendale Lamproite Field in the Kimberley region of Western Australia. One project is located on the Yilgarn Craton of Western Australia which is joint ventured with SouthernEra Diamonds Inc. (TSX:SDM). The SouthernEra tenements also include a joint venture with BHP Billiton Limited on a nickel/platinum project.

Caldera also has three base metal/gold projects in South Australia. One of these projects is the Mt. Carulina Project which is an Olympic Dam - style base metal/gold target.

CAUTIONARY STATEMENT

This News Release includes certain "forward-looking statements". All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of Caldera, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially form those anticipated in such statements. Important factors that could cause actual results to differ materially from Caldera's expectations are exploration risks detailed herein and from time to time in the filings made by Caldera with securities regulations.

Cusip: 1287D 105



Canada Australia
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Website: www.calderares.com E-mail: calderares@bigpond.com


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Contact Information

  • Caldera Resources Inc.
    Chris Reindler
    President
    011-618-9367-7728
    011-618-9367-7705 (FAX)