Castillian Resources Corp.

Castillian Resources Corp.

February 08, 2010 09:10 ET

Castillian Enters Agreement to Acquire Hope Brook Gold Mine Project, Newfoundland

TORONTO, ONTARIO--(Marketwire - Feb. 8, 2010) - Castillian Resources Corporation ("Castillian" or the "Company") (TSX VENTURE:CT) is pleased to announce that it has entered into an agreement (the "Letter Agreement") to acquire a 100% interest in approximately 993 claims comprising the Hope Brook Gold Project located on the southwest coast of Newfoundland (the "Property") from the Quinlan Brothers prospectors (the "Vendors"). 

The Hope Brook deposit, discovered in 1993 by BP-Selco Inc., was mined from 1987 to 1997 with total production reported to be 752,826 ounces of gold plus a copper concentrate from 1993 to 1997. Preproduction historical resources (non-NI 43-101 compliant) are reported to have been 10.2 million tonnes grading 4.54 g Au/t and 0.12% Cu (1.45 million ounces of gold) (Geological Survey, Newfoundland and Labrador). Gold mineralization occurs within a high-sulphidation epithermal system hosted by Late Proterozoic rocks of the northern Appalachian Avalon zone. In addition to the main zone that was mined, historical drill intersections of 3.88 g Au/t over 41.0m, 6.98 over 5.8 g Au/t over 5.8m and 4.64 g Au/t over 14.3m are reported up to 1km on strike to the southeast of the deposit. Since the closure of mining operations in 1997, little exploration and no drilling has been carried out for gold in the area. These results are historical in nature and as such should not be relied upon.

Pursuant to the Agreement, Castillian shall acquire a 100% interest in the Property in consideration for an aggregate cash fee in the amount of $280,000 and issuance to the Vendors of an aggregate of 500,000 common shares of the Company (the "Common Shares") over a four year period (the "Purchase Price") as follows: (i) $35,000 cash fee and 100,000 Common Shares upon satisfaction of all closing conditions; (ii) $35,000 cash fee and 100,000 Common Shares on or before the first anniversary of the Letter Agreement; (iii) $50,000 cash fee and 100,000 Common Shares on or before the second anniversary of the Letter Agreement; (iv) $80,000 and 100,000 Common Shares on or before the third anniversary of the Letter Agreement; (v) $80,000 and 100,000 Common Shares on or before the fourth anniversary of the Letter Agreement. Upon complete payment of the Purchase Price, the Company shall acquire a 100% interest in the Property, subject to a 2% net smelter return royalty (the "NSR") in favour of the Vendors. The Company shall have the option at any time during the term of the Letter Agreement to purchase 1% of the NSR from the Vendors for $1,000,000. The Company shall pay the Vendors an advance royalty of $20,000 per year on or before anniversary dates subsequent to the fourth anniversary until production is achieved – advanced royalty payments to be deductible from the royalty on production.

Completion of the acquisition is subject to the satisfactory completion of a 30 day due diligence period, and receipt of all required regulatory and securities approvals, including the approval of the TSX Venture Exchange, along with other customary closing conditions.

David Gower, Chairman of Castillian commented: "This is a very beneficial transaction for Castillian, as there appears to be significant mineralization remaining in the main deposit as well as excellent potential to outline new zones along strike. The Vendors have already identified new gold mineralization as well as anomalous rare earth element (REE) values on the Old Man Pond claim group. We will evaluate the potential of the historical mine which closed during a period of low gold prices as well as evaluate the numerous gold occurrences in the area surrounding the former mine. This complements the Company's recent acquisition of Tucano Resources Inc. and its intention to focus on exploration and development of gold deposits. Castillian plans to maintain and consider how best to further develop its core nickel assets."

Dr. Bill Pearson, P.Geo, a qualified person, as defined in NI 43-101 has reviewed and approved the technical information in this release.

About Castillian Resources

Castillian Resources Corp. is a Canadian mineral exploration company listed on the TSX Venture Exchange under the symbol "CT" which has base metal and gold properties in Canada, South America and Tanzania.

Cautionary Note Regarding Forward-looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the future financial or operating performance of the Company, its subsidiaries and its projects, statements regarding exploration prospects, statements regarding the potential and financial impact of the proposed Acquisition, the terms and conditions of the Acquisition, receipt of requisite approvals and the execution of definitive agreements, the benefits of the proposed Acquisition, the identification of mineral reserves and resources, costs of and capital for exploration projects, exploration expenditures, timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology 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 state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social uncertainties; acquisition risks, the actual results of current exploration activities; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; the business of Castillian and Tucano not being integrated successfully or such integration proving more difficult, time consuming or costly than expected, not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral prices; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and shortages and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information 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 information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

To view the Hope Brook Project Property Location Map, please visit the following link:


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