Dynamite Resources Ltd.

Dynamite Resources Ltd.

April 23, 2007 17:30 ET

Dynamite Resources Indirectly Acquires Option from WCP Resources Limited in the Lake Torrens IOCGU Project, adjacent to the World Class Olympic Dam Project

TORONTO, ONTARIO--(CCNMatthews - April 23, 2007) - Dynamite Resources Limited (TSX VENTURE:DNR) -


- Dynamite Resources Limited ('Dynamite') has entered into a Letter Agreement to earn up to a 32.5% interest in the Lake Torrens IOCGU Project by spending Australian Dollars ('AUD')6.5 million on the Project within a five year period.

- After fully funding the AUD6.5 million exploration program, Dynamite can increase its interest in the Lake Torrens IOCGU Project to 51% overall by exercising a call option at a predetermined amount.

- The Lake Torrens IOCGU Project is located immediately to the north, east and west of BHP Billiton's World Class Olympic Dam Mine in South Australia.

- The Lake Torrens IOGCU Project falls largely within IOCG Potential Rank 1 Area defined by Geoscience Australia to have the highest potential for IOCG mineralisation within South Australia's Gawler Craton.

- Numerous large mineralised iron oxide breccia systems of the Olympic Dam / Prominent Hill style have been discovered and only partly explored by seven deep diamond drillholes at Titan; and four holes at Marathon South.

- A 7,000 metres drilling contract has been signed & is expected to commence in early May 2007

- The existing Lake Torrens Farmin and Joint Venture Agreement between WCP Resources Ltd and Tasman Resources Limited will remain in force in all respects.

Dynamite Resources Limited ('Dynamite') (TSX VENTURE:DNR) is pleased to announce the signing of a Letter Agreement with Set Management Ltd. ('SetMan') whereby it has agreed to assume all of the rights, interests & obligations owned by SetMan under its Binding Term Sheet (the "Binding Term Sheet") with WCP Resources Ltd ('WCP')(ASX:WCP) regarding the Lake Torrens IOGCU Project ('IOGCU Project').

The IOGCU Project adjoins BHP Billiton Limited's world-class Olympic Dam mine at Roxby Downs in the Stuart Shelf region of South Australia. The IOGCU Project's, iron-oxide - copper - gold - uranium ('IOCGU') showings occur within 8 granted exploration licenses covering 2,761 km2.

Stan Bharti, Dynamite's Chairman, stated "Dynamite has secured an outstanding IOGCU Project. The Lake Torrens IOGCU Project is an attractive exploration project that immediately adjoins the world class Olympic Dam mine. We are very pleased to have signed this Letter Agreement and we look forward to finalizing the formal documentation and commencing the drilling program in May 2007."

Under the terms of the Binding Term Sheet, SetMan has the right to earn up to 50% of WCP's interest in the IOGCU Project. WCP has a joint venture with Tasman Resources Limited ('Tasman')(ASX: TAS) on the IOGCU Project. WCP has the right to earn 65% of the IOGCU Project, as governed by the Lake Torrens Farmin and Joint Venture Agreement ('Lake Torrens JV Agreement'), by incurring expenditures of Australian Dollars ('AUD')6.5 million on the IOGCU Project. Through the Binding Term Sheet, SetMan has agreed to fund the AUD6.5 million expenditure, in exchange for 50% of WCP's interest in the IOGCU Project. SetMan has a call option to increase its overall equity in the IOGCU Project to 51% at a predetermined payment amount.

Dynamite has entered into a Letter Agreement with SetMan to assume all of SetMan's rights, interests and obligations under the Binding Term Sheet. The consideration payable by Dynamite to SetMan is AUD100,000 and the grant of a 2.5% net smelter royalty on the IOCGU Project. This includes the reimbursement of a AUD50,000 Option Fee paid on behalf of SetMan to WCP. WCP owns 25% of SetMan and is entitled to 25% of the consideration being paid by Dynamite to SetMan.

Dynamite's expenditure on the IOGCU Project will be a minimum of AUD6.5 million over the next 5 years as it proceeds on a year on year basis. No interest will be earned by Dynamite unless and until it spends at least AUD3.25 million on the IOCGU Project. At that stage Dynamite will have earned a 25% interest in WCP's Project Interest, and thereafter will earn a further 7.7% of WCP's Project Interest for each additional AUD1,000,000 of expenditures or part thereof. WCP's rights are limited to the IOCGU targets and it will have no rights to sediment hosted mineralisation in the tenements. The transaction is subject to the completion of Formal Agreements which are expected to be concluded by 18 May, 2007 or such other dates as agreed by Dynamite, SetMan & WCP. The transfer to Dynamite is also subject to, among other things, Dynamite's satisfactory completion of its due diligence review, and receipt of requisite regulatory (including the TSXV) approvals.

Other Terms

Once Dynamite has fully funded the AUD6.5 million expenditure requirement, WCP will grant to Dynamite a call option to increase its interest in the IOGCU Project to 51% overall by paying to WCP (at WCP's election) either AUD70 million in cash or AUD20 million in cash and sole funding WCP's obligations under the Lake Torrens JV Agreement with Tasman until commercial production is achieved.

Dynamite agrees to the following terms as stated in the Binding Term Sheet

1. the payment to WCP of $200,000 on the settlement of the transfer from SetMan to Dynamite, which is to be used for exploration activities on the IOGCU Project;

2. WCP shareholders will have the right to participate in up to 30% of Dynamite's next public fundraising; and

3. WCP being able to appoint one director to Dynamite's Board.

The Lake Torrens JV Agreement will remain in force in all respects. The provisions of the Lake Torrens JV Agreement will prevail over any inconsistent provisions in the Agreement or subsequent formal documentation to the extent of any inconsistency.

Drilling on the Project to commence in May 2007

A 7,000 metres drilling program is planned to commence in early May 2007.

The Project tenements border BHP Billiton Limited's Olympic Dam Project tenure to the north, east and west and occur within IOCG Potential Rank 1 and 2 Areas defined by Geoscience Australia. Rank 1 is seen as having the highest potential for IOCG mineralisation on the Gawler Craton, and includes Olympic Dam (Proven and Probable Reserves1 of 761 millon tonnes grading 1.5% copper, 0.6 kg/t U3O8 and 0.5 g/t gold), Prominent Hill (Proven and Probable Reserves2 of 68.2 million tonnes grading 1.31% copper and 0.59 g/t gold) and Carrapateena (discovery intercept3 of 178.2 metres grading 1.83% copper and 0.64 g/t gold).

There are a number of targets comprising Fe-altered volcanic breccia systems, mineralised haematite-magnetite breccias, and untested gravity anomalies that have been identified within the Project area. Of these, the first priority prospects are the Titan and Marathon South prospects.

Titan was first tested by WMC Ltd in 1976 when they drilled two holes targeted on coincident strong gravity/magnetic anomalies. BD1 intersected 334 metres of 0.1% copper from 607 metres depth in strong IOCG-style altered basement. An initial program of 5 diamond holes has been designed to test high priority drill targets located to the northeast, northwest and southwest of BD1 within the large (approximately 10 km2 surface area) IOCG system at Titan.

Tasman commenced exploration using AMT over an untested gravity anomaly at Marathon South in 2005 and the initial hole intersected 270 metres of highly altered breccias having strong similarities with parts of the "core-zone" of the Olympic Dam breccia complex. An initial program of 4 diamond holes has been designed to test high priority drill targets located in the western and southeastern portions of the large anomaly (approximately 10 km2 surface area) at Marathon South.

There are numerous additional prospects identified in the Lake Torrens Project, including Vulcan, Zeus, Billy Barnes, Atlas and Parakylia that are all considered prospective for IOCGU mineralisation of the Olympic Dam / Prominent Hill style that will be tested in subsequent programmes.

WCP Placement

Dynamite has also executed an agreement for the placement of AUD1.0 million in WCP at AUD0.20 per share. The closing price of WCP as at 23 April 2007 was AUD0.25 per share. As a shareholder of WCP, Dynamite can also participate in WCP's recent decision to spin out its uranium assets into a separate ASX listed company scheduled for June 2007.

Qualified Person

The technical and scientific information in this document is based on information compiled by Mr Gavin Daneel, who is a Member of The Australasian Institute of Mining and Metallurgy and qualifies as a qualified person under National Instrument 43-101. Mr Daneel, who is a full-time employee of WCP, has reviewed the technical and scientific information in this press release.

Note 1: Olympic Dam MineSite Summary (olympicdam.infomine.com) Last updated - 15 November 2005)

Note: 2: Oxiana Limited. Prominent Hill Ore Reserve Statement Explanatory Notes August 2006

Note 3: Geological and metallogenic setting of the Carrapateena FeO-Cu-Au prospect - a PACE success story. MESA Journal 38, July 2005

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 transaction, 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; 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; 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.

Lake Torrens IOCGU Project tenements (delineated within white lines) comprise the Joint Venture between WCP and Tasman (comprising 2,761km2). Dynamite has the right to earn initially 50% of WCP's interest in the Joint Venture by expending AUD6.5 million and can increase its equity to 51% by predetermined payments. The tenements proximity to the World Class Olympic Dam Mine is shown. IOGC prospects & Geoscience Australia's IOGC Potential Rank 1 Areas are delineated within the dotted blue lines. Background image is processed residual gravity with hotter colours signifying greater density.

To see a map of the Lake Torrens IOCGU Project please view the following link: http://www.ccnmatthews.com/docs/dnrmap.pdf

Contact Information

  • Dynamite Resources Limited
    Stan Bharti
    (416) 861-1685
    Dynamite Resources Limited
    Blair Krueger
    President and Chief Executive Officer
    (416) 861-1685
    Website: www.dynamiteresources.com