Gleichen Resources Limited
TSX VENTURE : GRL

July 06, 2007 09:00 ET

Gleichen Closes $4.5 Million Private Placement, Updates Projects

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 6, 2007) - Gleichen Resources Limited ("Gleichen" or "Company") (TSX VENTURE:GRL) is pleased to report that it has closed its previously announced private placement of 10,000,000 units (the "Units") of the Company at a subscription price of $0.45 each for aggregate gross proceeds of $4,500,000. Each Unit consists of one Common Share and one warrant ("Warrant"). Each Warrant entitles the holder to acquire an additional Common Share for a period of two years with an exercise price of $0.60 per share. The Common Shares and any shares issued on the exercise of the Warrants are subject to a four month hold period expiring November 6, 2007. If, at any time after the mandatory four month hold period for the Units, the closing price of the Company's common shares is above $1.20 for 20 or more consecutive trading days, the Company has the right, on notice to the warrant holders, to accelerate the expiry date of the warrants to 20 business days following the date of such notice.

Jones Gable & Company Limited acted as the agent for the brokered portion of the offering and received a cash commission equal to $253,125 and 562,500 Agent Warrants, representing 7.5% of the gross proceeds of $3,375,000. On the non-brokered portion of the offering, Jones Gable received a finder's fee of $19,406.25 and was issued 43,125 Agent Warrants, representing 7.5% of the gross proceeds of $258,750 on the Units Jones Gable placed in the non-brokered portion. A further finder's fee of $64,968.75 was paid and 144,375 Agent Warrants were issued to a separate finder, representing 7.5% of the gross proceeds of $866,250. Each Agent Warrant is exercisable into one Unit for a period of two years from the closing of the Private Placement.

The Company has entered into two agreements to acquire a total of 26 mineral claims in the Stewart region of north-western British Columbia. These agreements have been conditionally approved by the TSX Venture Exchange.

The Marmot River Property

The main agreement (the "First Agreement") covers 23 mineral claims (the "Marmot River Property"). Pursuant to the First Agreement, the Corporation has the option to earn a 100% interest in the Marmot River Property by making a total of $300,000 in payments on or prior to the third anniversary of the date the TSX Venture Exchange approves the First Agreement (the "TSX-V Approval Date"). Further, the Corporation must issue 450,000 common shares of the Corporation on or prior to the third anniversary date of the TSX-V Approval Date. Upon the Corporation earning a 100% interest in the Marmot River Property, the Corporation will grant to the vendor a 3% net smelter royalty (the "First Royalty"). The Corporation may purchase up to 2% of the First Royalty by paying to the vendor $500,000 for each 1% of the First Royalty purchased.

The Corporation's payment and common share issuance commitments under the First Agreement are distributed over three years according to the following schedule:

a) $50,000 and 100,000 common shares within ten days of the TSX-V Approval Date;

b) $65,000 and 100,000 common shares on or before the first anniversary;

c) $85,000 and 100,000 common shares on or before the second anniversary; and

d) $100,000 and 150,000 common shares on or before the third anniversary.

The Marmot River Property is comprised of 23 contiguous minerals claims that are located approximately ten kilometres southeast of the town of Stewart, British Columbia. The Marmot River Property is located in the centre of the Stewart Complex, which is one of the most well mineralized belts of rocks in North America. The Marmot River Property area was quite active in the 1910's and 1920's but has seen only cursory attention since that time. Despite the notable lack of modern day exploration, the Marmot River Property hosts several already identified mineralized showings.

The Montana showing is comprised of at least two well mineralized, northeast striking structures. Mineralization consists of massive lenses and disseminations of sphalerite with lesser pyrite, chalcopyrite, galena and tetrahedrite in a gangue of quartz. A grab sample reported in 1983 assayed 0.684 grams per tonne gold, 225.8 grams per tonne silver, 0.585 per cent copper, 4.99 per cent zinc and 0.90 per cent lead. The second unnamed structure consists of a 0.10 to 0.30 metre wide discontinuous lenticular vein that dips vertically consisting of massive galena and sphalerite mineralization. A grab sample again reported in 1983 assayed 2.43 grams per tonne gold, 9,145 grams per tonne silver, 0.79 per cent copper, 11.50 per cent lead and 24.90 per cent zinc. Past production from these veins in the mid 1920's totals 24 tonnes, most of which coming from the Montana vein, with grades averaging 7.75 grams per tonne gold, 6,075 grams per tonne silver, 0.25 per cent copper, 14.14 per cent lead and 19.76 per cent zinc.

The Glacier Girl showing consists of a 45 metre wide, 300 metre long silicified zone containing minor pyrrhotite. The zone hosts lenticular fracture zones up to 5.0 metres wide that are intensely mineralized with pyrrhotite. A 1.5 metre chip was sampled in 1928 and reportedly assayed 13.7 grams per tonne gold, 686 grams per tonne silver and 0.2 per cent copper.

The North Fork occurrence is comprised of two northwest striking, westerly dipping veins. The shear hosted quartz veins are up to one metre wide and exhibit pyrite, galena, sphalerite and tetrahedrite mineralization. Two shipments of sorted ore between 1919 and 1924 totaled nine tonnes and averaged 3,872 grams per tonne silver, 14.4 per cent lead and 4.4 per cent zinc.

The Patricia target consists of several showings developed in granodiorite. Sphalerite, galena, and pyrite mineralization is hosted in thin quartz veins, up to 0.3 metres wide in the granodiorite and has been followed by a tunnel for 34 metres. Samples of quartz containing galena and pyrite assayed up to 133 grams per tonne gold.

The Emma Gordon showing consists of highly fractured and faulted granite with some silicification in the wallrock adjacent to major fractures. A diorite dyke cuts the granite and along its contacts hosts small stringers of sphalerite, pyrite, chalcopyrite and galena. A small trial shipment to the Trail smelter in 1914 assayed 2,276 grams per tonne silver, 0.56 per cent copper and 2.74 grams per tonne gold.

Proposed Work Program - The Marmot River Property

A geological report dated June 15, 2007 entitled "Geological Report on the Marmot River Property" (the "Technical Report") has been completed with respect to the Marmot River Property. The Technical Report has been prepared in compliance with the provisions of National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"). The author of the Technical Report is Stephen Kenwood, P. Geo., who is an "independent qualified person" as defined in NI 43-101. The Technical Report will be filed on SEDAR (www.sedar.com) once TSX Venture Exchange approval has been received for the option agreements.

The Technical Report recommends an initial work program comprising an airborne geophysical survey, geological mapping, prospecting, and sampling with a budget cost of $222,750. Contingent on favourable results from the initial program, a second phase program comprising 1,500 metres of diamond drilling is recommended with a total second phase budget of $738,100. It is the intent of the Corporation to undertake the recommended initial work program upon regulatory approvals of the transaction.

The Goat Property

The Corporation has also entered into an agreement (the "Second Agreement") whereby the Corporation has the option to acquire a 100% interest in three mineral claims (the "Goat Property"). To acquire the 100% interest, the Corporation must make payments totalling $60,000 on or prior to the second anniversary of the regulatory approval date. Further, the Corporation must issue 225,000 common shares of the Corporation on or prior to the third anniversary date of that date. Upon the Corporation earning a 100% interest to the three mineral claims, the Corporation will grant to the vendor a 2% Net Smelter Royalty (the "Second Royalty"). The Corporation may purchase the Second Royalty by paying to the vendor $500,000.

The Corporation's payment and common share issuance commitments under the Second Agreement are distributed over two years according to the following schedule:

a) $15,000 and 75,000 common shares within ten days of the TSX-V Approval Date;

b) $20,000 and 75,000 common shares on or before the first anniversary; and

c) $25,000 and 75,000 common shares on or before the second anniversary.

The Goat Property comprises three mineral claim blocks covering 865 hectares located 34 kilometres northeast of Stewart and 75 kilometres southeast of the Eskay Creek mine. The Goat Property hosts the Goat showing, which consists of a parallel series of polymetallic veins that are crudely laminated sulphide-quartz-siderite veins with massive sphalerite and disseminated arsenopyrite, pyrite, tetrahedrite, freibergite and minor galena. Small-scale production in the late 1970s treated 4,159 tonnes of material with reported grades of 563 grams silver per tonne, 1.72 grams gold per tonne and 1.65 per cent zinc. The Goat vein comprises a 0.1-metre-to-0.8-metre-wide quartz stringer vein that extends over a length of 240 metres. Surface rock grab samples collected by a previous operator in 2005 confirmed the tenure of the mineralization with six of the 44 samples returning more than one gram gold per tonne, 11 returning more than 34.29 grams silver per tonne, six samples returning greater than 1 per cent and two samples returning greater than 1 per cent lead. The 2007 exploration program for the Goat Property is currently in the planning stages and is expected to be finalized shortly after the receipt of regulatory approvals for the transaction.

The technical disclosure in this press release, including results of the previous exploration, has been reviewed by and is the responsibility of Richard A. Graham, P. Geol., and Director of Gleichen, who is a "qualified person" for the purposes of NI 43-101.

The proceeds from the Private Placement will be used for the Marmot River Property, the Goat Property and for working capital. All funds are in Canadian dollars unless otherwise stated.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Gleichen Resources Limited
    Richard A. Graham
    Director
    (604) 689-1428
    (604) 681-4692 (FAX)