Matador Exploration Inc.

Matador Exploration Inc.

June 14, 2005 19:07 ET

Matador and Austminex Exercise Option to Purchase the Coolgardie Gold Project in Western Australia

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 14, 2005) - Matador Exploration Inc. (TSX VENTURE:MXN) (the "Corporation") ("Matador") ("MXN") and its joint venture partner, Western Australia-based Austminex Limited (ASX:ATX) ("Austminex") ("ATX"), have exercised their option to acquire assets of the Coolgardie Gold Project ("CGP") from Herald Resources Limited ("Herald") and Leviathan Resources Limited ("Leviathan"), laying the foundation for redevelopment of the historically fragmented Coolgardie Gold Field, including a major new exploration initiative to be solely funded by Matador.

Matador and Austminex are scheduled to finalize terms within the next few weeks whereby they will consolidate the CGP assets and certain ATX tenements under their Redemption Joint Venture to become the largest landholders in the Coolgardie Gold Belt located in Western Australia, 560km east of Perth and 35 km south of the "Super Pit" at Kalgoorlie. "Redemption" is a major regional fault structure which hosts some of Coolgardie's best known gold deposits including Dreadnought, Burbanks, Empress, Perseverance, Rose Hill and Baileys.

The Redemption JV represents the first major regional amalgamation of tenement holdings in the Eastern Goldfields of Western Australia since the "Super Pit" lands were amalgamated during the late 1980s. The Redemption JV will have the mineral rights to more than 210 square kilometers of under explored land with an existing estimated gold resource of approximately 1.4 million ounces of contained gold (based on an Indicated Resource of 5.32 million tonnes at an average grade of 1.8g Au/t and an Inferred Resource of 13.7 million tonnes at an average grade of 2.5g Au/t) in the Kalgoorlie-Coolgardie-Widgiemooltha area of Western Australia, one of the world's most significant gold and nickel mining regions. Accompanying the tenement package, is a 1.1 million tonne per annum gold processing plant that is being acquired as part of the Redemption JV. The gold resource quoted herein is compliant under both the "2004 JORC Standards" and the "CIM Definition Standards on Mineral Resources and Ore Reserves" dated November 14th, 2004.

The decision to exercise the option over the CGP follows the completion of satisfactory due diligence and the payment by both companies of their share of the initial purchase installment required to proceed with the joint acquisition. In accordance with the acquisition agreements executed between the parties, this initial payment comprises AUS$500,000 in cash, of which Matador's share was AUS$366,688. In addition, Austminex will issue a total of 4,091,667 shares to Herald and Leviathan.

Subject to regulatory approval and financing, the Redemption JV is scheduled to complete the acquisition by early August 2005, with an aggregate settlement payment of AUS$3.7 million in cash (Matador's share AUS$2.0 million) plus 5 million Austminex shares - less the estimated costs of rehabilitation required for prior CGP operations.

At settlement, the Redemption JV must also provide cash security for the replacement of existing performance bonds totaling AUS$1.37 million (Matador's share AUS$685,000), and assume all existing rehabilitation obligations along with certain royalty, prospecting and other agreements. A final payment of AUS$500,000 (Matador's share AUS$250,000), plus interest of approximately AUS$17,500 will be made to Leviathan on 8 February, 2006.

On completion of the acquisition, Matador Mining Pty Ltd ("MMPL"), a wholly owned Australian subsidiary of Matador Exploration Inc., will be Operator of the Redemption JV, holding a 50% interest in the Three Mile Hill processing plant, and all equipment, licenses and performance bonds. MMPL will have an initial 10% interest in the tenements of joint venture, earning into up to a 50% interest by solely funding AUS$8 million of exploration to be staged over three years, with a first year spending commitment of AUS$2.7 million.

The Redemption JV Partners will systematically explore, develop, and mine complementary CGP and ATX tenements and resources in the Coolgardie-Widgiemooltha region, including high-grade gold projects at The Mount and Dreadnought. Under the direction of a management committee with equal representation from the Redemption JV partners, Matador will execute exploration plans designed to build a sustainable long-term gold production business with the Three Mile Hill Plant as a central processing facility for an extensive regional resource base. The initial focus of planned exploration is on high-grade gold deposits such as The Mount and Dreadnought (on Austminex's ground), as well as priority targets within the CGP tenements including extensions to the high-grade Countess mineralization and other high-grade lodes within the Tindalls/Empress mining area, immediately adjoining the Dreadnought Project.

On the exploration potential of the Redemption JV, Matador's President John Williamson said, "Most Archaean greenstone belts worldwide have demonstrated gold production of at least 5 million ounces. Coolgardie has produced 2.5 million ounces of gold since 1892, despite a long history of fragmented ownership. The consolidation of tenements under the Redemption JV will be the first time in history that a ground package of this magnitude has been in the hands of a single mining venture, allowing us to bring a coordinated and aggressive exploration approach to the Coolgardie Greenstone Belt. Under this concept, the Super Pit at nearby Kalgoorlie has become the largest operating open cut gold mine in Australia and produces about 850,000 ounces of gold per year from ore that is in the 1 to 2 grams gold per tonne range (gAu/t)."

He added, "We believe the Redemption JV is ideally positioned to unlock the value of the Coolgardie region, bringing together a highly experienced technical team, the necessary access to capital and a focused, long-term approach. The overall objective will be to define sufficient reserves to enable the Three Mile Hill Plant to operate at full capacity with 5 years of scheduled ore treatment. Cash flow generated from operations will then enable us to pursue an intensive exploration program to unlock the broader potential of the Coolgardie Gold Camp."

Background Information - Matador Exploration Inc.

Matador Exploration Inc. (TSX VENTURE:MXN) is a Canadian-listed company with exploration and production operations based in the Coolgardie region of Western Australia., whose mission is to become a significant gold producer.

During 2001, Matador produced slightly more than 10,000 ounces of gold from its Jaurdi Hills property 40 km north of the town site of Coolgardie (and 20 km north of the northern tenement boundary of the Redemption JV) in the northern extension of the Coolgardie Domain of the Menzies-Norseman Greenstone Belt, which also hosts the CGP.

Through the Redemption JV, Matador's acquisition of the CGP assets and ATX tenements is aimed at increasing its presence in the Coolgardie region and, in particular, addresses a critical production challenge while delivering a competitive advantage to its existing operations in Western Australia with the acquisition of the Three Mile Hill processing plant.

The Redemption JV program is supervised by Mr. Dean Besserer, P.Geol., B.Sc., Vice President of APEX Geoscience Ltd., who is the Qualified Person as defined by National Instrument 43-101. The resource estimate has been reviewed and prepared by Mr. D. Besserer, P.Geol. of APEX Geoscience Ltd. and Mr. S. Capp, MAusMIM., B.Sc., of Exploration Mining and Resource Services, both of whom are Qualified Persons under National Instrument 43-101. The gold resource quoted herein is compliant under both the "2004 JORC Standards" and the "CIM Definition Standards on Mineral Resources and Ore Reserves" dated November 14th, 2004. A detailed 43-101 compliant technical report will be filed on SEDAR within 30 days.

On behalf of the Board

Matador Exploration Inc.

John Williamson, P.Geol., President

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Contact Information

  • Matador Exploration Inc.
    Bernie Kennedy
    Investor Relations Manager
    1-888-331-2269 or (604) 331-2269