Module Resources Incorporated

Module Resources Incorporated

April 02, 2007 18:33 ET

Module Acquires Option on Previously Producing Gold Mine; Announces Changes in Management, Board of Directors

SURREY, BRITISH COLUMBIA--(CCNMatthews - April 2, 2007) -


Module Resources Incorporated ("Module") (NEX:MLE.H) is pleased to announce that it has signed a Letter of Intent to Option whereby Module can acquire up to 90% of the Carolin Mine and associated Ladner Creek properties ("the Carolin properties"), from Century Mining ("Century") (TSX VENTURE:CMM), subject to approval by the TSX NEX Exchange and the TSX Venture Exchange.

The transaction calls for Module to acquire an undivided 66.6% interest in the Carolin properties by making payments of US$ 0.4 million; completing work expenditures of US$3,500,000; and issuing 2.0 million common shares of Module (or cash in lieu of shares at Century's discretion) over a period ending 30 October 2009. Upon exercise of the initial option, Century retains the right to repurchase an undivided 17.7% interest, provided that measured resource estimates under CIM classifications pursuant to NI 43-101 are not less than 750,000 ounces of gold. Century will be entitled to appoint a member to Module's board of directors while Module is exploring and developing the Carolin properties.

During the period in which Module has an option on the tenures, Module will keep the mineral tenures permitted and in good standing. As part of the initial option, Module will, on or before August 30, 2007, replace the existing environmental bond on the property, or negotiate with the BC regulators responsible to refund the existing bond. Any part of the bond not refunded by regulators will need to be posted by Module.

If Century does not exercise its right to repurchase upon Module's exercise of the initial option, Module will be granted a second option, to acquire an additional 13.4% interest in the property from Century for US$2.0 million, or an additional 23.4% interest for US$4.0 million.

If the feasibility is not positive and no decision to proceed to commercial production is made by 30 October 2009, then Module may subsequently extend the option on the property to further explore and develop the resource ounces at its own expense for a period of five years, with Century's interest remaining at 33.4%. If at that time Century does not make the repurchase election within 60 days of the option date, Module will have an option to purchase an additional 9% working interest for the payment of US$3.75 million or an additional 19% working interest for the payment of US$8 million.

If Module has greater than 50% working interest in the concessions it will be the designated operator of a joint venture company or other corporate vehicle to be created by the working interest partners.

If and when the mine is developed and brought into production, Module must make a final payment of US$500,000 to Century within 60 days of achieving commercial production if Module has more than a 50% working interest, and a payment of US$250,000 if Module has a less than 50% working interest in the project.

Century maintains a right of first refusal on all dispositions of the properties by Module to any but related third parties.

For dilution purposes, the deemed interest of Century upon Module earning a 66.6% interest will be US$3.34 million and the deemed interest of Module will be US$6.66 million dollars. If Century's interest is diluted to 10 percent, such interest will revert to a 3% net smelter royalty.

Carolin, located 150 km from Vancouver near the community of Hope, between the Coquihalla and Trans-Canada highways, produced 43,500 ounces of gold over a 27-month period from 1982-1984. The most recent available previous analysis of this property, done by previous owner Athabaska Resources in 1996, suggested that as much as 190,000 oz. of gold may remain in the existing mine (1.36 million tonnes at 0.14 oz/t), with up to 33,000 more ounces in the tailings (600,000 tonnes at 0.54 oz/t). Both grades might make economic recovery possible.

The historic estimate is not compliant with the CIM classifications of NI 43-101 and while it is believed to be relevant, it should not be relied upon. Century previously commissioned a NI 43-101 report on the property, performed by George Cavey, P. Geol., which recommends further work on it, including updating the resource estimate to NI 43-101 standards and additional exploration and data analysis, with the intention of determining the resource in accordance with CIM classifications.

Module expects that the acquisition of the Carolin properties and the updating of the geological report will qualify the Company to successfully apply for a Tier 2 listing on the TSX Venture Exchange.

Exploration results elsewhere on the property have also been promising, with preliminary drilling results showing 0.33 ounces per tonne over 29.5 feet and 0.15 ounces per tonne over 49 feet. Not all the targets within the property have been tested. Module believes there is potential to expand the zones of mineralization and identify additional zones of mineralization.

Additional substantial areas of the Carolin property remain unexplored and are of significant interest, as the geology in this area - the Coquihalla gold belt - closely resembles the geology in the California Mother Lode district, which produced more than 9.9 million ounces of gold.

A plan for detailed geological assessment of the property is being prepared. Initial work will be funded by the proceeds from a recent private placement of stock, with additional funds expected to be acquired from a subsequent stock issuance. If exploration work is successful, Module intends to put the mine back into production.

Module is further pleased to announce the appointment of Greg S. Whiting as Chief Executive Officer. Mr. Whiting has managed the development of strategic startup ventures within several private and publicly traded companies for 15 years, most recently at The Stanley Works (NYSE:SWK) with results that have included the creation and introduction of more than 40 new product lines. He has had P&L responsibility for product categories up to US$30 million in annual sales and has frequently been responsible for developing and implementing strategies for business growth. Mr. Whiting's undergraduate degree is in metallurgical engineering, and his professional experience includes six years in new venture development at Sherritt Incorporated (TSX:S), a major Canadian mining company. Mr. Whiting was granted the option to purchase up to 250,000 shares on March 16, 2007, with up to 85,000 exercisable in the year ending March 16, 2008; 170,000 exercisable in the year ending March 16, 2009; and 250,000 exercisable in the year ending March 16, 2010.

"Module is very excited to have the opportunity to acquire the Carolin property, which has been an active mine in the recent past and offers exciting geological potential," said Mr. Whiting. "This acquisition is an essential component of our strategy to build a profitable precious metals mining company."

The company is also pleased to announce that J. Graham Eacott has been appointed to the Board of Directors, effective 30 March 2007. Mr. Eacott has extensive experience in corporate communications in the financial markets and was a highly ranked base metals analyst at two major Canadian investment dealers. He has supervisory experience in metallurgical operations at a copper mine and worked as a consultant on feasibility studies and plant design. Mr. Eacott is a graduate of the Canadian Securities Course. Mr. Eacott replaces John Schleinich, who has resigned from the board of directors, effective 30 March, 2007.

The company is additionally pleased to announce the appointment of Diana Rollo as Chief Financial Officer. Ms. Rollo has 8 years of experience in public accounting as audit manager for two major accounting firms; 12 years experience as chief accounting officer for a publicly traded Canadian gold mining company; and over 9 years of experience as chief financial officer and vice president of finance in mid-market companies. Ms. Rollo has experience in US and Canadian GAAP reporting and Sarbanes-Oxley compliance.

"We are very pleased to announce these changes, which are helping Module build a well-qualified team of management and financial professionals who collectively have many years of experience in new ventures, start-ups, acquisitions, reorganizations, exploration, development, financing, construction and operation of metals mines," commented Richard Gillard, who will remain as President and Director. Mr. Gillard is an experienced mining investor who helped organize Norsemont Mining during its early stages. "This new team will be crucial to our success as we pursue our strategy to build a profitable precious metals mining company."

This release contains "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws. Forward-looking information and statements involve known and unknown risks and uncertainties that may cause Module's actual results, performance and achievements to differ materially from those expressed or implied by the forward-looking information and statements and accordingly, undue reliance should not be placed thereon.

We seek Safe Harbor.

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

Contact Information

  • Module Resources Incorporated
    Brent Jones
    (360) 332-4652
    (360) 332-4653 (FAX)