Pacific Ridge Exploration Ltd.
TSX VENTURE : PEX
September 23, 2008 08:30 ET
Pacific Ridge Gains Aurora Energy as a Partner for the Baker Uranium Project
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 23, 2008) - Pacific Ridge Exploration Ltd. (TSX VENTURE:PEX) is pleased to announce an option/joint venture agreement with Aurora Energy Resources Inc. ("Aurora") (TSX:AXU) on the Baker Uranium Project, located near Baker Lake, Nunavut.
In 2007, Pacific Ridge acquired a 60% interest in the Baker Uranium Project from Kaminak Gold Corporation, who subsequently assigned their 40% interest to Kivalliq Energy Corp. ("Kivalliq"). In order to facilitate the Pacific Ridge and Aurora agreement, Pacific Ridge accelerated the payment of 2.0 million shares of its capital to Kivalliq to acquire the remaining 40% interest in the Baker Uranium Project. With Pacific Ridge now owning 100% of the Baker Uranium Project, Kivalliq will have the option to back-in to a 20% working interest when a pre-feasibility study is produced in respect of the Project. If Aurora terminates its agreement with Pacific Ridge, Kivalliq can elect to re-establish the terms of its original option, back-in and joint venture agreement with Pacific Ridge by returning the 2.0 million shares to Pacific Ridge.
The principal terms of the Pacific Ridge and Aurora agreement allow Aurora, as operator during an initial option period expiring December 31, 2011, to earn a 51% interest in the Baker Uranium Project by immediately subscribing to a private placement of 2.0 million shares of Pacific Ridge priced at $0.17 per share, and incurring staged exploration expenditures totaling $15 million during the initial option period.
Upon earning a 51% interest, Aurora may elect either to:
- earn an additional 14% by funding 100% of on-going costs and commit to producing a preliminary feasibility study on or before December 31, 2013; or,
- enter into a joint venture with Pacific Ridge (51% Aurora, 49% Pacific Ridge).
Pacific Ridge may elect to contribute to the joint venture. Should Pacific Ridge elect to not participate in the joint venture, its interest will be reduced to not less than 35%. Aurora may then contribute 100% of on-going costs until a preliminary feasibility study is produced.
When a preliminary feasibility study is produced, Kivalliq will have the right to back-in to a 20% joint venture interest by reimbursing 40% of the exploration costs incurred including the cost of production of the preliminary feasibility study. The reimbursement will be distributed on a pro-rata basis to Pacific Ridge and Aurora after Pacific Ridge has received the first $7.3 million. Should Kivalliq elect to back in but fail to contribute to the joint venture, its interest would be subject to dilution and if reduced to 5% or less, converted to a royalty. Pacific Ridge's joint venture interest would then range from a minimum of 15% to a maximum of 29%, depending on prior elections of Aurora and Pacific Ridge. Pacific Ridge and Aurora's joint venture interests would also be subject to dilution for non-contribution, and if reduced to 5% or less, converted to a royalty.
During 2006 and 2007 Pacific Ridge spent approximately $7.3 million on the Baker Uranium Project. The exploration program led to definition of nine uranium zones within a 60 kilometre long belt along the southern boundary of the Baker basin. Pacific Ridge drill tested three of the zones and discovered the Lucky-7 zone where a 17.3 metre drill intersection graded 0.30% U3O8. Within the nearby KZ zone, a 11.5 metre intersection graded 0.31% U3O8. Aurora proposes to have exploration crews on-site for the balance of this year's exploration season and is currently developing plans for an extensive airborne geophysical survey and diamond drilling.
The Baker Uranium Project is located 40 kilometres south of the community of Baker Lake. Of significance within the Baker Lake area is AREVA Resources Canada's Kiggavik uranium deposit, located 80 kilometres west of Baker Lake, where a feasibility study is underway and the regulatory process is expected to proceed for approval of a mine and mill complex. On December 3, 2007, AREVA reported that the Kiggavik resource is estimated at about 148 million pounds of uranium at an average grade of about 0.24% U3O8, and that mining could begin as early as 2015.
Aurora, Kivalliq and Pacific Ridge
Aurora has a strong presence and experience in the Canadian uranium sector, and Pacific Ridge is pleased to have this well-financed partner, with approximately $113 million in cash, to advance the Baker Uranium Project through resource definition and preliminary feasibility. Kivalliq's management team, with its well established and long-term exploration presence within the Nunavut community, continues to provide additional value to the project.
Mark O'Dea, Aurora's Deputy Chairman, said, "Since 2006, we have been looking globally for opportunities to continue building our pipeline of uranium projects. The Baker Basin property is a perfect addition to our evolving portfolio, as it accelerates our corporate strategy to discover and develop great assets in the best locations to be ready for the world's ever increasing need for uranium."
The Kivalliq agreement has received conditional acceptance by the TSX-Venture Exchange. The Aurora agreement is subject to acceptance for filing by the TSX Venture Exchange.
John S. Brock, President
Forward-Looking Information: This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address exploration drilling, exploration activities and events or developments that Pacific Ridge Exploration Ltd. (the "Company") expects to occur, are forward-looking statements. Forward-looking statements in this news release include statements regarding future exploration plans and expenditures. Although, the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploration and exploration successes, and continued availability of capital and financing and general economic, market or business conditions. These statements are based on a number of assumptions, including among others, assumptions regarding general business and economic conditions, the timing and receipt of regulatory and governmental approvals for the transactions described herein, the ability of the Company and other parties to satisfy stock exchange and other regulatory requirements in a timely manner, the availability of financing for the Company's proposed transactions and programs on reasonable terms, and the ability of third-party service providers to deliver services in a timely manner. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected on the forward-looking statements. The Company does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.