Portage Minerals Inc.

Portage Minerals Inc.

September 10, 2010 12:53 ET

Portage Announces Proposed Business Combination with Rockport Mining Corp.

TORONTO, ONTARIO--(Marketwire - Sept. 10, 2010) - Portage Minerals Inc. (the "Company") is pleased to announce that it intends to complete an arm's length business combination (the "Business Combination") with Rockport Mining Corp. ("Rockport"). The parties intend to complete the Business Combination by way of a three-cornered amalgamation (the "Amalgamation"), wherein a wholly-owned subsidiary of the Company will amalgamate with Rockport and continue as a wholly-owned subsidiary under the provisions of the Canada Business Corporations Act.

Pursuant to the terms of the amalgamation agreement, in order to acquire a 100% interest in Rockport, it is intended that Portage will issue 88,542,341 common shares (the "Portage Shares") to the holders of the common shares of Rockport (the "Rockport Shares"). 

In addition, Portage will issue 9,447,200 options, 39,771,835 warrants and $291,628 principal amount of convertible debentures to acquire Portage Shares for each option, warrant or convertible debenture of Rockport outstanding, as the case may be, not exercised prior to closing of the Business Combination.

Mutual Conditions Precedent

Completion of the Business Combination is subject to a number of mutual conditions, including, without limitation: the Amalgamation being approved by the required majority of votes of the shareholders of Rockport; the board of directors of Portage and Rockport approving the Amalgamation; Rockport completing a private placement of a minimum of $2,000,000; and receipt of all required regulatory approvals.

Conditions Precedent in favour of Portage

In addition to the mutual conditions, completion of the Business Combination is subject to a number of conditions in favour of Portage, including without limitation: no material adverse change in the business, affairs or operations of Rockport; the completion of a satisfactory due diligence review in respect of Rockport; and any deficiencies with respect to any of Rockport's mineral properties identified by counsel to Portage shall have been rectified to the satisfaction of Portage.

Conditions Precedents

In addition to the mutual conditions, completion of the Business Combination is subject to a number of conditions in favour of Rockport, including without limitation: Portage shall have a minimum cash balance of $300,000; and no material adverse change in the business, affairs or operations of Portage.

About Rockport Mining Corp.

Rockport is a private Canadian company focused on the exploration and potential development of gold and base metal properties located in southern New Brunswick. Rockport has assembled a portfolio of properties, all of which have been selected because of the strategic combination of their geological promise and proximity to existing transportation and processing infrastructure. A summary of Rockport's principal properties and property interests is set forth below.

Gold Properties

The Company's key gold properties include two 100% owned properties known as Golden Pike and Annidale Gold and interests in two properties, namely the Clarence Stream Gold Property and the Golden Ridge Property, under joint venture agreements with Freewest Resources Canada Inc. ("Freewest").

Golden Pike

The Golden Pike property, which consists of 100 claim units (group 4633) is held 100% subject to a 2.0% net smelter return ("NSR"). The most significant mineralization is located along the South Trend where drilling has tested a strike length of approximately 1000 meters. Rockport has completed 45 drill holes to date. Highlight drill intersections from Rockport's program as well as previous 1994-1996 drilling, include 40.07 g/t gold over 13.0m, 36.26 g/t gold over 10.06m, 8.08 g/t gold over 7.72m, 16.04 g/t gold over 5.0m and 26.47 g/t gold over 4.1m (all are core widths). Mineralization is quartz vein hosted (lode gold).

Annidale Gold

The Annidale Gold property surrounds the Golden Pike property and covers an approximate 40 km by 10 km segment of the Annidale Belt. The 1,597 claim unit (group 5061) property is held 100% by Rockport. Exploration work completed by Rockport thus far has largely been early staged, consisting of prospecting, an airborne survey and minor geochemical ground surveys. This work has identified a number of prospective target areas which warrant expanded exploration.

Clarence Stream Gold Property

Rockport entered into an option agreement dated October 11, 2007 (the "Freewest Option Agreement") with Freewest whereby Rockport was granted the right to earn a 65% interest in the 11,552 hectare Clarence Stream property and the 4,144 hectare Otter Lake property (collectively, the "Combined Properties"). Rockport earned a 30% interest in the Combined Properties on December 24, 2009 by expending $3,000,000 for exploration and development work on the Combined Properties. Rockport may earn an additional 20% vested interest (50% total) by expending an additional $4,500,000 for exploration and development work on the Combined Properties by October 2011. Rockport may earn an additional 15% interest (65% total) by funding the project through to a positive feasibility study. The Clarence Stream and Otter Lake properties are both subject to an underlying 2% NSR. 1% of the NSR can be purchased at any time, for the consideration of $500,000 for each 0.5%.  

Mineral Resources on the property were estimated and classified by Scott Wilson RPA following CIM best practices, and are summarized in the table below. At a cut-off grade of 3 g/t Au, Indicated Mineral Resources are estimated to total 822,000 tonnes grading 6.90 g/t Au containing 182,000 ounces of gold. Inferred Mineral Resources are estimated to total 1.2 million tones grading 6.34 g/t Au containing 250,000 ounces of gold. Scott Wilson RPA also estimated an Indicated antimony resource to be 114,000 tonnes grading 2.9% Sb containing 7.3 million pounds of antimony.

GOLD MINERAL RESOURCES AS OF DECEMBER 2009
Freewest Resources Canada Inc. and Rockport Mining Corp.
Clarence Stream Project
Area Category Tonnes Au Au Uncut Au Uncut Au
    (t) (g/t) (oz) (g/t) (oz)
Proximal Indicated 636,000 6.71 137,000 9.28 190,000
  Inferred 991,000 6.33 202,000 7.64 243,000
             
Anomaly-A Indicated 186,000 7.56 45,000 8.51 51,000
  Inferred 235,000 6.38 48,000 9.22 70,000
             
Total Indicated 822,000 6.90 182,000 9.11 241,000
  Inferred 1,226,000 6.34 250,000 7.95 313,000

 

Notes:
(1) CIM Definitions were followed for Mineral Resources.
(2) The cut-off grade of 3 g/t Au was estimated using an Au price of US$1,000/oz and assumed operating costs.
(3) Wireframes at 3 g/t Au and a minimum thickness of two metres were used to constrain the grade interpolation.
(4) High gold grades were cut to 30 g/t prior to compositing. Uncut average grades are listed for comparative purposes only.
(5) Several blocks less than 3 g/t Au were included for continuity or to expand the lenses to the two metre minimum thickness.

Freewest has alleged that the Freewest Option Agreement and Rockport's option to increase its ownership in the Combined Properties have been terminated. On August 16, 2010, Rockport filed a statement of claim in the Court of Queen's Bench in New Brunswick requesting a declaration and order that the Freewest Option Agreement and Rockport's option are in good standing and an order declaring that Rockport has earned its initial 30% interest in the Combined Properties. Rockport and its legal counsel intend to vigorously defend its rights and interests in the Combined Properties.

Golden Ridge Property

Rockport has entered into another joint venture effective dated November 15, 2007 with Freewest (the "Freewest Golden Ridge Agreement") pursuant to which Rockport can earn a 60% interest in a 3,386 hectare property (the "Golden Ridge Property") located 80 kilometres west of the City of Fredericton in York County, New Brunswick. During the period from 1997 to 2004, Freewest discovered significant gold mineralization on the Golden Ridge Property. Highlight intercepts (core width) from the 20 holes completed in 1999 and 2004 include:

GR-99-005: 23.0 meters grading 1.13 g/t Au (75.4 ft @ 0.033 oz/ton)
GR-99-010: 5.3 meters grading 4.85 g/t Au (17.4 ft @ 0.141 oz/ton)
GR-04-011: 19.9 meters grading 2.26 g/t Au (65.3 ft @ 0.066 oz/ton)
GR-04-013: 28.0 meters grading 1.07 g/t Au (91.8 ft @ 0.031 oz/ton)
GR-04-014: 33.2 meters grading 1.43 g/t Au (108.9 ft @ 0.042 oz/ton)
GR-04-015: 29.4 meters grading 1.71 g/t Au (96.4 ft @ 0.050 oz/ton)
GR-04-017: 14.3 meters grading 1.35 g/t Au (47.1 ft @ 0.039 oz/ton)

The Freewest Golden Ridge Agreement provides that Rockport is required to spend $1,600,000 on exploration and development work on the Golden Ridge Property by November 2010 in order to earn a 60% interest. Upon Rockport earning its 60% interest, a joint-venture will be formed with further exploration and development costs shared by Rockport and Freewest on a 60%-40% basis, respectively.

Base Metals

Rockport's key base metal property in New Brunswick is the Bald Hill Antimony property located in the Annidale Area approximately 40 km northwest of Sussex, New Brunswick.

Bald Hill Property

The Bald Hill property consists of 36 claims, which are included in the 1,697 claims held 100% by Rockport within the Annidale Gold Belt. Rockport's preliminary work has identified two separate mineralized trends of antimony plus or minus gold mineralization on the Bald Hill Property. Assay results have ranged up to 48% Sb and 3.01 g/t Au in rock grab samples. Soil geochemical results have suggested a large mineralized system with anomalous Sb, Au and molybdenum (Mo) being evident. As of July 1, 2008 Rockport had completed 16 diamond drill holes totalling approximately 3,450 metres. This initial drill program has delineated a northwest trending antimony (Sb) mineralized trends, located on the central portion of the property, over a strike length of 450 metres and to a maximum vertical depth of approximately 300 metres. The mineralized zones remain open in all directions. The best drill hole intercept was 11.7% Sb over a 4.51 metre core width in hole BH08-03. The immediate exploration objectives are to establish the overall magnitude of potential of this recently discovered mineralized trend.

Conestoga-Rovers & Associates (CRA) completed a National Instrument (NI) 43-101 Technical Report of the Bald Hill Property (CRA May 2010). The potential tonnage and grade of a potential mineral deposit at the Bald Hill Property, which is the target of further exploration, is expressed as ranges in the table below. The potential quantity and grade is conceptual in nature as there has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

POTENTIAL QUANTITY AND GRADE RANGES(1) – BALD HILL PROJECT (MAY 2010)

Zone Metric Tonnes Grade (%Sb)
Main Zone 700,000 to 900,000 4.33% to 5.40%
Parallel Zone 25,000 to 100,000 2.13% to 3.19%
Total 725,000 to 1,000,000 4.11% to 5.32%

Notes:
(1) The potential quantity and grade is conceptual in nature as there has been insufficient exploration to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resource.

Roger Dahn, Chief Operating Officer & Senior Vice President-Exploration of Rockport and a registered Professional Geologist, is designated as the Qualified Person under National Instrument 43-101 and has reviewed and approved the contents of this news release.

Shares Outstanding: 11,763,308

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