Red Crescent Resources Limited
TSX : RCB

Red Crescent Resources Limited

March 18, 2011 12:43 ET

Red Crescent Resources Acquires Second Zinc Project in Turkey

Completes Phase 2 of its Geographical Diversification Strategy in Turkey

TORONTO, ONTARIO--(Marketwire - March 18, 2011) -

(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)

Red Crescent Resources Limited (TSX:RCB) ("RCR" or the "Company") a mineral exploration and development company focused on base metals in Turkey, announced that it has acquired the Tufanbeyli Zinc Project, a historically active mine, for US$200 000. The project, acquired from YAMAS, a wholly owned subsidiary of Anatolia Minerals Development Ltd. that has recently merged to form Alacer Gold Corp., consists of two mining licenses, totaling approximately 6,000Ha situated in the Adana Province in South Central Turkey. 

"This important acquisition marks the successful completion of Phase 2 of our business diversification strategy explained during the company investor road show late last year," said Alan M Clegg, Chairman and Chief Executive of Red Crescent Resources. "Tufanbeyli has historically produced in excess of 200 000 tonnes of high grade ROM ("Run-of-Mine") Ore grading approximately 23% Zinc and was acquired with assistance by two Turkish industry professionals, Saracoglu and Yuksel. The Project will be operated initially directly by the Company subsidiary in Turkey, Red Crescent Resources Holdings A.S. ("RCRH") and intends to re-start operations in the second half of 2011."

Key Commercial Highlights of the Acquisition Agreement:

  • RCR has 100% interest in the Project in exchange for a cash payment made of US$200,000;
  • Saracoglu and Yuksel will be entitled to a 5% Net Profit Interest after taxation (NPIAT) for the duration of the projects operation, subject to RCR first recouping all of its capital expenditure on the Project;
  • RCR will pay additionally to Saracoglu and Yuksel an interim royalty of US$21,000 every 180 days from 11th March 2011, the date of transfer of the two Mining Licences to Red Crescent, up until the 5% NPIAT payable to Saracoglu and Yuksel exceeds the value of the annual royalty; and
  • Saracoglu and Yuksel will be entitled to sell their 5% NPIAT in the Project at any time after 12 months from the conclusion of the Agreement, subject to RCR having a right of first refusal to match a bona fida cash offer by any third party.

Project NI43-101Technical Aspects

All intellectual property on the Project and access to the diamond drilled core and Reverse Circulation drilling (RC) rejects has been obtained from YAMAS within the acquisition and vests with RCR.

Historically, Silvermet Corporation, a Canadian listed Company, entered into a Joint Venture Agreement with Yeni Anatolia Minerals A.S. (YAMAS) in June 2005 and engaged Peter George, P.Geo, Consulting Geologist from Canada, who completed a NI 43-101 technical report on the project in April 2006 and this remains available for perusal by investors on Sedar WWW.SEDAR.COM. A summary of the report's conclusions are given below;

  • A 15km long trend of zinc carbonate mineralization showings reflect the presence of an oxidized Mississippi Valley – type (MVT) deposit hosted in fore reef breccias within the Devonian limestones;

  • The geochemical survey over the area has outlined several strongly anomalous zinc zones that correlate directly with known areas of zinc mineralization as well as others, particularly strong lead –zinc anomalies in the south-east part of the Licenses that are considered new exploration/drilling target areas;

  • Heavy media separation tests conducted on various grades of mined zinc oxide ore carried out by SGS Lakefield Research has yielded excellent results with recoveries in excess of 80% and ~ 3x upgrade of ROM ore grade to produce saleable zinc concentrate product grading approximately 23% Zn; and

  • No code compliant mineral resources could be stated, however the main open pit at Ackal is orientated across the strike of the stratigraphy and the strong zinc geochemical soil anomaly outlines a trend in excess of 1,5km and there is clearly significant mineralization over a width up to 300m wide to a depth of at least 60m below surface. On a purely volumetric basis, in the main pit area there is potential for at least 35kt of zinc carbonate mineralization per meter of strike along the trend.

Completed Exploration Work and Resource definition

Following the publication of the technical report its recommendations were followed and approximately US$2,5m was spent on drilling at least 160 holes for a total of 12,700 meters over 5 different locations on the geochemical anomalies of which approximately 15% was Diamond Core drilling and 85% Reverse Circulation drilling. 

According to information provided by several local sources outside YAMAS, that despite positive results, the decision by Silvermet not to progress the Project and relinquish their option was principally due to the closure of their announced strategic acquisition of the Zinc Calcine Plant at Iskenderun from Metox and as they were able to source high grade EAF dust (25 to 30% Zn) feedstock from the Electric Arc Furnaces at the Iskenderun Steel plants on favorable terms. Accordingly the project was retained by YAMAS, but also not progressed in favor of other priority projects focused on Copper and being developed currently.

YAMAS have indicated to Red Crescent an "in-house" volume and grade calculation for the known mineralization defined from drilling and core sample assays completed at Tufanbeyli within a conceptual estimate of approximately 3 million tonnes grading approximately 10% Zn. Red Crescent has appointed the MSA Group, its independent exploration and geological consultant with requisite expertise in resource modeling to validate the raw data/modeling and the headline potential quantity and grade of the mineralisation defined by YAMAS to determine the initial quantum of NI43-101 Code Compliant Resources that may speculatively be reported at Tufanbeyli during the second quarter 2011. 

The MSA Group will also make recommendations regarding exploration works including a new drilling program during the 2011 season to either; a) enable the reporting of an initial code compliant resource, or b) fast track an increase in quantity and standard of any Code Compliant Resources that may speculatively now be defined by MSA. It is expected that MSA Group will complete its validation and recommendation report during late April 2011.

The Red Crescent geological team, including MSA, have visited the Project late in 2010 and confirmed the potential defined by the original Peter George NI43-101 technical report. 

"Securing the very promising and previously mined Tufanbeyli zinc oxide opportunity in the Adana region is aligned to our strategy of focusing only on Projects that have the potential to be in the lower quartile of the cost curve," said Doug Taylor, RCR's Executive Director of Strategy and Business Development. "The terrain, infrastructure and logistics at Tufanbeyli are favorable in this regard. The significant drilling that has been done on specific high grade areas of the Project, with projected low stripping ratios further supports the RCR plans reported in earlier releases to commence open pit mining and processing of ore (via a semi mobile heavy media separation Plant) to produce saleable zinc concentrate grading approximately 25% Zn during the 4th Q 2011. We also plan to commence with a Pre Feasibility Study on a Zinc Fuming Plant at Tufanbeyli to produce a quality zinc oxide product grading + 55% Zn during 2nd H 2011".

Muhanned Arar, RCR Divisional Director Exploration and Projects, added; "This acquisition is an important milestone. It strengthens our position and accelerates the operational strategy to generate early cash flow from its projects in the region and to increase its Zn mineral resource within the highly prospective mineralized belt within the Taurides that runs across 75% of the southern regions of Turkey. The mineralogy of the deposit is a major advantage for its exceptionally low iron content in the ore and the fact that the lead oxides (Cerrusite) occur in a separate horizon in the deposit which will lead to our ability to produce both clean Zn and Pb concentrates".

The statements made in this press release are subject to all or any necessary regulatory approvals and may contain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's expectations and projections.

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