Spider Resources Inc.

Spider Resources Inc.

December 07, 2006 09:21 ET

Spider Resources Inc.: President's Update for December 2006

TORONTO, ONTARIO--(CCNMatthews - Dec. 7, 2006) - Now that we are well into the fall/winter season, which is typically a fairly active time for the junior mining sector, it is my pleasure to update shareholders on the recent activity of Spider Resources Inc. (TSX VENTURE:SPQ), and our plans for the immediate future. Through several years of progress at the various property interests that we have controlled along with our joint venture partner, we've reached the point where important decisions need to be made so we can most efficiently maximize the discovery value for our projects in the future. Spider has been uncharacteristically quiet on the news front for quite some time, as management has been strategizing Spider's future over the past few months.

Exploration is an expensive endeavor with an uncertain outlook. Our previous strategy for approximately the last decade has been to form alliances with partners, to defray Spider's funding requirements in exchange for earning and maintaining an interest in various projects. This strategy has contributed to the successes we were able to achieve on the exploration front. All of our active projects to date have involved some form of partnership with KWG Resources Inc. As part of the reorganization of our alliance with KWG (see press release dated May 15, 2006) we have revised our partnership agreement to enable each company to further explore those projects that are of greatest interest, without requiring the other partner to agree to participate. This allows each party, to progress only those projects in which they have the greatest interest. We are required to bear the costs to continue to advance the projects that Spider has selected to advance. We must now determine which of them has the greatest potential for development. Spider's continuing strategy is to minimize expenditures where possible while maintaining the maximum interest in specific projects which have the strongest likelihood of future success.

The removal of the funding constraints for all the projects allows greater flexibility with exploration expenditures dedicated to specific projects. Additionally the option to secure alliances with new joint venture partners without the participation of KWG is a valuable tool missing in the past. The new arrangement with KWG allows Spider to enter into discussions with others on projects that Spider has elected to advance. As a result, the company announced on July 24th 2006 a new joint venture with Renforth Resources Inc. (formerly Wycliffe Resources Inc.). This arrangement will allow Renforth to earn an interest at the Kyle Lake Project by funding the next round of exploration work.

Prior news releases, have disclosed successful discovery of diamond-bearing kimberlite pipes in five separate occurrences within the Kyle Project. This project now warrants bulk sampling of the kimberlites, in order to complete a diamond size distribution curve analysis for each of these discoveries. The cost of each bulk sample is estimated at between $500,000 to $600,000. We already have collected approximately six tonnes from the Kyle Lake 1 and Kyle 3 kimberlites, with encouraging results.

At Kyle 2 Renforth has recently completed a core drilling program to initiate the collection of approximately five tonnes of sample material, in order to start the diamond test-work. Two holes were completed earlier this fall, and continued assessment of this kimberlite is scheduled for later this year and early next. Renforth also advises that work will commence on the Kyle 4 and Kyle 5 kimberlite occurrences early next year as their plan is to collect up to 5 tonnes of kimberlite from these as well. The initial objective for their exploration program on Spider's properties will be to analyze the diamond content of each of the 5 kimberlites to determine which of the kimberlite deposits has the best potential economic merit prior to funding larger scale test work at any of the sites. In addition to the much needed exploration funds to advance this project, Renforth contributes to the joint venture 39 kimberlite targets covered by 449 claim units. Each of these 39 kimberlite prospects will be prioritized and incorporated into a regional project in early 2007, this work is underway. It was Spider's work and vision, over a decade ago, along with the activities of De Beers that led to this new diamond province in Ontario's Lowlands. Other diamond explorers have now become active, or are simply maintaining claims in the immediate Kyle Diamond Area, including; De Beers in Joint Venture with Trigon Explorations, Southernera, Metalex, Probe, and Northern Shield. Renforth has agreed to contribute up to $6 million at the rate of $2 million per year over the next three years, in order to earn a 55% interest in the project, ensuring that the funding is in place to continue the exploration process on Spider's properties in this emerging diamond area of Canada.

This deal has added value for our shareholders, as Spider Resources will retain an exposure to the James Bay diamond play without any funding requirements At any time and at our election, Spider can opt to support or contribute to the exploration efforts of Renforth, contributing up to $5.92 million to reach 30% interest in this project, leaving KWG with the remaining 15% interest. Elsewhere in the general region, other companies are actively performing similar testing on their kimberlite, most notably Metalex on their nearby T1-1 kimberlite. At the nearby (100 km to the east) Victor Diamond project, DeBeers has decided to proceed with a development plan and are now fully permitted to build Ontario's first diamond mine at a capital cost of close to $1 billion, with start up currently scheduled for 2008. In just two years Ontario will be established as a diamond producing province, and De Beers' decision to go forward underlines our commitment to remain active with our diamond exploration efforts in the district.

We also continue to retain an interest in the five diamond bearing kimberlite pipes that have been discovered in the MacFayden Project with partner KWG. KWG has laid out plans to survey the perimeter of the property and bring the claim group to lease. Additionally, they have recently signed an exploration agreement with Attawapiskat First Nation. Kimberlite drill definition followed by bulk sampling of some of the MacFadyen kimberlites is planned for 2007. Spider will be not be required to contribute any funding for this program, but may need to contribute in the future, to maintain our one-third interest in the project, once KWG has expended $3.83 million specifically on the MacFadyen properties.

Continuing with our diamond projects, the diamond bearing outcrops that we have discovered near Wawa, Ontario continue to represent a challenge, in that the highest distribution of diamonds has been determined to be contained in isolated xenolith nodules within the much larger matrix of host rock. From surface outcroppings we estimate that xenoliths constitute approximately 10 - 20% of the entire rock mass. Diamond drilling this occurrence will give us a better understanding of the xenolith content, as the xenoliths content can be physically measured and converted to a percent by volume. We are continuing to work to identify a process to release the diamonds from the xenolith. This would enable targeting the higher content xenolith bearing portions of the geological structure and allow evaluation of the occurrence and perhaps lead to a bulk test.

At McFauld's Lake, the company has a very encouraging base metals (copper and zinc) discovery prospect. Our relatively shallow drill programs to date have outlined several well mineralized massive sulphide zones. Additional geophysical work is required to define the best targets for a drilling program designed to test each target at depth. The company believes excellent potential exists for outlining a major new massive sulphide deposit. Costing of the geophysical surveying is currently underway. Due to the remote location of the property, and the unfriendly topographic environment (swampy conditions under McFaulds #3 and #1), an exploitable massive sulphide deposit needs to be large, very large. Large tonnage goes hand in hand with great depth and/or great length. The near surface geophysical "length" expression has been tested by diamond drilling, the depth expression remains undefined. However, as target depths increase, so does the cost to explore them. The depths that need to be reached in the next drilling program translate into an expensive undertaking. It is therefore necessary to complete adequate preparation prior to drilling this exciting target. This work is subject to seasonal conditions, a deep penetrating geophysical "Titan 24 Deep Earth Imaging" survey is offered by Quantec Geoscience, this is being considered and would complement the existing gravimeter survey. Spider plans undertaking this geophysical work during the winter of 2007 to be followed by a status review of this potential "company making" massive sulphide project. Spider continues to monitor and share information with the other explorers in this remote area of northern Ontario, as combined efforts in the area enhance the discovery potential for making this the next Volcanic-hosted Massive Sulphide mining camp in Canada.

Spider is also involved in a chromite - platinum group metals project with joint venture partners KWG Resources and Freewest Resources Canada Inc. Our initial drill hole was designed to test for massive sulphide mineralization near the aforementioned McFaulds discoveries. Instead we intersected several meters of layered chromitite, containing appreciable Chrome, Platinum, Palladium, Rhodium and Ruthenium, as well as anomalous Nickel. This discovery attests to the unknown mineral potential of this relatively unexplored area of Northern Ontario. We have begun preliminary discussions with another joint venture group, which would allow them to attain a controlling interest in the project. Again, our objective on this program is to retain leverage to any future significant discovery while removing the obligation of exploration funding requirements until a time when there is the possibility of bringing the project to the next level of advancement.

With each of the decisions that we face on the various exploration projects currently underway, we will carefully consider Spider's priority to secure and maintain the greatest ownership interest possible against an economic discovery within our current land portfolio. To do this we need to weigh the exploration risk with the cost burden, while balancing this with the need to minimize our financial commitments, and thereby control further dilution as required to raise working capital.

We have recently (early September) closed a non Flow through financing in the amount of $150,000, proceeds to be used for general corporate purposes. Against an announced financing of $500,000 the actual amount received, was a direct result of the summer season and inherent problems with getting people together to close financings. Several investors asked for a further postponement into September; however this was not possible at the time. These investors have once again approached us, and have inquired as to any further financing that Spider needs. The "Use of Proceeds" is to augment working capital, thus allowing Spider to look outside of Canada, at several new projects recently presented to us. Management of Spider is of the opinion that international acquisitions containing gold/silver opportunities will open up many new doors to financing.

In pursuit of new projects, I have recently completed some international due diligence trips, and have targeted a few projects for acquisition. One of these has the possibility of becoming a small gold-silver producer within the first year of acquisition. The current owners of this project are desirous for a Canadian exploration/development company to acquire and advance this project, and are looking to turn a portion of their investment to date into an equity position in a Canadian resource company. Negotiations are currently underway with respect to this project. Other projects (advanced and grass roots) were also visited and are also being considered for acquisition. As negotiations advance and approach ratification, Spider will provide more details to its shareholders.

We look forward to the next exploration season in Canada's north early in 2007, and over the next few months we hope to be in a position to secure exploration/development assets outside of Canada. We will provide timely and regular updates on all exploration projects. As the Christmas season approaches I would like to thank all shareholders for their unwavering interest and support, and we look forward to a very active New Year.

Spider Resources Inc. is a tier 2 junior resource company, quoted for trading on the TSX Venture Exchange under the symbol "SPQ" and there are currently 240,344,390 shares of Spider issued and outstanding.

On Behalf of the Board of Directors,

Neil Novak, P.Geo., President

This press release includes certain "Forward-Looking Statements" within the meaning of the US Private Securities Reform Act of 1995. Other than statements of historical fact, all statements are "Forward-Looking Statements" that involve such various known and unknown risks, uncertainties and other factors. There can be no assurance that such statements will prove accurate. Results and future events could differ materially from those anticipated in such statements. Readers of this press release are cautioned not to place undue reliance on these "Forward-Looking Statements". All dollar amounts are in Canadian dollars unless otherwise noted.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Spider Resources Inc.
    Neil Novak, P.Geo.
    (416) 815-8666