Strachan Resources Ltd.
TSX VENTURE : SCN.P

July 09, 2012 07:00 ET

Strachan Resources Ltd. Announces Qualifying Transaction

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 9, 2012) - Strachan Resources Ltd. (TSX VENTURE:SCN.P) ("Strachan" or the "Company") is pleased to announce that it has entered into an agreement dated June 29, 2012 with Ken Ellerbeck and Gerald Locke, both of Kamloops, British Columbia (the "Optionors"), to acquire, subject to regulatory approval, up to 53 contiguous mineral claims known as the Chu Chua Property located in the Kamloops Mining Division, British Columbia. Under the terms of the agreement, the Company will have the option to acquire a 100 percent interest in the Chu Chua Property.

This acquisition is to be proposed as the Company's "Qualifying Transaction" that is to be conducted in accordance with TSX Venture Exchange (the "Exchange") Policy 2.4 concerning Capital Pool Companies.

To exercise the option the Company shall pay to the Optionors the sum of $1,300,000, consisting of $10,000 upon signing the agreement, a further $15,000 on regulatory approval of the Qualifying Transaction, a further $25,000 on or before September 30, 2013, a further $50,000 on or before each of September 30, 2014, 2015 and 2016, and a further $1,100,000 on or before September 30, 2017.

In addition, to exercise the option the Company shall issue and deliver 275,000 common shares within five business days after the date of Exchange acceptance of the Qualifying Transaction; and a further 275,000 common shares on or before September 30, 2013.

In addition, to exercise the option the Company shall incur a minimum of $200,000 in expenditures on the Property by September 30, 2013, and make reasonable efforts to make some expenditures in 2012; and a minimum of $100,000 of Expenditures on the Property for each of the years ending September 30, 2014, 2015, 2016 and 2017.

The Optionors will retain a 2% net smelter return interest which the Company has the right to purchase at any time for $1,500,000.

Upon completion of the qualifying transaction, Strachan will be a Tier 2 Mining Company.

The proposed acquisition will be negotiated and carried out by the parties dealing at arm's length to one another and therefore will not be a Non-Arm's Length Qualifying Transaction, as such term is defined under the rules and policies of the Exchange. As a result, the proposed acquisition will not require shareholder approval from the shareholders of Strachan.

The Property

The Chu Chua Property consists of 53 mineral claims covering a total area of 12,016 hectares (46.12 square-kilometres) approximately 20 km north of Barriere, British Columbia. The Property is host to a number of magnetic and electromagnetic airborne geophysical, rock and soil geochemical anomalies that bear similarities to the adjacent Chu Chua deposit, a Cyprus-type volcanogenic massive sulphide body currently owned by Reva Resources Corp., and under option to Newport Exploration Ltd. ("Newport"). On June 26, 2012, Newport announced a NI 43-101 compliant resource estimate for the Chu Chua deposit comprising an inferred mineral resource of 2,500,000 tonnes averaging 2.0% copper, 0.3% zinc, 9.4 g/t silver and 0.5 g/t gold at a copper block cut-off grade of 1.0%. The deposit as currently modelled is relatively shallow with approximately 75% of the inferred resource occurring within a 100 metre depth from surface.

The Chu Chua Property contains at least five discreet isolated and sizeable magnetic anomalies and two discreet, isolated conductance (electromagnetic) anomalies that bear resemblance to the discreet magnetic and electromagnetic anomalies associated with the Chu Chua deposit, identified by a 2008 AeroTEM III airborne geophysical survey conducted over the north-central half of the Property. Soil geochemical sampling, has been conducted over one of the magnetic anomalies and indicates the presence of anomalous copper and zinc values.

Within the southern part of the Property, a number of the magnetic and electromagnetic anomalies appear to extend past the boundary of the 2008 AeroTEM III survey. Rocks of the Devonian to Mississippian age Fennell Formation that host the Chu Chua deposit to the north underlie the anomalies. Previous diamond drilling of a porphyritic rhyolite by Corporation Falconbridge Copper during 1986 intersected quartz-pyrite stockwork mineralization that returned assays of 4.45 grams-per-tonne (g/t) gold over 2.52 m; including 30 centimetres of massive pyrite grading 18 g/t gold and 134 g/t silver. To the east also within the Property, rocks of the Cambrian to Mississippian age Eagle Bay Assemblage host gold, silver and base metal-rich quartz vein mineralization exposed within a number of trenches and short adits at the Energite showing. Historic production from the Energite showing between 1954 and 1972 totalled 36 tonnes that returned 3,732 g (120 ounces) silver, 1,581 kilograms (kg) copper, 1,341 kg lead, and 651 kg zinc.

Kristopher J. Raffle, P.Geo., APEX Geoscience Ltd., is a qualified person as defined by National Instrument 43-101 and is responsible for the preparation and approval of the technical information disclosed in the news release.

Conditions of Closing

The option agreement is subject to regulatory approval. It is not subject to any other significant conditions.

Private Placement

The Company will in due course announce a financing by private placement for funds to conduct the recommended work program on the Chu Chua Property and for working capital prior to regulatory approval of the Qualifying Transaction.

Deposit of Funds

The Company has paid a $10,000 non-refundable deposit on the signing of the option agreement to acquire the Chu Chua Property.

Sponsorship

Strachan will be seeking a waiver from the Exchange for the appointment of a sponsor for this transaction.

Directors and Officers

The board of directors of Strachan after the closing of the Qualifying Transaction will be composed of William Spratt, Ken Ellerbeck, Jack Bal and Steve Mathiesen. The officers of the Company after the closing of the Qualifying Transaction will be William Spratt, CEO and President, Gary Mathiesen, CFO and Steve Mathiesen, Secretary.

William Spratt

Mr. Spratt provides consulting services to mid-market companies, specializing in the areas of strategic planning, mergers and acquisitions, and the commercialization of new technology. He has served as an officer and as a board member of several public and private companies in Canada. Prior to 2002, Mr. Spratt spent 12 years with the Royal Bank of Canada, where he managed credit, service and liability portfolios, and as part of the North American Markets team, assisted with the US acquisitions that led the bank's expansion into the US retail marketplace.

Ken Ellerbeck

Mr. Ellerbeck has over 30 years' experience in mineral exploration in British Columbia, and has been the founding shareholder of several publicly traded junior resource companies. He continues to supervise and manage exploration programs on extensive privately held mining interests. Mr. Ellerbeck holds a BSc. in Mechanical Engineering from the University of Alberta, Edmonton and is a certified Project Management Professional (PMP). He is the President of Titan Consulting Inc., a private project management services company specializing in management of mineral exploration, real estate development and construction.

Jack Bal

Mr. Bal has 15 years of experience in the resource industry and public markets. Mr Bal served as CEO of Musgrove Minerals from 2004 to 2011 and is currently the President of Foresight Communications Corp. He has also served as President of Centerline Capital Corp., a private management company since November 2003. Mr. Bal is currently a director of CMC Metals Corp. and Upper Canyon Minerals Corp., both of which are resource companies listed on the TSX Venture Exchange.

Steve Mathiesen

Mr. Mathiesen is a business consultant and until recently was a corporate and securities lawyer and partner with McMillan LLP of Vancouver. His practice included mergers and acquisitions and financings for public and private companies and ventures involved in the technology, real estate, resource and other sectors. He is currently a director and officer of several Exchange listed companies.

Gary Mathiesen

Mr. Mathiesen is a Chartered Accountant and is the CFO of the Company. He has been the President and principal of Quay Property Management Corp., a real estate management company, and related companies since October 2000. Mr. Mathiesen has served as an officer and director of several Exchange listed companies.

Finder's Fee

In connection with the transaction, the Company has agreed to pay a finder's fee of 50,000 shares of the Company, subject to regulatory approval, to HDM Capital Ltd. (Howard Milne), of Vancouver, BC.

Statements in this press release regarding the Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as terms and completion of the proposed transaction. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

ON BEHALF OF THE BOARD

STRACHAN RESOURCES LTD.

Steve Mathiesen, President

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Strachan Resources Ltd.
    Steve Mathiesen
    President
    (604) 696-6677