Acadian Gold To Proceed With Acquisition Of Goldenville Mining Corporation.
Acadian Gold Corporation (ADA-TSX-VE) ("Acadian Gold") is pleased to announce that it has completed due diligence and will proceed with an agreement to acquire 100% of the outstanding common shares of Goldenville Mining Corporation ("GMC"), a private mineral exploration company with a substantial gold portfolio in Nova Scotia, Canada, and to assume the debt obligations of GMC at a total transaction cost of $275,473 (the "Transaction"). The vendors of GMC are Mr. D.S. MacLeod and Votix Corporation Limited ("Votix"), a private company controlled by Will Felderhof (the "Vendors").
The President and CEO of Acadian Gold, Mr. Felderhof, is a director and shareholder of Acadian Gold and also serves as President of Votix and GMC. Mr. MacLeod, the other Vendor, is an insider of Acadian Gold by virtue of his ownership of 22% of the outstanding shares of Acadian Gold. Accordingly, Acadian Gold's acquisition of GMC is being treated as a related party transaction. The board of directors of Acadian Gold appointed a special committee of independent directors ("Special Committee") to consider, among other things, the fairness of the Transaction to disinterested holders of common shares of Acadian and to make a recommendation to the board of directors as to whether or not to proceed with the Transaction. As part of its mandate, the Special Committee retained Northern Securities Inc. ("Northern") to prepare an independent opinion as to the fairness of the Transaction, from a financial point of view, to the disinterested holders of common shares of the Acadian Gold.
Upon review of the fairness opinion prepared by Northern, the Special Committee recommended that the board of directors of Acadian Gold proceed with the acquisition of GMC. The independent directors considered and approved the Transaction. Will Felderhof refrained from voting on the Transaction.
Acadian Gold assumed all ongoing operating costs of GMC as of June 14, 2004, on the condition that should Acadian Gold elect not to proceed with the Transaction, GMC would reimburse Acadian Gold all monies expended by Acadian Gold on behalf of GMC up to the date of termination. Acadian Gold may at its sole discretion terminate the Transaction at any time during the period ending July 30, 2004. The Transaction is scheduled to close on August 25, 2004.
The Transaction is subject to regulatory acceptance. The Transaction is exempt from the applicable valuation and shareholder approval requirements of TSX Venture Exchange ("TSXV") Policy 5.9 - Insider Bids, Business Combinations and Related Party Transactions by virtue of sections 5.5(2) and 5.7(1)(2) of TSXV Appendix 5B - OSC Rule 61-501. Section 5.5(2) provides that the requirement to obtain a formal valuation does not apply to an issuer carrying on a related party transaction where, at the time the transaction was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the transaction exceeds 25 percent of the issuer's market capitalization. Section 5.7(1)(2) provides a corresponding exemption to the minority shareholder approval requirement. At the time the transaction was agreed to, Acadian Gold had a market capitalization in excess of $5,000,000. As such, the Transaction falls well below the 25 percent threshold.
The total transaction cost of $275,473 is comprised of the cost of acquiring the 20,000,000 outstanding shares at the Vendors' cost of $118,928 and of assuming outstanding debt obligations of GMC in the amount of $156,545. Acadian Gold will pay $138,928 in cash on closing, and the balance owing on the assumed debt will be paid preferentially on the earlier of completion of Acadian Gold's next financing or 12 months after Closing. There are no royalties or burdens other than normal course assessment work pursuant to the Nova Scotia Department of Natural Resources requirements attached to the properties controlled by GMC.
GMC's gold portfolio comprises 524 mineral claims in 16 gold properties covering 8,485 hectares which upon closing the transaction will bring Acadian Gold's holdings to 23 gold properties covering 20,129 hectares. Included in this portfolio is the Goldenville Mine property, the largest past producer in Nova Scotia; the Lake Lode Mine property, host to one of the deepest past producing mines in Nova Scotia; the Moose River property which ties on to the property being explored/developed by Diamond Ventures NL of Australia; the Mooseland property which ties on to the property being explored/developed by Azure Resources Ltd.; and the Crows Nest property which ties on to the property being explored/developed by Scorpio Mining Corporation.
The Goldenville Mine property has historically been considered the most important gold district in Nova Scotia because its past recorded gold production of 212,300 ounces of gold far exceeded that of other gold districts. The deepest shaft was to 183 metres. Continuity of gold mineralization at depth is indicated by historic drill hole G-15 drilled by Goldenville Exploration Limited in 1983 which intersected 38.40 g/t gold over 0.30 metres at an approximate vertical depth of 317 metres.
The Goldenville Mine property is an advanced exploration/development project which boasts a large historic database generated from exploration programs completed in the 1980s. In addition to 26,743 metres of diamond drilling in 138 drill holes, the three compartment Stuart Shaft was rehabilitated to the 183 metre level and a limited program of underground sampling and drilling was undertaken prior to project suspension in 1988. A planned bulk sampling program based on recommendations by MPH Consulting Limited was not completed. A final report by MPH Consulting Ltd. (May, 1989), recommended that any future evaluation of the property continue the underground evaluation program initiated in 1988 and complete the required mine development in areas of high potential to obtain bulk sample material. The ultimate objective of the recommended program was to prepare a mineable reserve calculation and to develop operational parameters for use in a feasibility study.
The key mineral claims comprising the Goldenville Mine property cover 4 kilometres of strike length of the central and most important portion of the anticlinal structure hosting the former Goldenville mines. Approximately 110 gold bearing quartz veins are reported to occur over an approximate width of 156 metres. Many of these were mined on both the north and south limbs of the anticline. The eastern portion of the anticline is characterized by saddle veins which are reported (Faribault, Canadian Geological Survey, 1903) to be amongst the largest in the Nova Scotia goldfields.
Acadian Gold's first endeavours on this advanced gold property will be the compilation and digitization of historic data to support the construction of new geological plans, 3-D interpretation and estimation of resources.
The Lake Lode Mine property comprises 100 claims totaling 1,619 hectares in the heart of the Caribou gold district. The Lake Lode mine operated during the period between 1885 and 1909, and was developed on a stockwork breccia which was up to 6 metres thick and was mined from surface to a vertical depth of 335 metres. The recovered grade from this shoot was reported to be 7.2 g/t gold, and mining is reported to have ended due to the mill being destroyed by fire in 1909.
The Lake Lode Mine is coincident with a northwest striking flexure zone which intersects the northeast trending Caribou anticline. The Lake Lode flexure zone is one of a series of parallel northwest trending structures some of which are associated with known gold mineralization. Prospective drill targets have been identified by the occurrence of soil geochemistry anomalies (greater than 100 ppb gold) co-incident with the flexure traces.
The Lake Lode Mine property was the target of extensive surface exploration programs including grid scale geological mapping, geochemistry, geophysics and limited diamond drilling in the 1980s. The resulting large database will form the basis for Acadian Gold's follow-up effort on this advanced exploration property.
The Mooseland property comprises 24 claims (388 hectares) and covers the eastern extension of the Mooseland anticlinal structure which hosts the Mooseland Gold Mine, currently the site of an underground development program by Azure Resources Corp. ("Azure"). Lode gold style mineralization in the Nova Scotia goldfields can exhibit strike lengths in excess of 2 kilometres, hence the potential exists for the continuation of gold bearing veins from the Azure property onto GMC claims.
The Crows Nest property comprises 20 claims (323 hectares) and is contiguous and on strike with the Cochrane Hill gold property being explored/developed by Scorpio Mining Corporation. The property was the site of mining operations at the turn of the last century. The productive gold bearing veins were, like the Cochrane Hill Mine, on the south limb of the Cochrane Hill anticline.
Prospectivity of the Crows Nest property is demonstrated by the presence of known gold mineralization and the continuation of the Cochrane Hill Mine geology on to the GMC property.
The MacMillan Flowage and Indian Brook properties comprise 81 claims (1,311 hectares) in the Cape Breton Highlands. The properties cover gold discoveries made by Scominex Ltd. in the period 1986-1990. Gold mineralization occurs insitue in discrete quartz veins hosted by Precambrian age meta sediments and volcanics.
With the exception of two properties, Indian Brook and McMillan Flowage which encompass gold showings in Precambrian age meta volcanics in the Cape Breton Highlands, all of the remaining properties are in the Nova Scotia goldfields (Meguma Terrane), and are expected to be geologically compatible with the ribbon model. The ribbon model is a geological concept which recognizes the distribution of gold mineralized shoots contained within discrete, horizontal to shallow plunging zones which take the shape of ribbons. The ribbons often show vertical repetition at regular intervals with depth within individual quartz veins as well as laterally in adjacent veins.
The Goldenville Mine property and the Lake Lode Mine property, along with Acadian's existing Forest Hill, Beaver Dam and Tangier properties, brings to five the number of advanced gold properties under the control of Acadian Gold and represents another cornerstone in the Company's Nova Scotia goldfields development strategy. The Company's primary objective is to establish gold resources on multiple properties in the camp which could be developed to supply a central mill, administrative and service centre. This centralization strategy coupled with the application of the ribbon geological model brings a new approach to the development of these extensive gold deposits.
Peter C. Webster, P. Geo., is responsible for the management and supervision of the Company's exploration program and the preparation of the technical information reported in this news release. Mr. Webster is an independent third party geologist, President of Mercator Geological Services Limited and a qualified person as defined by National Instrument 43-101.
For additional information on the Company's properties and activities, please visit our recently updated web site at www.acadiangold.ca. If you wish to be added to the Company's email or fax distribution list for future news releases and updates, please contact us at phone: 902-444-7779, fax: 902-444-3296 or email: email@example.com
Shares Outstanding: 36,874,878
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.