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West Kirkland Signs Letter Agreement with Allied Nevada to Acquire Hasbrouck and Three Hills Properties in Nevada, Announces Related Financings

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West Kirkland Signs Letter Agreement with Allied Nevada to Acquire Hasbrouck and Three Hills Properties in Nevada, Announces Related Financings

 

 

 

 

 

 

West Kirkland Mining Inc. (TSX-V:WKM) announces today that the company has signed a binding letter agreement with Allied Nevada Gold Corp. (ANV:TSX) to acquire Allied’s Hasbrouck and Three Hills properties in southwestern Nevada for consideration of up to US$30 million. In connection with the Transaction, WKM announces a non-brokered private placement of up to 15,000,000 common shares at a price of CAD$0.10 per share for aggregate subscription proceeds of up to CAD$1,500,000.

 

WKM intends to raise additional funds through a brokered offering and will provide details of such offering in a later press release.

 

R. Michael Jones, CEO of West Kirkland Mining said, “We are pleased to reach this agreement with Allied Nevada following a systematic search over a six month period for an attractive gold project. The Hasbrouck and Three Hills properties together offer a well-defined resource base where we can utilize our core strengths and experience in mine evaluation and engineering. They also offer an excellent exploration opportunity for the discovery of additional resources. We look forward to presenting this opportunity more fully to our long standing institutional contacts and other investors in the days ahead.”

 

Terms of the Transaction:

 

Purchase Price: As set out in greater detail below, WKM is required to pay an aggregate of US$20,000,000 for a 75% interest in the Properties and an additional US$10,000,000 to acquire the remaining 25% interest in the Properties. The Purchase Price is to be paid as follows:

 



--  US$500,000 non-refundable cash payment (the "Deposit") which was paid to
    ANV upon execution of the Letter Agreement. The Deposit was paid in
    consideration of the rights granted to WKM under the Letter Agreement
    including ANV agreeing to deal exclusively with WKM in respect of the
    Properties for a period of 90 days.
--  An additional US$19,500,000 cash payment at closing (the "Initial
    Payment"), which shall occur no later than April 24, 2014, at which time
    WKM will have earned a 75% interest in the Properties. If WKM does not
    make payment of US$19,500,000 on or before April 24, 2014 it will not
    earn any interest in the Properties and will lose the Deposit.
--  An additional US$10,000,000 (the "Final Payment") shall be paid within
    30 months after the date of the Initial Payment (the "Final Payment
    Deadline"). If WKM pays the Final Payment to ANV in accordance with the
    terms and conditions of the Letter Agreement, it will acquire the
    remaining 25% interest in the Properties and own a 100% interest in the
    Properties.
--  If WKM does not make the Final Payment to ANV on or before the Final
    Payment Deadline, or if WKM offers payment and ANV chooses to decline
    the Final Payment, the Properties shall be transferred into a joint
    venture (the "Joint Venture") with WKM retaining a 75% interest in the
    Joint Venture and ANV retaining 25% interest in the Joint Venture.

 

 

Conditions to closing: The completion of the Transaction is subject to a number of conditions to closing including, but not limited to, WKM’s satisfactory completion of legal, title and environmental due diligence with respect to the Properties, completion of various financings to raise adequate funds to make the Initial Payment, board and regulatory approvals and other customary conditions in the mining industry for similar asset purchases and sales.

 

Hasbrouck and Three Hills Resource Estimate

 

The resources at Three Hills and Hasbrouck are at or near surface and are well oxidized.

 



Three Hills Indicated Resource (Jan. 1, 2012)
----------------------------------------------------------------------------
         Cate-  Cut-                                                   AuEq
Deposit  gory   Off    Tons    Au     Au Oz    Ag      Ag Oz  AuEq     oz(i)
----------------------------------------------------------------------------
Three   Indic- 0.01   5,736 0.023   133,600   not calculated   N/A   133,600
 Hills   ated
----------------------------------------------------------------------------



Hasbrouck and Three Hills Inferred Resource (Jan. 1, 2012)
----------------------------------------------------------------------------
        Cate-   Cut-                                                   AuEq
Deposit gory    Off    Tons    Au     Au Oz    Ag      Ag Oz  AuEq     oz(i)
----------------------------------------------------------------------------
Hasb-   Infe- 0.005 128,608 0.009 1,157,474 0.228 29,322,669 0.013 1,671,907
 rouck  rred
----------------------------------------------------------------------------
Three   Infe-
 Hills  rred   0.01    10.6 0.015       200   not calculated   N/A       200
----------------------------------------------------------------------------
(i) An Au:Ag price ratio of 57:14:1 has been utilized to convert the silver
contained value to a gold equivalent grade, which has been added to the
actual gold grade.

 

 

The Mineral Resources have been prepared by Scott E. Wilson in conformity with generally accepted CIM “Estimation of Mineral Resource and Mineral Reserves Best Practices” guidelines and are reported in accordance with the Canadian Securities Administrators NI43-101. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the mineral resource will be converted into mineral reserve.

 

Strategic Rationale for Transaction:

 



--  1,671,907 inferred AuEq ounces at Hasbrouck and 133,600 indicated Au
    ounces at the nearby Three Hills deposit (8km north) (see table above)
    would add to WKM's portfolio of gold/silver assets in the southwest
    United States including the TUG oxide deposit in Utah where WKM has
    completed a preliminary economic assessment.
--  Hasbrouck and Three Hills are all-oxide deposits, suitable for open pit
    mining and heap leaching, and are open at depth and laterally. An
    intercept of 66 meters grading 3.33 grams per tonne outside of the
    assessed resource at the Three Hills deposit highlights the exploration
    potential.
--  Additional targets on 51 km2 of patented and unpatented claims.
--  The acquisition would elevate WKM from an exploration company to a
    development company with potential for near-term production.
--  Potential strategic joint venture partnership with Allied, a current
    gold producer in Nevada with specialization in large open pit mining
    operations.
--  Deposits would be complimented by WKM's TUG deposit and approximately
    1,000 km2 of exploration ground in the Long Canyon Trend of Nevada/Utah
    and WKM would continue its focus on the southwest USA with its current
    full time office in Nevada.

 

 

Related Financings:

 

In relation to the Transaction, WKM is arranging the Private Placement of up to 15,000,000 shares for gross proceeds of up to CAD$1,500,000. Of the Private Placement Funds, US$500,000 has been allocated for the Deposit paid to ANV in consideration of the rights granted to WKM under the Letter Agreement, including ANV agreeing to deal exclusively with WKM in respect of the Properties for a period of 90 days. The Private Placement is subject to acceptance by the TSX Venture Exchange. The Company may pay finder’s fees in connections with Private Placement, subject to the acceptance of the TSXV.

 

WKM intends to raise additional funds through the Subsequent Offering and will provide details of such offering in a later press release. Of these additional funds, US$19,500,000 would be used to make the Initial Payment to complete the acquisition of a 75% interest in the Properties. At a date prior to the Final Payment Date, WKM may conduct a further financing to raise proceeds to pay the Final Payment.

 

The securities described herein have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States unless registered under the Act or unless an exemption from registration is available.

 

Details of Hasbrouck and Three Hills

 

The Hasbrouck property is located in Esmeralda County, Nevada, is accessible by paved road and consists of two claim blocks, Hasbrouck and Three Hills. The Hasbrouck claim block consists of 28 patented and 583 unpatented mining claims. The Three Hills claim block consists of six patented mining claims and 100 unpatented mining claims. Each claim block hosts a known significant gold resource, with the potential for further discoveries and expansion. The historic mining town of Tonopah, Nevada, lies within a short distance of the both properties. Historic mining in the area focused on bonanza grade veins and took place prior to the existence of technology to process oxide ores. Both deposits are close to infrastructure with existing good access.

 

The Hasbrouck and Three Hills deposits are oxidized, low-sulphidation, epithermal vein deposits with a combined Ag:Au ratio of 23:1 by weight. Most of the ounces of gold in the known deposits are hosted within the Tertiary Siebert Formation with minor amounts of mineralization in the underlying Fraction Tuff. The Hasbrouck mineral resource estimate was defined by 287 boreholes totaling 259,318 feet (79,040 meters) drilled between 1974 and 2011. The Three Hills deposit was defined by 260 boreholes totaling 74,524 feet (22,631 meters). Both deposits outcrop and feature a combined strip ratio of 0.3:1. Both deposits are open to further expansion, particularly Three Hills where hole THR12-15 encountered 66 meters of 3.33 g/t Au outside the known resource area.

About West Kirkland Mining Inc.

 

WKM was formed in 2010 to focus on gold exploration along major trends in North America. The Company has consolidated significant mineral rights positions within the Long Canyon Trend of Nevada/Utah. The founders and Board members of WKM have successful experience in gold discovery, mine development and mine operations in Nevada and other gold producing jurisdictions in North America.

Posted January 27, 2014

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