Brionor Resources Inc. ("Brionor" or the "Company") (TSX VENTURE:BNR) is pleased
to announce that it has entered into a letter agreement (the "Letter Agreement")
with Atala Resources Inc. ("Atala"), a private Ontario mining exploration
company holding mining rights in Argentina, and the shareholders of Atala (the
"Atala Shareholders") whereby Brionor proposes to acquire (the "Acquisition")
all of the issued and outstanding shares of Atala (each an "Atala Share") for an
aggregate purchase price of $300,000 (the "Purchase Price") payable by the
issuance of common shares of Brionor (each a "Brionor Share") at a deemed price
of $0,05 per Brionor Share. Under the Letter Agreement, each Atala Shareholder
shall receive 0.4655373 of a Brionor Share for each Atala Share held, for a
total of 6,000,000 Brionor Shares.
The closing of the Acquisition is scheduled to take place on or about March 29,
2013, and is subject to numerous conditions customary to this type of
transaction, including, the completion of a satisfactory due diligence on Atala
and its subsidiaries, the execution of a definitive share purchase agreement
between Brionor, Atala and the Atala Shareholders, the receipt by Atala of any
required third party consent and the receipt of the required regulatory
approvals. The Acquisition shall also be subject to the final approval of the
board of directors of Brionor. In this regard, Mr. Lew Lawrick, President of
Brionor, is also a director and shareholder of Atala, and as such, shall not
participate in the discussions or the vote of the board relating to such
approval.
Robert Ayotte, Executive Chairman of Brionor commented: "We are very pleased to
have the opportunity to position ourselves through Atala in a reputable very
prospective region of Argentina known for its recent mineral industry precious
metal discoveries. The Province of Santa Cruz in Argentina has seen over the
years, important mining, development and exploration activities. Brian Gavin,
founder and CEO of Atala, was instrumental in the discovery of McEwen Mining's
currently producing San Jose gold-silver mine in the region. The location of the
Atala's two optioned properties are in the vicinity of the Cerro Vanguardia
gold-silver mine. By this transaction, we hope to rapidly create value for our
shareholders."
Until the completion of the Acquisition, Brionor has agreed to fund all working
capital requirements of Atala as may be agreed to by the parties, subject to a
maximum amount of $75,000. Any such amount shall be immediately reimbursed by
Atala should the Letter Agreement be terminated or should the Company otherwise
withdraw from the transaction. In connection therewith, Atala shall grant to
Brionor a general security on all of its current and future assets. Furthermore,
in view of the substantial time and expense devoted by the Company in connection
with the proposed Acquisition, Atala has granted Brionor an exclusivity period
ending April 29, 2013 whereby during such period, neither Atala nor any of its
officers, directors and representatives shall solicit, initiate or encourage
submission of proposals or offers or respond to any submission, proposals,
offers or continue or engage in any negotiations or discussions with any person
relating, directly or indirectly, to any merger, consolidation, acquisition or
purchase of all or a portion of the assets of Atala or all or a portion of the
Atala Shares.
About Atala Resources
Atala's main asset is an option agreement (the "Option Agreement") with
Renaissance Gold Inc. ("RenGold") to earn 70% ownership of the Meridiano and
Covadonga properties, early stage gold exploration projects located about 20 km
apart in north-central Santa Cruz Province, Argentina, near the centre of the
Deseado Massif, an important new precious metals province. The projects consist
of four properties together totalling approximately 14,780 hectares and have
good access and proximity to infrastructure, including AngloGold Ashanti's major
Cerro Vanguardia Mine, the region's flagship and largest gold-silver operation.
As at August 31, 2012 (as per unaudited annual financial statements), Atala had
$23,914 in cash and cash equivalents, $142,693 in mineral properties and
deferred exploration expenses, $31,685 in current liabilities and no long-term
liabilities. It's share capital is comprised of an unlimited amount of common
shares of which a total of 12,891,667 shares are presently issued and
outstanding.
At the request of Atala and Brionor, a technical report (the "Report") has been
prepared in accordance with National Instrument 43-101 - Standards of Disclosure
for Mineral Projects ("NI 43-101") on both the Meridiano and Covadonga
properties. Both Meridiano and Covadonga are exploration-stage properties and
neither property contains a Mineral Resource or Reserve as defined NI 43-101.
The Report was prepared by Mel Klohn, P. Geo. (Spokane, Washington), an
independent qualified person under NI 43-101 and has been submitted to the TSX
Venture Exchange (the "Exchange") for review. The Report will be filed by
Brionor on SEDAR (www.sedar.com) concurrently with the completion of the
Acquisition.
Option Agreement
Pursuant to the Option Agreement, Atala can earn 70% ownership of the Meridiano
and Covadonga properties by making minimum staged annual expenditures totalling
Cdn$4.8 million per property over a 6-year period ($100,000 in year 1, $200,000
in year 2, $500,000 in year 3, $1 million in year 4 and 5 and $2 million in year
6), making staged annual payments totalling US$400,000 to RenGold over the same
6-year period (of which an amount of $25,000 has already been paid to RenGold,
and an amount of US$50,000 is payable in year 1, an amount of US$75,000 in year
2 and an amount of US$250,000 in year 6), making staged annual payments
totalling US$500,000 over a 4-year period for an underlying agreement to
complete outright purchase of the properties with the underlying claim owner (of
which an amount of $40,000 has already been paid, and an amount of US$80,000 is
payable by December 1, 2013, an amount of US$100,000 by December 1, 2014 and an
amount of US$280,000 by January 12, 2016), and by solely funding additional
expenditures totalling Cdn$10 million and the delivery of bankable feasibility
study within 7 years (with provisions available for a 5-year extension provided
than an additional amount of Cdn$100,000 is paid to RenGold and an additional $1
million in expenditures are incurred for each year the option is extended). The
current claim owner will aslo retain a 2% net smelter return royalty which may
be purchase at any time for US$800,000.
Upon having completed the option, the parties will form a joint venture which
will be governed by the terms of a joint venture agreement. In the context of
the Acquisition, the Company confirms that it is dealing at arm's length with
RenGold and the underlying claim owner.
Covadonga Property
Covadonga is an area of low relief with poor exposure and is underlain
predominantly by felsic lithic tuffs and volcaniclastic sediments that rest
unconformably on faulted blocks of older mafic volcanic units. Sparse outcrops
within the hydrothermal corridor return samples with small amounts of gold and
significant amounts of mercury from breccias and small veins encased in broader
zones of clay (argillic) alteration thought to represent zones of steam heated
alteration associated with very high level parts of a deeper, 1.5 km long
structurally-controlled epithermal system.
Prior exploration at Covadonga by RenGold focused on a 2 sq. km area in the
northwestern part of the property block using surface rock chip sampling and
mapping to define an altered and weakly mineralized zone. This zone subsequently
explored with 9 exploration trenches totalling 1,127 m in length, 8 of which
were spaced at irregular 50 to 200 m intervals along a 600 m long segment of the
corridor. The trenches reveal multiple zones of broad alteration, up to 25 m
wide, enclosing veining and brecciation not visible at the surface. Weakly
anomalous gold values, together with anomalous amounts of
mercury-arsenic-antimony, were returned from samples within most of these zones.
Meridiano Property
Regional mapping and satellite imagery suggest the Meridiano property lies in
the western part of a 8-10 km wide caldera, and the westernmost part of this
feature is thought to be the site of 2.5 km wide circular diatreme complex.
Andesitic to felsic tuffs in a 4 sq. km area are cut by gold-bearing
hydrothermal breccias filling N to NW trending fractures and faults. Virtually
all samples of these breccias contain small to significant amounts of gold,
arsenic and antimony, but very little silver or base metals, suggesting that the
mineralization in this area is preserved at a high level of erosion.
Prior exploration at Meridiano by RenGold focused on a 4 sq. km area in the
northern part of the property block. RenGold collected 403 rock chip samples,
carried out 65 line-km of magnetic and 32.5 line-km of gradient array IP ground
surveys, and completed 32 drill holes totalling 4,698 m in two reverse
circulation campaigns and one diamond core twin-hole campaign. The drill holes
were collared within a 1 sq. km area in the northwestern-most part of the
property. Most of the holes intersected one to several thin intervals of weak
mineralization, and 10 holes intersected at least 0.34 g/t Au over true widths
ranging from 1.5 to 13.5 m.
Recommendations of the Report
According to Mr. Klohn. the results of exploration carried out on the two
projects to date suggest that the principal target areas on each project
represent high-level parts of potential gold-mineralized epithermal systems at
depth. The mineralized diatreme model suggested for Meridiano is supported by
surface sampling, mapping, geophysical surveys, and by drilling. The area
encompassed by mineral showings, both at surface and depth, is sufficiently
large to warrant further exploration, and the possibility of finding similar
sizable new targets in nearby outlying areas is good. At Covadonga, surface
exploration results suggest potential for several types of interesting targets
of significant size, including possible disperse, low-grade large tonnage
deposits in addition to more typical Deseado Massif discrete vein systems.
Both projects deserve further exploration, specifically a first-phase program
consisting of ground work designed to define or re-define the known target
areas. The object of this work will be to establish targeting priorities before
planning or launching a future second-phase program consisting of further
drilling at Meridiano and new drilling at Covadonga. To this end, Mr. Klohn
recommends first-phase exploration programs totalling US$291,000 for the two
projects. A US$150,000 program consisting of additional ground geophysical
surveys, field mapping, systematic shallow augur hole/float sampling, and
limited trenching is suggested for Meridiano, and a US$141,000 program
consisting of ground geophysical surveys, more field mapping, systematic augur
hole/float sampling, and additional trenching is suggested for Covadonga.
Key Person of Atala
Brian Gavin
Mr. Gavin, a certified professional geologist, has 30 years' experience in all
phases of mineral exploration, project evaluation and project management in the
US, Mexico, Nigeria, Romania and Argentina.. Mr. Gavin was a founder and
subsequently President, CEO and Director of Franconia Minerals Corporation.
Under Mr. Gavin's leadership Franconia explored for copper, zinc and platinum
group metals in the US with joint venture partners Teck Cominco (now Teck) and
Impala Platinum. Franconia's major asset was the Birch Lake copper-nickel-PGM
deposit in the Duluth Complex in Minnesota. Franconia achieved a TSX listing in
2006 and was eventually acquired by Duluth Metals in 2011. From 1994 to 2009,
Mr. Gavin was a founder and Vice President Exploration of Minera Andes Inc.
(merged with McEwen Mining in 2011). Under his technical supervision Minera
Andes discovered the currently producing San Jose gold/silver mine and discovery
of the billion tonne Los Azules porphyry copper deposit, both in Argentina. He
holds a B.Sc. (Honours) degree in Geology from the University of London and a
M.S. degree in Geology and Geophysics from the University of Missouri-Rolla.
From 1981 to 1993, he was a consultant with Ernest K. Lehmann & Associates Inc.,
a geological mining consulting firm. He was Vice President of Exploration of
Minera Andes Inc. from 1994 to 2009. He is currently President, CEO and Director
of St Vincent Minerals Inc., a private exploration company active in the USA.
Following the completion of the Acquisition, Brionor will have 41,801,662 common
shares issued and outstanding, 85.65% of which will be held by current
shareholders of Brionor and 14.35% by Atala Shareholders. Under the Letter
Agreement, Atala shall have the right to designate one representative to the
board of directors of Brionor whose name will be submitted by Brionor for
nomination at the next annual meeting of shareholders. At this time, the Company
does not anticipate any changes to its management or board of directors.
At the closing of the Acquisition, Mr. Gavin will remain as the sole director
and officer of Atala. The Company also confirms that no finder's fee is payable
in connection with the transaction.
The technical information presented in this press release has been reviewed and
approved by Mr. Mel Klohn, author of the Report and an independent Qualified
Person under NI 43-101.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts responsibility
for the adequacy or accuracy of this release.
Some statements in this release may contain forward-looking information. All
statements, other than of historical fact, that address activities, events or
developments that the Company believes, expects or anticipates will or may occur
in the future (including, without limitation, statements regarding potential
mineralization) are forward-looking statements. Forward-looking statements are
generally identifiable by use of the words "may", "will", "should", "continue",
"expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or
the negative of these words or other variations on these words or comparable
terminology. Forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond the Company's ability to control or
predict, that may cause the actual results of the Company to differ materially
from those discussed in the forward-looking statements. Factors that could cause
actual results or events to differ materially from current expectations include,
among other things, without limitation, failure by the parties to complete the
Transaction, failure to establish estimated mineral resources, the possibility
that future exploration results will not be consistent with the Company's
expectations, changes in world gold markets or markets for other commodities,
and other risks disclosed in the Company's public disclosure record on file with
the relevant securities regulatory authorities. Any forward-looking statement
speaks only as of the date on which it is made and except as may be required by
applicable securities laws, the Company disclaims any intent or obligation to
update any forward-looking statement
FOR FURTHER INFORMATION PLEASE CONTACT:
Brionor Resources Inc.
Lewis Lawrick
President & CEO
647-478-5307
Robert Ayotte
Executive Chairman
450-441-9177
info@brionor.com
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