VANCOUVER, Feb. 26, 2013 /PRNewswire/ - Western Pacific Resources Corp. (the "Company" - WRP: TSXV) is pleased to announce that it has entered into an agreement to acquire, through its U.S. subsidiary, the Deer Trail Mine located in Piute County, Utah from the Deer Trail Mining Company, LLC ("DTMC"), a subsidiary of Unico, Inc.
Warwick Smith, CEO of Western Pacific, comments: "Acquiring the Deer Trail Mine is a significant milestone for Western Pacific. This transaction provides the platform to transform the Company from an explorer to a producer. Although further evaluation will be undertaken, we feel this property could go back into production within the next 12 - 18 months with a low capital investment. The timing was right for Western to acquire this incredible project for $7 million to be paid over two and a half years. Shareholders can expect 2013 to be a strong year for newsflow."
Eric Saderholm, President of Western Pacific, states: "In addition to the known polymetallic deposits (mineralization occurs in oxide and sulphidic ore), there are numerous other potential targets at Deer Trail, including Moly-Porphyry targets and gold-rich veins and skarns. This mining district is vastly under-drilled and under-explored which provides significant upside potential for discovery by Western Pacific. Our review of the data provided by the mine's former operations team identified numerous targets for exploration and potential new mines. I believe there are tremendous possibilities for increasing the known mineralization within the current mine and for additional discoveries in and around Deer Trail. We look forward to exploring the immediate and long term potential of this exciting property and moving it forward toward production."
Pursuant to the Agreement, the Company will pay to DTMC a total of $7 million (Canadian) over 2.5 years as follows:
- on closing, $1,825,000 in cash
- on closing, the transfer of the Company's Bombardier property, which the parties have assigned a value of $1,500,000;
- twelve months after closing, $2,000,000 subject to acceleration of payment if the mine is in commercial production; and
- thirty months after closing, $1,675,000 subject to acceleration of payment if the mine is in commercial production.
The Company will retain a right of first refusal for 36 months after closing in respect of a proposed sale of the Bombardier property by DTMC to a third party. If DTMC sells the Bombardier property after the 30th month following closing for less than $1,500,000, the Company will pay DTMC a "make whole" payment equal to the difference between the sale price and $1,500,000. The Company may elect to satisfy up to 25% of the total post-closing payments of $3,675,000 and 25% of any make whole payment in its common shares, where the number of shares will be is calculated based on 85% of the twenty day volume weighted share price.
The closing of the Acquisition is subject to customary closing conditions, including the acceptance of the TSX Venture Exchange, and the waiver by Crown Mines, L.L.C. ("Crown") or expiration of its right of first refusal in respect of the DTMC mining claims and certain of the related assets. Crown has until March 26, 2013 to exercise such right.
Deer Trail Mine Location
The Deer Trail Mine is located in Piute County, central Utah, approximately 5 miles SSW of Marysvale. The project encompasses 3,275 acres of prospective ground within 5 square miles and includes workings known as the Upper Deer Trail Mine, the Lower Deer Trail Mine, and the Carissa and Lucky Boy Mines.
Utah was ranked 4th nationally by the U.S. Geological Survey in 2011 for the value of nonfuel mineral production in the United States, making up 6.2% of the total value. Nonfuel mineral production was valued at $4.6 billion—$2.6 billion of this amount was attributed to base-metal production, $1.2 billion from industrial minerals and $0.7 billion from precious metal production.
Photo Gallery of Deer Trail Mine
Maps and Sections
The Deer Trail Mine is located near the center of the Marysvale volcanic field in the High Plateaus of west-central Utah, forming a transition between the Colorado Plateau and the basin-range provinces. The main adit of the mine, the PTH tunnel, crosses the range bounding Tushar fault zone that separates Paleozoic and Mesozoic sedimentary rocks. The DTM includes several Pb-Zn-Ag-Au-Cu manto deposits, with mine workings exposing westerly dipping sedimentary rocks of three units: The Toroweap and Queantoweap Formations and the Callville Limestone. The ore body is in the lower part of the Toroweap Formation and consists of a nearly continuous group of semiconcordant replacement bodies flanking a central vein. Roughly half of this orebody is oxidized and is exposed in the working of the Upper Deer Trail Mine, known as the Old Deer Trail Mine; the other half is located in the 8,600 area workings of the Lower Mine and consists of unoxidized sulphide ore. The Queantoweap Formation underlying the Toroweap, is a quartzite and hosts no known mantos. The 3,400 area of the Lower Mine underlies the Callville Limestone.
The project encompasses an attractive portfolio of advanced-stage properties at both Upper and Lower Deer Trail, and in addition, two other potentially large-scale exploration targets. The first is the Deer Trail Mountain Porphyry. Alteration patterns, geochemistry and structural features indicate that further testing should occur to test for a deep Molybdenum Porphyry target. The second exploration target is the Mississippian Redwall Limestone. Future work may include testing between 800-2,000 ft below DTM workings.
Permits & Infrastructure
The Deer Trail Mine has a Large Scale Mining Permit issued by Utah Div. of Oil, Gas & Minerals. Extensive infrastructure is in place, including a mill complex with a 250 tpd (capacity) flotation mill and crusher, and a developed network of timbered and ventilated tracks extending 5 miles, some of which need repair. Other infrastructure includes:
- Year-round water supply— ownership of and leasehold interests in water rights
- Substation on regional electric grid
- Mill complex: 250 ton/day flotation mill with crusher- (the mill was last in operation at a rate of 100-130 tpd in 2008)
- General Office, lab and sampling facility- laboratory built in early 2000's
- 5+ miles of timbered and ventilated adits with tracks
- Two battery locomotives and several 1.5 ton ore cars
- Engine storage and charging house
- Miners locker room
- Compressor building
- All weather road to US highway 89
- Major rail arteries within 75 miles plus interstate highways 15 and 70 within 30 miles
- Regional service and supply center half an hour from the property
Most Productive Periods at DTM
Source: Unico Annual Report Feb 28, 2010 http://www.sec.gov/Archives/edgar/data/1110737/000102317510000176/f10k61110final614.htm
Deer hunters first discovered the Deer Trail mineralized body outcropping at surface in 1878. Since 1975, Phelps Dodge, Noranda Exploration, Battle Mountain Gold and Cominco American have explored the property.
Between 1878 and 1917 around 10,000 tons of material were mined until a small mill was installed in 1918. Between 1918-1923 the mine produced around 138,000 tons of predominantly oxide material averaging 1.38 ounces per ton gold, 11.49 ounces per ton silver and 3.26% lead (zinc and copper were not recovered).
In 1923 mining was suspended when the workings encountered a fault that cut off the mineralized material, and for more than 20 years production was limited to drawing stopes and removing pillars.
In 1945 the PTH tunnel was started to explore for the faulted extension of the known mineralized body. After drifting 3,400 feet a new mineralized body was encountered and became the primary production area. In 1945, 5,000 tons of material averaging 2.84% lead, 0.76% copper, 6.26% zinc, 15.17 ounces per ton silver, and 0.19 ounces per ton gold were mined. The PTH tunnel was extended more than 10,000 feet with a developed network of tunnels, shafts and raises. By 1964 the PTH tunnel had intersected the offset part of the mineralized body at Deer Trail. Between 1964-1981 this segment produced over 100,000 tons of unoxidized sulphide mineralized materials averaging 15 ounces per ton silver, 0.10 ounces per ton gold, 12% zinc, 5% lead and 0.6% copper. The present working face is still in mineralized material.
There is a perpetual royalty on the Deer Trail Mine project to be paid to Crown Mines, L.L.C. in the amount of three percent (3%) on minerals other than gold, and five percent (5%) on gold. Crown Mines, L.L.C. also retains an undivided three percent (3.0%) interest in any oil and gas and associated hydrocarbons produced from the claims.
About Western Pacific
Western Pacific is a resource company transitioning into a polymetallic producer. Western is focused on advancing a strong portfolio of advanced-stage projects in the Western United States, including the permitted Deer Trail Mine, Piute County, Utah. Dedicated to achieving profitable production, Western's team is led by technical and financial experts who aim to succeed in creating shareholder value. For more information, please visit our website at www.westernpacificresources.com.
Clancy Wendt, M.Sc., a registered geologist in Arizona and British Columbia and a member of SME, SEG FAusIMM(CP) and PDAC, is Western Pacific's Qualified Person for the purposes of NI 43-101. Mr. Wendt has approved the disclosure of the scientific and technical information contained in this news release.
ON BEHALF OF THE BOARD
Warwick Smith, Chief Executive Officer
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this news release.
This news release contains forward-looking information, which involves known and unknown risks, uncertainties and other factors that may cause actual events to differ materially from current expectation. The ability of the Company to successfully complete the DTM acquisition on time or at all and the Company's ability to successfully place the acquired assets back into production are subject to various risks and other factors, including , the waiver by Crown Mines, L.L.C. or expiration of its right of first refusal, the risks of obtaining necessary licenses and permits to place the DTM assets back into production, diminishing quantities or grades of reserves; the availability of funds, the results of financing and exploration activities, political or economic developments in the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with development or mining activities; employee relations; availability and costs associated with mining inputs and labor; the speculative nature of exploration and development, the interpretation of drilling results and other geological data, risks associated with the estimation of mineral resources and the geology, grade and continuity of mineral deposits, project cost overruns or unanticipated costs and expenses. Such risks and other factors (which are also disclosed in the Company's documents filed from time to time on SEDAR at www.sedar.com) may cause actual results to differ materially from the Company's expectations.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE Western Pacific Resources Corp.