DENVER, Aug. 20, 2012 /PRNewswire/ -- Eastern Resources, Inc. (OTC Bulletin Board: ESRI), a Delaware corporation ("ESRI" or, the "Company"): The Board of Directors of ESRI is pleased to announce that Elkhorn Goldfields, Inc., a wholly owned subsidiary of ESRI and owner and operator of the Golden Dream Mine located near Boulder, Montana ("Elkhorn"), entered into a letter of intent with Black Diamond Holdings LLC ("BDH"). Pursuant to this letter agreement, the ounces of gold payable under the existing Minerals Product Receivables Purchase Agreement (the "MPRPA") between Elkhorn and BDH will be increased by 38,000 ounces, from 33,000 ounces to a total of 71,000 ounces. The gold payable rate under the MPRPA will be reduced from 80% to 50% with a production cost paid to Elkhorn of $500 per ounce on delivery. The tail, which is due after the Golden Dream Mine has produced an initial 250,000 ounces, will be increased from 6.5% to 15% at a production cost of $600 per ounce paid to Elkhorn at delivery. Elkhorn will realize up to $12,500,000 from the forward sale of the full 38,000 ounces.
Funds from the successful sale of these additional ounces of gold will be used to continue the development of the Company's Golden Dream Mine, targeting production of 258,000 ounces of gold and 8.6 million pounds of copper over the first five years of operations at a mining and milling rate of approximately 750 tons per day. Elkhorn has completed approximately 1,000 feet of underground development, has complete surface infrastructure, and most recently installed a water treatment system giving it the capability to fully develop the Golden Dream Mine. The Company believes there is an additional 250,000 ounces of gold drill indicated on the current mine level and the ore body is still open at depth and on strike.
ESRI is the owner of three fully permitted mines in the State of Montana which it owns through two operating subsidiaries, Elkhorn Goldfields, Inc. and Montana Tunnels Mining, Inc.
BDH is the parent company of ESRI. Black Diamond Financial Group LLC, the Manager of BDH, and an advisor to ESRI, will be responsible for the placement and coordination of the purchase of sub-contracts to the MPRPA as revised by the letter agreement. Patrick Imeson, Chief Executive Officer of the Company, and Eric Altman, Chief Financial Officer of the Company, are the managers of Black Diamond Financial Group LLC.
About Eastern Resources, Inc.
Eastern Resources, Inc. is an early stage, U.S. public company currently pursuing a business strategy in the precious and base metals mining sector in the United States. On April 6, 2012, the Company completed the acquisition of Montana Tunnels Mining, Inc. and Elkhorn Goldfields, Inc., and these two companies are now wholly owned subsidiaries of the Company.
About Montana Tunnels Mining, Inc.
Montana Tunnels Mining, Inc., a Delaware corporation, owns the Montana Tunnels Mine which is a fully integrated, open-pit mining operation, which is seeking to recommence mining and milling operations. Currently, operations are limited to care and maintenance functions. Montana Tunnels Mine staff engineers, in association with outside, independent mining consultants, have designed a mine plan for the expansion of the existing mine. Montana Tunnels Mine has received favorable records of decisions to begin this pit expansion from the Montana Department of Environmental Quality and the Bureau of Land Management. This deposit incorporates a proven and probable mineral reserve of 37.8 million tons of ore containing 488,000 ounces of gold, 8.2 million ounces of silver, 358 million pounds of zinc and 124 million pounds of lead. Ore will be processed through Montana Tunnels Mine's 15,000 ton-per-day concentrating facilities.
About Elkhorn Goldfields, Inc.
Elkhorn Goldfields, Inc., a Montana corporation, owns the Elkhorn Property which is a property with four identified gold and gold-copper mineral deposits. At the time Elkhorn Goldfields, Inc. acquired the Elkhorn Property from Newmont Mining Corporation in 1998, a mineral resource of 1.6 million ounces of gold had been delineated on the property. Elkhorn Goldfields, Inc. has advanced the first of these four deposits – the Golden Dream deposit – to the point where it is fully permitted and underground development is underway. The Golden Dream mine deposit incorporates a probable mineral reserve of 1.17 million tons of ore containing 258,000 ounces of gold and 8.3 million pounds of copper. Ore Production from the Golden Dream operation will be trucked 35 road miles to the Montana Tunnels Mine for processing through a separate 1,000 ton-per-day mill located within the Montana Tunnels concentrating facility.
Cautionary Note Regarding Forward Looking Statements
This press release of Eastern Resources, Inc. ("ESRI" or, the "Company") contains forward-looking statements within the meaning of the U.S. securities laws. Such forward-looking statements may include, without limitation, statements regarding the business strategy, plans and goals of the Company, plans for the Montana Tunnels Mine and the Golden Dreams Mine (the "Mines") including anticipated scheduling and production estimates, and direction of production, as well as estimated capital and other costs; future gold, silver, zinc, lead and copper prices; reserve and resource estimates; estimated gold and silver and base metal potential for expansion of existing resources; timing and results of drilling programs; hedging practices; currency exchange rate fluctuations; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; share valuation, including valuation relative to other resource companies and other statements that are not historical facts. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends" "anticipates" or "does not anticipate", "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on our current expectations and assumptions. The anticipated timing and cost of activation of the Mines as well as the expected production from the Mines are based on the following assumptions: Capital and operating cost estimates are based on recent cost estimates of construction and mining costs developed by independent consultants and ESRI personnel; production estimates are based upon the actual metal recovery achieved on the Golden Dream Mine and Montana Tunnels Mine ores; and ore tonnage estimates and precious and base metal grades are as indicated in the plans and production schedules for the Mines developed by Company personnel and outside consultants. Although ESRI management believes that its expectations are based on reasonable assumptions, it can give no assurance that these expectations will prove correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among others; risks relating to the planned activation of the Mines including risks of delays in receipt of reclamation bond approval and delays in completion of construction, uncertainties relating to availability and timing of capital for financing the planned reactivation, risks relating to availability of outside contractors, risks of shortages of equipment or supplies, uncertainties relating to obtaining approvals and permits from government regulatory authorities, and risks of inability to achieve anticipated production volume or manage cost increases; risks that ESRI's acquisition, exploration and property advancement efforts will not be successful; risks relating to fluctuations in the price of precious and base metals, the inherently hazardous nature of mining-related activities and uncertainties concerning reserve and recourse estimates as well as those factors discussed in ESRI's filings with the U.S. Securities and Exchange Commission (the "SEC"), including ESRI's latest filing on Form 8-K (SEC File No. 000-54645) filed with the SEC on April 12, 2012, as amended, and its other SEC filings including. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not intend to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise except as may be required under applicable securities laws.
SOURCE Eastern Resources, Inc.