Avanti Mining Reaches Agreement to Purchase the Past Producing Kitsault Molybdenum Mine, British Columbia
VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 20, 2008) – Avanti Mining Inc. (CNQ:AVMI) (“Avanti”) today announced it signed a definitive purchase agreement to acquire an undivided, 100% direct interest in the Kitsault molybdenum mine and surrounding mineral tenures, located in northern British Columbia, from Aluminerie Lauralco, Inc. (“ALI”), a wholly owned subsidiary of Alcoa, Inc. The purchase price is US$20 million. In addition, ALI can elect (within 90 days of Avanti delivering a feasibility study) to receive (a) a further US$10 million in cash or in Avanti shares at commercial production; or, (b) a 1% net smelter royalty on future production. This acquisition is subject to due diligence by Avanti and to regulatory approval with closing expected to occur within 120 days.
The Kitsault mine is located within a couple of kilometers of tidewater on Alice Arm in the Skeena Mining Division of British Columbia. The mine was a producer of molybdenum between 1967 and 1972, processing a total of 9,329,669 tonnes of ore grading 0.112% Mo. From 1981 to 1982, under the ownership of Amax, Inc., 4,069,548 tonnes of stockpiled and newly mined ore were milled, grading 0.076% Mo. Total production on the property during both periods was approximately 30 million pounds of molybdenum. Kitsault has developed road access to the mine site and is serviced by the BC Hydro transmission grid. The mine ceased operations in 1982 due to low molybdenum prices, but considerable historical reserves remained in place. Based on Amax Inc.’s 10-K Report dated December 31, 1985, proven and probable reserves were 104,316,500 tonnes grading 0.112% Mo, containing approximately 258 million pounds of molybdenum. These reserves are historic in nature, but Avanti believes this estimate is both relevant and reliable. Based upon its assessment of the calculation methodology and classification of these reserves, Avanti believes that it can produce an NI 43-101 compliant measured and indicated resource that will form the basis of a new feasibility study that it plans to initiate immediately thereafter.
Craig J. Nelsen, Avanti’s President and CEO, commented, “I am delighted that Avanti’s first acquisition is such a high-grade past producer located in British Columbia where mining continues to be a significant industry, supported by the provincial government. We will work diligently with the local communities and the Nisga’a Lisims Government, concurrent with preparing a revised bankable feasibility study, to put the mine back into production at the earliest possible date. The remaining infrastructure that exists at this former mine site, plus the high-grade nature of the ore body, puts it within the top five molybdenum development assets worldwide. We have been organizing ourselves in respect of this asset over the last several months, including reviewing the extensive archival data, and expect to have teams of professionals on site to immediately advance due diligence and development assessment work.”
In addition, the Kitsault property contains the historic Bell Moly and Roundy Creek resources. According to reports by Amax, Inc., Bell Moly contains an unclassified resource from 1979 of approximately 96,400,000 tonnes grading 0.054% Mo for a contained 115.1 million pounds of molybdenum. Roundy Creek is reported to contain an unclassified resource of approximately 7,000,000 tonnes grading 0.066% Mo for a contained 10.2 million lbs of molybdenum according to the BC Minfile report on this occurrence. These resources are also historic in nature; and, likewise, it is believed by Avanti that these estimates are both relevant and reliable.
Independent consulting geologist, Dr. Roger C. Steininger, has been retained to prepare an NI 43-101 Technical Report which will be filed on SEDAR within 45 days, that summarizes the historic information on the property and makes recommendations for future work programs to redevelop the mine. Dr. Steininger is a qualified person as defined by Canada’s NI 43-101. He was involved with both the development of the mine by Amax Inc. during its last operating period and with the formulation of the resource estimation at Bell Moly. Dr. Steininger is responsible for the technical aspects of this news release.
The Kitsault property carries a 9.22% net profits interest owned by Amax Zinc (Newfoundland), Limited. A finder’s fee in the amount of US$1,032,500 is payable to a third party in fully paid and non- assessable Avanti common shares, priced at a 20% discount to the closing price on the date this transaction is successfully concluded; and a success fee of 500,000 Avanti common shares will be paid to Avanti’s financial advisor in this transaction.
Avanti Mining Inc. is a newly formed company focused on acquiring, exploring, and developing mineral resource projects. The Kitsault mine is a formerly producing molybdenum prospect that Avanti intends to advance quickly to production.
Forward-Looking Statements: This news release contains certain forward-looking information concerning the business of Avanti Mining Inc. (the “Corporation”). All statements, other than statements of historical fact, included herein including, without limitation; anticipated dates for receipt of permits and approvals, construction and production, and other milestones; anticipated results of drilling programs, feasibility studies and other analyses; estimated timing and amounts of future expenditures, and the Corporation’s future production, operating and capital costs, operating or financial performance, are forward-looking statements. These forward- looking statements are based on the opinions of management at the date the statements are made and are based on assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events to differ materially from those projected in forward-looking statements. Important factors that could cause actual results to differ materially from the Corporation’s expectations include fluctuations in commodity prices and currency exchange rates; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; the need for cooperation of government agencies and native groups in the exploration and development of properties and the issuance of required permits; the need to obtain additional financing to develop properties and uncertainty as to the availability and terms of future financing; the possibility of delay in exploration or development programs or in construction projects and uncertainty of meeting anticipated program milestones; uncertainty as to timely availability of permits and other governmental approvals; and other risks and uncertainties disclosed in the Corporation’s prospectus dated July 31, 2007, which is available at www. Sedar.com. The Corporation is under no obligation to update forward-looking statements if circumstances or management’s opinions should change, except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
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