Opawica Explorations Inc. Commences Action Against Xstrata Copper Canada (“Xstrata”)
VANCOUVER, BRITISH COLUMBIA–(Marketwire – July 9, 2008) – Opawica Explorations Inc. (TSX:OPW) (“Opawica” / the “Company”) announces that it has commenced an action in the Ontario Superior Court of Justice against Xstrata Copper Canada to enforce Opawica’ rights under the 1999 joint venture agreement between Opawica and Xstrata’s predecessor, Falconbridge Limited, relating to the Chance property. Opawica also claims damages, legal costs and related relief.
In February 2008, Opawica proposed a ten hole exploration program to Xstrata under the Chance joint venture agreement. Xstrata did not respond within the 60 day prescribed period in the joint venture agreement, with the result that Opawica is now entitled to act as operator of the joint venture. However, Xstrata has disputed Opawica’s position and has refused to permit Opawica to proceed with the exploration program or to access the Chance Property.
The Chance property is patented ground and is located approximately 1850m northwest of Xstrata’s Kidd Creek copper, zinc, silver and lead mine near Timmins, Ontario. The Chance property has an historic Inferred Mineral Resource of 176,900 tonnes grading 12.8% Zn, 3.24% Pb and 178 g/t Ag to a depth of 350m (Falconbridge 1999). The current ownership interest of the surface and mineral rights to the Chance property is 41.09% Opawica and 58.91% Xstrata. The above surface and mineral rights interests are set forth in a Memorandum of Agreement filed on title in the Province of Ontario. However, Xstrata has taken the position that Xstrata controls the surface rights to the Chance property.
The ten hole drill program is primarily designed to infill drill the Chance Inferred Mineral Resource in order to upgrade the resources at Chance to NI 43-101 compliant resources as well as to test any remaining targets near the main Chance mineralization and to determine if metallurgical testing and a preliminary scoping study is warranted to obtain a definitive economic analysis of the Chance property prior to the mine closure of the Kidd Creek Mine.
Under the 1999 joint venture agreement, in the event that an economic ore reserve is outlined on any Xstrata-Opawica property subject to the joint venture, such economic ore reserve shall be brought into commercial production, on a timely basis, utilizing the Kidd Mine and metallurgical site for all compatible ores that originate from the joint venture properties. Xstrata now asserts that the Chance Inferred Mineral Resource may be smaller than originally represented to Opawica in 1999. In addition, Xstrata now advises Opawica that the mineralogy of the Chance Inferred Mineral Resource is not compatible with Xstrata’s Kidd Creek Mine and metallurgical site or smelting contracts. To Opawica’s knowledge, no recent metallurgical testing has been conducted on samples of the mineralized zones at Chance.
Without a complete, comprehensive, legible and current data base compiled pursuant to an independently prepared NI 43-101 report, any assertions regarding metallurgy or resources at Chance are premature.
A current data base derived from drilling is required at Chance as the historical data base provided by Xstrata to Opawica since February 2008 is incomplete and in some instances not totally legible.
Opawica intends to vigorously prosecute the action, and will take all available steps to protect its interest in the Chance property.
The Inferred Mineral Resources at Chance have not been sufficiently drilled by Opawica to have economic considerations applied to them to enable such resources to be categorized as Reserves. Further drilling is required to upgrade the resources to Measured and Indicated Resources and there can be no certainty that the preliminary or historical assessments, which are prior to NI 43- 101, will be realized. Accordingly, the Company is not presently treating the Inferred Mineral Resource estimates or historical estimates put forth by Falconbridge in 1999 as NI-43-101 Defined Resources.
Opawica’s Qualified Person for the Chance property is Mr. Fred Sharpley, P.Geo., of Kirkland Lake, Ontario and he has reviewed the contents of this release.
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