 |   Fri Apr 30, 2010
HEADS OF AGREEMENTS REACHED TO ACQUIRE INTERESTS IN MASSIVE SULPHIDE AND COBALT-MANGANESE MINERAL DEPOSITS IN SPAIN
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| | Mr. Douglas B. Hyndman, Director, is pleased to report that Sennen Resources Ltd. ("Sennen" or the "Company") has executed Heads of Agreements providing for the acquisition of interests in two mineral projects in Spain.
The Company has executed a Heads of Agreement to acquire an option over an 80% interest in Minera de Rio Guadiato S.L. ("MRG"), the Company that owns the rights to the La Nava-El Paredon massive sulphide mineral deposit located near Cordoba, Spain.
The Company has also executed a Heads of Agreement to acquire an option over a 75% interest in Minerales Nova S.L. ("Minerales"), the Company that owns a 100% interest in the Calatrava cobalt-manganese project located near Ciudad Real, Spain.
La Nava-El Paredon ("El Paredon")
El Paredon is located approximately 45 kilometers northwest of Cordoba in the Andalucia region of Southern Spain. El Paredon comprises one permit covering an area of six square kilometers, as granted by the Director General Ministry of Energy and Mines on March 9th, 2010.
The El Paredon deposit is hosted by the volcano-sedimentary strata of the Erillas Volcanic complex and is situated on the western plank of the La Nava-El Paredon Syncline. El Paredon was first discovered in 1979 from drilling in an area of several old iron ore workings and mineral showings. The drilling campaign consisted of 32 core-holes with 3,954m drilled that outlined a deposit of stratabound, semi-massive and disseminated mineralization that extends for at least 300m along strike and dips at 35°. From this previous work an 'ore estimation' for only a higher grade mineralized zone was conducted and was reported as being 257,736 tonnes grading 2.0% copper, 4.7% lead, 10.9% zinc, 1.8 g/t gold and 183 g/t silver. This historical resource estimate was made in accordance with the standards in effect at the time, but such estimate is not compliant with National Instrument 43-101. It is reported here for reference purposes only, and should not be relied upon. Disseminated mineralization was also reported to occur, with average grades of 0.4% copper, 0.6% lead, 1.4% zinc, 0.5 g/t gold and 24 g/t silver, but no resource estimation was conducted on this zone of lower grade mineralization.
In 1981 a feasibility study was carried out by Estudios Poyectus Mineras S.A. that concluded that the optimum design of the initial open-pit (to a depth of 80m) would have a 'recoverable resource' of 639,155 tonnes with grades of 1.1% copper, 3% lead, 6.5% zinc, 79.8 g/t silver and 0.6 g/t gold, with a waste to ore strip ratio of 4.3 to 1. This historical resource estimate was made in accordance with the standards in effect at the time, but such estimate is not compliant with National Instrument 43-101. It is reported here for reference purposes only, and should not be relied upon. A further drill campaign in 1982 located mineralization in the footwall sequences but no resource estimates were made following this drilling.
The drill spacing between holes at El Paredon varies from 15 to 50m and this is considered too wide for the correlation of mineralization for resource estimate purposes in line with NI 43-101 reporting requirements. Further drilling is therefore required to improve definition of the mineralization and to evaluate the dimensions of higher-grade zones. Also, gold values were often not reported, and both gold and silver grades require investigation. Further drilling and assaying is required to locate possible new ore zones that have higher ratios of precious to base metals. Previous work and technical studies were focused on a small area at El Paredon with very limited exploration and there is potential for the historical resource to be substantially increased within the area covered by the Permit and exploration work is proposed across the area in order to locate other similar sulphide deposits in the vicinity of El Paredon. MRG will remain the operator of the property and will manage and control exploration work in line with that recommended in the NI 43-101 report.
Sennen shall acquire the interest in El Paredon by way of an option to purchase 80% of the issued and outstanding shares of MRG (the "MRG Shares"), the Spanish company that owns the right to El Paredon. Under the terms of the agreement, Sennen shall be entitled to retain the option (the "MRG Option") to purchase the MRG Shares for up to three years (the "MRG Option Period") by paying a total of US$3.0 million and issuing a total of 8 million common shares of the Company with a deemed value of Cdn$0.26 per share (the "MRG Option Payments") over the course of the MRG Option Period. The MRG Option Payments are payable as follows:
(a) US$300,000 on execution of the Heads of Agreement, which payment secures an exclusivity period for Sennen in which to finalize formal agreements and secure regulatory acceptance;
(b) a further US$700,000 to be paid and 4,000,000 common shares of Sennen to be issued upon receipt of regulatory acceptance to the transaction ("MRG Completion");
(c) a further US$1,000,000 to be paid and a further 2,000,000 common shares of Sennen to be issued 12 months after MRG Completion in order to keep the MRG Option open for a second year;
(d) a further US$1,000,000 to be paid and a further 2,000,000 common shares of Sennen to be issued 24 months after MRG Completion in order to keep the MRG Option open for a third year in circumstances where Sennen has yet to exercise same.
In order to exercise the MRG Option, which can be done during the MRG Option Period at any time after 12 months from MRG Completion, Sennen must pay US$4 million and issue ten million common shares of Sennen with a deemed value of Cdn$0.26 per share.
In circumstances where Sennen exercises the MRG Option and acquires the MRG Shares it will have a right of first refusal to acquire the remaining 20% of MRG.
A finder's fee is payable by the Company on this transaction in accordance with TSX Venture Exchange guidelines.
Calatrava cobalt-manganese project ("Calatrava")
Calatrava is located approximately 15 kilometers south of Ciudad Real in south central Spain and is comprised of three permit areas, the Katrina, Camila and the Hortensia (the "Permits").
The Calatrava deposits are hosted within a flat lying volcano-sedimentary sequence with an average thickness of 2.2 meters with an average overburden depth of 6.1 meters. Spain's State Mining Research Company (ADARO) conducted extensive work on the Calatrava and completed over 200 large diameter auger holes, trenching down to depths of 14 meters, as well as detailed metallurgical testing.
The six deposits that comprise Calatrava were previously reported to contain an estimated 4.4 million tonnes grading 4.4% manganese and 0.13% cobalt. This historical resource estimate was made in accordance with the standards in effect at the time, but such estimate is not compliant with National Instrument 43-101. It is reported here for reference purposes only, and should not be relied upon. A NI 43-101 Technical Report is currently being prepared by Mr. Andrew Gourlay, P. Geol, for the Company. Previous engineering studies by ADARO report that using a simple washing and de-sliming procedure the 'resource' can be concentrated by a factor of five, producing concentrate with an average grade of 22% manganese and 0.65% cobalt. ADARO's metallurgical test results reported that the concentrate is amenable to SX-EW technology with estimated recovery rates of 85% cobalt and 94% manganese.
Previous exploration and technical studies were focused on the known deposits at Calatrava with very limited regional exploration and there is the potential for the resource to be substantially increased within the area covered by the Permits. Minerales will remain the operator of the property and will manage and control exploration work in line with that recommended in the NI43-101 report.
Sennen shall be entitled to retain the option (the "Minerales Option") to purchase the Minerales Shares for up to three years (the "Minerales Option Period") by paying a total of US$2.75 million and issuing a total of 6 million common shares with a deemed value of CDN$0.26 per share (the "Minerales Option Payments") over the course of the Minerales Option Period. The Minerales Option Payments are payable as follows:
(a) US$250,000 on execution of the Heads of Agreement, which payment secures an exclusivity period for Sennen in which to finalize formal agreements and secure regulatory acceptance;
(b) a further US$500,000 to be paid and 2,000,000 common shares of Sennen to be issued upon receipt of regulatory acceptance to the transaction ("Minerales Completion");
(c) a further US$1,000,000 to be paid and a further 2,000,000 common shares of Sennen to be issued 12 months after Minerales Completion in order to keep the Minerales Option open for a second year;
(d) a further US$1,000,000 to be paid and a further 2,000,000 common shares of Sennen to be issued 24 months after Minerales Completion in order to keep the Minerales Option open for a third year in circumstances where Sennen has yet to exercise same.
In order to exercise the Minerales Option, which can be done during the Minerales Option Period at any time after 12 months from the Minerales Completion, Sennen must pay US$3.5 million and issue 8 million common shares of Sennen with a deemed value of CDN$0.26 per share.
In circumstances where Sennen exercises the Minerales Option and acquires the Minerales Shares it will have a right of first refusal to acquire the remaining 25% of Minerales.
A finder's fee is payable by the Company on this transaction in accordance with TSX Venture Exchange guidelines.
El Paredon and Calatrava represent excellent opportunities to acquire and develop known resources located in a country offering a combination of political and economic stability together with a positive attitude towards mining. With the acquisition of the El Paredon and Calatrava, Sennen will have two active projects in Spain.
The Agreements remain subject to the acceptance of the TSX Venture Exchange.
Sennen currently has 47,998,665 shares issued and outstanding and over $17.9 million in cash in the treasury. The Company is capable of meeting all its obligations with respect to the acquisition and expenditures on both projects without the need for further financing.
The qualified person having prepared the contents of this news release is Mr. Andrew Gourlay, P.Geol.
For further corporate information contact:
Barbara Dunfield
604-685-6851
info@sennenresources.com
"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." |
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