Birchpoint Announces The Results of The Technical Report on The Lost Pond Uranium Exploration Property and Provides an Update on Its Prospective Qualifying Transaction With Hot Rock Uranium Corp.
Birchpoint Capital Inc. (“Birchpoint” or the “Company”), a capital pool company, is pleased to announce the completion and filing on SEDAR of an independent geological report prepared in accordance with National Instrument 43-101- Standards of Disclosure for Mineral Projects pertaining to the Lost Pond Uranium Property in Newfoundland (the “Geological Report”). The Geological Report dated effective July 15, 2006, was authored by Mr. Michael P. Cullen, P. Geo., of Mercator Geological Services Limited.
The Lost Pond Property is located about 20 kilometres east of the town of Stephenville, Newfoundland, and consists of 16 exploration licences totalling 1,358 contiguous mineral exploration claims. Twenty samples taken by Hot Rock of bedrock and boulders on the Lost Pond property ranged between 198.5 parts per million (“ppm”) and 9700 ppm (1.14% U3O8). The 20 grab samples taken in this initial program averaged 0.39% U3O8. Three samples taken subsequently in the same area yielded values of 1.68%, 1.37% and 0.34% U308. Hot Rock’s 100% interest in the Lost Pond Property and any further claims contiguous to it is subject to an aggregate 2% NSR, 50% of which may be purchased by Hot Rock for $1,000,000.
Birchpoint, through the previously announced (see press release dated May 23, 2006) planned acquisition of Hot Rock Uranium Corp. (“Hot Rock”), will also acquire a uranium exploration property package totalling 3,838 claims covering approximately 960 square kilometres in Newfoundland and five claims in Nunavut, all more fully described below.
Geological Report Summary
The main showing on the Lost Pond Property occurs approximately 28 kilometres from Stephenville and two kilometres from the TransCanada Highway and existing power lines. As of June 30, 2006, exploration expenditures on the property were reported by Hot Rock as totalling $345,400, inclusive of a $55,000 option payment related to the acquisition of the property. As described in the Geological Report, an area of radioactive bedrock and boulder occurrences at Lost Pond was discovered in 1981 by Shell Canada Resources Ltd. (“Shell”). Prospecting by Shell defined two areas of radioactive bedrock and boulders within the basement sequence near Lost Pond and Shell subsequently completed one short surface trench in each area. The two areas trenched by Shell were the focus of the claims acquired by Hot Rock and a limited amount of prospecting on behalf of Hot Rock was completed in that vicinity during May and June of 2006.
According to the Geological Report, Hot Rock’s sampling of radioactive bedrock and boulders returned laboratory results that show corresponding anomalous levels of uranium and thorium in addition to anomalous levels of several other elements. Uranium values for initial rock samples analyzed by Hot Rock ranged between 198.5 parts per million (“ppm”) and 9700 ppm (1.14% U3O8), with corresponding thorium levels between 159 ppm and 5260 ppm. Anomalous Rare Earth Element and other metal values further characterize these samples. A total of 20 grab samples taken in this initial program averaged 0.39% U3O8. These samples were analyzed for Uranium at Accurassay Laboratories located in Thunder Bay, Ontario. Accurassay is an accredited lab (ISO/IEC 17025). Assays for Rare Earth Elements and other metal values and confirmation assays for Uranium were performed by ALS Chemex in Vancouver, British Columbia. ALS Chemex is also an accredited lab under ISO/IEC 17025.
Hot Rock contracted Aeroquest Limited of Milton, Ontario, to complete a combined radiometric, magnetic and electromagnetic airborne survey over approximately 100 square kilometres of the property area. As shown in the Geological Report, survey results provided geophysical characterization of the known mineralized zone and preliminary independent interpretation identified several areas with similar anomalous geophysical signatures that require ground follow-up. Three of these were highlighted in the results as being highest in relative priority.
A two phase exploration program has been recommended by Mercator Geological Services Limited for the Lost Pond Property. The first phase comprises completion of detailed trenching and sampling programs in the known areas of uranium mineralization and ground follow-up of the airborne survey anomalies as part of property-wide mapping and prospecting programs. An allowance for limited diamond drilling is also included within the recommended $225,000 Phase 1 exploration budget. Contingent upon substantial success of Phase 1 programs, a $750,000 budget has been recommended for Phase 2, which would largely consist of expanded airborne survey coverage, continued ground follow-up of resulting anomalies and initiation of more detailed drilling and grid geophysical/geochemical investigations.
Birchpoint expects to have the funds to complete the entire proposed exploration program upon completing the Qualifying Transaction assuming the successful completion of the Private Placement as described below. Birchpoint expects to complete Phase 1 by November 30, 2006. As noted above, Phase 2 is contingent on substantial success in Phase 1.
Subsequent to receiving the above results, a property visit was organized with Birchpoint to review the area and an additional six grab samples were collected by Hot Rock personnel. These samples were analyzed at Accurassay Laboratories for Uranium only. Accurassay Laboratories is an accredited lab (ISO/IEC 17025), located in Thunder Bay, Ontario. Three of these samples were collected in areas of previous sampling and had values of 1.68%, 1.37% and 0.34% U3O8. Three other samples were taken from an area of clay alteration and boulders and returned values of 10 ppm, 69 ppm and 123 ppm Uranium. There has been insufficient exploration to define a mineral resource, and it is 2005969_15 uncertain if future exploration will result in the target being delineated as a mineral resource.
Qualifying Transaction Update
As announced by Birchpoint on May 23, 2006, Birchpoint plans to acquire all of the issued and outstanding securities of Hot Rock in consideration for the issuance of 6,400,000 common shares of Birchpoint at a deemed price of $0.27 per common share and the issuance by Birchpoint of 550,000 common share purchase warrants exercisable at $0.30 per common share until May 15, 2007. The acquisition, once completed, is intended to constitute Birchpoint’s qualifying transaction pursuant to Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange (the “Qualifying Transaction”). The Qualifying Transaction is an arm’s length transaction.
Upon Hot Rock completing its capitalization and acquisition of certain properties in Newfoundland and Nunavut, a definitive share exchange agreement for the Qualifying Transaction was entered into between Birchpoint, Hot Rock and all of the securityholders of Hot Rock dated as of June 23, 2006 (the “Share Exchange Agreement”).
Completion of the Qualifying Transaction would result in the Company through its acquisition of Hot Rock acquiring uranium exploration properties in Newfoundland and Nunavut.
Closing the Qualifying Transaction is subject to the satisfaction of or compliance with the terms and conditions as set forth in the Share Exchange Agreement, including:
(a) Birchpoint must be satisfied in its sole discretion with its due diligence review of Hot Rock;
(b) All of the common shares and warrants of Hot Rock must be transferred from the beneficial owners thereof to Birchpoint free and clear of any encumbrances, adverse claims, rights or interests; and
(c) The acquisition must receive approvals by all regulatory bodies having jurisdiction in connection therewith including, the TSX Venture Exchange.
Additional Property Acquisitions
In addition to the Lost Pond Property, Hot Rock has subsequent to the preparation of the Geological Report added a number of claims to this block and has acquired a number of other Uranium properties in Newfoundland to add to its portfolio. A block of 173 claim units were recently added to the east of Lost Pond to cover an area of uranium anomalous Hare Hill Granite and a block of 92 claim units was staked to the west to cover an airborne radiometric anomaly near Harry’s River. The Lost Pond property now totals 1623 claims.
Hot Rock has also acquired by staking and option agreement, ten other claim groups in Newfoundland. Three of the ten claim groups are located on the west coast in similar geology to the Lost Pond showings. A 350 claim group was acquired by staking north of Stephenville Crossing (Black Duck) and a 188 claim group was staked southeast of Flat Bay near Mt. Howley. The third property consisting of 236 claim units, is located in the Portland Creek area on the Northern Peninsula. Fifty of these claims were optioned from a third party on terms which require cash payments totalling $75,000 and share issuances totalling 100,000 shares over four years. The Portland Creek Property is subject to a 2% NSR, 50% of which may be purchased by Hot Rock for $1,000,000. The other 186 claims were staked by Hot Rock. Four of the ten properties are located on the south coast along the Hermitage geologic belt and include the Hare Bay property (168 staked claims), the Peter’s Snout property (396 staked claims), the Lapoile Bay property (534 staked claims) and the Deep Brook property (53 staked claims). Three of the ten properties have been staked within or proximal to the Deer Lake basin totalling 290 units. Hot Rock reports that no field work or expenditures have been carried out on any of these properties since acquisition.
In total, Hot Rock now has a 100% interest in 3,838 claims in Newfoundland covering an area of approximately 960 square kilometres.
Exploration licenses are issued in Newfoundland for a period of five years and can be renewed through application, payment of prescribed renewal fees and demonstration that required yearly assessment work has been performed.
Hot Rock has also staked a property located in the Sandybeach Lake area in Nunavut, 350 kilometres northwest of Churchill, Manitoba. The property consists of five claims and to Hot Rock’s knowledge, there has been no previous drilling in the area.
Birchpoint intends to complete a non-brokered Private Placement immediately prior to the closing of the Qualifying Transaction, which is subject to the approval of the TSX Venture Exchange. The financing is expected to consist of 3,320,000 common shares priced at $0.27 per common share for gross proceeds of $896,400, which has been increased since the financing was initially announced. Birchpoint intends to use the proceeds to execute the foregoing exploration program. The current officers and directors of Birchpoint may subscribe under the private placement.
There are currently 6,250,000 common shares of Birchpoint issued and outstanding. After the completion of the Private Placement and the Qualifying Transaction, there are expected to be 15,970,000 common shares of Birchpoint issued and outstanding (excluding the exercise of any options and warrants of Birchpoint).
Birchpoint intends to grant upon completing the Qualifying Transaction 440,000 options under its stock option plan at an exercise price of $0.27 per common share. The options will be issued to officers, directors, employees and consultants of the Company who are 2005969_15 in a position to contribute materially to the successful operation of the business of the Company and will expire five years from the date of the grant.
The Company has advanced to Hot Rock a $25,000 non-refundable deposit to preserve assets pursuant to the TSX Venture Exchange Policy 2.4. The Company has also received approval from the TSX Venture Exchange to advance to Hot Rock as a secured loan up to an additional $100,000, which Hot Rock has used to stake claims. The loan will be secured against the newly staked claims. As at the date hereof, the Company has loaned Hot Rock $95,000 in addition to the $25,000 deposit referred to above.
The Company has obtained from the TSX Venture Exchange a waiver of the sponsorship requirement for the Qualifying Transaction. The Company expects trading of Birchpoint’s common shares on the TSX Venture Exchange to resume in the near future.
The Company’s Qualified Person (“QP”) for the Lost Pond project is Wayne Reid, P.Geo. As the QP, he has prepared or reviewed the technical information for the property. Wayne Reid is the President, Chief Executive Officer and a director of Hot Rock and the proposed Vice President of Exploration of the resulting issuer to the Qualifying Transaction.
For further information, please contact Mr. Daniel Whittaker, President, Chief Executive Officer and Chief Financial Officer of Birchpoint at:
Telephone: (902) 482-5214
Fax: (902) 492-0197
This press release includes certain statements that may be deemed “forward-looking statements”. All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration activities and events or developments that the Corporation expects, are forward looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include exploitation and exploration successes, continued availability of financing, and general economic, market or business conditions.
The Qualifying Transaction will not be submitted to the shareholders of Birchpoint for approval.
Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, further due diligence, and Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Birchpoint should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this press release.
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