VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 3, 2009) - Lions Gate Metals Inc. (TSX VENTURE:LGM) ("LGM" or the "Company") has reached agreement in principle with AusNiCo Pty. Ltd. ("AusNiCo") to merge the companies under LGM.
AusNiCo is an unlisted Australian company with nickel exploration tenements in South East Queensland, Australia. It is 79% owned by D'Aguilar Gold Ltd. ("D'Aguilar") (ASX:DGR) which is listed on the Australian Securities Exchange. The merger of the two companies will create a listed base metals specialist with nickel, copper and molybdenum assets in British Columbia, Canada, and Queensland, Australia.
From its inception, AusNiCo was designed to secure an extensive tenure position for nickel exploration in Queensland. It currently owns a tenement position of 1,760 km2 in south east Queensland covering a strike extent of over 200 km of prospective intruded and altered ultrabasic rocks.
AusNiCo has recognized extensive ultra mafic belts of rocks with high nickel backgrounds over its 200 km of strike length. Aero magnetic survey data flown by various explorers and government data indicates the locations of these belts which are commonly masked by younger sediment cover and deep weathering profiles. Intense aeromagnetic anomalies within these belts indicate the location of hot granitic and other intrusions which have altered the rocks to assemblages rich in magnetite (which gives a magnetic response). These intrusions have commonly introduced varying degrees of sulphur into the surrounding nickeliferous ultramafic host and nickel sulphides then precipitate within 2 km of the contact.
AusNiCo's main project areas are located on the Black Snake Plateau 200 km north west of Brisbane. Nickel sulphides have so far been outlined at five specific locations in the belt, most importantly at Pembroke where nickel sulphides have been intersected in drilling.
The largest nickel target has been defined at Mt Cobalt where surface rock chip and spoil sampling has recorded an anomaly over 400 metres long and averaging 200 metres wide. The presence of a strong magnetic signature modeled at a depth of 350 metres under and to the north of Mt Cobalt suggests the presence of a porphyry copper system which AusNiCo believes has also generated the nickel mineralization above it.
AusNiCo is targeting a project with in excess of 20 mt in the oxide zone and a similar target in the sulphide zone at Mt Cobalt and at a number of other prospective localities nearby including Ridleys and Pembroke, 4 and 1.5 kms south respectively, McCarthys to the south east, Kandanga 30 km south east and Neurum, 20 kms north.
Leach recoveries of 75% nickel from oxide material in previous testing and the recent relatively low cost of acid, potential for local acid supplies, excellent logistic and local infrastructure features, and the potential open cut style of mineralization all auger well for the ultimate demonstration of competitively low mining and treatment options for the project.
A detailed presentation about AusNiCo, including maps and photographs and its major projects may be viewed on the website of D'Aguilar Gold Limited www.daguilar.com.au. The due diligence to be undertaken by LGM will include the preparation and filing of a report that complies with NP43-101.
Experience gained by Nick Mather and Brian Moller in the foundation and rapid growth of Waratah Coal Inc., is expected to contribute strongly to the growth of Lions Gate. Waratah Coal Inc. was the TSX-V listed proprietor of one of the western world's largest undeveloped coal resources before its CDN$130m takeover in December 2008. Each new member of the board of directors of LGM will bring unique experience and skill sets.
"LGM's goal is to execute on its global acquisition strategy targeting large base metals resources. The acquisition of AusNiCo and its exciting nickel projects will compliment Lions Gate Metals' already impressive copper and molybdenum assets," commented LGM Director, Arni Johannson.
The material terms of the merger are as follows:
- LGM will acquire all of the issued securities of AusNiCo in exchange for the issue of 10 million common shares and three million five year warrants exercisable at CDN$1.10 per share.
- Each company will appoint three directors to a new LGM Board of six directors. LGM directors Damien Reynolds, Arni Johannson and Mark Hewett will continue as directors and AusNiCo will propose as directors Ian Levy, Brian Moller and D'Aguilar CEO Nick Mather.
- The acquisition is subject to completion of satisfactory reciprocal due diligence and any required shareholder and regulatory approvals in Canada and Australia.
- LGM must complete a concurrent private placement of not less than CDN$3 million with a unit price of not less than $1.10 per common share and a half warrant with an exercise price of $1.50 for a two-year period. A 7% cash commission and warrants representing 7% of the units sold will be offered for the private placement.
- LGM will pay a finder's fee of 3.5% of the value of the transaction.
About Lions Gate Metals
Lions Gate Metals Inc. is a Canadian based, junior resource company focused on the exploration, development, and acquisition of both advanced and early stage mineral projects. LGM owns 100% of three substantial copper and molybdenum projects located in British Columbia. LGM's flagship project is the Poplar porphyry copper - molybdenum deposit near Houston, BC. The Huckleberry Mine, located approximately 35 kilometres southwest of the Poplar Deposit, produces copper and molybdenum from a deposit of similar age and setting.