Eagle Plains Forms Subsidiary To Focus on Gold-Copper Assets
Cranbrook B.C., 26 September, 2005: The Board of Directors of Eagle Plains Resources Ltd. (TSX-V:EPL) (the "Company" or "Eagle Plains") is pleased to announce a proposed arrangement to reorganize the Company's mineral property assets in an effort to maximize shareholder value. Certain mineral properties as described below will be transferred into a new company, incorporated under the name Copper Canyon Resources Ltd. ("Copper Canyon").
Under the terms of the arrangement, Eagle Plains shareholders of record on closing of the arrangement will receive one share of Copper Canyon for every one Eagle Plains share held. Concurrently, Eagle Plains will transfer $400,000 cash to Copper Canyon to provide working capital and exploration funding. Copper Canyon will apply to have its shares listed on the TSX Venture Exchange.
The reorganization is designed to improve the identification and valuation of specific Eagle Plains properties, to enhance Eagle Plains's ability to divest specific properties through simpler corporate ownership, and to enable Eagle Plains to separately finance and develop its various assets, selectively reducing stock dilution.
The rationale for the formation of Copper Canyon is to firstly, oversee through indirect participation the development of the Copper Canyon project and the advanced Abo project, and secondly, to direct and complete the 2006 exploration program on the Severance project. The formation of Copper Canyon will allow Eagle Plains to continue to focus on its core business model of acquiring and advancing grass roots base and precious metal exploration properties.
The proposed reorganization is subject to shareholder approval by resolution approved by not less than 66 2/3 % of votes cast. The Company expects to present the matter to shareholders at a special meeting targeted for the fall of 2005. The Company anticipates that the reorganization and listing of Copper Canyon will be completed shortly thereafter. The reorganization is also subject to approval of the Court of Queen's Bench of Alberta and to acceptance by the TSX Venture Exchange. Further particulars will be announced in due course.
Copper Canyon Project
The Copper Canyon project, located in northwestern British Columbia, is controlled 100% by Eagle Plains and is under option to NovaGold Resources Inc. (AMEX, TSX: NG), which may earn a 60% interest in the project by completing C$3,000,000 in exploration expenditures, issue a total of 296,000 shares of NovaGold and make property payments totaling C$250,000. NovaGold may earn an additional 20% interest in the project for a total of 80% by paying Eagle Plains C$1 million and completing a feasibility study by October 1st, 2011.
An Inferred Category resource estimate completed by independent engineering firm Hatch Ltd. of Vancouver, B.C., Canada, shows that the Copper Canyon target at the Galore Creek project in northwestern British Columbia contains 164.8 MT grading 0.35% copper, 0.54 g/t Au and 7.15 g/t silver (0.74% copper equivalent), representing 1.16 billion pounds of copper, 37.9 million ounces of silver and 2.86 million ounces of gold using a 0.35% copper equivalent(1) cut-off grade (EPL/NG news release January 10th, 2005, filed on SEDAR).
Exploration at Copper Canyon is being conducted concurrently with work on the contiguous Galore Creek project, controlled 100% by NovaGold. Collectively, the Copper Canyon/Galore Creek targets contain a resource totaling 13.7 million ounces gold and 12.0 billion pounds copper. For the combined projects, NovaGold has reported Measured and Indicated category resources of 516.7 million tonnes containing 5.9 million ounces of gold, 75 million ounces of silver and 6.8 billion pounds of copper and Inferred category resources of 578.3 million tonnes containing 7.8 million ounces of gold, 81 million ounces of silver and 5.2 billion pounds of copper (NG news release April 19, 2005, filed on SEDAR).
The results from 2004 drilling at Copper Canyon combined with the earlier results, have defined a broad area of precious metal rich mineralization at least 700 meters by 400 meters which is open to expansion in all directions and at depth. The mineralization begins at surface continuing to as much as 300 meters depth and occurs as a roughly 100+ meter thick zone of disseminated chalcopyrite and pyrite hosted within an intrusive porphyry complex.
Abo (Harrison Gold) Project
The Abo (Harrison Gold) project consists of 76 units (1900 ha) owned 100% by EPL, and subject to an option agreement whereby Northern Continental Resources (TSX-V:NCR) may earn a 60% interest in the property by completing $3,000,000 in exploration expenditures and issuing 1,200,000 shares over 5 years. Hydroelectric power, natural gas and rail service are located within 3km of property boundaries.
The property area has been held or optioned by various operators since the early 1970’s. Exploration work includes mapping, soil sampling, ground-based geophysics, 444m of underground development work and a total of 13,856m (45,448’) of diamond drilling. Barry Price, P.Geo. in 2002 prepared a National Instrument 43-101 compliant resource estimate that outlines an Indicated Resource on the property of 1.845 million tonnes grading 2.79 g/t Au containing 165,000 ounces of gold and an Inferred Resource of 0.6 million tonnes grading 2.8 g/t Au containing 55,000 ounces of gold in the Jenner and Portal zones, which are open to depth.
The Severance property is located 125km west of Carmacks, in central Yukon. The property is owned 100% by Eagle Plains, and was purchased from 4763 NWT Ltd. In the summer of 2002, Eagle Plains conducted an exploration program consisting of geological mapping, prospecting and soil sampling. The soil program returned many significantly anomalous values with 31 of 344 samples returning greater than 100 parts per billion (ppb) gold. Coincident with the gold is copper, molybdenum and arsenic-all considered key pathfinder elements associated with intrusion-related copper-gold systems (IRCGs). Scott Casselman, P. Geo and Dr. David H.D. Hildes, Geophysicist, qualified persons under National Instrument 43-101, have completed an updated 43-101 compliant technical report on the property, recommending a two-phase drill program totaling $662,500.
Note: (1) Copper equivalent calculations use metal prices of US$375/oz for gold, US$5.50/oz for silver and US$0.90/lb for copper. Copper equivalent calculations (CuEq%) reflect gross metal content that have been adjusted for metallurgical recoveries based on the following criteria: Copper Recovery = (%Cu-0.06)/%Cu with a minimum of 50% and Maximum of 95%; Gold Recovery = (Au g/t – 0.14)/Au g/t with a minimum of 30% and Maximum of 80%; and Silver Recovery = 80%.
NovaGold may acquire up to an 80% interest in the Copper Canyon property under an option from Eagle Plains Resources (TSX-V: EPL). The property directly adjoins the main Galore Creek property and NovaGold is exploring Copper Canyon as part of its overall Galore Creek project.
The results from the 2004 drilling at Copper Canyon, combined with the earlier results, have defined a broad area of precious metal rich mineralization at least 700 meters by 400 meters which is open to expansion in all directions and at depth. The mineralization begins at surface continuing to as much as 300 meters depth and occurs as a roughly 100+ meter thick zone of disseminated chalcopyrite and pyrite hosted within an intrusive porphyry complex.
The new resource estimate was based on a three-dimensional geologic and mineralization model that integrates 6,850 meters (22,500 feet) of drilling in 21 core holes with a total of 4,749 assays. Grades for the block model were estimated using ordinary kriging procedures. Mineralization was composited on 6 meter intervals with high-grade samples capped based on lognormal probability plots. Due to the relatively widespread spacing of the drilling at Copper Canyon all resources in this estimate were classified as Inferred.
The drill program and sampling protocol were completed with oversight by qualified person Scott Petsel, Senior Project Geologist for NovaGold. A rigorous quality control and quality assurance protocol was utilized on the project including blank and reference samples with each batch of assays. All NovaGold drill samples were analyzed by fire assay at ALS Chemex Labs in Vancouver, B.C., Canada.Database quality control and quality assurance standards were overseen by Hatch Ltd. The independent resource estimation by Hatch Ltd. was under the direction and oversight of qualified persons Gary Giroux and Robert Morris, Hatch Ltd., Vancouver, B.C., Canada. A detailed 43-101 compliant technical report will be completed on the resource estimate within 30 days.
New Target Resources Support Expansion of Galore Creek Preliminary Economic Assessment Base Case
The new inferred resource estimate for the Copper Canyon deposit is the first of three new target area resources underway for the Galore Creek project and demonstrates the continued potential to expand the known resources at Galore Creek. The Preliminary Economic Assessment completed in August, 2004 by independent engineering firm Hatch Ltd., did not include any mineralization from Copper Canyon, West Fork, or Junction target areas, all of which are anticipated to contain significant additional resources based on 2004 drill results. In addition to this new resource at the Copper Canyon target new resource estimates from the Junction, West Fork and main Central/Southwest deposits are anticipated to be completed during the remainder of the first quarter.
The definition of these new resources at Galore Creek are significant in that they support the expansion of the project parameters beyond the base case presented in the August 2004 Preliminary Economic Assessment study. The base case in that study showed that at a production level of 30,000 tonnes per day or 11 million tonnes per year, the Galore Creek project has the potential in the first 5 years of production to average 270,000 ounces gold, 1.8 million ounces silver and 200 million lbs copper annually at an average total co-product cash cost of $125/oz for gold and $0.49/lb copper which is in the lower quartile of producer costs. Based on the criteria presented in the study, each additional year of higher-grade throughput averaging 1 g/t gold and 1% copper adds US$175 million in annual operating cash flow using long term metal prices of $375/oz gold, $5.50/oz Silver and $0.90/lb copper increasing to over US$250 million in annual cash flow at recent prices of $425/oz gold, $6.50/oz silver and $1.35/lb copper. The company is very encouraged with results to date from Galore Creek and believe that continued work in 2005 will positively impact the rate of return for the project.
2005 Galore Creek Exploration and Development Program
Planning is currently underway for an expanded exploration and development program at Galore Creek in 2005. The exploration program is targeted to begin late-May continuing through fall with an increase to 8 core drills on site and a minimum of 50,000 meters (165,000 feet) of drilling in preparation for a Feasibility Study in 2006.
As part of the current work on the project, Hatch Ltd. has been retained to complete a Pre-Feasibility level study on Galore Creek that integrates the new resources from West Fork, Junction, Copper Canyon along with an updated main Central/Southwest deposit resource. The study will look at increased yearly production levels for the project and will refine estimates for capital and operating costs, as well as look in more detail at site layout, metallurgy, resource optimization scheduling, and development timelines. The results of this work will be available in the second half of 2005 and will guide the Feasibility level engineering programs for the project.
Work will concurrently proceed with further environmental studies for the Galore Creek Environmental Assessment Report which is being completed by RTEC the joint company comprised of Rescan Environmental Services and the Tahltan Nation Development Corporation.
Eagle Plains Resources continues to conduct research, acquisition and exploration projects in western Canada. The Company controls over 30 gold and base-metal projects, many with third parties including NovaGold Inc. (NG:AMEX,TSX), Amarc Resources Ltd. - a Hunter Dickinson Group Company (AHR:TSX-V), Northern Continental Resources Inc. (NCR:TSX-V), and Golden Cariboo Resources Inc. (GCC:TSX-V). These agreements expose Eagle Plains to over $16.5 million in exploration expenditures over the next five years. In recent years, Eagle Plains has completed option agreements with Billiton Metals, Rio Algom Exploration, Kennecott Exploration, Viceroy Resource Corp. and numerous other junior exploration companies, resulting in over 27,000m (90,000 ft) of drilling and over $8,000,000 in exploration spending on its projects since 1998.
This news release has been reviewed and approved by Tim J. Termuende, P.Geo., hereby designated as a “Qualified Person” under National Instrument 43-101.
Note: (1) Copper equivalent calculations use metal prices of US$375/oz for gold, US$5.50/oz for silver and US$0.90/lb for copper. Copper equivalent calculations (CuEq%) reflect gross metal content that have been adjusted for metallurgical recoveries based on the following criteria: Copper Recovery = (%Cu-0.06)/%Cu with a minimum of 50% and Maximum of 95%; Gold Recovery = (Au g/t – 0.14)/Au g/t with a minimum of 30% and Maximum of 80%; and Silver Recovery = 80%. Copper Equivalent grades are based both on long-term average metal prices and estimated recoveries based on extensive metallurgical data from the adjacent Galore Creek Central/SW deposit. The grade interpolation used ordinary kriging procedures from a geologic model developed from the previously announced drilling at Copper Canyon during 2004 by NovaGold and historic results which had encountered significant widths of gold, silver and copper mineralization.
On behalf of the Board of Directors
“Tim J. Termuende”
President and CEO
Cautionary Note Regarding Forward-Looking Statements
Neither the 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. This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.