Eagle Plains Forms Strategic Alliance With Billiton Plc
Cranbrook, B.C.: Eagle Plains Resources Ltd. (EPL:ASE) announces that it has entered into an agreement with London-based Billiton Plc through its wholly owned subsidiary Billiton Exploration Canada Limited, covering claims in the Findlay Creek area located 45 km north of the Sullivan Mine in southeastern B.C., Canada. This area is considered highly prospective for the discovery of new zinc sedex deposits located within the Proterozoic Aldridge Formation. The Sullivan deposit, owned by Cominco Ltd. contained reserves of 149,000,000 tonnes grading 6.3% lead, 5.9% zinc, and 69 g/T silver and has seen continuous production for over 100 years. The mine is scheduled for shut-down in December, 2001.
Billiton will make an investment in Eagle Plains in exchange for the right to option the North Findlay and Hap properties (owned 100% by Eagle Plains) and the right of first refusal for future financings by the company.
The subscription stage of the agreement involves the purchase by Billiton of 1,125,000 Common Shares at a price of CDN $0.40/share, of which 875,000 will be issued as flow-through shares. Proceeds from the above will be $450,000, and will augment additional private-placement proceeds of $350,000 from the proposed sale by Eagle Plains to arm's length and non-arm's length investors of an additional 875,000 units comprised of one $ 0.40 flow-through common share and one Series A warrant (exercisable for one year at $0.55/share, and for a second year at $0.75/share), for a total financing of CDN $800,000. 1,125,000 Series A warrants will also be made available to Billiton in addition to 1,000,000 Series B warrants exercisable at $0.75 for a period of 36 months, with Series B warrants conditional upon Billiton entering into an option on the above-mentioned properties. Partial funding from the financing will be used by Eagle Plains, as operator, to carry out a $350,000 diamond drilling program on the North Findlay property during 1999.
The second stage will involve the right of Billiton to enter into an option agreement whereby Billiton may earn a 50% interest in the Hap and North Findlay properties by spending $2,000,000 on exploration over four years. Billiton may secure another 20% interest (for an aggregate 70% interest) by providing Eagle Plains with project financing to the start of commercial production from the property.
Commenting on the agreement, David Whitehead, Billiton's Chief Executive, Exploration and Development said, "Following last month's announcement of the restructuring of our Exploration and Development Division, this deal is an important confirmation of our intention to work very much more closely with independent resource companies and is reflective of the new approach that Billiton will take in the exploration business. We welcome the opportunity to work with Eagle Plains who recognised in 1995 the potential of the area to host a significant zinc sedex deposit of the Sullivan type, and we look forward to the commencement of the drilling programme during the summer".
The issuance price for the above financing was determined by current market conditions and through negotiation between Eagle Plains and Billiton. Completion of the proposed private placement is subject to the company receiving all required regulatory approvals. The Alberta Stock Exchange requires that a formal application be filed by the company within 14 days of this news release.
On behalf of the Board of Directors
“Tim J. Termuende”
President and CEO
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