Appalaches Buys a Gold Producer in Nova Scotia
Ressources Appalaches has just signed an agreement to acquire the gold producer Dufferin Resources, located in Nova Scotia. The Company wish to clarify the disclosure of historical Mineral Resource Estimates released on December 2, 2008.
The cost of the transaction was established at $4,000,000, payable in four instalments spread over three years. Once the final payment has been made, the acquisition will be free of all royalties. In the meantime, Appalaches must pay a royalty of 2% to Dufferin Resources. Any net income from production will be applied to these payments.
The mineralization at the Dufferin Mine consists of gold-bearing quartz veins of stratiform “Saddle Vein” type, folded en echelon and enclosed in sedimentary rocks. Thirteen veins have been identified by earlier drilling over a distance of 900 metres, down to a depth of 400 metres. The historical resources in the first two veins were estimated at 152,100 tonnes at a grade of 12.8 g/t Au (figures not compliant with NI 43-101). The historical resource estimates has been calcultated in 1993 by D.R. Duncan & Ass. Ltd of Nova Scotia. The estimate is based on 40 holes spread over a length of 450 metres and to a depth of 60 meters. According to Alain Hupe, P.Geo, Qualified Person in charge of the project, the estimate are reliable but can’t by classify according with the actual regulation (NI 43-101). It should be noted that a qualified person has not done sufficient work to classify the historical estimate as current mineral resources, the issuer is not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon.
The Company’s exploration target is to define 1,250,000 to 1,750,000 tonne at 7 to 10 g/t Au. This objective is based on an extrapolation of the historical resources in the first two veins to all 13 veins, over the length of 900 metres indicated by the earlier work, which includes about fifty holes. Even if the Company’s objective is based on 58 holes, the potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in discovery of a mineral resource to be mined.