February 12, 2010
Redzone Resources Ltd. Options Lara Copper Deposit In Peru, Announces $4 Million Dollar Financing And Announces Plans To Apply For Graduation To The Toronto Stock Exchange
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Redzone Resources Ltd. ("Redzone" or the "Company") (CNSX:REZ) is pleased to announce that it has acquired the right to earn up to 75% interest in two copper properties (together, the "Project"), one of which hosts the Lara deposit located in the Southern Peruvian Coastal Belt.
Michael Murphy, President & CEO of Redzone said, "The Lara deposit was discovered in the late 1990s when the copper price dipped below US$0.70 per pound and was not adequately delineated. Today with copper prices in the US$3 per pound range, our focus will be to expand the size of the deposit and evaluate its potential for commercial development. Redzone will also continue to evaluate world class mining projects for potential acquisition."
Peruvian Gold Ltd. discovered porphyry style copper and molybdenum mineralization at Lara in the mid-1990s. Two porphyry centers known Lara and Socos have been delineated within a corridor of hydrothermal alteration extending over several kilometers. Preliminary metallurgical test work completed in the late 1990s indicates that the enriched zone of the Lara deposit is amenable to low cost solvent extraction and electro-winning ("SX/EW") processing.
In 2007, two holes were drilled into the core of the Lara deposit and returned 20 metres of 1.2% copper and 13.7 metres of 0.93% copper in the enriched zone, followed by 13.7 metres grading 0.33% copper and 220.4 metres grading 0.25% copper, respectively, in the sulphide zone. Both holes ended in mineralization. The Socos target has never been drill tested.
Redzone believes that excellent potential for discovery of additional copper mineralization exists on the Lara property, particularly in the following areas:
- Supergene/Hypogene porphyry copper enrichment zones beneath the leached cap east, west and south of the known resource at Lara;
- Supergene porphyry copper enrichment zones beneath the gravel cover at Socos;
- Extensions to the known copper sulphide mineralization in the Lara and Socos areas; and
- Oxide copper mineralization within the entire Lara Porphyry System.
In total, 27 drill holes representing 3,290 metres have tested a roughly 500 metre by 500 metre portion of the Lara copper-molybdenum porphyry centre. In 2005, an estimated inferred mineral resource of 18.6 million tonnes grading 0.53% copper using a 0.2% copper cut-off and a simple polygonal resource model for the Lara deposit was documented in the independent National Instrument 43-101 ("NI 43-101") technical report on the property entitled 'Summary of Exploration, Metallurgy and Scoping Studies on the Lara Porphyry Copper Property and Proposed 2005 Exploration Program, Rio Viscus, Palpa, Peru' authored by John Nebocat, P. Eng. dated February 9, 2004 and revised March 31, 2005. Within this inventory are highergrade blocks estimated at 6.5 million tonnes grading 0.91% copper using a 0.5% cut-off and 4.8 million tonnes grading 1.04% copper using a 0.6% copper cut off. The technical report is available for viewing under the corporate profile of Lara Exploration Ltd. on SEDAR at www.sedar.com
An updated NI 43-101 technical report is currently being prepared and Redzone plans to initiate the drill permit process within the next two weeks.
The Tingo Este Property
The second property is the 3,700 hectare Tingo Este property located in Coastal Peru, east of the city of Ica. According to Tinka Resources Ltd., press release dated January 24, 2007, mapping and prospecting has outlined a 1,000 by 800 metre area hosted by granodiorite and quartz monzonite of the Coastal Batholith which intruded Jurassic and Cretaceous sediments and volcanic. The early staged property has never been drill tested and surface values ranged from 0.012% to 0.9% copper. Redzone plans on initiating a site evaluation of the property prior to implementing a detailed exploration program. Potential quantity and grade is conceptual in nature. There has been insufficient exploration to define a mineral resource on the Tingo Este property and it is uncertain if further exploration will result in the target being delineated as a mineral resource.
Terms of the Acquisition
Redzone acquired the right to earn up to a 75% interest in the Project from Lara Exploration Ltd ("Lara") via earning into Minas Dixon BVI ("Minas"), a wholly owned subsidiary of Lara. Under the agreement, Redzone must spend US$2.5 million in exploration on the Project and issue 850,000 common shares of Redzone to Lara over a three year term to earn an initial 55% interest in the Project. Redzone can then elect to earn an additional 20% interest in the Project by completing a bankable feasibility study and making a one time cash payment of US$1.5 million on or before January 28, 2015. Lara retains a 1% net smelter royalty on all production from the Project. Redzone is Project operator. The minimum first year exploration expenditure is US$500,000.
Along with the option agreement, Redzone proposes to complete a combined brokered and non-brokered private placement (the "Offering") pursuant to which it will issue up to 8,888,888 units ("Units") at a price of $0.45 per Unit to raise aggregate gross proceeds of up to approximately $4,000,000. Each Unit will consist of one common share and one-half of one share purchase warrant of Redzone (each whole such share purchase warrant, a "Warrant").
Each Warrant shall entitle the holder thereof to acquire one additional common share of Redzone at an exercise price of $0.65 per share at any time on or before the date which is 24 months after the closing date of the Offering. Jones Gable & Company Limited (the "Agent") is acting as agent for the brokered portion of the Offering. In connection with the Offering, Redzone has agreed to pay a finder's fee to the Agent and certain other qualified registrants assisting in the Offering in the amount equal to 6% of the gross proceeds raised by such registrants, and issue broker warrants to the Agent and such finders entitling the holders to acquire such number of common shares of Redzone as is equal to 6% of the aggregate number of Units sold by the Agent and such finders, respectively, in the Offering, at a price of $0.65 per share, for a period of two years following the closing of the Offering. The Offering remains subject to the receipt of all applicable regulatory approvals.
Upon completion of the Offering, it is the intention of Redzone to apply to graduate the listing of its common shares from the Canadian National Stock Exchange to the Toronto Stock Exchange ("TSX"). Graduation will be subject to Redzone satisfying all applicable listing criteria of the TSX.
The securities described herein have not been registered under the U.S. Securities Act of 1933, as amended (the "Act"), and may not be offered or sold in the United States unless registered under the Act or unless an exemption from registration is available.
Mineral resources that are not reserves do not have demonstrated economic viability. An Inferred Mineral Resource is that part of a mineral resource for which quantity and grade can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity.
Richard Graham P.Geol., a director of Redzone and a Qualified Person as defined by National Instrument 43-101 Standards of Disclosure for Mineral Projects, is responsible for the preparation and verification of the technical information in this release.
ON BEHALF OF THE BOARD OF DIRECTORS OF
REDZONE RESOURCES LTD.
Director, President and CEO
For further information please contact:
Forward Looking Statements -- Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Redzone, including, but not limited to the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, [NTD: remainder of sentence has been cut off] Note this note to draft -- disclosure is missing from the bottom of this section
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