Partners with High River Gold MinesHigh River Gold Mines Ltd. has entered into a partnership agreement with Goldrush Resources Ltd. whereby Goldrush will obtain 21 early stage exploration permits from High River totalling approximately 4,690 square kilometres in Burkina Faso, West Africa, in exchange for an equity interest in Goldrush and backin rights, including operatorship rights, on mineral deposit discoveries.
The partnership with Goldrush provides High River with:
1. financing to meet the required exploration expenditures to maintain and advance these prospective early stage exploration permits;
2. the ability to benefit from all Goldrush discoveries in Burkina Faso;
3. the opportunity to focus its energies and finances on its significant Bissa gold discovery and the construction of the Taparko-Bouroum gold mine and processing plant; and
4. ownership, direct and indirect, of one of the largest land positions in Burkina Faso, exceeding 8,000 square kilometres.
High River is concentrating its exploration work on the promising Bissa project in Burkina Faso, where the results of the current drilling campaign are expected to define an initial gold resource of one million ounces. With five other priority targets identified within 10 to 15 kilometres of the Bissa project, High River's objective is to build a large resource base on this 1,000-square-kilometre contiguous land package.
The 21 exploration permits to be transferred to Goldrush are divided into three groups and exclude High River's main areas of focus: the Taparko-Bouroum exploitation licence, together with the Bissa and Labola exploration projects. The first group, referred to as the Taparko area permits, consists of nine permits totalling 2,186 square kilometres with four of the permits adjacent to the north, west and south boundaries of High River's Taparko exploitation permit. The second group, referred to as the Hounde group, is located approximately 280 kilometres southwest of Ouagadougou and consists of seven exploration permits covering an area of approximately 1,400 square kilometres. The third group, known as the Kindo/Kaya group permits, is located approximately 40 kilometres north of Ouagadougou and consists of five exploration permits covering an area of approximately 1,105 square kilometres. Two of the Kindo/Kaya permits lie approximately six kilometres to the northwest of High River's Bissa project with the other three permits situated approximately 30 to 40 kilometres southeast of the Bissa project.
In exchange for receiving a 90-per-cent interest in the 21 exploration permits (with the remaining 10-per-cent interest being retained by the government of Burkina Faso), Goldrush will issue to High River:
1. A total of 4.8 million common shares at a deemed value of 20 cents per share (for a value of $960,000), which will represent an equity interest of approximately 19.9 per cent in Goldrush; and
2. a non-interest-bearing convertible debenture with a term of five years in the amount of $2,342,277. Goldrush will have the right to redeem the debenture for cash or by the issuance of common shares at a deemed value of $1 per common share any time during the term of the debenture.
The agreement is conditional upon regulatory approval and board approval of both companies.
High River will contract part of its exploration team to Goldrush at cost to operate the exploration programs on the permits, subject to Goldrush's approval of the exploration programs. The agreement provides Goldrush with access to the future processing plant at Taparko-Bouroum for up to 500,000 tonnes per year once the planned mill has been expanded beyond its current one-million-tonne-per-year design capacity. High River will have a right, in the event a deposit is discovered on the properties transferred to Goldrush, to purchase a 50-per-cent interest in each property at a cost of 1.5 times Goldrush's actual out-of-pocket costs on that property. If High River exercises its right, a joint venture will be formed and High River will be the operator during the mine development and production stage.
The agreement also provides for High River to be given the right to purchase a 50-per-cent interest with operatorship rights in any new property acquired by Goldrush in Burkina Faso at a cost of two times Goldrush's actual out-of-pocket costs on that property.
High River will have 60 days from the date of a positive feasibility study on each property to exercise its backin right, after which time the right shall expire.
Exploration programs for the 21 permits are currently being planned with a proposed 2006 exploration budget of approximately $2.2-million (U.S.) scheduled to commence in early 2006. High River may subscribe for a minimum of 10 per cent and a maximum of 19.9 per cent of any future financings of Goldrush.