Mr. Simon Tam reports
CHALLENGER DEVELOPMENT CORP. ANNOUNCES OPTION AGREEMENT TO EXPAND TANZANIA GOLD EXPLORATION PROJECT AND PRIVATE PLACEMENTS
Challenger Development Corp. has entered into an option agreement with Eden Gold Ltd., whereby the company will acquire a 80-per-cent legal and beneficial interest in 70 primary mining licences, two prospecting licences and four HQ-P applications for exploration of gold on property located in the Buziba/Geita region of Tanzania. This acquisition further expands Challenger's presence in the Lake Victoria gold mining camp. This new property is composed of approximately 212 square kilometres.
The property is located within the prospective Rwamagaza greenstone belt, part of the Sukuma Land greenstone belt, within the Lake Victoria goldfields. This greenstone belt hosts the Tulawaka gold mine (1.7 million ounces), the Bulyanhulu gold mine (18 million ounces) and the Buzwagi gold mine (4.5 million ounces) which are owned and operated by African Barrick Gold. The property forms part of the Buziba-Busolwa-Buckreef project area that received extensive investigation by East Africa Mines Ltd., Spinifex Gold, Anglo Gold Ashanti, Gallery Gold Ltd. prior to 2006 and IAMGold Tanzania Ltd. between 2006 and 2009.
Gallery Gold and IAMGold Tanzania completed different exploration stages, including regional geochemical and geophysical surveys, as well as reverse circulation, aircore and diamond drilling on the property. Better drilling results from the property are included in the attached table.
DRILLING HIGHLIGHTSHole ID From (m) To (m) Over (m) Grade Intercept descriptionMWBR223 8 9 1 2 1 m of 2.00 g/t 13 15 2 0.59 2 m of 0.59 g/t 22 25 3 18.21 3 m of 18.21 g/t 34 38 4 1.78 4 m of 1.78 g/t 112 117 5 0.78 5 m of 0.78 g/t 33 38 5 0.77 5 m of 0.77 g/tMWBR 120 43 45 2 0.59 2 m of 0.59 g/t 57 59 2 1.25 2 m of 1.25 g/t 90 97 7 11.19 7 m of 11.19 g/tMWBD013 35.1 46 10.9 1.09 10.9 m of 1.09 g/t 61.5 63 1.5 3.2 1.5 m of 3.20 g/t 86 106.5 20.5 1.77 20.5 m of 1.77 g/t 118.5 121.5 3 1.73 3 m of 1.73 g/t 136.5 157 20.5 0.92 20.5 m of 0.92 g/tMWBR157 1 9 8 50.87 8 m of 50.87 g/t 19 38 19 52.15 19 m of 52.15 g/t
Pursuant to the option agreement, the company may exercise the option to earn an 80-per-cent interest in the property by making cash payments in the total of $1.5-million (U.S.) over a three-year period, incurring a total of $3-million (U.S.) in work expenditures on the property over three years and issuing five million common shares to the optionors over a three-year period. The optionors shall be entitled to a 2-per-cent net smelter return royalty on the production from the property. The company may purchase 1 per cent of the net smelter return royalty, thereby reducing it to 1 per cent for the price of $1-million (U.S.). Upon the exercise of the option, the parties will enter into a joint venture for the further exploration and development of the property. The option agreement is subject to the approval of the exchange. By way of amendment agreements, the company has increased its earn-in interests in the Buziba-Busolwa property (TSX Venture Exchange approval on Feb. 22, 2010) and the Rwamagaza property (TSX-V approval on Oct. 8, 2010) from 70 per cent to 80 per cent. All other terms of the agreement remain the same, and no additional consideration is being paid to increase the interest. These amendment agreements may be subject to exchange approval. Mike Magrum, PEng, a qualified person under National Instrument 43-101, has approved the technical content of this news release.
Private placement
The company has entered into a private placement for the sale of six million units at a price of 45 cents per unit for a total of $2.7-million. Each unit will consist of one common share and one share purchase warrant for the purchase of one further common share of the company within two years at the price of 75 cetns per share. These transactions are subject to regulatory approval. The maximum allowable finder's fee shall be paid in shares and cash with regard to the value derived from the agreement and the private placement financing as per the TSX Venture Exchange's policy guidelines.