Mongolian Aquisition by CSPMs. Lynda Bloom reports
Canadian Shield Resources (CSP-TSX) has entered into an agreement to acquire from Tavis Communications a 100-per-cent interest in a mineral exploration licence consisting of 61,292 hectares located in Mongolia's South Gobi desert for the sum of $60,000 (U.S.) and 500,000 common shares in the capital stock of the company (subject to a 2-per-cent net smelter return royalty), in instalments as follows:
1. The cash portion of the purchase price is due and payable as follows:
a) $10,000 (U.S.) on execution of the purchase agreement (the first payment);
b) $15,000 (U.S.) upon execution of a formal agreement and documentation (the second payment) by no later than Aug. 1, 2002; and
c) the balance of the purchase price, subject to adjustment for the actual number of hectares to a maximum of $60,000 (U.S.), calculated on the basis of $1 (U.S.) per hectare (the final payment) on closing.
2. The share portion of the purchase price, 500,000 common shares in the capital stock of the company, is due and payable on the earlier of the date that all conditions precedent are either satisfied or waived or Sept. 30, 2002 (the closing).
The company will have the right, at its option, to purchase one-half of the 2-per-cent net smelter return royalty by payment of $2-million (U.S.) to Tavis, a company wholly owned by Paul MacKenzie.
The closing of the purchase agreement and the transactions contemplated therein are subject to the following conditions precedent for the benefit of the company:
a) the execution and delivery of a definitive agreement respecting the transactions contemplated by the purchase agreement;
b) satisfactory due diligence of Tavis's legal interest in the mineral exploration licence; and
c) acceptance of the purchase agreement and the transactions contemplated therein by TSX Venture Exchange and approval by all other regulatory authorities having jurisdiction in the transaction.
The land encompassed by the exploration licence is approximately 175 kilometres due west of Ivanhoe Mines Ltd.'s Turquoise Hill (Oyu Tolgoi) gold and copper discovery, in the South Gobi desert, in the subprovince of Bayanovoo. Both the land encompassed by the exploration licence and Oyo Tolgoi lie within the Barga Terrane tectonic unit. This consists of
Paleozoic volcanic, sedimentary and intrusive rocks, and Mesozoic sedimentary cover rocks. These units are intruded by a complex variety of feldspar porphyry, feldspar-hornblende porphyry, and quartz-feldspar porphyry stocks and dikes. The Barga Terrane is interpreted as having formed in ocean-margin environment with active island-and-Andean-type magnetic arcs, rifted basis, accretionary wedges, and continental margins.
This geological setting is viewed favourably for a wide range of metal deposits. In 1997, Mongolia changed its mining laws which gave rise to a significant exploration activity led by international mining companies including WMC, MK Gold Company, Uranerz Ltd., BHP, Rio Tinto, Phelps Dodge and Newmont Mining. Ivanhoe's success at Turquoise Hill has launched a staking rush in southern Mongolia. News released by Ivanhoe and reported in
Stockwatch May 29, 2002, indicate the estimated inferred resource at Turquoise Hill at 821 million tonnes grading 0.52 of a gram per tonne of gold and 0.38 per cent copper, based on a cutoff grade of 0.3 per cent copper equivalent.