Thursday, 15 August 2013

Southern Arc: Shareholders give OK to Eagle Hill investment

Southern Arc Minerals Inc. (CVE:SA) announced Thursday it is to go ahead with its planned strategic investment  in Eagle Hill Exploration Corporation (CVE:EAG) announced in July, having gained shareholder approval to acquire a 26.14 per cent interest in the Vancouver-based explorer.
Southern Arc, itself a Vancouver-based explorer primarily engaged in resource properties in Indonesia invested $7.32 million to acquire 97.65 million units of Eagle Hill by way of private placement at a price of $0.075 per unit. Each unit comprises one common share of Eagle Hill and one half share purchase warrant, with each whole warrant entitling the holder to acquire a further common share of Eagle Hill at a price of $0.10 per share for a period of four years. Should Southern Arc choose to exercise all of its warrants, the Company would hold a 30.74 per cent interest in Eagle Hill on a fully diluted basis, and be the company's largest shareholder. 
The move is part of Southern Arc’s diversification strategy as it seeks to gain exposure to advanced-stage gold projects outside Indonesia, the company said at the time of the deal’s initial announcement. Eagle Hill’s focus is closer to home with its principal property including the Windfall Lake gold and copper property comprising 366 contiguous claims covering an area of 12,070 hectares located in the Abitibi mineralized belt of northern Quebec. 
The Windfall Lake gold deposit,190 km northeast of Val d'Or, is accessible by paved highways and all-weather gravel roads, with 641 diamond holes having been drilled at the site to date. Of these holes, 356 were used in the latest resource estimate for the project, completed by SRK Consulting Canada, which identified 1.7 million tonnes of indicated resources averaging 10.05 grams per tonne (g/t) gold and 2.9 million tonnes in the inferred category averaging 8.76 g/t gold, for contained gold of 538,000 ounces indicated and 822,000 ounces inferred. 
Since the resource estimate was announced in July last year, Eagle Hill has reported some high grade drill hole results including 288.5 g/t gold over 12.4 metres, which included a whopping 4,180 g/t gold over 0.8 metres. 
Dundee Corporation (TSE:DC.A), a Toronto-based asset management company also participated in the private placement by investing $4.67 million to acquire an additional 62.34 million units of Eagle Hill, thereby increasing its ownership of in the explorer from 18.8 per cent to 26.14 per cent.
As part of the deal announced in July, Eagle Hill's board will be remade to include two directors appointed by Southern Arc, two by Dundee, and two by Eagle Hill. 
The Eagle Hill Board of Directors will conduct an executive search to permanently fill the positions of CEO, President and CFO, currently being held by interim officers.
"Eagle Hill is now well funded, with the technical and business expertise required to unlock the full potential of the Windfall Lake Gold Project," said Chairman and CEO of Southern Arc, John Proust. "Windfall Lake is exactly the type of property we've been looking for. It's high-grade, has a substantial resource that's open for expansion, and is located in a well-recognized mining-friendly jurisdiction. We look forward to commencing drilling in September and working with Dundee and Eagle Hill to rapidly developing the property."
Shares in Southern Arc Minerals were trading up on the TSX Ventures Exchange the day prior to the announcement, with the miner adding 2 cents at close of market, an increase of 12 per cent overall.
Eagle Hill was trading flat on the TSX Ventures Exchange the day before the announcement, closing at 7 cents per share.
Dundee was trading well down the day of the announcement in Toronto, losing 49 cents to close at $22.08.

No comments:

Post a Comment