Orex Minerals Inc. (TSX VENTURE:REX) has announced that it has signed an agreement with Northland Resources S.A. (TSX:NAU)(OSE:NAUR) to buy Northland's Barsele Gold project in Sweden.
The total consideration is valued at a minimum of USD 15.5 million, and includes cash and shares on signing, as well as deferred cash and share payments, investments in the project and a 2% Net Smelter Royalty (NSR).
The Barsele Project is located some 40 kilometres southeast of the town of Storuman in Västerbottens Län, a regional district of northern Sweden approximately 600 km due north of Stockholm. The geographic coordinates for the Project are approximately 65°05' north latitude and 17°30' east longitude.
Exploration in the project area has been ongoing for more than 25 years. Since 1985, approximately 360 diamond drill holes (~37,000m) have been drilled on the Barsele Project. In 2006 Northland completed a NI43-101 technical report which contained resource estimates with both indicated and inferred resources. These estimates were prepared for Northland and filed on SEDAR on April 13, 2006. Orex is currently verifying those estimates.
Gold mineralization at Barsele is predominantly within a granodiorite that ranges in width from 200 to 500 metres, with a strike-extent in excess of some eight kilometres. The Central and Skiråsen Zones have a combined strike length of 1.35 kilometres by some 250 metres in width. The Avan Zone has a strike length of 1,400 metres and a width varying from 200 to 500 metres. Base metal content of the deposit is typically low.
The Central-Avan-Skiråsen (CAS) zone at Barsele contains most of the documented gold in the 2006 resource report with a grade similar to other gold deposits in the area. The CAS zone, which is exposed on surface, is a mineralized granodiorite that has been deformed, sheared and intruded by late stage quartz veins. Orex's technical team feels there is a good chance to expand the known dimensions of the deposits outlined to date. In addition, there is also evidence to suggest that the grade could also increase. A one tonne bulk sample collected on the project from the surface expression of the Central Zone returned a grade of 5.1 g/t Au which is considerably higher grade than the average grade of the drill hole samples.
In the Norra Zone, massive sulphide mineralization is exposed in two open trenches in the centre of the drilled zone. The footprint of the main mineralized body at Norra, based on drilling, is some 300 metres in strike-length and 50 metres in width.
The Norra Zone contains the balance of the gold reported in the 2006 resource report although the overall grade for this deposit is higher than at the CAS zone. The target at Norra is a gold rich volcanogenic massive sulphide although continuity of mineralization seems to be an issue. More drilling will be required to locate a larger body of mineralization. The geological environment is conducive to finding other similar or possibly larger deposits.
At least three other target areas of known gold mineralization have been reported from the various generations of regional exploration outside the CAS and Norra zones. Further exploration is warranted on these zones.
Orex plans an aggressive exploration program which will include an airborne geophysical survey, a ground IP geophysical survey followed by diamond drilling to test both the strike extensions but also the depth potential of the deposit outlined to date. In addition, the Company expects to complete a bulk sample from the Central Zone in an attempt to understand why the grade of the previous one tonne surface sample was considerably higher than the average grade of the drill hole samples.
Northland will receive a total of US $5 million in cash over two years from signing, and US $3.5 million worth of Orex shares to be issued over a period of four years from signing of the Final Agreement. Orex has also guaranteed a minimum US $3 million to be spent on the Barsele project in the first two years. Finally, Northland will retain a 2% NSR, which can be purchased at any time for US $4 million in cash. Northland will also have the right to appoint a Director to the Board of Orex.
Final details, conditions and approvals are expected to be completed during January 2011, with closing expected on or before January 26th 2011. The closing is subject to a number of conditions including: Orex obtaining a legal opinion on the validity and transferability of the Barsele Claims, receipt of approval for the transaction from the TSX Venture Exchange, and Orex obtaining assurance from the relevant Swedish authority that the work Orex proposes to complete on the expired claims at Barsele project will allow Orex to gain ownership of them. A finders fee will be payable upon closing.
George Cavey, P.Geo., is the Qualified Person as defined in NI43-101 and takes responsibility for the technical disclosure in this news release.