TSX-V: MDL
VANCOUVER, May 16 /CNW/ - Medallion Resources Ltd (TSX-V: MDL) announces
that it has finalized the definitive agreement with the vendors to acquire the
Ocelot, Nevada, gold-exploration property. The Ocelot property comprises
155 unpatented federal lode mineral claims covering approximately 3,100 acres
in Lander County, 40 km north of Austin, Nevada.
Subject to the acceptance of the TSX Venture Exchange (the "Exchange"),
the agreement requires Medallion to pay to the vendors an advance-royalty
payment of US$30,000 and 50,000 common shares of the Medallion at a deemed
price of $0.30 per share, as well as additional escalating annual
advance-royalty payments against a net smelter royalty of three percent (of
which, one percent may be purchased at the Company's option). There is a
required first-year drilling work commitment of 4,000 feet on the Ocelot
property; thereafter, 7,500 feet per year is required until completion of a
bankable-feasibility study. The Exchange has granted conditional acceptance to
the acquisition of the Ocelot property, subject to the Company raising
sufficient funds to ensure completion of Phase 1 of the planned Ocelot
property exploration program.
Medallion has agreed, subject to the acceptance of the Exchange, to issue
to qualified investors, on a non-brokered private-placement basis, a maximum
of 1,700,000 Units (the "Units") at a price of $.30 per Unit for gross
proceeds totaling $510,000. Each Unit consists of one common share and one
non-transferable share purchase warrant (the "Warrants"). Each Warrant will
allow the subscriber to purchase one additional common share at a purchase
price of $0.40 per share for a period of two years from the closing date.
Director Donald Lay and other Company insiders may take part in the private
placement and may sell personally held Medallion shares in order to assist in
the financing.
The Company may pay a cash finder's fee equal to 8% of the total gross
proceeds of the offering and finder's warrants ("Finder's Warrants"), equal to
10% of the number of Units sold under the offering. Each Finder's Warrant may
be exercised for one additional common share of the Company at an exercise
price of $0.30 per share for a period of one year from the closing. The Units
issued upon the closing of the placement are subject to a 4-month hold period.
The successful completion of the private placement will ensure Medallion
has sufficient funds to provide general working capital and to complete the
Phase 1 work program, as set out in the Technical Report that was commissioned
by the Company in accordance with National Instrument 43-101. The net proceeds
of the private placement will supplement the Company's treasury holdings of
600,000 common shares of American Bonanza Gold Corp (TSX: BZA). A director of
Medallion, Mr Donald Lay, has agreed to loan to the Company an aggregate of
US$60,000 to fund the initial costs of the acquisition of the Ocelot Property.
The loan, also subject to the acceptance of the Exchange and evidenced by way
of a promissory note, will be unsecured, repayable after one year and will
bear interest at the rate of prime plus 2% per annum.
In other business, Medallion announces that J Wayne Marsden now will
serve as Investor Relations Consultant. Mr Marsden has been involved with
Medallion at various times over the past six years. For other work performed
for the Company, Mr Marsden was granted stock options, on 11 February 2006, to
purchase 40,000 shares at a price of $0.24 per share. These options may be
exercised until 11 February 2011. Mr Marsden will handle investor relations
questions and comments at 888-366-4464 and jwmarsden(at)aol.com.
Medallion Resources Ltd (TSX-V:MDL) is exploring the Ocelot Gold Project
targeting potential deep, high-grade mineralization of the epithermal
quartz-adularia gold-exploration model. This model is characterized by gold
deposits such as Midas, Silver Cloud, and deeper portions of Sleeper and
Grassy Mountain. Typical of the epithermal quartz-adularia gold model, the
Ocelot property contains widespread occurrences of silicification, anomalous
gold values and a quartz-adularia hot-springs system. The property also lies
at the intersection of two major Nevada gold trends, the Northern Nevada Rift
and the Independence - Crescent Valley Lineament. The Northern Nevada Rift is
host to numerous epithermal deposits including Florida Canyon, Sleeper and
Gold Banks, all of which contained at least two million ounces of gold. The
Pipeline deposit (greater than 15 million ounces) occurs along the
Independence - Crescent Valley Lineament.
ON BEHALF OF THE BOARD OF DIRECTORS
"William H Bird", PhD, PGeo,
President & CEO
William H. Bird, PhD, PGeo, serves the Board of Directors of the Company
as an internal, technically Qualified Person. Technical information in this
news release has been reviewed by Dr Bird and prepared in accordance with
Canadian regulatory requirements as set out in National Instrument 43-101.
This news release was prepared by Company management, who take full
responsibility for content. The TSX Venture Exchange has not reviewed and does
not accept responsibility for the adequacy or accuracy of this release.
Forward-looking statements in this release are made pursuant to the "safe
harbor" provisions of the USA Private Securities Litigation Reform Act of
1995. Forward-looking statements involve known and unknown risks and
uncertainties that may cause the Company's actual future-period results to
differ materially from forecasts.
