Upper Canada Gold Announces Agreement to Acquire Pine Tree-Josephine Property in Mariposa, California
NOT FOR DISSEMINATION TO U.S. NEWS WIRE SERVICES
Toronto, Ontario CANADA, January 26, 2012 /FSC/ - Upper Canada Gold Corporation (UCC - TSX Venture), ("Upper Canada" or "the Company") (TSXV: UCC), announces that the Company has entered into a definitive purchase and sale agreement with the owner (the "Vendor") of a fee simple interest (subject to a 3% net smelter royalty) of approximately 3,350 acres (part of the Rancho Las Mariposa Land Grant) located 15 miles north of Mariposa, California and known as the Pine Tree-Josephine Property (the "Property") under which Upper Canada will acquire the Vendor's interest in the Property. The Property includes the Pine Tree-Josephine Deposit which covers a two and a half mile (4 km) segment of the Mother Lode vein system, which consists of en echelon quartz veins, silica-ankerite alteration zones and ultrabasic intrusive associated with the Melones Fault Zone. Upper Canada may designate any date up until January 16, 2013 to close the acquisition of the Property.
Within the Property, four gold bearing alteration zones have been identified along the fault zone, the most significant of which is the Pine Tree-Josephine deposit. This deposit was developed extensively during previous mining activity and was further delineated during a surface reverse circulation drilling program from 1985 to 1986 (65,158 feet), which probed the deposit over 2,700 feet of strike length to a depth of 900 feet.
An in-situ geologic historical resource (called "reserve" at the time) was estimated by Derry Michener Booth & Wahl, Inc. (DMBW) in 1988. They reported in the "drill indicated" categories 8,290,100 tons grading 0.085 ounces per ton (opt) gold at a 0.025 opt cut off for a total of 702,184 oz Au; and in the "drill inferred" category they reported an additional 1,597,300 tons grading 0.078 ounces per ton gold for a total of 124,781 oz Au. DMBW also noted the potential for a possible increase of resources in the footwall of the known mineralization where drill holes were extending through the footwall. Other historical "reserve" estimates were also done in 1986 by Wright Engineers Ltd and an underground conceptual "reserve" estimate was completed by Beacon Hill Consultants Ltd. (BHC) in 1991. Historically, the underground potential was estimated by BHC (Case 1) to be 7.3Mt grading 0.116 ounces per ton Au for 838,000 of Au. This does not meet the "potential" definition for NI 43-101 as BHC did not give a range of tons and grade.
The above historical estimates are not compliant with CIM standards and National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI-43-101") requirements and they are not relevant to the Company or its acquisition of the Property. There is no new data regarding the historical estimates available to the Company. The Company has not performed any work or study to date to substantiate the reported historical estimates, and thus, the information alone should not be relied on for investment purposes.
In the event that the Company completes the acquisition of the Property, the Company intends to bring the DMBW historical resource to CIM and NI 43-101 standards. Further exploration will test the expansion of the resources and to assess the underground resource potential.
The history of the Property dates back to 1848 when gold was officially discovered in the region and several deposits have been mined intermittently from the early 1850's until the end of the Second World War. The most significant of these deposits is the Pine Tree-Josephine Deposit, which has been extensively developed and has, according to William B. Clark (Gold Districts of California, California Division of Mines and Geology, Bull. 191 (1963)), produced in excess of $4,000,000, the equivalent of more than 125,000 ounces of gold from underground mining of high-grade quartz veins.
Under the purchase agreement and an agreement with a third party, the Company may acquire a 100% interest in the Property (subject to a 3% net smelter royalty) for aggregate consideration of US$5,120,000 to the Vendor and the payment of a finder's fee to the third party of US$150,000 plus 3% of the price paid to the Vendor. Pursuant to the purchase agreement, the Company has paid a non-refundable deposit of US$30,000 to the Vendor and an initial finder's fee of US$50,000 to the third party. A second non-refundable deposit of US$90,000 must be paid to the Vendor prior to April 10, 2012. All deposits and initial fees are to be credited against amounts payable at the time of acquisition. In the event that Upper Canada elects to abandon the acquisition of the Property, the Vendor shall be entitled to retain all deposits received as liquidated damages.
In the event that the Company decides to proceed with the transaction it is anticipated that it will be completing an equity financing in order to raise the required funds to pay the anticipated US$5,253,600 due on closing. In order to finance its acquisition of the Property and subsequent work program on the Property, the Company plans to raise between $4 million and $10 million. The completion of the acquisition is subject to a number of conditions including receipt of all necessary regulatory approvals, completion of satisfactory due diligence and obtaining sufficient financing on acceptable terms together with the satisfaction of all covenants and conditions contained therein. There can be no assurance that the Company will be able to satisfy these conditions or that the transaction will ultimately be completed.
The Company had previously attempted to acquire the Property during the summer of 2011. As part of those attempts, the Company retained Mr. A.A. Burgoyne, P.Eng., M.Sc., a consulting geologist who is an independent Qualified Person under NI 43-101 to complete a NI-43-101 compliant technical report on the Property. The Company intends to make use of the technical report completed by Mr. Burgoyne at that time in order to support its acquisition of the Property.
It is expected that, if completed, this acquisition will enhance the Company's current open pit resource base.
Mr. A.A. Burgoyne, P.Eng., M.Sc., is the Qualified Person under NI 43-101 who has reviewed the contents of this release.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
FOR FURTHER INFORMATION CONTACT:
Michael Churchill - President
Tel: 647-977-9267 x101
Website: www.uppercanadagold.com
Cautionary Note Regarding Forward Looking Statements:
Some of the statements contained herein may be forward-looking statements which involve known and unknown risks and uncertainties. Without limitation, statements regarding the completion of the acquisition of the Property by the Company, potential mineralization, resources and expansion of resources, recoveries, exploration results, and future plans and objectives of the Company are forward looking statements that involve various degrees of risk. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world price of mineral commodities, general market conditions, risks inherent in mineral exploration, risks associated with mine permitting, metallurgy, development, construction and mining operations, the uncertainty of the determination of mineable ounces of gold , or the future profitability of the Company's projects.
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Source: Upper Canada Gold Corporation (TSX-V: UCC) http://www.uppercanadagold.com
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