May 9, 2011 (Canada NewsWire Group) --
/NOT FOR DISSEMINATION TO U.S. NEWS WIRE SERVICES/
TORONTO, May 9 /CNW/ - Upper Canada Gold Corporation ("Upper Canada" or "the Company") (TSXV: UCC), announces that the Company has entered into a letter agreement (the "Letter Agreement") with an arm's length party (the "Vendor") giving Upper Canada the right to purchase 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"). 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 Faut Zone.
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 form 1985 to 1986 (65,300 feet), which probed the deposit over 2,800 feet of strike length to a depth of 900 feet.
An in situ geologic resource (called "reserve" at the time) was estimated by Derry Michner Booh & Wahl, Inc. in 1988. They reported in the measured and indicated categories 8,290,100 tons grading 0.085 ounces per ton gold at a 0.025 opt cut off for a total of 702,184 oz Au; in the inferred category they reported an additional 1,597,300 tons grading 0.078 opt gold for a total of 124,781 oz Au. Other "reserve" estimates were also done in 1986 by Wright Engineers Ltd and an underground conceptual "reserve" estimate was completed by Beacon Hill Consultants Ltd. in 1989. The resource categories used by various parties in the 1980's do not conform to 43-101 protocol and do not meet CIM standards.
The above historical estimates are not compliant with 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.
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 Kenneth N. Shonk Consulting (June 2008), produced in excess of 125,000 oz of gold from underground mining of high-grade quartz veins.
Under the Letter Agreement, the Company may acquire a 100% interest in the Property for aggregate consideration US$12,000,000 with US$6,000,000 due upon closing and the balance due 370 days following closing. The balance due 370 days following closing shall be secured by a mortgage against the Property. Under the Letter Agreement, the Company has the exclusive right to carry out a 30 day due diligence for a deposit of US$50,000 and to extend the due diligence period for US$125,000 for each additional 30 day period thereafter subject to a maximum of three extensions. The initial US$50,000 deposit will be paid to the Vendor subject to the Vendor's compliance with certain conditions. The initial deposit of US$50,000 and the first extension payment, if any, shall be non-refundable but shall be applied against the deferred component of the purchase price in the event the Company elects to exercise its option to purchase the Property. 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 initial US$6,000,000 due on closing. The Property is subject to a 3% net smelter royalty. 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 execution of definitive transaction agreements together with the satisfaction of all covenants and conditions contained therein.
The Company has retained a consulting geologist who is a Qualified Person under NI 43-101 and who is familiar with the Property and the available data, to complete an NI-43-101 compliant technical report.
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.
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 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 and copper in pounds or other minerals in pounds, or the future profitability of the Company's projects.
Michael Churchill - President
Tel: 416-678-0928
Website: www.uppercanadagold.com