The Newman-Madsen Property is adjacent to the Madsen Gold Project ("Madsen") which Laurentian entered into a Definitive Agreement to purchase from Claude Resources Inc. ("Claude") on December 19, 2013. Together the two properties comprise in excess of 5,000 hectares in the prolific Red Lake gold camp of Northwestern Ontario.
The consolidated property consists of two former gold producers including the Madsen Gold Mine which had previous gold production of 2.4 million ounces.
Darin Labrenz President & CEO of Laurentian stated that: "Laurentian is pleased to announce the acquisition of the Newman-Madsen Gold Property. The Madsen Mine Trend has never been consolidated under one operator and the addition of the Newman-Madsen property represents a unique opportunity to apply a new and consistent exploration model to a consolidated mine trend that exceeds over 12 kilometres in length and over 50 square kilometres in size. This first-time consolidation of the Madsen Mine Trend will transform Laurentian into a leading Red Lake gold exploration company."
Consideration payable by Laurentian consists of shares representing 9.9% of Laurentian’s shares outstanding following completion of both the Madsen and Newman-Madsen acquisitions.
On closing of the Newman-Madsen transaction, it is anticipated that Laurentian will seek shareholder approval to appoint Mr. Robert Pease, current President & CEO of Sabina, to Laurentian’s previously announced proposed Board of Directors (see Proposed Board of Directors below).
Strategic Rationale for Madsen and Newman-Madsen Transactions
Establishes Laurentian as a leading Red Lake focused gold explorer with the third largest land position and second largest historical production in one of North America’s most prolific gold camps
Consolidation of Madsen Mine Trend under single ownership and the application of modern exploration to numerous highly prospective exploration targets and former producers along a 12 km corridor
The Newman-Madsen property consists of 38 patented mining claims and together with Madsen provides exposure to a contiguous 50 square kilometer land package with numerous exploration targets along the 12 km Madsen Mine Trend, including additional prospective structural horizons associated with the Buffalo and Laverty deposits
Madsen Gold Project contains an Indicated mineral resource of 928,000 oz gold in 3.24 million tonnes grading 8.93g/t Au and an Inferred mineral resource of 297,000 oz gold in 0.79 million tonnes grading 11.74 g/t Au*
Potential near-term low-capital production opportunity facilitated by a fully permitted 500 tonne per day mill, 1,275 metre shaft, and associated mining and tailings management infrastructure
New management and Board with deep Red Lake knowledge, and proven technical and capital markets expertise
Closing of the Newman-Madsen and Madsen transactions are expected in February 2014 and subject to receipt of all required shareholder, regulatory and third party consents, satisfaction of customary closing conditions. The Newman-Madsen transaction is subject to the closing of the Madsen transaction, and the completion by Laurentian of a financing to raise minimum gross proceeds of C$7.5 million.
Macquarie Capital Markets Canada Ltd. is acting as financial advisor to Laurentian with regard to the acquisition and financing.
About the Madsen Gold Project and the Madsen Transaction
On December 19th, 2013 Laurentian announced it had entered into a Definitive Agreement to purchase a 100% interest in the Madsen Gold Project from Claude Resources Inc. The terms of the Madsen Transaction include both cash payments and share consideration to Claude consisting of:
Cash consideration of C$3.75 million at closing;
Cash consideration of C$2.5 million payable 3 months following closing;
Cash or share consideration (at Laurentian’s option) of C$2.5 million payable 6 months following closing; and
Share consideration at closing representing 19.9% of Laurentian’s shares outstanding following completion of the acquisition and an initial C$7.5 million financing.
The Madsen Gold Project
The Madsen Gold Project consists of 237 patented and leased mining claims covering an area of 4,193 hectares and includes two former gold producers (Madsen, Starrett-Olsen). The Madsen Gold Mine operated continuously from 1938 to 1974, and 1997 to 1999. Total recorded production is 7,872,679 metric tonnes at an average grade of 9.7 g/t Au producing 2,452,388 ounces of gold.
In 2009, SRK Consulting Inc. calculated a mineral resource for the Madsen Gold Mine. SRK compiled a geological database consisting of 13,617 historic surface and underground core holes, 647 stope boreholes, and 6 underground core drill holes completed by Claude. Using this database SRK estimated an Indicated and Inferred mineral resource for four mineralized zones accessible from the underground mine workings.
Existing mine and mill infrastructure on the property includes a 1,275 metre shaft, recently de-watered to below the 16 level (approximately 775 metres below surface), a 500 tonne per day mill and CIP gold recovery circuit installed at site in the late 1990’s, and tailings storage facility, all of which are fully permitted and currently on care and maintenance. The existing permitted infrastructure provides considerable development flexibility, allowing for shortened timelines and the opportunity to leverage on exploration success.
The second former gold producer on the Madsen property is the historic Starrett-Olsen Mine. A 450 metre shaft was sunk in 1945 and mining operations were carried out from 1945 to 1956. A total of 823,544 metric tonnes were mined at an average recovered grade of 6.17 g/t Au to produce 163,990 ounces of gold. The Starratt-Olsen Mine does not have a current mineral resource. Only limited modern day exploration has been conducted near the mine workings.
In addition to the historic production and the mineral resource, the Madsen Gold Project has enormous upside exploration potential. A new understanding of controls on high-grade mineralization in the Red Lake camp has resulted in multiple recent discoveries on the Madsen property since the mining operation ceased. These include the Fork Zone, Russett South, Treasure Box, and Buffalo. A near term focus of Laurentian will be to advance many of these exploration targets and potentially define mineral resources. Laurentian will also focus its exploration efforts on developing additional targets along the 12 km-long Madsen Mine Trend and the 10 km-long ‘8 Zone’ corridor.
