Blind Creek Resources Ltd. Announces Intention to Move Forward with Engineer Gold Mines Spinout Transaction
Blind Creek Resources Ltd. Announces Intention to Move Forward with Engineer
Gold Mines Spinout Transaction
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES/
VANCOUVER, Jan. 19, 2018 /CNW/ - (TSXVE: BCK) – Blind Creek Resources Ltd. ("Blind Creek" or
the "Company") is pleased to announce its intention to transfer its Engineer Mine property and the
adjoining Gold Hill Property which it acquired from BCGold Corp. (now Pan Andean Minerals Ltd.) in early
2017 together with certain claims it had previously acquired (the "Engineer Gold Mine Project") to
Engineer Gold Mines Ltd. ("Engineer"), a wholly-owned subsidiary of Blind Creek subject to receipt of all
required regulatory approvals) for common shares of Engineer (the "Engineer Distribution Shares"). The
Engineer Distribution Shares will then be distributed to the common shareholders of Blind Creek on the
reduction of the stated capital of the Blind Creek common shares, all by way of a plan of arrangement
(the "Plan of Arrangement") under the Business Corporations Act (British Columbia) (the "Arrangement").
Blind Creek and Engineer have entered into an arrangement agreement (the "Arrangement Agreement")
dated January 19, 2018 in connection with the Arrangement (which has been filed under Blind Creek's
profile on www.SEDAR.com.) The Arrangement is intended to deliver value to shareholders by unlocking
the potential of the Engineer Gold Mines Project.
About the Engineer Gold Mines Project
The Engineer Gold Mines Project is a gold/silver project situated 32 km southwest of Atlin, British
Columbia. The Engineer Gold Mine Property consists of six patented crown grants, five legacy mineral
claims, and 42 Mineral Titles Online "MTO cell" claims that surround and overlap the crown grants. The
total contiguous property package covers an area of approximately 12,032 hectares. All claims are
indicated to be in good standing on the BC Mineral Titles Online website until at least December 1, 2018
and are owned 100% by Blind Creek. Guardsmen Resources Inc. retains a 2.5% net smelter return on
the five Gold Hill claims, 2% of which can be purchased for C$1.5 million. There are no other underlying
royalties in respect of the Engineer Gold Mines Project.
The Engineer Gold Mine is a historic high-grade gold-silver producer and it is estimated that 14,263
tonnes was mined between 1910 and 1952, although the majority of the production occurred between
1912 and 1927 from 8 mine levels. A 30 tonne-per-day gravity separation mill was installed on the
Property in 1994 to conduct seasonal batch milling. The mill was operational as recently as 2011.
The Engineer Gold Mine is an advanced exploration project that possesses a small, but high-grade,
Inferred Mineral Resource. Recent diamond drilling, surface trenching, underground sampling, and
geological mapping have confirmed the geological continuity of the Engineer and Double Decker
veins. Other veins such as the Boulder-Governor, Shaft, Andy and Jersey Lily are targets that could
possibly add to the mineral resource base with further exploration success.
The Engineer Gold Mine Project can also be advanced with exploration along the known shear zones
(Shear A and Shear B). Both shears have multi-km strike lengths and host significant widths of silica-rich
hydrothermal breccia with low-grade gold mineralization. With the exception of a limited drill program
conducted in 2008, there has been very little work completed on these shear zones. Significant diamond
drilling results from Shear A include values up to 34.0 metres grading 0.45 g/t Au (2011).
Preliminary soil geochemical surveys have shown that these shear structures are anomalous in gold
pathfinder elements such as arsenic and antimony. A systematic, property-wide soil survey would be the
initial step to identify any higher-grade anomalies for drill testing.
Blind Creek has commissioned a Technical Report in accordance with National Instrument 43 -101
entitled "Engineer Gold Mine, British Columbia, Canada - 2018" authored by Darren O'Brien, P. Geo,
Michael Redfearn, P. Eng. and Dr. Simon Dominy, FAuslMM(CP), FGS(CGeol) dated January 18, 2018
(the "Engineer Technical Report") in respect of the Engineer Gold Mines Project. The Technical Report
may be accessed under Blind Creek's profile on www.SEDAR.com.
The Technical Report includes an Inferred Resource Estimate for the remna nt portions of the Engineer
and Double Decker veins reported below in Tables 1 and 2 at varying cut-off grades.
TABLE 1 NOVEMBER 2017 MINERAL RESOURCE ESTIMATE BASED ON A 5 G/T AU CUT-OFF
Category Vein Tonnage
(t)
Average Grade
(Au g/t)
Contained Gold
(oz)
Inferred Engineer 30,800 20.6 20,400
Inferred Double Decker 10,100 13.1 4,200
Total: 41,000 19.0 25,000
TABLE 2 NOVEMBER 2017 MINERAL RESOURCE ESTIMATE AT A NOMINAL 25 G/T AU CUT -OFF
Category Vein Tonnage
(t)
Average Grade
(Au g/t)
Contained Gold
(oz)
Inferred Engineer 10,400 60 20,100
Inferred Double Decker 3,600 30 3,500
Total: 14,000 52.5 23,600
Notes: Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. It is uncertain if further
exploration will result in upgrading the Inferred Mineral Resource to an Indicated or Measured Mineral Resource category. The
Mineral Resource is reported at a 5 g/t Au cut-off where the resource margin in defined by historical payability with the assumption
extraction would be by narrow vein methods. Grades diluted to a 1 m stope width.
This mineral resource estimate is based on a VLP (vertical longitudinal section) approach with projection
of mineralized shoots down-dip and along strike based on surface exposure and underground
development. The global grade applied to each vein structure was based on the partitioning of grades
from historical production figures and production records to indicate payability. All grades were diluted to
minimum stoping width of 1 m. A density factor of 2.8 t/m3 was used. 3D models for the Double Decker
and Engineer veins were constructed using Vulcan software. The vein wireframes were constrained by
historical mining records and recent drilling. The Vulcan solids were used to define the primary
mineralized material volume. A bulk density factor and payability factor were applied to define tonnage.
Areas of mined-out portions were subtracted where required, assuming a 1 m stope width.
The Technical Report proposes a $6.2 million exploration and development program to be conducted in
two phases to continue advancing the Engineer Gold Mine Project. The proposed program focuses on
mineral resource expansion, metallurgical test-work, and bulk sampling.
The Transaction
The proposed Arrangement will include a transfer of the Engineer Gold Mines Project in exchange for the
assumption of the Assumed Liabilities by Engineer and the Engineer Distribution Shares. Pursuant to the
Arrangement, Blind Creek intends to distribute the Engineer Distribution Shares to Blind Creek common
shareholders on a pro rata basis (other than to shareholders who dissent in accordance with the
provisions of the Arrangement) on the reduction of the stated capital of the Blind Creek common shares.
Blind Creek shareholders will be entitled to receive one Engineer Distribution Share for every two
common shares of Blind Creek held by each such shareholder. The effective date of the Arrangement is
currently planned for early in the second quarter of 2018. There will be no changes in shareholders'
holdings in Blind Creek as a result of the Arrangement.
The Arrangement is subject to TSX Venture Exchange ("TSXVE"), regulatory and Supreme Court of
British Columbia (the "Court") approvals, as well as approval by not less than two-thirds of the votes cast
at a special meeting (the "Meeting") of Blind Creek shareholders, to be called in connection wi th the
Arrangement. Full details of the Arrangement will be included in the management information circular (the
"Circular") to be sent to Blind Creek shareholders in connection with the Meeting, which will include
information on Blind Creek, Engineer, the Engineer Gold Mines Project and the Arrangement.
The board of directors of Engineer is comprised of Andrew H. Rees, Thomas Kennedy, Glen MacDonald
and Brian Fowler, who is also the President of Engineer while Dale Dobson has been appointed Chief
Financial Officer. This is also the management team of Blind Creek. Changes and additions to the
management team may be made as needed and as the Engineer Gold Mines Project progresses.
The Company intends to apply for a listing of the common shares of Engineer on the TSXVE. Any such
listing will be subject to Engineer fulfilling all of the listing requirements of the TSXVE.
The closing of the Arrangement is subject to customary conditions, including the receipt of all regulatory,
Court and shareholders approvals, covenants and representations and warranties. The summary of the
terms of the Arrangement Agreement herein is qualified by the full text of the Arrangement Agreement,
which is available under Blind Creek's profile on www.SEDAR.com.
Upon completion of the Arrangement, Engineer will hold a 100% interest in the Engineer Gold Mines
Project and will focus on the advancement of this project. Blind Creek will retain and focus on the
advancement of its key Blende mineral property (the "Blende Project"), located in the Mayo Mining
District, Yukon, as well as its prospective zinc/lead exploration property known as the "AB Property"
located in the Northwest Territories.
The Company believes that investors have understandably focused on the oppor tunity provided by the
Blende Project, as well as the AB Property. The Company has positioned itself as a base metals
exploration company, while the Engineer Gold Mines Project is prospective for gold and silver. The
proposed spinout will allow Blind Creek to focus on further advancement of the Blende Project and on
continued efforts on development of this project. The Company believes that the Engineer Gold Mines
Project has exploration upside that should be developed. The creation of Engineer and the dist ribution of
the Engineer Distribution Shares to the Blind Creek common shareholders is expected to enhance
shareholder value by bringing increased investor focus to the potential that the Company sees in the
Engineer Gold Mines Project.
The special resolution to be considered by the Blind Creek shareholders at the Meeting and the
Plan of Arrangement to be approved by the Court will include a provision that Blind Creek may
determine not to proceed with the Arrangement if it determines in its sole discretion that it is in
the best interests of Blind Creek not to proceed.
Financing
Engineer will conduct a non-brokered private placement financing (the "Engineer Private Placement") of
subscription receipts (the "Subscription Receipts"), at a price of $0.10 per Subscription Receipt. All funds
raised in connection with the Engineer Private Placement (the "Escrow Proceeds") will be held in escrow
pending satisfaction of certain escrow release conditions (the "Escrow Release Conditions"), as set out
below. Upon satisfaction of the Escrow Release Conditions, the Subscription Receipts will automatically
be exercised, without payment of any additional consideration and with no further action on the part of the
holders thereof, for one Engineer unit (the "Units"). Each Unit is comprised of one Engineer common
share and one-half of one share purchase warrant (the "Warrants"). Each whole Warrant is exercisable to
acquire one Engineer common share at a price of $0.15 per share for a period of two years following the
issuance of the Warrants. There may be one or more closings in respect of the Engineer Private
Placement; however, there can be no assurances that there will be any closings or that sufficient funds
will be raised to permit Engineer to fund its operations or to obtain a listing on the TSXVE.
The Escrow Release Conditions are substantially as follows: (i) all conditions to the completion of the
Arrangement pursuant to the Arrangement Agreement (other than the release of the Escrowed
Proceeds), shall have been satisfied; (ii) the receipt of all regulatory approvals required for the
Arrangement to be completed (including that of the TSXVE); (iii) the receipt of all required shareholder
and Blind Creek Board of Director approvals required for the Arrangement; (iv) receip t of gross proceeds
of no less than $500,000 from the Engineer Private Placement; (v) the Court issuing a final order in
connection with the Arrangement; (vi) no material change having occurred in respect of Engineer or Blind
Creek; and (vii) the Company shall have delivered a release notice to the Subscription Receipt agent
confirming that items (i) through (vi), inclusive, have been satisfied.
If the Escrow Release Conditions are not satisfied prior to escrow release deadline, all of the escrowed
funds plus accrued interest, if any, will be returned to the purchasers of the Subscription Receipts in
accordance with the terms of the Engineer Private Placement. To the extent that the Escrowed Proceeds
plus accrued interest, if any, are not sufficient to repay the purchase price for all Subscription Receipts,
Engineer and Blind Creek will satisfy any shortfall.
Any securities issued in connection with the Engineer Private Placement will be in addition to the
Engineer Distribution Shares that will be distributed to Blind Creek common shareholders in connection
with the Arrangement. If the Engineer Private Placement is completed in full, investors in the Engineer
Private Placement will hold approximately 28% of the issued and outstanding Engineer common shares
following completion of both the Engineer Private Placement and the Arrangement, on a non -diluted
basis.
The Engineer Private Placement is subject to the approval of the TSXVE. There can be no assurances
that the Engineer Private Placement or the Arrangement will be completed on the terms set out above, or
at all.
Risks and Uncertainties
The Arrangement contains a number of risks and uncertainties, which will be set out in greater detail in
the Circular for the Meeting. These include risks associated with the disposition of the Engineer Gold
Mines Project to a private company which, while it is expected to become a reporting issuer in connection
with the Arrangement and will apply to list the Engineer distribution shares on the TSXVE, can not make
any assurances that either one of these things will happen as they are subject to receipt of regulatory
approvals. Blind Creek will retain the right not to proceed with the Arrangement in the event that the
Board of Directors of Blind Creek determines that it is not in the best interests of Blind Creek to proceed;
however, if the Arrangement is completed there can be no assurances that Engineer will be able to
maintain a listing on a stock exchange or that the Engineer Gold Mines Project will yield economic
mineralization results. The Arrangement is subject to regulatory, stock exchange and shareholder
approval, any of which may not be forthcoming. The Engineer Private Placement may not be completed
for sufficient funds to qualify Engineer for a listing or to carry out its business plan, or at all. If the
Engineer Private Placement is completed in full, there can be no assurances that Engineer's utilization of
the funds raised in the financing will yield positive results. While Blind Creek intends to complete the
Arrangement in a manner that does not produce unfavourable tax results for Blind Creek, Engineer or the
shareholders, there may be adverse tax consequences – each shareholder should consult with his, her or
its tax advisors to understand the tax implications of the Arrangement. Please see the section entitled
"Cautionary Note Regarding Forward-Looking Statements" for further risk and uncertainties associated
with the Arrangement.
Qualified Persons
Technical disclosure for the Engineer Gold Mines Project included in this press release, has been
reviewed and approved by Mr. Darren O'Brien, P.Geo., a Qualified Person (Q.P.) as defined by National
Instrument 43-101.
About Blind Creek Resources Ltd.
Blind Creek is a Vancouver-based junior resource company focused on lead-zinc-silver and gold-silver
project acquisition, exploration and development in Yukon (Blende Property), Northwest Territories (AB
Property) and British Columbia (Engineer Gold Mine). The Company's flagship property is the Blende
Property in north-central Yukon. More recently the company has signed an agreement to acquire a 100%
interest in the AB Property (MV-Type Zinc-Lead) in the Northwest Territories and purchased the historic
and fully-permitted Engineer Gold Mine, situated 32 km southwest of Atlin, B.C.
For additional information please visit the company website www.blindcreekresources.com.
On behalf of the Board of Directors,
Mr. Brian P. Fowler, P.Geo.
President
Cautionary Note Regarding Forward-Looking Statements
Certain statements made and information contained herein in the press release constitutes "forward-
looking information" and "forward-looking statements" within the meaning of applicable securities
legislation (collectively, "forward-looking information"). The forward-looking information contained in this
press release is based on information available to the Company as of the date of this press release.
Except as required under applicable securities legislation, the Company does not intend, and does not
assume any obligation, to update this forward looking information. Generally, this forward-looking
information can frequently, but not always, be identified by use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or
statements that certain actions, events, conditions or results "will", "may", "could", "would", "might" or "will
be taken", "occur" or "be achieved" or the negative connotations thereof.
All statements other than statements of historical fact may be forward-looking statements. Forward-
looking information is necessarily based on estimates and assumptions that are inherently subject to
known and unknown risks, uncertainties and other factors that may cause the actual results, level of
activity, performance or achievements of the Company to be materially different from those expressed or
implied by such forward-looking information, including but not limited to: risks and uncertainties relating
to, among other things, the risk of the Company not obtaining court, Blind Creek shareholders or stock
exchange approvals to proceed with the Arrangement; the risk of unexpected tax consequences to the
Arrangement, the risk of unanticipated material expenditures required by the Company prior to completion
of the Arrangement; risks of the market valuing Blind Creek and Engineer in a manner not anticipated by
the Company; risks relating to the benefits of the Arrangement not being realized or as anticipated, the
inherent uncertainties regarding cost estimates, changes in commodity prices, currency fluctuation,
financing, unanticipated resource grades, infrastructure, results of exploration activities, cost overruns,
availability of materials and equipment, timeliness of government approvals, taxation, political risk and
related economic risk and unanticipated environmental impact on operations, as well as other risks
uncertainties and other factors, including, without limitation, those referred to in the "Risks and
Uncertainties" section of the press release, and elsewhere, which may cause the actual results, level of
activity, performance or achievements of the Company to be materially different from those expressed or
implied by such forward-looking information.
The Company believes that the expectations reflected in the forward-looking statements and information
included in this press release are reasonable but no assurance can be given that these expectations will
prove to be correct and such forward-looking statements and information should not be unduly relied
upon. This statement and information speaks as of the date of the press release. In particular, this press
release contains forward-looking statements or information statements with respect to completion of the
Arrangement; the availability of working capital for both Blind Creek and Engineer; tax consequences of
the Arrangement; benefits of the Arrangement, obtaining Blind Creek shareholder, court and TSXVE
approvals of the Arrangement; the listing of Engineer common shares on the TSXVE; the timing for
mailing of an information circular; holding Blind Creek's meeting and completing the Arrangement; the
potential development of the Blende Project; estimation of commodity prices, mineral resources, costs
and the success of exploration activities; expectations with regard to adding to mineral resources through
exploration; permitting time lines; ability to obtain surface rights and property interests; requirements for
additional capital; government regulation of mining activities; environmental risks; unanticipated
reclamation expenses; title disputes or claims; limitations on insurance coverage; and other risks and
uncertainties.
Forward-looking information is based on certain assumptions that the Company believes are reasonable,
including that the current price of and demand for commodities will be sustained or will improve, the
supply of commodities will remain stable, that the general business and economic conditions will not
change in a material adverse manner, that financing will be available if and when needed on reasonable
terms and that the Company will not experience any material labour dispute, accident, or failure of plant
or equipment. These factors are not, and should not be construed as being, exhaustive. Although the
Company has attempted to identify important factors that would cause actual results to differ materially
from those contained in forward-looking information, there may be other factors that cause results not to
be as anticipated, estimated, or intended. There can be no assurance that such statements will prove to
be accurate, as actual results and future events could differ materially from those anticipated in such
statements. All of the forward-looking information contained in this document is qualified by these
cautionary statements. Readers are cautioned not to place undue reliance on forward -looking information
due to the inherent uncertainty thereof.
Statements relating to "mineral resources" are deemed to be forward looking information, as they involve
the implied assessment, based on certain estimates and assumptions that the mineral resources
described can be profitably produced in the future.
The TSXVE has in no way passed upon the merits of the proposed transaction and has neither
approved nor disapproved the contents of this press release.
Neither the TSXVE nor its Regulation Services Provider (as that term is defined in the policies of
the TSXVE) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Blind Creek Resources Ltd.
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CO: Blind Creek Resources Ltd.
CNW 13:51e 19-JAN-18