VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/15/12 -- Banks Island Gold Ltd. (TSX VENTURE: BOZ) (the "Company") announces that, further to its news release dated February 10th 2012, it has signed a Letter of Intent ("LOI") with Seabridge Gold Inc. ("Seabridge") for an option to acquire 100% of the Red Mountain Gold Project ("Project") located in British Columbia approximately 18 km east of the Port of Stewart, BC. The transaction is subject to TSX Venture Exchange approval and the execution of a definitive agreement between the parties.
The Red Mountain Gold Project, 17,100 hectares in size, is an advanced stage gold property. Expenditures on the Project to date amount to approximately $40M and includes 127,300m of diamond drilling, 2,000m of underground development, and advanced environmental, metallurgical, and engineering studies.
The Company has paid $100,000 to secure exclusive rights for the 120 day period following February 3rd, 2012, the date of the Letter of Intent (the "Exclusivity Period"), to conduct due diligence and to negotiate an option agreement with Seabridge for the acquisition of the Red Mountain Gold Project. The Company has completed its due diligence review of the Project and is satisfied and is moving ahead with settling the definitive option agreement. The terms of the LOI contemplate that the Company may earn a 100% interest in the Project from Seabridge by making the payments to Seabridge as detailed below:
-- $100,000 cash payment to secure the 120 day Exclusivity Period.
-- $900,000 cash payment and 4,000,000 common shares of the Company upon
execution of the Option Agreement, which must be executed before expiry
of the 120 day Exclusivity Period.
-- $1,500,000 cash payment on or before the 18 month anniversary of the
LOI.
-- $9,500,000 cash payment on or before the 3 year anniversary of the LOI.
Mr. Benjamin Mossman, the Company's President and CEO, stated, "The advanced Red Mountain Gold Project represents an excellent opportunity for the Company to apply its core competency in mine engineering and project development. The Project may lead to synergies with our near term production goals at the Yellow Giant Gold Property and allow the Company to present a plan for significant, growing, and sustained gold production."
Mr. D. L. Craig, P.Geo, prepared a mineral resource estimate for the Marc, AV, and JW Zones effective March 4th, 2002 for Seabridge titled "Red Mountain Project, British Columbia, Canada Technical Report". Mr. Deptuck, P.Geo, SRK Consulting, prepared a mineral resource estimate for the 132 and 141 Zones effective January 2005 in the technical report titled "Mineral Resource Estimation Zones 132 and 141, Red Mountain Gold Project, British Columbia".
A qualified person of Banks Island Gold has not done sufficient work to classify the historical estimate as a current mineral resource. The Company believes these historic resource estimates are relevant to the Red Mountain Gold Property and are reliable in general. However, Banks Island Gold is not treating the historical estimates as current mineral resources. Aggregated Historic Mineral Resources estimated for Seabridge Gold at Red Mountain using a 1.0 g/t gold cut-off grade are displayed in Table 1.
Table 1 - Red Mountain "Historic" Mineral Resources
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Au Grade Ag Grade Gold Silver
Category Tonnes (gpt) (gpt) (oz) (oz)
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Measured & Indicated 1,594,200 7.8 29 400,000 1,500,000
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Inferred 2,075,000 3.7 6 248,000 372,000
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The Company has retained Mr. Robert Baldwin, P.Eng., to prepare an updated NI 43-101 compliant Technical Report on the Red Mountain Gold Property and supervise the preparation of a current mineral resource estimate and Preliminary Economic Assessment (PEA). Mr. Lyn Jones, P. Eng, of ConsuMet Ltd. has been retained to prepare the metallurgy and process components of the PEA.
Mr. Benjamin Mossman, P.Eng, is the qualified person who reviewed and approved the contents of this news release.
The Company is a junior mining company focused on the advancement of two advanced stage gold properties towards commercial production. The Company's mineral properties are located in the northwest coastal region of British Columbia. For more information, please refer to the Company's website at www.banksislandgold.com.
ON BEHALF OF THE BOARD OF DIRECTORS
Benjamin W. Mossman, P.Eng, President, Director, & Chief Executive Officer
This press release contains forward-looking statements. All statements, other than statements of historical fact, constitute "forward-looking statements" and include any information that addresses activities, events or developments that the Company believes, expects or anticipates will or may occur in the future including the Company's strategy, plans or future financial or operating performance and other statements that express management's expectations or estimates of future performance.
Forward-looking statements are generally identifiable by the use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations on these words or comparable terminology. These statements, however, are 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, implied by or projected in the forward-looking information or statements. Important factors that could cause actual results to differ from these forward-looking statements include but are not limited to: risks related to the exploration and potential development of the Company's project, the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, future prices of gold, as well as those factors discussed in the sections relating to risk factors of the Company prospectus dated September 30, 2011 filed on SEDAR.
There can be no assurance that any forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader should not place any undue reliance on forward-looking information or statements. Except as required by law, the Company does not intend to revise or update these forward-looking statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this release. Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Banks Island Gold
Benjamin W. Mossman, P.Eng
President, Director, & Chief Executive Officer
604-245-0066
www.banksislandgold.com
