otterman
12 years ago
Chesapeake Agrees to Sell El Escorpion Silver Project to Gunpoint Exploration Ltd.
Wednesday, June 20, 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 20, 2012) - Chesapeake Gold Corp. (TSX VENTURE:CKG) ("Chesapeake") is pleased to announce that it has entered into an agreement with Gunpoint Exploration Ltd. (TSX VENTURE:GUN) ("Gunpoint"), Chesapeake's 82% owned subsidiary, whereby Gunpoint will acquire a 100% interest in Chesapeake's El Escorpion silver project ("Escorpion") located in eastern Guatemala. Chesapeake's Guatemalan subsidiary, Hunt Exploration S.A., has an option to acquire Escorpion by making payments to a private owner totalling US$351,000 over five years. Escorpion is subject to a 1.0% net smelter return ("NSR") royalty which can be purchased for US$585,000 at any time.
The Escorpion property is a 900 hectare concession located 85 kilometers by paved road southeast of Guatemala City. Escorpion is situated 7 kilometers southwest and along trend of Tahoe Resources Inc.'s world class Escobal deposit which has a NI 43-101 compliant indicated mineral resource of 367 million ounces of silver grading 422 g/t, plus 37 million ounces of silver grading 254 g/t in the inferred category. Mineralization at Escobal is associated with steeply dipping and northeast-southwest trending intermediate sulfidation epithermal silver rich quartz veins with significant values in gold, lead and zinc. The Escobal land package completely surrounds the Escorpion project.
The outcropping mineralization at Escorpion appears to have many similarities to that at Escobal and occurs in a fault controlled, intermediate sulfidation epithermal system characterized by several multistage, subparallel silver-lead-zinc quartz-carbonate veins and stockworks. To date, the northeast-southwest trending system has been traced discontinuously for over 1500 meters along strike and remains open to the northeast and southwest. The system is characterized by carbonate-minor quartz vein swarms in the southwest (Mina Blanca zone) and quartz stockworks and quartz veins in the northeast part of the concession (Escorpion-Los Pozos zones). The exposed vertical extent of the system is greater than 300 meters. The epithermal system is hosted in volcaniclastic sediments, porphyritic andesites and rhyodacitic rocks, the same rock types which host mineralization at Escobal.
The Mina Blanca zone has been traced along strike for 350 meters, up to 50 meters wide and with a topographic relief of 150 meters. This broad zone consists of numerous en echelon, oxidized multistage veins up to 7 meters wide. Selected channel samples taken across the veins from shallow workings and hand dug trenches returned:
5 meters of 78.0 g/t silver, 2.30% lead and 2.63% zinc
4 meters of 62.6 g/t silver, 0.71% lead and 0.42% zinc
3 meters of 53.7 g/t silver, 6.48% lead and 2.05% zinc
6 meters of 73.6 g/t silver, 3.81% lead and 0.70% zinc
A second subparallel vein swarm is located 200 meters to the south of the Mina Blanca zone. Channel sampling of individual veins has returned up to 4 meters of 41 g/t silver, 0.18% lead and 0.24% zinc.
The Escorpion and Los Pozos zones are located in erosional windows 400 meters apart in an area of extensive volcanic cover. The Escorpion zone hosts a drusy to massive quartz stockwork that has been mapped over an area 70 meters by 100 meters with channel samples up to 33 g/t silver, 0.2% lead and 0.2% zinc. The Los Pozos zone is situated topographically higher with the vein and surrounding stockwork hosted in argillized rhyodacite rocks. Samples from a quartz stockwork zone, up to 100 meters wide and 200 meters in length, returned anomalous values in silver, lead, zinc, bismuth, arsenic and antimony. Preliminary work suggests the Escorpion and Los Pozos zones represent the possible extension of the Mina Blanca zone along strike and higher up in the epithermal system.
At Escobal, high grade silver mineralization typically begins between fifty and several hundred meters below surface and underlies leached and oxidized veins which are anomalous in gold, silver and base metals. The high grade mineralization was not discovered until the property was drilled extensively starting in 2007.
Gunpoint has agreed to acquire a 100% interest in Escorpion by issuing and granting the following to Chesapeake.
•500,000 common shares of Gunpoint
•500,000 warrants exercisable at $1.50 per share for a term of five years
•A 1.5% NSR royalty in the event Chesapeake purchases the existing 1.0% NSR
•1.0 million common shares of Gunpoint in the event a NI 43-101 measured and indicated resource estimate of 1.0 million gold equivalent ounces is achieved on the Escorpion property.
The transaction is subject to the approval of the TSX Venture Exchange.
Gunpoint plans to follow-up Chesapeake's prospecting of the vein and altered outcrops at Escorpion. Detailed mapping, trenching and rock channel sampling along the fault controlled, altered corridor will delineate priority drill targets. Gunpoint is planning to drill test both the Mina Blanca and Escorpion-Los Pozos zones within 6-8 months.
Gunpoint is a gold exploration company with projects in the United States and Mexico. Gunpoint's flagship Talapoosa project in Nevada has a drill indicated NI 43-101 measured and indicated resource of 632,000 ounces of gold at 0.92 g/t plus an inferred gold resource of 326,000 ounces at .89 g/t. Talapoosa also contains a resource of 8.2 million ounces of silver at a grade of 12.2 g/t in the measured and indicated categories plus an inferred resource of 4.3 million ounces grading 11.6 g/t. Gunpoint currently has approximately 39.1 million shares issued and outstanding.
Chesapeake remains focused on its world class Metates project located in Durango State, Mexico. A pre-feasibility study is currently being advanced and expected to be released in Q3 2012. In addition, Chesapeake continues to systematically explore its regional projects near the Metates and Ranchito sites (see NR4-2012, dated March 6, 2012). Geophysical survey work has been contracted to commence in July. Drilling at one of the regional projects is planned for late third quarter. Currently Chesapeake has approximately $40 million in working capital.
Mr. Alberto Galicia, P.Geo., Chesapeake's Project Manager and a Qualified Person as defined by NI 43-101 supervised the preparation of the technical information in this release. E. Max Baker, Ph.D., Member AusIMM, President of Gunpoint, has also reviewed this news release.
For more information on Chesapeake, please visit our website at www.chesapeakegold.com.
CHESAPEAKE GOLD CORP.
P. Randy Reifel, President
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this release are forward-looking statements, such as estimates and statements that address future events and conditions that describe the Company's future plans, objectives or goals which are subject to various risks and uncertainties in relation to the Company. The assumptions used in the preparation of such statements although considered reasonable at the time of preparation may prove to be imprecise and as such, actual results in each case could differ materially from those currently anticipated in such statements. The Company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations
Chesapeake Gold Corp.
604-731-1094
www.chesapeakegold.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
http://www.theglobeandmail.com/globe-investor/news-sources/?date=20120620&archive=ccnm&slug=201206200799846001
otterman
12 years ago
Chesapeake Gold Corp.: New Positive Scoping Changes Delays Metates Pre-Feasibility Study Into Q3
Friday, May 25, 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 25, 2012) - Chesapeake Gold Corp. ("Chesapeake") (TSX VENTURE:CKG) wishes to report on the current status of the pre-feasibility study ("PFS") of its 100% owned Metates project located in Durango State, Mexico. One of the largest undeveloped gold-silver projects in the Americas, Metates contains a NI43-101 measured and indicated resource of 1.18 billion tonnes at a grade of 0.50 g/t gold and 13.7 g/t silver containing 19.0 million ounces gold and 519 million ounces silver together with 4.2 billion pounds of zinc (see NR2-2012 dated February 16, 2012).
Subsequent to the updated preliminary economic assessment study ("PEA") (see NR1-2011 dated March 7, 2011) and the recent new resource estimate on Metates (see NR2-2012), Chesapeake and its team of prominent industry consultants have during the past few months made a number of important process and scoping changes that will positively impact the PFS in respect to the capital and operating economics, zinc production, water conservation, energy costs, environmental impact and mine closure.
Most of the key tasks integral to the PFS such as the mining plan, comminution, flotation and pressure oxidation circuits, gold and silver recovery facilities, pipelines, road construction and geotechnical studies are substantially complete. To complete and integrate the engineering and costing for the optimization work still underway, the Company's independent consultants are targeting mid third quarter for the PFS results to be available. Some of the principal changes which will impact the PFS include:
1.Based on the new resource estimate prepared by Independent Mining Consultants ("IMC") of Tucson, Arizona (see NR2-2012), optimization studies have determined that approximately 300 million tonnes of low grade resource material (with an average grade above the mine cutoff grade of 0.35 g/t gold equivalent) which was previously treated as waste in the PEA, will now be stockpiled during active mining operations. In the PFS, it is now contemplated that the stockpiled ore will be processed at the end of active mining thereby extending the project by six years and add about four million ounces of gold-equivalent revenue. Production from the low grade stockpile will significantly lower the life-of-mine ("LOM") stripping ratio as well as fund the project's final reclamation work. Moreover, the tailings resulting from processing the stockpile will be deposited into the mined out open pit filling it to about 35% of total depth. The tailings back fill will accelerate the development of a pit lake required for final closure. Final engineering and costing of the mine plan is expected within 4-5 weeks.
2.Separate storage facilities were designed in the PEA for the waste rock and flotation tailings at the Metates mine site. As reported after the PEA, the PFS will integrate the co-disposal of these products into a common facility. Recent optimization engineering now includes the addition of a dewatering circuit to the flotation concentrate tailings to recycle more than 80% of the process water at the mine site. The resulting water conservation will lead to major cost reductions in the water supply and distribution systems. Furthermore the filtered dry tailings enables a "cap and cover" technique whereby the benign tailings will be used to encapsulate mine waste rock during daily operations. This sustainable best practice is considered to be one of the most effective ways of limiting potential acid rock drainage conditions. Besides the footprint of the co-disposal area being appreciably reduced, the concurrent on-going reclamation will significantly reduce the closure costs and long-term environmental liability. Final engineering of the tailings dewatering and placement systems is expected to be complete within 4-5 weeks.
3.The PEA provided for recovery of a zinc concentrate from the pressure oxidation solutions and shipment to a third party smelter for final processing. The PFS will incorporate a solvent extraction/electrowinning process ("SX/EW") to produce a high value zinc ingot onsite. Based on IMC's new mine schedule, Zincobre of Spain is engineering an 80,000 tonnes per year SX/EW plant that will produce nearly twice as much zinc over the LOM as was projected in the PEA. The process plan facilitates the production and stockpile of a zinc hydroxide product recovered from the pressure oxidation circuit that exceeds the capacity of the 80,000 tonnes per year SX/EW plant. Peak zinc grades occur early in the mine schedule and the stockpile will feed and maintain the SX/EW plant at nearly full capacity through the project life. In the PEA all of the zinc that exceeded plant capacity was lost, amounting to about 1.6 billion pounds LOM. Final engineering and costing for the SX/EW plant and stockpile location is expected in 3-4 weeks.
4.The overall environmental impact of the project will be significantly reduced with the use of clean burning natural gas instead of coal to fuel the project's dedicated power plant. Current estimates from third party power providers indicate that the capital cost savings and long term stable supply of natural gas will reduce the cost of electrical power supplied to the project. The Mexican government has recently announced the planned construction of two natural gas pipelines that will service the area close to the project. Switching to gas from coal in the PFS has resulted in new engineering at the Ranchito metal processing site to eliminate coal handling systems and redesign for the kiln fuel source in the limestone mining and neutralization operation. Final engineering for the Ranchito metal recovery facilities should be completed within 5 weeks.
Mr. Randy Reifel, President of Chesapeake said, "The delay in issuing the PFS is unfortunate but the optimization studies using international best practices have added considerable value to the project. Compared to the PEA, we anticipate that the PFS will report significantly more gold, silver and zinc production through a longer mine life while reducing the overall environmental impacts at both the Metates and Ranchito sites. We believe that the results of the PFS will confirm that this project has the potential to be a low cash cost, long lived precious metal producer with excellent project economics."
Currently, Chesapeake has over $41 million in working capital. Chesapeake is continuing to work toward a full feasibility study during the PFS period. Management also believes the proposed waste management practice and mine closure plan will be very positive for permitting the project's development and construction.
Gary Parkison, CPG, Chesapeake Vice President Development and a Qualified Person as defined by NI43-101, has reviewed the technical information presented in this release in regards to the Metates project.
CHESAPEAKE GOLD CORP.
P. Randy Reifel, President
FORWARD LOOKING STATEMENTS
Some of the statements contained in this release are forward-looking statements, such as estimates and statements that address future events and conditions that describe the Company's future plans, objectives or goals which are subject to various risks and uncertainties in relation to the Company. The assumptions used in the preparation of such statements although considered reasonable at the time of preparation may prove to be imprecise and as such, actual results in each case could differ materially from those currently anticipated in such statements. The Company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations
Chesapeake Gold Corp.
604 731 1094
www.chesapeakegold.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
http://www.theglobeandmail.com/globe-investor/news-sources/?date=+20120525&archive=ccnm&slug=201205250793354001
otterman
12 years ago
Chesapeake Updates Status of the Pre-Feasibility at Metates Regional Exploration Underway On Three New Mexican Prospects
Tuesday, March 06, 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 6, 2012) - Chesapeake Gold Corp. (TSX VENTURE:CKG) ("Chesapeake" or the "Company") wishes to report on the current status of the pre-feasibility study ("PFS") on its 100% owned Metates project located in Durango State, Mexico. In support of the PFS, Chesapeake recently announced a new NI43-101 compliant resource for Metates (see NR2-2012) which estimates the project contains a total of 19.0 million ounces gold and 519 million ounces silver (Measured + Indicated), making it one of the largest undeveloped precious metal resources in the Americas.
To date, most of the key tasks integral to the PFS such as the comminution, flotation and pressure oxidation circuits, pipelines, road construction and geotechnical studies are nearing completion. The Company, however, has been advised by their independent consultants that two critical path tasks are lagging and will delay the delivery of the results of the PFS until early second quarter 2012. One delay is related to the lag in obtaining vendor quotes from several key equipment manufacturers. Another factor is the completion of the design and costing of the zinc metal recovery (SX/EW) circuit which is now estimated to take an additional several weeks. In both cases, the delay is largely due to the extremely high work load being experienced by most consultants working in the mining and metals industry.
Chesapeake is confident the results of the PFS will generally support the results of the preliminary economic assessment (see NR1-2011) and confirm that the Metates project has the potential to be a large scale, long life, and low cash cost precious metal producer.
Regional Exploration
Besides advancing Metates towards the near term completion of the PFS, Chesapeake has also been engaged in an aggressive regional exploration program. Generative exploration has focused on the Mexican states of Durango and Sinaloa proximate to the Metates and Ranchito sites. Thus far, this program has been successful in identifying three new highly prospective properties that represent district scale opportunities with the potential to host large bulk minable precious metal and/or polymetallic deposits.
Jacky , Sinaloa State
Jacky is a significant new discovery hosting a low sulfidation epithermal system(s) characterized by multiple events of quartz veining that includes breccias, bladed quartz replacing calcite and stockworks. Preliminary exploration has identified a regional scale subvertical northwest-trending fault zone cutting intrusive rocks which hosts a strongly silicified mineralized zone at least 1,200 meters long, up to 100 meters wide and with a vertical extent of more than 400 meters. The regional fault which controls the mineralization extends at least eight kilometers, well beyond the limits of the known mineralization, and presents a very attractive target for further exploration. In addition, mineralized quartz veins are also associated with several large peripheral areas of strong argillic alteration.
Channel sampling across partial sections of the quartz veins and stockworks has returned the following results over different elevations along this structure:
•21 meters of 1.5 g/t gold and 50 g/t silver
•6 meters of 6.0 g/t gold and 143 g/t silver
•7 meters of 1.4 g/t gold and 23 g/t silver
•4 meters of 1.0 g/t gold and 64 g/t silver
Jacky is a grass roots discovery by Chesapeake and the Company has applied for a large 11,000 hectares concession covering multiple target areas within this new district. The style of mineralization present at Jacky is similar to that at several large precious metal producers in the Sierra Madre of Mexico including the Palmarejo and Pinos Altos mines.
San Ramon, Sinaloa State
San Ramon is a gold-copper-silver deposit where extensive garnet-magnetite-hematite-malachite mineralization has developed within exoskarn developed along a regional contact zone between Cretaceous limestones and Tertiary granodiorites. To date, preliminary geologic mapping and sampling have identified two main mineralized zones along six kilometers of this limestone-granodiorite contact. This favorable contact goes under post-mineral cover to the northwest and generally dips shallowly to the southwest. These two zones are three kilometers apart and separated by an area of cover and sparse mineralized outcrops.
The Northwest zone crops out over an area measuring 700 meters by 500 meters and hosts skarn type mineralization over a thickness ranging from 10 to 50 meters. An envelope of disseminated oxides and sulfides developed in jasperiodal limestone commonly overlies the skarn, adding several meters in thickness to the mineralization. Channel sampling in this zone has returned the following results:
•42 meters of 0.5 g/t gold, 45 g/t silver and 1.7% copper
•8 meters of 1.2 g/t gold, 96 g/t silver and 2.0% copper
•20 meters of 0.3 g/t gold, 91 g/t silver and 1.0% copper
Skarn type mineralization in the Southeast zone can be traced discontinuously over an area measuring at least 600 meters by 100 meters, with a mineralized thickness from 10 to 50 meters. Channel sampling in this zone has returned the following assay results:
•90 meters of 0.9 g/t gold, 40 g/t silver and 1.2% copper
•32 meters of 0.9 g/t gold, 113 g/t silver and 1.5% copper
•20 meters of 0.5 g/t gold, 37 g/t silver and 0.7% copper
Chesapeake has consolidated a large land position covering the entire extent of this regional contact zone. The flat lying geometry, favorable topography, consistently good grades and known extent of the skarn mineralization, together with its possible extension to the northwest makes San Ramon an exceptional exploration target.
Nicole, Durango State
Mineralization in the core area of the Nicole prospect bears a strong similarity to the sediment and intrusive hosted mineralization found at Metates. Abundant sulfides are noted in outcrop including pyrite, sphalerite and enargite as stockwork veinlets and disseminations. As at Metates, these sulfides are commonly associated with strong hydrothermal alteration. Exploration to date has outlined an area of Metates type mineralization measuring about 600 meters by 500 meters, from which channel samples have returned the following results:
•135 meters of 0.8 g/t gold, 16 g/t silver and 0.74% zinc
•50 meters of 0.4 g/t gold, 13 g/t silver and 1.0% zinc
•35 meters of 0.7 g/t gold, 20 g/t silver and 0.48% zinc
•20 meters of 0.4 g/t gold, 116 g/t silver and 0.53% lead
At higher elevations peripheral to the core area of Metates type mineralization there are epithermal quartz veins with higher precious metals and lower base metal values. As such, the mineralized system at Nicole may be zoned with the potential for additional Metates type mineralization at depth. Channel samples across these quartz veins have returned:
•4 meters of 0.3 g/t gold and 397 g/t silver
•2 meters of 7.3 g/t gold and 810 g/t silver
•10 meters of 0.1 g/t gold and 83 g/t silver
Chesapeake can leverage its knowledge of the geologically similar Metates deposit to efficiently explore and evaluate the Nicole prospect.
Systematic exploration which includes geologic mapping, sampling and trenching is currently underway on these projects. Follow up geophysical surveys including magnetic and IP-resistivity are planned for the second quarter. Based on successful exploration results Chesapeake has budgeted to drill at least one of these projects in 2012.
Currently, Chesapeake has over $45 million in working capital.
ALS Global was the analytical laboratory used for the samples included in this release. Sample preparation was performed in Hermosillo and Zacatecas, Mexico with analyses done in Vancouver, Canada.
Gary Parkison, CPG, Chesapeake Vice President Development and a Qualified Person as defined by NI43-101, has reviewed the technical information presented in this release in regards to the Metates project. Alberto Galicia, P. Geo, Exploration Manager for Chesapeake and a Qualified Person as defined by NI43-101, has reviewed the technical information in this release in regards to the exploration prospects.
For more information on Chesapeake, please visit our website at www.chesapeakegold.com.
CHESAPEAKE GOLD CORP
P. Randy Reifel, President
Some of the statements contained in this release are forward-looking statements, such as estimates and statements that address future events and conditions that describe the Company's future plans, objectives or goals which are subject to various risks and uncertainties in relation to the Company. The assumptions used in the preparation of such statements although considered reasonable at the time of preparation may prove to be imprecise and as such, actual results in each case could differ materially from those currently anticipated in such statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations
Chesapeake Gold Corp.
604-731-1094
www.chesapeakegold.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
http://www.theglobeandmail.com/globe-investor/news-sources/?date=20120306&archive=ccnm&slug=201203060772197001
otterman
12 years ago
Chesapeake Gold Announces New Resource Estimate For Metates
Thursday, February 16, 2012
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 16, 2012) - Chesapeake Gold Corp. ("Chesapeake") (TSX VENTURE:CKG) is pleased to announce the results of a new NI 43-101 compliant resource estimate for its 100% owned Metates gold-silver project located in Durango State, Mexico. The resource estimate was prepared by Independent Mining Consultants ("IMC") of Tucson, Arizona and incorporates 53 core holes totalling 23,500 meters completed by Chesapeake in 2011. The previous resource estimate for the Metates deposit was announced in April 2010 and was based on a gold equivalent cutoff grade of 0.40 g/t gold and assumed metal prices of $900 per ounce gold and $14 per ounce silver. The new resource is based on assumed metal prices of $1,200 per ounce gold and $24 per ounce silver and a cutoff grade of 0.35 g/t gold equivalent*.
Key findings of the new mineral resource estimate are:
•Measured and Indicated resources increase to 19.0 million ounces of gold, 519 million ounces of silver and 4.2 billion pounds of contained zinc, representing over 95% of the total mineral resource
•Inferred resources of 800,000 ounces of gold, 21 million ounces of silver, and 130 million pounds of zinc
•Measured and Indicated gold equivalent resources of 27.9 million ounces
Based on a cut-off grade of 0.35 g/t gold equivalent the in-pit resources are as follows, broken down into sedimentary hosted and intrusive hosted mineralization:
Metates Mineral Resource
Resource Class Ktonnes Gold Eq. Gold Gold Silver Silver Zinc Zinc
(g/t)* (g/t) (Koz) (g/t) (Koz) (%) (Mlbs)
Measured 344,832 0.87 0.60 6,663 15.9 176,377 0.179 1,361
Intrusive Host 90,003 1.05 0.77 2,222 16.5 47,746 0.261 518
Sediment Host 254,829 0.81 0.54 4,441 15.7 128,631 0.150 843
Indicated 834,527 0.68 0.46 12,347 12.8 342,314 0.153 2,824
Intrusive Host 148,000 0.82 0.61 2,922 12.1 57,576 0.216 705
Sediment Host 686,527 0.65 0.43 9,425 12.9 284,738 0.140 2,119
Measured + Indicated 1,179,359 0.74 0.50 19,010 13.7 518,692 0.161 4,184
Intrusive Host 238,003 0.91 0.67 5,144 13.8 105,323 0.233 1,223
Sediment Host 941,356 0.69 0.46 13,866 13.7 413,369 0.143 2,962
Inferred 67,557 0.54 0.38 818 9.7 21,158 0.088 130
Intrusive Host 5,368 0.57 0.43 74 7.9 1,363 0.059 7
Sediment Host 62,189 0.54 0.37 744 9.9 19,795 0.090 123
*Gold equivalent grade is defined as gold (g/t) plus silver (g/t)/58.4 taking into account different metallurgical recoveries for gold and silver. Note: contained resources may not add due to rounding
The Metates resource estimate is based upon 29,223 assay intervals and 229 diamond core drill holes totalling 86,700 meters. An updated geologic interpretation included 14 rock types and 10 structural domains. The resource estimate used inverse distance weighting methods to assign estimated gold, silver and zinc grades to blocks within the geologic domains. The average drill hole spacing throughout the resource area is approximately 75 meters. Block size for the geology and grade estimation modeling was 15 meters by 15 meters by 15 meters. Grade models were validated visually and the inverse distance resource estimates were compared with nearest neighbour models. Tonnage estimates incorporated 617 bulk density measurements to assign unique densities for the 14 different rock types defined in the geologic model. IMC classified the resource by applying a specific number of individual assay composites together with the average distance from the closest drill holes for each block.
The mineral resource was estimated within the US$1,200 gold optimized pit shell (using a cut-off grade of 0.35 g/t gold equivalent) based on a large open pit delivering ore at the rate of 120,000 tonnes per day. The economic parameters and costs used to develop the pit shell are processing the ore via grinding, production of a flotation concentrate and oxidation of the concentrate followed by cyanidation to recover gold and silver. Assumed operating costs were US$1.50 per tonne for mining, and US$10.80 per tonne for processing, general and administrative. Estimated overall metal recoveries are 90% for gold and 77% for silver based on extensive metallurgical testing (see Chesapeake news release NR3-2011). Potential revenue from zinc recovery was not used in the economics to derive the resource. Mineralization that is within the block model but falling outside the pit shells is not reported in the resource estimate. Mineral resources that are not mineral reserves do not have demonstrated economic viability and may include inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them and allow them to be classed as mineral reserves.
The open pit associated with the resource measures 2,200 meters north-south, 1,900 meters east-west and about 650 meters in depth. The total material within this cone shell is 2.39 billion tonnes. Based on the results of the 2011 drill program, the deposit remains open to the northwest and southeast. The north and northeast extent of the deposit has been defined as drilling of the former Inferred classed resources in this area largely returned lower grade assays. The 2011 infill drill program supported an increase in the Measured + Indicated resources by 1.83 million ounces gold, 52.2 million ounces silver and 791 million pounds of zinc over the previous estimate.
This resource estimate will form the basis for developing an engineered pit design that will be used to generate potential reserves as part of the upcoming pre-feasibility study ("PFS"). The design of the PFS pit will use a variable and higher cutoff grade than used for this resource estimate to optimize overall economic returns. The PFS pit will sequentially mine the higher grade intrusive hosted mineralization in the earlier years of operation before moving into the sediment hosted mineralization.
Chesapeake's 100% owned Metates project is one of the largest undeveloped gold-silver projects in the Americas. On a gold equivalent basis, Metates contains 27.9 million ounces in Measured + Indicated class material along with 1.2 million ounces in the Inferred class.
The resource estimations were completed by Mike Hester, FAusIMM, of IMC, an independent qualified person ("Q.P.") pursuant to NI43-101, who has reviewed and approved this release. Gary Parkison, CPG, Vice President Development for Chesapeake Gold and Metates Project Manager and a Q.P. has reviewed the technical information contained in this release.
Chesapeake has in place a comprehensive quality assurance/quality control ("QA/QC") program including standards, blanks and duplicate samples as well as check assays that form part of the sampling and assaying protocol. Core samples are cut with one-half of the core shipped directly to ALS Labs in Hermosillo, Mexico for sample preparation with the pulps subsequently sent to ALS Labs in Vancouver, Canada for gold fire assay and ICP analysis. The results of the QA/QC program have been reviewed by Jeff Jaacks, Ph.D, of Geochemical Applications International, Inc., an independent qualified person.
For more information on Chesapeake and its Metates Project, please visit our website at www.chesapeakegold.com.
CHESAPEAKE GOLD CORP
P. Randy Reifel, President
This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Such forward-looking statements and information herein include, but are not limited to, statements regarding prospective gold, silver and zinc production, timing and expenditures to develop the Metates property, gold, silver and zinc resources, grades and recoveries, cash costs per ounce, capital and operating expenditures and sustaining capital and the ability to fund mine development at Metates. The Company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law.
Forward-looking statements or information involve known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Chesapeake and its operations to be materially different from those expressed or implied by such statements. Such factors include, among others: ability to finance mine development, fluctuations in the prices of gold, silver and zinc, fluctuations in the currency markets (particularly the Mexican peso, Canadian dollar and U.S. dollar); changes in national and local governments, legislation, taxation, controls, regulations and political or economic developments in Canada and Mexico; operating or technical difficulties in mineral exploration, development and mining activities; risks and hazards of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected geological conditions, pressures, cave-ins and flooding); inadequate insurance, or inability to obtain insurance; availability of and costs associated with mining inputs and labour; the speculative nature of mineral exploration and development, diminishing quantities or grades of mineral reserves as properties are mined; risks in obtaining necessary licenses and permits, and challenges to the Company's title to properties.
Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward- looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements or information.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations
Chesapeake Gold Corp.
604-731-1094
www.chesapeakegold.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
http://www.theglobeandmail.com/globe-investor/news-sources/?date=20120216&archive=ccnm&slug=201202160766873001
otterman
12 years ago
Chesapeake Gold Corp.: Significant Progress Towards Completion of the Pre-Feasibility Study Reported on Metates
Thursday, December 15, 2011
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 15, 2011) - Chesapeake Gold Corp. (TSX VENTURE:CKG) ("Chesapeake") is pleased to provide an update to various activities and related developments on its 100% owned Metates gold-silver project located in Durango State, Mexico. Metates hosts one of the largest known undeveloped gold and silver deposits containing 17.2 million ounces gold, 466 million ounces silver and 3.4 billion pounds zinc (Measured + Indicated) and 2.6 million ounces gold, 62 million ounces silver and 360 million pounds zinc (Inferred). The April 2011 updated Preliminary Economic Assessment ("PEA") reported that the Metates project would produce an average of 759,000 ounces gold and 20.0 million ounces silver annually over a 19 year mine life with strong project economics.
Metates is envisioned as a conventional open pit mining operation with ore fed to a crushing/grinding circuit with the ground material fed to a bank of flotation cells. The bulk sulphide flotation concentrate is then transported downhill to the Ranchito processing site via a slurry pipeline. At Ranchito, the concentrate is placed into an autoclave circuit where the sulfides are oxidized prior to cyanidation to recover the gold and silver as dore bars. The zinc in the concentrate will be recovered as zinc cathode using solvent extraction/electrowinning methods (SX/EW). Based on the results of pilot and lab scale metallurgical test work reported in September, current overall recoveries based on the above flowsheet average 90% for gold, 77% for silver, and 81% for zinc.
Natural Gas Pipeline and Electric Power
Based on the costs estimated in the PEA, approximately 35%-40% of the total operating cost per tonne of ore processed is related to electric power costs. The PEA assumed power was generated from a dedicated coal fired power plant to be constructed in Tobolampo, a west coast industrial port in Sinaloa State. In November 2011, the Mexican national power commission (Comision Federal Electricidad or CFE) announced their intent to construct a natural gas pipeline along the northwest coast of Mexico. The pipeline would extend south from the current terminus at Hermosillo approximately 900 kilometres to Mazatlan. Gas would be supplied from existing pipelines in the southwest United States. The gas pipeline is slated for completion in 2015.
The importance of this gas pipeline to the Metates project is significant on several fronts. First, a gas fired power plant often has lower operating costs per unit of energy produced and is more environmentally friendly relative to a coal fired plant. Secondly, the capital cost to construct a gas fired plant is approximately one half or less that of a coal fired plant of similar capacity Third, the pipeline allows for more flexible siting options for the power plant which may result in further capital cost savings. In addition, the gas pipeline will allow for the construction of a smaller spur line to the Ranchito processing site where the gas can substitute for coal as the fuel source for the lime kiln and possibly as a combustion source to drive the steam turbines linked to the oxygen plant installation.
Pace Global, a leading energy consulting and management company with headquarters in Fairfax, Virginia, ("Pace"), has been engaged by Chesapeake to advise and support the Company towards it goal to secure a long term, low cost power supply agreement from a third party owner/operator. Pace has reported that several independent power producers have expressed interest in financing and operating a gas fuelled power plant for the Metates project.
Air Products of Allentown, Pennsylvania, ("Air Products"), a leading worldwide supplier of large air separation plants has been providing design and costing guidance for the oxygen plant installation related to the autoclave circuit as part of the Metates pre-feasibility study ("PFS"). Air Products has recently developed a new oxygen production technology (Ion Transfer Membrane or ITM) that offers significantly lower operating and capital costs to produce high purity oxygen while consuming less water and with a smaller physical installation footprint. Oxygen represents the single largest area of operating cost at the Metates project owing to electric power consumption. Air Products believes this technology will have a significant positive impact on the project's operating costs. Commercialization of this technology for large applications is expected to be compatible with the development timeframe of the Metates project.
Integrated Mine Waste Rock and Flotation Tailings Storage Facility
Work has continued on the optimization of waste rock and flotation tailings storage at the Metates site by Ausenco Vector ("Vector") of Denver, Colorado. In the PEA, separate storage facilities were designed for the waste rock and flotation tailings at the Metates mine site. Detailed engineering and design work has confirmed that disposal of both of these products in a common facility located in an area of favourable natural topography within the Arroyo San Nicolas drainage is technically feasible as well as economically and environmentally attractive. In addition the integration of these two waste streams will allow the implementation of a range of acid rock drainage mitigation options using a portion of the tailings as a benign "cap and cover" material. Chesapeake is also evaluating the option of using various tailings dewatering methods to both conserve water and provide even greater flexibility with the placement and operation of this integrated storage facility. Design for closure options currently under consideration includes the partial backfilling of the pit and establishing a natural outlet to eliminate a potential pit lake. Significant long term capital and operating cost savings are associated with this common storage facility and related mine closure.
Work by Vector is also moving forward at the Ranchito site where integrated disposal of both the autoclave acid neutralization residue with the precious metal leach tailings is being evaluated. Characterization testing of both of these materials is on-going. Disposal of both of these materials in a common facility also appears to be geotechnically feasible and significantly less expensive versus the construction and operation of two separate facilities.
Metallurgy
Additional sulphide flotation testing evaluating the impact of a suite of different reagents along with grind size and pH has been completed at Resource Development Inc. of Wheatridge, Colorado. The results of this flotation test matrix series is now available and are currently under review. Preliminary results suggest that high (+90%) gold recoveries are obtained for all test conditions and samples tested. Chesapeake continues to focus on optimizing flotation conditions that will consistently improve silver recoveries to the concentrate.
Geotechnical Investigations
During the 2011 drilling campaign 12 geotechnical holes totalling 3,219 meters were completed as proposed by Call & Nicholas, Inc. of Tucson, Arizona, ("CNI"), to support pit slope recommendations. CNI are integrating the results obtained from these holes along with collected laboratory and field data to determine the pit slope angles to be used in the PFS design pit. CNI is nearing the completion of their studies. Vector has evaluated the results from a comprehensive investigative program that included a series of geophysical surveys, test pits and bore holes to evaluate ground conditions in areas of proposed high impact site facilities at both the Metates and Ranchito sites. These investigations are nearing completion with a few boreholes remaining. Results to date support the proposed location of these facilities as shown in the PEA.
Environmental Studies
Environmental baseline data collection and reporting has been completed for the Metates, Ranchito and connecting infrastructure corridor with no significant environmental issues being identified. The environmental baseline work included a survey of biological, cultural and socio-economic resources. A number of surface and groundwater sampling stations have been established at both the Metates and Ranchito sites and a program of regular sampling is now underway on a quarterly basis.
Other Pre-Feasibility Study Investigations
M3 Engineering & Technology of Tucson, Arizona ("M3") is moving forward with a wide range of project related activities and recently finished the general arrangement drawings for the Metates site. Completed comminution testing and bond index work classified the Metates material as generally soft to moderately soft with reference to impact breakage and abrasion. Based partially on these results, M3 has determined that a more conventional SAG mill/ball mill circuit will be included in the PFS rather than the high pressure grinding rolls utilized in the PEA with a considerable capital cost savings. M3 is also working on obtaining vendor quotations for major capital cost items including crushing, grinding, flotation, thickening, precious metal recovery circuits and lime kiln. Sherritt Technologies will be developing the detailed design and capital and operating cost estimates for the pressure oxidation circuit for the PFS as well as the zinc recovery plant.
M3 has completed their initial design of an alternate access road and concentrate pipeline route from the Metates mine site to the Ranchito processing site. As currently surveyed, the road route is about 127 kilometers long with the pipeline perhaps 5-10% shorter owing to elimination of road switchback segments. The costing of the road and pipeline is underway.
2011 Drill Program
The core drilling program for 2011 has now been finished with a total of 53 holes totalling 24,255 meters. Chesapeake drilled 30 infill holes totalling 14,960 meters to convert Inferred class material to Measured class, and 11 step-out holes totalling 5,307 meters. Final assays from the last core holes are expected this month. Independent Mining Consultants of Tucson, Arizona, ("IMC"), will be incorporating the 2011 drill data into a new resource estimate which should be available in January 2012. The new resource will be the basis for the mine schedule and reserve estimate for the upcoming PFS.
Summary
The recent activities and developments reported represent significant and material new information that will enhance the economic profile of the Metates project. The construction of the natural gas pipeline will address the largest single area of operating cost at the Metates project at no direct capital cost to Chesapeake. Moreover, this pipeline affords the opportunity for further operating cost savings and synergies in numerous other areas. Chesapeake looks forward to integrating these new positive developments into the upcoming PFS. M3 and numerous other coordinating consultants working on the PFS anticipate the summary results of the study will be available during the first quarter of 2012.
Chesapeake currently has 39.8 million shares outstanding (47.5 million fully diluted) and $14 million in cash and liquid investments.
Mr. Gary Parkison, CPG, Chesapeake Vice President Development and a Qualified Person as defined by NI 43-101 supervised the preparation of the technical information in this release.
For more information on Chesapeake and its Metates Project, please visit our website at www.chesapeakegold.com.
CHESAPEAKE GOLD CORP.
P. Randy Reifel, President
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations
Chesapeake Gold Corp.
604-731-1094
www.chesapeakegold.com
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.
http://www.theglobeandmail.com/globe-investor/news-sources/?date=20111215&archive=ccnm&slug=201112150753496001
amarksp
17 years ago
February 8, 2007
http://www.kaiserbottomfish.com/s/Trackers.asp?ReportID=170037&_Type=Trackers&_Title=Tracker....
Imminent merger between American Gold and Chesapeake a marriage made in heaven
Synopsis: American Gold Capital Corp (AAU-V: $2.71) was recommended a medium priority bottom-fish buy in the $0.75-$1.00 range on January 5, 2006 (Tip of the Day - January 5, 2006). The basis for the recommendation was the ownership of two "out of the money" gold deposits in Mexico and Nevada called Metates and Talapoosa that Sun Valley sponsored American Gold acquired while gold was below $400 per oz. The stock jumped in March 2006 when the Chesapeake merger was announced. After analyzing the merger terms I issued a Good Relative Spec Value Buy recommendation at $2.09 (Tracker 2006-08 - March 20, 2006) on the premise that the value of the share, warrant and conversion "right" American Gold would receive upon completion of the merger would be worth much more than the prevailing price. These terms have changed somewhat to accommodate jurisdictional and tax issues, but their effect for American Gold shareholders remains largely unchanged. American Gold stock traded as high as $2.80 in May 2006 before succumbing to the double whammy of the general market sell-off and delays encountered with the details of the merger. We are now close to the merger's completion, and we have a gold price once again in an uptrend that is at the highest level since the sell-off in May 2006.
For those of you adhering to the bottom-fishing strategy American Gold remains a Spec Cycle 100% Hold because 1) I expect the 3 pieces of paper you will get during the next couple weeks will soon be worth a lot more than the $2.71 you could get today by selling American Gold, and, 2) the bottom-fishing strategy forbids adding to your position once a speculation cycle gets underway. For those of you who are Spec Value Hunters, namely sophisticated investors seeking to exploit inequities in the resource sector, I recommend not only holding the American Gold shares you bought when I recommended the stock at $2.09, but I also recommend adding to your position at the current price of $2.71 before the merger to secure a position that not only gives you a stake in Randy Reifel's ability to repeat the success he achieved with Francisco Gold through the El Sauzal and Marlin gold discoveries, but to also secure a stake in the possibility that the price of gold will soar well above $850 during the next 5-6 years. However, I qualify this recommendation in that if you are a hard money or apocalyptic gold bug (Paul van Eeden, Ian Gordon etc), you should ignore this recommendation, for if you believe gold will go up because the US dollar collapses or the global economy goes to hell in a handbasket, you will probably lose money buying American Gold because in your scenario American Gold's assets will remain out of the money regardless of the price of gold. But if you are a conspiracy gold bug (GATA, John Embry, James Turk etc) who thinks the price of gold has been artificially suppressed and will slingshot to a much higher "real" level without a corresponding rise in capital and operating costs, then buying American Gold now before the merger makes a lot of sense. And if you are a "prosperity" gold bug such as myself who believes that gold's increasingly obvious irrelevance as "money" makes it highly attractive as an asset class independent of sovereign and corporate risk in an expanding global economy whose eventual power structure 10-20 years from now strikes you as rather murky, meaning that in the interim raw gold ownership demand will outstrip incremental mine supply as everybody hedges a portion of their wealth in something that is not readily "fabricated", "printed" or otherwise bestowed with the ontological quality of "existence", then you too will (hopefully) see wisdom in owning American Gold before the merger is consummated.
The merger between American Gold and Chesapeake Gold Corp (CKG-V: $6.88) is expected to close by February 14 (a suitable day for a marriage made in heaven), at which point I will close out the American Gold bottom-fish cycle because it will become too complicated to track the value of the 0.29 Chesapeake shares, 0.145 Chesapeake warrants and 0.029 Chesapeake Series 1 Class A (possibly non-trading) shareholders will get for each American Gold share. For those of you who are math challenged or averse to complexity, or just plain skeptical that gold will rise much above $850 during the next five years, I recommend the simplicity of just buying Chesapeake Gold at $6.88. In formal terms, Chesapeake Gold is a Good Relative Spec Value Buy at $6.88 based on the $300 million implied project value of Metates based on 43 million fully diluted Chesapeake shares. This alternative of ignoring American Gold and buying Chesapeake instead is valid because the merger gives Randy Reifel's Chesapeake the critical mass needed to attract an institutional audience leery of mother nature's willingness to cough up new world class discoveries, but cognizant of the Reifel team's willingness to squeeze value out of an existing deposit. Sun Valley's strategy of accumulating "out of the money" deposits with an optimistic macro commodity outlook was essentially passive, but in merging with Chesapeake this strategy gains an active component where the Chesapeake management will look hard at making Metates and Talapoosa work at a gold price below $850. Metates has a resource of 3.4 million ounces gold and 61 million ounces silver, while Talapoosa has a resource of 1 million ounces gold and 14 million ounces silver. Randy Reifel thinks his team can make Metates and Talapoosa valuable at prices below $850 gold. Chesapeake is thus very attractive to speculators who think gold will oscillate between $500 and $1,000 during the next 5-6 years without triggering the $850 conversion privilege, and who think Randy Reifel's team has the smarts and will to extract value from Metates and Talapoosa below $850 gold. The American Gold/Chesapeake merger is an example of where the sum of the parts is worth more than the value of the parts on their own. Beyond telling KBFO members that buying American Gold at $2.71 and Chesapeake Gold at $6.88 constitutes rational speculation, Tracker 2007-01 tries to explain how these various pieces of paper American Gold shareholders will get will work.
Breaking down the value of the post merger securities
Shareholders have approved the merger between Randy Reifel's Chesapeake Gold Corp (CKG-V: $6.88) and American Gold Capital Corp (AAU-V: $2.71), with completion expected by February 14, 2007. The merger terms are straightforward for Chesapeake shareholders who keep their shares in the new company which will continue with Chesapeake's name. American Gold shareholders will receive 0.29 Chesapeake shares, 0.145 of a warrant to buy Chesapeake at $8.00 for 5 years (expected to be listed for trading), and 0.029 of a Series 1 Class A share (TSX-V still thinking about listing it for trading). At current prices for American Gold ($2.71) and Chesapeake ($6.88), the value of these three securities breaks down as follows. The 0.29 Chesapeake shares American Gold shareholders will receive are worth $2.00 at $6.88 Chesapeake. A five year warrant exercisable at $8.00 is bound to be worth at least $1.00. That, at least, is what I would be willing to pay; I have not attempted a Black and Scholes valuation because the leverage implicit in Chesapeake's price as linked to Metates suggests an off the scale volatility. On my terms the 0.145 warrant received for each American Gold share would be worth about $0.15. At $6.88 Chesapeake, if the $850 magic number was triggered, the 0.029 Class A shares would convert into 0.29 Chesapeake shares worth $2.00. This $2.00 value for the 0.029 Class A shares, however, is not realistic because of the uncertainty that their convertibility will be triggered during the next 5-6 years. They would thus have a market value lower than the converted value. For the value of American Gold now and the 3 securities issued after the merger to be a wash, the 0.029 Class A share would have to be worth $0.56 ($2.71 AAU price minus $2.00 for 0.29 CKG at $6.88 minus $0.15 for the 0.145 CKG warrant trading at $1.00). In other words, if the Class A shares were listed, they should trade at $19.31 to make the American Gold merger exchange a wash. Since the Class A share converts into 10 Chesapeake shares if gold trades at $850 average for 90 days, it would have a theoretical value of $68.80 on conversion if Chesapeake is at $6.88. The current pricing of American Gold relative to Chesapeake is assigning a 72% discount to the Class A shares.
Why make the Class A shares convertible into Chesapeake 10:1?
If the Class A share were trading, what would one expect its value to be? The Series 1 Class A share is an unprecedented instrument whose value is tied to the price of gold and the share price of Chesapeake. If the LME afternoon gold fix averages at least $850 per oz during any 90 day period, the Series 1 Class A share converts into 10 Chesapeake shares. One might ask why American Gold shareholders receive 0.029 Class A shares that convert into 0.29 Chesapeake shares rather than 0.29 Class A shares that convert 1:1. The answer is that Class A shares carry the same voting rights as common shares, which would have given American Gold shareholders nearly 50% of the votes of Chesapeake in the 1:1 scenario. In effect, this signals that control of the destiny of American Gold's "sleeper" assets shifts from Sun Valley (Peter Palmedo and Chris Falck) to Randy Reifel. Lurking in the background as a significant shareholder of the merged company will be Goldcorp, which has now swallowed the swallower (Glamis Gold) of Randy Reifel's past success stories.
The Class A share is an external event driven security
The merger was first announced on March 3, 2006, and has taken a long time to complete because of complex jurisdictional and tax issues. What started out as a merger structure viewed as brilliant by people like myself, got bogged down in consequences for American and Canadian shareholders, as well as regulatory concerns about exchange values and other arcane issues. The biggest trouble has been caused by the Class A share, a hybrid security whose value is linked both to the future price of gold and the value of Chesapeake. It is an "event driven" security, meaning that it has no intrinsic value until an event external to the security it converts into has occurred. Gold could swing between $650 and $1,000 during the next 5 years without ever producing that $850 average price over 90 days needed to make the Class A convertible into Chesapeake stock. While everybody is focused on Chesapeake's ability to demonstrate Metates economic at less than $850 gold, Chesapeake could make a world class discovery on one of its grassroots exploration plays in Mexico which takes the stock to $50. That would make the Class A portion shareholders got for their American Gold stock worth $14.50 if it became convertible. But until that trigger is achieved, the intrinsic value is zero. In this scenario the price of gold becomes unrelated to the price of Chesapeake. The market value of the Class A share would thus be based on the probability that the Class A share would become convertible into common Chesapeake stock. That probability would be exclusively linked to the gold price.
What about Chesapeake speculation that conversion will never be triggered?
The pricing of the Class A share, however, is more complicated than estimating the probability that gold will average at least $850 for 90 days during the next five years and looking up the price of Chesapeake. There is nothing special about the $850 price in terms of the economic value of the Metates deposit. At $849 gold the Metates deposit could be worth a lot to Chesapeake, especially if metallurgical breakthroughs are achieved. If the Class A shares expire in 5 years without the conversion trigger occurring, about 9 million shares of potential Chesapeake dilution will disappear. Assuming the trigger is within achievable range given the volatility of the gold price, the market would be expected to price Chesapeake on the basis of its projects' economic value divided by Cheaspeake's fully diluted capitalization. For example, suppose nearly 5 years from now the market decided Metates, Talapoosa and Chesapeake's other assets were worth $2.2 billion. At 43 million fully diluted shares that translates into about $50 per share. Suppose the Bank of England decides it is time to sell some more gold with great fanfare, knocking back the price of gold just enough so that the magic 90 day average price of $850 is not achieved. The Class A shares that would have converted into 9 million common shares evaporate, reducing the fully diluted capitalization of Chesapeake to 34 million shares. Because a 5% swing above or below $850 gold is not going to materially change the market's economic assessment of Chesapeake's gold assets, the new Chesapeake stock price should be $2.2 billion divided by 34 million, or about $65. But how much of that post-expiry jump will already be built into the Chesapeake price? At $65 Chesapeake the Class A portion received for each American Gold share would have a conversion value of about $19 rather than the $14.50 at $50 Chesapeake. The point I'm trying to make is that the pricing dynamic underlying the Class A shares becomes circular as we approach boundary conditions.
Another wrinkle: the gold price can extend the Class A expiry by 1 year
The merger terms also include a provision that if the Class A shares are listed for trading on a stock exchange, and LME gold manages to close at $850 or higher for only 1 day during the final 6 months of the 5 year expiration period, the expiry will be extended to 6 years. Here a single day's price fix could prevent the Class A share from becoming worthless, and bestow on it another year to actualize the conversion triggered underlying value. This is not a simple matter of calculating time and volatility premiums. The pricing of the Class A shares in these boundary conditions involving unrelated forces interwoven in a non-linear dynamic will keep some mathematician very busy.
Sad, but no surprise that the TSX is reluctant to list the Class A shares
That the TSX regulators are mulling the Class A shares with furrowed brows is no surprise, because this instrument is precedent setting and will be much copied, especially if an exchange accepts them for trading. It creates a way for apples and oranges to merge. For example, both Stornoway and Ashton shareholders might have been happier with a takeover bid which included a security with a time limit that converted into Stornoway stock only if a certain milestone were achieved. In the case of Ashton the milestone would not have involved linkage to a diamond price, but rather some sort of diamond resource size threshold like those which trigger back-in rights in property option agreements. The case of American Gold is different in that the resource is already known, and it is a commodity price change which would create value. Chesapeake, of course, would have no control over the price of gold. At a time when there is great uncertainty about the level of long term metal prices - witness the ongoing battle between the structural bulls and cyclical bears - at the same time there is the will and capital to consolidate assets that could be developed into mines if current metal prices prove sustainable, one would expect Class A scenarios such as pioneered by Chesapeake and American Gold to become a popular negotiating term.
The Chesapeake Class A share is a blueprint for a novel merger and acquisitions strategy
For example, consider Blue Pearl, a medium sized molybdenum producer. There are a number of juniors with molybdenum deposits that are economic at $25/lb molybdenum, but are trading well below the value of the deposit in discounted cash flow terms because the market is unwilling to plug current metal prices into cash flow models. The gap between the market value of these juniors and the project DCF at current base metal prices is often enormous. This gap could be closed by a Blue Pearl issuing Chesapeake style Class A shares with a conversion trigger linked to long term molybdenum prices when acquiring strategic molybdenum deposits.. Blue Pearl would only suffer the dilution from the conversion if molybdenum prices hold up over the long run. In such a scenario the acquired deposit would likely be worth much more than the acquisition price paid in common and convertible stock, because the negotiated value would be somewhere between the company's market value and the DCF value of the assets at prevailing metal prices. What clinches the deal is the expectation that the shareholders of the acquired junior would receive a bonus through the conversion of their "Class A" shares in the event that the rosy metal price scenario transpires. If such contingently convertible securities are allowed to trade, the initial recipients could collect a premium before the trigger is fulfilled. It would be a way for both the acquiring and acquired company to shift commodity price risk to the market. It would encourage more merger and acquisitions activity involving the juniors, which is a way of cementing the value created by a venture capital oriented stock exchange such as the TSX-V. It would also encourage larger companies to include "strategic" considerations in their decision-making, such as Inco did in 1996 when it bid 4 times more for Diamond Fields than Voisey's Bay was worth in discounted cash flow terms. (Readers may recall that Inco also used time limited securities in the bundle it issued for Diamond Fields.)
Could Class A style shares be the niche CNQ needs to put itself on the map?
It is understandable that the TSX would prefer to keep its distance from securities with complex pricing dynamics. It has been suggested that such shares get listed on the Montreal Exchange which specializes in derivatives, but the Chesapeake Class A shares are not a true derivative and the Montreal Exchange is apparently not interested in this type of security. Could it be that this is the niche which could put Canada's fledging CNQ stock exchange on the map? I don't bother to follow anything which lists on the CNQ because the universe of juniors offered by the TSX-TSXV is large enough and CNQ appears to be a destination for companies whose corporate transactions are rejected by the TSX. If CNQ can offer efficient order execution for the Chesapeake Series 1 Class A shares, and accepts listing of these securities which convert into the shares of companies listed on bigger exchanges, it would make itself relevant to a very broad audience.
If the TSXV lists the Class A shares, the convertibility changes
At the moment Chesapeake management is pessimistic that the TSXV will accept the Class A shares for trading, in which case the recipients will have to hold them or try to sell them in the grey market. If they are listed for trading, the conversion terms would change slightly, thanks to an obscure exchange requirement. Key to the conversion ratio is the price of Chesapeake on the day that the conversion trigger is deemed to have been achieved. The conversion ratio will be the Chesapeake price less $1.00 divided by the Chesapeake price and multiplied by 10. So if Chesapeake is at $8.00, one Class A share would convert into 8.75 Chesapeake shares. If Chesapeake were trading at $50, the Class A share would convert into 9.8 shares. (The higher the stock price, the closer to 1.0 will be the conversion ratio.) Of course, if Chesapeake's price has collapsed to $1.00 or lower, the conversion ratio would be zero. The formula protects Chesapeake from a dilutionary death spiral. This sliding conversion ratio applies only if the Class A shares are listed for trading within 60 days of the merger. I don't like this feature because it adds another layer of uncertainty to the value of the Class A shares, and because this provision was at the insistence of the TSX, which is backing off from letting the Class A shares trade, I would hope that Chesapeake abandons this formula if it gets the Class A shares listed on another exchange such as the CNQ.
The merger of American Gold and Chesapeake creates a strong company
The Series I Class A instrument was created because American Gold's primary asset is the Metates gold-silver deposit in Mexico whose various metallurgical, environmental and location challenges require $850 gold or better to be economic. When the merger plan was announced in March 2006 Chesapeake was cash rich and busy generating gold-silver projects in Mexico with the goal of duplicating its discovery successes, El Sauzal and Marlin. American Gold wanted to acquire additional "out-of-the-money" gold deposits, but its ability to do so on lucrative terms was hampered by the fact that higher gold prices were needed to justify a higher stock price based on Metates and Talapoosa. For both companies it was a waiting game whose outcome neither management could speed up. The merger would combine an exploration machine with a couple advanced gold-silver deposits whose value would blossom with a rising gold price. The merged company will have about $40 million working capital. It is a good example of the Plan A-Plan B-Plan C strategy which I think is perfect for that phase of the market cycle where one is uncertain that this is as good as it will ever get, or just a lull before it gets a lot better.
Randy Reifel not a fan of hard money or apocalyptic gold bug thinking
In designing the terms of the Series I Class A share Chesapeake's Randy Reifel has distanced himself from the "hard money" gold bug crowd which anticipates a much higher gold price due to the collapse of "fiat money". Unfortunately, real costs do not shrink when a fiat currency is debased, with the result that a higher gold price created by rampant inflation is accompanied by correspondingly higher cost thresholds. In accepting the terms of the Series 1 Class A shares, Reifel is gambling that the cost of developing Metates stays put while the price of gold soars above $850. If anything, he is expecting an increase in the real price of gold. For those who tie the price of gold to the fate of the US dollar, this merger has dilutionary implications for Cheasapeake, which may be forced to issue extra stock when the price of gold goes up even though Metates remains worthless thanks to a corresponding increase in costs. This group would include "hard money" gold bugs like Paul Van Eeden as well as apocalyptic gold bugs like Ian Gordon for whom the only way to benefit from a rising gold price is to own gold itself.
The new Chesapeake will appeal to conspiracy and prosperity gold bugs
The deal does, however, make sense to the conspiracy type of gold bug such as GATA and John Embry, who believe that the price of gold has been artificially suppressed. In this view the inflation has already happened and is reflected in the real cost of developing Metates. What the conspiracy gold bugs are looking for is a slingshot effect where gold jumps to a much higher level without a corresponding increase in costs. This "catchup" is similar in outcome to that expected by "prosperity" gold bugs, among whom I would count myself. But while a conspiracy gold bug thinks that the market for gold is manipulated by a cabal of masterminds trying to hide the true state of affairs, a prosperity gold bug thinks that the gold market is free in the sense that all gold owners are acting to maximize their own interest, and that a higher gold price will develop if demand for gold ownership outstrips new supply in the long run. Furthermore, such demand will not develop because the economic apocalypse has arrived, but rather because the growing prosperity of a global economy engenders new demand for an asset class that is independent of sovereign and corporate risk. In this scenario the size of the global economy vastly eclipses the current value of the 4 billion ounce above ground stock of gold, and is growing at a faster rate than the incremental new supply added to the gold stock by mine production. For the prosperity gold bug the real price of gold has to go higher precisely because gold is no longer relevant as that accounting system called "money", but has become relevant as a passive physical asset class whose value lies in the fact that it costs resources to bring more of it into existence. (To put gold's irrelevance in context, consider that all the gold in the world sitting in vaults doing nothing is worth just $2.6 trillion while $1 trillion worth of oil gets burned up annually to keep wheels turning.)
Hoping gold does not go to the moon, but not minding if it does
While it would be foolish for hard money and apocalyptic gold bugs to speculate on gold projects that are marginal at current prices, it makes perfect sense for both conspiracy and prosperity gold bugs to speculate on marginal projects such as Metates. And because Chesapeake will have both a Plan A bet on better real gold prices, and a Plan B exploration bet on new discoveries that work at current or lower gold-silver prices, the sum of the two parts will be more than the value of the parts alone. For his part, Chesapeake's Randy Reifel concedes that he is not a gold bug of the hard money or apocalyptic type, and is in fact hoping that gold averages $849 for the next six years while he tries to improve metallurgical recoveries and identify higher grade zones within Metates that make the deposit valuable below $850 gold. But he will not complain about a $1,000 or higher gold price if costs stay put, because that extra $150 per ounce all flows to the bottom line. High cost gold deposits offer extraordinary leverage to scenarios where the real price of gold increases substantially.
Lone Clone
18 years ago
Chesapeake Gold Corp.: Update on Business Combination
Wednesday August 9, 9:00 am ET
http://ca.us.biz.yahoo.com/ccn/060809/200608090341580001.html?.v=1
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 9, 2006) - Chesapeake Gold Corp. (TSX VENTURE:CKG - News; "Chesapeake") and American Gold Capital Corporation (TSX VENTURE:AAU - News; "American Gold"), wish to provide an update on the status of the proposed business combination of the two companies, previously announced March 3, 2006.
Both companies are continuing in their efforts to complete, and expect to be in a position to execute the definitive combination agreement between the companies in late August 2006. The delay in executing the definitive agreement results from the efforts made in evaluating and structuring the proposed transaction to achieve an optimal fiscal outcome from the perspective of both parties and their shareholders.
Once the definitive agreement is executed, American Gold will finalize the information circular for mailing to its shareholders in connection with the holding of a Special Meeting to approve the proposed business combination. It is expected that the meeting materials will be mailed to American Gold shareholders in September for a Special Meeting to be held in October. If the proposed business combination is approved by American Gold's shareholders, the business combination should close in early November, 2006.
Pursuant to the proposed business combination, Chesapeake will issue for every (1) outstanding share of American Gold (i) 0.29 Chesapeake common shares ("shares"), (ii) 0.145 Chesapeake common shares purchase warrants ("warrants") and (iii) 0.29 Chesapeake rights ("rights"). American Gold has 30,855,525 common shares issued and outstanding which will result in the issue of 8,948,102 shares, 4,474,051 warrants and 8,948,102 Rights.
Each Warrant shall entitle the holder to purchase one (1) Chesapeake common share at $8.00 for a term of five (5) years.
The original structure of the transaction will be amended with the issuance of a preferred share instead of a Right. Each Right, which will be received in the form of a Chesapeake Preferred Share, shall be exercisable, for no additional consideration and for a period of five (5) years, into one (1) Chesapeake common share in the event that the average London PM fix closing trading price of gold is equal to or greater than US$850 per ounce on such market during any 90 consecutive day period during the five year term.
Both companies will continue to seek a listing for the Warrants and Preferred Shares. In the event a stock exchange listing is obtained for the Preferred Share, the Preferred Share will be exercisable for one Chesapeake common share at $1.00 for a term of five years which will be extended by one year if the trading price for gold has been at or above US $850 per ounce on any day during the last six months of the five year term.
If the proposed transaction is completed, it is anticipated that Chesapeake will have a total of 28,685 897 shares issued and outstanding. Of these shares approximately 68.8% will be held by the existing Chesapeake shareholders and 31.2% will be held by the existing American Gold shareholders. In addition, it is anticipated that the American Gold shareholders will hold warrants to acquire approximately 4.5 million additional shares and preferred shares to acquire a further approximately 9.1 million shares which if fully vested would represent approximately 53.4% of the then outstanding shares.
The proposed transaction is subject to the execution of the definitive agreement and conditional on American Gold shareholder and regulatory approvals.
Forward looking statements
This press release contains certain forward looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the company's expectations and projections.
The TSX has neither approved nor disapproved the information contained in this press release.
Contact:
P. Randy Reifel
Chesapeake Gold Corp.
President
(604) 731-1094
www.chesapeakegold.com
Chris K. Falck
American Gold Capital Corporation
President
(604) 689-1765 Extension.1
--------------------------------------------------------------------------------
Source: Chesapeake Gold Corp.
amarksp
18 years ago
CKG-Some Well Reasoned Posts...
From: SimplyTheFacts Read Replies (3) of 8151
I just think that there are some catalysts in the near term (not related to the AAU deal) that could generate renewed interest in the stock.
TSL, could you maybe share what these catalysts are that you see in the near term? I didn't want to get into a lengthy discussion last night for I don't want to offend any of us cult members. However, since we have now started a civilized conversation, maybe we could sort through the facts and separate them from the story we have all fallen in love with.
Facts are the highly touted La Juliana property was a bust. Furthermore the high expectations from La Gitana, one of the main reasons many invested in the company, have to this day not been realized. The company is slowly moving its attention to other areas, such as Pena Blanca among others. Drilling has been slow, 21 holes in the past 14 months. Besides the probable 1 mil low grade stuff discovered at La Gitana, to date CKG has acquired it's gold and not discovered it. First by purchasing La Cecilia and now with the merger with AAU.
The "Big News" was a dud simply because merging with AAU will ultimately make CKG a good takeover candidate only when the price of gold is over $750. (Obviously barring a great discovery on one of their properties, which is not happening soon because they are not drilling) IMHO, I don't see the price of gold moving over 750 this year or the next. So CKG's story, if and when it comes through is about three to five years away. Volume is low because there is simply no interest for now. There is no PR and news releases are scarce. We are still waiting on the JV news which should be coming soon, but I don't think that would significantly move the stock.
So all in all, great company, great management and a wonderful story which in time will prove to be a great investment. But for this year and possibly the next the stock will remain under pressure in my opinion, and I can't change that no matter how many pints I have. Please don't shoot the messenger, thank you.
Best,
STF
__________________
From: TheSlowLane Respond to of 8151
I believe that we will see a JV wrapped on La Calavera soon, perhaps in conjunction with some of the results of the work that have been done getting it to the drill-ready stage. I think there is another JV in the pipeline behind that (I am writing from memory, which is dangerous). They had about 10 more holes to do on Cerro di Oro as of PDAC. I expect we will see results on that before too much longer. RR is looking to prove up 1MM ounces at La Gitana. I think LG has proven to be more difficult than perhaps was initially anticipated, in terms of complexity of the structure and the lay of the land. However, they have not walked away from it, the goal is to prove up 1MM ounces for now. Meanwhile, they have found numerous other targets in the area between La Gitana and La Calavera that look highly prospective. Yes, it will take time to quantify that, so probably no near-term catalysts on those. However, it seems to me that based on what they are seeing, the long-term objective of defining a district is not unreasonable. As for when gold is going to hit and sustain $750, I don't think anyone knows for sure. I do recommend that you listen to the Coxe conference call for this week though. The focus is on the US Dollar. The thing with currencies is that crises can develop faster and go further than anyone expects. If that happens with the USD, and that seems probable, given the extremes of the situation, then all bets are off. However, that is clearly out of the realm of things which are under CKG's control. Anyway...you could well be right, we could be sitting on dead money for some period of time. So, whether you stick around or look for opportunities elsewhere and then see how things develop, is a decision only you can make. We'll save you a seat if you wander and let us know if you find anything good(er)!
___________________________
From: jackjc Respond to of 8151
I think that is a more accurate look at CKG.
After 2 yrs of looking for gold CKG has bought a large low grade
gold deposit and become more of a speculation on POG and less
of an explorer.
While his followers may still believe that finding another
profitable gold deposit is a 100% certainty, Randy himself
obviously knows better and is placing a side bet.
I thank him for the FGX profit, but did not stay with the
CKG rollout. However the stock has done well, with a lot of
faith in Randy's ability, and is so priced.
amarksp
18 years ago
Okay...update on CKG...
12/16/2005 4:55:35 PM
From: TheSlowLane
Drilling is finished for 2005. They have some holes in the lab but not all of them, some holes still need to be logged. Since the last press release, eight holes have been drilled. These are all step-outs, all on Cerro di Oro. Some are several hundred metres out, so...big steps. They are trying to get a real feel for this thing. He cautioned that they may not hit on every hole, but that they are quite pleased with the appearance of some of the holes. All of the holes are to the south of previous drilling, at various elevations.
The weather is excellent and they are moving fast now. The drillers did not finish the last hole, but will complete it when they return in January. There is another drill pad that is ready, so they will probably drill one more new hole after returning. He is looking at end of January, early February to be able to release the results. They have gotten more done in the last few weeks than they have in the preceding months (due to weather).
At Pena Blanca...lots of work has been done recently. Trenching, chip sampling, base camp, road access (4 wheel drive). Some of the samples from PB will get to the lab before Christmas. They can already tell that there are targets that are definitely worth drilling there.
Second rig will not be brought in until they have finished their step-outs and have their arms around this beast. They will start drilling the La Gitana vein when the second rig is running.
Lots of work has been done on La Calavera. 25KM of mag survey has been done, they have more to do in January, but that is the last work that needs to be done before it is drill ready. There are three companies waiting on the mag survey results who are JV candidates. It is likely that La Calavera will be JV'ed because it is higher base metal content than the other targets and RR wants CKG to concentrate on the precious metal deposits.
Other JV's may be done on some of the properties in the north, El Volcan and/or El Patos.
As far as Cerro di Oro goes, the core looks pretty darn good and they are fast approaching a million ounces (on CDO alone) and there is a lot more to go. They are getting good numbers on Pena Blanca, it is a big, oxidized system. So, in other words, the stock is at the same level as it was a year ago and the company is way further along.
More stock available at this level than he had expected, but it is getting absorbed. He knows who bought half of the volume today, but I did not press him to divulge. It was a friendly buyer is all he could say.
So...that's it, boys and girls! We gonna rock and roll in 2006, is my guess
____________________
From: TheSlowLane Read Replies (1) | Respond to of 39187
ogi - Pena Blanca is referenced in the NR before the latest one:
"The La Gitana Project lies along a major northwest trending Regional fault that extends for more than one hundred kilometers along strike. During the past several months reconnaissance work has identified 6 potential bulk tonnage target areas which led Chesapeake to stake an additional 350,000 hectares along this trend. The first prospect targeted, Pena Blanca, is an area that consists of several square kilometers of argillic alteration hosting disseminated gold mineralization in clay-quartz zones. Pena Blanca was discovered through stream sentiment sampling with values up to 1.3 g/t gold followed by a rock chip sampling program that returned up to 5.4 g/t gold. Pena Blanca is located 15 kilometers northwest of La Gitana."
_________________
TheSlowLane Read Replies (2) | Respond to of 39187
ogi - one more thing, I don't think we'll see a JV on La Calavera until January at the earliest. Randy wants to complete the mag survey work there before sitting down with the three interested parties. Of course, we want to get the best possible deal, so a little more information first...then they will determine with whom they want to work.
____________________________
From: Claude Cormier Read Replies (1) | Respond to of 39187
Ogi,
First reference to Pena Blanca is page 3 in:
http://www.chesapeakegold.com/download/News_Release_June23_2005.pdf
Second reference to Pena Blanca is page 3 as well as first references to Nopales, Pena Larga, and Sanata Maria in:
http://www.chesapeakegold.com/download/PR%20Nov-21-05.pdf
Ed Monton
19 years ago
Chesapeake Gold sets out terms of La Calavera deal
2004-12-21 16:39 ET - News Release
Mr. P. Randy Reifel reports
CHESAPEAKE ANNOUNCES EXCHANGE APPROVAL OF LA CALAVERA PROPERTY OPTION
Chesapeake Gold Corp. has set out the terms of its deal to option a 100-per-cent interest in the La Calavera precious metal-copper skarn project in central Oaxaca state, Mexico, as previously reported in Stockwatch on June 29, 2004. The property comprises two mineral concessions, Cerro Calavera and La Zalamera.
Chesapeake may acquire a 100-per-cent interest in the Zalamera concession by paying to the optionor $5,000 (U.S.) in cash upon signing the option agreement (paid), undertaking exploration expenditures on the property totalling $2.65-million by Dec. 20, 2009, completing a feasibility study on the property by Dec. 20, 2012, and by issuing to the optionor a total of 150,000 common shares of Chesapeake over a period of five years as follows:
10,000 common shares to be issued on or before 10 days following Dec. 20, 2004;
15,000 common shares on or before Dec. 20, 2005;
20,000 common shares on or before Dec. 20, 2006;
25,000 common shares on or before Dec. 20, 2007;
30,000 common shares on or before Dec. 20, 2008; and
50,000 common shares on or before Dec. 20, 2009.
Chesapeake may acquire a 100-per-cent interest in the Calavera concession by complying with all of the above obligations necessary to earn a 100-per-cent interest in the Zalamera concession, and by making staged cash payments to the original claim owners of the Calavera concession totalling $490,000 (U.S.) over four years (which includes a final payment of $430,000 (U.S.) to be made by Feb. 24, 2008).
Upon completion of the feasibility study, Chesapeake will also issue additional common shares to the optionor as follows:
50,000 common shares, if the feasibility study states that the recoverable proven and probable gold-silver-copper reserves on the property contain either: (i) not less than one million ounces of recoverable proven and probable gold and silver and gold equivalent and silver equivalent reserves; or (ii) not less than 50 million tons of copper mineralized rocks with sufficient grade to render the recovery of the copper economically viable as a credit in the development and production of a polymetallic mine; and
100,000 common shares, if the feasibility study concludes that: (i) the recoverable proven and probable gold-silver-copper reserves on the property are greater than two million ounces of gold and gold equivalent; and (ii) the property contains not less than 100 million tons of copper mineralized rocks with sufficient grade to render recovery of the copper economically viable as a credit in the development and production of a polymetallic mine.
Any common shares issued pursuant to the exercise of the option to acquire the property will have a hold period of four months commencing from the date of such issuance. Except as disclosed herein, no other securities of Chesapeake will be issued as bonuses, finders' fees or commissions in connection with the acquisition of the property.
The original claim owners of the Calavera concession have retained a 1-per-cent net smelter royalty which Chesapeake may purchase for $2.0-million (U.S.) if Chesapeake has earned a 100-per-cent interest in the property.
Upon earning a 100-per-cent interest in the property, the optionor of the property will be granted a 2-per-cent NSR in respect of the Zalamera concession (of which one-half or 1 per cent may be purchased by Chesapeake for $2.0-million (U.S.)) and a 0.25-per-cent NSR on the Calavera concession.
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