Spruce Ridge Resources Ltd. Declares Dividend-In-Kind of Shares of RX Gold & Silver Inc.
Posted on February 13, 2012 at 14:47 PM EST
NORFOLK COUNTY, ONTARIO -- (Marketwire) -- 02/13/12 -- Spruce Ridge Resources Limited (TSX VENTURE: SHL) ("Spruce Ridge") is pleased to announce that its board of directors has declared a dividend-in-kind (the "Dividend") of 7,163,764 of the 7,500,000 common shares of RX Gold & Silver Inc., (formerly RX Exploration Inc.) (TSX VENTURE: RXE) ("RX Shares") held by Spruce Ridge. The Dividend is payable on February 27, 2012 to holders of record of Spruce Ridge Shares at the close of business on February 22, 2012 (the "Record Date").
Spruce Ridge has designated the Dividend to be an "eligible dividend" for the purposes of the Income Tax Act (Canada) and corresponding provincial legislation. The dividend will be taxable and non-residents of Canada will be subject to Canadian withholding taxes. Shareholders with questions regarding the tax treatment of dividends should consult with their own tax advisors or contact their local office of the Canada Revenue Agency and, where applicable, the provincial taxation authorities.
The Dividend will be distributed on a pro rata basis. No fractional shares or cash in lieu thereof (or any other form of payment) will be payable under the Dividend. Any fractional interests in RX Shares under the Dividend will be rounded up or down to the nearest whole number of shares. Based upon the number of Spruce Ridge Shares currently outstanding, and ignoring the effect of rounding for fractional interests, one RX Share will be paid under the Dividend for every four Spruce Ridge Shares held on the Record Date.
It is expected that certificates evidencing the RX Shares paid under the Dividend will be mailed to shareholders of Spruce Ridge on or shortly after February 27, 2012. Spruce Ridge will advise shareholders following the payment date of its calculation of the fair market value of the RX Shares distributed under the Dividend.
No RX Shares will be delivered to Spruce Ridge shareholders who are non-residents (or deemed to be non-residents) of Canada. Instead, these shares will be aggregated and sold in the open market by a registered securities broker or dealer on their behalf. Following completion of the selling process, non-residents will receive their pro rata share of the cash proceeds from the sales, net of applicable withholding taxes and brokerage fees.
In July 2008 Spruce Ridge completed a transaction with RX Gold & Silver Inc. whereby a joint venture company was formed to acquire approximately 400 acres of patented mining claims covering an overall length of about five miles which is adjacent to RX's Drumlummon Mine near Marysville, Montana. Pursuant to the JV Agreement, Spruce Ridge earned its 50% working interest in the JV Property by subscribing to a private placement of RX in the amount of CDN $3,000,000 consisting of a total of 7,500,000 common shares at a price of CDN $0.40 per unit.
The JV Property contains tailings from the Drumlummon Mine which, according to historical information, contain substantial recoverable amounts of gold and silver. The Drumlummon tailings resulted from mining operations between 1884 and 1910. A 1935 report by L.S. Ropes, a consulting engineer, estimated that there were 882,150 short tons (800,200 tonnes) of tailings, containing 29,500 ounces of gold and 681,500 ounces of silver, for average grades of 1.15 grams per tonne of gold and 26.50 grams per tonne of silver. It was based on sampling of cuttings from 1996 feet (608.4 metres) of 9-inch drill holes, with fire assays of samples, and metallurgical testing of composite tailings samples. Although it is a historical estimate and, as such, cannot be relied upon, it would appear to be of similar status and calibre to what would now be called an "indicated mineral resource". In the opinion of management, it is relevant to a preliminary assessment of the possible economic potential of the tailings, but it is not being treated by management as a current mineral resource or mineral reserve. Insufficient work has been done by a qualified person to verify the historical estimate, which would require a similar-sized drill program, sampling and assaying of the cuttings, and metallurgical testing to determine the recoverability of gold and silver from the tailings.
Limited sampling of shallow, hand-dug pits, and assaying by Spruce Ridge in 2009 gave an average, on thirteen samples, of 1.241 grams per tonne gold and 31.77 grams per tonne silver, which are 7% and 20% higher, respectively, than the averages of the samples quoted by Mr. Ropes in his 1935 report, possibly indicating enrichment of near-surface layers by the winnowing effect. Metallurgical tests done in 1935 and quoted in the Ropes report reported 88 percent recovery of gold and 85% recovery of silver by regrinding to 100% -200 mesh and 88% -300 mesh, followed by 48 hours of bulk cyanidation. Generally, metal recoveries in tailings reprocessing operations are much lower than in milling of primary ores. Spruce Ridge has initiated a mineralogical study of the Drumlummon tailings to determine exactly how the metals are hosted, and metallurgical testing is planned, using processes suitable for the host minerals, their grain sizes and degrees of liberation and encapsulation, as determined by the mineralogical study.
Technical material in this news release has been prepared and/or reviewed by Colin Bowdidge, Ph.D., P.Geo., a Qualified Person as such term is defined in NI43-101, who also collected the 2009 tailings samples quoted herein. Assaying of those samples was performed by Activation Laboratories Ltd. of Ancaster, Ontario, a Canadian laboratory that is certified under ISO/IEC 17025, using fire assay on 30-gram splits, with atomic absorption finish for gold, and inductively-coupled plasma - optical emission spectroscopy for silver.
About Spruce Ridge Resources
Spruce Ridge Resources is focused on exploring the Kramer gold property in western Newfoundland. It has three gold properties in the Beardmore-Geraldton greenstone belt of northwestern Ontario and two uranium properties in Newfoundland. Spruce Ridge has a 50% joint venture with RX Gold & Silver Inc. The JV Property contains tailings from the Drumlummon Mine in Montana.
This News Release includes certain "forward-looking statements". These statements are based on information currently available to the Company and the Company provides no assurance that actual results will meet management's expectations. Forward-looking statements include estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Forward-looking statements may be identified by such terms as "believes", "anticipates", "expects", "estimates", "may", "could", "would", "will", or "plan". Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to, among other things, results of exploration, project development, reclamation and capital costs of the Company's mineral properties, and the Company's financial condition and prospects, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for minerals; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of the Company; and other matters discussed in this news release. This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. The Company does not undertake to update any forward-looking statement that may be made from time to time by the Company or on its behalf, except in accordance with applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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