Adriana Announces Joint Venture Agreement With WISCO
TORONTO, ONTARIO -- (Marketwire) -- 12/19/11 -- Adriana Resources Inc. ('Adriana') - (TSX VENTURE: ADI) is pleased to announce that, it has entered into a Joint Venture Agreement (the 'JV Agreement') with a wholly owned subsidiary of WISCO International Resources Development & Investment Limited ('WISCO') to engage in the development and operation of the Company's Lac Otelnuk and December Lake iron ore properties in Nunavik, Quebec (together, the 'Lac Otelnuk Project').
Allen J. Palmiere, President and CEO of Adriana said 'This is an extremely important milestone for Adriana and for the people of Quebec. With the financial support of our new partner, it enables us to accelerate the development of our Lac Otelnuk Project. The project, in conjunction with the Government of Quebec's Plan Nord, will provide a significant economic stimulus for the development of Northern Quebec.'
On closing of the JV Agreement, WISCO, which currently owns approximately 19.8% of Adriana, will fund an additional CDN$91,633,611, being the balance of the CDN$120 million of WISCO's original commitment pursuant to the originally signed Framework Agreement. Adriana and WISCO have agreed that CDN$51,633,611 will be paid directly to Adriana and the remaining CDN$40 million will be injected into a Joint Venture Company (the 'JV Company'). Adriana will transfer its interest in the Lac Otelnuk Project into the JV Company and, on closing, WISCO will acquire a 60% interest and Adriana will hold the remaining 40% interest. WISCO has agreed to use commercial best efforts to assist the JV Company to obtain project financing for 70% of the development costs required to achieve start of commercial production for the Lac Otelnuk Project, the size and scope of which will be determined by a bankable Feasibility Study. WISCO has agreed to provide dilution protection to Adriana by providing funding assistance of up to a maximum of CDN$200 million for a term of up to 12 months in the event that Adriana has difficulty in funding its share of any cash call prior to the achievement of commercial production. Adriana and WISCO have agreed to purchase all the production from the JV Company at fair market value in proportion to their respective equity interests. Mr. Palmiere will be appointed as the CEO of the JV Company and Adriana will have the right to appoint two of the five directors of the JV Company. The JV Company will reimburse Adriana for certain expenditures incurred on the Lac Otelnuk Project since January 17, 2011, the date Adriana and WISCO entered into the original Framework Agreement. The finder's fee originally announced of 10% of the cash consideration and a participating 4% interest in the Project was renegotiated, and as a result, a finder's fee in the amount of CDN$6,763,361 will be paid by Adriana on the closing of the JV Agreement in full satisfaction of the previously disclosed agreement with an arm's length third party.
The transactions contemplated in the JV Agreement are subject to a number of conditions which include, among other things, Government approvals in Canada and China, and regulatory approvals including final approval from the TSX Venture Exchange and the receipt of shareholder approval by Adriana as required under the policies of the TSX Venture Exchange.
Adriana will be seeking shareholder approval by way of written consent of shareholders holding at least 50.1% of the issued and outstanding common shares. The transaction is anticipated to close on or before January 19, 2012.
About WISCO
WISCO is one of the major subsidiaries of Wuhan Iron & Steel (Group) Corporation (the 'WISCO Group'), headquartered in Wuhan in the province of Hubei in the People's Republic of China. The WISCO Group is one of the 'Big Three' Chinese state-owned integrated iron and steel company. In 2010, the WISCO Group had an annual output of 36 million tonnes of steel. The WISCO Group's portfolio of business activities includes mining, coking, sintering, iron making, steel making, rolling and associated utilities.
Lac Otelnuk Project Update
During the 2011 drilling season, Adriana drilled 113 holes totalling 15,333 meters on the Lac Otelnuk Project bringing the total drilled since 2007 to 28,682 meters. Drilling in 2011 included exploration holes to test undrilled geophysical targets for future drilling and extensive delineation drilling north and south of the previously defined 6.5 billion tonne mineral resource. A National Instrument ('NI') 43-101 Mineral Resource estimate completed by Watts, Griffis and McOuat Limited ('WGM') indicates 4.89 billion tonnes of Measured and Indicated Mineral Resources and an additional 1.56 billion tonnes of Inferred Mineral Resources based on a Davis Tube Weight Recovery ('DTWR') cut-off grade of 18%. The press release dated August 23, 2011 noting the above updated NI 43-101 Mineral Resource estimate is available under Adriana's SEDAR profile at www.sedar.com.
Summary of Mineral Resource Estimate
----------------------------------------------------------------------------
Resource Tonnes %Total Fe % %SiO2 %Fe
Classification (in billions) (Head) DTWR (DTC) (DTC)
----------------------------------------------------------------------------
Measured 4.40 29.1 27.4 3.4 68.4
----------------------------------------------------------------------------
Indicated 0.49 28.3 26.3 3.2 68.5
----------------------------------------------------------------------------
Total M&I 4.89 29.0 27.3 3.4 68.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Inferred 1.56 29.6 27.1 3.6 68.0
----------------------------------------------------------------------------
This Mineral Resource estimate was based on a drilling grid that included only 9 kilometers of strike length. The exploration drilling has defined new targets and has extended the potential strike length of the iron formation from 25 to 42 kilometers. Adriana plans to update the NI 43- 101 Mineral Resource estimate as soon as all the assaying is complete and the drill hole database has been updated. In addition, several large diameter PQ holes were drilled in order to obtain bulk samples for metallurgical testing.
SGS Minerals Inc., metallurgical consultants for the Lac Otelnuk Project, have completed extensive bench scale metallurgical testing, rock and tailings characterization, and mineralogical studies. It is anticipated that large scale grinding tests using the PQ core will be carried out in early 2012.
Golder Associates, the environmental consultants for the project, conducted extensive field studies during the 2011 field season to supplement prior year studies. Field studies include: hydrology, surface water and sediment, fish, and aquatic and wildlife studies. The results of the field studies are currently being compiled. This work is in anticipation of the Environmental and Social Impact Assessment which is expected to be completed in approximately 12 months.
Adriana announced positive results from a Preliminary Economic Assessment (the 'PEA') on April 13, 2011. The PEA was completed by Met-Chem Canada Inc. using WGM's Mineral Resource estimate, previously released in a Technical Report dated May 7, 2009. The NI 43-101 Technical Report on the PEA is available under Adriana's SEDAR profile at www.sedar.com and has an effective date of April 8, 2011.
The JV Company intends to enter into a contract to conduct a bankable Feasibility Study in 2012. The time to complete the bankable Feasibility Study is estimated to be 12 months. During this period, the JV Company will focus on negotiating Impact Benefit Agreements with the Inuit and First Nations in the project area.
Allen J. Palmiere said, 'This is an exciting time for both Adriana and WISCO. We look forward to creating value for all stakeholders and advancing the Lac Otelnuk project through feasibility and construction. We anticipate many exciting milestones ahead.'
Mr. Frank Condon, P.Eng., a consultant of Adriana and a qualified person as defined by NI 43- 101, has reviewed and approved the technical disclosure information on the Lac Otelnuk Project.
ON BEHALF OF ADRIANA RESOURCES INC.
Allen J. Palmiere, President and CEO
Certain information regarding the Company, including the closing of the JV Agreement with WISCO, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties. Certain important risk factors could cause the Company's actual results to differ materially from those expressed or implied by such forward-looking statements including, without limitation, approvals of the government of China, approval of the TSX-V, changes in the world wide price of mineral commodities and currency fluctuations, general market conditions, the uncertainty of future profitability and access to sufficient capital. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and caution should be exercised on placing undue reliance on forward looking information.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
Contacts:
Adriana Resources Inc.
Allen Palmiere
President & CEO
apalmiere@adrianaresources.com
Adriana Resources Inc.
Connie Dos Santos
Director, Investor Relations
416-363-2200 ext. 223
cdossantos@adrianaresources.com
www.adrianaresources.com
