Exall hatches Gold Eagle Mines (February 17, 2005)

Toronto-based junior Exall Resources (EXL-T) plans to spin off its mining assets into a new company named Gold Eagle Mines.

Shares in the new company will be distributed to Exall’s existing shareholders as a dividend-in-kind at the rate of one Gold Eagle share for each five Exall shares held, resulting in the issuance of around 11 million Gold Eagle shares. Also under the reorganization plan, Dominck & Dominick Securities have been retained to raise up to $3 million to help cover Exall’s share of exploration costs at the Gold Eagle mine in Red Lake, Ont.

The plan, which is subject to regulatory approval, will be put to a shareholder vote in April.

Upon completion of the reorganization, Exall will apply to have shares in Gold Eagle listed for trading on the Toronto Stock Exchange. The parent company will also change its name to Exall Energy, which will retain the oil and gas exploration, development and production properties in Alberta, British Columbia and Texas. Exall will use a recently arranged $1.5-million revolving production loan facility from Alberta-based ATB Financial to expand its oil and gas business in western Canada.

Exall’s key mining asset is its half-interest in the Gold Eagle mine where the company and equal partner Southern Star Resources (SSR-V) recently launched a 10,000-metre drill program. Chibougamau Diamond Drilling currently has one drill rig testing the southern extension of the property’s Western Discovery zone (WDZ), southwest of the Gold Eagle mineshaft. A second drill rig will focus its efforts to the east of the zone. Some infill drilling is also planned.

Late last year, Micon International pegged resources in the WDZ at 309,000 tonnes grading 16.7 grams gold per tonne (uncut), for around 165,700 oz. of contained gold.

The Gold Eagle mine produced around 40,000 oz. gold between 1937 and 1941. The property has not been subject to any significant exploration since those operations ceased. The property is bounded to the north by the former-producing McKenzie Red Lake mine, which produced 651,156 oz., and to the east by the Cochenour Willans mine which poured some 1.2 million oz.