Exall hatches Gold Eagle Mines (February 28, 2005)

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

Shares in the new company would be distributed to Exall’s existing shareholders as a “dividend in kind” at the rate of one Gold Eagle share for every five Exall shares, resulting in the issuance of around 11 million Gold Eagle shares.

Dominick & Dominick Securities has 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.

Shareholders will vote on the plan in April.

Exall will apply to have Gold Eagle shares listed for trading on the Toronto Stock Exchange. The parent company will change its name to Exall Energy and retain the oil and gas 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. Targets include the southern and eastern extensions of the Western Discovery zone, which has a total resource of about 309,000 tonnes grading 16.7 grams gold per tonne (uncut), or 165,700 oz. gold.

The Gold Eagle mine produced 40,000 oz. gold between 1937 and 1941, since which time it has been little-explored.

The property is bounded to the north by the McKenzie Red Lake mine, which produced 651,156 oz. during its lifetime, and to the east by the Cochenour Willans mine, which poured 1.2 million oz.