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TORONTO, ONTARIO–(Marketwire – Dec. 22, 2011) – Chieftain Metals Inc. (“Chieftain” or the “Company“) (TSX:CFB) is pleased to announce it has entered into a gold and silver purchase transaction with a subsidiary of Denver-based corporation Royal Gold, Inc. (“Royal Gold“) (NASDAQ:RGLD)(TSX:RGL) to sell a portion of the precious metals stream expected to be produced at the Tulsequah Chief mine. Chieftain will receive an initial, up-front advance payment from Royal Gold for US$10-million following closing, with additional advance payments of up to US$50-million for the project build (upon certain conditions being met) that will be pro-rated during the development of the project.
The advance payments and future proceeds will allow Royal Gold to purchase, upon production of the Tulsequah Chief mine: (i) 12.50% of payable gold at $450/ounce for the first 48,000 ounces delivered, decreasing to 7.50% thereafter at $500/ounce; and (ii) 22.50% of payable silver at $5.00/ounce up to 2,775,000 ounces, decreasing to 9.75% thereafter at $7.50/ounce.
The recently completed Preliminary Economic Assessment (“PEA“) announced by the Company in a press release dated June 14, 2011 established a base project with robust economics which estimates that approximately 46% of Chieftain’s Net Revenues will consist of gold and silver revenue streams. The PEA states that it is anticipated that the project will produce 6.28mm tonnes of mineable resource with an average of 45,000 ounces of payable gold and 1.4mm ounces of payable silver per annum; or 387,000 payable ounces of gold and 12,546,000 payable ounces over the current life of the mine.
Victor Wyprysky, President and Chief Executive Officer, commented, “We are pleased to enter into this transaction with Royal Gold on the first anniversary of our IPO. Royal Gold’s commitment to the Company highlights the value of the Tulsequah Chief deposit. This financing does not dilute shareholders and increases the project NAV. The purchase amount, achieved by monetization of a portion of our precious metals demonstrates the value inherent in the project. This transaction is an important first component in the project financing for the Tulsequah Chief development as we plan for mine construction commencement in 2012.”
About Chieftain Metals Inc.
Chieftain Metals’ principal business is the acquisition, exploration and development of mineral properties. Since incorporation, the company’s business has focused entirely on the acquisition, and thereafter the development, of the Tulsequah Chief Polymetallic Project, in north-western British Columbia, Canada. The Tulsequah Project consists of 38 mineral claims and Crown-grants covering approximately 14,220 hectares and two previously producing mines. For more information on the Tulsequah Project, please refer to the Company’s NI 43-101 compliant technical reports, “Preliminary Economic Assessment” dated July 29, 2011; “Tulsequah Chief Deposit, Tulsequah Chief Property, Northern British Columbia” and “Big Bull Project, Tulsequah Chief Property, Technical Report, Northern British Columbia”, each dated as of November 8, 2010 and available under the Company’s profile on SEDAR (www.sedar.com).
Forward-Looking Information:
This press release contains “forward-looking statements” within the meaning of Canadian legislation, concerning the business, operations and financial performance and condition of the Company. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “expects”, “is expected”, “anticipates” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “will” or “occur”. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward looking statements, including but not limited to the risk factors described in the Company’s public disclosure on SEDAR.
Forward-looking statements are based on a number of assumptions, including assumptions regarding general market conditions, the availability of financing for proposed transactions and programs on reasonable terms and the availability of outside service providers to deliver services in a satisfactory and timely manner. These factors and assumptions are not intended to represent a complete list of the factors and assumptions that could affect the Company; however, these factors and assumptions should be considered carefully. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.
