Home / Mining Company News Releases (Unreviewed) / ExGen Amends Option With Phoenix for Empire Mine Project; Will Transfer 80% of Konnex to Phoenix to Facilitate Phoenix AIM Listing

ExGen Amends Option With Phoenix for Empire Mine Project; Will Transfer 80% of Konnex to Phoenix to Facilitate Phoenix AIM Listing

VANCOUVER, BC–(Marketwired – November 14, 2016) –


ExGen Resources Inc. (TSX VENTURE: EXG) (OTC PINK: BXXRF) (“ExGen“) is pleased to announce today that, subject to TSX Venture Exchange approval, together with Konnex Resources, Inc. (“Konnex”) a wholly owned subsidiary of ExGen, it has entered into a letter agreement with Phoenix Global Mining Ltd., a private British Virgin Islands based mining company focused on base metals development (“Phoenix“) to amend (the “Amendment“) the Option Agreement on our Empire Mine Project (“Empire Mine Project“), first announced by ExGen on July 21, 2015 (the “Original Option“).

Phoenix and ExGen have been engaged in multiple discussions over the past several months to revise the Original Option to facilitate Phoenix’s current plans to complete an IPO and list Phoenix’s shares on the Alternative Investment Market of the London Stock Exchange during the first quarter of 2017 (the “Phoenix IPO“). The Amendment allows Phoenix to acquire 80% of the common shares of Konnex, ExGen’s wholly owned subsidiary which holds the leases to the Empire Mine Project, on the following terms and conditions, including a term requiring the return of the Konnex common shares to ExGen in certain circumstances:

Project Participation

  • Upon the deposit by Phoenix of US $1,000,000 into the Konnex bank account (discussed below under Project Expenditures by Phoenix), 80% of Konnex’s common shares will be transferred to Phoenix
  • ExGen to retain a 20% carried interest until commencement of mine construction
  • ExGen to be granted a 2.5% net smelter returns royalty for all metals on the Empire Mine Project (the “2.5% NSR“)
  • 30-mile area of interest, which applies to both ExGen’s 20% carried interest and the 2.5% NSR
  • If any of the cash or share payments, or project expenditure requirements, both as described below, are not completed as required pursuant to the Original Option as amended by the Amendment, or if the Original Option is terminated, then the 80% of the Konnex common shares will be returned to ExGen without ExGen paying any consideration

Cash and Shares

  • ExGen was paid a cash payment of US $50,000 on signing the Original Option (PAID)
  • ExGen was issued 5,000,000 common shares of Phoenix on signing the Original Option (ISSUED)
  • ExGen was paid a cash payment of US $50,000 within 60 days of signing the Original Option (PAID)
  • ExGen was paid a cash payment of US $50,000 on signing the Amendment (PAID)
  • ExGen was issued an additional 5,000,000 common shares of Phoenix (substantially pursuant to the Original Option terms) and an additional 1,300,000 common shares of Phoenix on signing the Amendment (ISSUED)
  • As of the date of the Amendment ExGen holds 16.6% of the ordinary shares in issue of Phoenix
  • ExGen to be paid a cash payment of US $100,000 on the earlier of the Phoenix IPO date or by March 31, 2017
  • ExGen to be paid US $100,000 on each anniversary date of the earlier of the Phoenix IPO or March 31, 2017 (the “IPO Anniversary Payment“) until the completion of a bankable feasibility study on the Empire Mine Project
  • The IPO Anniversary Payment increases 100% to US $200,000 for any payment where during the prior 12 months period the minimum expenditures on the Empire Mine Project has not been met (please see below for minimum expenditure requirements)

Project Expenditures by Phoenix

  • Phoenix to have deposited a minimum of US $1,000,000 into the Konnex bank account by the earlier of the Phoenix IPO date or by June 30, 2017
  • Phoenix to spend the US $1,000,000 on the Empire Mine Project within 12 months of deposit into the Konnex bank account
  • Phoenix to fund all Empire Mine Project property maintenance and sustaining costs of Konnex
  • Phoenix to spend a minimum of US $500,000 on the Empire Mine Project every 12 months until completion of the bankable feasibility study

Deal Protection and Corporate Structure

  • Should Phoenix sell its 80% interest in Konnex prior to the commencement of commercial production, ExGen shall have the right but not the obligation to either sell its 20% interest in Konnex on the same terms as Phoenix. Alternatively, ExGen may elect to have any acquiring party fund all of ExGen’s pro rata share of project capital costs by way of loan from Konnex, with interest payable by Konnex, without dilution to ExGen’s 20% joint venture interest
  • Within 15 days of signing the Amendment, Jason Riley shall be invited to join the board of directors of Phoenix as ExGen’s representative
  • Within 15 days of signing the Amendment, Konnex shall reorganize its board of directors to comprise a total of 5 directors, with Phoenix to appoint 3 out of the 5.

The 30 mile area of interest was structured to provide ExGen with the upside exposure to any potential regional exploration success on the Empire Mine Project.

The Amendment is subject to TSX Venture Exchange approval.

Mr. Jason Riley, CEO of ExGen commented: “We are excited about the dual focus of AP Pit development and deeper sulphide exploration that Phoenix has decided to pursue on Empire. This will be the first serious follow up on the high grade potential in the deeper sulphide zone at Empire since the US Bureau of Mines work in 1942. As the largest shareholder of Phoenix at 16.6%, we are also pleased at the progress they are making towards an IPO in Q1 next year.”


The Phoenix team has previously built two companies from development through to production, Nelson Gold in Tajikistan, an 80,000 oz/annum gold producer (source: Nelson Gold financial statements and Northern Miner 8/31/98) and Oxus Gold’s Amantaytau Goldfields in Uzbekistan, which produced more than half a million ounces of gold and almost 2.5 million ounces of silver in its first 6 years of production (source: Oxus Gold plc June 30, 2007 financial statements). Its principals have practical hands-on experience in precious and base metals exploration and mining, as well as being successful in project generative work, globally sourcing new projects for exploration and development for mid tier and major copper, gold, and iron ore producers.

Phoenix Chairman, Mr. Roger Turner, has an extensive mining career spanning over 40 years, including running multiple TSX and AIM listed companies and mining for copper in Granisle BC, Hudbay Minerals in Manitoba, Falconbridge in Uganda and for Rio Tinto Technical Services in London.

Mr. Turner commented, “We are excited to be taking on the development of the Empire Mine in Idaho and working with the local community to build a wealth-creating future for all stakeholders. Our next step will be to complete an update of a 1997 resource calculation to NI 43-101 standards. There are an additional 67 drill holes to add to the 1997 resource which was originally based on 220 holes. Most of these holes targeted the surface oxides but a few intersected the underlying sulphide zone. These results, combined with the results of an underground drilling and sampling programme carried out by the US Bureau of Mines (USBM, predecessor to the US Geological Survey) in 1942 make this an exciting project.”

“Should the technical feasibility and economic viability of the project be established, there are two major objectives. Firstly, to achieve early production from an open pit SX-EW project producing cathode copper as well as gold and silver from the near-surface oxide resources and secondly, to fully understand and develop the sulphide resources below the oxides. This potential is apparent from the deeper drilling and the work carried out in 1942 by the USBM. We are confident that with staff, stakeholder, community, and advisor support we will turn our vision of Empire into a highly profitable major mine.”


The historic Empire Mine is reported to have produced 694,000 tonnes with recovered grades of 3.64% copper, 1.65 g/t gold and 53.9 g/t silver from underground workings during the period 1901 to 1942. Head grades were between 6% and 8% copper. Review of more recent documents shows that the Empire Mine produced an additional 115,500 tonnes from 1943 intermittently to 1973, with recovery grades of 2.27% Cu, 1.11 g/t Au and 23.76 g/t Ag. The property is classified as a polymetallic copper skarn. The mineralization is represented by a vertical zone (5 to 15 metres wide) of higher grade copper-gold-silver sulphide mineralization located within and below a larger zone of lower grade copper-oxide mineralization. Previous work on the property has encountered oxide and sulphide copper mineralization over a strike length of 1,200m, a width of 6 to 70m and to a depth of more than 300m.

The old underground mine was accessed by ten adits which are spaced vertically at 100ft intervals, from the 200 foot level to the 1100 foot level. An underground drilling and wall-rock sampling programme was carried out by the US Bureau of Mines (USBM) in 1942. The following table shows the results from their sampling of certain stopes on the 300, 700, 800 and 900 levels (*):

Stope Length Assay
Location in metres % Cu gm/T Au gm/T Ag
300Level 8.8 3.47 0.27 113.83
700Level 7.2 1.36 0.62 15.77
800Level N 15.2 1.22 1.13 11.67
800Level S 10.7 1.56 1.95 36.00
900Level 10.7 0.94 0.45 15.43

Examples of channel sampling on the oxide-dominated 300 level are as follows:

Sample Width Assay
Number in metres % Cu gm/T Au gm/T Ag
327 1.5 3.00 0.17 162.86
328 1.5 4.59 0.17 114.86
329 1.5 5.31 0.34 137.14
330 1.5 1.63 0.17 66.86
331 1.5 2.10 0.34 90.86
332 1.5 1.26 0.17 61.71
333 1.5 1.70 0.17 72.00
334 1.5 2.00 2.57 30.86
335 1.5 1.31 1.37 49.71
336 1.2 4.40 0.51 109.71
337 1.2 0.74 4.80 77.14
338 1.1 1.15 1.71 72.00
339 1.2 2.82 1.03 89.14

The following table summarises the documented results of the USBM’s drill holes that have intersected mineralization below the near-surface oxides:

Hole and       Cu Au Ag WO3
Level From To Intersection % gm/T gm/T %
B2 L1000 0 4.3 4.3 2.6 0.1 19 0.044
B10 L1000 0 15.9 15.9 2.9 3.1 32  
B11 L1000 0 9.3 9.3 2.1 1.6 24  
B12 L1000 0 6.7 6.7 2.0 1.5 24  
B13 L1000 0 2.7 2.7 2.5 1.8 28  
B16 L1000 0 13.8 13.8 1.6 0.3 22  
B17 L1000 0 12.8 12.8 2.1 0.4 22  
B23 L800 0 7.4 7.4 3.1 5.5 43  
B28 L1000 0 17.6 17.6 3.1 2.3 44  

The same USBM report also states that the following samples were taken from a 55-ton shipment of ore from the 1000 foot level in 1942 (*):

  % Cu opt. Au opt. Ag % WO3
4 samples 3.28 0.240 1.75 4.28
Carload 2.45 0.105 1.35 2.08

The presence of tungsten (WO3) at depth could be a major factor in the future of the Empire Mine Project.

(*) Source:- Farwell, F.W and Full, R.P. 1944. Geology of the Empire Copper Mine near Mackay, Idaho: USGS Open File Report 44-17.
The full report can be found on the internet at https://pubs.er.usgs.gov/publication/ofr4417
Note: all copper values are total-copper %.

Emphasis is given to this historic underground work by numerous records which show the gradual increase in sulphide copper content vs oxide copper with depth. There are no documented exploration results from the deeper workings of the mine other than those of the USBM; their results offer very attractive targets for future exploration via surface drilling and/or underground access. Furthermore, some of the higher-grade zones detected by the USBM may still be in-place. The potential for deeply-seated polymetallic sulphide mineralization is currently an important focus of exploration at the Empire Mine Project.

Surface exploration on the property by several exploration companies between 1964 and 1975 resulted in the drilling of 151 holes mostly within the area referred to as the Atlantic-Pacific (AP) Pit. Surface mining of the AP Pit in ~1974-75 was based on drilling completed by Behre Dolbear in 1972. The AP pit is currently the focus of exploration as a potential low-strip-ratio open pit with production of SX-EW cathode copper.

Cambior Exploration USA Inc. explored the property from 1995 to 1997, and drilled 47 diamond drill holes (7,350m) mostly within the AP pit. Their goal was to generate a copper resource estimate. The Cambior historical estimate was divided into two components, a precious metal bearing oxide copper resource and a copper-zinc style of mineralization. Cambior reported a “drill-indicated”, near surface, oxide copper estimate of 18.23 million tons grading 0.49% copper, 0.19% zinc, 13.5 g/t silver (0.44 oz/t) and 0.51g/t gold (0.015 oz/t) with an additional 9.65 million tons of material grading 0.29% copper and 0.31% zinc with no precious metals.

The work completed by Cambior is historical in nature and does not comply with National Instrument (“NI 43-101”) standards. A Qualified Person has not done sufficient work to classify the historical estimate as a current resource estimate under NI 43-101, the work completed by Cambior has not been verified by ExGen and ExGen is not treating the historical estimate as a current resource estimate. The “drill indicated oxide resource” terminology used by Cambior does not follow the terminology outlined in Section 1.2 and Section 1.3 of NI 43-101 and can therefore not be categorized under NI 43-101 guidelines. A considerable amount of additional diamond drilling, assaying, confirmation of the extent and grade of the mineralization reported in the core holes used in the historical estimate, density measurements, updated metal prices and additional metallurgical testwork would be required to either upgrade or verify the historical estimate as a current mineral resource that complies with NI 43-101.

Cambior also carried out preliminary metallurgical testwork on the mineralization from the Empire Mine Project. Results from the leach tests conducted by METCOM Research of Tucson Arizona, suggested recoveries of 75% to 80% for both copper and gold with 50-60% from silver and zinc from 100 mesh material. The METCOM work contemplated a flow sheet using sequential leaching of copper by sulphuric acid followed by neutralization of the pulp and precious metal recovery through cyanide leaching.

Due to low commodity prices and financial commitments elsewhere, Cambior relinquished the property in 1999.

Between 2004 and 2011, Trio Gold Corp. (“Trio“) and Musgrove Minerals Corp. (“Musgrove“) completed an additional 67 core and reverse circulation holes (for a total of 8,383m) as an in-fill drilling program to complement Cambior’s drill effort. To review the drilling results for these drilling campaigns please see the news releases filed by Trio and Musgrove on www.sedar.com.

Phil van Angeren, P. Geo., a Qualified Person as defined by National Instrument 43-101, has reviewed and verified the technical mining information provided in this release.

About ExGen Resources Inc.

ExGen, formerly Boxxer Gold Corp, identifies projects and has a strategy to aggregate them during the current market downturn and fund exploration through joint ventures and partnership agreements. This approach significantly reduces the technical and financial risks for ExGen, while maintaining the upside exposure to new discoveries and potential cash flow. The company intends to build a diverse portfolio of projects across exploration stages and various commodity groups. ExGen currently has 6 projects in Canada and the US.

For more information on ExGen please visit our website at http://exgresources.com or contact ExGen Resources Inc.

Neither the 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.

Forward-Looking Information: This news release contains certain forward-looking information. All statements included herein, other than statements of historical fact, are forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. In particular, this news release contains forward-looking information in relation to: the Original Option and the Amendment on the Empire Mine Project including, without limitation, the transfer of the 80% of the Konnex common shares to Phoenix and the earning of the Original Option by Phoenix, future cash payments by Phoenix to ExGen, Phoenix common share payments and NSR payments in relation to the Original Option, the Amendment and the Empire Mine Project, and possible exploration and development expenditures on the Empire Mine Project; the exploration and production potential of the Empire Mine Project, the ability to bring the Empire Mine Project onto production and the potential mining methods for the Empire Mine Project; the additional exploration, assaying, confirmation, metallurgical, and other work required to upgrade or verify the historical work on the Empire Mine Project; the timing and ability to prepare a NI 43-101 resource calculation; future exploration and development plans on the Empire Mine Project; the timing for exploration and drilling on the Empire Mine Project; the timeframe within which the Empire Mine Project can be advanced; the Phoenix IPO including the completion and the timing for completion of the Phoenix IPO; and the potential return to ExGen of the 80% of the Konnex common shares potentially issued to Phoenix. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. There can be no assurances that the Original Option or Amendment will result in the exploration of the Empire Mine Project or that the development of the Empire Mine Project will occur, and if development occurs, that such development will result in a producing mine. In the forward looking information contained in this news release, ExGen has made numerous assumptions, based upon practices and methodologies which are consistent with the mineral industry. In addition, ExGen has assumed: the continued market acceptance of its joint venture partnership model; the ability of ExGen to raise future equity financing, if needed, at prices acceptable to ExGen; ExGen’s current and initial understanding and analysis of the Empire Mine Project; the ability of ExGen or third parties to discover viable exploration targets and the results of exploration on the Empire Mine Project; the ability of Phoenix to explore and develop the Empire Mine Project; the cost of exploration, including sampling, drilling and assaying, on the Empire Mine Project, the costs of developing the Empire Mine Project and the costs and the ability of Phoenix to produce a feasibility study; the ability of Phoenix to complete the Phoenix IPO in a timely manner; and ExGen’s general and administrative costs remaining constant. While, ExGen considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause ExGen’s observations, actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Known risk factors include, among others: there is no certainty that the Option will result in significant exploration of the Empire Mine Project or development of the Empire Mine Project into a producing mine; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineralization and uncertainty as to the actual results of exploration and development or operational activities; uncertainty as to the availability and terms of future financing; uncertainty as to timely availability of permits and other governmental approvals; ExGen may not be able to comply with its ongoing obligations regarding its properties; the early stage development of ExGen and its projects, and in particular, the Empire Mine Project; general business, economic, competitive, political and social uncertainties; capital market conditions and market prices for securities, junior market securities and mining exploration company securities; commodity prices; competition; changes in project parameters as plans continue to be refined; accidents and other risks inherent in the mining industry; lack of insurance; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting ExGen; conclusions of economic evaluations; and lack of qualified, skilled labour or loss of key individuals. A description of additional assumptions and risk factors used to develop such forward-looking information that may cause actual results to differ materially from forward-looking information can be found in ExGen’s disclosure documents on the SEDAR website at www.sedar.com. Although ExGen has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. ExGen does not undertake to update any forward-looking information except in accordance with applicable securities laws.


Jason Tong
Chief Financial Officer
Email: [email protected]



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