Northland resources spins-out its non-ferrous projects
Vancouver, Canada, October 23, 2007: The Board of Northland Resources Inc. ("Northland") is pleased to announce that it will spin-out Northland's non-ferrous projects in Sweden and Finland to a newly formed Swedish company named Æsir Mining AB ("Æsir"). Pareto Securities ASA has been appointed as Northland's advisors with respect to this transaction.
Northland's wholly-owned Swedish subsidiary, Barsele Guld AB, will transfer 100% ownership in its subsidiary Gunnarn Mining AB ("Gunnarn") via the sale of shares to Æsir. Gunnarn holds the titles and concessions covering the Barsele (Au), Norra (Au, Ag, Cu, Pb), Skarven (Au, Ag, Zn, Pb) and Näsvattnet (Cu, Pb, Zn, Ag) projects in Sweden; along with an option on the Kapsa (Au) project in Finland. The sale of shares in Gunnarn to Æsir is in consideration for approximately 26 million shares in Æsir with a deemed value of US$1.50 per share (total value US$39 million) and a cash payment of US$15 million. Barsele Guld will also retain a 2% Net Smelter Royalty ("NSR") on all of the projects.
In order to make the cash payment to Barsele Guld and further develop its properties, Æsir will raise up to US$45 million in new equity in a private placement to Norwegian and international institutional investors. Æsir will also use the funds to conduct an aggressive development program at the Barsele Gold Project, exploration drilling at the Norra Cu-Pb-Au-Ag Project and exploration work at a number of promising early-stage projects in Sweden and Finland.
Æsir will be registered on the Norwegian Over-The-Counter market (NOTC) shortly after the private placement has been concluded. A listing on the Oslo Axess is planned for the first half of 2008.
Northland is also pleased to announce that Mr. Kjell Larsson has accepted the position of CEO and President of Æsir. Mr. Larsson has over 24 years of exploration, operations and executive management experience, including the development and operation of precious and base metals properties in Sweden, Canada and South America. Mr. Larsson received his Master of Science in Mining Engineering from Luleå University in Sweden. He began his career as a mining engineer with LKAB and has worked at various mining operations in Sweden and Canada as well as being a board member for an Australian exploration company. He was most recently the Vice President of Mining for Lundin Mining Corp.
Mr. Vance Thornsberry will resign as Northland's VP Exploration to take on the position of VP Exploration of Æsir. Mr. Thornsberry is a graduate Geologist from the Missouri School of Mines at the University Missouri, Rolla. He has over 30 years experience in exploration, operations and management in North America, South America, Northern Europe and the Philippines. From 1970 to 1982 he worked for Inspiration Consolidated Copper Company in various management capacities. Since 1982, he has consulted primarily in gold exploration for numerous major and junior mining companies, including serving as VP of Exploration. Mr. Thornsberry has been involved in several late to feasibility-stage projects.
The Board of Directors of Æsir will consist of Simon Ridgway (Chairman), Buck Morrow, Eric Forssberg, Leif Engström and Deborah Craig.
Mr. Buck Morrow, the President of Northland, commented: "The Board of Northland believes that the sale of Barsele to Æsir, and the proposed listing of Æsir on the Oslo Axess, will allow Northland shareholders to monetize the investment to-date in non-ferrous projects and to participate in the future upside potential through the retained share ownership and 2% NSR. The creation of Æsir as a pure gold and base-metal company will allow Mr. Larsson and Mr. Thornsberry to focus their extensive experience on development of the Barsele and Norra project while fully exploring the rest of Æsir's project portfolio. In addition, Northland, with the sale of its non-ferrous assets, will have a more concentrated focus on unlocking the full value of Northland's ferrous projects."
Background on Barsele
In March 2006, Northland completed a NI43-101 resource calculation for the Barsele gold project (see press release dated March 1, 2006). Using a 0.7g/t Au cut off the resources are:
In June 2007, the Chief Mine Inspector of Sweden granted exploitation (mining) concessions for the extraction of gold and silver at Barsele, including the Avan, Central and Skiråsen zones, and for the extraction of gold, silver, lead and zinc at Norra. Granting of the exploitation (mining) concessions, which are valid for 25 years, is subject to a standard consultation and appeals process with all interested stakeholders. Prior to commencing construction, the Company must complete, and receive approval for, a full environmental permit.
Background on Norra
The Norra prospect is interpreted as a Skellefteå VMS-type precious-metal rich, base metal sulphide deposit that has subsequently been modified by metamorphism and deformation. An exploration program including additional diamond drilling, alteration mapping and geological mapping is planned in order to further evaluate the extent of mineralization at Norra along strike and below the 100-150 m depth. The potential for discovery of a significant polymetallic sulphide deposit in the area is considered good.
Background on Kapsa
The Kapsa project is approximately 4km away from one of Europe's largest gold deposits, the Suurikuusikko deposit, which is being developed by Agnico Eagle and is reported to contain between 2.5 to 3.5 million ounces of gold in resources. The Kapsa area is under-explored, but the regional geophysical maps indicate at least one major shear zone with a similar geophysical signature to that which hosts the Suurikuusikko gold deposit to the east. The limited historical data indicate elevated Au, Ag, Cu, and Zn values occur within the claim reservation area.
Qualified Person
Vance V. Thornsberry, PGeo, Vice-President of Exploration of Northland, is the Qualified Person as defined in National Instrument 43-101 responsible for overseeing the design and execution of the Barsele and Norra exploration programs, and has verified that the information presented in this release is an accurate summary of the NI 43-101 Resource Report of March 2006 for the Barsele and Norra project as provided to Northland by Chlumsky, Armbrust & Meyer of Lakewood, Colorado USA.
ON BEHALF OF THE BOARD
"Buck Morrow"
NORTHLAND RESOURCES INC.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
CONTACT INFORMATION
Northland Resources Inc.
Buck Morrow, President
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