May 30, 2008, Vancouver, British Columbia: Continent Resources Inc. (CNQ: CORE) is pleased to announce the signing of a Letter of Intent ("LOI") with Southwest Exploration Group LLC ("Southwest") to acquire an undivided 100% interest in certain mineral claims containing known copper mineralization in the prolific SW United States porphyry copper district in Arizona and New Mexico.
Continent Resources CEO Robert Bick comments: "With the proposed acquisition of this very high quality portfolio of copper properties, located in one of the world's most prolific copper-producing regions, Continent will become a significant copper explorer. Several of the properties have seen valuable past drilling programs with the discovery of important copper mineralization."
"The Southwest Exploration Group (Thornwell Rogers, Daniel Laux, and Michael Pawlowski) have spent the majority of their careers exploring and developing copper deposits, for Phelps Dodge and other copper companies. They will take an active role in the company with Michael Pawlowski serving as President, Daniel Laux as VP Exploration and Thornwell Rogers as a consultant." "The acquisition of these properties gives Continent a huge head start in copper exploration. We are currently planning drilling on the "flagship" Lone Mountain property where we will grid drill the surface-exposed oxide mineralization and probe the deeper, higher-grade skarn-hosted copper-zinc mineralization at depth."
The package of properties (the "Properties") acquired from Southwest includes the Lone Mountain and Mimbres prospects in New Mexico and the West Safford, Teague, Twin Peaks, and West Jerome prospects in Arizona.
The Lone Mountain porphyry copper system is located near Silver City, New Mexico, and is within sight of the large Tyrone and Chino porphyry copper deposits owned by Freeport-McMoran. Land holdings consist of two New Mexico State mineral leases and 40 unpatented federal mining claims. At Lone Mountain, two distinct targets are present; a near-surface zone of oxide mineralization which will be the first target for Continent's drilling; and deeper, sandstone and carbonate-related copper-zinc-silver skarn mineralization which can attain much higher grades over significant widths. Oxide mineralization begins approximately 60 meters below surface and continues to over 250 meters below surface. The lower parts of the oxide zone become chalcocite-dominant. Historical data shows that the skarn mineralization, which can attain multiple percent grades of copper and zinc over significant (tens of meters) true widths, will be the focus of a second phase of drilling which will involve the deepening of certain holes targeting the shallower oxide-dominant mineralization. A review of existing drill data show that the lower skarn horizons radiate outwards from a central intrusive stock as relatively flat-lying beds.
Lone Mountain represents a poorly-explored, (current drill hole spacing is approximately 250 meters) well-mineralized porphyry-skarn system with multiple, stacked mineralized targets, and will therefore form the first target to be tested by Continent. Drill testing the entire system will represent a major exploration effort for the Company. The results are anticipated to provide the earlier identification of significant copper-zinc-silver mineralization at depth. In addition the drilling will test the presence of shallow, open-ended copper oxide-chalcocite mineralization near surface which has never been systematically tested.
The Mimbres Property consists of 45 unpatented lode claims and 2,040 acres of New Mexico State Mining Leases over a porphyry copper-molybdenum deposit and higher-grade copper-zinc-gold-silver-bearing skarns. Bear Creek Exploration drilled 18 holes up to 1,000 meters deep with assays up to 1.0% copper. Assays typical of skarn intersections include 22 metres grading 0.50% Cu; 15 metres grading 0.60% Cu; and 12.5 metres grading 1.0% Cu. As is the case at the nearby Lone Mountain project, drill spacings were very far apart, and the alteration and mineralized zones remain open in several directions. Continent considers the earlier work to have identified a mineralized system, which now must be explored in a detailed, systematic manner to identify an ore resource. As at Lone Mountain, no importance was given to the oxide mineralization which overlies the deposit, and this will form one of the first exploration priorities for Continent.
The Safford property consists of approximately 2,860 acres of claims, and a 640 acre Arizona State Mineral Exploration lease. The target at West Safford is a large tonnage "Resolution-type" porphyry copper target, buried beneath younger alluvium, in the Safford Mining District. The extrapolation of known, ore controlling structures has formed an important exploration criteria in the acquisition of the West Safford ground. Further target definition has included the use of biogeochemistry, ground magnetics (carried out by Bear Creek Exploration), and a large IP survey. Phelps Dodge completed two drill holes that encountered a quartz-pyrite zone. Continent interprets the earlier two drill holes to have intersected the "pyrite shell" within a much larger system, as evidenced by the size of the IP anomaly. The system remains, essentially, untested.
The Teague Springs Property consists of 1,920 acres of claims located west of Dos Pobres in the Safford Mining District. The target is a large tonnage, buried Laramide porphyry copper-molybdenum-silver-gold system associated with a large, untested IP anomaly and a Mo-Cu-Zn biogeochemical anomaly. The target area is covered by shallow pediment gravels based on past gravity surveys, and has never been drilled. IP, magnetic, gravity, and biogeochemical surveys have all proved successful in discovering world class porphyry copper systems at the nearby Morenci and Safford mining districts.
The Twin Peaks property is a partially drilled, copper oxide targetthat has excellent infrastructure and potential for a large open-pit copper oxide body with very low strip ratio. A surface area measuring 750 metres by 520 metres exhibits veins, veinlets, and stockworks of chrysocolla and secondary malachite, tenorite, and cuprite and chalcocite hosted by a pyrite-poor, Laramide-age, quartz monzonite. Only six drill holes have tested this target, each with highly encouraging results, including one hole with 86.9m grading 0.37% total Copper starting at surface. The copper oxide zone is open and untested under alluvial cover to the north, west, and south.
The West Jerome property is considered by Continent management to represent a highly-potential massive sulphide target in the western Jerome Mining District, Arizona. The property consists of approximately five square kilometres of claims on the west side of Freeport McMoran (previously Phelps Dodge) patented lands.
The United Verde and United Verde Extension mines, proximal to the West Jerome property, have produced over 98% of the past production from the famous Jerome mining district. Phelps Dodge production records from 1889-1974 for the United Verde mine show production of 32.99 million tons grading 4.36% copper, 1.53 oz/ton silver, and 0.042 oz/ton gold. The United Verde Extension mine began production in 1938 and produced a total of 3.9 million tons grading 10.23% copper, 1.71 oz/ton silver, and 0.039 oz/ton gold. As such, the combined deposits at Jerome rank as a giant, world-class massive sulphide deposit.
The West Jerome prospect offers an opportunity to explore for similar, very large massive sulphide deposits with high grades of copper and zinc. The West Jerome prospect has favourable features similar to the nearby United Verde mine including similar stratigraphy which makes it a high quality drill target.
Continent will begin exploring at Lone Mountain as a first priority, with the objective of producing a geological resource of the near-surface oxide copper mineralization, while lengthening a percentage of the holes to intersect the deeper, higher-grade copper-zinc-bearing skarn mineralization which was discovered in earlier drilling. The Twin Peaks copper oxide prospect is considered drill-ready and will represent a second near-term exploration target.
Meanwhile, surface mapping, geochemical sampling, and geophysical studies will be carried out on the remainder of the prospects to ready them for drilling.
As consideration for Continent's proposed acquisition of an undivided 100% interest in the Properties from the Southwest, the terms of payment and share issuances by Continent to Southwest shall be as follows:
1. Continent shall pay to Southwest an amount equal to USD$150,000 payable in cash, no later than five (5) business days after the closing of the acquisition, provided that all of the applicable regulatory approvals required in connection with the transaction have been obtained by Continent.
2. Upon the first anniversary of the closing, and subject to Continent maintaining its stated commitments to Southwest, Continent shall pay to Southwest USD$150,000 in cash.
3. After the closing and upon completion of the first financing, which shall amount to at least USD$1,000,000 by way of a public offering or private placement, Continent shall pay to Southwest a further USD$150,000 payable in cash.
4. Upon completion of the closing, Continent shall grant 9,000,000 options (the "Options") to the Southwest, subject to a vesting schedule extending over a period of 42 months. Each Option shall entitle the holders to purchase one common share from Continent at a price of $0.25 per share for a period of ten (10) years from the date the Options are granted subject to applicable securities rules and regulations.
5. Continent shall pay to Southwest a royalty equal to 2.0% of the net smelter return ("NSR") on minerals from each of the individual Properties. Continent may purchase one half of one percent (0.5%) of the NSR on production from each of the individual Properties from Southwest at any time for a total purchase price of $1,000,000.
A finder's fee of $150,000, payable in cash or shares, will be paid upon closing of the acquisition.
The closing of the transaction is subject to the satisfaction or waiver of the following conditions:
1. Approval of Continent's board of directors to the transaction;
2. Completion of due diligence regarding claims ownership and geological data validation by Continent to its sole satisfaction;
3. All applicable regulatory approvals with respect to the transaction having been obtained; and
4. The signing of the definitive agreement which will supersede the LOI. Non Brokered Private Placement
To finance the initial drilling program and as an integral part of the acquisition of the Properties, Continent Resources has negotiated, subject to regulatory approval, a private placement of up to 6,000,000 units at a price of $0.25 per unit (the "Unit"), for gross proceeds of up to $1,500,000. Each Unit will consist of one common share of the Company (the "Share") and one half of one Share purchase warrant (the "Warrant"). Each whole Warrant will entitle the holder thereof to purchase one additional Share (a "Warrant Share") of the Company at a price of $0.35 per Warrant Share for a period of two years from the date of issuance (the "Private Placement"). Finder's fees, payable in cash and/or shares, will be paid in the amount of up to 10% of the proceeds of the Private Placement.
Shares issued pursuant to this Private Placement, as well as any Shares issued pursuant to the exercise of the Warrants and the finder's fees, are subject to a four-month hold period from the date of issuance.
Proceeds from the Private Placement will be used to carry out geological, geochemical and geophysical studies on the Properties, the initial phase of drilling on the Lone Mountain property and for general working capital. Drilling will initially focus on the near-surface oxide mineralization with specific holes deepened to probe the underlying, higher-grade copper-zinc-silver skarn mineralization discovered during previous, historical drilling campaigns.
Continent Resources Inc. holds a significant portfolio of copper properties in one of the world's most prolific copper-producing regions, in Arizona and New Mexico. This area is elephant country for copper, containing the greatest cluster of porphyry copper deposits anywhere in the world and making up over 10% of the world's copper production. Continent Resources Inc. is focused on the discovery of copper resources which are suitable for leaching. Lone Mountain, the Company's feature property is within sight of the large Tyrone and Chino porphyry copper deposits owned by Freeport-McMoRan.
For more information please visit: www.continentresources.com
In compliance with National Instrument 43-101, Michael R. Pawlowski, President of Continent Resource Inc., is the Qualified Person who prepared and supervised the preparation of the information that forms the basis for this news release.
On behalf of Continent Resources Inc.,
"Michael R. Pawlowski"
Michael R. Pawlowski
President and Director
Continent Resources Inc.
FORWARD LOOKING STATEMENTS: This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, the continued advancement of the company's general business development, research development and the company's development of mineral exploration projects. When used in this document, the words "anticipate", "believe", "estimate", "expect", "intent", "may", "project", "plan", "should" and similar expressions may identify forward-looking statements. Although Continent Resources Inc. believes that their expectations reflected in these forward looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statement. Important factors that could cause actual results to differ from these forward-looking statements include the potential that fluctuations in the marketplace for the sale of minerals, the inability to implement corporate strategies, the ability to obtain financing and other risks disclosed in our filings made with Canadian Securities Regulators.
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