Blind Creek Resources Ltd. Announces Intention to Move Forward with Engineer Gold Mines Spinout Transaction

/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, Jan. 19, 2018 /CNW/ - (TSXVE: BCK) ? Blind Creek Resources Ltd. ("Blind Creek" or the "Company") is pleased to announce its intention to transfer its Engineer Mine property and the adjoining Gold Hill Property which it acquired from BCGold Corp. (now Pan Andean Minerals Ltd.) in early 2017 together with certain claims it had previously acquired (the "Engineer Gold Mine Project") to Engineer Gold Mines Ltd. ("Engineer"), a wholly-owned subsidiary of Blind Creek subject to receipt of all required regulatory approvals) for common shares of Engineer (the "Engineer Distribution Shares"). The Engineer Distribution Shares will then be distributed to the common shareholders of Blind Creek on the reduction of the stated capital of the Blind Creek common shares, all by way of a plan of arrangement (the "Plan of Arrangement") under the Business Corporations Act (British Columbia) (the "Arrangement"). Blind Creek and Engineer have entered into an arrangement agreement (the "Arrangement Agreement") dated January 19, 2018 in connection with the Arrangement (which has been filed under Blind Creek's profile on www.SEDAR.com.) The Arrangement is intended to deliver value to shareholders by unlocking the potential of the Engineer Gold Mines Project.

About the Engineer Gold Mines Project

The Engineer Gold Mines Project is a gold/silver project situated 32 km southwest of Atlin, British Columbia. The Engineer Gold Mine Property consists of six patented crown grants, five legacy mineral claims, and 42 Mineral Titles Online "MTO cell" claims that surround and overlap the crown grants. The total contiguous property package covers an area of approximately 12,032 hectares. All claims are indicated to be in good standing on the BC Mineral Titles Online website until at least December 1, 2018 and are owned 100% by Blind Creek. Guardsmen Resources Inc. retains a 2.5% net smelter return on the five Gold Hill claims, 2% of which can be purchased for C$1.5 million. There are no other underlying royalties in respect of the Engineer Gold Mines Project.

The Engineer Gold Mine is a historic high-grade gold-silver producer and it is estimated that 14,263 tonnes was mined between 1910 and 1952, although the majority of the production occurred between 1912 and 1927 from 8 mine levels. A 30 tonne-per-day gravity separation mill was installed on the Property in 1994 to conduct seasonal batch milling. The mill was operational as recently as 2011.

The Engineer Gold Mine is an advanced exploration project that possesses a small, but high-grade, Inferred Mineral Resource. Recent diamond drilling, surface trenching, underground sampling, and geological mapping have confirmed the geological continuity of the Engineer and Double Decker veins. Other veins such as the Boulder-Governor, Shaft, Andy and Jersey Lily are targets that could possibly add to the mineral resource base with further exploration success. 

The Engineer Gold Mine Project can also be advanced with exploration along the known shear zones (Shear A and Shear B). Both shears have multi-km strike lengths and host significant widths of silica-rich hydrothermal breccia with low-grade gold mineralization. With the exception of a limited drill program conducted in 2008, there has been very little work completed on these shear zones. Significant diamond drilling results from Shear A include values up to 34.0 metres grading 0.45 g/t Au (2011).

Preliminary soil geochemical surveys have shown that these shear structures are anomalous in gold pathfinder elements such as arsenic and antimony. A systematic, property-wide soil survey would be the initial step to identify any higher-grade anomalies for drill testing.

Blind Creek has commissioned a Technical Report in accordance with National Instrument 43-101 entitled "Engineer Gold Mine, British Columbia, Canada - 2018" authored by Darren O'Brien, P. Geo, Michael Redfearn, P. Eng. and Dr. Simon Dominy, FAuslMM(CP), FGS(CGeol) dated January 18, 2018 (the "Engineer Technical Report") in respect of the Engineer Gold Mines Project. The Technical Report may be accessed under Blind Creek's profile on www.SEDAR.com.

The Technical Report includes an Inferred Resource Estimate for the remnant portions of the Engineer and Double Decker veins reported below in Tables 1 and 2 at varying cut-off grades.

TABLE 1 NOVEMBER 2017 MINERAL RESOURCE ESTIMATE BASED ON A 5 G/T AU CUT-OFF

TABLE 2 NOVEMBER 2017 MINERAL RESOURCE ESTIMATE AT A NOMINAL 25 G/T AU CUT-OFF

This mineral resource estimate is based on a VLP (vertical longitudinal section) approach with projection of mineralized shoots down-dip and along strike based on surface exposure and underground development. The global grade applied to each vein structure was based on the partitioning of grades from historical production figures and production records to indicate payability. All grades were diluted to minimum stoping width of 1 m. A density factor of 2.8 t/m3 was used. 3D models for the Double Decker and Engineer veins were constructed using Vulcan software. The vein wireframes were constrained by historical mining records and recent drilling. The Vulcan solids were used to define the primary mineralized material volume. A bulk density factor and payability factor were applied to define tonnage. Areas of mined-out portions were subtracted where required, assuming a 1 m stope width.

The Technical Report proposes a $6.2 million exploration and development program to be conducted in two phases to continue advancing the Engineer Gold Mine Project. The proposed program focuses on mineral resource expansion, metallurgical test-work, and bulk sampling.

The Transaction

The proposed Arrangement will include a transfer of the Engineer Gold Mines Project in exchange for the assumption of the Assumed Liabilities by Engineer and the Engineer Distribution Shares. Pursuant to the Arrangement, Blind Creek intends to distribute the Engineer Distribution Shares to Blind Creek common shareholders on a pro rata basis (other than to shareholders who dissent in accordance with the provisions of the Arrangement) on the reduction of the stated capital of the Blind Creek common shares. Blind Creek shareholders will be entitled to receive one Engineer Distribution Share for every two common shares of Blind Creek held by each such shareholder. The effective date of the Arrangement is currently planned for early in the second quarter of 2018. There will be no changes in shareholders' holdings in Blind Creek as a result of the Arrangement.

The Arrangement is subject to TSX Venture Exchange ("TSXVE"), regulatory and Supreme Court of British Columbia (the "Court") approvals, as well as approval by not less than two-thirds of the votes cast at a special meeting (the "Meeting") of Blind Creek shareholders, to be called in connection with the Arrangement. Full details of the Arrangement will be included in the management information circular (the "Circular") to be sent to Blind Creek shareholders in connection with the Meeting, which will include information on Blind Creek, Engineer, the Engineer Gold Mines Project and the Arrangement.

The board of directors of Engineer is comprised of Andrew H. Rees, Thomas Kennedy, Glen MacDonald and Brian Fowler, who is also the President of Engineer while Dale Dobson has been appointed Chief Financial Officer. This is also the management team of Blind Creek. Changes and additions to the management team may be made as needed and as the Engineer Gold Mines Project progresses.

The Company intends to apply for a listing of the common shares of Engineer on the TSXVE. Any such listing will be subject to Engineer fulfilling all of the listing requirements of the TSXVE.

The closing of the Arrangement is subject to customary conditions, including the receipt of all regulatory, Court and shareholders approvals, covenants and representations and warranties. The summary of the terms of the Arrangement Agreement herein is qualified by the full text of the Arrangement Agreement, which is available under Blind Creek's profile on www.SEDAR.com.

Upon completion of the Arrangement, Engineer will hold a 100% interest in the Engineer Gold Mines Project and will focus on the advancement of this project. Blind Creek will retain and focus on the advancement of its key Blende mineral property (the "Blende Project"), located in the Mayo Mining District, Yukon, as well as its prospective zinc/lead exploration property known as the "AB Property" located in the Northwest Territories.

The Company believes that investors have understandably focused on the opportunity provided by the Blende Project, as well as the AB Property. The Company has positioned itself as a base metals exploration company, while the Engineer Gold Mines Project is prospective for gold and silver. The proposed spinout will allow Blind Creek to focus on further advancement of the Blende Project and on continued efforts on development of this project. The Company believes that the Engineer Gold Mines Project has exploration upside that should be developed. The creation of Engineer and the distribution of the Engineer Distribution Shares to the Blind Creek common shareholders is expected to enhance shareholder value by bringing increased investor focus to the potential that the Company sees in the Engineer Gold Mines Project.

The special resolution to be considered by the Blind Creek shareholders at the Meeting and the Plan of Arrangement to be approved by the Court will include a provision that Blind Creek may determine not to proceed with the Arrangement if it determines in its sole discretion that it is in the best interests of Blind Creek not to proceed.

Financing

Engineer will conduct a non-brokered private placement financing (the "Engineer Private Placement") of subscription receipts (the "Subscription Receipts"), at a price of $0.10 per Subscription Receipt. All funds raised in connection with the Engineer Private Placement (the "Escrow Proceeds") will be held in escrow pending satisfaction of certain escrow release conditions (the "Escrow Release Conditions"), as set out below. Upon satisfaction of the Escrow Release Conditions, the Subscription Receipts will automatically be exercised, without payment of any additional consideration and with no further action on the part of the holders thereof, for one Engineer unit (the "Units").  Each Unit is comprised of one Engineer common share and one-half of one share purchase warrant (the "Warrants"). Each whole Warrant is exercisable to acquire one Engineer common share at a price of $0.15 per share for a period of two years following the issuance of the Warrants. There may be one or more closings in respect of the Engineer Private Placement; however, there can be no assurances that there will be any closings or that sufficient funds will be raised to permit Engineer to fund its operations or to obtain a listing on the TSXVE.

The Escrow Release Conditions are substantially as follows: (i) all conditions to the completion of the Arrangement pursuant to the Arrangement Agreement (other than the release of the Escrowed Proceeds), shall have been satisfied; (ii) the receipt of all regulatory approvals required for the Arrangement to be completed (including that of the TSXVE); (iii) the receipt of all required shareholder and Blind Creek Board of Director approvals required for the Arrangement; (iv) receipt of gross proceeds of no less than $500,000 from the Engineer Private Placement; (v) the Court issuing a final order in connection with the Arrangement; (vi) no material change having occurred in respect of Engineer or Blind Creek; and (vii) the Company shall have delivered a release notice to the Subscription Receipt agent confirming that items (i) through (vi), inclusive, have been satisfied.

If the Escrow Release Conditions are not satisfied prior to escrow release deadline, all of the escrowed funds plus accrued interest, if any, will be returned to the purchasers of the Subscription Receipts in accordance with the terms of the Engineer Private Placement. To the extent that the Escrowed Proceeds plus accrued interest, if any, are not sufficient to repay the purchase price for all Subscription Receipts, Engineer and Blind Creek will satisfy any shortfall.

Any securities issued in connection with the Engineer Private Placement will be in addition to the Engineer Distribution Shares that will be distributed to Blind Creek common shareholders in connection with the Arrangement. If the Engineer Private Placement is completed in full, investors in the Engineer Private Placement will hold approximately 28% of the issued and outstanding Engineer common shares following completion of both the Engineer Private Placement and the Arrangement, on a non-diluted basis.

The Engineer Private Placement is subject to the approval of the TSXVE. There can be no assurances that the Engineer Private Placement or the Arrangement will be completed on the terms set out above, or at all.

Risks and Uncertainties

The Arrangement contains a number of risks and uncertainties, which will be set out in greater detail in the Circular for the Meeting. These include risks associated with the disposition of the Engineer Gold Mines Project to a private company which, while it is expected to become a reporting issuer in connection with the Arrangement and will apply to list the Engineer distribution shares on the TSXVE, can not make any assurances that either one of these things will happen as they are subject to receipt of regulatory approvals. Blind Creek will retain the right not to proceed with the Arrangement in the event that the Board of Directors of Blind Creek determines that it is not in the best interests of Blind Creek to proceed; however, if the Arrangement is completed there can be no assurances that Engineer will be able to maintain a listing on a stock exchange or that the Engineer Gold Mines Project will yield economic mineralization results. The Arrangement is subject to regulatory, stock exchange and shareholder approval, any of which may not be forthcoming. The Engineer Private Placement may not be completed for sufficient funds to qualify Engineer for a listing or to carry out its business plan, or at all. If the Engineer Private Placement is completed in full, there can be no assurances that Engineer's utilization of the funds raised in the financing will yield positive results. While Blind Creek intends to complete the Arrangement in a manner that does not produce unfavourable tax results for Blind Creek, Engineer or the shareholders, there may be adverse tax consequences ? each shareholder should consult with his, her or its tax advisors to understand the tax implications of the Arrangement. Please see the section entitled "Cautionary Note Regarding Forward-Looking Statements" for further risk and uncertainties associated with the Arrangement.

Qualified Persons

Technical disclosure for the Engineer Gold Mines Project included in this press release, has been reviewed and approved by Mr. Darren O'Brien, P.Geo., a Qualified Person (Q.P.) as defined by National Instrument 43-101. 

About Blind Creek Resources Ltd.

Blind Creek is a Vancouver-based junior resource company focused on lead-zinc-silver and gold-silver project acquisition, exploration and development in Yukon (Blende Property), Northwest Territories (AB Property) and British Columbia (Engineer Gold Mine). The Company's flagship property is the Blende Property in north-central Yukon. More recently the company has signed an agreement to acquire a 100% interest in the AB Property (MV-Type Zinc-Lead) in the Northwest Territories and purchased the historic and fully-permitted Engineer Gold Mine, situated 32 km southwest of Atlin, B.C.

For additional information please visit the company website www.blindcreekresources.com.

On behalf of the Board of Directors,

Mr. Brian P. Fowler, P.Geo.
President
[email protected]

Cautionary Note Regarding Forward-Looking Statements

Certain statements made and information contained herein in the press release constitutes "forward-looking information" and "forward-looking statements" within the meaning of applicable securities legislation (collectively, "forward-looking information"). The forward-looking information contained in this press release is based on information available to the Company as of the date of this press release. Except as required under applicable securities legislation, the Company does not intend, and does not assume any obligation, to update this forward looking information. Generally, this forward-looking information can frequently, but not always, be identified by use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events, conditions or results "will", "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" or the negative connotations thereof.

All statements other than statements of historical fact may be forward-looking statements. Forward-looking information is necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties 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 information, including but not limited to: risks and uncertainties relating to, among other things, the risk of the Company not obtaining court, Blind Creek shareholders or stock exchange approvals to proceed with the Arrangement; the risk of unexpected tax consequences to the Arrangement, the risk of unanticipated material expenditures required by the Company prior to completion of the Arrangement; risks of the market valuing Blind Creek and Engineer in a manner not anticipated by the Company; risks relating to the benefits of the Arrangement not being realized or as anticipated, the inherent uncertainties regarding cost estimates, changes in commodity prices, currency fluctuation, financing, unanticipated resource grades, infrastructure, results of exploration activities, cost overruns, availability of materials and equipment, timeliness of government approvals, taxation, political risk and related economic risk and unanticipated environmental impact on operations, as well as other risks uncertainties and other factors, including, without limitation, those referred to in the "Risks and Uncertainties" section of the press release, and elsewhere, which 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 information.

The Company believes that the expectations reflected in the forward-looking statements and information included in this press release are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information should not be unduly relied upon. This statement and information speaks as of the date of the press release. In particular, this press release contains forward-looking statements or information statements with respect to completion of the Arrangement; the availability of working capital for both Blind Creek and Engineer; tax consequences of the Arrangement; benefits of the Arrangement, obtaining Blind Creek shareholder, court and TSXVE approvals of the Arrangement; the listing of Engineer common shares on the TSXVE; the timing for mailing of an information circular; holding Blind Creek's meeting and completing the Arrangement; the potential development of the Blende Project; estimation of commodity prices, mineral resources, costs and the success of exploration activities; expectations with regard to adding to mineral resources through exploration; permitting time lines; ability to obtain surface rights and property interests; requirements for additional capital; government regulation of mining activities; environmental risks; unanticipated reclamation expenses; title disputes or claims; limitations on insurance coverage; and other risks and uncertainties.

Forward-looking information is based on certain assumptions that the Company believes are reasonable, including that the current price of and demand for commodities will be sustained or will improve, the supply of commodities will remain stable, that the general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed on reasonable terms and that the Company will not experience any material labour dispute, accident, or failure of plant or equipment. These factors are not, and should not be construed as being, exhaustive. Although the Company has attempted to identify important factors that would 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. 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. All of the forward-looking information contained in this document is qualified by these cautionary statements. Readers are cautioned not to place undue reliance on forward-looking information due to the inherent uncertainty thereof.

Statements relating to "mineral resources" are deemed to be forward looking information, as they involve the implied assessment, based on certain estimates and assumptions that the mineral resources described can be profitably produced in the future.

The TSXVE has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither the TSXVE nor its Regulation Services Provider (as that term is defined in the policies of the TSXVE) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Blind Creek Resources Ltd.