Sona Responds to Civil Claim by Illidge and White Over Elizabeth Option Agreements
It is the Company's position that this legal action by the Plaintiffs is a baseless attempt to arbitrarily terminate the agreements for their advantage. Sona will vigorously defend its rights to enforce these agreements in their entirety, and it will take legal action to recover any costs and damages resulting from this spurious action.
The Claim
The Plaintiffs' threat of termination (November 26, 2014) and subsequent filing of the Notice (March 6, 2015) came as a complete surprise to Sona. The Company has received no prior notices, communications or complaints from the Plaintiffs, who made no attempt to contact the Company regarding these matters. All efforts by Sona to contact the Plaintiffs have been rejected, and phone messages have not been returned.
Since the Company entered into the agreements in 2002, it has spent over $6.8 million (including advanced royalties to the Plaintiffs) for ongoing programs on the Project, in consultation with professional geoscientists and engineers, to move it toward a feasibility study and/or gold production. Importantly, under the terms of the option agreements, revenues from net smelter return royalties constitute the Plaintiffs' principal monetary benefit, contingent on the commencement of commercial mining. At all times, Sona has moved the Project forward with the ultimate goal of full commercial production for the benefit of all parties.
All of Sona's activities on the Project have been filed as reports in compliance with regulatory authorities. At all material times, the Company has kept the Plaintiffs informed of its exploration and development activities on the Project. The Plaintiffs never objected to any of the Company's plans or to the work conducted; nor did they raise any concerns regarding Sona's efforts at any time prior to filing the Notice.
Sona's Exploration Activities Since 2002
The Project began as an early-stage exploration venture with some evidence of gold mineralization from limited, unverifiable assay results mentioned in historical studies held by the Plaintiffs. No substantial work had been carried out on the Project since the late 1950s. It was well understood by all parties that the Company would need to undertake a great deal of further work to determine whether the Project had any potential of becoming commercially viable. To date, this still has not been definitively demonstrated.
From 2002 to 2014, Sona conducted a series of exploration and development programs under the guidance of registered professional geoscientists and engineers. The purpose was to advance the Project toward a feasibility study and/or commercial gold production.
Work included six diamond drilling programs, consisting of 147 drill holes totalling 18,396 metres; along with geophysical surveys; underground adit rehabilitation; establishment of geological survey grids; rock, soil and stream sediment sampling; geological mapping; metallurgical studies; aerial photography; and a digital terrain mapping survey.
Sona also completed crucial upgrades to the Project's infrastructure, including a major improvement of the Elizabeth access road from the Yalakom Forest Service Road; installation of a modern 25-person camp; a septic system; and numerous storage, office and other buildings.
Activities that required permitting were mainly completed under permit MX-3-230, which allowed for drilling, trenching and underground sampling. The Company obtained additional permits for the aforementioned upgrade to the Elizabeth access road; and for a special use permit for completion and upgrading of a 70-kilometre haul road, to allow for the eventual transport of ore from the Project for processing at the Blackdome mill. The road permits were critical for any commencement of commercial production.
During this period, Sona published 15 technical reports, including eight exploration work assessment reports and seven NI43-101 technical reports. In addition, the Company contracted four metallurgical studies by independent consultants.
Of these NI43-101 reports, Sona delivered the Project's first mineral resource (June 2009, SRK (Canada)) and its first Preliminary Economic Assessment (June 2010, Micon International) regarding the viability of commercial production at the Project, in conjunction with the development of the Blackdome Gold Mine and mill. Until the publication of these two reports, it was unclear whether the Project had any economic potential as a commercial mine.
The Company planned and permitted additional work, designed to improve both confidence in the mineral resource and the economics of the Project; and to allow for the commissioning of an independent pre-feasibility study, the next step toward a feasibility study. These efforts included internally generated financial analysis containing estimates of capital and operation expenditures.
Role of Thomas Illidge
Plaintiff Thomas Illidge was the principal heavy equipment contractor for all exploration and development executed on the Project from the time he signed the option agreements in 2002. He was a trusted source for objective analysis of all underground test mining, drilling, blasting, road and drill pad construction and camp management. His participation encompassed every stage of the Company's programs, including planning, permitting, marshalling, execution, cleanup and remediation. Sona found his skills and experience of great value. According to the Company's independently audited financial records, it has paid Mr. Illidge and his associated companies over $1 million since 2002. Including sums paid to members of Mr. Illidge's family, total disbursements for contracting, wages and expenses amounted to some $1.3 million, which represents about 20 percent of the $6.65 million Sona spent directly for exploration and development on the Project.
About Sona Resources Corp.
Sona is a junior gold resource company based in Vancouver, with a focus on bringing its Blackdome-Elizabeth Gold Project into full commercial production. Since its inception in 1990, the Company has engaged in a wide range of mineral exploration activities in Canada, Mexico and the United States, as well as small-scale gold production.
Sona owns a 100 percent interest in both the former Blackdome Gold Mine in south-central British Columbia, 250 kilometres north of Vancouver; and the Elizabeth Gold Deposit Property, 30 kilometres south of Blackdome. Four Crown grants and one mineral claim on the Elizabeth Project are subject to option agreements. At Blackdome, the mineral resources are estimated to be 144,500 tonnes, grading 11.29g Au/t and containing 52,600 oz. gold, indicated; and 90,600 tonnes, grading 8.79g Au/t and containing 25,900 oz. gold, inferred (news release dated May 4, 2010). At Elizabeth, Sona has outlined an inferred gold resource of 522,900 tonnes, grading 12.26g Au/t and containing 206,100 oz. gold (news release dated June 8, 2009).
The content of this news release has been reviewed by John P. Thompson, a Qualified Person for the purposes of NI 43-101, with the ability and authority to verify the authenticity and validity of the data herein.
Mineral resources that are not mineral reserves do not have demonstrated economic viability.
On behalf of the Board,
Nick Ferris
Executive Chairman
This news release contains certain forward-looking statements, and such statements involve risks and uncertainties. The results or events predicted may differ materially from actual results or events. Any forward-looking statement speaks only as of the date of this news release. Except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results, or any other occurrence.
This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
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.
Contact
Sona Resources Corp.
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+1 (604) 684-6678
info@sonaresources.com
www.sonaresources.com
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