July 9 2012, Vancouver, BC – Rathdowney Resources Ltd. (“Rathdowney" or the “Company”) (TSXV: RTH) announces that it will make a $4.4 million investment in Heatherdale Resources Ltd. (“Heatherdale”) (TSXV: HTR) by subscribing for 22,000,000 common shares of Heatherdale, in a private placement, at a price of C$0.20 per share. The placement is subject to TSX Venture Exchange approval and, when completed, will result in the Company holding approximately 18.4% of Heatherdale.
Through this investment, Rathdowney will gain a significant interest in Heatherdale’s 100%-owned Niblack Copper-Gold-Zinc-Silver project located in southeastern Alaska, USA. Niblack is a project with excellent operating characteristics and potential for development over the next two years.
Rathdowney’s Operational Focus Remains on Project Olza
Rathdowney’s main operational focus continues to be its flagship Olza Zinc Project in the prolific Upper Silesian mineral district of Poland. Project Olza hosts extensive Mississippi Valley Type Zinc-Lead deposits as indicated by widespread drilling and historical resource estimates conducted by the Polish State.
An extensive drilling program was undertaken by Rathdowney over the past year to confirm this historical information. The program has been very successful. An estimate of the Zinc resource will be delivered in the next six to eight weeks. This is the first step in progressing Project Olza toward development over the medium term.
“Rathdowney is fortunate in having a very strong treasury in a very challenging market. The Company completed a large financing when it went public in 2011, and we have also been able to advance drilling programs at Olza over the past year at a lower cost than anticipated” said President and CEO John Barry. “We have also adjusted our broader corporate strategy to take advantage of opportunities that arise under current market conditions. Hence, we see this investment as a compelling opportunity for exposure to a quality project like Niblack, which is closer to production than Olza, with metal diversification but still with a common Zinc theme. There is real value available in these depressed markets and we are in the happy position to be able to take advantage while still having have sufficient funds to continue to advance our larger-scale Olza Project.”
Corporate Strategy to Capitalize on Market Conditions and Focus on Late Stage Projects
In response to global economic conditions, the Company is focused on rebalancing the risk profile of its project portfolio while maintaining significant exposure to successful discoveries. To this end, management has chosen to bolster its near term development pipeline by gaining an interest in the later stage projects and to farm-out its early stage Zinc projects in Ireland. Rathdowney's exploration team in Ireland has done an excellent job with these early stage projects, which are attracting the interest of major international mining companies as shown by the announcement on the Company’s Mallow Project made earlier this week (see news release dated July 3 2012).
Rathdowney believes that its investment in Heatherdale provides shareholders with a low cost opportunity to participate in a project with excellent potential. Drilling by Heatherdale over the past two plus years has significantly expanded Niblack’s mineral resources, with strong indications that drilling planned for this year will underpin prefeasibility work to advance the project rapidly. The project also enjoys strong local government and community support which, combined with existing underground infrastructure, would facilitate production in the near term.
Rathdowney engaged independent technical advisors to assess the Niblack Project and the proposed drilling program for 2012. These advisors, along with Rathdowney’s in-house technical team, believe that the drilling program is wholly warranted. Rathdowney is making the investment at a premium to the market in order to secure a strategic block of shares, and to take a strong role in future planning for the project.
On completion of the financing, in addition to owning approximately 18.4% of Heatherdale’s shares, Rathdowney will also have the option to appoint up to two members to Heatherdale’s Board of Directors and provide input to Heatherdale’s Technical Management Group.
Rathdowney and Heatherdale are both Hunter Dickinson-associated companies, and have some directors in common. There are synergies as both companies draw from the same pool of technical expertise in Vancouver which has a track record of excellence in delivery. Such commonality in directors, management and technical expertise has provided Rathdowney with great comfort in its due diligence and confidence in the effectiveness of Heatherdale’s management…