Forest Gate Divests Oil and Gas, Diamond Interests, Settles Bank Debt
Calgary, Alberta--(Newsfile Corp. - January 22, 2013) - Forest Gate Energy Inc. (TSXV: FGE) reports that it has settled its debt with Canadian Western Bank, Edmonton, and has come to an agreement whereby the bank will release its security on all the assets of the company.
As of today, Forest Gate has proceeded with three separate arm’s length sales of its assets. The divestitures, all of which are non-core, include the Saskatchewan diamond properties, the 10 percent interest in the Rangeview, Divide and Katherine oil and gas licenses also in Saskatchewan, and its interests in the Ferrybank and Nevis oil and gas licenses.
As a result of the divestitures, Forest Gate has paid all of its debts to Canadian Western Bank. As part of the terms of settlement, the bank also removed its blanket security over the assets of the company. The loan with Canadian Western Bank was assumed as part of a transaction that resulted in the acquisition of Rangeview, Divide and Katherine oil and gas licenses.
As well, Forest Gate has canvassed its unsecured creditors and upon removal of the current cease trade order on its securities intends to enter into an informal restructuring of existing trade debt.
Forest Gate is working to remove the existing cease-trade orders and restore trading of its shares on TSX Venture Exchange. The company is required to pay certain penalty fees related to the late filing of its 2011 financial statements and other late filings. These fees must be paid before there can be a resumption of trading of the company’s shares. Additionally, Forest Gate is required to raise funds to pay these penalty fees and have working capital for the legal and accounting services that are the ongoing expense of a public company.
The company also owns 100 percent interest in the Pershing gold/iron property and Cuff Lake iron ore property both near Val d’Or, Quebec.
To rebuild the business, the company will continue to look at opportunities in the energy business and the mineral exploration and mining businesses. The company is contemplating a new corporate structure to allow for the ownership of different natural resource assets. Forest Gate executed a spin-out in 2004 of a separate mining company (Blue Note Mining) for which Forest Gate shareholders received shares.
Forest Gate will continue to pursue financing for the exploration of its 100 percent-owned Pershing property near Val d’Or, Quebec.
“The Canadian-American iron ore market for the moment appears be over-supplied but the returning strength in the price structure of iron is encouraging,” said Michael C. Judson, Forest Gate’s CEO “We therefore will continue to develop the resource base of the iron showing on the Pershing. Given the financial climate at the present moment, however, we may also need to turn our priorities to continue the development of the Pershing’s gold potential.”
To date, three gold showings have been identified on the Pershing property. The Simon showing in the southwestern portion of the Pershing property contains a narrow mineralized zone (less than 5 metres) at the base of the iron formation which hosts disseminated sulfides that carry 1 to 5 grams per tonne gold.
This mineralized zone also contains several sets of narrow quartz tourmaline veins, some of which from historical data had assays as high as 47 grams per tonne. Most of the historical work was concentrated on the Simon showing and this is where all of the early drilling was conducted to define the gold showing.
Gold mineralization was also encountered in historical drilling completed in an area known as the F-block. The F Block is located approximately 2.5 kilometres northeast of the Simon block which is in the central portion of the Pershing property. One of these historical drill holes identified massive bull quartz veins up to 1.5 metres thick associated with faulting in the core area of a tightly folded iron formation unit. This drill hole was not assayed and should be relogged, sampled and assayed.
Alteration of the banded iron formation in adjacent areas contained massive lenses of pyrrhotite less than 0.5 metres thick that returned historical gold assays in excess of 10 grams per tonne. This is known as the F-Block Showing.
An entirely new zone of gold mineralization was identified in 2011 by Forest Gate on the northwestern part of the property approximately 1.8 kilometres due north of the Simon showing. The area was drilled as a follow-up to check existing magnetic anomalies in the area.
The first hole, FG11-04, was drilled to test an isolated magnetic low anomaly that indicated the presence of silicification. This hole returned values of 18.3 grams of gold per ton over 0.10 metres and 10.5 grams of gold per ton over 0.20 metres.
The second hole FG11-05, located approximately 0.6 kilometres west of hole F11-04, was drilled to test the presence of a fault structure inferred on the basis of magnetic signatures. This hole intersected a strongly altered fault zone within which narrow quartz veins contained high-grade gold values. In one sampled intersection, the fire assay with gravimetric finish returned for the plus 150 mesh fraction 145 grams of per ton and 44.6 grams of gold per ton on the minus 150 mesh fraction. These results suggest free gold is present in the veins. This new, unexplored area of the Pershing property is located 1.7 kilometres north of the Simon showing and is now known as the Marquis showing.
Forest Gate conducted in the autumn of 2011 a new heliborne aeromagnetic and VTEM survey of the Pershing property to more accurately locate the anomalies and the structures associated with gold mineralization and iron formation units. This data is being evaluated and a new better defined structural interpretation of the area is now being used to plan and inform the next drilling program.
“Rebuilding Forest Gate will come down to identifying the project that attracts capital and that could be in energy, mineral exploration or in a mining deal,” said Judson “We will follow the capital as a matter of necessity.”
About Forest Gate Energy:
Forest Gate Energy Inc. is a publicly listed natural resource company trading on the TSX Venture Exchange under the symbol FGE.
Technical information in this news release was prepared in accordance with Canadian regulatory requirements as set out in National Instrument 43-101 and has been reviewed by Edward Procyshyn, Geo, who is the qualified person as defined by NI 43-101. Assay samples are taken from NQ-size drill core sawn in half; one half is shipped to ALS Minerals in Val d’Or, PQ, and the other half of the core sample is kept for future reference. The submitted samples are crushed such that the crushed material passes -10 mesh (2mm) screen. The crushed material is split until a 300 gram samples is obtained. This sample is pulverized so that plus 90% of the sample passes 200 mesh (0.75mm)(now called pulp) from which a 30 gram sample is taken for standard fire Au-assay and AA finish to determine amount of gold in the sample. Blank samples and standard samples are inserted by Forest Gate Energy into the sampling stream such that ~1 out of 15 samples is either a blank or standard reference sample. Samples returning more than 1 gpt Au are resubmitted for gravimetric metallic screen and fire assay-AA finish analysis. The pulp and the split reject are returned and securely stored with the core. When warranted, another 30g of the pulp sample is also geochemically analyzed for multi-elements using 4-acid digestion followed by ICP analysis with OES Finish (Inductively couple plasma optical emission spectroscopy). The ALS laboratory also will occasionally complete check duplicate analysis on samples submitted and analyze blank and standard samples they select and insert into the sample stream. Since the orientation and attitude of the gold bearing and iron bearing mineralized units are not yet known, the core intervals samples do not represent the true width of the mineralized zone.
Certain statements regarding Forest Gate, including management’s assessments of future plans and operations and Forest Gate’s anticipated financial performance, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond Forest Gate’s control. These risks may cause actual financial and operating results, performance, levels of activity and achievements to differ materially from those expressed in, or implied by, such forward-looking statements.
Such factors include, but are not limited to: the impact of general economic conditions in Canada and the United States; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced; competition; the lack of availability of qualified personnel; fluctuations in commodity prices; the results of exploration and development drilling and related activities; imprecision in reserve estimates; the production and growth potential of Forest Gate’s various assets; fluctuations in foreign exchange or interest rates; the ability to access sufficient capital from internal and external sources; and obtaining required approvals of regulatory authorities.
Neither TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this release.