GOTHENBURG, Sweden, July 16, 2002 (PRIMEZONE) -- Riddarhyttan Resources AB:
-- Prominent North American and Asian institutional gold funds to
invest in Riddarhyttan Resources AB.
-- A new treasury issue of 10 million shares to raise a total of
approximately SEK 34 million for the company by way of private
placement.
-- The new broadening of our shareholder base through the addition of
institutional ownership will provide financial strength and
enhance future flexibility in the company's strategic planning
process.
-- The first of the company's four major stated objectives for the
12-month period has now been achieved.
Increased Institutional Ownership in Riddarhyttan
In recent months, several prominent North American and Asian institutions have demonstrated a desire to invest in the company. Given this interest, Riddarhyttan's Board of Directors has unanimously decided to issue 10 million treasury shares to be sold to various institutions around the world. Authorization for this treasury issue was voted upon and granted at Riddarhyttan's ordinary shareholder meeting in April 2002. The new stock issue will add approximately SEK 34 million to the treasury.
Such investment interest from internationally recognized gold funds further demonstrates the world-class potential of Riddarhyttan's advanced exploration asset, the Suurikuusikko gold project, situated in Northern Finland.
The addition of a robust international institutional shareholder base will provide additional financial strength and enhance future flexibility in the company's strategic planning process.
The proceeds of the private placement will be used to help finance further exploration and feasibility related studies at Suurikuusikko, in preparation for an eventual decision to initiate mine development on the project.
In early 2001 the company published a resource calculation conducted by Micon International Ltd. on the Suurikuusikko gold deposit, totaling 8.3 million tonnes (indicated and inferred), grading 6.1 g/t (1.6 million ounces of gold). Based on this resource calculation and further findings published in our Interim Feasibility report, the project was shown to be economically viable at a gold price of $300/oz and further highlighted that the potential for finding additional resources and reserves remained high. The study also firmly concluded that such resource and reserve enhancements would lead to "economies of scale" related improvements to the project's already positive economics.
Given these interim conclusions, Riddarhyttan's Board of Directors adopted a plan in late 2001 to focus on increasing the gold resources on the project to the 3 million ounce mark (all categories).
The exploration program has thus far been successful in identifying further resource potential on the project. As recently reported, the company has successfully focused on step-out drilling on the near surface and deeper extensions along the known limits of the mineralized zones. Early stage reconnaissance drilling has also been completed in the Iso Kuotko and Lintula areas of the project.
The company is confident that the recently published assays from new extensions of existing zones lying outside of the existing resource and reserve areas will add new ounces to the company's future resource estimates.
Our Goal: Completion of Four Strategic Objectives by Next Year's AGM
Four strategically important objectives were communicated to our shareholders during Riddarhyttan's annual shareholder's meeting, held in April 2002. The objectives are:
-- Broadening and strengthening of the shareholder base. Our
focus was specifically on adding institutional investors, through
the issuance of 10 million treasury shares. As previously stated,
a more robust, internationally oriented shareholder base will have
the effect of enhancing the company's financial strength in
addition to broadening the company's range of options regarding
the ultimate development of our primary gold asset, Suurikuusikko.
-- Obtaining mining permits. As part of the mine permitting
process initiated at the end of 2000, Riddarhyttan recently
submitted a comprehensive EIS to the Finnish government in support
of our application. The company expects a decision to be
forthcoming regarding mining permits by the end of Q3, 2002.
-- Government Grants. Given the unemployment situation and
other economic growth conditions inherent in the region where
Suurikuusikko is situated, the company was informed from the
outset of our exploration program in 1998 that matching Finnish
government/EU grants could be available for future mine
development. Given this fact, in addition to the knowledge that
there are other such precedents for mining grants within Finland
and the EU, the company recently submitted an application for
grant assistance from the Finnish government. A decision expected
by Q4, 2002.
-- Decision to Initiate Mine Development. As discussed,
Riddarhyttan's Board of Directors has endeavored to demonstrate
gold resource potential in the order of 3 million ounces at
Suurikuusikko. Given the exploration successes of this past year,
and a firm expectation of more to come, the company will initiate
a new resource calculation in the fall 2002. Once the company has
achieved this milestone, a decision will then be taken as to the
operating parameters of mine development at Suurikuusikko, either
alone or through joint venture.
With the first goal completed, and with the company armed with fresh capital from the private placement, we have now reached a position of strength to tackle the remaining objectives.
An Interesting Autumn Season Awaits
Drilling operations on the Suurikuusikko project have been in-progress since the start of 2002, with up to five drill rigs in action during one particular period this past spring. Drilling operations will be reduced over the summer season but will then pick up with intensity into the fall months, in order to reach our stated objectives.
Given our company's stated efforts to reducing future operating costs and to optimize gold recoveries, further metallurgical test work is being initiated at Gold Field's test facilities in South Africa. Previous test work has demonstrated that further processing cost reductions are achievable and that further study is warranted in support of these reductions.
In addition, as stated, the company is awaiting further news this fall with respect to permits.
A resurgence in the world gold markets, lead by an increase in the gold price from the $250/oz level to $320/oz and above, has had a positive effect on the Suurikuusikko gold project. The company supports the notion that further enhancements to the gold price are forthcoming, with further strengthening to continue into the latter half of this year as indicated by the world's top gold analysts.
Without a doubt, the autumn of 2002 will be a pivotal time for the company and its shareholders.
Share Lending
In order to facilitate the aforementioned private placement transaction Dunross & Co AB, the company's major shareholder, has temporarily put on loan a total of 10 million shares to Oehman Fondkommission. The loaned shares will be returned to Dunross as soon as the new share issue has been registered at the Swedish Registration office (PRV), with the new shares having been distributed accordingly.
Riddarhyttan Resources AB is a prospecting company with deposits of base metals and precious metals in the Nordic countries. The company's primary business concept is to acquire, either through prospecting or purchase, new mineral occurrences that can be upgraded to minable deposits through detailed prospecting. In the Suurikuusikko deposit (Finland), which is Riddarhyttan's most advanced project, resources ("indicated" and "inferred resources") amount to 8.3 million tonnes with a gold grade of 6.1 grams of gold per tonne (approximately 1.6 million ounces of gold).