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Cons Petroquin to buy Corhill for cash and shares

Mr. Arthur Gordon-Tydd reports

HIGH GRADE URANIUM PROPERTY ACQUIRED AND PRIVATE PLACEMENT

Consolidated Petroquin Resources Ltd. has entered into a purchase agreement to acquire a 100-per-cent interest in the Corhill uranium-gold-platinum property located 312 miles north-northwest of Yellowknife, Northwest Territories, straddling the Northwest Territories/Nunavut border.

The terms of the purchase agreement for a 100-per-cent interest in the property require the company to make cash payment of $50,000 and to issue 500,000 shares. The property is subject to a 2-per-cent net smelter return royalty. The company has the right to reduce the royalty to 1 per cent by paying $1-million. This acquisition is subject to exchange approval. A finder's fee, in the maximum amount permitted under the policies of the TSX Venture Exchange, is payable.

The Corhill property comprises 18 mineral claims and covers 30,628.45 acres. The claims straddle the Northwest Territories/Nunavut border and are approximately 312 miles north-northwest of Yellowknife and 90 miles southwest of Kugluktuk (Coppermine).

The property holds significant potential for Athabasca basin-type unconformity uranium deposits and the genetically related Coronation Hill (Australia)-type mineralization with associated gold and platinum group metals.

The property consists of lower Proterozoic granites and rhyodacite tuffs which are adjacent to and are unconformably overlain by Middle Proterozoic Hornby Bay sandstone. The northeast-striking Fault River shear zone splays into a set of parallel structures, producing a prominent graben. On the east-northeastern portion of the property, mineralization comprises numerous high-grade Au-Pt-Pd-bearing pitch-blende-coffinite veins and disseminations in sheared, hematized and hloritized fluorite-biotite granite along the Fault River shear zone. Hornby Bay group sandstone lay in fault contact with the main mineralized zone, 30 metres to 50 metres northwest. The area of most interest is 400 metres by 100 metres in size, open to the northwest (under a lake). High-grade precious metal values and radioactivity are obtained in a core area 280 metres by 30 metres in size, where trenching has exposed 18 veins varying from two to 30 metres in strike length and 0.2 to three metres wide. A highlight assay of 0.758 ounce Au per ton, 0.773 ounce Pt per ton and 1.021 ounce Pd per ton was produced from one 30 centimetres, thick veinlet in this zone. A high value of 1.35 per cent U₃O₈ over 0.8 metre was returned in trench sampling. A single drill hole in this area intersected numerous radioactive shears with best values of 0.31 per cent to 1.25 per cent U₃O₈ over 0.16 metre to 0.34 metre, with anomalous Au-Pt-Pd values.

Previous work by Cominco located a radioactive quartz-hematite breccia in a pyritic rhyodacite tuff along a 030 structure. Re-analysis of trench samples by Aber in 1988 returned values of 8,400 parts per billion Au, 100 parts per billion Pt and 130 parts per billion Pd over one metre. A grab sample assayed 1.904 ounces per ton Au, 2,648 parts per billion Pt and 2,402 parts per billion Pd. Numerous anomalous samples have been located along the same structure. An unexplained airborne radiometric anomaly in an area of above-background lake sediment samples is another priority target.

The property geology is structurally controlled and shows the results of unconformity-related mineralization processes. The objective is to discover world-class, high-grade uranium deposits, similar to those found in the Athabasca basin in Saskatchewan.

Mike Magrum, PEng, a qualified person under National Instrument 43-101, has approved the technical information contained in this news release. Completion of the transaction is subject to exchange acceptance.

The company has entered into a private placement for the sale of 6.7 million units at a price of 15 cents per unit for a total of $1,005,000. Each unit will consist of one common share and one share purchase warrant for the purchase of one further common share of the company within two years at a price of 30 cents per share. The funds shall be used for unallocated working capital and property acquisition. The maximum allowable finder's fee shall be payable.

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