Queenstake Resources Acquires Gold Mine

On July 2, 2003, Queenstake Resources Ltd. acquired the Jerritt Canyon gold mine in Elko County, Nevada from joint venture partners AngloGold Limited and Meridian Gold Inc. for US$1.5 million cash, the issue of 32 million Queenstake common shares and certain future production and royalty payments totalling a maximum of US$10 million.

In connection with the acquisition, Queenstake issued units comprised of common shares and common share purchase warrants, and subscription receipts that were exercisable for further units upon completion of the mine acquisition for aggregate gross proceeds of approximately $27 million pursuant to brokered private placements in Canada and the U.S. Westwind Partners Inc. and Loewen, Ondaatje, McCutcheon Limited acted as agents in connection with the financings. Further, with Westwind Partners acting as debt placement agent, Queenstake obtained senior debt financing of US$20 million secured against the mine assets.

The majority of the equity and debt financing proceeds were applied by Queenstake to pay for an environmental risk transfer programme with AIG Environmental comprised of mine and mill closure and reclamation insurance, mine and mill reclamation surely and pollution legal liability coverage for pre-existing and future conditions.

Queenstake was represented on the senior debt financing, by Gowling Lafleur Henderson LLP, with a team led by Joe Giuffre and Rob McKeen, and including Stuart Breen in Vancouver and Michael Anderson in Toronto. Randal Jones and Kenneth Sam of Dorsey & Whitney LLP in Seattle, were U.S. special counsel to Queenstake in connection with the equity financings.

Westwind Partners and Loewen, Ondaatje, McCutcheon were represented by Dawn Whittaker of Ogilvy Renault in Toronto. The senior debt lender was represented by Torys LLP, with a team that included Donna Parish, David Nowak, Robert Mansell, Chris Fowles, Janie Tremblay, Stephanie Montgomery, Brian Prill and Sonia Campbell in Toronto and Jeff Gracer, Bill Gray, Andy Beck and Carl Walker in New York.