MONTREAL, QUEBEC--(Marketwire - Feb. 19, 2013) - Beaufield Resources Inc. ("Beaufield" or the "Company") (TSX VENTURE:BFD) is pleased to announce that it has signed an exclusivity agreement (the "Exclusivity Agreement") and a non-binding letter of intent (the "LOI") with HudBay Minerals Inc. ("Hudbay") to acquire the Balmat Zinc Mine ("Balmat") in New York State via the acquisition of all the issued and outstanding shares of the capital of Balmat Holding Corporation ("Balmat Holding"), a wholly-owned subsidiary of HudBay (the "Acquisition"). The LOI and Exclusivity Agreement give Beaufield 90 days to complete its confirmatory due diligence review, negotiate a definitive agreement, and close the Acquisition based on the terms provided for in the LOI.

The key terms of the LOI contemplate Beaufield acquiring Balmat for payments totalling C$12 million and up to C$2 million in initial equity of Beaufield, consisting of:

  • An initial payment due upon closing of the Acquisition (the "Closing") of C$4 million in cash;

  • Equity consideration issued at Closing up to C$2 million in common shares of the Company's capital (the "Shares") priced at a 5% discount to the 10-day volume-weighted average price prior to the closing date, subject to a maximum of 12 million shares;

  • A second cash payment due six months after Closing of C$4 million;

  • A third cash payment due 12 months after Closing of C$4 million.

Each of Beaufield and Hudbay has the option to elect to have 50% of the second and third payments satisfied through the issuance of additional Shares, the price of which will be based on a 5% discount to the 10-day volume-weighted average price prior to the date of payment, subject to a cumulative limit of Hudbay holding no more than a 9.9% interest in Beaufield.

Beaufield intends to secure the remainder of the financing for the restart of the Balmat mine and the second and third payments. The Balmat assets include a fully developed underground mine, a zinc concentrator and related infrastructure for the production and shipment of zinc concentrates.

As the Acquisition would constitute a "Fundamental Acquisition" pursuant to the policies of the TSX Venture Exchange (the "Exchange"), upon issuance of this press release, the trading of Beaufield's common shares on the Exchange will be halted until satisfactory review by the Exchange of required documents, including a geological report regarding Balmat and of Balmat Holding's financial statements.

Beaufield has historically been a pure exploration company with its focus on mineral exploration in Quebec. Responding to poor market conditions for junior explorers, Beaufield hired veteran mine operator Kevin Weston as President and CEO in November 2012. Mr. Weston was tasked by the Board with changing the way Beaufield manages its business in order to create value for its shareholders. With the Acquisition, the Company is heading in a new direction which in the very near term will include both operations and exploration. Mr. Weston's experience running similar underground zinc mines, such as G9, Myra Falls, Caribou, and Bougrine is expected to allow the Company to maximize the value of Balmat.

Balmat is located near the town of Gouverneur, New York, and is approximately three hours driving time from Montreal, where Beaufield has its office. The physical assets are comprised of a zinc concentrator, headframe and underground shaft, a fully developed underground mine, underground production equipment, rail siding for shipping concentrate, tailings pond and all associated infrastructure for an operating mine. Since its last closure in 2008, Hudbay has kept the mine in a state of readiness. This high-quality work is greatly to the advantage of Beaufield, as the Company plans to restart the mine as its first order of business.

The assets also include over 50,000 acres of mineral rights and leases and includes the past producing Edwards, Pierrepont and Hyatt Mines. The Balmat Mine has produced over 30 million tons (27 million tonnes) of ore at an average grade of 8.6% since 1928. In total, all of the mines related to this agreement have produced over 43 million tons (39 million tonnes) of ore at an average grade of 9.5% zinc.

The Balmat No. 2 Mine was initially put into production in 1928; the operation produced continuously until 2001. In 2004, Balmat was purchased by a predecessor company to Hudbay, who undertook a feasibility study and after a significant capital investment reopened the Balmat No. 4 mine in 2006. In 2008, due to prevailing market conditions, the operation was shut down and has since been on care and maintenance.

The final production from the mine was from the Balmat No. 4 Mine shaft, a circular concrete lined shaft. The concentrator was constructed in 1972 and is capable of processing up to 5,000 tons per day (4,540 tonnes per day). It has processed ores from the Balmat, Edwards, Hyatt and Pierrepont Mines. The mill has been continually upgraded since it was constructed and it is an automated modern facility. Zinc metal recoveries were in the 94% to 95% range and a high quality concentrate was produced grading 55% zinc.

Balmat current historical resources estimation (Hudbay, 2008) is as follows:

Category Tonnes Zinc Grade
Measured 880,000 13.4
Indicated 570,000 17.5
Inferred 1,769,000 13.3

The historical resource estimation was prepared internally by the technical team at Hudbay in December 2008 and no National Instrument ("NI") 43-101 compliant technical report was required or prepared.

The resource estimate was prepared using MineSight 4.60-01 block modeling software. The block model was constrained by 3D wireframes of the zinc mineralized zones and grades were estimated using Ordinary Kriging. Specific Gravity (SG) measurements were used to develop linear correlation and were applied to the block model to determine a calculated SG based on zinc grade. A total of 2,178 mineralized assays from 525 drill holes were selected as defining the mineralized zones for the estimate.

Assay samples were weighted by the calculated SG and composited into full length composites. High grade composites were restricted, based on a review of the probability and histogram plots, by limiting their search distance. Correlograms were determined using MineSight software to determine the orientation and spatial continuity of the mineralization.

The three-dimensional block model was constructed using blocks measuring 15 ft by 15 ft by 15ft. The mineral resource estimates were classified according to the CIM Definition Standards on Mineral Resources and Mineral Reserves and classified as Measured, Indicated and Inferred.

There are no other resource estimates subsequent to the 2008 resource estimation mentioned above that are available to Beaufield. A qualified person has not done sufficient work to classify these historical estimates as current mineral resources or mineral reserves. The historical estimate could be upgraded to NI 43-101 with additional QAQC validation by a qualified person. Beaufield is not treating the historical estimate as a current mineral resource and will undertake to prepare a NI 43-101 compliant resource estimate as part of the due diligence.

At this time there is no current resource estimate and a feasibility study has not been completed so there is no certainty the proposed operation will be economically viable and a decision of recommencement of production has not been made.

Beaufield geologists believe that the property offers good exploration potential both within the Balmat mine and regionally. Several of the mineralized zones remain open down plunge. Additionally, other zones, not included in the resource estimate, have recently been discovered. The 2007 discovery of the Sully zone located 7 kilometres northeast and along strike of the Balmat mine demonstrates the potential of the area. The area between this zone and the Balmat mine remains unexplored and has been earmarked as a priority exploration target.

At a regional scale, several zinc showings exist on the property and remain to be further explored.

The LOI and the Exclusivity Agreement that Beaufield has signed with Hudbay provides that Beaufield shall complete all required environmental, technical and legal due diligence review within the exclusivity period. The Acquisition and the issuance of Shares to Hudbay, upon satisfactory confirmatory due diligence review and the conclusion of a definitive agreement, will be subject to the approval of the Exchange.

Beaufield's President, Kevin Weston comments: "The Balmat Mine is a unique opportunity for Beaufield's shareholders. Balmat offers a de-risked project and the possibility to become a revenue generator in a reasonable and controllable timeframe. Challenges associated with bringing new Greenfield projects into production can include spiraling capital costs, unspecified permitting timelines, and uncontrollable infrastructure construction timelines. These challenges do not exist with the Balmat project. Although the project was not strategic to Hudbay due to its size, I feel it is an excellent building block for Beaufield to enter the ranks of the producing mining companies. We are pleased as well that Hudbay has chosen to become a substantial equity holder in Beaufield."

Minvisory Corp. is acting as the Company's financial advisor in connection with the Acquisition.

This news release has been prepared and approved by David Rivard, P.Geo., Vice-President Exploration of Beaufield and reviewed for the metallurgy information by Bogdan Damjanovic, P. Eng., Senior Metallurgist at Micon International Ltd., both Qualified Persons under NI 43-101.

About Beaufield:

Beaufield is a mineral exploration company with its exploration activity focused in Quebec. With approximately $7.5 million in working capital, including $2 million in flow-through financing to be dedicated for exploration by the end of 2013, Beaufield is well positioned to advance its portfolio of exploration properties and identify other potential opportunities in the mineral exploration or development stage that we can add value to on behalf of our shareholders.

The information set forth in this press release includes certain forward-looking statements. Such statements are based on assumptions exposed to major risks and uncertainties. Although Beaufield deems the expectations reflected in these forward-looking statements to be reasonable, the Company cannot provide any guarantee as to the materialization of the expectations reflected in these forward-looking statements. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has reviewed or accepts responsibility for the adequacy or accuracy of this Release. Completion of the Acquisition is subject to a number of conditions, including but not limited to, Exchange acceptance. There can be no assurance that the Acquisition will be completed as proposed or at all.

Contact Information:

Kevin Weston
514.842.3306 (FAX)