Fortune Valley Resources Inc. ("Fortune Valley" or the "Company")
(TSX VENTURE: FVX) announces that it has raised $250,000 by issuing
a convertible unsecured debenture to Uruguay Mineral Exploration
Inc. ("Uruguay") (TSX-V: UME), that a subsidiary of Anglo American
plc has agreed to grant an option to acquire a 100% interest in the
Pantanillo gold deposit in Region III of Chile to one of Fortune
Valley's wholly-owned subsidiaries, and that Fortune Valley has
signed a non-binding letter of intent with Uruguay in connection
with a proposed business combination.
The Debenture
The debenture, which is without interest and which matures on
November 30, 2009, is convertible at Uruguay's option into Common
shares of Fortune Valley at any time at a conversion price of $0.06
per Common share. Uruguay has agreed that it will not convert the
debenture while Uruguay and Fortune Valley are negotiating the
proposed business combination.
The Company intends to use the proceeds of the debenture to make
the initial payment required for the acquisition of the option over
the Pantanillo prospect and to negotiate and consummate the
proposed business combination.
It is not anticipated that any change of control of Fortune
Valley will occur as a result of this debenture financing. Upon
conversion, Uruguay may become an insider of Fortune Valley.
The Property Acquisition
Anglo American Norte S.A., a subsidiary of Anglo American plc,
has agreed to grant Fortune Valley's wholly-owned subsidiary,
Fortune Valley Resources Chile S.A., an option to acquire a 100%
interest in the Pantanillo gold deposit in Region III of Chile.
Located in the prolific Maricunga gold district of northern
Chile, the potential mineral deposit at Pantanillo is estimated at
between 82 to 125 million tonnes grading 0.83 to 0.73 g/t gold
using a 0.6 to 0.5 g/t gold cut off for the lower and higher
tonnage estimates respectively, which is equivalent to 2.18 to 2.95
million ounces of contained gold. The potential quantity and grade
of the potential mineral deposit is conceptual in nature, as there
has been insufficient exploration to define a mineral resource, and
it is uncertain if further exploration will result in the target
being delineated as a mineral resource.
US$4,000,000 must be spent on development work and cash payments
of US$850,000 must be made over a period of three years to earn a
100% interest in the property. An initial cash payment of
US$100,000 is required at closing. The vendor will receive a 3.5%
net smelter returns royalty on future production from the property.
An annual minimum royalty of US$300,000 is payable in years four
and five, increasing to US$1 million from year six.
The Pantanillo property comprises 11,750 hectares of
exploitation concessions located 125 kilometres east from the city
of Copiapo in Region III of Chile at an elevation of 4,600 metres
above sea level.
The property is located in the prolific Maricunga Gold Belt
which currently has two operating gold mines, La Coipa and
Maricunga, and several major gold projects at project development
stage, including Marte-Lobo, Pantanillo, Cerro Casale, La Pepa,
Volcan and Caspiche.
To view the map accompanying this release, please click on the
following link: http://media3.marketwire.com/docs/fvx105m1.JPG.
The Maricunga Gold Belt, comprising a NNE trending chain of
andesitic to dacitic volcanoes, measures approximately 150
kilometres long (north-south) by 30 kilometres wide and hosts a
series of epithermal high sulphidation and porphyry-style
gold-silver-copper deposits. The Pantanillo deposit was discovered
in 1992 and is a gold-porphyry with both oxide and sulphide gold
mineralization.
Historical geological work on the Pantanillo property has been
performed by Anglo American (1992-2005) and Kinross Gold
(2005-2008). The potential mineral deposit at Pantanillo is
estimated at between 82 to 125 million tonnes grading 0.83 to 0.73
g/t gold using a 0.6 to 0.5 g/t gold cut off for the lower and
higher tonnage estimates respectively, which is equivalent to 2.18
to 2.95 million ounces of contained gold. This estimate is based on
the results of a total of 8,398 metres of reverse circulation
drilling and diamond drilling completed on the Pantanillo deposit
and a preliminary assessment prepared by Kinross Gold in 2007.
The potential quantity and grade of the potential mineral
deposit is conceptual in nature, as there has been insufficient
exploration to define a mineral resource as defined by the
standards of NI 43-101, and it is uncertain if further exploration
will result in the target being delineated as a mineral
resource.
Anglo American and Kinross Gold performed geochemistry,
geophysics, trenches, and geological mapping to 1:5000 on the
property. In the area north of the Pantanillo gold deposit, there
are a number of gold anomalies associated with epithermal veins;
local small miners (pirquineros) are operating in this area. In the
area of south of the Pantanillo gold deposit, zones of banded
volcanic rock with hydrothermal alteration and gold mineralization
have been observed.
The Maricunga Gold Belt has several major gold projects in
development stage. In November 2008, Kinross Gold acquired a 100%
interest in the 5.9 million ounce gold resource at Marte-Lobo in
the Maricunga for about US$258 million. In addition, project
development work is advancing at the Cerro Casale, Volcan and
Caspiche projects.
The strategic location of the Pantanillo gold deposit provides
opportunities to leverage continued infrastructure improvements in
the region to support the project development.
The Company intends to prepare a NI 43-101 technical report for
the Pantanillo property.
The Company plans to conduct further drilling on the Pantanillo
gold deposit to upgrade the potential mineral deposit to a mineral
resource as defined by the standards of NI 43.101 and to complete
preliminary metallurgical testing aimed at defining a viable heap
leach, open pit operation. The significant potential for a new gold
discovery on the overall land package will also be investigated.
Project development work will be advanced on power, water and
logistics to confirm the feasibility of securing or purchasing key
raw materials and services, and discussions will be initiated with
mining companies owning other significant gold resources in the
Maricunga Gold Belt to investigate potential development
synergies.
Mr. Robert Perry, Certified Professional Geologist, V.P.
Exploration, Intuitive Exploration Inc., who is a Qualified Person
under National Instrument 43-101, has reviewed the technical
disclosure in this press release. Mr. Perry has verified the data
disclosed in this press release and has relied on summary
information available from internal studies prepared by the former
operator.
The Proposed Business Combination
Fortune Valley and Uruguay are also pleased to announce that
they have signed a non-binding letter of intent that sets out the
details of a proposed business combination, by which Uruguay
proposes to acquire all of the issued and outstanding Common shares
of Fortune Valley.
Pursuant to the letter of intent, the proposed transaction is
anticipated to be structured as a plan of arrangement by which each
Fortune Valley Common share will be exchanged for 0.4554 Uruguay
shares. If the proposed transaction completes, then Fortune Valley
shareholders will hold approximately 25% of the approximately 64.9
million shares Uruguay will have issued and outstanding.
The transaction will be subject to, among other things, the
parties entering into a definitive agreement by October 13, 2009,
both parties obtaining satisfactory results of their due diligence
investigations, receipt of all required regulatory approvals and
obtaining Fortune Valley shareholder approval by November 30, 2009.
The transaction is scheduled to close by November 30, 2009. Fortune
Valley has agreed not to solicit alternate transactions while
Uruguay and Fortune Valley are pursuing the proposed
transaction.
The letter of intent contemplates that certain directors of
Fortune Valley will enter into lock-up agreements by which they
will vote their shares in favour of the transaction. These
directors currently hold approximately 30% of the issued and
outstanding Common shares of Fortune Valley.
Completion of the financing, acquisition and proposed business
combination are subject to regulatory approval, including
acceptance by the TSX Venture Exchange.
Fortune Valley Resources Inc. is a mining company focused on
creating shareholder wealth through the development of high quality
gold assets in Chile and Argentina.
Forward Looking Statements
All statements, other than statements of historical fact,
contained or incorporated by reference in this news release,
including any information as to the future financial or operating
performance of the Company, constitute "forward looking statements"
within the meaning of certain securities laws, and are based on
expectations, estimates and projections as of the date of this news
release. There can be no assurance that such statements will prove
to be accurate; such statements are subject to significant risks
and uncertainties, and actual results and future events could
differ materially from those anticipated in such statements.
Forward-looking statements include, without limitation, the ability
of the Company to consummate the proposed business combination as
set out in the letter of intent, or at all, the ability of the
Company to raise the funding required to complete the acquisition
of the Pantanillo property in accordance with the option, or at
all, and the ability of the Company to raise the funding required
to undertake the necessary exploration activities on the Pantanillo
property and the results of those activities. The Company disclaims
any intention or obligation to update or revise any forward looking
statements whether as a result of new information, future events
and such forward-looking statements, except to the extent required
by applicable law.
The Board of Directors
Fortune Valley Resources Inc.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Fortune Valley Resources Inc. 56-98-230-2277
1-303-931-8597 www.fortunevalleyresources.com
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