Blue Cove Capital Corp. Enters into Letter of Intent for Multiple Gold Properties in the Battle Mountain/Cortez Trends of North Central Nevada as Its Qualifying Transaction
09:15 EDT Monday, August 24, 2009
globeinvestor.com
Blue Cove Capital Corp. Enters into Letter of Intent for Multiple Gold Properties in the Battle Mountain/Cortez Trends of North Central Nevada as Its Qualifying Transaction
Vancouver, British Columbia CANADA, August 24, 2009 /FSC/ - Blue Cove Capital Corp. (BCV.P - TSX Venture), announces that that it has entered into a letter of intent (the "Letter of Intent") dated August 18, 2009 with Golden Predator Mines (US) Inc. ("Golden Predator US") and Great American Minerals Inc. ("GAM" and together with Golden Predator US, the "Vendors") to acquire the Vendors' collective interest in certain mineral exploration properties located in the Battle Mountain and Cortez Trends of North Central Nevada, USA including the Modoc Project, UNR/Keystone Project, Trail Project and the Platte River Joint Venture Project (collectively, the "Properties") on the terms set out in the Letter of Intent (the "Acquisition"). The Acquisition would include the assignment of all of the Vendors' right, title and interest in the Properties as well as the obligations in certain underlying agreements to which the Properties are subject. The Acquisition is subject to TSX Venture Exchange ("TSXV") approval and is intended to constitute the Company's qualifying transaction and the Modoc Project to constitute Blue Cove's qualifying property under the policies of the TSXV. Under the Letter of Intent the parties have agreed to use commercially reasonable efforts to negotiate and settle by September 15, 2009 a definitive agreement (the "Definitive Agreement").
Pursuant to the Letter of Intent as consideration for the Properties, the Definitive Agreement would provide that on closing the Company will pay to the Vendors an aggregate of US$1,000,000, issue to the Vendors an aggregate of 1,000,000 common shares ("Shares") and pay certain maintenance costs ("Costs") incurred by Golden Predator US estimated at US$104,000 coming due after the date of the Letter of Intent and before closing. The Vendors would also retain a 1.5% net smelter return royalty on the sale of all minerals produced from the Properties other than the Platte River Project, and a 0.75% net smelter return royalty on the sale of all minerals produced from the Platte River Project. As consideration for entering the Letter of Intent, Blue Cove has paid to the Vendors a CDN$25,000 non-refundable payment which will be credited against the Costs which are payable on closing. On closing of the Acquisition, Golden Predator US shall have the right to appoint one individual as a director of Blue Cove until Blue Cove's next annual general meeting and to appoint one individual as a nominee as a director at Blue Cove's next two annual general meetings. In addition, for a period of two years from closing of the Acquisition Golden Predator US shall have a pre-emptive right to participate in future equity issuances of Blue Cove in order to maintain its proportionate ownership interest as at closing.
The Properties
The Properties are all gold exploration properties located in the Battle Mountain, Cortez/Cortez Hills and Eureka Gold Districts of Nevada. Numerous major corporate owned Gold Mines in the districts & trend include Newmont Gold's Lone Tree & Phoenix Mine Complex's, Barrick & Goldcorp's jointly owned Marigold Mine, Barrick's Pipeline, Cortez & Cortez Hills Gold Mines & Deposits, US Gold's Tonkin Springs Gold Mine and Barrick's Archimedes Gold Mine.
The Modoc Project is located in Lander County, Nevada two miles west of Newmont's Phoenix Mine project in the Battle Mountain Mining District.
The UNR/Keystone lower plate gold project lies within the Battle Mountain-Cortez Gold Trend, approximately 18 miles south of Barrick Gold's Cortez & Pipeline Mine and 12 miles south of the new Cortez Hills Mine.
The Platte River Joint Venture Project is on the northeast flank of the Roberts Mountains, southeast of the Cortez Hills Mine Project (Barrick Gold) and just east of US Gold's Tonkin Springs Mine Project.
The Trail Project located in the Eureka Mining District in Eureka County, Nevada is located on the west flank of Lookout Mountain approximately two miles north of Staccato Gold's Lookout Mountain Gold Deposit and Barrick Gold's Archimedes Gold Mine is currently in production approximately four miles north.
Under the Letter of Intent, prior to executing the Definitive Agreement, Company will conduct due diligence on the Properties and the underlying agreements to which they are subject. Additional disclosure regarding the Properties, and in particular the Modoc Project, will be provided in the Company's filing statement to be prepared in connection with its qualifying transaction.
Golden Predator US and GAM are Nevada companies. Golden Predator US is a wholly owned subsidiary of Golden Predator Royalty & Development Corp. (TSXV:GPD) ("Golden Predator"), a British Columbia company listed on the TSXV and GAM is a wholly-owned subsidiary of EMC Metals Corp. (TSX:EMC) ("EMC"), a British Columbia company listed on the Toronto Stock Exchange. To the knowledge of the Company, no person directly or indirectly beneficially holds a controlling interest or otherwise controls Golden Predator or EMC. The Acquisition will not be a Non-Arm's Length Qualifying Transaction under the policies of the TSXV and will not require the approval of the Company's shareholders.
Modoc Project
The Modoc Project is comprised of 120 unpatented mining claims encompassing approximately 2,150 acres. The Company understands that: (a) the Vendors together currently hold a 100% interest in the Modoc Project, except for 12 claims in which the Vendors hold a 1/3 interest; (b) Gale Peak Resources Group ("Gale Peak") holds the remaining 2/3 interest which it has leased to the Vendors until February 1, 2019; (c) in order to maintain the leasehold interest, the Vendors must pay the following advance minimum royalty payments: US$20,000 by March 31, 2010; US$30,000 by March 31, 2011; US$40,000 by March 31, 2012; US$50,000 by March 31, 2013; and US$60,000 by March 31, 2014 and each year thereafter; (d) the Vendors must also incur a total of US$500,000 in exploration expenditures prior to February 1, 2013 (US$75,000 of which must be incurred by February 1, 2012); (e) Gale Peak is also entitled to a 1.33% production royalty on the claims subject to the leasehold interest; (f) the Vendors may purchase the remaining two-thirds interest in the 12 claims from Gale Peak and one-half of the production royalty at any time for US$2,000,000; and (g) all advance minimum royalty payments and production royalty payments will be credited toward this purchase price. On completion of the Acquisition, Blue Cove would assume these obligations of the Vendors.
The Company has engaged Ernest Hunsaker CPG, a qualified person under National Instrument 43-101 to prepare a technical report in respect of the Modoc Project (the "Technical Report").
Platte River Project
The Company understands that: (a) the Vendors together currently hold a 49% joint venture interest in the unpatented claims (the "Platte Claims") and the leasehold interests (the "Platte Lease" and the "Blue Cap Lease") that comprise the Platte River Joint Venture Project; (b) Platte River Gold (US) Inc. ("Platte") holds the other 51% joint venture interest; (c) the Platte River Project consists of five project areas, including the Gabel, Frazier Creek, Vinini, Mo and Summit Projects for a combined land package consisting of approximately 303 unpatented mining claims; (d) the Platte Lease is in respect of nine of the claims and is for a period of twenty years commencing April 11, 2006; (e) the Platte Lease requires annual payments of between US$5,000 to US$8,500 and required exploration expenditures of US$275,000 by October 2010 which has not been incurred; (f) the claims subject to the Platte Lease are also subject to net smelter return royalties of between 3% and 4.5%; (g) the Blue Cap lease is in respect to six of the claims and is for a period of 20 years commencing on October 2, 2006; (h) the Blue Cap lease requires annual payments of $2,000; and (i) the claims subject to the Blue Cap Lease are subject to net smelter return royalties of between 3.0% and 3.5%.
UNR/Keystone Project and Trail Project
The Company understands that the Vendors together currently hold a 100% interest in the UNR/Keystone Project, which consists of 231 unpatented mining claims covering approximately 4,110 acres and a 100% interest in the Trail Project which consists of 30 unpatented mining claims.
Concurrent Financing
In connection with the Acquisition, the Company intends to complete a financing to raise CDN$2,000,000 (the "Financing") led by Canaccord Capital Corporation, the terms of which will be determined at a later date. The net proceeds of the Financing will be used to fund the Acquisition, the work program to be provided in the Technical Report, costs associated with the Qualifying Transaction and to provide general working capital.
The Resulting Issuer
On the closing of the Acquisition, the Company anticipates being classified as a "Tier 2" natural resource issuer. The Company will also own the Properties subject to applicable underlying agreements and expects to be actively engaged in the exploration of the Properties, as well as the acquisition and exploration of other mineral resource properties predominantly in Nevada.
The following table sets out the names, relationship to the Company and summarizes the backgrounds of the persons who it is presently anticipated will constitute insiders of the Company upon closing of the Acquisition. In addition, on closing of the Acquisition, Golden Predator US will have the right to appoint one director of the Company, who has not yet been identified. Other current directors and officers of the Company are expected to resign on closing of the Acquisition.
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NAME RELATION TO COMPANY BACKGROUND
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Chet Idziszek Interim President, Mr. Idziszek serves as
Non-Executive Chairman President and Director of
and Director Madison Minerals Inc., Lund
Gold Ltd. and Oromin
Explorations Ltd. In 1990,
Mr. Idziszek received the
"Mining Man of the Year" award
and received "Prospector of
the Year Award for 1994" in
recognition of his vital role
in the discovery and
development of the Eskay Creek
gold deposit in Canada.
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Donald McDowell Executive Vice-President Mr. McDowell is the former
Corporate Development President, Chief Executive
and Director Officer and founder of Great
American Minerals, Inc. now
wholly owned by Golden
Predator Mines. Mr. McDowell
has over 25 years of Nevada
geological exploration,
property evaluation and
resource development
experience including 15 years
with Santa Fe Pacific Gold and
2 years with Kennecott
Exploration.
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John Seaman Director Mr. Seaman currently serves as
the Chief Financial Officer of
Pediment Exploration Ltd., and
Premier Gold Mines Limited. In
addition, he currently serves
as President, Chief Executive
Officer, Chief Financial
Officer and Secretary of QRS
Capital Corp. Mr. Seaman also
serves as an independent
director of Valor Ventures
Inc., Skybridge Development
Corp., Galena Capital Corp.
and MBMI Resources Inc. from
October 8, 2002 to May 11,
2007, Mr. Seaman served as the
Chief Financial Officer of
Wolfden Resources Inc.
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Jim Stewart Director Mr. Stewart has practiced law
in both private practice and
as corporate counsel since
1984. He has extensive
experience in the fields of
mining, corporate and
securities law. Mr. Stewart
has served as a director of
senior officer for a number of
publicly traded companies
including Prime Equities
Ltd., Adrian Resources Ltd.,
Buffalo Gold Ltd., Madison
Minerals Inc. and Oromin
Explorations Ltd.
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Brett Kagetsu Corporate Secretary Mr. Kagetsu is a partner of
the national law firm of
Gowling Lafleur Henderson LLP
and practices in the area of
corporate finance and
securities.
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Adrian Rothwell Chief Financial Officer Mr. Rothwell is a Chartered
Accountant with over 20 years
of experience, and has
provided financial consulting,
management and controllership
services to the mining
industry since 1995. He has
acted as financial consultant
to a number of other publicly-
traded companies and is Chief
Financial Officer of MBMI
Resources Inc., Garson Gold
Corp., and Centurion Minerals
Ltd. He offers industry
specific experience in
financial and regulatory
reporting, project management,
compliance and corporate
structuring. Mr. Rothwell is a
member of the Institute of
Chartered Accountants of
British Columbia and the
Institute of Chartered
Accountants of Australia.
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Conditions for Closing
The Letter of Intent provides that completion of closing of the Acquisition is subject to several conditions including, among other things, TSXV acceptance, the completion of due diligence on the Properties to the satisfaction of the Company, entering into the Definitive Agreement by September 15, 2009 and the completion of the Financing.
Sponsorship
Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless an exemption from the sponsorship requirement is available. The Company intends to apply for an exemption from the sponsorship requirement. There is no assurance that the Company will be able to obtain such an exemption.
BLUE COVE CAPITAL CORP.
David Rutt,
President
(403) 701-1832
CAUTIONARY STATEMENT
Completion of the above transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority approval of the shareholders of the Company. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
This press release contains forward-looking information within the meaning of Canadian securities laws. Such information includes, without limitation, information regarding the completion of the proposed acquisition of the Properties and the Financing; and the anticipated business plans of the Company. Although the Company believes that such information is reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking information is typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking information provided by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking information as a result of various factors, including, but not limited to, the state of the financial markets for the Company's equity securities, the state of the market for gold or other minerals that may be produced generally, recent market volatility; variations in the nature, quality and quantity of any mineral deposits that may be located, the Company's ability to obtain any necessary permits, consents or authorizations required for its activities, to raise the necessary capital or to be fully able to implement its business strategies and other risks associated with the exploration and development of mineral properties. The reader is referred to the Company's most recent annual and interim Management's Discussion and Analysis for a more complete discussion of such risk factors and their potential effects, copies of which may be accessed through the Company's page on SEDAR at www.sedar.com.
Source: Blue Mountain Capital Corp. (TSX-V BCV)
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