TORONTO, ONTARIO, Jun. 18, 2010 (Marketwire) -- Valdez Gold Inc. (TSX VENTURE:VAZ) ("Valdez" or the "Company") is pleased to announce that it has signed a letter of intent with Gammon Gold Inc. (GAM-TSX:GRS-NYSE, or "Gammon") pursuant to which the parties agree to negotiate in good faith a definitive agreement whereby Gammon will have the right to acquire Valdez' Los Jarros and Jarros Norte Properties (the "Properties") in Chihuahua, Mexico by making successive payments over a four year period aggregating US $2.5 million. The required option payments would be as follows:
Option Payment Date Amount
Upon execution of the Definitive Agreement: US$ 50,000
12 Months after execution of Definitive Agreement: US$ 100,000
24 Months after execution of Definitive Agreement: US$ 250,000
36 Months after execution of Definitive Agreement: US$ 400,000
48 Months after execution of Definitive Agreement: US$ 1,700,000
Total Option Payments: US$ 2,500,000
In addition, should Gammon initiate commercial production from the Properties, Gammon would pay a royalty to Valdez equal to 2.0% of the Net Smelter Returns ("NSR") from such production. Should the cumulative royalty payments to Valdez reach US$2,500,000, the NSR would be reduced to a 1% NSR that would be paid so long as there is commercial production from the Properties.
This proposed transaction will allow the Company to focus its efforts and resources on the Flume Property located near Dawson City, Yukon and the Bluff Project on the Seward Peninsula in Alaska, but still retain an interest in any future success Gammon may have on the Properties. Company management continues to seek opportunities in acquiring and/or investing in properties in Mexico and elsewhere that have a good potential in developing into a major asset for the Company.
Completion of the transaction contemplated in this release is subject to certain conditions including, without limitation, completion of satisfactory due diligence by Gammon with respect to the properties, execution of a definitive purchase agreement and receipt of all necessary regulatory approvals.
This press release contains forward-looking statements within the meaning of applicable securities legislation. Such statements include, without limitation, statements regarding the future results of operations, performance and achievements of the Company, including potential property acquisitions, the timing, content, cost and results of proposed work programs, the discovery and delineation of mineral deposits/resources/reserves, geological interpretations, proposed production rates, potential mineral recovery processes and rates, business and financing plans and business trends. Although the Company believes that such statements are reasonable, it can give no assurances that such expectations will prove to be correct. Forward-looking statements are 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 forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward-looking statements as a result of various factors, including, but not limited to, variations in the nature, quality and quantity of any mineral deposits that may be located, significant downward variations in the market price of any mineral that may be produced, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, to produce minerals from its properties successfully or profitability, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies. All of the Company's public disclosure filings may be accessed via www.sedar.com and readers are urged to review these materials, including any technical reports filed with respect to the Company's mineral properties. This press release is not, and is not to be construed in any way as, an offer to buy or sell securities in the United States.
Neither the 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.