Fortune Valley Resources Inc.
TSX VENTURE : FVX

Fortune Valley Resources Inc.

October 05, 2009 09:15 ET

Fortune Valley Announces Issuance of $250,000 Convertible Debenture, Acquisition of Option Over Major Gold Deposit and Proposed Business Combination With Uruguay Mineral Exploration Inc.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 5, 2009) - 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.

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