Cayden Resources Inc.
TSX VENTURE : CYD

Cayden Resources Inc.

May 19, 2011 08:01 ET

Cayden Options Nevada Silver-Gold Properties

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 19, 2011) -Cayden Resources Inc. (TSX VENTURE:CYD) ("Cayden" or the "Company") announces that it has signed an option agreement (the "Option") with Vancouver based Railhead Resources Ltd. ("Railhead") a private resource explorer, under which Cayden can earn either a 50% or 60% interest in three groups of Nevada silver-gold exploration properties which Railhead has the right to acquire from an underlying owner. The Option allows Cayden to earn a 50% interest in the claims by either demonstrating the existence of a 2 million ounce gold equivalent deposit on the properties (minimum average grade of 1 gm/tonne, minimum cut-off 0.75 gm/tonne) or by spending $20 million ("M") on the properties over a three year period ($2M, year 1; $6M, year 2; and $12M, year 3). In order to proceed to a 60% interest, Cayden would have to spend a further $10M in the 4th year of the Option. These figures are subject to downwards adjustment (to $15M for 50% and $20M for 60%) if Railhead does not complete the staking of certain other claims forming part of the land package. Railhead's work obligations of $7.5 million to the Underlying Owner will be covered by Cayden's earn-in requirements however Railhead must itself make certain cash and share payments to the underlying owner. The underlying owner is entitled to a sliding scale royalty of up to $1.50 per silver ounce and $30 per gold ounce. Certain of the claims are subject to a 9%-15% net operating profits royalty in favour of the underlying owner who is also entitled to minimum advance royalties on the three claim group of $75,000 per quarter payable starting in 2014 increasing to $175,000 per quarter in 2021.

Once Cayden has earned-in to either the 50% or 60% interest, the parties will continue in a customary joint venture in the form appended to the Option and each will be responsible for paying its share of ongoing costs pro rata, failing which a party will be diluted. As of the date hereof, the Option is subject to underlying owner's consent, final title due diligence and TSX Venture Exchange acceptance; all targeted to complete within a few weeks. A NI 43-101 technical report is in progress and will make recommendations to test a number of historical showings on the properties which are described below. The Option will be filed on SEDAR upon the conditions being met.

Quartz Mountain Project, Nevada

The Quartz Mountain project represents three distinct historical mining districts in Nye and Mineral Counties, central Nevada, comprising of Quartz Mountain, Lodi Hills, and Downeyville. Historically, the Quartz Mountain district was organized in 1875 after the discovery of rich gold bearing silver-lead ores on the southeast flank of Lodi Hills. Over the next several decades, additional mines and adjoining prospects were active in development and production. In 1920, gold rich silver-lead ores were found on the northwest flank of Quartz Mountain and the San Rafael mine commenced operations. Despite some breaks in production, San Rafael produced ore from 6 levels of underground until 1957 Additional gold-silver epithermal veins and breccia targets abound in the Downeyville area.

A privately held, Utah-based company, from which Railhead has optioned the claims, first started geological investigations in the area during the mid 1950's. By the mid 1960's the owners had outlined silver-gold-lead-zinc resources (non NI 43-101 compliant) on the key San Rafael ground and had identified additional tonnage potential along strike and down dip of the system. Over an ensuing 30 year period the owners conducted an intense district-wide mineral evaluation undertaking geological mapping, the collection of hundreds of rock samples, thin section microscopic work, ore genesis studies, detailed gossan evaluation, underground mapping and sampling, bulk tonnage and metallurgical testing, and dozens of drill holes. As the information was accumulated, evidence of a multi-phase porphyry district became apparent from the style of surficial mineralization, temperature of formation, alteration sequence, and the presence of mineralized intrusives. In the 1970's, the release of a U.S.G.S. regional airborne survey depicted a broad, linear magnetic high trending NNE-SSW through all the known areas and also into the flats towards Gabbs.

All the historical evidence gathered on the region suggests potential for a large scale mineralized district primarily composed of Mesozoic metasedimentary and metavolcanic rocks intruded by plutonic rocks while Tertiary volcanics outcrop to the north. Several major faults bisect the region. Contact metamorphism is widespread in the vicinity of the plutons along with intense hydrothermal alteration. While there has been no modern detailed exploration or recent exploitation of mineralized zones, the Company has conducted recent investigations on the claims in proximity to historical workings and has identified multiple at-or-near-surface, potentially bulk mineable targets with potential at depth and along strike

The current land position of the Railhead project exceeds 15,000 acres (over 60 km2). In April 2010, Railhead contracted Geotech Ltd. to conduct a detailed magnometer and ZTEM airborne survey of the project. This survey has been completed. Interpreted results of the airborne survey will be correlated with known historic drill hole locations in preparation for a drill program scheduled to commence in Q2, 2011. Railhead and Cayden are in the process of obtaining permits for up to 300 drill holes.

Cayden chief executive officer, Ivan Bebek, commented on the Option: "The optioning of Railhead's historic Nevada claims represents a great opportunity for Cayden to explore a highly prospective silver gold district with significant historical workings which we believe has the potential to host substantial new silver gold deposits. This project is part of our western basin land strategy which includes the Morelus Sur project in Mexico which Cayden is now in the process of drilling."

On Behalf of the Board,

Ivan Bebek, President and CEO

About Cayden Resources Cayden is a junior mineral exploration company focused on exploration and development of high quality mining assets located primarily in the Americas. It currently holds rights to properties in British Columbia, Mexico and Nevada. Managed by highly skilled and successful technical and financial professionals, Cayden is well financed with no debt. Cayden is also strongly committed to the highest standards for environmental management, social responsibility, and health and safety for its employees and neighboring communities. Cayden trades on Tier 1 of the TSX Venture Exchange. More information about Cayden is available at www.caydenresources.com.

The above release contains forward looking information which in Cayden's view is based on reasonable assumptions and estimates. There can be no assurance that forward looking statements will prove to be accurate and are subject to may factors beyond the control of Cayden including third party consents, regulatory approvals the state of capital markets and the appetite for higher risk junior resource companies. For further details about Cayden and the risks it faces see its public filings at www.sedar.com.

Neither the TSX Venture Exchange nor any other regulatory authority accepts responsibility for the adequacy or accuracy of this release.

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