Cayden Resources Inc.
TSX VENTURE : CYD

Cayden Resources Inc.

February 16, 2011 09:56 ET

Cayden Resources Exercises Option for Morelus Sur Gold Project and Provides Project Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 16, 2011) -

NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Cayden Resources Inc. (TSX VENTURE:CYD) ("Cayden" or the "Company") is pleased to announce that it has exercised its option agreement with La Camera Mining Inc. (the "Option Agreement") to acquire its Mexican subsidiary, LC Mines SA de CV ("LC Mines") as previously announced on October 15, 2010.

As of the date of this release and pursuant to the terms of the Option Agreement, the Company has made loans to LC Mines in the amount of US$2,947,000, satisfying the obligation under the agreement. Prior to April 30, 2011, the Company will be required to issue 2,887,500 common shares and 1,443,750 share purchase warrants to LC Mines which will be subject to a 4 month hold. Each share purchase warrant will entitle the holder to acquire one common share of the Company at a price of $4.00, for a period of two years from the date of issue.

A further finder's fee of $1,150,000 in common shares is payable to two arms-length parties as a result of the Company's exercise of the Option Agreement (the "Finder's Fee") and will be issued at the same time as the shares are issued to La Camera Mining Inc.

The Company anticipates issuing and delivering the shares and purchase warrants payable under the Option Agreement and the Finder's Fee within two business days of this release.

Morelos Sur Purchase Right

Upon settlement of the Option Agreement, Cayden, though LC Mines, will hold a purchase right to acquire an 100% interest in the Morelos Sur gold property located in the Nukay mining district of central Guerrero State in southern Mexico (the "Purchase Right"). Under the terms of the Purchase Right, the Company is required to make the following payments to a third party:

    Value added Interest on amount
Due dates Principal payment tax @ 16% due at payment
On or before April 10, 2011 US$3,000,000 US$480,000 US$198,000
On or before October 10, 2011 US$7,250,000 US$1,160,000 US$236,000

All amounts paid for value added tax are expected to be recovered by the Company.

The Morelos Sur property, on commencement of operations, is subject to the following royalties for a Net Settlement Value according to the following schedule:

  • 3.5% when the price of gold is equal to or greater than US$600 per troy ounce;
  • 3.0% when the price of gold is equal to or greater than US$550 per troy ounce; and
  • 2.5% when the price of gold is less then US $550 per troy ounce;

If the Company does not start production by April 30, 2011, it will have the obligation to pay an advance minimum royalty payment of US$ 200,000 annually plus the applicable VAT, with the first payment due on December 5, 2011.

Morelos Sur Project Update

Drilling is ongoing at the Mina Verde target with three core rigs drilling large stepout holes from the existing resource (see the Company's News Release dated October 15, 2010 for details of the resource). To date the Company has drilled over 3000 meters and plans to release the first results in short order.

The Company is also preparing to drill at the La Hormiga prospect where several small historic workings occur amongst intrusive rocks with strong coincident magnetic anomalies. The La Hormiga target has previous surface sampling with gold values up to 5 g/t Au in trench samples.

Cayden also intends to drill the La Jolla prospect where previous drilling has intercepted narrow widths of iron oxide rich silicified marble with grades up to 97 g/t Au.

After completion of extensive surface sampling and an airborne geophysical survey, which will cover the entire Morelos Sur property, Cayden will also be initiating drilling on the La Magnetita magnetic anomaly, which is one of the largest magnetic anomalies in the district.

President and CEO, Ivan Bebek commented, "The board of Cayden is very pleased with the decision to execute the completion of the option agreement with La Camera Mining Inc. The ownership of the Mexican Subsidiary gives Cayden the option for 100% ownership of the Morelos Sur Gold Project. Cayden welcomes the stakeholders of La Camera Mining Inc. as significant shareholders going forward and with the completion of the recent funding Cayden is well financed to rapidly advance the Morelos Sur Gold Project with its current team of 35 qualified people and 3 drills currently operating at site. We expect 2011 to be an exciting year for our shareholders as we aggressively explore the Morelos Sur gold Project."

On Behalf of the Board of Directors,

Ivan Bebek, President and CEO

About Cayden Resources Inc. Cayden is a junior mineral exploration company focused on the rapid exploration and development of high quality mining assets located primarily in North and South America. 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 the TSX Venture Exchange. More information about Cayden is available at www.caydenresources.com.

All news releases relating to this offering will include the following statement: This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities described herein have not been and will not be registered under the United States Securities Act of 1933, as amended, or the securities laws of any state and may not be offered or sold within the United States, absent such registration or an applicable exemption from such registration requirements.

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

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