Deal Capital Ltd.
TSX VENTURE : DCP.P

February 23, 2007 09:00 ET

Deal Capital to Acquire the Santa Gertrudis Gold Deposit

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 23, 2007) - Deal Capital Ltd. (the "Company" or "Deal Capital") (TSX VENTURE:DCP.P) has signed two Letters of Intent which, assuming completion of the transaction set out therein, will result in the re-consolidation of the Santa Gertrudis Gold Deposit formerly owned and operated by Phelps Dodge Mining Company ("PD") and Campbell Resources Inc. ("Campbell") in northern Mexico. A major mining company is currently exploring the bordering Greta Property which the Company has an option to buy should that company not complete its earn-in agreement. The historical gold resource on the project will be updated into an NI 43-101 compliant resource estimate as one of the first year's priorities. Historical data consolidation and geological analysis, leading to aggressive drilling programs to expand the near surface oxide gold resource and to drill test sulphide-bearing extensions of the known gold zones to depth which are geologically similar to the Carlin Trend in Nevada, USA, will also be part of the first year's activities.

The Santa Gertrudis Gold Project

The Santa Gertrudis Gold Project (the "SG Property"), located 180 km north of Hermosillo, Sonora, Mexico, was discovered by PD in 1986 and advanced to open pit heap leach production in 1991. From May 1991 to October 2000, the SG Property produced 564,000 ounces of gold at an average grade of 2.13 grams per tonne. PD sold part of the SG Property to Campbell in 1994 for US$10 million. Campbell later ceased mining and processing activity due to low gold prices during the late 1990's and settled some outstanding debts by assigning several core area concessions, including the un-mined Cristina deposit, to certain local Mexican contractors ("Lopez-Limon"). The proposed transactions aim to re-consolidate these concessions, which will allow for a district-wide exploration program. Other mineral properties that are part of the SG Property package include the relatively high-grade Amelia Mine and recently staked ground to the west, northwest and southeast of the SG Project's historic workings. The Amelia Mine had historically produced over 1 million tonnes at 2.88g Au/tonne.

The Company will own directly, or have options to earn-in on, a combined holding of approximately 34,800 hectares in the SG Property (130 square miles). Title to two outlying concessions is pending. The SG Property is part of the Santa Teresa Mining District in the Cucurpe Municipality of the northern Mexican state of Sonora. It lies within Mexico's "Free Zone", which allows for imports to incur a 33% lower import tax.

Remaining historic resources for the SG Property as recorded by Campbell when production ceased in 2000 (Barrera, November 30, 2000) are non-NI 43-101 compliant and include 8.1 million tonnes averaging 0.94 g Au/tonne on the Lopez-Limon concessions, and 5.9 million tonnes averaging 1.71 g Au/tonne on Sonora Gold Corporation's concessions. These historic resources should not be relied upon as the estimates are not current and do not meet CIM definition standards but are reported here for historical purposes only. Our early goal is to test these historic resources to establish NI 43-101 compliant resources.

The proposed geological exploration team are personnel from the Sonora Copper LLC group. In addition to verifying near-surface, oxide mineralization, these SG Property veterans will aggressively define the economic potential in the SG Property's numerous known sulfide zones, which were ignored during the open pit, heap leach operations of 1991 - 2000, as well as investigating potential deep feeder structures of Carlin-type mineralization on newly staked ground forming part of the SG Property. In 1997, Campbell commissioned Behre Dolbear & Company, Inc. to complete a report to assess the deep Carlin-style targets at the SG Project. Their report concluded: "Behre Dolbear concludes that the property contains potential for a deep, Carlin-type target from an examination of the property and the presently available data for the project. The geology, structure, geochemistry, geophysics and mineralization are indicative of this type of system and the similarities to the Post-Betze deposit are very striking. Santa Gertrudis is at the same position the Carlin Trend was at the point in time Barrick bought the Gold Strike property from Western States Minerals and started their deep exploration program." And, "The deep exploration potential at SG is very positive and the chance for deep mineralization is very good. The surface potential, as you know, is without question." There is excellent potential for additional shallow gold deposits both adjacent to known oxide gold occurrences and under shallow gravel cover.

The Acquisition Terms

Deal Capital signed a Letter of Intent on February 13, 2007 with Sonora Gold Corporation, a TSX Venture Exchange company (TSX VENTURE:SGG.V), to acquire 100% of its two Mexican subsidiaries, First Silver Reserve, S.A. de C.V. ("First Silver") and Recursos Escondidos, S.A. de C.V. ("Recursos Escondidos"). In addition, the Company also signed a Letter of Intent on February 13, 2007 with Sonora Copper LLC, a privately owned U.S. company, to acquire 100% of its Mexican subsidiary Compania Minera Chuqui S.A. de C.V. ("Chuqui"). Together, these companies control the Santa Gertrudis Gold Project in Northern Mexico, and these acquisitions will constitute the Company's Qualifying Transaction ("QT"). Both Sonora Gold Corporation and Sonora Copper LLC are arm's length to the Company.

The Company paid a non-refundable deposit of $25,000 to Sonora Gold Corporation for the acquisitions of the 100% interest in First Silver and Recursos Escondidos, and will pay US$650,000 and issue 1,500,000 common shares of the Company, subject to an escrow agreement, upon closing of the QT. Three more payments of US$500,000 will be paid in cash or common shares, at the option of the Company, on the first, second and third anniversary dates. If the closing of the transaction goes beyond April 30, 2007, the Company will pay Sonora Gold Corporation a payment of US$10,000 to extend the closing date to May 31, 2007.

For the acquisition of the 100% interest in Chuqui, the Company will issue 3,750,000 common shares, subject to an escrow agreement, to Sonora Copper LLC upon closing of the QT. Chuqui holds several claims outright, and also has an agreement with Lopez-Limon to acquire its share of the SG Project which calls for payments of US$300,000, US$500,000 and US$1 million in the next three years, respectively. The Company will assume the future payments to Lopez-Limon and will acquire its interest upon completing the payments.

The Company will also reserve 2 million common shares for future issuance to Sonora Copper LLC as a contingent payment upon the completion of an NI 43-101 compliant geological resource report where the delineated resource is greater than 2.7 million gold equivalent ounces subject to various conditions. The first 1 million of these common shares will be issued upon the expansion of the measured and indicated gold equivalent resource to 1.7 million ounces.

The common shares of the Company to be issued to Sonora Gold Corporation and Sonora Copper LLC will be subject to escrow and/or hold periods in accordance with the policies of the TSX Venture Exchange and applicable securities laws.

A finder's fee will be paid in accordance with the TSX Venture Exchange finder's fee guidelines in common shares of the Company to an arm's length party for the acquisitions of First Silver and Recursos Escondidos. These shares will be issued as the payments are made for the acquisitions, subject to various conditions.

The Financing & Share Structure

In conjunction with the above transactions, an equity financing of 10 million Subscription Receipts at $0.50 per unit to raise $5 million will be completed. The financing will be done by way of a Subscription Receipts offering which will close as soon as the funds are raised. The four-month hold period on these Receipts will commence on the date the financing is closed which is expected to be before the transaction closes. The Subscription Receipts will each convert into a unit (a "Unit") upon closing of the transaction. Each Unit will consist of one common share and one half of a non-transferable common share purchase warrant. Each warrant will allow the holder to purchase one additional share for a period of 24 months at $1.00. Further information will be announced shortly regarding this financing.

In addition, the Company has agreed to issue up to a maximum of 400,000 additional Units for funds raised by Sonora Copper LLC prior to closing on the same terms as the financing.

Upon closing of the transaction as outlined above, it is anticipated that the Company will have the following share structure:



Current issued and
outstanding: 2,500,000 (1 million subject to escrow)
Acquisition of
Recursos Escondidos
and First Silver 1,500,000 (Subject to escrow - to be finalized)
Acquisition of Chuqui 3,750,000 (Subject to escrow - to be finalized)
Financing 10,000,000 (Four month hold period)
Sonora Copper LLC
initial funding 400,000 (Maximum amount; Four month hold period)
Finder's Fee 397,800 (To be issued over 3 years)
----------
Total Common Shares 18,547,800

Shares reserved for
potential future
issuance:
Contingent payment 2,000,000
Stock options TBA
Financing Warrants 5,000,000
Sonora Copper LLC
initial funding
warrants 200,000
IPO broker's warrants 150,000


Other Considerations

A new name for the Company, changes to the Board of Directors and Officers, and other details will be provided in the filing statement and future news releases.

A Sponsor for the transaction and an Agent for the financing will be announced shortly.

The Company's Qualified Person with respect to the geological information contained in this news release is Dr. A. J. Sinclair, P. Eng., P. Geo., a Director of the Company.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. 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.

Winnie Wong, President & Director

Deal Capital Ltd. is a Capital Pool Company trading on the TSX Venture Exchange under the symbol "DCP.P".

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.

Contact Information

  • Deal Capital Ltd.
    Winnie Wong
    President & Director
    (604) 687-3520
    (604) 688-3392 (FAX)