Goldrea Resources Corp.
TSX VENTURE : GOR
PINK SHEETS : GORAF
FRANKFURT : GOJ

Goldrea Resources Corp.

April 26, 2007 13:32 ET

Goldrea Resources Corp.: DAYE Gold Mine Acquisition

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 26, 2007) - On November 7, 2006 Goldrea Resources Corp. (the "Company") (TSX VENTURE:GOR)(PINK SHEETS:GORAF)(FRANKFURT:G0J) entered into an agreement with Rushan Guoxin Assets Management Ltd. ("RG"), the sole shareholder of DAYE, to purchase from RG, 80% of the issued and outstanding shares of DAYE. DAYE's major assets are comprised of an operating gold mine with a rated capacity of 1750 tons per day located in the Shandong Province, China, near Rushan City. DAYE's assets include mechanical equipment, house properties, construction buildings and transportation equipment. DAYE's assets also include two (2) wholly owned subsidiaries one of which operates a sercite recovery operation and the other which operates a construction brick forming operation. The parties agreed upon a purchase price of RMB 114.4 million which equates as at April 20, 2007 to $16,645,200 in Canadian funds, at a conversion rate $1 Canadian equals 6.8729 RMB (0.1455). The purchase price was to be paid over five (5) years. It was a feature of the purchase that the employees of DAYE would have an option to purchase 10% of the issued and outstanding shares of DAYE from the Company following the completion of the purchase.

Since the shares of DAYE being purchased are state-owned assets, the Company is required to conduct its purchase through the Shandong Property Rights Trading Centre Ltd. (the "SPRT Centre"), a property right trading market established under Chinese law, which ensures that state-owned property rights are traded publicly according to regulations.

In order to meet the form and regulations of the SPRT Centre the Company and RG have entered into a Property Rights Transfer Agreement in a form of agreement specified by the Centre and same has been signed by the parties on the 22nd day of April, 2007. The purchase price for the shares remains the same, however the payment terms have been adjusted to meet the requirement of Chinese law for the purchase of state-owned assets and consequently on the Closing Date of the transaction the cash payment will equal 30% of the purchase price and be in the amount of RMB 34,320,000 (Cdn $ 4,993,560). The balance of the purchase price being RMB 80,080,000 (Cdn $ 11,651,640) will be payable by the issuance of that number of fully paid free trading common shares in the capital of Goldrea (subject to a four month hold period) that is equal to the balance of the purchase price. On each of the first, second and third anniversaries of the closing of the transaction the Company must repurchase one third of the shares issued to RG on account of the purchase price. The fixed price for the repurchase will be the price of the shares on the date the shares were issued. Based on the closing price of the Company's shares at April 24, 2007 -Cdn.$0.63, the projected number of shares to be issued on the closing of the transaction to pay the balance of the purchase price (RMB 80,080,000 - Cdn $ 11,651,640) would be 18,494,666 shares which issuance may create a new control block of shares of the Company since it may exceed the 20% defined amount for control. This control block would be held by RG and would exist for at least one year until, pursuant to the acquisition agreement, the Company repurchased one third of the issued shares.

It is a term of the purchase that the Company grant an option to the employees of DAYE to purchase a 10% interest in the issued and outstanding shares of DAYE. If exercised such purchase is to be made from the 80% of the shares purchased by the Company from RG.

This acquisition is subject to the approval of the shareholders of the Company, approval of the TSX Venture Exchange, approval of the Chinese government and in addition is subject to the Company and RG at the time of closing of the transaction, having had formed a new equity joint venture company pursuant to the laws of China and having had agreed upon the articles of association for such company. The purchase price was reached pursuant to negotiations between the Company and RG, but nevertheless had to meet the board price set for state assets as determined by the SPRT Centre. To assist in its negotiations, the Company obtained a valuation of the assets of DAYE from Wardrop Engineering Inc., which estimated 100% of the value of the assets of DAYE at Canadian $18,724,000. The balance sheet of DAYE, which together with the financial statements of DAYE must be brought into line with Canadian Generally Accepted Accounting Principles prior to closing.

The DAYE operating gold mine adjoins the Company's existing China joint venture which is carried out by way of a co-operative company which is a limited liability company having the name Rushan Goldrea Inc. This joint venture (Company's interest 74%) has been actively exploring and developing its mineral properties and has had a NI 43-101 resource analysis on its properties recently completed by N. Tribe and Associates Ltd. dated January 19, 2007, as follows:



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CATEGORY TONNAGE GRADE TOTAL OZS
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Indicated resource 5,184,124 tonnes 1.999 331,175
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Inferred 4,313,424 tonnes 1.999 275,968
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The full NI 43-101 Report may be reviewed on the SEDAR website at www.sedar.com under the Company's posted documents.

On Behalf of Management

GOLDREA RESOURCES CORP.

Larry W. Reaugh, President and Chief Executive Officer

This news release may contain certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time with the Toronto Venture Exchange, the British Columbia Securities Commission and the US Securities and Exchange Commission.

The TSX-Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Goldrea Resources Corp.
    Larry W. Reaugh
    President and Chief Executive Officer
    (604) 531-9639
    (604) 531-9634 (FAX)
    Email: info@goldrea.com
    Website: www.goldrea.com