Red Mile Capital Corp.

June 25, 2009 13:00 ET

Red Mile Announces Qualifying Transaction

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 25, 2009) - Red Mile Capital Corp. ("Red Mile") (TSX VENTURE:RDM.P) has entered into a binding Letter of Intent (the "LoI") dated June 22, 2009 with Russet Lake Resources Inc. ("Russet Lake"), a private arm's length Ontario corporation, to earn a 100% interest in the Blue Quartz gold property (the "Property") located in the north central part of the Beatty Township, 73 kilometers east-northeast of Timmins, Ontario, Canada. Russet Lake currently holds an option (the "Option") to acquire a 100% interest in the Property, subject to net smelter return royalties totaling 2.5% (the "NSR"), under the terms of an option agreement dated September 1st, 2008 between Thundermin Resources Inc. and Wesdome Gold Mines Ltd., as optionors, and Russet Lake, as optionee (the "Option Agreement").

The proposed transaction, which is subject to regulatory approval, will serve as Red Mile's qualifying transaction (the "Qualifying Transaction") for the purposes of the Policies of the TSX Venture Exchange (the "Exchange"). Following completion of the Qualifying Transaction, Red Mile will be classified for Exchange purposes as a mining issuer.

Pursuant to the terms of the LoI, Red Mile and Russet Lake have agreed to enter into a definitive agreement (the "Agreement") pursuant to which Red Mile can earn a 100% interest in the Property, subject to the NSR, by:

1) issuing 3,505,000 of its common shares (the "Shares") to Russet Lake at a deemed price per share equal to the "Discounted Market Price" (as that term is defined in the Policies of the Exchange), against delivery to Red Mile of an assignment of Russet Lake's interest in the Option, the Option Agreement and the Property, together with all data, maps and information in respect of the Property in Russet Lake's possession; and

2) assuming Russet Lake's remaining obligations under the Option Agreement in order to exercise the Option which include:

a) making a cash payment of $20,000 and issuing 50,000 common shares on or before September 1st, 2009;

b) making a cash payment of $20,000, issuing 100,000 common shares and completing $150,000 in work expenditures on or before September 1st, 2010; and

c) making a cash payment of $20,000, issuing 100,000 common shares and completing $250,000 in work expenditures on or before September 1st, 2011.

Up to an aggregate 0.5% of the NSR can be bought back for $500,000.

Completion of the Agreement and closing of the transaction with Russet Lake are subject to the following conditions, all of which must either be fulfilled or waived by Red Mile:

(a) approval of the Board of Directors of Red Mile of the terms of the transaction contemplated in the LoI, and of the LoI and the Agreement;

(b) completion, to the satisfaction of Red Mile, of due diligence reviews in respect of the Option, the Option Agreement and the Property;

(c) receipt by Red Mile of a satisfactory title opinion or report in respect of the Property;

(d) receipt by Red Mile of a National Instrument 43-101 ("NI 43-101") compliant report in respect of the Property;

(e) receipt of the written consent of the "Optionors" under the Option Agreement to the assignment contemplated in the LoI; and

(f) receipt of all required regulatory and stock exchange approvals, including, without limitation, the acceptance for filing by the Exchange of the transaction contemplated by the LoI and the Agreement as Red Mile's Qualifying Transaction.

The Property covers 400 hectares (4.0 square kilometers) of Early Precambrian gold mineralized rocks belonging to the Abitibi Greenstone Belt, located in the north central part of the Beatty Township. Gold was first discovered on the Property in 1907. In 1913 a vertical two compartment shaft was sunk to investigate the potential of gold mineralized veins exposed on surface. The operation ceased in 1916 due to fire. In 1921 the original shaft was deepened and surface and underground exploration continued until 1928. 1n 1933, Amalgamated Goldfields produced 30 ounces of gold from the underground workings and the surface dump. Since then, property has only seen sporadic exploration, including a 4 - hole diamond drill program carried out by Russet Lake in 2008.

Red Mile will engage an independent qualified person to prepare a technical report (a "Report") with respect to the Property in accordance with the requirements of NI 43-101 and the Exchange. A further news release will be issued by Red Mile with respect to the Property once the Report has been completed and accepted by the Exchange. Red Mile's Qualified Person (as defined in NI 43-101) for the purposes of this news release is Kerry Sparkes, P.Geo, a director of Red Mile, who has reviewed and approved the technical content of this news release.

As at the date hereof, Red Mile has approximately $760,000, and no current liabilities. As such, Red Mile has sufficient working capital to complete the proposed Qualifying Transaction including the first and second year exploration expenditures. No additional financing is required to complete the Blue Quartz Property acquisition and the Board of Directors will determine when additional financings are required. Red Mile currently has 6,200,000 common shares issued and outstanding. Red Mile has also granted stock options to the current directors and officers to acquire up to an aggregate 620,000 common shares, at an exercise price of $0.20 per share, and has granted an aggregate 400,000 agent's options in connection with its initial public offering, at an exercise price of $0.20 per share.

Russet Lake is an arm's length private company incorporated pursuant to the laws of Ontario. Red Mile is advised that the directors and officers of Russet Lake are John V. Hickey of Toronto, Ontario, Director and President, and Robert Seitz of Toronto, Ontario, Director. Red Mile is further advised that no single shareholder of Russet Lake directly or indirectly beneficially holds a controlling interest in or otherwise controls or directs Russet Lake.

The proposed Qualifying Transaction constitutes an Arms-Length Transaction under the Policies of the Exchange. The Qualifying Transaction and related matters will not be submitted to the shareholders of Red Mile for approval. Red Mile intends to apply for an exemption from the sponsorship requirements of the Exchange in connection with the Qualifying Transaction.

The board of directors of Red Mile currently consists of Larry Whitehead, Robert Matheson, Peter Tallman, John Pallot and Kerry Sparkes. It is anticipated that upon approval of the Qualifying Transaction, John V. Hickey, President of Russet Lake, will join the board of Red Mile as President and CEO. Kerry Sparkes will be appointed Vice President. Robert Matheson will remain as the Chief Financial Officer. Larry Whitehead, Peter Tallman and John Pallot will remain as directors. In addition, Red Mile will use its best efforts to elect or appoint an additional director of Russet Lake to its board at the earliest possible date.

The proposed directors and key officers biographies are listed below:

Mr. Hickey (Toronto, Ontario), Proposed President, CEO and Director, John Hickey has been employed as a consultant with Blind Pharaoh Consulting, a private company, since 2006. From 2003 to 2006, he was Chief Financial Officer, Chief Operating Officer and a partner at Industrial Temporary Solutions Inc. Prior thereto, from 1996 to 2003, he served as investment advisor with BMO Nesbitt Burns. Mr. Hickey is also Chief Financial Officer for Nebu Resources Inc. and Sea Green Capital Corporation, both junior exploration companies listed on the Exchange.

Mr. Sparkes (North Vancouver, British Columbia), Proposed Vice President and Director is a professional geologist and has over 20 years experience in the exploration business gained working for Noranda Exploration Co. Limited as Project Geologist for seven years prior to becoming Senior Geologist and Exploration Manager with Archean Resources. In 1997, he joined Voisey's Bay Nickel Company Ltd., as Senior Geologist in charge of advanced exploration at Voisey's Bay. In 1998, Mr. Sparkes formed his own consulting company and began consulting for several junior exploration companies. At present, Mr. Sparkes holds the position of Vice-President Exploration for Messina Minerals Inc., and supervises the exploration and development of Messina's Boomerang Massive Sulphide Deposit. Mr. Sparkes is also a director of Donner Metals Ltd. and Knight Resources Ltd., both Vancouver based junior exploration companies listed on the Exchange.

Mr. Matheson (Vancouver, British Columbia), Chief Financial Officer, Corporate Secretary and Director, received his Chartered Accountant designation in 1983 while articling with an international accounting firm. In 1984, he founded a predecessor firm of Dale Matheson Carr-Hilton LaBonte LLP, Chartered Accountants, where he has been a principal since. Mr. Matheson is a lead in the firm's Private Enterprise Group. In addition, he has other business interests, including being a partner in four steakhouse franchises.

Mr. Whitehead (South Surrey, British Colum) Director, is a senior executive experienced in general management, corporate finance, public company stewardship, investment banking and venture capital. Mr. Whitehead has founded several businesses and TSX listed public companies involved in the technology and resource sectors in Canada. He has served as Officer and Director for numerous private and public companies and has raised significant amounts of capital for their various business activities. Mr. Whitehead was previously employed by Citibank Canada as Regional Manager for Western Canada and he holds a Masters in Business Administration degree conferred by the University of Washington in 1992.

Mr. Pallot (New Westminster, British Columbia), Director, has over 32 years experience in the telecommunications industry as a Business Field Supervisor for Telus. He has served as a Director of numerous public companies focused on the resource sector since 1993. Since 2002, Mr. Pallot has been the President and Chief Executive Officer of Windarra Minerals Ltd. and Westward Explorations Ltd., both mining issuers listed on the Exchange.

Peter Tallman (North Vancouver, British Columbia), Director, is a geologist with over 25 years of mineral exploration experience gained from working on projects in Canada, Mexico, South America and Australia. He received his Bachelor of Science degree from the University of Western Ontario in 1984. Mr. Tallman spent three years as Vice-President, Exploration for Prime Equities International Corp., and previously worked for Noranda Inc. and BP-Selco Inc., exploring mineral resource properties primarily in Canada, Mexico, and South America. At present, Mr. Tallman is President and Chief Executive Officer of Messina Minerals Inc. focusing on base metal mineral deposits in central Newfoundland including Messina's newly discovered Boomerang massive sulphide deposit.

Completion of the transaction is subject to a number of conditions including but not limited to Exchange acceptance. 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 filing statement to be prepared in the 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.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

On behalf of the Board of Red Mile Capital Corp.

Larry Whitehead, President and CEO

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.

Contact Information

  • Red Mile Capital Corp.
    Larry Whitehead
    President and CEO