Redzone Resources Ltd.

Redzone Resources Ltd.

September 16, 2009 09:30 ET

Redzone to Acquire Interest in Las Palmas Property in Mexico

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 16, 2009) - Redzone Resources Limited (CNSX:REZ) ("Redzone") is pleased to announce that it has entered into an agreement (the "Agreement") with Minera Teck, S.A. de C.V. ("Teck"), a wholly owned subsidiary of Teck Resources Limited (TSX:TCK.A and TCK.B, NYSE: TCK) to acquire an initial 50% interest in the Las Palmas property located in Mexico's Oaxaca and Veracruz states (the "Property").

Neil Halldorson, President of Redzone states, "We are delighted to be working with Teck on this exciting exploration property. Teck has conducted preliminary exploration work and has identified a number of drill ready targets, which we intend to explore as soon as possible."

The largely pediment covered, 26,400 hectare Property lies in a structural belt in southern Mexico that has the potential to host intrusive-related, epithermal gold mineralization possibly associated to alkaline magmatism. The property was staked by Teck in 2005/2006 on the back of regional work completed by the Mexican Geological Survey ("MGS") and has never been drill tested.

Under the terms of the Agreement, and upon Redzone establishing a Mexican subsidiary ("RZ Mexico") by no later than October 31, 2009, RZ Mexico will enter into an option agreement with Teck (the "Option Agreement") pursuant to which it may initially acquire a 50% interest in the Property (the "50% Option").

Under the terms of the Option Agreement, RZ Mexico is committed to making US$1,000,000 in property expenditures by August 31, 2010 and thereafter an additional US$2,000,000 in optional expenditures by August 31, 2012 (collectively the "Expenditures").

Once the Expenditures have been made, RZ Mexico will earn a 50% interest in the Property subject to certain options that Teck has retained (the "Teck Options"). The Teck Options provide for RZ Mexico's 50% interest to be subject to change if Teck chooses to elect one of the following within 60 days of RZ Mexico acquiring that interest:

1. Teck may elect to make Property expenditures of US$3,000,000 over two years thereby increasing its interest in the Property to 60% and reducing the interest of RZ Mexico to 40% (the "T-1 Option"); or

2. Teck may elect to have RZ Mexico sole funded an additional US$3,000,000 in Property expenditures at which time RZ Mexico will have earned a 100% interest in the Property subject to a 2% NSR payable to Teck. If Teck makes this election, then Teck will have the right to earn back a 51% interest exercisable at any time up to 60 days after RZ Mexico has earned its 100% interest by making Property expenditures equal to 1.5 times RZ Mexico's total expenditures over four years (the "T-2 Option"). If Teck earns back a 51% interest in the Property, then in conjunction with its notice that it has exercised the T-2 Option it can make an additional election to earn back an additional 9% interest (for an aggregate 60% interest) in the Property by making an additional US$6,000,000 in Property expenditures over two years (the "T-3 Option").

Under the terms of the Agreement, Redzone guarantees to Teck the payment of any expenditures commitments made by RZ Mexico to Teck in connection with the Option Agreement.

Following the exercise of any of the 50% Option, T-1 Option, T-2 Option or T-3 Option, as applicable, Teck and RZ Mexico shall form a corporate joint venture and shall thereafter contribute to expenditures on the Property in proportion to their respective interests in the Property, or be subject to dilution of their respective interests. In the event that the interest of either RZ Mexico or Teck in the Property is reduced below 10% at any time, such interest shall be converted to a 5% net profits royalty.

The foregoing disclosure is based on exploration data and geological reports supplied by Teck that have been reviewed and compiled by Richard A. Graham, P. Geol. Mr. Graham is the CEO of Redzone and a qualified person as defined by National Instrument 43-101 of the Canadian Securities Administrators, and has reviewed the contents of this press release. The data disclosed in this release has not been verified by Mr. Graham, as such data was prepared and provided to Redzone by a third party (Teck).

Forward-Looking Statements: Certain information set forth in this news release may contain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Redzone, including, but not limited to the impact of general economic conditions, industry conditions, risks associated with mining activities, volatility of commodity prices, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.

The CNSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Redzone Resources Ltd.
    Neil Halldorson
    (604) 562-2582