Terraco Gold Corp.

Terraco Gold Corp.

February 06, 2006 08:00 ET

Terraco and Metallic Ventures Sign Letter of Intent on Moonlight Property; Moonlight Adjoins Midway's Spring Valley Claims in Pershing County, Nevada

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 6, 2006) - Terraco Gold Corp. ("Terraco") (TSX VENTURE:TEN) is pleased to announce that it has signed a Letter of Intent ("LOI") with Metallic Ventures (U.S.), Inc. ("Metallic"), a subsidiary of Metallic Venture Gold Inc. (TSX:MVG), to enter into an Exploration Agreement with an Option to Joint Venture ("EA") on the Moonlight Property mining claims located in Pershing County, Nevada.

The Moonlight Property is located 15 miles northeast of Lovelock, Nevada in the Humboldt Range, 5 miles north of Coeur d'Alene Mining Company's Rochester Mine. Throughout its 17-year history, the Rochester mine has produced over 107 million ounces of silver and well over one million ounces of gold, according to the Company website. The Moonlight property also adjoins Midway Gold Corp.'s Spring Valley Project to the south, where Midway has reported drill intercepts that include highlights of 105 feet ("ft") of 0.325 ounce per ton ("opt"), 215 ft of 0.137 opt, and 123 ft of 0.169 opt.

Property Overview

The Moonlight project area was identified by Cordilleran Exploration Company ("Cordex"), on behalf of Metallic, and consists of 64 unpatented lode claims. The Cordex principals, who identified the project area, are John Livermore, who is credited with the discovery of the Carlin deposit in Nevada and the discovery and development of the Pinson and Dee mines, and Andy Wallace, who is credited with a major role in the discoveries of the Marigold and Stonehouse/Lone Tree gold deposits as well as the Daisy (Secret Pass) mine.

Gold and silver mineralization occurs along a north-northeast trending structure at the original Moonlight Mine. The high angle structure cuts Permo-Triassic Rochester Rhyolite and Limerick Greenstone of the Koipato Group. According to the Midway Gold website, these are the same sequence of rocks that host gold mineralization discovered at Midway's Spring Valley Project, which adjoins the Moonlight property on the south. Similarly to Spring Valley, alluvial gravels cover the projection of the Moonlight structure and the Permo-Triassic host rock package south of the original Moonlight and Bluebird mines. The projection of the Moonlight structure is generally parallel in strike with the north-northeast-trending Black Ridge Fault Zone that extends from the Coeur Rochester mine northerly through the Midway Spring Valley discovery. The Moonlight structure may be the northerly extension of the Black Ridge Fault Zone, as minor offsets of the district-scale Black Ridge structure may have occurred across west-northwesterly striking cross faults. High-grade silver ore was produced from the Moonlight mine during the 1860's. The targets at Moonlight consist of breccia hosted and stockwork-related gold-silver mineralization hosted by the Rochester Rhyolite. Cordex conducted ground magnetometer and soil geochemical surveys across part of the gravel covered zone. Soil and ground mag anomalies require additional work to define the best drill targets. The target model is similar to that of Midway's Spring Valley Project.

"The Moonlight property represents a tremendous opportunity for Terraco in one of Nevada's most prospective gold and silver districts," said Todd Hilditch, President of Terraco Gold Corp. "We look forward to a longstanding and rewarding relationship with Metallic."

Commenting on the Agreement, Jeffrey Ward, CEO said, "We are very pleased to have Terraco involved in the Moonlight property and believe they will determine and test the full potential of the project."

LOI Agreement

Pursuant to the terms of the LOI, Terraco or its nominee, and Metallic will enter into an Exploration Agreement and Joint Venture ("EA"). The EA will allow Terraco to earn up to a 70% interest in the Property by 2014. Terraco will have earned a majority 51% interest by spending one million dollars (usd$1,000,000) in exploration activities on the property within a four-year period as follows: usd$100,000 by the first anniversary of the EA; usd$200,000 by the second anniversary of the EA; usd$300,000 by the third anniversary of the EA and usd$400,000 by the fourth anniversary of the EA. Upon completion of the one million dollar (usd$1,000,000) expenditure by Terraco, Terraco will have earned the fifty-one percent (51%) undivided interest in the property, unless it elects to exercise a second option to earn an additional 19% interest in the property by spending an additional two million dollars (usd$2,000,000) within an additional four year period at a minimum rate of usd$500,000 per year. When Terraco has exercised its option to acquire either a 51% or 70% interest in the project, Terraco and Metallic will establish a JV in respect of the project, of which Terraco will be the operator.

The first usd$100,000 in exploration expenditures is a firm commitment. In addition, Terraco will issue MVI, 125,000 common shares of Terraco upon execution of the EA, and will issue an additional 125,000 common shares on each of the subsequent 3 anniversaries of the EA. The first anniversary issuance is a firm commitment.

Terraco may terminate the Agreement at any time after spending the initial usd$100,000 and issuing 250,000 common shares by providing 60 days written notice to Metallic.

The execution of the definitive EA is subject to Board of Directors approval and receipt of all required regulatory approvals.

The technical information of this release has been reviewed and approved by Charles Sulfrian, P.Geol, Vice-President Exploration and a 'qualified person', as defined by NI 43-101.

Metallic Ventures Gold Inc. is an Ontario incorporated gold company trading on the Toronto Stock Exchange under the trading symbol MVG. The Company is focused on major past-producing mining districts in Nevada and controls two advanced projects with considerable near-term production potential: Converse and Goldfield.

Terraco Gold Corp. is a mineral exploration company, listed on the TSX Venture Exchange under the symbol "TEN". Please visit Terraco's website at www.terracogold.com for additional information.


Todd Hilditch, President

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

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