SULLIDEN EXPLORATION INC.

SULLIDEN EXPLORATION INC.

March 16, 2005 08:30 ET

Top Legal Opinions Defend Sulliden's Claim to Shahuindo; Arbitration Conclusion in Sight


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: SULLIDEN EXPLORATION INC.

TSX SYMBOL: SUE

MARCH 16, 2005 - 08:30 ET

Top Legal Opinions Defend Sulliden's Claim to
Shahuindo; Arbitration Conclusion in Sight

MONTREAL, QUEBEC--(CCNMatthews - March 16, 2005) - Sulliden Exploration
Inc. (TSX:SUE) reports that it has received several legal opinions from
Peru's leading law firms confirming its legal and constitutional right
to the Shahuindo gold and silver property in northern Peru. Two such
legal opinions were rendered by Messrs. Javier de Belaunde and Marcial
Rubio Correa which provide confirmation that the Transfer Agreement
between Sulliden, through its wholly-owned subsidiary Minera Sulliden
Shahuindo S.A.C., and Compania de Exploraciones Algamarca S.A. and
Compania Minera Algamarca S.A. (hereinafter collectively the
"Algamarcas"), is valid and binding.

The conclusions of Messrs. de Belaunde and Rubio are predicated on the
following premises:

1. Constitutionality of the Contract

The foregoing legal opinions confirm that the Transfer Agreement between
Sulliden and the Algamarcas satisfies all the criteria governing the
most basic articles of constitutional law, that is the freedom of two
parties to enter into a contract having a legal purpose and complying
with the laws of public order. This basic right is guaranteed by the
Peruvian Constitution.

The Minutes of the General Assemblies of Shareholders of the Algamarcas
on July 31, 2002 document the fact that the shareholders voted and
approved the terms of the transfer of mineral rights and superficial
lands of the Shahuindo project as set out in the Letter of Intent
between Sulliden and the Algamarcas dated July 25, 2002. The Algamarcas
shareholders authorized its Chairman, Mr. Miguel Orbegoso Tudela,
through a Special Power of Attorney, to sign and execute the Transfer
Agreement. On August 15, 2002, the Definitive Letter of Intent was
executed and the Transfer Agreement between the Algamarcas and Sulliden
through its wholly owned subsidiary, Minera Sulliden Shahuindo S.A.C.,
was duly filed in the notary public's registry on November 11, 2002 in
Lima in accordance with General Mining Law. The twenty-six mining
concessions as specified in Annex I, and the superficial lands as
specified in Annex I-A, were transferred to Sulliden for the total sum
of US$4,130,000. The parties also agreed to include in the transfer all
parts being constituent and accessory to the mining concessions.

2. On Good Faith and Common Intention

The provision of the Civil Code that contracts must be negotiated, made
and executed according to the rules of good faith and common intention
by the parties that inspire the performance of agreements.

The legal opinion from Mr. Rubio states:

"The conclusion is evident: there is a relationship of absolute good
faith both in the communication of the organizational form that
Sulliden's business will be conducted in Shahuindo and in the compliance
with the terms of the Letter of Intent dated July 25, 2002. The
situation is lawful and both parties know what has been happening
between them."

This is further confirmed by Mr. de Belaunde:

"Constitutionally, Sulliden has fully met the terms of the agreement,
including the full amount of US $4,130,000 plus applicable interest,
including the payments under judicial consignment made at the 59th Civil
court of Lima and the validity term rights for the mining concessions
specified in the transfer. Whereas Sulliden acted in accordance with the
principles of good faith inspiring the negotiation, signing and
execution of the agreements, the Algamarcas since the execution of the
Transfer Agreement have acted in bad faith by intending to ignore the
events that gave rise to the signing of the contract and the objectives
of the agreement itself."

In addition, the down payment made by Sulliden to the Algamarcas upon
signing the agreement was used by the latter to pay some of its
obligations including $107,243.72 payable to Compania de Minas de
Buenaventura S.A. for a private option agreement for a termination
clause as provided for in the Transfer Agreement, with the remaining
$212,756.28 being distributed among the Algamarca shareholders in
proportion to their share of ownership. This confirms that all
shareholders were absolutely aware of the terms under which Miguel
Orbegoso Tudela representing the companies had executed the task.

Notwithstanding the fact that some months later, the new shareholder of
Algamarca, Alta Tecnologia e Inversion Minera y Metalurgica S.A .
(Atimmsa), represented by Victor Raul Eyzaguirre, signed a statement
that Atimmsa was "aware of the existence of two previous engagements
affecting exclusively the mining concessions of the two companies, whose
termination shall be on the own account and risk of the new shareholders
of the companies stipulated in this transaction", proceeded to ignore
the Transfer Agreement which remained valid and binding according to the
Civil Code rules of good faith and common intention, and that it did so
"with exclusive intention of achieving benefits in an unlawful and
abusive manner." Mr. de Belaunde's legal opinion goes on to summarize:

"The conclusion is that the attempt to renege from the effects of the
Transfer Agreement of Properties, registered as Public Deed on Nov. 11,
2002, constitutes a violation of the principle of good faith that
inspires the loyal and righteous practice of Law, since the good faith
exercised by Sulliden and its subsidiary, Minera Sulliden Shahuindo
S.A.C., is evident in this case; and so is the malicious intent from the
Algamarca companies and their shareholders, being subject to the
application of Theory of Own Acts."

Based on the foregoing opinions, Sulliden remains confident in its legal
right to the Shahuindo property. It is management's understanding that
the arbitration process will be concluding at the end of April with a
decision to be rendered shortly thereafter. The arbitration panel,
composed of three arbitrators, one appointed by Sulliden and the other
by the Mining Council, is being presided by Jorge Santistevan de
Noriega, Peru's first ever Human Rights Ombudsman. Sulliden is
encouraged that the Tribunal will deliver a decision based upon the
concrete evidence in place in accordance with the spirit and integrity
of the Mining Law and Constitution of Peru.

Sulliden Exploration Inc. is a mineral exploration company focused on
the development of its 100% interest in the Shahuindo gold-silver
project located 25 km north of Alto Chicama and 70 km south of Yanacocha
in northern Peru. An option interest to acquire 66% of an adjacent 1,900
hectares known as the Vikingo concessions brings the Company's land
holdings in this exciting gold district to almost 10,000 hectares. In
addition, Sulliden through a subsidiary has entered into an option
agreement to earn a 50% interest in the Torrine gold project with
Aruntani SAC and affiliates in southern Peru.

Certain of the information contained in this news release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements include without limitation, statements regarding estimates of
reserves and resources, future plans and objectives, results of
exploration, uncertainty with respect to changes in general economic or
political conditions, title to properties, litigation, legislative,
environmental and other judicial, regulatory and competitive
developments in areas in which the Company operates. There can be no
assurance that such statements will prove to be accurate; 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 Sulliden's expectations are disclosed under the heading
"Risk Factors" in its 2004 Annual Report as well as in its Annual
Information Form (AIF) both of which are filed with Canadian regulators
on SEDAR.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Sulliden Exploration Inc.
    Jacques Trottier
    President
    (514) 861-1953
    sulliden@colba.net
    or
    Sulliden Exploration Inc.
    Donna Yoshimatsu
    VP Investor Relations
    (416) 362-8809
    dyoshi@sulliden.com