Torch River Resources Ltd.
TSX VENTURE : TCR

Torch River Resources Ltd.

June 28, 2005 16:32 ET

Torch River Resources Ltd.: News Release

CALGARY, ALBERTA--(CCNMatthews - June 28, 2005) - Torch River Resources Ltd. (TSX VENTURE:TCR) (the "Corporation")

Clarification to June 21, 2005 News Release

As stated in the Corporation's June 21, 2005 News Release, the Corporation is pleased to announce that the shareholders of the Corporation at its Annual General Meeting held on June 15, 2005, unanimously approved the Corporation entering into an Option Agreement to acquire up to and including a 100% interest in molybdenum/copper property located in the Skeena mining division of the central coastal region of British Columbia (known as the "Red Bird Property"). Molybdenum (better known as "moly") is primarily used in the manufacturing of stainless steel and used in the pipeline industry.

Location of the Red Bird Property

The Red Bird Property is located in the central coastal region of British Columbia, 100 kilometres north of the town of Bellaa Coola and 140 kilometres southwest of Houston, British Columbia.

History of the Red Bird Property

The Corporation states that the following information is a historical estimate and at this point the Corporation has not done the work necessary to verify the classification of the resource or reserve nor is it treating these historical estimates as NI43-101 defined resource reserves verified by a Qualified Person and the historical estimate should not be relied upon.

The following information was prepared by Donald George MacIntyre, Ph.d, P.Eng. who is the Qualified Person who prepared the technical information presented in the News Release.

The Red Bird Property was extensively explored by Phelps Dodge Corporation ("Phelps") between 1963 and 1968 and Craigmont Mines Limited ("Craigmont") in 1979 and 1980 (the "Companies"). The Companies completed a total of 31,579 metres of diamond drilling in 133 drill holes. This work found a moly resource associated with an eoceneh quarz monzonite porphyry stock. Craigmont did a resource calculation and a preliminary economic analysis of the property in 1980 and 1981. This was done based on a cut-off grade of 0.10% MoS2 and Craigmont calculated that there was 33,75,000 tones grading 0.18% MoS2 amenable to open pit mining and an additional resource of 33,350,000 tones grading 0.16% MoS2 that could be mined from underground. This estimate was based on three separate zones amenable to open pit mining and a single zone that could be mined from underground.

These estimates were re-calculated in 1981 by computer and the results were incorporated into an appraisal of the property by D.J.M. Farnsworth in 1981 for Craigmont ("Farnsworth 1981").

In July 2003, Andris Kikauka, P.Geo., on behalf of Fundamental Resources Limited, visited the Red Bird Property where he quarter split and sampled 110 metres of drill core from holes 79-95 and 79-96 drilled by Craigmont. These samples were sent to ALS Chemex Laboratories in Vancouver, British Columbia. This re-sampling of core confirmed the MoS2 grade reported by Craigmont in their drilling logs for these holes. Two further samples from drill hole 79-95 were sent to Vancouver Petrographics for analysis. One sample from drill hole 79-95 at 58.7 metres was reported to contain 0.2% apatite.

These historical resource estimates were done prior to current standards for disclosure of resource estimates and therefore are not in accordance with current NI43-101 standards as set out by the Canadian Institute of Mining, Metallurgy and Petroleum.

Since the historical mineral resource estimation done by Craigmont and Phelps, no new resource calculation has been done for the property. As part of the proposed 2005 work program the Phelps and Craigmont drill core are to be re-sampled and re-analyzed. Further, it is proposed that additional infill drilling be done to prove the continuity and grade of the zones identified in the historical drilling. The Corporation will not be able to provide a new resource estimate until such data has been acquired and reviewed by a Qualified Person using modern computer technology and CIM best practices for estimating mineral resource grades and tonnages.

Proposed Work Program

The proposed 2005 work program would consist of a preliminary program to further assess the Red Bird Property with the main focus being additional sampling of core samples, outcrops and a recognisance survey of the access route options. The budget for the 2005 work program is estimated to be approximately $150,000.00 which shall be funded from the Corporation's current working capital.

The additional sampling of the core will be based on the drill core currently stored on the property. The core is well marked with reasonable access and therefore will be re-sampled in 5 metre lengths either by quarter splitting or by taking all the main core in the core boxes. Further sampling of the outcrops will be by way of grab sampling and trenching. The proposed recognisance of the access route options is proposed to be conducted by helicopter or fixed wing aircraft. This feasibility analysis is needed to be conducted to assess the economic viability of refurbishing historical ground routes through Twedsmuir Park versus a new route to the tide water down Salahagen Creek. However, the 2005 work program does not require a ground access route as the work would be by helicopter or fixed wing aircraft supported.

Letter Agreement with Red Bird Resources Ltd. ("Red Bird")

The proposed letter of agreement, which is subject to regulatory approval, provides as follows:

1. Red Bird shall irrevocably grant to the Corporation the sole and exclusive right and option to acquire up to and including one hundred percent (100%) undivided interest in and to the Red Bird Property free and clear of all charges, encumbrances, claims, royalties and net profit interests of whatsoever nature except as set forth in the agreement ("Option Agreement").

2. The option shall be fully exercised upon the Corporation paying to Red Bird, the Option Exercise Price, as set forth below, in full.

3. The Option Exercise Price shall be payable to Red Bird by the Corporation in the following manner:

(a) the non-refundable sum of $50,000 payable on or before execution of the Option Agreement to acquire all pertinent technical and geological data relevant to the property;

(b) the sum of $50,000 payable on or before June 15, 2005;

(c) the sum of $150,000, which will be used by Red Bird to fund the initial work program on the Red Bird property to be paid on or before June 30, 2005;

(d) the sum of $200,000 payable on or before May 15, 2006;

(e) the sum of $500,000, which will be used by Red Bird to fund the work program on the Red Bird property to be paid on or before June 30, 2006;

(f) the sum of $500,000 to be paid on or before May 15, 2007;

(g) the sum of $750,000 which will be used by Red Bird to fund the work program on the Red Bird property to be paid on or before May 15, 2007;

(h) the sum of $500,000 payable on or before May 15, 2008;

(i) the sum of $750,000 which will be used by Red Bird to fund the work program on the Red Bird property, payable on or before May 31, 2008;

At this time the Corporation has earned a 25% undivided interest in the property. If the Corporation does not complete the Option Agreement to earn 100% of the property, Red Bird shall have the right of first refusal to buy back the 25% interest earned by the Corporation, for the cash payment of $1,800,000. This right of first refusal shall expire on December 31, 2008. If Red Bird elects not to buy back the 25% interest, Red Bird retains the sole right to negotiate future deals with third parties on 100% of the Red Bird Property.

In addition to the foregoing, the Corporation is obligated to:

(a) pay the sum of $4,000,000 to Red Bird on or before December 31, 2008;

(b) issue and deliver to Red Bird the following Common Shares of the Corporation:

(i) 1,000,000 Commons Shares within fifteen (15) days of receiving approval from the TSX Venture Exchange Inc. ("Exchange") and the shareholders of the Corporation;

(ii) 2,000,000 Shares on or before May 15, 2007;

(iii) 2,000,000 Shares on or before May 15, 2008;

(iv) 2,000,000 Shares on or before May 15, 2009; and

(v) 3,000,000 Shares on or before December 31, 2009.

Torch is a company listed and trading on the TSX Venture Exchange, symbol: TCR.

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

Contact Information

  • Torch River Resources Ltd.
    Mr. Ronald M. Burko
    President
    (306) 978-4444
    Website: www.torchriver.ca