Valencia Ventures Inc.

Valencia Ventures Inc.
Beartooth Platinum Corporation

Beartooth Platinum Corporation

March 02, 2007 08:00 ET

Valencia Completes Sale of Idaho Gold Project to Clearwater Mining Corporation

TORONTO, ONTARIO--(CCNMatthews - March 2, 2007) - Valencia Ventures Inc. (TSX VENTURE:VVI), together with Beartooth Platinum Corporation (TSX VENTURE:BTP) have completed the sale of 100% of the Idaho Gold Project to Clearwater Mining Corporation, a privately held mining company focused on developing and operating mines in the State of Idaho and the greater northwest of the United States along with Mexico. The Idaho Gold project includes the Buffalo Gulch project and three advanced stage exploration properties namely, Friday/Petsite, Deadwood, and Dixie (the "Advanced Stage Properties").

Under the terms of the Agreement, Clearwater will make cash payments to Valencia and Beartooth (the "Venders") totalling CDN$1,500,000. The Vendors will retain a Net Smelter Return (NSR) royalty on future gold production from the Idaho Gold project and a 50% continuing interest in the Advanced Stage Properties. The NSR royalty will include an additional payment over the base 1% royalty rate, which is tied to an increased gold price. Clearwater will also assume various carrying costs and liabilities connected with the Idaho Gold project.

Valencia's President and CEO, Doug Bache noted, "The sale of the Idaho Gold project to Clearwater represents an excellent opportunity for both parties and enables the construction and operation of a mine at Buffalo Gulch." He added, "The transaction allows Valencia to realize exceptional value during this period of high gold prices and permits further progress in Valencia's strategy to focus on building a quality portfolio of silver projects."

Rod Nicholls, Clearwater's Chairman, commented, "Our purchase of the Idaho Gold project; particularly, Buffalo Gulch project is the starting point for the building of a new intermediate precious metals producer." Adding, "Our team is very experienced in permitting, developing and operating mines in the State of Idaho and Buffalo Gulch represents an opportunity for Clearwater to get a fast start in producing a sizeable amount of gold production. In the early 1990's the Buffalo Gulch property was fully permitted as an operating gold mine and mine construction was started. However the construction was mothballed in the mid 1990's due to the low gold prices and Buffalo Gulch was never put into commercial gold production. Clearwater has started the process to re-activate the operating permits for the Buffalo Gulch property in order to restart the mine construction process and place Buffalo Gulch into production. The future Buffalo Gulch mine represents an excellent economic development opportunity for the Elk City area, and the State of Idaho."

Based on life-of-mine gold production estimates from the Idaho Gold - Buffalo Gulch project, Valencia has determined that 100% of the revenues from the life-of-mine gold royalty suggest an undiscounted pre-tax value of US$1.2 million based on a gold price of US$650 per ounce. Further, Valencia management estimates that the gold royalty has the potential to generate the following discounted royalty revenues at gold prices ranging from US$650 per ounce to US$825 per ounce as shown in Table 1 below:

Table 1. Pre-tax Discounted Royalty Revenues (100% of project basis)
(1), (2) Expressed in US$ Millions; except where noted

Discount Rate
Gold Price (US$/oz) 0% 5% 8%
650 1.2 1.1 1.0
750 1.7 1.6 1.5
825 2.7 2.4 2.3

1. The estimated royalty revenues contained in Table 1 are for indicative purposes and were not included in the technical report and further, are not necessary representative of the gold price that may be realized at the time gold production from the Idaho Gold/Buffalo Gulch project.

2. Valencia's equity interest in the Idaho Gold project is currently 51% and Beartooth Platinum Corporation holds 49% in the project.

All technical disclosure in this press release relating to the Idaho Gold project and estimated life of mine production is extracted from a technical report entitled "Preliminary Assessment Review of the Scope and Potential of the Buffalo Gulch Heapleach Project Near Elk City, Idaho dated March 21, 2006 prepared in accordance with Canadian National Instrument 43-101 ("NI 43-101") by Mr. Kirk H. Rodgers, who is a "qualified person" under NI 43-101 and is independent of Valencia Ventures Inc. The technical disclosure contained in this press release has been reviewed and approved by Mr. Rodgers.

The CDN$1,500,000 in cash payments to the Vendors is payable as follows: (a) CDN$100,000 on Closing; (b) CDN$1,150,000 within 30 days of receipt of all operating permits from the regulatory authorities for the operation of Buffalo Gulch as a mine (however in the event that the permits are in process but not obtained by 24 months from January 31, 2007, then Clearwater shall make an interim property payment of CDN$50,000, or the property reverts back to the Vendors. Further, in the event permits are in process but not obtained by 36 months from January 31, 2007, then Clearwater shall make an interim property payment of CDN$1,100,000, or the property reverts to Vendors; and (c) the remaining CDN$250,000 would be paid within 90 days of the commencement of commercial production of gold from Buffalo Gulch.

Clearwater will pay, upon closing, any annual property licenses incurred and paid by the Vendors after September 1, 2006 on a pro-rata basis, for the period November 1, 2006 to August 31, 2007. Additionally, Clearwater will be responsible for: (1) Upon receiving the necessary operating permits for Buffalo Gulch, replacing certain existing state environmental bonds; (2) assuming existing lease, royalty and other contractual obligations to the underlying property owners of the Property from November 1, 2006 onward. The agreement with Clearwater remains subject to all required regulatory approvals.

Clearwater intends to complete a joint venture on or sale of the Advanced Stage Properties that are subject of the Transaction with a publicly held junior exploration company or companies to conduct further exploration and development work on those properties in exchange for cash, stock, work commitments and royalty commitments ("Post Closing Strategic Property Transaction"). As further consideration for the Transaction, Clearwater shall pay to the Vendors fifty percent (50%) of the cash, stock and royalty commitment proceeds received by Clearwater from the Post Closing Strategic Property Transaction.

In view of Clearwater's intention to complete a Post Closing Strategic Transaction for the Advanced Exploration Stage Properties the parties will agree to the following basic protective terms and conditions:

(a) Clearwater shall take all ordinary and customary actions to maintain in good standing the right title and interest in the Advanced Exploration Stage Properties, which shall include, but not be limited to maintaining all claims notifications and monuments, paying all claims maintenance fees with relevant government authorities, making all royalty payments to underlying property owners, and assuming all additional obligations for the maintenance of the Advanced Exploration Stage Properties as required in any underlying ownership, lease or option agreement.

(b) If Clearwater does not complete at least one (1) Post Closing Strategic Property Transaction for one of the Advanced Exploration Stage Properties within twelve months of the Closing of the Transaction, the Vendors shall have the option to re-purchase the Advanced Exploration Stage Properties from the Clearwater for Five Thousand Canadian Dollars ($5,000).

Clearwater shall grant the Vendors a Right of First Refusal on any proposed Strategic Property Transaction, where the Vendors shall have the right to enter into the proposed Post Closing Strategic Transaction for the Advanced Exploration Stage Properties with Clearwater on the same terms and conditions being offered by the publicly held junior exploration company or companies that Clearwater is negotiating with to conclude a Post Closing Strategic Property Transaction.

The Vendors will retain a 1% Net Smelter Return Royalty on all Idaho Gold properties including Buffalo Gulch, Friday/Petsite, Deadwood and Dixie subject to a cap of C$1.5 million in the case of Buffalo Gulch and C$1.0 million cap on all others.

The Vendors will also received a variable cash "Bonanza Payment" per ounce of gold produced from the Buffalo Gulch property ranging for US$7.50 per ounce to US$33.00 per ounce based on the price of gold realized from the sale of gold produced from Buffalo Gulch as shown in the following table:

Per Ounce Price of Gold Realized At Amount of Bonanza Payment in United
Time of Production States Dollars per ounce
of gold produced

US$600 - US$700 US$7.50 per ounce
US$701 - US$800 US$12.50 per ounce
US$801 - US$900 US$22.50 per ounce
US$900 and above US$33.00 per ounce

Further information on the Idaho Gold project and result of the preliminary study can be found in the technical report filed on SEDAR entitled "Preliminary Assessment Review of the Scope and Potential of the Buffalo Gulch Heap Leach Project Near Elk City, Idaho" dated March 2006, prepared by Mr. Kirk H. Rodgers of Golder Associates who is a qualified person under NI 43-101 and is independent of Valencia.

Valencia is a Canadian resource company traded under the symbol VVI on the TSX Venture Exchange. Valencia's development strategy is focused on the exploration and development of silver and gold projects. Currently, the company has delineated a mineral resource at the Cachinal Silver-Gold-Zinc project in Chile and is evaluating the Rancheria Silver project in the Yukon Territory and British Columbia, Canada. The company recently completed a feasibility study on the Mt. Bundy Gold project in the Northern Territory, Australia, and is considering various development strategies. With a focus on silver, the company has a number of precious metal acquisitions under consideration in the Americas.

Shareholders are encouraged to visit Valencia's website ( for further information about the Company's other projects.

Statements in this release that are not historical facts are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Readers are cautioned that any such statements are not guarantees of future performance and that actual developments or results may vary materially from those in these "forward-looking statements".


Contact Information

  • Valencia Ventures Inc.
    Doug Bache
    President and CEO
    (416) 861-5884
    Valencia Ventures Inc.
    David Meyer
    Vice-President, Business Development
    (416) 861-5891
    Clearwater Mining Corporation
    Lisa Maxwell
    VP of Corporate Development
    (604) 682-2433