Valencia Ventures Inc.
TSX VENTURE : VVI

Valencia Ventures Inc.
Beartooth Platinum Corporation
TSX VENTURE : BTP

Beartooth Platinum Corporation

December 04, 2006 16:05 ET

Valencia Enters Into Agreement to Sell Idaho Gold Project

TORONTO, ONTARIO--(CCNMatthews - Dec. 4, 2006) - Valencia Ventures Inc. (TSX VENTURE:VVI), together with Beartooth Platinum Corporation (TSX VENTURE:BTP), has entered into an agreement to sell 100% of their respective interests in the Idaho Gold project ("Idaho Gold" or the "Project") to Clearwater Mining Corporation ("Clearwater"). Clearwater is 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 property and three advanced stage exploration properties namely, Friday/Petsite, Deadwood, and Dixie (the "Advanced Stage Properties").

Under the terms of the Agreement, Clearwater will assume various carrying costs and liabilities connected with the Idaho Gold project. In addition, Clearwater will assume all existing obligations of the Vendors (being Valencia Ventures Inc. and Beartooth Platinum Corporation) and will make cash payments to the Vendors 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 additional "Bonanza" payments over the base 1% royalty rate tied to the price of gold.

The CDN$1,500,000 in cash payments to the Vendors would be payable as follows: (a) CDN$100,000 on Closing (expected to be on or about December 15, 2006); (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.

Valencia's President and CEO, Doug Bache commented, "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 developing a high quality portfolio of silver projects.

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.

It is Clearwater's plan and intention to further to complete a strategic transaction within twelve months of the Closing of the Transaction for 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 comprehension of 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 follows:



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


The agreement with Clearwater remains subject to all required regulatory approvals.

Further information on the Idaho Gold project and result of the preliminary study can be found in the technical report 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 Kirk H. Rodgers of Golder Associates who is a qualified person under NI 43-101 and is independent of Valencia.

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

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 properties. Currently, the company is evaluating the Cachinal Silver project in Chile and 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.

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".

THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

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