Feb. 10, 2011 (Filing Services Canada) -- BCY Resources Inc. (BCY - TSX Venture), announces that it has entered into a letter agreement (the "Agreement") dated February 7, 2011, subject to regulatory approval, with Riverside Resources Inc. ("Riverside") to acquire up to a 75% interest in three drill ready exploration properties (the "Catrina", "Escondida" and "Pedernal" properties) located in Durango-Zacatecas, Mexico (the "Durango Properties"). Riverside is the 100% registered and beneficial owner of the Durango Properties, comprising an area of over 76,000 hectares. The Durango Properties are strategically located in the rich producing Mesa Central region of Mexico.
Terms of the Option
In consideration for the Company's acquisition of a 75% undivided interest in the Durango Properties (the "Option"), the Company must meet the following obligations:
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Due Dates Cash Payments Shares(1) Exploration
Expenditures
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On execution of
the Definitive Agreement $50,000 200,000 Nil
6 months from the date
of the Definitive Agreement Nil 200,000 $200,000
12 months from the date
of the Definitive Agreement $100,000 400,000 $1,000,000
24 months from the date
of the Definitive Agreement $150,000 600,000 $1,000,000
36 months from the date
of the Definitive Agreement $200,000 1,200,000 $1,800,000
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Totals $500,000 2,600,000 $4,000,000
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(1) Prior to the entering into the Definitive Agreement, the Company will effect a consolidation, based on four (4) old shares for one (1) new share. All of the shares to be issued to Riverside in connection with the exercise of the Option will be post-consolidated shares of the Company.
(2) The share issuances indicated assume a minimum value of $0.50 per share. In the event that at a share issuance date the market value of the common shares (calculated as the 30-day volume weighted average) is less than $0.50, then the number of shares to be issued on that date shall be adjusted to equal the number that results when the original number of shares contemplated above is multiplied by $0.50 and the resulting number is divided by the actual market value at that date. In addition, all prior share issuances will be adjusted accordingly, in accordance with the same formula, where such adjustment results in Riverside receiving additional shares in respect of such issuance.
The Agreement will be superceded by a definitive agreement and will be subject to a number of conditions including, but not limited to, TSX Venture Exchange approval.
The Durango Properties
The Durango Properties are located in the States of Durango and Zacatecas, Mexico. The Durango Properties are comprised of the "Catrina", "Escondida" and "Pedernal" mining claims covering over 76,000 hectares.
Extensive groundwork has been conducted by Riverside's geologists identifying multiple drill ready targets.
Riverside completed the development of a strategic portfolio of five drill-ready, gold-silver projects (including the three in which the Company will be earning an interest) in the Mesa central region of Durango-Zacatecas, Mexico. All of these projects were developed through a completed exploration alliance with Kinross Gold Corp., the culmination of 2-1/2 years of generative exploration and targeting through the Riverside-Kinross Exploration alliance and include the top projects out of more than 220 anomalous areas that were evaluated.
The Catrina Gold Project is comprised of over 14,000 hectares and located within the prolific gold-silver belt of the Mesa Central Region in Durango. It is in close proximity to numerous present and past producing gold and silver mines, such as the Penoles Mining Camp and the Kilometer 66 mine. Riverside's exploration program on the Catrina property identified four principal target zones by using IP surveys. A first phase 10 hole 2,600 meter drill program has been designed to test geology and geochemistry of the system. Geochemistry of the alteration zone shows a strong gold anomaly extending over an area of more than 3 km2. The geophysical IP response at Catrina is comparable in scale to the Camino Rojo and Penasquito projects which also have similar trace element geochemistry (gold-silver-zinc-lead). The combination of a strong geophysical IP response, regional magnetic highs associated with intrusions, encouraging geochemistry, and thin cover makes the Catrina Project a high-priority target moving forward.
The Escondida Gold Project is comprised of over 37,000 hectares in Northern Zacatecas, situated within a NW trending structural corridor hosting mines such as Castillo, San Sebestian and Miguel Auza. Riverside completed an initial exploration program on the property that included detailed mapping, sampling, structural analysis and IP geophysics. Two east-west striking mineralized trends were identified at Escondida within a 2.1 km by 1.3 km zone defined as the primary drill target area. These mineralized structures were identified through a geophysical IP survey with the target area remaining wide open in multiple directions. The outcropping, cross cutting mineralized structures and projection undercover show many similarities to the nearby Valenciana and San Jose de Reyes mining districts. Several target areas have been delineated for immediate follow up. The Escondida project is immediately north of Silver Standard Mines' Valenciana district and south of Penole's San Jose de Reyes Mine. A first phase 10 hole 2,500 meter drill program has been recommended.
The Pedernal Gold Project is comprised of over 24,000 hectares, located 60 kilometres north of the town of Rodeo, and immediately west of the Penoles District in northern Durango State. The Pedernal project contains an extensive network of veins with strong alteration and indications of an upper part of an epithermal/porphyry style system. Recent exploration by Riverside identified four principal northwest trending mineralized zones with up to 3.5 km of continuous veining and total vein strike lengths of up to 12 km. Individual veins at surface have a true thickness of up to 6 meters with contiguous zones showing up to 30 meters in thickness in vein clusters. The prospect covers a broad zone comprising an extensive network of silica veins and breccia zones. The introduction of high-level epithermal silica with anomalous gold values is seen in a series of sub-parallel vein/structure systems forming silica ledges. The silica ledges and epithermal vein textures coupled with finely disseminated sulphides and anomalous gold values make this area highly prospective. A first phase 4 hole 1,000 meter drill program has been recommended to test the potential depth of the system.
John Harrop, P. Geo, FGS, is the Company's Qualified Person and has reviewed and takes responsibility for the technical contents of this news release.
At the Company's Annual General and Special Meeting held on June 3, 2010, shareholders approved a consolidation based on a ratio of 5:1 or such other ratio as determined by the directors in their discretion. The board of directors has determined that it is in the best interests of the Company to consolidate its share capital on the basis of four (4) old shares for 1 (one) new share (the "Consolidation"). The Company will file required documentation with corporate authorities and regulatory authorities to give effect to the Consolidation. All of the shares to be issued in connection with the Option will be issued on a post-Consolidation basis.
In conjunction with the Consolidation, the Company intends to change its name to Mexigold Corp., subject to the acceptance of the TSX Venture Exchange. There will also be a Finder's Fee payable of 250,000 post-consolidated common shares to BMO Nesbitt Burns Inc. for their assistance in the transaction.
The Company will be proceeding with a financing for gross proceeds of up to $3,000,000. Details will be announced after the Consolidation and name change have been effected.
ON BEHALF OF THE BOARD OF DIRECTORS
"Peeyush Varshney"
Peeyush Varshney, LL.B.
President & CEO
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contact:
Investor Relations
Phone (604) 684-2181
info@varshneycapital.com
Suite 2050-1055 W.Georgia St.,
PO Box 11121, Vancouver, BC
Canada V6E 3P3
Phone (604) 684-2181
Fax (604) 682-4768
Source: BCY Resources Inc. TSX-V (BCY) www.varshneycapital.com
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