CAPELLA RESOURCES LTD. (TSX-V: CPS) (“Capella”
or the “Company”)
is pleased to announce that it has entered into an option (the “Royalty
Reduction Option”) to reduce the royalty
on the Company’s 100% interest in the Dorado
(Lajitas) gold property located in the Copiapo area of Northern Chile
(the “Property”).
The Property is currently subject to a 5% net smelter return royalty
(the “Royalty”)
held legally by International Mineral Resources Ltd. (“IMR”),
a privately held company incorporated pursuant to the laws of the Turks
and Caicos Islands, and beneficially held by IMR (a 50% beneficial
interest) and an arm’s length party (a 50%
beneficial interest) (the “Arm’s
Length Party” and together with IMR, the “Royalty
Holders”).
Pursuant to the terms of the Royalty Reduction Option, Capella will pay
the Royalty Holders an aggregate payment of $100,000 in cash, or at
Company’s election the equivalent value in
shares of the Company, as consideration for the option granted. Capella
may exercise its option, on or before August 29, 2011, to reduce the
Royalty from 5% to 2% by paying the Royalty Holders an aggregate cash
payment of US$3,000,000. All shares issued in relation to the Royalty
Reduction Option, if any, will be subject to a hold period pursuant to
applicable securities laws and the polices of the TSX Venture Exchange
(the “Exchange”),
of four months plus one day from the date of issuance.
The Royalty Reduction Option is considered to be a “Related
Party Transaction” as such term is defined by
the polices of the Exchange as IMR is legally and beneficially owned by
Richard L. Bachman, an officer and director of the Company. The Royalty
Reduction Option (and the consideration payable in connection therewith)
is subject to applicable regulatory approval and the exercise of the
option granted in the Royalty Reduction Option may be subject to
shareholder approval.
The Company is also pleased to announce that Mr. Gerald Aberle has been
appointed Vice President Operations for Capella, subject to applicable
regulatory approval. Mr. Aberle received his Bachelors of Science degree
in mining engineering from the South Dakota School of Mines and
Technology in 1980. Mr.
