CAPELLA RESOURCES LTD. (TSX-V: CPS) (“Capella”
or the “Company”)
further to the Company’s news release of
September 26, 2008, Capella is pleased to announce that the TSX Venture
Exchange (the “Exchange”)
has accepted for filing documentation in connection with the Royalty
Reduction Option Agreement (the “Royalty
Reduction Option”) among the Company, Compania
Minera Cerro El Diablo, a wholly owned-owned subsidiary of the Company,
International Mineral Resources Ltd. (“IMR”)
and Roberto Alarcon Bittner (“Bittner”
and together with IMR, the “Royalty Holders”).
Pursuant to the terms of the Royalty Reduction Option, the Company is
required to pay the Royalty Holders an aggregate payment of $100,000 in
cash, or at the Company’s election, the
equivalent value in common shares of the Company (“Common
Shares”), as consideration for the option
granted (the “Initial Payment”).
Capella has elected to pay the Initial Payment in Common Shares at a
deemed price of $0.08 per Common Share and accordingly, Capella has
issued an aggregate of 1,250,000 Common Shares to the Royalty Holders
(625,000 Common Shares to each of IMR and Bittner). Such Common Shares
have a hold period expiring on March 1, 2009.
The Company may exercise the Royalty Reduction Option, on or before
August 29, 2011, by making a further cash payment of US$3,000,000 (the “Option
Payment”) to the Royalty Holders. The Option
Payment is subject to the further approval of the shareholders of the
Company and the Company expects to seek such approval at its next Annual
General Meeting (the “Meeting”).
In the event that the Royalty Reduction Option is approved by a majority
of shareholders, the directors of the Company will have the sole
discretion to determine whether to exercise the Royalty Reduction
Option. If the Royalty Reduction Option is exercised, the Company will
pay the Royalty Holders the Option Payment (US$1,500,000 to each of IMR
and Bittner) and the existing net smelter return royalty on the Company’s
100% interest in the Dorado (Lajitas) gold property located in the
Copiapo area of Northern Chile will be reduced from 5% to 2%.
The Royalty Reduction Option is considered to be a “Related
Party Transaction” as such term is defined by
the policies of the Exchange as IMR is legally and beneficially owned by
Richard Bachman, an officer and director of the Company.
About Capella Resources Ltd.
Capella Resources Ltd.
