Aug. 24, 2009 (Filing Services Canada) -- Blue Cove Capital Corp. (BCV.P - TSX Venture), announces that that it has entered into a letter of intent (the "Letter of Intent") dated August 18, 2009 with Golden Predator Mines (US) Inc. ("Golden Predator US") and Great American Minerals Inc. ("GAM" and together with Golden Predator US, the "Vendors") to acquire the Vendors' collective interest in certain mineral exploration properties located in the Battle Mountain and Cortez Trends of North Central Nevada, USA including the Modoc Project, UNR/Keystone Project, Trail Project and the Platte River Joint Venture Project (collectively, the "Properties") on the terms set out in the Letter of Intent (the "Acquisition"). The Acquisition would include the assignment of all of the Vendors' right, title and interest in the Properties as well as the obligations in certain underlying agreements to which the Properties are subject. The Acquisition is subject to TSX Venture Exchange ("TSXV") approval and is intended to constitute the Company's qualifying transaction and the Modoc Project to constitute Blue Cove's qualifying property under the policies of the TSXV. Under the Letter of Intent the parties have agreed to use commercially reasonable efforts to negotiate and settle by September 15, 2009 a definitive agreement (the "Definitive Agreement").
Pursuant to the Letter of Intent as consideration for the Properties, the Definitive Agreement would provide that on closing the Company will pay to the Vendors an aggregate of US$1,000,000, issue to the Vendors an aggregate of 1,000,000 common shares ("Shares") and pay certain maintenance costs ("Costs") incurred by Golden Predator US estimated at US$104,000 coming due after the date of the Letter of Intent and before closing. The Vendors would also retain a 1.5% net smelter return royalty on the sale of all minerals produced from the Properties other than the Platte River Project, and a 0.75% net smelter return royalty on the sale of all minerals produced from the Platte River Project. As consideration for entering the Letter of Intent, Blue Cove has paid to the Vendors a CDN$25,000 non-refundable payment which will be credited against the Costs which are payable on closing. On closing of the Acquisition, Golden Predator US shall have the right to appoint one individual as a director of Blue Cove until Blue Cove's next annual general meeting and to appoint one individual as a nominee as a director at Blue Cove's next two annual general meetings. In addition, for a period of two years from closing of the Acquisition Golden Predator US shall have a pre-emptive right to participate in future equity issuances of Blue Cove in order to maintain its proportionate ownership interest as at closing.
The Properties
The Properties are all gold exploration properties located in the Battle Mountain, Cortez/Cortez Hills and Eureka Gold Districts of Nevada. Numerous major corporate owned Gold Mines in the districts & trend include Newmont Gold's Lone Tree & Phoenix Mine Complex's, Barrick & Goldcorp's jointly owned Marigold Mine, Barrick's Pipeline, Cortez & Cortez Hills Gold Mines & Deposits, US Gold's Tonkin Springs Gold Mine and Barrick's Archimedes Gold Mine.
The Modoc Project is located in Lander County, Nevada two miles west of Newmont's Phoenix Mine project in the Battle Mountain Mining District.
The UNR/Keystone lower plate gold project lies within the Battle Mountain-Cortez Gold Trend, approximately 18 miles south of Barrick Gold's Cortez & Pipeline Mine and 12 miles south of the new Cortez Hills Mine.
The Platte River Joint Venture Project is on the northeast flank of the Roberts Mountains, southeast of the Cortez Hills Mine Project (Barrick Gold) and just east of US Gold's Tonkin Springs Mine Project.
The Trail Project located in the Eureka Mining District in Eureka County, Nevada is located on the west flank of Lookout Mountain approximately two miles north of Staccato Gold's Lookout Mountain Gold Deposit and Barrick Gold's Archimedes Gold Mine is currently in production approximately four miles north.
Under the Letter of Intent, prior to executing the Definitive Agreement, Company will conduct due diligence on the Properties and the underlying agreements to which they are subject. Additional disclosure regarding the Properties, and in particular the Modoc Project, will be provided in the Company's filing statement to be prepared in connection with its qualifying transaction.
Golden Predator US and GAM are Nevada companies. Golden Predator US is a wholly owned subsidiary of Golden Predator Royalty & Development Corp. (TSXV:GPD) ("Golden Predator"), a British Columbia company listed on the TSXV and GAM is a wholly-owned subsidiary of EMC Metals Corp. (TSX:EMC) ("EMC"), a British Columbia company listed on the Toronto Stock Exchange. To the knowledge of the Company, no person directly or indirectly beneficially holds a controlling interest or otherwise controls Golden Predator or EMC. The Acquisition will not be a Non-Arm's Length Qualifying Transaction under the policies of the TSXV and will not require the approval of the Company's shareholders.
Modoc Project
The Modoc Project is comprised of 120 unpatented mining claims encompassing approximately 2,150 acres. The Company understands that: (a) the Vendors together currently hold a 100% interest in the Modoc Project, except for 12 claims in which the Vendors hold a 1/3 interest; (b) Gale Peak Resources Group ("Gale Peak") holds the remaining 2/3 interest which it has leased to the Vendors until February 1, 2019; (c) in order to maintain the leasehold interest, the Vendors must pay the following advance minimum royalty payments: US$20,000 by March 31, 2010; US$30,000 by March 31, 2011; US$40,000 by March 31, 2012; US$50,000 by March 31, 2013; and US$60,000 by March 31, 2014 and each year thereafter; (d) the Vendors must also incur a total of US$500,000 in exploration expenditures prior to February 1, 2013 (US$75,000 of which must be incurred by February 1, 2012); (e) Gale Peak is also entitled to a 1.33% production royalty on the claims subject to the leasehold interest; (f) the Vendors may purchase the remaining two-thirds interest in the 12 claims from Gale Peak and one-half of the production royalty at any time for US$2,000,000; and (g) all advance minimum royalty payments and production royalty payments will be credited toward this purchase price. On completion of the Acquisition, Blue Cove would assume these obligations of the Vendors.
The Company has engaged Ernest Hunsaker CPG, a qualified person under National Instrument 43-101 to prepare a technical report in respect of the Modoc Project (the "Technical Report").
