|July 03, 2007|
Reservoir and Phelps Dodge Exploration Corp. to Explore Together at Rakita in Serbia
|VANCOUVER, BRITISH COLUMBIA - (CCNMatthews - July 3, 2007) - Reservoir Capital Corp. ("Reservoir" or the "Company") (TSX VENTURE:REO - News) is pleased to report that it has signed an earn-in agreement with Phelps Dodge Exploration Corp., ("Phelps Dodge") a subsidiary of Freeport-McMoRan Copper & Gold Inc., ("Freeport"), to explore its Rakita License in Southern Serbia.|
The Rakita license covers altered to highly-altered granitic rocks with disseminated pyrite, silicification and quartz veining. Ancient workings have been located within the License area that appear to have explored quartz-sulfide veins in altered granite that have the potential to host a large intrusion-related gold system. The License area, in southern Serbia, represents the potential extension of mineralization identified on the nearby Trun Property in Bulgaria, which is interpreted to be intrusion-related gold mineralization and is currently being explored by EurOmax Resources Ltd. and Teck Cominco Ltd.
Under the terms of the agreement, Phelps Dodge shall have the option to earn a 65% ownership interest in Rakita (BVI) Ltd., ("Rakita BVI") by making certain expenditures on or for the benefit of the Rakita License and thereupon form a joint venture with the Company for operation of Rakita BVI as follows;
- Phelps Dodge has the exclusive right and option (the "Earn-In Option") to acquire an undivided 65% right, title and ownership interest in Rakita BVI by funding US$500,000 of expenditures over a three-year period in two phases. During Phase 1, Phelps Dodge shall fund US$50,000 of expenditures to be matched by Reservoir. During Phase 2, Phelps Dodge shall solely fund US$450,000 of expenditures including a minimum of 2,500 cumulative meters of drilling;
- If Phelps Dodge terminates its Earn-In Option, but has funded expenditures of at least US$250,000 prior to any such termination, Reservoir shall agree to pay Phelps Dodge a 1% net smelter returns royalty on the production of minerals from the Property;
- Upon exercise of its Earn-In Option, Phelps Dodge will have a period of 90 days in which it may elect to continue to solely fund the expenditures on the Property until completion of a Feasibility Study. If Phelps Dodge makes such election, completes and delivers a Feasibility Study within 7 years of the date of the Earn-In Agreement, Phelps Dodge will have acquired an additional 10% interest and shall have a 75% right, title and ownership interest in Rakita BVI; and
- Thereafter, Phelps Dodge and Reservoir shall fund its interest on a pro-rata basis or dilute and if their respective interest dilutes below 10%, its interest shall convert to a net smelter royalty of 1%.
Subsidiaries of Reservoir and Phelps Dodge originally applied for the Rakita License area on the same day and this agreement has been reached between the two companies in order to jointly participate in this exploration opportunity. Upon signing the agreement on May 17, 2007, each company's Serbian subsidiary relinquished its original application in favor of Rakita Exploration D.o.o. ("Rakita Exploration") a wholly-owned subsidiary of Rakita BVI which was created for the purpose of this transaction. The Rakita License was subsequently issued to Rakita Exploration on May 31 2007.
Concurrently, Reservoir has agreed to issue 100,000 of its common shares to Eurasian Minerals Inc., ('Eurasian') to extinguish Eurasian's royalty rights over the original Rakita License application area, granted under the terms of the Share Purchase Agreement signed between the Company and Eurasian January 26, 2007.
Miljana Vidovic, the President and CEO of the Company stated, "We are pleased to have found an equitable mechanism for both companies to share the exploration opportunity at Rakita and to have Freeport as an exploration partner," and added, "We were very favorably impressed by the progressive and proactive attitude of the Serbian Ministry or Energy and Mines in supporting this solution and promptly issuing the new license."
Location maps will be posted on the Company's website www.reservoircapitalcorp.com in the coming days.
Dr. Duncan Large, Chartered Engineer (UK) and Eur. Geol., a Qualified Person as defined by National Instrument 43-101 and consultant to the Company, is responsible for the preparation of the technical information in this release.
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