Vancouver B.C. January 12, 2010: Foundation Resources Inc. ("FDN" or the "Company") announces the signing of a letter of intent ("LOI") to acquire up to a 70% interest in the 1,005 hectare San Rafael gold/silver property located approximately 150 km north-west of Durango in the Durango State, Mexico.
Key points summary:
San Rafael Property Acquisition
The San Rafael property consists of five mineral claims covering 1,005 hectares in the Durango State, Mexico located approximately 150 km north-west of Durango City and is readily accessible year round. The property is a past producer with 4 underground levels totaling 400m with only 200m of a known 1.6km strike length explored by historic underground mining. San Rafael is a low sulfidation epithermal gold-silver vein deposit similar to Goldcorp, Penoles and Great Panther's projects along Sierra Madre Occidental. Historic sample results reported by previous mine operators were independently confirmed by recent channel samples that average 13.86 g/t Au and 175.88 g/t Ag over a width of 3.8m.
To earn a 70% interest, Foundation has agreed to make payments totaling USD$400,000, issue 2,500,000 common shares of Foundation, and incur an aggregate of $2,000,000 in exploration expenditures on the property over a four-year period. The Vendor will retain a 1.5% royalty of which the Company has the right to purchase the entire Royalty, by paying the Vendor USD$1,500,000.
On or before 60 days from the signing of the LOI Foundation and the Vendor shall prepare and sign a Formal Agreements detailing the terms set out in the LOI. If the Formal Agreement cannot be made within the 60 days both Foundation and the Vendor agree the LOI will be terminated with no payments, liabilities or penalties due to either Foundation or the Vendor.
The agreement is subject to regulatory approval.
Foundation has agreed to the terms of a non-brokered private placement of up to 3,000,000 units of the company at a price of $0.15 per unit for gross proceeds of up to $450,000. Each unit comprises of one common share and one whole non-transferable warrant, with each warrant exercisable into a common share for a period of two years at an exercise price of $0.20 in the first year and at a price of $0.25 per share thereafter. The securities offered will be subject to a four month hold period. A finder's fee, in accordance with the policies of the TSX Venture Exchange, will be payable in cash, units, a combination of cash and units and warrants.
The proceeds will be used to conduct the first years work program on the San Rafael property and general corporate development purposes.
Completion of the offering is subject to receipt of TSX Venture Exchange and all other regulatory approval.
John Hiner, WA State Licensed Geologist, is the company's qualified person on the project as required under NI 43-101 and has reviewed the technical information contained in this press release.
About Foundation Resources Inc.
Foundation is a mineral exploration company focused on exploration and development of high potential gold properties in Canada and Mexico. Its Coldstream Property is located in the Western Superior geological province of the Canadian Shield, which is noted for hosting prolific gold deposits in Ontario, Canada. The San Rafael property is located approximately 150km north-west of Durango in the Durango State, Mexico
On behalf of the board,
Paul Chung
President
Neither the 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." News release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in resource exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements.
