November 6, 2009
Redzone Executes Definitive Option Agreement to Acquire an Interest in Las Palmas Property in Mexico
Vancouver, British Columbia November 6, 2009. Redzone Resources Limited (CNSX:REZ) ("Redzone") is pleased to announce that a definitive option agreement (the "Agreement") has been executed between its wholly owned subsidiary Compañia Minera Oyamel, S.A. de C.V. ("RZ Mexico") and Minera Teck, S.A. de C.V. ("Teck"), a wholly owned subsidiary of Teck Resources Limited, pursuant to which RZ Mexico has the option to acquire an initial 50% interest in the Las Palmas property located in Mexico's Oaxaca and Veracruz states (the "Property"), as previously announced in Redzone's press release dated September 16, 2009 (available on SEDAR at www.sedar.com).
Under the terms of the Agreement, RZ Mexico may initially acquire a 50% interest in the Property (the "50% Option") by making $1,000,000 in property expenditures by no later than August 31, 2010 and thereafter an additional $2,000,000 in optional expenditures by no later than August 31, 2012 (collectively the "Expenditures"). Once the Expenditures have been made, RZ Mexico will earn a 50% interest in the Property subject to certain options that Teck has retained (the "Teck Options"). The Teck Options provide for RZ Mexico's 50% interest to be subject to change if Teck chooses to elect one of the following within 60 days of RZ Mexico acquiring that interest:
(a) to advise RZ Mexico that Teck is exercising its right to make optional property expenditures of $3 million within two years thereby increasing its interest in the Property to 60% and reducing the interest of RZ Mexico to 40% (the "T-1 Option"); or
(b) to advise RZ Mexico that RZ Mexico will have the sole obligation to fund any Property expenditures and when it has funded an additional $3 million it will have earned a 100% interest in the Property subject to a 2% NSR. If Teck makes this election, then Teck will have the right to earn back a 51% interest exercisable at any time up to 60 days after RZ Mexico has earned its 100% interest by making Property expenditures of 1.5 times RZ Mexico's total expenditures to a maximum of $9 million within four years (the "T-2 Option"). If Teck earns back a 51% interest in the Property, then in conjunction with its notice that it has incurred the requisite expenditures and earned back to a 51% interest it can make an additional election to earn back an additional 9% interest (for an aggregate 60% interest) in the Property by making an additional $6 million in Property expenditures over two years (the "T-3 Option").
Redzone has guaranteed to Teck the payment of any expenditures commitments made by RZ Mexico to Teck in connection with the Agreement. Following the exercise of any of the 50% Option, T-1 Option, T-2 Option or T-3 Option, as applicable, Teck and RZ Mexico shall form a joint venture and shall thereafter contribute to expenditures on the Property in proportion to their respective interests in the Property, or be subject to dilution of their respective interests. In the event that the interest of either RZ Mexico or Teck in the Property is reduced below 10% at any time, such interest shall be converted to a 5% net profits royalty. For further details regarding the Property, please refer to Redzone's press release dated September 16, 2009 as available on SEDAR at www.sedar.com.
For further information please contact:
Neil Halldorson, President
The CNSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Forward - Looking Statements: Certain information set forth in this news release may contain forwardlooking statements that involve substantial known and unknown risks and uncertainties. These forwardlooking statements are subject to numerous risks and uncertainties, certain of which are beyond the control of Redzone, including, but not limited to the impact of general economic conditions, industry conditions, risks associated with mining activities, volatility of commodity prices, currency fluctuations, dependence upon regulatory approvals, the availability of future financing and exploration risk. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements.