Downtown Industries Enters into Letter of Intent with St. Elias Mines
VANCOUVER, September 13, 2010 – Downtown Industries Ltd. (the “Company”) is pleased to announce that it has entered into a letter agreement (the “Letter Agreement”) with St. Elias Mines Ltd. (“St. Elias”) pursuant to which the Company will acquire an option (the “Option”) to earn up to an undivided 75% interest in and to the South Rim Project, which consists of 21 mineral claims covering approximately 8,221.53 ha located in the Omineca Mining Division of British Columbia (the “Property”). Following completion of an initial $100,000 work program on the Property and preparation of a NI 43- 101 Technical Report, the Company anticipates applying to graduate to Tier 2 on the TSX Venture Exchange (the “Exchange”).
Under the terms of the Letter Agreement, in order to acquire up to a 51% undivided interest in and to the Property (the “First Option”), the Company is required to pay to St. Elias $5,000 in cash within five business days from signing the Letter Agreement and issue to St. Elias 5,000 common shares of the Company within 10 business days of signing a formal agreement. In addition, the Company is required to, over a period of three years from the date that the Company graduates to Tier 2 on the Exchange: (i) pay to St. Elias in cash an aggregate of $75,000; (ii) issue to St. Elias an aggregate of 110,000 common shares of the Company; and (iii) incur exploration expenditures on the Property in the aggregate amount of $600,000.
In order to acquire a further 24% undivided interest in and to the Property (the “Second Option”), the Company is required to, over a period of three years from the date that the Company elects to earn the Second Option: (i) pay to St. Elias in cash an aggregate of $250,000; (ii) issue to St. Elias an aggregate of 300,000 common shares of the Company; and (iii) incur exploration expenditures on the Property in the aggregate amount of $1,500,000.
The Company shall have the exclusive right to manage and operate the exploration programs as operator during the period of the First Option and thereafter if the First Option is fully exercised. An operator’s fee of 8% of total exploration expenditures incurred shall be charged by the Company and will qualify as an exploration expenditure.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange approval and the execution of a formal agreement.
ON BEHALF OF THE BOARD
Aaron Keay Chief Executive Officer
For more information, please contact:
Downtown Industries Ltd.
Aaron Keay Chief Executive Officer 604-678-4024 [email protected]
Neither 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.