Otis Capital Signs Memorandum of Understanding to Acquire the Blue Hill Creek Gold Deposit


April 22, 2008

VANCOUVER, B.C. – Otis Capital Corp. (the “Company”) is pleased to announce that it has entered into an agreement in principal dated April 15, 2008 to acquire a 100% interest in the Blue Hill Creek Gold Deposit (the “Property”), a prospective mineral property located in Cassia County, Idaho, USA. It is expected that this transaction will constitute the Company’s Qualifying Transaction as defined by the TSX Venture Exchange. This will be an arm’s-length Qualifying Transaction.

The vendors comprise Mr. Mitch Bernardi and Dr. John Carden, both of Spokane, Washington, USA, and Win Boom Enterprises Limited, of Hong Kong, PRC (the “Vendors”). Win Boom Enterprises Limited is owned by Jayang Jhaveri, a resident of Hong Kong, China. At present, the Vendors have no beneficial interest in the Company.

A refundable deposit of US$40,000 (the “Deposit”) has been paid to Messrs. Bernardi and Carden (“B&C”). The Deposit will be refunded to the Company in the event that a definitive agreement (the “Definitive Agreement”) is not executed by June 1, 2008. An additional payment of US$40,000 will be made to B&C upon execution of the Definitive Agreement and 1,500,000 shares of the Company will be issued to the Vendors upon TSX Venture Exchange (“TSX”) approval of the definitive agreement.

Additional payments will be required as follows:

  • 750,000 shares will be issued to the Vendors on or before 6-months from execution (“Execution”) of the Definitive Agreement;
  • On or before the first anniversary of Execution US$50,000 will be paid to B&
  • C and 750,000 Property Shares will be issued to the Vendors;
  • 750,000 shares will be issued to the Vendors on or before 18 months from Execution;
  • On or before the second anniversary of Execution US$60,000 will be paid to B&C and 750,000 shares will be issued to the Vendors;
  • 750,000 shares will be issued to the Vendors on or before 30 months from Execution;
  • On or before the third anniversary of Execution US$70,000 will be paid to B&C and 750,000 shares will be issued to the Vendors;
  • On or before the fourth anniversary of Execution US$80,000 will be paid to B&C; and
  • On or before the fifth anniversary of Execution US$100,000 will be paid to B&C.

The Company will earn interests in the Property over the term of the Definitive Agreement as follows:

  • upon making the US$40,000 payment upon Execution and issuing 1,500,000 shares upon TSX approval, the Company will have acquired an undivided 10% interest in the Property;
  • upon issuing a further 750,000 Property Shares on or before 6-months from Execution, the Company will have acquired an aggregate undivided 20% interest in the Property;
  • upon making the first anniversary payment of US$50,000 and issuing 750,000 Property Shares, the Company will have acquired an aggregate undivided 30% interest in the Property;
  • upon issuing a further 750,000 Property Shares, the Company will have acquired an aggregate undivided 40% interest in the Property;
  • upon making the second anniversary payment of US$60,000 and issuing 750,000 Property Shares, the Company will have acquired an aggregate undivided 50% interest in the Property;
  • upon issuing a further 750,000 Property Shares, the Company will have acquired an aggregate undivided 60% interest in the Property;
  • upon making the third anniversary payment of US$70,000 and issuing 750,000 Property Shares, the Company will have acquired an aggregate undivided 70% interest in the Property;
  • upon making the fourth anniversary payment of US$80,000, the Company will have acquired an aggregate undivided 85% interest in the Property; and
  • upon making the fifth anniversary payment of US$100,000, the Company will have acquired a 100% interest in the Property.

A 2.5% net smelter royalty (“NSR”) will be paid to B&C on production of gold from the Property. At any time, the Company will have right to buy the NSR, or a portion thereof, for US$1.0 million per percentage point (i.e. $2.5 million for the entire NSR).

The Property payments noted herein may be accelerated, from time to time, at the option of the Company in order to shorten the earning schedule noted above. In addition to the foregoing, the Company will be responsible for filing and paying all annual assessments and fees relating to the Property. There is a one (1) mile area of mutual interest around the existing boundaries of the Property.

It is expected that Dr. Carden will join the Board of the Company at Closing of the Transaction, and that Mr. Bernardi will be actively engaged by the Company as a consulting Geologist. Dr. Carden has more than 20 years’ experience in exploration management, teaching, and research. He has broad experience in managing large exploration programs including tracking costs, managing personnel, negotiating leases and contracts, writing technical reports, delivering verbal presentations, writing permitting and compliance documents for state and federal agencies, and managing remote drilling programs involving camp logistics. He has a proven track record for discovery of ore deposits in the western United States, with a gross metal value of more than $250 million. From 1986 through 1998, Dr. Carden was with Echo Bay Mines. During the period from 1992 to 1998, he was Echo Bay’s Director of U.S. Exploration, where he directed the work of two district geologists, eight senior geologists, and a GIS specialist. This group was successful in generating 35 funded projects over a five year period. While at Echo Bay, he discovered the 600,000 ounce Lamefoot gold deposit, Echo Bay’s highest-grade and lowest cost producer, and the Easy Junior gold deposit, a 250,000 ounce sediment-hosted gold deposit located in White Pine County, Nevada. Most recently, Dr. Carden has consulted on gold projects in Mexico for Minefinders in Chihuahua and Sonora states, and in Zacatecas for Corex Gold Corp.

Dr. Carden has a Ph.D. in Geology from the Geophysical Institute, University of Alaska, Fairbanks, Alaska and an M.Sc. degree in Geology from Kent State University, Kent, Ohio. He is a Licensed Geologist in the State of Washington and a member of the American Institute of Professional Geologists and the Society of Economic Geologists. Dr. Carden is currently a Director of Paramount Gold and Silver Corp., Magnum Uranium Corp. and Corex Gold Corp.

Mr. Bernardi has over 30 years of experience in the mining industry and a proven exploration track record of mineral resources and discoveries in gold, zinc, copper, yttrium, rare earths, and uranium. Mr. Bernardi’s education includes a M.Sc. in Geology (Magnum Cum Laude) from Western Washington University and additional studies under a University Fellowship at Ohio State University. The bulk of Mr. Bernardi’s professional experience, some 20 years, has been in precious metals property generation, exploration, and development, having worked on numerous deposit types while employed by Echo Bay Mines, Cyprus Metals Exploration, Meridian Minerals, Unocal – Molycorp, Inc., Latitude Minerals and Amoco Minerals. He is currently the Chief Geologist of Magnum Uranium Corp., and in this role has been responsible for the identification, acquisition and development of all Magnum properties.

Discoveries directly associated with Mr. Bernardi as project leader or as co-discoverer of include the Kilgore gold deposit, Idaho, Coulterville gold project, California, Crypto zinc deposit, Utah, Pan gold deposit, Nevada, Santiam copper breccia pipe, Oregon, and the Blue Hill Creek gold/silver deposit, Idaho.

Due to the staggered share issuance schedule, there will be no need for shareholder approval of the transaction.

About the Property

The Company retained Mr. Laurence Pancoast, a registered professional geologist and the Company’s Qualified Person, to prepare a NI 43-101 Technical Report entitled “Blue Hill Creek Gold Project – Geology, Mineralization, Resource Potential, Cassia County, Idaho” (the “Report”). The Report confirmed the presence of an open-ended Inferred Resource totaling 14,438,600 tons having an average gold grade of 0.0163 ounces per ton, for a total of 235,000 ounces of gold. Additionally, the Report recommends an immediate USD$600,000 exploration program, including $500,000 in drilling.

Located in Cassia County, Idaho, the Blue Hill Creek Gold Deposit is a classic epithermal hot spring-type gold exploration target consisting of 18 unpatented federal lode mining claims and an adjacent 80 acre Idaho State lease. Gold mineralization at Blue Hill Creek was originally discovered by Meridian Minerals in the summer of 1985. This mineralization is part of a larger, north-trending, 5-mile-long by 1-mile-wide belt of precious metal occurrences along the western margin of the Albion Range metamorphic core complex. At Blue Hill Creek, alteration and gold mineralization are mainly hosted by capping sinters and Tertiary Salt Lake Formation epiclastic sedimentary and tuffaceous volcanic rocks. Gold-bearing chalcedonic sinters and strongly silicified tuffaceous sedimentary rocks with disseminated pyrite and quartz veining compose the main target in the altered zone. This zone, currently 3,350-feet long and up to 1,000-feet wide, with mineralization open in all directions as well as at depth, contains surface gold values to 0.060 opt. Mineralization appears related to north- and northeast-trending, high-angle structures. Local, post-mineral northeast-trending faulting has displaced and buried mineralized sections to the northwest, some of which have yet to be drill tested.

A total of 11,403 feet of drilling spread among 26 reverse circulation holes have been placed on the property, 17 by Meridian to partially test the Tertiary-hosted target during the 1986 and 1987 field seasons, and an additional nine by Latitude Minerals Corp. to test the Tertiary-hosted target and suspected deeper feeders in Paleozoic carbonate rocks during the 1998 field season. Of the 26 holes drilled, 22 encountered gold mineralization and extensive zones of silicification, with 10 holes bottoming in rock containing in excess of 0.010 opt Au. Some of the best intercepts include 100 feet @ 0.033, 400 feet @ 0.017, 260 feet @ 0.024, and 170 feet @ 0.023 opt Au. These historic drill results confirm the presence of significant thicknesses of bulk-tonnage, epithermal hot-spring-type gold mineralization in the target area, as well as the potential for additional mineralization along the open-ended, lateral, and at depth extensions of the deposit.

Concurrent Financing

The Company is also pleased to announce that it will conduct a non-brokered private placement pursuant to which it will issue up to 4,000,000 Units at a price of $.50 per Unit, for aggregate gross proceeds of up to $2,000,000. Each Unit will consist of one common share (a “Share”) and one Share purchase warrant (a “Warrant”). Each Warrant will be exercisable to purchase a Share of the Company for two years, at a price of $.70 per Share in year one, and $.90 per Share in year two. The net proceeds from this private placement will be used to conduct the work program recommended on the Property and for general working capital purposes. Commissions or finder’s fees may be paid to qualified entities up to the rates allowed by the TSX Venture Exchange. The proposed financing is subject to the approval of the TSX Venture Exchange.

Completion of the transaction is subject to TSX Venture Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.”

ON BEHALF OF THE BOARD

“Craig T. Lindsay”
President

For additional information please contact:

Tel: 604.683.2507 Fax: 604.683.2506
# 350-409 Granville St., Vancouver, BC, V6C 1T2 T. 604.683.2507 F: 604.683.2506
craig@otiscapital.com

 

THE TSX VENTURE EXCHANGE HAS NEITHER APPROVED OR DISSAPROVED OF THE CONTENTS HEREIN.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
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