Colombian

[Tackler]

Avalanche options Colombia property, names director

2008-04-03 17:34 MT - News Release

Mr. Sandy MacDougall reports

AVALANCHE ENTERS INTO OPTION AGREEMENT FOR MINING PROPERTY IN COLUMBIA, APPOINTS STEWART FUMERTON AS A DIRECTOR, GRANTS INCENTIVE STOCK OPTIONS, ANNOUNCES $1.5MM PRIVATE PLACEMENT FINANCING AND SETS DATE FOR AN EXTRAORDINARY SHAREHOLDER MEETING TO APPROVE A 4:1 SHARE CONSOLIDATION

Avalanche Minerals Ltd. has entered into a mining projects option purchase agreement with Mina El Gran Porvenir del Libano S.A., a company incorporated in Colombia, and various other parties, pursuant to which the vendors have agreed to sell to Avalanche nine contiguous mineral concessions covering 3,606 hectares in the department of Tolima, Colombia.

The purchase price for the property consists of $10.25-million, of which 10 per cent will be paid after Avalanche obtains approval of the TSX Venture Exchange and completes its due diligence on the property, all of which must occur on or before May 27, 2008. Thereafter, 15 per cent of the purchase price will be paid to the vendors every six months for a period of three years. Upon the purchase price being paid in full, title to the property will be transferred to Avalanche. In addition, Avalanche will pay to the vendors a total annual bonus of $100,000 for each year until the purchase price is paid in full. A finder's fee in an amount to determined will be paid to an arm's-length party for introducing Avalanche to the property, subject to approval of the TSX Venture Exchange.

Small-scale mining is currently under way on the property in two locations, at the Libano mine and at the Sirpe occurrence. The vendors are permitted under the agreement to continue such small-scale mining for up to three years from the date of the agreement at a maximum rate of 80 tonnes per day from the Libano mine and a maximum of 50 tonnes per day from the Sirpe occurrence, which is currently being developed. Both operations can be terminated earlier if Avalanche decides to accelerate the payment of the purchase price. All such operations will be subject to continuing environmental, technical and financial audits.

The principal licence for the property is fully permitted for mining and all types of exploration activities. An addendum will be filed shortly by the vendors to add drilling to the exploration permit already approved on the remaining concessions. In addition, there is an active community relations program already in place with respect to operations on the property.

Avalanche commissioned Dr. Karen Volp, PhD, of SRK Exploration Services, Cardiff, United Kingdom, to review the geology and mineral potential of the Libano gold mine within the property. The mine is located 109 kilometres west-northwest of Bogota. Results of Dr. Volp's representative rock chip sampling at Libano are given in the table.

 
 RESULTS OF THE LIBANO ROCK CHIP SAMPLES COLLECTED BY DR. VOLP 
  
 ALS certificate   LI08028024        LI08028024      LI08028024 
 method              ME-GRA22          ME-GRA22         Ag-OG62 
 element                   Au                Ag              Ag 
 sample No.               g/t               g/t             g/t 
  
 14418                  <0.05                <5               * 
 14419                  27.80               136 
 14420                  23.20               178             204 
 14421                  17.00               108              72 
 14422                 116.50               201             252 
 14423                  16.10               134             138 
 14424                  11.15                12               * 
 14425                   1.94                <5               * 
 14426                 141.00               691             609 
 14428                  24.00                26               * 
 14429                   2.68                11               * 
 14430                  12.00                97             113 
 14431                 105.50               116 
 14432                  10.80                29               * 
 14433                   0.49                <5               * 
 14434                  20.10                65               * 
 14435                   4.46                22               * 
 14436                  49.80               151 
 14437                 225.00               448 
 14438                  14.55                28               * 
 14439                  20.20               292 
 14440                   8.70               130 
 14441                  60.30                91               * 
 

C. Tucker Barrie, PhD, PGeo, a consultant to Avalanche, has also visited the property. He has noted that the SRK report indicates very high gold and silver values from a single, zoned, quartz sulphide vein, that is two metres to 4.5 metres thick and has continuity on a scale of hundreds of metres. The mineralogy is an assemblage of pyrite, galena, sphalerite, chalcopyrite, tetrahedrite and tennantite. The deposit is open along strike in two directions and at depth, and has very high potential to expand in tonnage. Other mines and occurrences are present within the vein/fault structure directly along strike in both directions. The total strike length for the structure is 3.5 kilometres within the property.

In addition, Dr. Stew Fumerton, PhD, PGeo, vice-president of exploration for Avalanche, has visited the property. Dr. Fumerton reports that small-scale mining is currently under way in two locations within the concessions, at the Libano mine and at the Sirpe occurrence. Present mining operations at Libano use the room-and-pillar method in one-metre-high stopes, targeting either the upper or lower contact of the quartz vein. Mining occurs on five levels, the four upper levels are spaced 20 metres apart vertically and the total mine down-dip development is 300 m within the vein, which dips between 40 degrees and 50 degrees. These underground workings have been surveyed along strike for 170 m on the main level. The newer mill located on-site at Libano has a capacity of 100 tonnes per day and ore is hand sorted prior to milling. No mill exists at the Sirpe operation and the old mill at Libano is no longer functional. Dr. Fumerton has been advised that these mining operations have been taking place intermittently for 10 years and 9,000 grams of gold per week are presently recovered. Previous exploration on the property has consisted of prospecting and driving short adits on any discovery.

During the 60-day due diligence period, a systematic channel/panel sampling program will be implemented along all drifts developed along the vein and this work will be directly supervised by Dr. Fumerton. Samples will be collected vertically across the vein at 10-metre horizontal intervals. If time permits, samples will also be collected from the stopes.

The company has also arranged a non-brokered private placement, subject to regulatory approval, of up to 15 million units of the company at a price of 10 cents per unit. Each unit will consist of one common share in the capital of the company and one share purchase warrant, each warrant entitling the holder to purchase a common share at a per share price of 18 cents for two years from the date of closing of the financing. All securities issued will be subject to a four-month hold period from the date of issuance. The proceeds from the private placement will be used, in part, to make the first payment for the property and for general corporate purposes.

In addition, Avalanche has granted a total of 2.4 million incentive stock options pursuant to its option plan to its directors, officers and employees. The options are exercisable at price of 12 cents until April 3, 2013.

Dr. Fumerton has been appointed as a director of the company effective April 3, 2008.

Avalanche will, subject to exchange and shareholder approval, implement a share consolidation on the basis of one new share for four old shares. In conjunction with the share consolidation, Avalanche will seek shareholder approval to change its name. Avalanche expects to call a special meeting of its shareholders on or about June 5, 2008, to obtain shareholder approval for the consolidation and name change.

The technical content of this news release has been prepared under the supervision of Dr. Fumerton, Avalanche's vice-president, exploration, who is a qualified person under National Instrument 43-101.