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FIRESTEEL ANNOUNCES EXTENSION TO LOI WITH LIONS GATE FOR OPTION ON THE ROK COYOTE PROPERTY

^{Published on 2010-11-02 09:45:36 - Market Wire}
 

Trading Symbol: FTR- TSX: V

VANCOUVER, Nov. 2 /CNW/ - Firesteel Resources Inc. (TSXV:FTR) ("Firesteel" or the "Company") is pleased to announce that it has agreed to amend and to extend the term of a binding letter of intent ("LOI") with Lions Gate Metals Inc. ("Lions Gate") dated January 21, 2010. Under this LOI Firesteel will grant Lions Gate a four year option (the "Option") to acquire a seventy-five percent (75%) interest in the Company's 6,891 hectare ("Ha") ROK-Coyote copper-gold mineral property (the "Property"). The Property is adjacent to and immediately northwest of Imperial Metals Corporation's ("Imperial Metals") Red Chris copper-gold property which has identified mineral resources and reserves and has disclosed significant grades of copper and gold mineralization in recent drilling results. Details of the LOI were disclosed by the Company in a news release dated January 25, 2010. Negotiation of the formal agreement with Lions Gate to supersede the LOI was suspended in April pending resolution of a court action initiated by Brett Resources Inc. ("Brett") with respect to the Property. An agreement was subsequently reached between Brett and the Company for dismissal of this court action (News release of October 25, 2010).

The Option has been granted in exchange for a two percent (2%) net smelter royalty and about $3.3 million in total consideration consisting of cash, Lions Gate common shares (the "Shares") and exploration work commitments to be completed over a four year period.  Firesteel has the right to increase its final interest in the Property from twenty-five percent (25%) to thirty percent (30%) by paying $200,000 at any time after the third year of the option period but prior to the time a production decision is made on the Property.

Terms of the LOI

Under the terms of the LOI, Lions Gate will be granted an Option to acquire a seventy-five percent (75%) interest in the Property for an aggregate consideration of $3,260,500 consisting of an aggregate of 650,000 Shares (valued at $435,500 at the $0.67 closing price of the Shares on November 1, 2010), an aggregate of $496,000 in cash payments and an aggregate work commitment of $2,329,000, all over a period of four years (the "Option Period"). During the Option Period, Lions Gate will be the operator of the Property.

A $121,000 portion of the cash payments (the "Second Cash Payment") is payable on the later of execution of the formal agreement or receipt of TSX Venture Exchange ("TSX-V") approval. Firesteel is obligated to use this cash payment to reimburse Brett for exploration work undertaken by them on the Property as part of settling litigation with Brett. Any Shares issued by Lions Gate pursuant to the Option shall be subject to a pooling arrangement providing for the release of such shares on issuance and twenty-five percent (25%) every three months thereafter. Lions Gate shall also have a first right to repurchase or arrange for the purchase of any Shares to be issued to Firesteel.

The details of payments to Firesteel and work commitments on the Property are shown in the following table for the four year term of the option:

(1)     This will be reduced by the initial $171,000 in cash payments to Firesteel; $50,000 which had been paid on execution of the LOI and the $121,000 to be paid by Lions Gate on the later of the formal agreement or TSX-V approval.

Firesteel retains the right to acquire a five percent (5%) interest in the Property at any time following the date which is three years after the Option is approved by the TSX-V and until a production decision is made concerning the Property for total consideration of $200,000. If Firesteel elects to exercise this right, the resulting ownership in the Property would be seventy percent (70%) Lions Gate and thirty percent (30%) Firesteel.  Firesteel will also be granted a two percent (2%) net smelter royalty (the "Royalty") on the Property, subject to Lions Gate's right to purchase one half (½) of such royalty (one percent (1%)) for $1,000,000 at any time within 240 days of commencement of commercial production.

It is intended by the parties that the LOI will be superseded by a formal mineral lease option agreement within 45 days. Lions Gate and Firesteel will provide further updates by way of news releases when a formal agreement is signed. This LOI is entered into subject to approval of the TSX-V.

About Lions Gate

Lions Gate is a Canadian based, junior resource company focused on the exploration, development, and acquisition of both advanced and early stage mineral projects.  Lions Gate owns 100% of three substantial copper and molybdenum projects located in British Columbia.  Lions Gate's flagship project is the Poplar porphyry copper molybdenum deposit near Houston, BC. The Huckleberry Mine, located approximately 35 kilometres southwest of the Poplar Deposit, produces copper and molybdenum from a deposit of similar age and setting. 

Firesteel is a junior minerals exploration company which explores for and develops quality precious and base metal prospects in the resource rich Stikine Arch area of British Columbia, and in the NWT and Mexico.  The Company has been exploring its Copper Creek and ROK - Coyote discovery properties in northern British Columbia with strong showings of copper and gold mineralization. Firesteel maintains its interests in the oil and gas business through its 16 percent shareholding in Blacksteel Energy Inc. (TSXV:BEY).

ON BEHALF OF THE BOARD OF DIRECTORS OF
FIRESTEEL RESOURCES INC.

"Walter Wakula"

_________________________
Walter Wakula,
Chairman of the Board

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Advisory Regarding Forward Looking Statements

This news release contains forward-looking statements which include, but are not limited to: statements regarding the Company's plans to complete a formal and definitive agreement with Lions Gate, receive future cash and Shares from Lions Gate, complete the joint venture, realize the expected exploration work obligations committed on the Property, future drilling, expectations for exploration prospects, as well as operations plans, outlook, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact.  Although Firesteel believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurance that such expectations will prove to be correct.  Results of the Company may be affected by a variety of variables which could differ materially from those anticipated or implied in the forward-looking statements.

The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement and are made as of the date of this news release.  Unless otherwise required by applicable securities laws, the Company does not intend nor does it undertake any obligation to update or review any forward-looking statements to reflect subsequent information, event, results or circumstances or otherwise.