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Clarification Regarding Loan and Write-Off to Related Party, OntarioCo

ID: 1069042
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(businesspress24) - TORONTO, ONTARIO -- (Marketwire) -- 12/29/11 -- Valencia Ventures Inc. (TSX VENTURE: VVI) ("Valencia" or the "Company") is issuing this release to clarify the terms and write-off of its loan in the principal amount of $700,000 ("Loan") to a private Ontario company ("OntarioCo") at the request of the TSX Venture Exchange (the "TSXV").

Further to its news releases dated June 23, 2010, March 4, 2011, and June 20, 2011, the Company wishes to clarify that OntarioCo is a related party to the Company given that the spouse of Mr. Stan Bharti, Chairman and Director of the Company, is an Insider given her shareholdings of OntarioCo. Moreover, Mr. Bharti's adult son has a further material interest in OntarioCo as he is OntarioCo's sole director and officer, and a shareholder. The adult son was also the personal guarantor of the Loan.

The Company's press release of June 20, 2011 announced OntarioCo had repaid $127,000 on the principal of the Loan, resulting in an outstanding principal balance of $573,000. To clarify the $127,000 payment was paid to the Company from a third party as a result of the termination of the assumption agreements press released on March 4, 2011. No interest on the loan has been paid to date.

On June 2, 2011 the Company entered into an agreement with OntarioCo to write-off the outstanding balance on the Loan in return for 500,000 common shares of South American Rare Earth Corp. ("SAREC"), a private company. The 500,000 common shares of SAREC were valued at $100,000, based upon the valuation conducted by the third-party agents to the private placement completed by SAREC shortly prior to this agreement. As a result, the Company has recorded the remaining principal balance and interest of $526,890 as an impairment loss.

However, the Company has had discussions with the guarantor regarding payment of the remaining balance of the loan as well as unpaid interest.

The Company failed to ensure the conflict of interest in respect of the Loan was dealt with appropriately according to TSX Venture Exchange Policy. Written notification of the existence and extent of Mr. Bharti's conflict of interest was not provided to disinterested directors at the time of the Loan. Moreover, the Company did not ensure that the documents reviewed and considered for the forgiveness of the Loan by the disinterest directors disclosed the value of the consideration the Company was to receive in return for writing off the loan. Finally the Company did not issue proper public dissemination disclosing the conflict of interest. To address these deficiencies the Company has implemented a Code of Business Conduct and Ethics and a Corporate Disclosure Policy.

About Valencia

Valencia is a Canadian resource company traded under the symbol VVI on the TSX Venture Exchange. For additional information on this press release or Valencia's projects, please visit .

Forward - Looking Information

Except for statements of historical fact relating to the Company, certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to expectations regarding the repayment of the loan. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is based on the opinions and estimates of management as of the date such statements are made. Estimates regarding the mineral resources are based on the assumptions and parameters set out above and on advice from independent, qualified consultants. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks described in the public record of the Company posted under the profile of the Company on SEDAR at . Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

NEITHER THE 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.

Contacts:


Valencia Ventures Inc.
Frederic W.R. Leigh
President and CEO
416-861-5933



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published by: MARKETWIRE
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Date: 12/29/2011 - 13:32
Language: English
News-ID 1069042
Character count: 0
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Firma: Valencia Ventures Inc.
Ansprechpartner: Feedback to businesspress24.com about Pressrelease-id:
Stadt: TORONTO, ONTARIO
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