🕐22.01.09 - 20:33 Uhr
Potash One (KCL:TSX) and Potash North (PON:TSXv) Announce Business Combination
Potash North Resource Corporation Potash One Inc.
TSX.V: PON
TSX.KCL
NEWS RELEASE
January 22, 2009
Potash One and Potash North Announce Business Combination
Potash One Inc ("Potash One") and Potash North Resource Corporation
("Potash North") are pleased to announce that they have entered into a
binding letter of intent ("LOI") containing the principal terms by
which, subject to satisfaction of certain conditions, Potash One will
acquire all of the issued and outstanding common shares of Potash North
through a Plan of Arrangement or other form of business combination (the
"Business Combination").
The LOI contemplates that each Potash North shareholder will receive
0.3125 common shares of Potash One for each common share of Potash
North.
In addition, all outstanding convertible securities of Potash
North will be exchanged for comparable convertible securities of Potash
One in an amount and at exercise prices adjusted in accordance with the
same exchange ratio.
The exchange ratio represents an approximate 29%
premium for the shares of Potash North over the 20-trading day period
prior to the execution of the LOI.
There are currently 65,745,002 Potash North common shares issued and
outstanding, 2,750,000 outstanding options to purchase Potash North
common shares, 38,672,000 Potash North common shares issuable pursuant
to outstanding share purchase warrants and an additional 5,000,000
common shares and 5,000,000 common share purchase warrants issuable
pursuant to an outstanding unsecured convertible note.
Potash One owns
7,583,850 common shares of Potash North which represents 11.5% of the
currently outstanding shares of Potash North and an additional 7,583,850
share purchase warrants.
Certain shareholders including Potash One and all the directors and
officers of Potash North have agreed to vote their shares in favour of
the Business Combination.
The Business Combination will require the approval of Potash North
securityholders, the Toronto Stock Exchange and the TSX Venture
Exchange, and will be subject to other customary conditions, including
the execution of a definitive agreement and completion of due diligence.
The LOI provides that Potash North shall not, directly or indirectly,
solicit, initiate or encourage letter of intent offers from, or
negotiations with, any third party with respect to any other potential
merger or acquisition of all or a material portion of Potash Norths
business, assets or outstanding securities except where required to
satisfy fiduciary obligations of directors.
Potash North and Potash One
have both agreed to pay a non-completion fee of $2.5 million under
certain circumstances.
The transaction is expected to close by May 15,
2009.
The Business Combination, once completed, will create one of the
strongest junior potash development companies in Canada.
Potash One
will be fully funded through to completion of feasibility on its
solution mining amenable potash development property located in southern
Saskatchewan (the "Legacy Project").
Current cash of the resulting
company would be approximately $50 million.
Paul F.
Matysek, President and CEO of Potash One, stated, "I am very
pleased that Potash One has been able to execute this binding LOI with
Potash North as this transaction strengthens our balance sheet, further
consolidates the potash junior industry and positions the company with
over 500,000 acres of subsurface Potash permit holdings, in
Saskatchewan.
This includes a very prospective exploration stage potash
property adjacent to the largest potash mine in the world.
In addition,
we are pleased to have the support of a number of significant
shareholders who together with our present shareholders are committed to
the continued development and progress of the Legacy Project.
This
Business Combination further strengthens our exploration and development
position in the Potash industry, bringing us closer to our goal of
becoming the first greenfield potash producer in Canada in decades."
Craig A Angus, President and CEO of Potash North, stated; "I am very
excited with the opportunity that this transaction presents to our
shareholders.
As a result of the turmoil in world capital markets, it is
increasingly apparent that the successful companies in the junior potash
space will be those that have large cash treasuries and advanced stage
projects moving toward feasibility and development.
This business
combination will create the best capitalized Canadian Junior potash
development company working in the Saskatchewan basin.
Our shareholders
will have the opportunity to participate in the advancement of the
Legacy Project to completion of feasibility and potentially through to
production in the coming years while maintaining the exploration
exposure to our KP 416 and 417 Permit areas near Esterhazy".
Canaccord Capital Corporation has acted as advisor to an independent
committee of the Board of Directors of Potash North and has provided to
such independent committee of Potash North their verbal advice, subject
to final review of documentation, that the consideration offered
pursuant to the transaction is fair, from a financial point of view, to
the shareholders of Potash North, other than Potash One.
Information on Potash One and Potash North may be viewed on the internet
at their respective websites noted below, or at the Canadian securities
regulators website at www.sedar.com.
For more information please contact Arlen Hansen of Kin Communications
at (604) 684-6730 or (866) 684-6730
POTASH NORTH RESOURCE CORPORATION POTASH ONE INC.
Craig Angus
Paul Matysek
President & CEO
President & CEO
(604) 697-6262
(604) 697-5686
www.potashnorth.com
www.potashone.com
(1) Legacy Project: Potash One is a TSX listed Canadian resource company
engaged in the exploration and development of advanced potash properties
amenable to solution mining.
The Company owns 100% of more than 330,000
acres of contiguous Potash Subsurface Exploration Permits in
Saskatchewan.
It includes the 97,240 acre Legacy Project which has a
43-101 compliant Inferred Mineral Resource of 391.5 million tonnes of
K20 and Indicated Mineral Resource of 40.8 million tonnes of K20 and is
adjacent to the largest producing solution mine in the world.
Cautionary Statements Regarding the Business Combination: Completion of
the transaction is subject to a number of conditions, including
regulatory approval, shareholder approvals, completion of satisfactory
due diligence, a definitive agreement and approval of the British
Columbia Supreme Court.
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 Management Information Circular to be
prepared in connection with the transaction, any information released or
received with respect to the business combination may not be accurate or
complete and should not be relied upon.
Trading in the securities of
exploration and development stage resource companies should be
considered highly speculative.
Forward-Looking Statements: Statements in this release that are
forward-looking statements are subject to various risks and
uncertainties concerning the specific factors disclosed under the
heading "Risk Factors" and elsewhere in the corporations periodic
filings with Canadian Securities Regulators.
Such information contained
herein represents managements best judgment as of the date hereof based
on information currently available.
Statements in this press release
other than purely historical information, including statements relating
to the companies future plans and objectives or expected results,
constitute forward-looking statements.
Forward looking statements are
based on numerous assumptions and are subject to all of the risks and
uncertainties inherent in the companies business, including risks
inherent in mineral exploration and development.
The companies do not
assume the obligation to update any forward-looking statement.
In
particular, no representation is made in this release as to the timing
of the business combination, whether the business combination will
complete on the terms described herein or at all, the success or value
of the combined companies after the business combination.
In addition,
there are numerous risks and other factors that will influence a
development decision, including concluding resource evaluations on
mineral properties, mine design limitations, permitting risks and
economic factors, all of which may be beyond our control.
U.S.
Cautionary Statements: We advise US investors that while the terms
"measured resources", "indicated resources" and "inferred resources" are
recognized and required by Canadian regulations, the US Securities and
Exchange Commission does not recognize these terms.
US investors are
cautioned not to assume that any part or all of the material in these
categories will ever be converted into reserves.
TSX and TSX Venture Exchange: Neither the TSX nor the TSX Venture
Exchange has reviewed, and neither accepts, responsibility for the
adequacy or accuracy of this release.