X-Tal Announces Definitive Merger Agreement With American Eagle Resources, Inc.
November 02 2010 - 2:40PM
Marketwired Canada
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN UNITED STATES
X-Tal Minerals Corp. (TSX VENTURE:XMT.H) (the "Company" or "X-Tal") and American
Eagle Resources Inc. ("AME") are pleased to announce that they have entered into
a definitive Merger Agreement (the "Agreement") dated November 1, 2010 to
complete a business combination (the "Transaction") in which the Company will
acquire all of the outstanding shares of AME. The combined entity will focus on
generating shareholder value through the exploration and development of its
mineral projects in Fiji.
Pursuant to the terms of the Agreement, all of the common shares of AME shall
become exchangeable for common shares of the Company on a basis of one (1)
common share of AME for one (1) common share of X-Tal. AME and X-Tal currently
have 21,108,543 and 6,300,001 common shares outstanding, respectively. The
Company will also complete a name change to Lion One Metals Limited and plans to
graduate from the NEX to the TSX Venture Exchange ("TSXV").
About American Eagle
AME is a private British Columbia corporation that holds, through its subsidiary
Lion One Limited Fiji, five Special Prospecting Licenses covering 38,034
hectares in the Fijian Islands, including the assets collectively known as the
Tuvatu project ("Tuvatu"). A technical report for Tuvatu dated October 1, 2010
has been completed according to NI 43-101 guidelines by P&E Mining Consultants
of Brampton, Ontario.
The Tuvatu High-Grade Gold Project
Tuvatu hosts the second largest gold deposit in Fiji after the large Emperor
Gold Mines ("Emperor") gold deposit at Vatukoula (6 million oz. Au produced to
date). These deposits are 50 km apart and are associated with the same NE
trending lineament of alkaline rocks on the island of Viti Levu. Epithermal gold
veins at Tuvatu occur along the margins of the eroded Navilawa volcanic center
in a multi-phase environment also featuring porphyry copper- style
mineralization.
Over US$32 Million of Previous Work
Previous work on Tuvatu includes over 80,000 meters of surface and underground
drilling and a total of over US$32 million worth of expenditures in drilling,
metallurgical testwork, a complete feasibility study, resource and reserve
estimation, and mine construction.
In 1997 Emperor developed 1,630 metres of underground workings after having
completed 48,008 meters of surface drilling, and followed up with underground
drilling, geophysical surveys, bulk sampling, and trial mining. In 2000 Emperor
commissioned Bateman-Kinhill to complete a feasibility study in conjunction with
a further 23,668 meters of drilling and environmental and community studies.
Metallurgical tests incorporated with the feasibility study included trial
milling of ores through the Emperor Mill at Vatukoula, reporting over 90% gold
recoveries.
Historic and Current Mineral Resource and Reserve Estimates
Historical mineral resource estimates for Tuvatu were reported in compliance
with the Australian Joint Ore Reserves Committee (JORC) guidelines and included
Indicated Mineral Resources of 1,065,000 tonnes at 8.45 grams Au per tonne, or
289,000 oz. Au, in addition to Inferred Mineral Resources of 757,000 tonnes at
10.31 grams Au per tonne, or 251,000 oz. Au. In connection with a
pre-feasibility study commissioned by Emperor in 2000, a Probable Reserve was
reported of 269,034 oz. Au grading 6.3 grams Au per tonne.
A NI 43-101 compliant Mineral Resource Estimate prepared in conformance with
generally accepted CIM "Estimation of Mineral Resource and Mineral Reserves Best
Practices" (2005) guidelines was completed in August 2010 by P&E and supersedes
all historic resources. Eugene Puritch P.Eng., and F.H. Brown, CPG, Pr.Sci.Nat.
of P&E are the QP's responsible for preparation of the Mineral Resource Estimate
shown below.
The total sampling database for the Tuvatu project consists of 607 records
encompassing data from surface and underground sampling and surface and
underground drilling. The mineral resource was estimated using Inverse Distance
Cubed weighting of capped composite samples, with a grade capping of 40g/t Au.
The strike length of the deposit is on the order of 900 m.
P&E Underground Mineral Resource estimate at a 2.0 g/t Au cut-off (1,2,3)
as of August 1, 2010
---------------------------------------------------------------------------
Indicated Inferred
---------------------------------------------------------------------------
Tonnes x Au Oz Tonnes x Au Oz
1000 Au g/t x 1000 1000 Au g/t x 1000
---------------------------------------------------------------------------
Sulphides 760 7.05 172 2.502 5.78 465
---------------------------------------------------------------------------
Oxides 0 0 0 116 4.15 15
---------------------------------------------------------------------------
TOTAL 760 7.05 172 2,618 5.71 480
---------------------------------------------------------------------------
1. Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability. The estimate of Mineral Resources may
be materially affected by environmental, permitting, legal, title,
taxation, socio-political, marketing, or other relevant issues.
2. The quantity and grade of reported inferred resources in this estimation
are conceptual in nature. There is no guarantee that all or any part of
the Mineral Resource will be converted into Mineral Reserve.
3. Based on a gold price of US$983.00/oz. and 90% process recovery.
Underground operating costs supporting the 2.0 g/t cut-off are as
follows; mining $30/t, processing $15/t, G&A $13/t
Planned Financing of $10 Million
In conjunction with the Transaction, the Company has engaged MGI Securities
Inc., to act as agent and advisor and carry out a concurrent private placement
(the "Financing") of up to $10,000,000. The Company has agreed to pay cash
commissions of up to 6% of the gross proceeds raised, and issue agent's warrants
of up to 6% of the number of shares sold. In addition, the Agent has the option
(the "Agents' Option") to sell up to that number of additional Units which is
equal to 15% of the number of Units sold pursuant to the Offering at a price
equal to the Issue Price. The Agents' Option may be exercised at any time within
30 days after the closing date of the Offering.
New Board Composition
Upon completion of the Transaction, it is expected that the board of directors
of the resulting Company will consist of four members, including Walter H.
Berukoff, George S. Young, Richard Meli, and David Duval. Mr. Berukoff has been
instrumental in building successful mining companies such as Miramar Mining,
Northern Orion Resources and La Mancha Resources, while Mr. Young has had
significant roles in building companies such as Mag Silver, International
Royalty Corp., and Bond International Gold. Mr. Berukoff will act as Chairman
and Director of Lion One Metals Limited.
The Transaction is unanimously supported by the Board of Directors of both AME
and X-Tal and will be fully described in the Management Information Circulars to
be filed with regulatory authorities and mailed to AME and X-Tal shareholders in
accordance with applicable securities laws. The Transaction will be subject to
shareholder approval, and will be voted upon at the Annual Meeting of the
Company, to be held at the offices of the Company on December 21, 2010. The
record date for the meeting will be November 15, 2010.
The Agreement will result in a reverse takeover of the Company subject to
shareholder and regulatory approval, including approval of the TSXV. The
Transaction is also subject to the approval of the AME shareholders. The shares
of the Company to be issued to current shareholders of AME may be subject to
escrow and/or resale restrictions in accordance with applicable securities
legislation and the policies of the TSXV.
Darcy Krohman, P.Geo, a Qualified Person for the Company under the meaning of
Canadian National Instrument 43-101, has reviewed the technical information in
this news release.
ON BEHALF OF THE BOARD OF DIRECTORS
Walter H. Berukoff, Chairman
This news release may contain forward-looking statements addressing future
events and conditions and therefore, involve inherent risks and uncertainties.
Actual results may differ materially from those currently anticipated in such
statements.
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