Potash North
Resource Corporation TSX.V:PON
Potash One Inc.
TSX.KCL
News Release
January 22nd, 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 North's
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
regulator's 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, President & CEO Paul Matysek, President & CEO
(604)
697-6262 (604) 697-5686
���(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 management's 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: W e
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.
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