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Aquiline
Resources Inc. (“Aquiline” or the “Company” and
Absolut Resources Corp. (“Absolut”) (TSX-V: ABS) are
pleased to report they have entered into a binding letter agreement
(the “Letter Agreement”) pursuant to which Aquiline offers
to acquire 100% of the issued and outstanding shares of Absolut that it
does not already own by way of a three way transaction (the “Transaction”).
This is a transaction between two companies with an established
historical relationship, and would result in the creation of a Gold
Division within Aquiline, the initial focus of which will be Absolut’s
Pico Machay project in Peru
and Aquiline’s Calcatreu project in Argentina. If the
Transaction is successful, Dan Noone,
President and CEO of Absolut, will become Aquiline’s President of
the Peru
subsidiary, and the team of technical engineers and geologists
currently advancing Pico Machay will continue under Aquiline.
The
Combination of Aquiline and Absolut delivers to shareholders:
Advanced gold
assets: Absolut’s Pico Machay project in Peru
has 580,000 inferred ounces (Mineral Resource Estimate, Caracle Creek International Consulting, Oct. 2006,
see breakdown below in Table A), which is being advanced as described
in the most recent Absolut press release dated Sept. 26, 2007. Absolut
is currently completing engineering and metallurgical studiesin support of permit applications. Studies
to date (see Technical Report cited above) have reflected high gold
recoveries (>88%) in a style of mineralization that would be
amenable to a low capital, low cost, heap leach operation.
Proven mining
jurisdiction: Aquiline secures assets in another Spanish-speaking
South American jurisdiction, with a well-established mining code and
long track record of foreign ownership.
Technical
expertise: Absolut has a team of engineers and metallurgists with
mine-building experience based in Lima,
Peru. Upon
completion of this transaction, Aquiline intends to appoint Mr. Harry Burgess of Micon
International to serve as an external director.
Aquiline
has been a 10% shareholder of Absolut in the past, and currently owns
2,766,000 Common Shares representing approximately 9.7% of the issued
and outstanding Common Shares of Absolut and 1,970,000 Absolut warrants
exercisable at $0.75 and $1.00. Absolut currently has 28,375,247 shares
issued and outstanding, 5,000,000 warrants (3,500,000 exercisable at a
price of $0.75 per share until Aug. 28, 2008 and 1,500,000 exercisable
at a price of $1.00 per share until December 6, 2007) and 2,450,000
options, at a weighted average exercise price of $0.72 with expiry
dates from 2007 to 2012. the shares,
unexercised warrants and options of Absolut will be exchangeable at the
exchange ratio outlined below to shares, warrants and options of
Aquiline, excluding Absolut shares and warrants held by Aquiline.
Marc Henderson, President
and CEO of Aquiline, commented “With gold prices approaching
record highs and Absolut making steady progress towards production at
Pico Machay, now seemed like an excellent time for Aquiline to expand
its gold interests. Our Calcatreu project is an attractive asset –
particularly in the current price environment – but has been
totally overshadowed by Navidad and will benefit from the geographic
and jurisdictional diversification that Absolut brings to the table in
this transaction.”
Summary of Terms
The
proposed structure of the Transaction will be finalized in a definitive
agreement (the “Exchange Agreement”), the principal terms
of which are expected to be announced within the next 30 days. The
Transaction contemplates a three-way transaction between Aquiline, a
wholly-owned Aquiline subsidiary to be incorporated for the purpose of
the Transaction and Absolut. Aquiline’s wholly-owned subsidiary
will then be amalgamated with Absolut to create a new entity wholly
owned by Aquiline, and the Absolut shareholders will receive Aquiline
shares as follows: (i) 0.1 common shares of
Aquiline for each common share of Absolut and (ii) warrants of Aquiline
for each one warrant of Absolut, subject to a price adjustment equal to
the exchange ratio. The Agreement will provide for an adjustment of the
exchange ratio based on the difference in trading prices of the
respective companies. This value represents a premium of 70% over the
value of Absolut’s shares at closing on September 28, 2007
(closing price $0.60) and a 47% premium over the 61 day (last two
months) volume weighted average trading price on the date ended Sept. 28,
2007.
On
completion of the proposed Transaction, which is expected to occur
prior to the year end, and assuming no exercise of existing warrants
and options, it is anticipated that Aquiline will issue an aggregate of
2,560,925 Aquiline common shares to Absolut shareholders, representing
approximately 4.7% of the issued and outstanding common shares of
Aquiline. This number could be increased by the number of warrants an options of Absolut exercised, but such effect is
neutral as the offer comprises shares, warrants and options on the same
ratio basis.
The
Letter Agreement has received unanimous support from both Boards, and
Absolut has established a Special Committee of its Board to engage a
financial advisor who will deliver an independent valuation. Under
terms of the Letter Agreement, Aquiline and Absolut have agreed to
grant each other exclusivity subject to certain exceptions and Absolut
has agreed to pay Aquiline a break fee in the amount of $1,000,000
payable under the customary conditions should Absolut solicit or
recommend alternative offers from competing parties.
Closing
conditions will be detailed in the forthcoming Exchange Agreement, and
will include but not be limited to the completion of due diligence investigations,
shareholder approval by two-thirds of the votes cast by disinterested
Absolut shareholders present and voting at a special meeting of
shareholders called to approve the Transaction, compliance with the
related party rules contained in Ontario Securities Commission Rule
61-501, and stock exchange approvals.
ABOUT
AQUILINE RESOURCES
Aquiline
Resources Inc. is a precious metals exploration and development company.
The Company’s core strategy is to acquire advanced stage
high-grade metal deposits within the Americas. Aquiline’s
two main assets are the Calcatreu Gold Project, in Rio
Negro Province, Argentina,
and the Navidad Silver Project in neighbouring Chubut Province.
Aquiline operates Navidad in trust under an Interim Project Development
Agreement. These projects both occur along the Gastre Fault, an
emerging mineralized district in southern Argentina that consists of
several near-surface zones of high-grade mineralization, amenable to
open pit mining.
ABOUT
ABSOLUT RESOURCES
Absolut
Resources Corp. is a Peruvian-focused gold exploration and development
company based in Toronto,
Canada.
Absolut strongly believes in an international best practices approach,
and implements this on all its social and environment decisions. Absolut
has implemented a quality control program to ensure best practice The
required qualified person for the Pico Machay Gold Project is Mr. Dan Noone who is a member of the Australian
Institute of Geoscientists and is President and CEO of Absolut
Resources Corp.
Table A
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Combined Zone
(Inferred Resource as of October, 2005).
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Interval Au (g/t)
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Tonnes
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Grade Au (g/t)
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Contained Ounces Au
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0.3 – 0.5
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4,664,000
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0.39
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58,000
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0.5 – 1.0
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6,833,000
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0.73
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161,000
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>1.0
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4,429,000
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1.52
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217,000
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Total > 0.3
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15,926,000
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0.85
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437,000
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|
|
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Sulphide Zone
(Inferred Resource as of October, 2005).
|
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Interval Au (g/t)
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Tonnes
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Grade Au (g/t)
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Contained Ounces Au
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0.3 – 0.5
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5,766,000
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0.38
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71,000
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0.5 – 1.0
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2,793,000
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0.67
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60,000
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>1.0
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341,000
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1.30
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14,000
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Total > 0.3
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8,900,000
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0.51
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146,000
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“Inferred
Resources” have a great amount of uncertainty as to their
existence and as to their economic and legal feasibility. It cannot be
assumed that all or any part of an inferred resource will ever be
upgraded to a higher category. Under certain Canadian rules, estimates
of Inferred resources may not form the basis of feasibility or other
economic studies.
FORWARD-LOOKING
STATEMENTS
This press release includes certain
"forward-looking statements". All statements, expressed or
implied, regarding the ability of Aquiline to complete the proposed
Transaction with Absolut are forward-looking statements that involve
various risks and uncertainties, as disclosed under the heading
"Risk Factors" and elsewhere in Aquiline documents filed from
time to time with applicable regulatory authorities. There can be no assurance that such
statements will prove to be accurate and actual results and future
events could differ materially from those anticipated in such
statements.
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