49 North Resource Fund Inc.
TSX VENTURE : FNR

49 North Resource Fund Inc.

January 17, 2008 17:40 ET

49 North Resource Funds Announce Proposed Roll-Over Transaction

SASKATOON, SASKATCHEWAN--(Marketwire - Jan. 17, 2008) - 49 North Resource Fund Inc. (49 North) (TSX VENTURE:FNR) and 49 North 2007 Resource Flow-Through Limited Partnership (the 2007 Fund) announce that they have reached an agreement in principal pursuant to which 49 North will acquire substantially all of the assets of the 2007 Fund in a proposed roll-over transaction (the "Transaction") that is targeted to close on or about February 22, 2008. At closing, the 2007 Fund will sell and transfer its investment portfolio and other assets to, and in exchange for common shares of, 49 North, and, immediately thereafter, the 2007 Fund will be wound-up and the common shares will be distributed pro rata amongst the 2007 Fund's unitholders. The Transaction will be carried out in accordance with the "roll-over" provisions in subsections 85(2) and (3) of the Income Tax Act (Canada) and is not expected to have material income tax consequences to the 2007 Fund or its unitholders.

The assets transferred by the 2007 Fund and the common shares issued by 49 North will be valued for the purposes of the Transaction on the basis of the Funds' respective net asset values (NAV) as of February 14, 2008 (the Effective Time), which is the date of a special meeting of the 2007 Fund that has been called for the purpose of authorizing the Transaction. As outlined in more detail below, based on the 2007 Fund's investment portfolio and NAV as of December 31, 2007, the total value of the 2007 Fund's assets as of February 14, 2008 is anticipated to be approximately $7,884,000, or $8.39 per unit for each of the 932,770 units that are currently outstanding. At the same time, 49 North's common shares are anticipated to have a NAV of approximately $16.15, which would result in an estimated 484,783 common shares of 49 North being issued in satisfaction of the purchase price for the 2007 Fund's assets; thereby increasing the total number of outstanding common shares of 49 North from the 1,399,157 shares that are currently outstanding to an estimated 1,883,940 after completion of the transaction; and representing a conversion ratio of approximately 0.52 common shares being issued for each unit of the 2007 Fund. These valuations are based on calculations made as of December 31, 2007 which can be expected to change between then and the Effective Time such that the actual purchase price, number of common shares to be issued by 49 North and the resulting conversion ratio may be expected to be different than the above estimates.

49 North and the 2007 Fund are both Saskatoon based investment funds focused on junior and intermediate mineral exploration and oil & gas companies and share common management led by President & CEO Tom MacNeill CFA. The 2007 Fund raised $9,327,700 on the sale of 932,770 units at $10.00 per unit in an initial public offering that was completed in October 2007 pursuant to a prospectus dated July 19, 2007 that was filed with securities regulators in all provinces of Canada other than Quebec. The Transaction is substantially the same as the "Proposed Roll-over Transaction" that was described in that prospectus, and constitutes a "Reorganization Transaction" as defined in the 2007 Fund's Partnership Agreement. As such, implementation of the Transaction is subject to approval by ordinary resolution of the limited partners of the 2007 Fund at a special meeting to be held on February 14, 2008 in Saskatoon, Saskatchewan. Additional information concerning the Transaction is included in the 2007 Fund's information circular for that meeting, dated January 16, 2008, a copy of which will be available at www.SEDAR.com.

Closing is also subject to completion of a definitive transfer agreement and receipt of all necessary approvals of securities regulatory authorities and the TSX Venture Exchange. Subject to these conditions, the Transaction is expected to close on or about Thursday, February 22, 2008.

Tables I and II attached hereto summarize the investment portfolios of 49 North and the 2007 Fund, respectively, as of December 31, 2007 (in the case of 49 North after giving effect to its conversion effective January 1, 2008 from its former limited partnership structure to its current corporate structure). Table III includes a pro forma calculation of (a) the purchase price that will be paid by 49 North to acquire all of the assets of the 2007 Fund in the proposed Transaction; (b) the total number of common shares to be issued by 49 North in satisfaction of that purchase price; (c) the resulting number of common shares to be issued to the limited partners of the 2007 Fund in exchange for each unit (the Conversion Ratio) then held by the respective limited partners; and (d) the estimated number of common shares of 49 North that will be outstanding upon completion of the Transaction. The information in these tables has been compiled by management based on certain estimates and assumption which cannot be represented as complete or accurate in all respects as at the date hereof, including those estimates and assumptions set forth in the notes that follow the tables. This information has not been audited or reviewed by the funds' auditors, is subject to change and is intended for illustration purposes only. Without limiting the generality of the foregoing, unless otherwise indicated, the information in the tables is presented as of December 31, 2007, whereas the net asset values and net asset values per security for both 49 North and the 2007 Fund that will be used in the proposed Transaction, and the resulting Purchase Price and Conversion Ratio for the Transaction, will be based on the values determined as of the Effective Time (ie. the close of business on February 14, 2008). These values will change between December 31, 2007 and such Effective Time and the changes may be material.



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TABLE I: Summary of Net Assets of 49 North Resource Fund Inc.
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Symbol No. of % of
Holdings(1)(2) Shares Fair Value Portfolio
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Mineral exploration
Athabasca Potash Inc. (TSX) API 2,155,325 $ 16,811,535 64.39%
Anglo Minerals Ltd. ALM 167,900 906,660 3.47%
Red Rock Energy Inc. RRK 1,968,560 802,188 3.07%
Great Western Minerals Group Inc. GWG 1,609,000 627,510 2.40%
Copper Reef Mining Corporation
(unlisted) 2,000,000 600,000 2.30%
Great Western Diamonds Corp. GWD 2,052,000 502,740 1.93%
Claude Resources Inc. (TSX) CRJ 334,900 465,511 1.78%
Golden Band Resources Inc. GBN 916,000 412,200 1.58%
Wescan Goldfields Inc. WGF 1,711,086 410,660 1.57%
Eagle Plains Resources Ltd. EPL 541,500 314,070 1.20%
Raytec Metals Corp. RAY 640,000 256,000 0.98%
ESO Uranium Corp. ESO 600,000 234,000 0.90%
Halo Resources Ltd. HLO 600,000 228,000 0.87%
J-Pacific Gold Inc. JPN 451,000 211,970 0.81%
Tagish Lake Gold Corp. TLG 1,423,846 199,338 0.76%
Stikine Gold Corp. SKY 1,666,667 183,333 0.70%
Soltoro Ltd. SOL 280,000 173,600 0.66%
Northern Freegold Resources Ltd. NFR 202,000 157,560 0.60%
Goldsource Mines Inc. GXS 760,000 144,400 0.55%
Valgold Resources Ltd. VAL 440,334 129,898 0.50%
Other 711,859 2.73%
Oil & Gas
Ruby Energy Inc. (private) 916,996 489,061 1.87%
Southern Pacific Resource Corp. STP 248,150 394,558 1.51%
Nordic Oil & Gas Ltd NOG 291,000 218,250 0.84%
Prairie Hunter Energy Corp.
(private) 208,333 197,916 0.76%
Ivory Energy Inc. IV 230,107 147,268 0.56%
Other 178,242 0.68%
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$ 26,108,331
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Less estimated net debt and other charges $ 3,325,848
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Estimated Net Asset Value of the Corporation $ 22,782,483
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Common Shares Outstanding 1,399,157
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Estimated Net Asset Value per common share $ 16.28
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TABLE II: Summary of Net Assets of 49 North 2007 Resource Flow-Through
Limited Partnership
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Symbol No. of % of
Holdings(1)(2) Shares Fair Value Portfolio
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Mineral exploration
Northern Freegold Resources Ltd. NFR 1,046,052 $ 815,921 9.21%
Western Potash Corp. (private) 1,250,000 750,000 8.46%
Claude Resources Inc (TSX) CRJ 490,568 637,738 7.20%
CanAlaska Uranium Ltd. CVV 1,376,111 564,206 6.37%
Great Western Minerals Group Inc. GWG 1,250,000 487,500 5.50%
Wildcat Exploration Ltd. WEL 2,000,000 380,000 4.29%
Eagle Plains Resources Ltd. EPL 500,000 290,000 3.27%
Rockport Mining Corp. (private) 352,941 264,706 2.99%
Roxgold Inc. ROG 720,000 241,200 2.72%
Laurion Mineral Exploration Inc. LME 1,570,265 235,540 2.66%
Halo Resources Ltd. HLO 531,915 202,128 2.28%
Santoy Resources Ltd. SAN 400,000 192,000 2.17%
Buchans River Ltd. BUV 431,000 183,175 2.07%
Raytec Metals Corp. RAY 454,500 181,800 2.05%
Northern Continental Resources Inc. NCR 500,000 150,000 1.69%
Copper Reef Mining Corp. (unlisted) 375,000 124,999 1.41%
Oil & Gas
Prairie Hunter Energy Corp.
(private) 922,715 1,107,258 12.50%
PanWestern Energy Inc. PW 1,748.422 1,031,569 11.64%
Nordic Oil & Gas Ltd. NOG 775,000 581,250 6.56%
Southern Pacific Resource Corp. STP 226,250 359,738 4.06%
Welton Energy Corporation WLT 147,000 80,882 0.91%
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$ 8,861,610
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Less estimated net debt and other charges at
December 31, 2007 $ 978,000
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Estimated Net Asset Value of the 2007 Fund $ 7,883,610
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Limited partnership units Outstanding 932,770
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Estimated Net Asset Value per unit $ 8.45
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TABLE III: Pro Forma calculation of Purchase Price and Conversion Ratio as
of February 14, 2008
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Listed Fund 2007 Fund
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Estimated net asset value at December 31, 2007 $ 22,782,483 $ 7,883,610
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Estimate of expenses and accrued liabilities
from January 1 to February 14, 2008 (3) $ 203,098 $ 54,365
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Estimated net asset value at February 14, 2008 $ 22,604,324 $ 7,829,245
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Common shares / units outstanding 1,399, 517 932,770
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Net asset value per common share / unit at
February 14, 2008 $ 16.15 $ 8.39
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Purchase Price for Assets of 2007 Fund $ 7,829,245
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Number of Shares to be issued by 49 North in
satisfaction of Purchase Price 484,783
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Conversion Ratio (ie number of common shares
of 49 North to be issued in exchange for each
unit of the 2007 Fund) 0.52
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Estimated number of common shares of 49 North
outstanding after completion of the Transaction 1,883,940
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Notes:

(1) All investee companies are listed on the TSX Venture Exchange unless
otherwise indicated.

(2) The investment portfolios of both 49 North and the 2007 Fund include
warrants which are not included in the above tables because they were
not "in the money" as of December 31, 2007. Warrants that are in the
money, if any, at the Effective Time will be included in calculating net
asset values for the purpose of the proposed Transaction and all
warrants or similar rights in the 2007 Fund's investment portfolio will
be included in the assets acquired by 49 North in the proposed
Transaction.

(3) Estimated expenses and accrued liabilities for the period from January
1, 2008 to February 14, 2008 include operating and administrative
expenses and accruing interest on loan facilities, dividends on
outstanding second preferred series 1 shares of 49 North and management
fees.


The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • 49 North Resource Fund Inc.
    Tom MacNeill
    President & CEO
    (306) 664-4626