Carrington Acquisition Corp.
TSX VENTURE : CAQ.P

August 11, 2008 17:34 ET

Carrington to Acquire Dolly Silver

LONDON, ONTARIO--(Marketwire - Aug. 11, 2008) - Carrington Acquisition Corp. of London Ontario (TSX VENTURE:CAQ.P) ("Carrington") and Mr. George Lunick President and CEO of Carrington, are pleased to announce the signing of a term sheet dated July 16, 2008 (the "Agreement") to acquire all of the outstanding common shares of Dolly Silver Corporation ("Dolly Silver"), a junior Canadian silver mining and exploration company, in exchange for common shares of Carrington (the "Dolly Acquisition").

Dolly Silver owns a number of silver exploration properties located in British Columbia (the "Dolly Silver Properties") and has entered into an earn-in agreement (the "Earn-In Agreement") with Dolly Varden Resources ("Dolly Varden") to earn a 50% interest in the Dolly Varden silver mines, deposits and properties located in the historic Dolly Varden mining camp in British Columbia (the "Dolly Varden Properties"). The Dolly Silver Properties and Dolly Varden Properties (collectively the "Exploration Properties") are considered prospective for the discovery of gold, silver, zinc and lead deposits. Based on the terms of the Earn-in Agreement, Dolly Silver is required to make a $500,000 down payment and spend $7,500,000 on exploration of the Exploration Properties over a three year period. After all terms and conditions of the Earn-in Agreement are met, Dolly Silver and Dolly Varden will be deemed to have formed a joint venture.

Transactions

The Dolly Acquisition is an arm's-length transaction. The directors and officers of Carrington currently have no interest in Dolly Silver, and none of the principals of Dolly Silver have any interest in Carrington. The Dolly Acquisition is intended to constitute Carrington's Qualifying Transaction (as defined in TSX Venture Exchange (the "Exchange") Policy 2.4 Capital Pool Companies). Upon completion of the Dolly Acquisition, the Resulting Issuer (as defined in Exchange Policy 2.4) will be considered a Tier 2 mining issuer (as defined in Exchange Policy 2.1).

Subject to Exchange and shareholder approval, and upon completion of the transactions contemplated, Carrington will change its name to Dolly Silver Corporation.

The Interim Financing

Dolly Silver is conducting an interim financing by way of a private placement (the "Interim Financing"). The Interim financing will consist of 20,000,000 Dolly Silver common shares at a price of $0.05 for gross proceeds of $1 million. Proceeds will be used as follows: $500,000 deposit to Dolly Varden pursuant to the Earn-In Agreement, $250,000 towards exploration over Dolly Silver Properties and Dolly Varden Properties, $50,000 for a 43-101 technical report on the Exploration Properties and the balance for working capital and general administrative purposes. The Interim Financing is being undertaken as a non brokered private placement by West Oak Capital Inc. ("West Oak") acting as agent. A commission of 4 million Dolly Silver common shares (at a deemed price of $0.05 per share) will be paid to West Oak. The sole beneficiary of West Oak is Robert Bruce Duncan, an arms length party to Carrington and Dolly Silver.

Dolly Silver has engaged the services of Surefund Capital Corporation ("Surefund") to assist with the overall Dolly Acquisition. A total of 2 million Dolly Silver common shares (at a deemed price of $0.05 per share) will be issued to Surefund, pursuant to a consulting contract, for corporate finance and structuring advice and assisting with negotiating various aspect of the Dolly Acquisition. Faryl Perkins is the sole beneficial owner of Surefund, an arms length party to Carrington and Dolly Silver.

The Pre-Listing Financing

As a condition of the Dolly Acquisition, Dolly Silver will complete a private placement of up to $4 million (the "Pre-Listing Financing"). Proceeds from the Pre-listing Financing will be used to fund exploration of the Exploration Properties, the costs of the Listing Financing and for general working capital purposes.

The Pre-Listing Financing will consist of a private placement of 20,000,000 units of Dolly Silver at a price per unit of $0.20 for gross proceeds of up to $4 million ($3.6 million net of commissions). Each unit will consist of one common share and one-half common share purchase warrant (the "Warrants"). Two Warrants will entitle the holder to purchase one additional common share at a price of $0.25 per share for a period of 12 months following closing of the Listing Financing. The Warrants are callable by the Resulting Issuer upon five days prior notice to the holder in the event that the weighted average closing price of the common shares on the Exchange is at or above $0.75 for twenty consecutive trading days.

The Listing Financing

Concurrent with the Exchange listing, Carrington will undertake a private placement of up to 2,000,000 units at a price per unit of $0.25 for gross proceeds of up to $500,000 (the "Listing Financing"). Each unit will consist of one common share and one half common share purchase warrant. Two warrants will entitle the holder to purchase one additional common share at a price of $0.25 per common share for a period of 12 months following Listing. The warrants are callable by the Resulting Issuer upon five days prior notice to the holder in the event that the weighted average closing price of the common shares on the Exchange is at or above $0.75 for 20 consecutive trading days. Purchasers of the units will be subject to a four month hold period.

Silverbridge will act as agent for Dolly, with Haywood Securities Limited ("Haywood") co-lead in the Listing Financing. A commission of 10% cash will be payable on the gross proceeds of the Listing Financing. Silverbridge and Haywood will also receive broker warrant units entitling them to purchase that number of units equal to 10% of the number of units sold pursuant to the Listing Financing, exercisable for a period of one year from the closing of the Listing Financing at a price of $0.25 per share (the "Agent's Warrants"). Silverbridge reserves the right to convert its cash commission to common shares in the Resulting Issuer.

In addition to the foregoing, Haywood will be paid a sponsor fee of $50,000 cash as well as be issued further warrants to purchase up to 50,000 shares of Carrington on the same terms as the Agent's Warrants.

Silverbridge is registered as a limited market dealer in Ontario. It is a private company wholly-owned by the Hughnie Laing Trust whose sole beneficiary is Hughnie Laing. Hughnie Laing is the wife of Glenn Laing, a proposed director of the Resulting Issuer. Silverbridge is arm's length to Carrington and non-arm's length to Dolly Silver.

The Dolly Acquisition

The consideration for the Dolly Acquisition, inclusive of the shares to be issued pursuant to the terms of the Pre-Listing Financing will be $11.5 million, payable by way of the issuance to the security holders of Dolly Silver of an aggregate 46 million common shares in the capital of Carrington ("Purchase Shares") at a deemed price of $0.25 per Purchase Share. It is anticipated that the Purchase Shares held by the security holders of Dolly Silver will be issued subject to a Tier 2 Value Security Escrow Agreement pursuant to Exchange Policy 5.4.

Carrington reserves a price of $0.25 per share for the Purchase Shares to be issued pursuant to the Dolly Acquisition and the Listing Financing and for stock options to acquire up to approximately 7,000,000 common shares of the Resulting Issuer (the "New Stock Options") to be granted to directors, officers, employees and consultants of the resulting issuer upon completion of the Dolly Silver Acquisition. The grant of the New Stock Options is subject to regulatory approval including shareholder approval, if required.

Completion of the Dolly Acquisition is subject to a number of conditions, including but not limited to:

(i) completion and execution of a formal share exchange agreement between Carrington and the principals of Dolly Silver;

(ii) approval of the Dolly Acquisition by the Exchange, and all other necessary regulatory approvals;

(iii) completion of the Listing Financing; and

(iv) the resignation of the existing officers and directors of Carrington in favour of nominees of Dolly Silver.

Carrington currently has 5.3 million common shares outstanding. Assuming completion of the Dolly Acquisition and Concurrent Financing, it is expected that the Resulting Issuer will have approximately 77.3 million common shares issued and outstanding.

The sole principal shareholder of Dolly Silver is The Hughnie Laing Trust. After giving effect to the Interim Financing, The Hughnie Laing Trust will hold 12 million of the outstanding shares in the capital of Dolly Silver, or approximately 18.2%. After giving effect to the Interim Financing, the Listing Financing and the Dolly Acquisition, the Hughnie Laing Trust will hold 12 million shares in the Resulting Issuer, or approximately 15.5%.

Dolly Silver initially had 5 seed shareholders. After giving effect to the Interim Financing, Dolly Silver is expected to have 15 shareholders. Once the Pre-Listing Financing is complete, Dolly Silver is expected to have approximately 30 shareholders. After giving effect to the Dolly Acquisition, the former shareholders of Dolly Silver will hold an aggregate of 46 million common shares in the Resulting Issuer, or approximately 59.74%.

Management and Directors

Upon completion of the Dolly Acquisition, the Resulting Issuer's board of directors will change with the appointment of Dolly Silver's nominees. Namely, Fred Christensen will be appointed Non Executive Chairman and Director, Glenn Laing will be appointed Acting President, CEO and Director and George Lunick will be appointed CFO. In addition, a suitably qualified and experienced VP Exploration will be recruited and additional appointments of Directors of the Resulting Issuer will be appointed.

The background of each of the proposed directors and senior officers of the Resulting Issuer are as follows:

W. Fred Christensen, Director (Age: 77 years)

Fred Christensen holds a BA (Law) from the University of Washington, USA and is a member in standing of the British Columbia Bar for 50 years. He has over 45 years experience as a promoter and financier of resource sector companies including: Dolly Varden Resources, Lytton Minerals Ltd., and Jumbo Petroleum Corporation.

Glenn Laing, Director (Age: 56)

Glenn Laing holds a B.Sc Eng (Mining Geology) degree from the University of Witwatersrand, Johannesburg and an M.Sc (Mining Engineering) degree from Colorado School of Mines, Golden, Colorado, USA. Mr. Laing has been involved in the natural resources and financial sectors for over 30 years. Mr. Laing's experience in the mining and exploration industry began in 1973 with underground, surface mining and exploration in Southern Africa, Europe, Central Asia and Canada. In the 1990s his experience extended to the North American investment banking and financing, and to the mining and oil and gas sectors. In 1999 he formed Silverbridge Capital Inc., a limited market dealer of which he is currently President. In total, he has over 25 years experience in a managing director and/or President / CEO position of publicly listed companies. He is a director of Bridge Capital Partners Pty Ltd. - an Australian Corporate Finance and Advisory firm, Jumbo Petroleum Corporation (TSX Venture) and director of Southern Hemisphere Mining Limited (TSX Venture).

George Lunick, CFO and Director (Age: 50)

George has been a Chartered Accountant with Lunick & Company, a private chartered accounting firm in London, Ontario since 1992. George has been the Chief Executive Officer, President and a director of Pearl River Holdings Ltd, a public company in the business of manufacturing plastic products, trading on the TSX Venture Exchange, since May 1995. George was also a director of The Loyalist Insurance Group Limited, a public company in the business of insurance, trading on the TSX Venture Exchange, from December 1996 to May 2004 and he was a director of Jackal Energy Inc, a capital pool company, from February 2001 to June 2002, which traded on the Exchange. Mr. Lunick received his Bachelor of Arts, Hons. Degree from the Richard Ivey Business School at the University of Western Ontario in June of 1981 and his professional designation as a chartered accountant from the Institute of Chartered Accountants of Ontario in September of 1983.

Dr. Roger Steininger. Ph. D., Director (Age: 60)

Dr. Roger C. Steininger Ph.D. has more than 40 years experience in the minerals industry including a senior management position with a major mineral company, Amselco Minerals and for the last 20 years has maintained a consulting geologist practice. As part of Dr. Steininger's consulting practice, he has continued his involvement in exploration and development programs in association with several major mining companies.

Dr. Steininger is a Certified Professional Geologist - having received such designation from the American Institute of Professional Geologists in 1987. Dr. Steininger received his Ph.D. in Geology from Colorado Sate University in 1986, a M.S. in Geology from Brigham Young University in 1966 and a B.S. in Geology from Western Michigan University in 1964.

Description of the Dolly and Dolly Varden Assets and Exploration Properties

Dolly Silver controls a total of 9,373.98 hectares of mineral tenures in the upper Kitsault Valley and Evindsen Creek areas located 40 kilometers southeast of Stewart, in west central British Columbia, in the Skeena Mining Division.

The Dolly Varden Properties abut the Dolly Silver block on the east side, and are the subject of the Earn-In Agreement between Dolly Silver and Dolly Varden.

The Dolly Varden Properties are comprised of several types of tenure, including Crown Grants, Mining Leases, and located claims that effectively comprise 6,348.03 hectares of ground.

Since the location of the Dolly Varden, Sportsman and North Star claims in 1911, the deposits and showings of the upper Kitsault valley area have dominated the silver mining and exploration activity of the Alice Arm region in north western British Columbia. Mining initiated in 1919 as a direct shipping operation at the Dolly Varden Mine.

The Torbit deposit was located and explored while the neighbouring Dolly Varden mine was in production. The Torbit deposit was first developed in the mid to late-1920s. In the 1920s access was by trail or narrow-gauge railway from Alice Arm. In the mid-1940s the railway was replaced by a road. Subsequently, Torbit Silver Mines Limited bought the property in 1946 and built and operated a 350 tonne-per-day hydroelectric-powered mill and flotation concentrator plant.

Many of the significant properties in the upper Kitsault were assembled by Dolly Varden Mines Ltd., which was incorporated in 1960. Successive ownership changes ended in 1976 when the company was put up for sale, and purchased by Dolly Varden Resources Limited. Subsequently, the company was amalgamated under the name of Dolly Varden Minerals Inc. in 1979 with three other companies holding land in the valley.

The above information has been sourced from various public company reports and governmental information sources. The exploration properties will be subject to a National Instrument 43-101 report to be completed by Dolly as part of the Dolly Acquisition.

About Dolly Silver Corporation

Dolly Silver was incorporated in December, 2007 pursuant to the British Columbia Business Corporations Act. It has been active since 2007 and its operational office is located in Toronto, Ontario. Dolly has not conducted any business other than to acquire and explore the Dolly Tenements in British Columbia. Dolly Silver has negotiated an agreement with Dolly Varden Resources to earn a 50% interest in the Dolly Varden Properties.

The following is a summary of Dolly Silver financial information (unaudited) prepared by Dolly Silver's management for the period from inception (November 27, 2007) to June 30, 2008:

- Total Assets $1,111,185.00

- Total Liabilities $149,120.00

- Total Revenue nil

- Net Income ($167,936.00)

READER ADVISORY

A general policy of the Exchange requires that a sponsor be retained to prepare a sponsor report in compliance with Exchange Policy 2.2. Haywood Securities, subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Trading in the shares of Carrington will remain halted until receipt by the Exchange of satisfactory documentation.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. 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 information circular to be prepared in connection with the proposed transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Dolly Acquisition and has neither approved or disapproved the contents of this news release.

Contact Information

  • Carrington Acquisitions Corp.
    George Lunick
    President & CEO
    (519) 679-1300
    or
    Dolly Silver Corporation
    Glenn Laing
    (416) 368-8496