Metallum Resources Inc.
TSX VENTURE : MRV

Metallum Resources Inc.

November 17, 2009 11:04 ET

Metallum Resources Inc. Announces Signing of Definitive Agreement with Solfotara Mining Corp. and Additional Information in Respect of its Proposed Business Combination

TORONTO, ONTARIO--(Marketwire - Nov. 17, 2009) - Metallum Resources Inc. (TSX VENTURE:MRV) (the "Company" or "Metallum") provides this updated news release, as required by the rules of the TSX Venture Exchange, in respect to its proposed reverse takeover ("RTO") with Solfotara Mining Corp. ("Solfotara") as first announced on February 28, 2009; supplemented by a detailed news release dated March 18, 2009 (the "Proposed Transaction") and subsequent news releases dated April 30, June 1, July 2, August 4, September 3, and October 8, 2009. The parties to the Proposed Transaction act at arm's length. As is normal policies of the Exchange, trading in Metallum's shares have been up to the date hereof halted since the Proposed Transaction was first announced.

Update

Definitive Agreement

Metallum and Solfotara signed a definitive agreement (the "Definitive Agreement") in relation to the Proposed Transaction on November 6, 2009. The salient business terms of Proposed Transaction have not changed from the terms first announced in Metallum's news release on February 28, 2009, as supplemented by its more detailed news release dated March 18, 2009. Most notably, it has been agreed by the parties that immediately prior to the closing of the Proposed Transaction, the common shares of Metallum will be consolidated on a basis of one new common share for every 6.4 old shares while the shareholders of Solfotara will receive one common share of the Resulting Issuer for each Solfotara common share held.

Other items related to the Proposed Transaction that have been completed during the period from the Company's last news release, October 8, 2009 until now, are as follows.

Spin Out Transaction

In light of the pending completion by Solfotara of a transaction which will see Solfotara spin-out (herein, the "Spin Out Transaction") Solfotara's recently acquired interest in Hinoba Holdings (Philippines), Inc., which Philippines company owns (indirectly) a 92.5% economic interest in the Hinoba-an copper property (the "Hinoba-an Property") located on the island of Negros in the Philippines (more details of which are provided below), Metallum's shareholders, as well as the shareholders of Solfotara will, assuming the completion of the Spin Out Transaction, receive shares (and in the case of Solfotara shares and warrants) of an entity known as "Copper Development Corporation" ("CDC"). CDC is the company which is set to become the new owner of the Hinoba-an Property. Specifically, the shareholders of Metallum would receive, subject to certain conditions precedent, a total of 7,029,334 shares of CDC (the "Metallum CDC Shares") while the shareholders of Solfotara would receive 35,832,459 shares and 11,250,000 warrants of CDC representing, in aggregate, approximately 61.5% of the issued shares of CDC, as a distribution by both Solfotara and Metallum to their respective shareholders by way of a reduction of paid-up capital ("PUC"). It is anticipated that it will be those shareholders of Metallum at the effective date of the closing of the Proposed Transaction ("Effective Date") that will be entitled to receive the Metallum CDC Shares. It is further anticipated that each Metallum shareholder will be entitled at the Effective Date to receive approximately 0.836 of a CDC share for every one common share held.

Among other things, the Spin Out Transaction is subject to (i) the approval of the shareholders of Solfotara at a meeting to be held in Vancouver on November 23, 2009, to both the Spin Out Transaction and to a proposed reduction of Solfotara's PUC, and (ii) in the case of Metallum, shareholder approval to a reduction of Metallum's PUC. It is the present intention of the parties that CDC will seek to effect an initial public offering and concurrent listing of its shares on the Alternative Investment Market of the London Stock Exchange ("AIM").

There can be no assurance that the Spin Out Transaction will be approved or, if approved by the shareholders of Solfotara, completed. In addition, there can be no assurance that if such transaction is completed, that CDC will be successful in completing its proposed initial public offering and concurrent listing of shares on AIM. Full details of the Spin Out Transaction will be included in the joint management circular of Solfotara and Metallum that is being prepared in connection with the Proposed Transaction and which both the shareholders of Metallum and Solfotara will need to approve at meetings of its respective shareholders – contemplated to be held in January 2010. In this regard, it is anticipated that the joint information circular will be mailed to shareholders in the month of December, 2009.

The Hinoba-an Property has been extensively explored over the years including 48,244m of diamond drilling, 10,906m of reverse circulation drilling, metallurgical test work and preliminary engineering and design analysis. Pre-feasibility studies indicate that the two deposits on the property, Don Joase ("DJ") and A1, are reasonably well drilled and that due attention has been paid to core handling, sampling and assaying. A 1998 scoping study undertaken by the prior owner, International Pursuit (Philippines), Inc., a subsidiary of International Pursuit Corporation at the time, estimated geological resources at the DJ and A1 deposits at various cut-off grades as follows:

Cut-off GradeIn-Situ Resource
(DMTx 1,000)
Grade, % Cu
0.20432,9870.367
0.25325,5850.415
0.30254,1080.456

Information relating to the Hinoba-an Property is set out in a Consultants' Report dated April 15, 2005 which sets out an independent technical review of the geology and resources of the Hinoba-an Property. The principal authors of the Consultants' Report were A. Border, M.AusIMM, F. Davey, P.Geo and D. Gunning. P.Eng. of Orequest Consultants Ltd. of Vancouver, BC.

A qualified person has not done sufficient work to classify the historical estimate as current mineral resources, therefore the Company is not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon.

St Anthony Property

One of Solfotara's five mineral properties first announced in the February 28, 2009 news release, the gold-rich porphyry copper St. Anthony Property, now has a draft National Instrument 43-101 report completed written by Neil T. Motton, MAusIMM, MAIG, which is currently under review by TSX-V staff.

About Solfotara Mining Corp.

Solfotara is a privately owned British Columbia company that has, through a number of foreign subsidiary companies, an interest in five exploration properties, being Basay, Biliran, Tawi-Tawi, Kilong-Olao and St. Anthony, all as described in more in Metallum's February 28, 2009 Press Release. Solfotara currently has 42,861,793 common shares issued and outstanding.

About Metallum Resources Inc.

Metallum Resources Inc. is a precious metals exploration company which holds a group of 11 patented and 18 unpatented claims within Chester Township, known as its Chester Gold Property, located west of Highway 144 midway between Sudbury and Timmins, Ontario. As first announced in a news release on August 21, 2009 (and updated by press release dated October 8, 2009), Metallum has signed a definitive agreement with Trelawney Mining and Exploration Inc. for the sale of its interest in the Chester Gold Property, conditional on all approvals required by Metallum including that of Metallum's shareholders - which approval is expected to be received on November 25, 2009. Metallum also has an option to earn a 70% interest in the M-18 gold property in Argentina. Metallum has 53,803,828 common shares issued and outstanding.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and Shareholder approval. The Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon.

Further details may be obtained from our website: www.metallumresourcesinc.com.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Proposed Transaction and has neither approved nor disapproved the contents of this news release.

Neither the TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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