PhosCan Chemical Corp.
TSX VENTURE : FOS

PhosCan Chemical Corp.
BALTIC RESOURCES INC.
TSX VENTURE : BLR

BALTIC RESOURCES INC.

October 29, 2007 07:00 ET

Phoscan Chemical and Baltic Resources Agree to Merge to Consolidate 100% Ownership of the Martison Phosphate Project

TORONTO, ONTARIO--(Marketwire - Oct. 29, 2007) - Phoscan Chemical Corp. (TSX VENTURE:FOS) and Baltic Resources Inc. (TSX VENTURE:BLR) announced today that they have agreed to combine their interests in the Martison Phosphate Project, in which they each currently hold an equal joint-venture interest.

Upon completion of the merger, Phoscan will own a 100% interest in the Martison Phosphate Project. The former Baltic shareholders will own common shares of Phoscan and common shares of a newly-formed company ("Newco"), which will own all property interests of Baltic other than its interest in the Martison Project. After completion of the merger, current Phoscan shareholders will own approximately 60.33% of Phoscan and current Baltic shareholders will own approximately 39.67% of Phoscan and 100% of Newco. It is expected that the transaction will close in January, 2008.

The combination is proposed to be effected by way of plan of arrangement, pursuant to which the assets and liabilities of Baltic would be re-organized such that all of its assets and liabilities other than the Martison Project would be transferred to Newco in exchange for the receipt by Baltic of common shares of Newco on a one-for-one basis, which would then be distributed to the Baltic shareholders (the "Arrangement"). Baltic would then merge with a newly created subsidiary of Phoscan and each Baltic common share will be exchanged for 1.4 common shares of Phoscan. This attributes equal value to Phoscan and Baltic's respective 50% interests in Martison.

Stephen Case, Chief Executive Officer of Phoscan, said "The merger of Phoscan and Baltic will create a company with 100% ownership of the Martison Phosphate Project and a strong combined board, management team and operational expertise. We believe that this transaction will result in an improved platform for financing and executing the continued development of the Martison Project and an enhanced market presence that will create value for our shareholders."

Donald McKinnon, Chief Executive Officer and President of Baltic, added "This transaction provides the positive catalyst needed to accelerate the advancement of Martison. This merger is expected to provide excellent value for our shareholders."

The merger has been approved by the boards of directors of Phoscan and Baltic and will be subject to, among other things, the favourable vote of shareholders of Baltic and Phoscan at special meetings of shareholders to be called to approve the transaction. The boards of directors of each of Phoscan and Baltic have determined that the transaction is in the best interest of their respective company and that the share exchange ratio is fair to their shareholders, and unanimously recommend that shareholders vote in favour of the transaction. Westwind Partners Inc. has provided an opinion to the board of directors of Baltic that the Phoscan share exchange ratio is fair, from a financial point of view, to the holders of the common shares of Baltic. Phoscan's financial advisor is Wellington West Capital Markets Inc.

Management Team and Board of Directors

After completion of the Arrangement, Stephen Case, President and Chief Executive Officer of Phoscan, will be the President and Chief Executive Officer of Phoscan, and the other directors of Phoscan will be Glen Magnuson, Henry (Hank) Giegerich, John D. Yokley, Donald McKinnon, Chris Hodgson and Gordon McKinnon. In addition to Mr. Case, the senior management of Phoscan will be comprised of Janet Lowe, Executive Vice President and Gary L. Pigg, Project Manager.

About Phoscan and Baltic

Phoscan and Baltic are engaged through a joint venture agreement in the advancement of the Martison Phosphate Project located near Hearst, Ontario. The Martison Project entails the development of a phosphoric acid plant, utilizing the Martison phosphate deposit and sulphuric acid from Ontario base-metal smelters. Phosphate concentrate and sulphuric acid are the two primary inputs in the production of phosphoric acid. The Martison Project is strategically positioned in proximity to target markets with access to excellent infrastructure including rail, power, labour and an abundant supply of sulphuric acid. The phosphoric acid produced will be used as feedstock for the production of higher valued products in the fertilizer and industrial markets that provide both an economic and logistical advantage.

Phoscan Chemical Corp., Baltic Resources Inc.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements with respect to the merger transaction, transactions related to the merger transaction, and matters concerning the business, operations, strategy, and financial performance of Phoscan and Baltic. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe" or "continue" or the negative thereof or similar variations. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the transaction contemplated herein is completed. Forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, the ability of Phoscan and Baltic to obtain TSXV approval for the merger transaction and related transactions. Unless otherwise stated, all forward looking statements speak only as of the date of this press release and neither Phoscan or Baltic undertakes any obligation to update such statements except as required by law.

Contact Information

  • Phoscan Chemical Corp.
    Stephen Case
    President & CEO
    (416) 972-9222
    or
    Baltic Resources Inc.
    Don McKinnon
    President & CEO
    (705) 268-9000
    or
    Baltic Resources Inc.
    Gordon McKinnon
    Manager Corporate Development
    (705) 268-9000