Staccato Gold Resources Ltd.
TSX VENTURE : CAT

Staccato Gold Resources Ltd.

March 23, 2010 08:58 ET

Staccato Gold Announces Business Combination With Timberline Resources

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 23, 2010) - Staccato Gold Resources Ltd. (TSX VENTURE:CAT) ("Staccato") is pleased to announce that it has entered into a definitive agreement (the "Agreement") with Timberline Resources Corporation (NYSE Amex:TLR) ("Timberline"), whereby Timberline will acquire, through a court-approved plan of arrangement, all of the issued and outstanding common shares of Staccato by way of a share exchange (the "Arrangement"). Under the Agreement, Staccato shareholders will receive one share of common stock of Timberline and US$0.0001 for every seven Staccato common shares held (the "Exchange Ratio"). This represents a value of approximately C$0.17 per Staccato share based on the closing price of Timberline shares on the NYSE Amex on March 22, 2010, an 82% premium to the closing price of Staccato shares on the date prior to announcement of the Arrangement and a 76% premium to Staccato's 20-day volume weighted average closing price.

Agreement and Arrangement Details

Upon completion of the Arrangement, Timberline will have approximately 56 million common shares issued and outstanding, with 73 million shares on a fully diluted basis. Current Timberline shareholders will own approximately 74% of the shares outstanding and former Staccato shareholders will own approximately 26%. On a fully diluted basis, Timberline will be owned 71% by current Timberline shareholders and 29% by current Staccato shareholders.

Pursuant to the Agreement, the holders of a portion of the outstanding Staccato options and the holders of all Staccato warrants will be entitled to receive Timberline options and warrants at the Exchange Ratio and with corresponding changes to the exercise price based on the Exchange Ratio. The balance of the outstanding Staccato options will either be exchanged for Staccato shares or cancelled at closing.

The Arrangement has been unanimously approved by the Board of Directors of Staccato and the management and directors of both companies have entered into support agreements. Staccato's Board received a fairness opinion from Paradigm Capital Inc. The Agreement contains a commitment from Staccato not to solicit or initiate discussions concerning alternative transactions to the proposed Arrangement.

Following completion of the Arrangement, the Board of Directors will consist of seven directors from Timberline.

Completion of the Arrangement is subject to customary closing conditions including the receipt of all necessary court and regulatory approvals and a favorable vote of at least two-thirds of the holders of Staccato common shares voted at a special meeting of shareholders to be held on May 14, 2010 and a favorable vote of a majority of the holders of Timberline common shares voted at a special meeting of its shareholders. 

Timberline will seek a listing on the TSX Venture Exchange (the "TSX-V") with the intent to have a listing in Canada and on the NYSE Amex. The Agreement provides for the payment of reciprocal break fees under certain conditions, and the Arrangement is expected to close by June 15, 2010.

Investor Conference Call

An investor conference call to discuss the details of the Arrangement will be held on Wednesday, March 24, 2010. Paul Dircksen, Chairman and Vice President Exploration of Timberline, Randal Hardy, Timberline's Chief Executive Officer, and Grant Ewing, Chief Executive Officer of Staccato will host the call.

Conference Call Details:

Date: March 24, 2010
Time: 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time)
Dial in: Canada and USA Toll Free Dial In: 1-800-214-0694
  Outside of Canada and USA:         1-719-955-1425
Passcode: 713423

A link to a replay of the call will be available for two weeks on Staccato's website. A presentation will be available on Staccato's website at www.staccatogold.com and Timberline's website at www.timberline-resources.com/TLR-CAT-Acquisition.htm.

Benefits for Staccato Shareholders

  • Staccato shareholders will receive an attractive premium and a position in a stronger entity
  • Timberline's business model provides investors exposure to gold production, the "blue sky" potential of exploration, and the "picks and shovels" aspect of the mining industry through its contract core drilling subsidiaries
  • The combined company has a strong near-term development asset base in the United States with Staccato's Lookout Mountain Project in Nevada and Timberline's Butte Highlands Gold Project JV in Montana
  • Staccato shareholders will benefit from near-term gold production at Butte Highlands, an active exploration division, and two drilling services units with annual revenue of US$17 million in FY2009.

Benefits for Timberline Shareholders

  • The combined company has a strong near-term development asset base in the Unites States with Staccato's Lookout Mountain Project in Nevada and Timberline's Butte Highlands Gold Project JV in Montana
  • Additional gold ounces acquired at an attractive price, in the prolific gold producing Battle Mountain - Eureka trend, with the potential for excellent metallurgical characteristics conducive to economical heap leaching
  • Additional potential gold production and cash flow
  • Cash infusion of approximately $5 million for exploration and development at Lookout Mountain
  • Additional pipeline of early-stage, highly-prospective projects within the South Eureka property
  • Expanded institutional and retail shareholder base

Staccato's President and CEO, Grant Ewing, said, "We are very pleased with the premium offer Timberline has made. Timberline is a near-term producer that has the expertise and the knowledge base to move our advanced stage Lookout Mountain Project towards production - in addition to their own projects. We are impressed with the Timberline management team and believe that the combined assets of Staccato and Timberline represent enhanced value creation potential for Staccato shareholders."

Randal Hardy, Timberline's CEO, commented, "This acquisition advances our goal of positioning Timberline as an emerging gold producer. We are focused on projects that offer near-term production potential and significant exploration upside. The South Eureka property, which includes the Lookout Mountain project, is located in Nevada's prolific gold producing Battle Mountain - Eureka trend. Nevada is considered one of the world's best gold exploration and mining jurisdictions, and the South Eureka property includes a very large land package with multiple gold occurrences, some of which may potentially be put into production with a relatively low level of capital expenditures. We believe this acquisition will enhance the value of Timberline as we develop these projects concurrent with the development of our Butte Highlands Gold Project."

About Staccato Gold Resources Ltd.

Staccato Gold is a well funded junior gold exploration company with resources and advanced stage exploration assets located exclusively in Nevada. Staccato is focused on advancing its flagship Lookout Mountain project, located in one of the dominant gold trends in Nevada. Staccato is listed on the TSX-V and trades under the symbol "CAT".

About Timberline Resources Corporation

Timberline is a diversified gold company with three complementary business units: a mine in development with upcoming gold production, an active exploration division, and two contract drilling services subsidiaries. Timberline is focused on the evaluation and acquisition of advanced-stage exploration opportunities with the potential for near-term development and production. Timberline formed a 50/50 joint venture with Highland Mining, LLC, an affiliate of Small Mine Development, LLC at its royalty-free Butte Highlands Gold Project, which commenced development in the summer of 2009 and has gold production targeted in the near term. The Management team has experience, depth, and a solid track record of achievement in building successful companies and discovering economic ore bodies. Timberline is listed on the NYSE Amex and trades under the symbol "TLR".

Additional Information and Where to Find It

In connection with Timberline's and Staccato's solicitation of proxies with respect to the meeting of shareholders of each of Timberline and Staccato to be called with respect to the proposed Arrangement, Timberline will file a proxy statement with the Securities and Exchange Commission (the "SEC") and Staccato will file an information circular with certain regulatory authorities in Canada. 

SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT/INFORMATION CIRCULAR WHEN IT IS FINALIZED AND DISTRIBUTED TO SHAREHOLDERS BECAUSE
IT WILL CONTAIN IMPORTANT INFORMATION.

Shareholders will be able to obtain a free-of-charge copy of the proxy statement/information circular (when available) and other relevant documents filed with the SEC from the SEC's website at http://www.sec.gov and with Canadian regulatory authorities from SEDAR at http://www.sedar.com. Shareholders of Timberline will also be able to obtain a free-of-charge copy of the proxy statement and other relevant documents (when available) by directing a request by mail or telephone to Timberline Resources Corporation, 101 E. Lakeside, Coeur d'Alene, Idaho 83814 or (208) 664-4859, or from Timberline's website, www.timberline-resources.com. Shareholders of Staccato will also be able to obtain a free-of-charge copy of the information circular and other relevant documents (when available) by directing a request by mail or telephone to Staccato Gold Resources Ltd., Suite 2060, 777 Hornby Street, Vancouver, British Columbia, Canada V6Z 1T7 or (604) 682-8789 or from Staccato's website, www.staccatogold.com.

None of the securities anticipated to be issued pursuant to the Arrangement have been or will be registered under the Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws, and are anticipated to be issued in reliance upon available exemptions from such registration requirements under Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Statements in this press release other than purely historical information, including statements relating to Staccato's future plans and objectives or expected results, are forward-looking information within the meaning of Canadian securities laws. Forward-looking information is based on numerous assumptions, including that equipment and personnel will be available when required, that no delays are experienced in the planned work programs, that technical issues identified in the previous resource estimate for the Lookout Mountain project can be addressed and within the time frame anticipated, and that all necessary approvals for the planned programs will be obtained in a timely manner. Forward-looking information is subject to all of the risks and uncertainties inherent in Staccato's business, including risks inherent in resource exploration and development. Such risks include, but are not limited to, delay in obtaining permits and approvals, actual results of exploration activities differing from those anticipated, failure of equipment, accident, labor disputes and other risks associated with mineral exploration activities. Although Staccato has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to not be as anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on forward-looking information due to the inherent uncertainty thereof.

Grant Ewing, President, Chief Executive Officer & Director

Staccato Gold Resources Ltd.

Neither the TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Staccato Gold Resources Ltd.
    Gareth Thomas
    Corporate Development
    604-682-8789
    www.staccatogold.com