Trans National Minerals Inc.
TSX VENTURE : TNF.P

January 27, 2010 15:25 ET

Trans National Minerals Inc. Enters Into Agreement Regarding Its Qualifying Transaction

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 27, 2010) - Trans National Minerals Inc. (TSX VENTURE:TNF.P) (the "Company") announces that that it has entered into an option agreement (the "Agreement") dated January 26, 2010 with Mosquito Consolidated Gold Mines Limited ("Mosquito") and Mosquito Mining Corp. (US) ("Mosquito US") pursuant to which the Company has been granted an option (the "Option") to acquire a 100% interest in and to the certain unpatented mineral claims known as the Pine Tree copper-molybdenum property (the "Pine Tree Property") located in the Pilot Mountains in Mina, Nevada.

The acquisition of the Option is intended to serve as the basis for the Company's "Qualifying Transaction" under the policies of TSX Venture Exchange (the "Exchange") and is subject to Exchange acceptance.

Mosquito is a British Columbia corporation listed on the Exchange. Mosquito is involved in the business of mineral exploration and currently holds an interest in various mineral exploration properties, including the Pine Tree Property. Mosquito US is a Nevada corporation and a wholly-owned subsidiary of Mosquito. Mosquito US is the sole legal and beneficial owner of a 100% right, title and interest in and to the Pine Tree Property.

The Pine Tree Property

The Pine Tree Property is an exploration stage mineral resource property with the principally targeted resource being copper. The property is comprised of 59 mineral lode claims covering an area of approximately 1320 acres located in the Pilot Mountains Mining District in west-central Nevada. As of September 30, 2009, the date of Mosquito's most recently filed financial statements, Mosquito has incurred aggregate exploration expenditures of approximately $7,200,000 (unaudited) on the Pine Tree Property since first acquiring an interest in the property in May 2005.

The Pine Tree Property is subject to a 2% net smelter return royalty (the "NSR Royalty") in favour of Western Geosciences, Inc. and James H. Meyers. Upon the payment of US$2,000,000 in royalty payments, the NSR Royalty will be reduced from 2% to 0.5%.

Terms of the Option

In order to maintain the Option in good standing and earn a 100% interest in the Pine Tree Property, the Company is required to make the following payments and share issuance to Mosquito US or Mosquito:

  1. on closing of the Qualifying Transaction (the "Effective Date"), a cash payment of two hundred thousand ($200,000) dollars and one million (1,000,000) common shares;
  2. on or before the first anniversary date of the Effective Date, an additional cash payment of two hundred thousand ($200,000) dollars and an additional one million (1,000,000) common shares;
  3. on or before the second anniversary date of the Effective Date, a cash payment of an additional two hundred thousand ($200,000) dollars and an additional one million (1,000,000) common shares;
  4. on or before the third anniversary date of the Effective Date, a cash payment of an additional two hundred thousand ($200,000) dollars and an additional one million (1,000,000) common shares; and
  5. on or before the fourth anniversary date of the Effective Date, a cash payment of an additional two hundred thousand ($200,000) dollars and one million (1,000,000) common shares.

In addition, the Company must incur aggregate exploration and development expenditures on the property of three million ($3,000,000) dollars on or before the fourth anniversary date of the Effective Date, subject to minimum expenditures of five hundred thousand ($500,000) dollars being incurred each year on or before the applicable anniversary date of the Effective Date.

During the option period, the Company will also be responsible for making advance royalty payments of US$25,000 per year to the holders of the NSR Royalty.

The Company and Mosquito will enter into a management services agreement pursuant to which Mosquito will provide project management services to the Company in respect of the operation of the Pine Tree Property. A Qualified Person of the Company shall oversee, supervise and approve all work carried out by Mosquito and Mosquito will be entitled to earn a 10% overhead fee for project management services provided to the Company.

Non-Arm's Length Qualifying Transaction

Together, Hongxue Fu, (the Chief Executive Officer and a director of the Company, and the Chairman of Mosquito) and his wife Jianwen Zheng, both Chinese residents, indirectly, through International Energy & Mineral Resources Investment (Hong Kong) Company Limited ("IEMR") and Ivy Mining Inc. ("Ivy"), and directly hold approximately 18.99% of Mosquito's issued and outstanding shares. Together, Mr. Fu and Ms. Zheng also hold 72% of the Company's issued and outstanding shares. Consequently, the proposed Qualifying Transaction will be a non-arm's length Qualifying Transaction under the policies of the Exchange and will require majority of the minority shareholder approval in accordance with rules of the Exchange.

With regards to the ownership of Mosquito, as stated above, the company is a publicly traded company listed on the Exchange. To the knowledge of the Company, Mosquito's issued and outstanding shares are widely held.

Concurrent Financing

As part of the Qualifying Transaction, the Company intends to complete an equity financing involving the issuance of up to 10,000,000 common shares at a price of $0.30 per share for gross proceeds of up to $3,000,000 (the "Concurrent Financing"). It is expected that the Concurrent Financing will be conducted by way of a private placement having both a brokered and non-brokered component.

The net proceeds of the Concurrent Financing will be used to fund the costs associated with the completion of the Qualifying Transaction, the work program on the Pine Tree Property and to provide general working capital.

The Resulting Issuer

Upon completion of the Qualifying Transaction, the Company intends to be classified and listed as a Tier 2 Mining Issuer on the Exchange and be involved in the business of mineral exploration and development.

The following table sets out the names, relationship to the Company and summarizes the backgrounds of all persons who, at this time, are expected to be insiders of the Company upon closing of the Qualifying Transaction:

Name Relation to Company Background
Hongxue Fu Director, Chief Executive Officer, 50% shareholder President of IEMR
Jianwen Zheng 21% shareholder President of Inner Mongolia IEMR Valley Mining Limited
Bruce Pridmore Director, Chief Financial Officer, promoter Founder and Managing Partner of London Asia Capital Canada
Michael Raymont Director Partner of London Asia Capital Canada              
Judson Culter Director Accountant
Robert Gayton Director Financial Consultant

Prior to or in conjunction with the completion of the Qualifying Transaction, the Company expects that it will retain the services of a professional geologist (or equivalent) to serve as a director, officer or consultant to the Company.

Conditions for Closing

The completion of the Qualifying Transaction is subject to several conditions including, among other things, the Company being satisfied with the results of its due diligence investigations, Exchange acceptance of the Agreement and the Concurrent Financing, obtaining majority of the minority approval of the transaction from the shareholders of the Company, and completion of the Concurrent Financing.

Sponsorship

Sponsorship of a Qualifying Transaction of a Capital Pool Company is required by the Exchange unless an exemption from the sponsorship requirement is available. The Company intends to apply for an exemption from the sponsorship requirement. There is no assurance that the Company will be able to obtain such an exemption.

Trading Halt

As required by the policies of the Exchange, trading of the Company's common shares has been halted in connection with the announcement of the Qualifying Transaction. Trading will remain halted pending the satisfaction of the Exchange's initial filing requirements in respect of the Qualifying Transaction and the Exchange's initial assessment of the transaction and related matters. Shareholders are advised that trading may remain halted until the Exchange provides its final acceptance to the Qualifying Transaction.

TRANS NATIONAL MINERALS INC.

Hongxue Fu, Chief Executive Officer

CAUTIONARY STATEMENT

Completion of the above transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange 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 management information circular or filing statement to be prepared in connection with the 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 has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Trans National Minerals Inc.
    Bruce Pridmore
    Chief Financial Officer
    250-884-6006
    info@tnmineral.com