Vaaldiam Resources Ltd.
TSX : VAA

Vaaldiam Resources Ltd.

February 16, 2010 13:17 ET

Vaaldiam Provides Update Regarding Previously Announced Unsolicited Take-Over Bid

TORONTO, ONTARIO--(Marketwire - Feb. 16, 2010) - Vaaldiam Resources Ltd. (TSX:VAA) ("Vaaldiam") reports that late last week management of Vaaldiam had a conversation with Mr. Michael Bailey, the individual who on February 1, 2010 announced an unsolicited take-over bid for the common shares of Vaaldiam at a price of US$0.07 per share. During the conversation, Mr. Bailey indicated that, despite his February 1, 2010 announcement of the unsolicited bid for Vaaldiam, he no longer had an intention of proceeding with a bid for all of the shares of Vaaldiam, but that he would consider proposing some type of investment and/or interim financing of Vaaldiam.

On February 12, 2010 Vaaldiam received a non-binding term sheet for an "equity line" investment and interim financing from 4543262 Canada Inc. ("Numberco"), a company of which Mr. Michael Bailey is President. The term sheet provides, among other things, that Numberco would commit to subscribe for and purchase from treasury up to Cdn$10 million of Vaaldiam common shares on an as-needed by the Company basis over a 24 month period at a price equal to a 5% discount to the market price of Vaaldiam's common shares at the time of a proposed draw down. However, a number of conditions would be required to be met in order for Numberco to advance the funds, including a requirement for ten arm's length and non-arm's length shareholders of Vaaldiam to first agree to sell an aggregate of approximately 100 million freely tradeable common shares of Vaaldiam to Numberco at 94% of market value and thereafter agree to loan the funds from such sales to Vaaldiam.

Vaaldiam's board of directors has reviewed the term sheet and have unanimously rejected it based on, among other things, the fact that (i) such transaction does not contain commercially reasonable terms, (ii) such transaction could not be completed within the timing set forth in the term sheet, if at all, (iii) on an informal canvassing of certain of the arm's length and non-arm's length shareholders referenced as vendors' of Vaaldiam shares, none of such shareholders were willing to entertain the proposed transaction, (iv) previous public disclosure regarding Mr. Bailey and Dunn Capital Partners, a group referenced in Mr. Bailey's February 1, 2010 press release, gives Vaaldiam and its board serious concerns regarding the legitimacy of this proposal and Mr. Bailey's ability to consummate any proposed transaction and (v) Vaaldiam's board of directors believes that the previously announced transaction (see Press Release dated January 18, 2010) whereby Tiomin Resources Inc. ("Tiomin") would acquire, via a plan of arrangement, all of the outstanding common shares of Vaaldiam in an all-share transaction (the "Transaction") on the basis of 0.80 Tiomin common share for each Vaaldiam common share is a superior transaction to that which is being proposed.

On or before February 22, 2010, Vaaldiam will be mailing its meeting materials in respect of the shareholder meeting to be held on March 15, 2010 to consider the Transaction. The Transaction was approved by the board of directors of Vaaldiam, following the unanimous recommendation of its independent committee comprised solely of independent directors and the receipt of a fairness opinion from Fraser Mackenzie Limited, financial advisors to the independent committee, which provided that, subject to certain assumptions and limitations set out therein, the proposed Transaction is fair, from a financial point of view, to the Vaaldiam shareholders. The board of directors of Vaaldiam recommends that holders of Vaaldiam shares vote in favour of the Transaction.

ABOUT VAALDIAM RESOURCES LTD.

Vaaldiam Resources Ltd. is a Canadian-based diamond mining and exploration company with two mines in Brazil and advanced-staged diamond exploration projects in Brazil and Canada. For additional information regarding Vaaldiam please visit www.vaaldiam.com, or contact Ken Johnson, President and CEO or Cintia Zanellato, Corporate Secretary, at (416) 363-6927.

This press release contains certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to international operations; risks related to joint venture operations; actual results of current exploration activities; changes in project parameters as plans continue to be refined, future prices of resources; possible variations in reserves, grade or recovery rates, accidents, labour disputes and other risks of the mining industry; and delays in obtaining governmental approvals or financing or in the completion of development or construction activities. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Contact Information

  • Vaaldiam Resources Ltd.
    Ken Johnson
    President and CEO
    (416) 363-6927
    or
    Vaaldiam Resources Ltd.
    Cintia Zanellato
    Corporate Secretary
    (416) 363-6927
    www.vaaldiam.com