GOLCONDA RESOURCES LTD.
TSX VENTURE : GA

GOLCONDA RESOURCES LTD.

May 12, 2008 11:10 ET

Acquisition by Golconda Resources Ltd. of Lyncorp Drilling Services Inc.

CALGARY, ALBERTA--(Marketwire - May 12, 2008) - Golconda Resources Ltd. (TSX VENTURE:GA) ("Golconda" or the "Company") is pleased to announce that Golconda and David Mullen, sole shareholder of Lyncorp Drilling Services Inc. ("Lyncorp") have entered into an agreement whereby Golconda will acquire all of the issued and outstanding shares of Lyncorp. Closing of the proposed transaction is subject to a number of conditions, including the completion of satisfactory due diligence by parties, TSX Venture Exchange ("TSXV") approval and approval by the shareholders of Golconda if required. David Mullen, a Non Arm's Length Party of Golconda, holds an aggregate of 7,740,000 Golconda common shares which represent 14% of the issued and outstanding Golconda common shares.

Lyncorp, a private company incorporated under the laws of Alberta and headquartered in Calgary with its operations center in Smithers B.C., has provided diamond core drilling services to the exploration industry in British Columbia, Saskatchewan, Alaska and Nevada. Lyncorp has seven rigs capable of skid mounted and helicopter supported drilling.

The agreement, dated May 9, 2008, provides for the acquisition by Golconda of all of the issued and outstanding shares of Lyncorp for an aggregate purchase price of $6,500,000, payable by the issuance of:

(a) 7,500,000 common shares of Golconda (the "Acquisition Shares"), having a deemed price of $0.10 per share, to be issued on the closing date;

(b) 25,000,000 common shares of Golconda (the "Performance Shares"), having a deemed price of $0.10 per share, to be issued on the date that the acquired drilling business achieves EBITDA of $1,640,000 (the "Performance Event"), provided such Performance Event occurs prior to December 31, 2009; and

(c) a 10% secured debenture in the principal amount of $3,250,000, payable on or before the date that is 24 months from the closing date of the transaction.

In conjunction with the proposed transaction, $483,000 of debt owed by Golconda to Lyncorp (or its associates or affiliates) will be repaid and cancelled by the issuance from treasury of 4,830,000 common shares of Golconda (the "Debt Shares"), each having a deemed value of $0.10 per share. Further, the Company proposes to grant an aggregate of 1,000,000 stock options to directors, officers and employees of Golconda concurrent with the closing of the transaction. These stock options will have an exercise price equal to $0.17 per share and will have a five (5) year term.

In the event the transaction is completed and the Performance Event is achieved, it is anticipated that David Mullen (or his nominees, associates or affiliates) will hold an aggregate of 45,070,000 common shares of Golconda (including his current shareholdings, the Acquisition Shares, the Performance Shares and the Debt Shares), representing approximately 48.8% of the issued and outstanding Golconda common shares. No finder's fee is payable in connection with the proposed transaction.

Following completion of the transaction, it is proposed that each of Terry Chan, Robert Crancer, Reynoudt Jalink and Lyle Pederson resign as directors of Golconda and that David Mullen, Leonard Messmer and an additional new independent director (to be announced once identified), be appointed to the Golconda board. Further, upon completion of the transaction, it is proposed that Guenter Liedtke will resign as President, Chief Executive Officer and Chief Financial Officer of Golconda and will become the Chief Operating Officer of the Company. It is proposed that Sid Dutchak will become the President and Chief Executive Officer of Golconda and Robert Gillies will become the Chief Financial Officer. As such, on completion of the transaction, the senior executives and the board of directors of Golconda will include the following individuals:

Sid Dutchak (Proposed President and Chief Executive Officer)

Mr. Dutchak, an independent businessman, will serve as the Company's President and Chief Executive Officer. Mr. Dutchak was previously the President of Cordy Oilfield Services Inc. (formerly QCC Technologies Inc.) from March 2001 to July 2007. Prior to that, Mr. Dutchak was a director of QCC Technologies since 1999. Mr. Dutchak has served on several public company boards, and within the past five years served on the boards of How To Web TV Inc., Ergo Ventures Inc. and Maple Leaf Reforestation Inc.

Robert Gillies (Proposed Chief Financial Officer)

Mr. Gillies will serve as the Company's Chief Financial Officer. Mr. Gillies is currently the Chief Financial Officer of Cordy Oilfield Services Inc., a public company listed on the TSXV. Mr. Gillies is a Chartered Accountant with 30 years experience as a Partner in accounting firms and as a CFO in several public companies listed on the TSXV and the Toronto Stock Exchange. He has spent considerable time working with start-up and emerging businesses.

Guenter J. Liedtke (Director and Chief Operating Officer)

Mr. Liedtke will continue to serve on Golconda's board of directors. He has over 40 years' experience in mineral exploration. From 1967-1977 he worked in Southern Africa for the South African Geological Survey, Penarroya, a French Mining Company, and Newmont. Between 1977 and 1983 he was responsible, as the Manager of Exploration, for guiding uranium exploration in North America and South Africa, for the German company Sedimex. In 1984 Mr. Liedtke took Canu Resources Ltd. public and acted as president. Since then he has been a director and officer of several public companies, as well as the founder, president and director of Golconda Resources Ltd. since 1986.

Howard G. Coopersmith, R.P.G. (Director)

Mr. Coopersmith has over 30 years experience in diamond deposits and project evaluation, feasibility and development, including projects in North America, South America, southern Africa, West Africa, Australia, India and Europe. Previously an officer/director of several diamond explorers and miners, he currently consults for select clients and various international engineering consultancies, investment bankers and brokerage houses, and is frequently an invited speaker at conferences.

David Mullen (Proposed Director)

Mr. Mullen is a director of Shear Minerals Ltd. and Copper Fox Metals Inc., which are publicly traded mineral exploration companies. Mr. Mullen is the Chief Executive Officer of Cordy Oilfield Services Inc., a publicly traded oil services company. Previously, Mr. Mullen served in various capacities, including Senior Vice President, in Mullen Trucking LP, a wholly-owned subsidiary of Mullen Group Income Trust. Mr. Mullen has also been a director of Rocky Mountain Dealerships Inc., a TSX listed company, since December, 2007. Mr. Mullen resides in Calgary, Alberta.

Leonard Messmer (Proposed Director)

Mr. Messmer, a Calgary businessman, is the owner of Monument Machineshop Ltd, a drilling equipment manufacturer and distributor. Mr. Messmer founded Mesken Contracting Ltd., a Southern Alberta heavy equipment construction company in 1982 and currently acts as its president.

Golconda will issue a further press release disclosing financial information for Lyncorp in due course. Trading in the common shares of the Company will remain halted until such financial information has been disclosed and such further documentation has been provided to the TSXV.

Completion of the transaction is subject to a number of conditions including, but not limited to, the parties entering into a definitive agreement and TSXV acceptance. There can be no assurance that the transaction will be completed as proposed or at all.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange does not accept responsibility for the accuracy or adequacy of this release.

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