Atikokan Resources Inc.
TSX VENTURE : AKN

August 09, 2005 13:42 ET

Atikokan Resources Inc. Announces Merger with Silvermet Corporation

TORONTO, ONTARIO--(CCNMatthews - Aug. 9, 2005) - Atikokan Resources Inc. (TSX VENTURE:AKN) ("Atikokan" or the "Company") is pleased to announce that it has entered into a letter of intent (the "Letter of Intent") dated July 13, 2005 with an Ontario incorporated private company called Silvermet Corporation ("Silvermet"), pursuant to which Atikokan and Silvermet have agreed to complete a business combination (the "Business Combination") to form a new company called "Silvermet Corporation" ("Newco"). The Business Combination is expected to constitute a Reverse Take-over of the Company as defined in the policies of the TSX Venture Exchange (the "TSX-V").

Newco will continue the business of Atikokan as a mineral resource company. Atikokan owns a 100% interest in the Lumby Lake property located in the Atikokan area of northwestern Ontario. On the closing of the Business Combination, Silvermet will have raised approximately $1,000,000 to provide sufficient working capital for the next 18 months and an earn-in option with Anatolia Minerals Development Limited, a Toronto Stock Exchange listed company, whereby Silvermet can earn up to a 70% interest in the Tufanbeyli zinc property located in Turkey.

In addition, Silvermet holds 333,333 common shares of Logan Resources Ltd. ("Logan"), which represents approximately 2% of the issued and outstanding common shares of Logan, a TSX-V listed company with copper and gold exploration projects in the Yukon Territory. Clifford H. Frame, part of the management team of Newco, is also a director of Logan Resources Ltd.

Summary of the Proposed Reverse Takeover

Under the terms of the Letter of Intent: (i) the holders of Silvermet common shares (the "Silvermet Common Shares") will receive 1 common share of Newco (a "Newco Common Share") for each Silvermet Common Share; and (ii) the holders of Atikokan common shares (the "Atikokan Common Shares") will receive 1 Newco Common Share for every 3 Atikokan Common Shares. The outstanding stock options of Silvermet and warrants of Atikokan will be exchanged for stock options and warrants, respectively of Newco based on the same ratio as the common shares of the respective companies have been exchanged for Newco Common Shares. On completion of the Business Combination, on both a basic and fully diluted basis, the shareholders of Silvermet and Atikokan will own approximately 80.0% and 20.0% of Newco, respectively. There are currently 16,360,962 Atikokan Common Shares issued and outstanding and 22,000,000 Silvermet Common Shares issued and outstanding. Silvermet has approximately 20 shareholders.

No Non-Arm's Length Party (as that term is defined in the TSX-V Policies) of the Company has any direct or indirect beneficial interest in Silvermet or is an insider of Silvermet, and there is no relationship between any Non-Arm's Length Party of the Company and any Non-Arm's Length Party of Silvermet.

The Business Combination is subject to certain regulatory approvals and is conditional upon the completion of satisfactory due diligence by both Atikokan and Silvermet and the negotiation of a definitive agreement.

It is anticipated that, on closing, Newco will have outstanding approximately 27.5 million Newco Common Shares and approximately 267,000 warrants to purchase Newco Common Shares at an exercise price of 42 cents per share. In addition, subject to Atikokan shareholder approval, it is anticipated that Newco, on closing, will have outstanding options to acquire approximately 2.75 million Newco Common Shares at an exercise price of 15 cents per share and having a two year term. Options issued to former directors to acquire 519,000 Newco Common Shares at an exercise price of 33 cents or 60 cents per share will expire 30 days after closing.

Upon completion of the Business Combination, it is anticipated that the following persons will be appointed as directors of Newco: Stephen G. Roman, Clifford H. Frame and Geofrey Myers. Each of Silvermet and Atikokan has the right to appoint one additional director. In addition, it is expected that the following persons will be appointed to positions as executive officers of Newco: Clifford H. Frame (Managing Director), Stephen G. Roman (Chairman and CEO), T. Douglas Willock (VP, Corporate Development) and Geofrey Myers (Secretary).

It is anticipated that following completion of the Business Combination, the following corporations will own more than 10%, calculated on an undiluted basis, of the issued and outstanding Newco Common Shares: Frame Mining Corporation (18.2%); Honeysuckle Assets Inc. (18.2%); and Greyling Investments Inc. (10.9%). Frame Mining Corporation is incorporated in Ontario, and is controlled by Clifford H. Frame. Honeysuckle Assets Inc. is incorporated in the British Virgin Islands and is controlled by European private investors. Greyling Investments Inc. is incorporated in the Cayman Islands, and is controlled by the Nelson Bunker Hunt Trust Estate - Trust B, a trust domiciled in Texas.

Completion of the transaction is subject to a number of conditions, including but not limited to, TSX-V acceptance and disinterested shareholder approval. 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 to be prepared in connection with the transaction, any information released or received with respect to the Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of Atikokan 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.

Contact Information

  • Atikokan Resources Inc.
    Claude Durocher
    Chairman, President and CEO
    (416) 368-3601
    or
    Silvermet Corporation
    Stephen G. Roman
    Chairman, President and CEO
    (416) 203-8336
    www.silvermet.ca