Beta Minerals Inc.
TSX VENTURE : BMI

Beta Minerals Inc.

July 17, 2008 08:59 ET

Beta Executes Securities Exchange Agreement To Complete Reverse Takeover to Acquire Kaolin Assets

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 17, 2008) -

Agreement

Beta Minerals Inc. ("Beta") (TSX VENTURE:BMI) is pleased to announce that it has entered into a binding letter agreement dated July 15, 2008 (the "Agreement") with Erdene Resource Development Corp. (formerly, Erdene Gold Inc.) ("Erdene") and Deepstep Kaolin Company LLC ("Deepstep), pursuant to which Beta will acquire all of the kaolin assets located in the United States as described below (collectively, the "Clay Assets") held by Erdene Materials Corporation ("EMC"), a wholly owned subsidiary of Erdene incorporated pursuant to the laws of Delaware, by acquiring all of the issued and outstanding shares of EMC in exchange for shares of Beta (the "Transaction").

The arm's length Transaction will constitute a "Reverse Take Over" under the applicable policies of the TSX Venture Exchange (the "Exchange"). No relationship exists between or among the officers and directors of Beta, the officers and directors of Erdene, and each of Beta and Erdene.

Consolidation

Prior to the closing of the Transaction, Beta intends to consolidate (the "Consolidation") the issued and outstanding common shares of Beta ("Beta Shares") on the basis of 10 current Beta Shares being consolidated into 1 post-consolidation common share of Beta ("Beta New Share").

Terms of Transaction

Pursuant to the Transaction, at the time of closing EMC will transfer certain assets such that it will only hold the Clay Assets. Erdene will then exchange all of the issued and outstanding securities of EMC to Beta in consideration for the issuance by Beta of 11,700,000 Beta New Shares (the "Consideration Shares"). The Consideration Shares shall be issued as to 10,700,000 to Erdene and 1,000,000 to Deepstep. 3,600,000 of the Consideration Shares issued to Erdene will be subject to a contractual hold period and will be released upon certain milestone events pertaining to the Clay Assets being achieved. 350,000 of the Consideration Shares issued to Deepstep will be such subject to a contractual hold period and will be released on the later of certain commercial production targets being obtained or the first anniversary date of the closing of the Transaction. Additional Consideration Shares or Units (as defined below) may be issued to Erdene based on a closing adjustment for any surplus expenditures made by Erdene with respect to the management or development of the Clay Assets over $300,000 from July 15, 2008 to closing of the Transaction. The Consideration Shares may also be subject to escrow conditions imposed under Exchange policies. Pursuant to the Transaction, Beta may pay up to $220,000, in cash or Beta Shares, to certain service providers prior to completion of the Transaction.

Concurrent with the closing of the Transaction, Erdene will nominate a new board of directors of Beta, initially expected to be five persons. It is anticipated that Philip S. Martin would stand as Chairman and that Kenneth W. MacDonald and Chris Cowan would stand as directors with the two remaining board seats to be filled by independent directors. It is further contemplated that Kenneth W. MacDonald will be appointed President and Chief Executive Officer and that Paul Coughlan, Allan Pryor and David Avant will form the balance of the management team. Additional information regarding the proposed directors and officers will be provided at a later date.

Financing

In addition, prior to closing of the Transaction, it is intended that Beta will complete a brokered private placement, on a best efforts basis, of a minimum of 2,500,000 and a maximum of 4,166,000 units ("Beta Unit") at $1.20 per Beta Unit (the "Private Placement"). Each Beta Unit shall consist of one Beta New Share and one half of one Beta New Share purchase warrant, each whole warrant being exercisable for one Beta New Share for 24 months at a price of $1.50 per Beta New Share. Closing of the Private Placement will occur concurrently with the closing of the Transaction. The proceeds from the Private Placement will be used to develop the Clay Assets. Additional information regarding the Private Placement will be provided when available.

Description of the Clay Assets

Background

Erdene, through its wholly owned subsidiary, EMC, is involved in the exploration, evaluation and development of primary kaolin resources in the state of Georgia, U.S.A. EMC conducted an extensive core drilling and laboratory testing project between 1998 and 2001 to discover and define in-ground primary kaolin resources. The project has evaluated and explored the large area of the Southern Appalachian Piedmont Province from east-central Georgia to west-central South Carolina that is underlain primarily by the Sparta granite. A significant primary kaolin resource was discovered and acquired through a series of leases and land purchases.

Resources

The kaolin resources are in the form of primary kaolin which is formed by the in situ alteration (weathering) of bedrock, principally granite, associated with the Sparta pluton (referred to as Sparta primary kaolin). Primary kaolins are very different from the sedimentary clays which have been the focus of the Georgia kaolin industry for over a hundred years. In comparison, from a mining viewpoint, the Sparta primary clay district has much less overburden thickness. However, the crude clay is much higher in coarse quartz and other non-clay grit residue minerals which must be removed. The quality of the degritted kaolin itself is also quite different. The most distinctive difference is the much higher brightness and whiter color which can usually be obtained by simple low cost magnetic separation and reduction leach processing. The Sparta primary kaolin is highly crystalline and can make a very high aspect-ratio platey product which is ideal for certain product applications.

Access

All of the project areas are easily accessible by paved highway to within a minimum of 3 km of the properties, then by all season dirt roads to the properties themselves. The Lucky, Brookins and Maddox areas are located within 8 km of Sparta, Georgia, which has a population of approximately 1500 and is located about 85 km from Athens, Georgia (population 100,000) via paved two-lane highway. The Bluenose and Tudor areas are located within 20 km of Augusta, Georgia, a city of 200,000 people via paved two-lane highway.

The properties are located approximately 500 feet above sea level. Generally, the area has a flat topography and is covered with sandy soil and the typical vegetation for the area is Georgia Pine. The climate in eastern Georgia is characterized by warm summers and very mild winters.

History

The presence of primary kaolin in Georgia and South Carolina has been well known and documented over the past century. Its potential development was not considered for hydrous or calcined products until the early 1980's when Georgia Kaolin Company began an investigation into the potential for commercial development of primary kaolin. U.S. Borax Inc. ("U.S. Borax"), a subsidiary of Rio Tinto Ltd., initiated a project in 1991 evaluating primary kaolin in Georgia, beginning with the Maddox property where a former Martin Marietta aggregate quarrying operation exposed primary kaolin. During the period 1992 to 1996, U.S. Borax discovered and drilled at 400 to 800 foot spacing the Lucky Strike, Brookins and Maddox primary kaolin prospects and completed a limited regional exploration program. U.S. Borax drilled 443 holes totaling 25,469 feet.

In October 1998, EMC acquired from U.S. Borax its mineral leases and a parcel of real estate associated with U.S. Borax's primary kaolin exploration project. The acquisition included four properties known as Lucky Main, Lucky Southwest, Brookins and the Maddox property, totaling approximately 2,500 acres. None of the resource properties were previously mined for kaolin. The Maddox property was mined as an aggregate quarry (3 million tons total production) in the 1960s and early 1970s. EMC's resource properties are either forest property, farm property or private residence property.

Mineralization

The Sparta primary kaolins are very different from the sedimentary clays which are the center of the industry in the Coastal Plain area from Macon, Georgia trending northeast to Aiken, South Carolina. In comparison, from a mining viewpoint, the Sparta primary clay district has much less overburden thickness. However, the crude clay is much higher in coarse quartz and other non-clay grit residue minerals which must be removed. The quality of the degritted kaolin itself is also quite different. The most distinctive difference is the much higher brightness and whiter color which can usually be obtained by simple low cost magnetic separation and reduction leach processing. The Sparta primary kaolin is highly crystalline, and occurs both in thin high aspect ratio platelets and as thick accordion-shaped stack-like crystals which are quite easily cleaved to thin plates. Particle size can be reduced by centrifugation and delamination cleavage of the stack-like crystals. Wet milling of the oversize centrifuge rejects can be done to any desired particle size specification, making a desired very high aspect-ratio platey product. Sparta-type primary kaolin viscosity is fundamentally different from that of the typical Georgia sedimentary clays. The higher viscosity of the Sparta kaolin is likely due to its high aspect ratio platey nature and particle size distribution, which can also be positive optical attributes for many uses as a paper pigment and in industrial applications.

Additional information regarding the Clay Assets can be found in Erdene's annual information form dated March 25, 2008 (the "AIF") for the year ended December 31, 2007 under the heading "Sparta Kaolin Project". The AIF is available at www.sedar.com under the name Erdene and was filed on March 25, 2008.

All information regarding the Clay Assets has been provided by Erdene and has not been independently verified by management of Beta.

Conditions

The proposed Transaction is subject to a number of conditions including the following:

a. satisfactory due diligence by both Erdene, Deepstep and Beta;

b. Beta having a minimum of $2,200,000 in cash at closing of the Transaction, prior to the Private Placement and payment of the expenses related to the Transaction;

c. employment agreements, services agreements or other satisfactory arrangements in place for the position of President and CEO and with key management personnel, namely Alan Pryor, David Avant and Paul Coughlan;

d. Beta receiving a satisfactory opinion from its financial adviser that the Transaction is fair to the shareholders of Beta from a financial perspective;

e. TSXV providing Beta with conditional approval for the listing of the Beta New Shares;

f. the Private Placement being completed;

g. the approval of the shareholders of Beta of the Transaction, the Consolidation and a name change of Beta; and

h. regulatory approvals.

Sponsorship

Beta intends to make application for an exemption from the Exchange's sponsorship requirements based upon the Private Placement being conducted on a brokered basis.

About Beta

The Company was incorporated under the provisions of the Business Corporations Act (Ontario) on September 27, 2002 and its principal business activity is the acquisition and exploration of mineral properties. To date, the Company has not generated significant revenues from operations and is considered to be in the development stage. Upon completion of the Transaction, Beta's business will be the exploration and development of the Clay Assets.

About Erdene and EMC

Erdene was incorporated under the Canada Business Corporations Act on July 27, 2000. Erdene's common shares are listed for trading on the Toronto Stock Exchange under the symbol "ERD". Erdene's corporate office is located in Dartmouth, Nova Scotia and its head office is located in Toronto, Ontario. EMC is a wholly owned subsidiary of Erdene incorporated under the laws of Delaware.

About Deepstep

Deepstep, of Georgia, USA is a private corporation controlled by David Avant. Mr. Avant began his career with Georgia Kaolin Company where he was responsible for some of the initial research into the use of primary kaolin. He has been involved in the exploration and development of industrial minerals worldwide for 27 years. He was involved in the development of a high quality mica operation in middle Georgia which was the first ever to utilize mica from sedimentary deposits. Mr. Avant has a number of patents applying to various industrial mineral applications and is considered one of the leading innovators in the production and separation of kaolin, sands and micas in the Georgia region. On October 31, 2007, Erdene entered into an option agreement with Deepstep for the purpose of jointly developing Erdene's primary kaolin resources.

Completion of the transaction is subject to a number of conditions, including, the Exchange's 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 or filing statement to be prepared in connection with the transaction, any information released or received with respect to the change of business may not be accurate or complete and should not be relied upon. Trading in the securities of Beta should be considered highly speculative.

This new release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

The 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.

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