Black Hat Capital Inc.

October 25, 2006 13:26 ET

Black Hat Capital Inc. Announces Proposed Qualifying Transaction

Advanced Stage Silver Exploration in Mexico

CALGARY, ALBERTA--(CCNMatthews - Oct. 25, 2006) -

(Not for dissemination in the United States of America)

Black Hat Capital Inc. ("Black Hat" or the "Corporation") (TSX VENTURE:BHC.P) today announced details concerning its proposed qualifying transaction (the "Qualifying Transaction") involving the acquisition of certain mining properties from Great Horn Inc. ("Great Horn"), a corporation incorporated and validly subsisting under the laws of the State of Delaware in the United States of America.

Great Horn retained, Behre Dolbear & Company Ltd. to prepare a technical report dated, September 15, 2006 and revised October 10th, 2006 (the "Behre Dolbear Report") under National Instrument 43-101 on the Great Horn Property (as defined below).

Black Hat announced today that it has entered into a letter of intent with Great Horn, dated July 12, 2006, to acquire the Se los Dije Claim Group located in the Municipalities of Zacatecas, Guadalupe and Veta Grande in the State of Zacatecas, Mexico (the "Great Horn Property"). The closing date of this acquisition is expected to be in December 2006 or January 2007, subject to due diligence. This transaction which, when completed, will constitute its Qualifying Transaction as a capital pool company. The transaction is subject to the policies of the TSX Venture Exchange Inc. (the "Exchange") relating to the qualifying transactions of capital pool companies and Shareholder approval of Black Hat. Upon completion of the Qualifying Transaction, Black Hat will continue as a company focused in the mining sector.

The Great Horn Property

The Se los Dijes Claim Group is composed of eight concessions totalling 312.2 hectares located approximately five kilometres north-east of the city of Zacatecas in the Zacatecas mining district. Mine workings within the subject claims are located in two main areas: San Ramon and Los Gatos covering approximately 300m of the La Platosa and Veta del Alto veins.

The San Ramon mine workings comprise the San Ramon and Azul shafts approximately 95 m deep with four subsurface levels. The Azul shaft was refurbished in 2003 and was used to dewater the mine workings for mapping and sampling purposes. Once the sampling program was completed, dewatering was halted and the workings reflooded to about 30 m below surface.

The Los Gatos workings consist of a 40 m long pit along the vein and are observed connecting with a near surface caved level. Old maps show a small stope and mine workings along the vein for another 45m and to a depth of approximately 30m.

Mineralization of the Zacatecas District is typically low sulfidation, epithermal, with a common mineralogical vertical zoning from silver-rich sulfides and sulfo-antimonides to base metals at depth. Oxide mineralization, as shown in the San Ramon mine area, is expected to reach a depth between 40 to 50 m of predominantly iron oxides mixed with minor concentrations of oxidized silver minerals.

Though there is no actual record of production on the Se los Dije Claim Group, it has been reported that during the 1950's approximately 20,000 metric tons of ore grading 1.0 to 2.0 g/t gold and 400 to 600 g/t of silver were extracted at San Ramon. Historical resource and reserve estimates of the Se los Dije Claim Group have been reported at 640,000 tonnes of oxide ore with 0.5 g/t gold and 246 g/t silver and 1.2 Mtonnes at 1.3 g/t gold and 274 g/t silver of sulphide ore. Black Hat notes that these estimates do not comply with existing 43-101 code, and refer to Potential Mineralization.

Upon acquisition of the Se los Dije Claim Group, Black Hat proposes to conduct surface drilling and sampling of existing underground working in the San Ramon and Los Gatos areas to determine if a minable resource can be outlined in preparation for the future development of a mining operation. In parallel, an exploration program of surface mapping and diamond drilling has been planned to test the potential along the 2 kilometre strike length of the San Fernando, La
Platosa, Veta del Alto and the possible extension of the San Salvador veins. Based on present knowledge of the Se los Dije Claim Group, the aim is to define a resource of 10 to 20 million ounces of silver.

The Black Hat Financing

In a related matter, Black Hat Capital Inc. is pleased to announce a non-brokered private placement financing of up to $1,200,000 comprising the sale of 4,000,000 shares at a price of $0.30 per share on a best efforts basis, (the "Black Hat Private Placement") subject to regulatory approval. The proceeds will be used to finance exploration and development work on the newly acquired Se los Dije Group of Claims and for general working capital including complementary acquisitions.

Summary of the Qualifying Transaction

In consideration for the acquisition of the Great Horn Property, Black Hat will issue to Great Horn Inc. 8,000,000 common shares in the capital of Black Hat and US$200,000. The issued shares and the cash payment will held in escrow during the period of claim transfer and released when the Se los Dije Claim Group is transferred to Black Hat's wholly owned Mexican subsidiary.

The Se los Dije Claim Group (the "SLD Claim Group") is held by Minera Portree de Zacatecas S.A. de C.V. ("Portree Mexico"). On June 9, 2003, Great Horn acquired control of the claim group by entering into an agreement with Portree Mexico to advance funds to maintain, explore and develop the claims. Further to this agreement on May 10, 2006, a Heads of Agreement document was signed between Portree Mexico and Great Horn. In this document it was agreed that in exchange for the approximately US$ 450,000 advanced to Portree by Great Horn, Portree Mexico would transfer to Great Horn or it's assignees the SLD Claim Group. In the letter of intent dated July 12, 2006 Great Horn agreed transfer the SLD Claim Group free and clear of any and all liabilities or encumbrances in exchange for 8,000,000 common shares in the capital of Black Hat and US $200,000.

Great Horn Inc. is a non-trading public company incorporated in the State of Delaware, USA. The management of Great Horn is composed of Mr. Herman Becker-Fluegel; CEO, Mr. Robert Reese; President and Ms. Margaret Speciale, Corporate Secretary. The Board of Directors of Great Horn has Mr. Herman Becker-Fluegel as Chairman and Mr. Robert Reese, Mr. Walter Burger and Mr. Jan-Marteen Wentrup as directors. The company presently has approximately 120 shareholders with Mr. Herman Becker-Fluegel and family holding approximately 71% of all shares, with Mr. Becker-Fluegel personally holding 14%.

After completion of the Black Hat Placement, Black Hat will have 16 million Common Shares issued and outstanding. After completion of the Qualifying Transaction, the Black Hat Board of Directors will consist of Anthony Croll, Mark Brennan, Lester Fernandes, Stephen Shefsky and Robert A. Campbell M.Sc., P.Geo. Mr. Campbell and Mr. Shefsky are proposed to be added to the Board subject to regulatory approval. In addition, Zoran Arandjelovic tendered his resignation from the board of directors of Black Hat effective October 19, 2006 and the board has accepted his resignation. Mr. Arandjelovic will remain as a consultant to Black Hat.

Mr. Campbell is a senior geologist with more than 26 years of experience in the mining and exploration industry across North and South America with both major and junior mining and exploration companies, and has extensive geological experience in all phases of development. He received a B.A. in geological science from the University of California at Santa Barbara in 1978 and a M.Sc. degree in geology from the University of Western Ontario in 1985.

Mr. Shefsky is the President of Verena Minerals and the President of Cancap Investments Limited. Mr Shefsky brings over 15 years experience in the junior equity markets to the Black Hat board of directors.

Mr. Stephen Wallace is proposed to be appointed as the President of Black Hat, subject to regulatory approval concurrent with the contemplated transaction. Mr. Wallace is a practicing geologist with more than 20 years experience throughout Canada and internationally. Educated at the University of Ottawa with a degree in Geology (B.Sc.), he has held management and technical positions with major and junior resource companies.

Following the completion of the Qualifying Transaction Great Horn Inc. will hold approximately 50% of the Black Hat Common Shares, the current Black Hat shareholders will hold approximately 25% of the Black Hat Common Shares and the subscribers to the Black Hat Private Placement will hold approximately 25% of the Black Hat Common Shares, assuming completion of the maximum number of shares to be sold under the Black Hat Private Placement.

Black Hat has retained Blackmont Capital Inc. to provide a sponsorship report to the TSX Venture. The completion of the Qualifying Transaction is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Qualifying Transaction is also subject to additional conditions precedent, including shareholder approval of the Corporation, satisfactory completion by due diligence reviews by the parties, board of
directors' approval of the Corporation, the entering into of a formal agreement, the entering into of an employment agreement with Stephen Wallace, and certain other conditions.

The Qualifying Transaction will be an arm's length transaction as the current directors and officers of Black Hat own no interests in Great Horn Inc or the Great Horn Assets. Black Hat announces it has reserved a price of $0.30 per share for the grant of stock options to acquire up to 10% of the number of issued and outstanding Black Hat Common Shares (the "Stock Options") in the event the Qualifying Transaction and the Black Hat Private Placement are completed. The grant of the Stock Options is subject to regulatory approval. The Stock Options will be granted to directors, officers, employees and consultants of Black Hat, as determined by the Board of Directors of Black Hat following the completion of the Qualifying Transaction.

Trading of the Black Hat Common Shares will not resume until the TSX Venture has accepted the Behre Dolbear Report and all other documents required by the TSX Venture have been filed.

Black Hat will issue a further news release at such time as the TSX Venture has received the necessary documentation and trading of the Black Hat Common Shares is to resume.

This news release has been reviewed and approved by Baltazar Solano-Rico, a "Qualified Person" under National Instrument 43-101.

"Completion of the 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.

"Blackmont Capital Inc., subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion."

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Black Hat will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Black Hat.

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.

Contact Information

  • Black Hat Capital Inc.
    Anthony M. Croll
    (514) 399-9952