Castillian Resources Corp.

Castillian Resources Corp.

July 24, 2009 09:16 ET

Castillian Agrees to Acquire Tucano Exploration Inc.

TORONTO, ONTARIO--(Marketwire - July 24, 2009) -


Castillian Resources Corporation ("Castillian" or the "Company") (TSX VENTURE:CT) is pleased to announce that it has entered into a letter agreement to acquire 100% of the issued and outstanding common shares of Tucano Exploration Inc. ("Tucano"), a private mineral exploration company, incorporated pursuant to the laws of the Province of Ontario (the "Acquisition").

Pursuant to the Acquisition, Tucano shareholders will receive 2.29 common shares of Castillian (the "Castillian Shares") in exchange for each one common share of Tucano (the "Tucano Shares"). The consideration to be paid by Castillian to Tucano is valued at approximately $1,500,000. Accordingly, Castillian would issue an aggregate of 25,000,000 common shares of Castillian valued at $0.06 per Castillian Share. There are currently 107,489,359 Castillian Shares issued and outstanding and 10, 910,000 Tucano Shares issued and outstanding. Upon completion of the Acquisition, Tucano shareholders will hold approximately 18.8% of the Company.

The Boards of Directors of both Castillian and Tucano unanimously support the proposed business combination.

Completion of the Acquisition is subject to a number of conditions, including but not limited to, a due diligence review period and the negotiation and execution of a definitive agreement to be entered into between the parties.

Tucano's principal asset is the 100% owned Paramirim Au-Cu project in west-central Bahia state, Brazil which consists of 33 mineral concessions covering more than 36,000 hectares. This project covers a favourable belt for both IOCG-style mineralization and orogenic gold that extends some 80 km along strike. Work completed by Tucano includes geological mapping, sampling and approximately 2,000m of reconnaissance drilling which has defined a number of follow-up targets and Tucano is currently in the process of completing a National Instrument 43-101 compliant technical report on the project

In connection with the Acquisition, Tucano has advanced $250,000 to Castillian by way of a loan agreement (the "Loan") in order to assist the Company with the costs and expenses related to the Acquisition. The Loan is subject to an interest rate of 10% per annum and is secured against the Company's interest in the Mangabal Nickel Project located in the Goais State, Brazil. The Loan shall become repayable on March 16, 2010.

It is anticipated that the proposed Transaction will complement Castillian's intention to refocus on more advanced to development stage projects with a gold and or copper focus in Brazil or elsewhere in South America. Castillian continues to develop its portfolio of nickel projects in Brazil, Tanzania and Argentina. Pursuant to the Acqusition, it is proposed that Dr. Bill Pearson, P.Geo., President & Chief Executive Officer of Tucano will join the Board of Directors of Castillian and will become the President & Chief Executive Officer of the Company. It is further anticipated that Mr. David Gower, the current President and Chief Executive Officer of Castillian will become the Chairman of the Board of Directors of the Company.

David Gower commented: "This is a beneficial transaction for Castillian, as it brings cash into the Company and enhances management. Dr. Pearson has a strong track record of success in gold exploration and development in South America, notably in Brazil and will be dedicated full time to developing Castillian's projects and growth. The companies have been jointly evaluating advanced projects in Brazil in recent months and we have excellent technical teams with complementary skills, that together include ore reserve and engineering capabilities which strengthen our ability to acquire and execute advanced or development stage projects. We are continuing to maintain and develop our nickel assets."

Bill Pearson said: "I am very pleased to be joining Castillian. This agreement gives Tucano shareholders liquidity and potential for significant upside going forward. Our combined technical teams are a huge asset which will enable us to move forward rapidly to evaluate and complete technical work on projects. Brazil is an excellent country to be in with significant opportunities. I look forward working with David and the Board of Directors of Castillian to build a strong dynamic junior mining exploration and development company."

Regulatory Approvals

Completion of the Acquisition is subject to a number of conditions, including without limitation, negotiation and execution of the definitive share exchange agreements, TSX Venture Exchange acceptance and receipt of other regulatory approvals, including shareholder approval, if required. There can be no assurance that the acquisition will be completed as proposed or at all.

About Castillian Resources

Castillian Resources Corp. is a Canadian mineral exploration company listed on the TSX Venture Exchange under the symbol "CT" which has partnered with Xstrata Nickel to explore the approximately 153,000 hectares of the Mangabal nickel-copper project in Brazil. The Company is earning an interest in the Las Aguilas Nickel-Copper-PGM Project in Argentina from Marifil Mines Ltd. and has the right to purchase a 100% interest in the Kagera Project which comprises over 1,600 square kilometres in the highly mineralized Kabanga Nickel Belt in Tanzania and rights to acquire 90% of the Pederson deposit, an advanced gold exploration project in Bolivia which is currently under force majeure.

Cautionary Note Regarding Forward-looking Information

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the future financial or operating performance of the Company, its subsidiaries and its projects, statements regarding exploration prospects, statements regarding the potential and financial impact of the proposed Acquisition, the terms and conditions of the Acquisition, receipt of requisite approvals and the execution of definitive agreements, the benefits of the proposed Acquisition, the identification of mineral reserves and resources, costs of and capital for exploration projects, exploration expenditures, timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social uncertainties; acquisition risks, the actual results of current exploration activities; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; the business of Castillian and Tucano not being integrated successfully or such integration proving more difficult, time consuming or costly than expected, not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral prices; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and shortages and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information 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 information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.


Contact Information

  • Castillian Resources Corporation
    Ana Lopes
    Manager Investor Relations
    (416) 861-2264
    Castillian Resources Corporation
    David Gower
    President & CEO
    (416) 861-5902