Erdene Resource Development Corporation

Erdene Resource Development Corporation

July 17, 2008 09:00 ET

Erdene Announces Reverse Takeover of Beta Minerals Inc.

Advances Kaolin Business

HALIFAX, NOVA SCOTIA--(Marketwire - July 17, 2008) - Erdene Resource Development Corp. ("Erdene") (TSX:ERD) today announced it has entered into a binding letter agreement (the "Agreement") with Beta Minerals Inc. ("Beta") (TSX VENTURE:BMI) and Deepstep Kaolin Company LLC ("Deepstep") whereby Erdene will exchange all of the outstanding common shares of its wholly owned US subsidiary, Erdene Materials Corporation ("EMC"), for common shares of Beta (the "Transaction"), giving Erdene a controlling interest in Beta. Prior to the Transaction, EMC will transfer all of its "non-clay assets", consisting primarily of its construction aggregate assets, to another company owned by Erdene.

"We are very excited by this arrangement which provides for initial funding of very promising business opportunities that will be advanced independently through a new public entity," said Ken MacDonald, VP Business Strategy and CFO of Erdene. "With EMC's primary clay projects already producing for the paper industry and new ceramic applications moving through final commercial testing we envision significant growth in these areas as well as rapid advancement of other opportunities."

The Business Opportunity

Upon completion of the proposed Transaction, Beta will control one of the highest quality kaolin resources in North America. Due to an aggressive exploration and acquisition program by EMC in the late 1990s, Beta will control a large, high brightness primary clay resource of "premium" quality with an in-ground , resource of 21.9 million tons. The projects are located in central Georgia which is the largest producing kaolin clay region globally. In addition to the kaolin resources, the clay assets will include ongoing commercial production on a pre-paid royalty basis by Kamin LLC (formerly J. M. Huber Corporation), a minerals laboratory and pilot plant originally developed by RTZ's industrial mineral division, a joint venture with Deepstep to develop and manufacture specialty kaolin products largely in the ceramics business, large surface land ownership of approximately 1,500 acres, and an experienced operations and management team.

While the greatest demand for kaolin-based pigments comes from the paper industry, kaolin is also used in paints, plastic, rubber and ceramics where it provides brightness, colour and particle shape properties. The Agreement will enable EMC to expand on the current commercial product line used by the paper industry and to develop new product lines for the primary kaolin resources, initially in the ceramics sector. EMC has also been conducting testing of the resource for use in the catalytic converter sector and is evaluating its use in the cement industry. The initial focus will be the production and sale of kaolin products to the ceramic industry and toll processing of specialized industrial mineral products. EMC and Deepstep have been working with manufacturers over the past 24 months testing various EMC primary clay sources in different ceramic and glazing clay applications and are about to begin commercial production.

Terms of the Agreement

Pursuant to the Agreement, Beta will effect a 10:1 share consolidation prior to the closing of the Transaction resulting in Beta having a fully diluted share position of approximately 3,132,248 shares immediately prior to the issuance of any post-consolidation Beta shares. EMC will transfer all of its non-clay assets to a separate entity and, on the closing of the Transaction, Erdene will transfer all of the shares of EMC to Beta in exchange for 11,700,000 Beta post consolidation shares ("Transaction Shares"). The 11,700,000 Transaction Shares will be distributed to Erdene to the extent of 10,700,000 shares and the remaining 1,000,000 shares to Deepstep. As a result, upon issuance of the Transaction Shares, Erdene will control 72% of the issued and outstanding shares of Beta. 3,600,000 of the Consideration Shares issuable 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. Additional Consideration Shares may be issued to Erdene based on a closing adjustment for any surplus expenditures made by EMC with respect to the management or development of its clay assets in excess of $300,000 before the closing. The Consideration Shares may be subject to escrow conditions imposed by the TSX Venture Exchange. Concurrent with the closing of the Transaction, Erdene will nominate a new board of directors of Beta, initially expected to be five persons.

Conditions of the Agreement

The Agreement is subject to a 30 day due diligence period and to fulfillment of a number of conditions precedent including receipt of all required regulatory approvals, approval from the shareholders of Beta to the transaction, the share consolidation and a name change, Beta entering into employment/service agreements for the position of President and CEO and with key management personnel, Beta receiving a satisfactory opinion from its financial adviser, and Beta having cash on hand at closing in the minimum amount agreed upon by the parties. Assuming all conditions are met, it is anticipated that the transaction will close not later than late November 2008.

About Beta Minerals Inc. (Beta)

Beta is a well financed, Vancouver based, TSX- Venture listed company that has been evaluating projects for acquisition, exploration and development. Beta Minerals was founded around the exploration assets of the former Highwood Resources in 2002.

About Erdene Resource Development Corp.

Erdene (formerly Erdene Gold Inc.) is a diversified resource development company with multiple projects at various stages of development from exploration to production all focused on high-growth commodities. The Corporation has a strong portfolio of exploration properties in Mongolia where it has a strategic alliance with Xstrata Coal to develop its coal properties and a strong focus on base metals (copper and molybdenum), precious metals (gold) and energy (coal). Minarco-MineConsult, of Sydney, Australia, has recently completed a National Instrument 43-101 compliant independent resource estimate for the Zuun Mod molybdenum project and is currently working on a scoping study on the project. In addition, Erdene has near-term cash flow opportunities in its North American assets, which include a 25% interest in the Donkin Coal Alliance with Xstrata Coal, agreements with KaMin LLC (formerly J.M. Huber Corporation) and Ready Mix USA as operators and developers in the southeast U.S. for its kaolin clay and construction aggregate projects, respectively. Erdene has a cash position of approximately $22.4 million with 89,230,877 common shares issued and outstanding and a fully diluted share position of 98,783,352 common shares.

Forward-Looking Statements

Certain information regarding Erdene contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although Erdene believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Erdene cautions that actual performance will be affected by a number of factors, most of which are beyond its control, and that future events and results may vary substantially from what Erdene currently foresees. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration results, continued availability of capital and financing and general economic, market or business conditions. The forward-looking statements are expressly qualified in their entirety by this cautionary statement. The information contained herein is stated as of the current date and subject to change after that date.

Contact Information

  • Erdene Resource Development Corp.
    Peter C. Akerley
    President and CEO
    Erdene Resource Development Corp.
    Ken W. MacDonald
    Vice-President Business Development and CFO