Galahad Metals Inc.

Galahad Metals Inc.

February 24, 2011 09:25 ET

Galahad to Spin Out Bottle Creek to Red Ore Gold Inc.

OTTAWA, ONTARIO--(Marketwire - Feb. 24, 2011) - Galahad Metals Inc. ("Galahad")(TSX VENTURE:GAX) is pleased to announce today its intention to spin out (the "Transaction") its 60% interest in Bottle Creek Exploration, LLC ("Bottle Creek") into a new BC incorporated company called Red Ore Gold Inc. ("Red Ore"), a wholly-owned subsidiary of Galahad. Bottle Creek is a joint venture with Golden Gryphon USA, Inc. and holds the claims forming the Bottle Creek, Nevada gold property (the "Property"). In consideration, Galahad will receive 8,953,360 common shares of Red Ore (the "Consideration Shares"), at a deemed price of $0.50 per Consideration Share, for aggregate consideration of $4,476,680, representing the amount spent to date by Galahad in exploration and property staking and payment costs at the Property. The Consideration Shares will be subject to a voluntary thirty-six month escrow agreement, with no shares freely tradable for the first six months, or such other release schedule imposed by the TSX Venture Exchange.

It is anticipated that upon completion of the Transaction, the directors and officers of Red Ore will be Robin Dow (Director, Chair and CEO), Michael Newman (Director), Larry Hoover (Director), Bob Schellenberg (Director) and Sabino Di Paola (CFO).

Upon completion of the Transaction, it is anticipated that Red Ore will:

  • complete a private placement of up to 2 million Units at a price of $0.50 per unit, each unit comprised of one Red Ore common share and one whole Red Ore common share purchase warrant exercisable at $0.75 for two years, for $1 million for working capital purposes and to fund exploration activities on the Property;

  • complete a National Instrument 43-101 technical report in respect of the Property;

  • complete its initial public offering ("IPO") by filing a prospectus in the provinces of British Columbia, Alberta and Ontario; and

  • concurrent with its IPO, apply for a listing of the Red Ore common shares on the TSX Venture Exchange.

The Transaction, the proposed IPO and the proposed subsequent listing is subject to the approval of the TSX Venture Exchange as well as the approval of other required regulatory bodies.

Galahad intends to retain the Consideration Shares, rather than to distribute them to its shareholders. The Board of directors is of the opinion that by Galahad retaining the Consideration Shares rather than distributing them to its shareholders, an orderly and balanced after market will be created for the IPO shares.

Robin Dow, Galahad CEO reports: "Management believes that Galahad is not receiving any recognition in the public markets for the Property. The significant Bottle Creek holdings, which encompass over 900 claims, are a very exciting drill ready project, with a 2011 budget of $1.6 million in drilling and sampling programmes. Upon completion of the Transaction and the IPO, it is anticipated that Galahad shareholders will receive the benefit of indirect ownership in a newly-listed public company in addition to retaining their interest in Galahad's other, exciting exploration projects."

P I Financial Corp. has been retained to provide advisory services with respect to this Transaction.

This news release does not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. The securities referred to in this news release have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent registration under the United States Securities Act of 1933, as amended, or an applicable exemption from such registration requirements.

"The statements in this Press Release may contain forward looking statements that involve a number of risks and uncertainties. Actual events or results could differ materially from the Company's expectations and projections. 

Neither the TSX Venture Exchange, nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

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