Golden Dynasty Resources Ltd.
TSX VENTURE : GLY

Golden Dynasty Resources Ltd.

February 21, 2008 12:54 ET

Golden Dynasty Announces Proposed Acquisition

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 21, 2008) - Golden Dynasty Resources Ltd. ("Golden Dynasty" or "the Company") (TSX VENTURE:GLY) has entered into an agreement to purchase, directly or indirectly, 100% of the participations (shares) of Hidrocarburos del Cantabrico S.L., ("HDC"), a private company incorporated under the laws of Spain, from Energy (CG) Ltd. ("Energy"), a private British Virgin Island company, for 161,421,232 common shares of the Company. Completion of the acquisition is subject to a number of conditions.

After completion of this transaction, Golden Dynasty will have 329,431,085 common shares issued and outstanding.

About HDC

The principal asset of HDC is the right to five exploration licences (the "Licences") for coal bed and coal mine methane extraction in the Asturias area of Spain.

Details of the Licences held by HDC are as follows:

1. The Mieres Hydrocarbon exploration licence granted for six years from April 20, 2002. This licence currently has its "clock stopped" (as described below) at the beginning of the fifth year pending receipt by HDC of final authorization to develop the Mosquitera - Pumarabule coal mine methane project.

2. The Lieres, Campomanes and Laviana Hydrocarbon exploration licences granted for six years from March 20, 2004. These licences all currently have their "clocks stopped" at the beginning of the third year pending receipt by HDC of the development approval of the Mosquitera - Pumarabule mine in the case of Lieres, pending the closure of the San Antonio mine in the case of Campomanes and pending the closure of the Carrio coal mine in the case of Laviana and,

3. The Gijon Hydrocarbon exploration licence granted for six years from November 30, 2002. This licence currently has its "clock stopped" at the beginning of the third year pending the closure of the La Camocha coalmine. This licence is held in the name of a third party. HDC holds an indefinite and irrevocable power of attorney from the third party for the transfer of this licence to HDC at any time without payment.

HDC has done considerable exploration and research on methane seepage and production rates on the Licences and has advanced the methane projects to the stage where HDC can, subject to receipt of regulatory approvals, begin construction of methane recovery facilities. HDC requested Spanish authorities to approve stoppage of the Licences until the mines, which are owned or operated by Hulleras del Norte, S.A. ("HUNOSA"), are closed and become available for methane production under the Licences. This request for stoppage was granted by the Spanish authorities. HDC expects its first operations will be under the Mieres and Lieres licences relating to the Mosquitera-Pumarabule mine (the "Mine"). The Mine has been shut down by HUONSA and an abandonment plan has been filed and approved by the authorities. Upon approval by Spanish authorities of the HDC development plan, HDC will take control of the Mine property and begin construction of facilities for the methane recovery process. The "clock" on the Mieres and Lieres licences will then recommence. The Licences can be converted, subject to receiving required Spanish approvals, in whole or in part into production licences when production is commenced.

Coal Mine Methane (CMM) Recovery

HDC has done research and development on the recovery of coal mine methane. Its plan is to recover methane gas that naturally seeps into abandoned coal mines, a process that is accelerated by the application of a partial vacuum created by sealing the mine to prevent air from diluting the methane. This methane can then be used to fuel electric generators and the resulting electricity sold into the existing power grid.

The capital cost of producing electricity from the Licences has the potential to be advantageous to the Company because the mine sites are already connected to the power grid.

The economics of HDC's CMM projects may be enhanced if the Spanish government introduces premiums for electricity produced by alternative energy processes. There is also the possibility that HDC's CMM's projects would be given tradable carbon credits since the methane currently being vented into the atmosphere is more harmful than the carbon dioxide that the burning of the methane would produce. There is no assurance however that any of this will occur.

The Company has retained Petrotech Engineering Ltd. to prepare a report on HDC's Mieres project that is in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.

Legal proceedings - HUNOSA

HDC encountered difficulties with HUNOSA, the current operator of the above coal mines, over HDC's claim to the methane gas granted through the Licences. HDC appealed to the Spanish authorities and received a favourable ruling stating that HDC's proposed use of abandoned coal mines was compatible with the Licences it had been granted and was in the public interest, an important concept under Spanish law. This ruling is "executively enforceable" which means that HDC may proceed with its development with no further interruption from HUNOSA. HUNOSA is appealing this ruling but development may proceed unless HUNOSA wins the appeal. Negotiations are underway to resolve this matter in an amicable manner.

Directors and Insiders of Energy (CG) Ltd.

Dixon Porter, CEO resident of Spain, Tom Vessels, Director resident in USA, Robert Gershen, Director resident in USA.

Dixon Porter, Managing Director of both Energy, and HDC, holds 1 of the 77,143 shares of HC. This is for administrative and legal reasons under Spanish law.

New Directors

Energy will have the right to nominate three directors to the Golden Dynasty Board. The new directors will be subject to satisfactory due diligence by Golden Dynasty and the approval of the TSX Venture Exchange (TSXV).

Conditions to Closing

The transaction is subject to a number of conditions, including:
1) Receipt of all regulatory and other required approvals;

2) The completion of satisfactory due diligence by both parties;

3) All amounts owing by HDC or its parent company to any company within the Energy group of companies will be resolved in a manner and on terms acceptable to each of Energy and the Company;

4) The completion of financing to enable the Company to complete the exercise of the $13,000,000 USD Columbus Option (see Company news release of October 26, 2007) and for operational purposes;

5) The appointment of representatives of Energy to the Board of Directors of the Company at closing as previously described; and

6) The granting to the new directors, subject to applicable regulations of the TSXV and all required approvals, of 15,500,000 share options.

Financing

The Company has appointed Associated Energy Managers LLC ("AEM") to, among other things, seek mechanisms whereby the required funds can be raised to accomplish the Company's objectives. AEM is a limited liability, US private company specializing in financing projects within the oil and gas industry. AEM is entitled, subject to the rules of the TSX Venture Exchange, to compensation for its services.

Closing

The closing of the HDC acquisition is scheduled for five business days after receipt of all necessary approvals, but in no event later than April 30th 2008 unless otherwise agreed by the parties.

As completion of the transaction is subject to a number of significant conditions, including acceptance of the TSXV and other required approvals, there can be no assurance that the transaction will be completed.

Investors are cautioned that the information provided in this news release relating to HDC and the Licences is based upon information received from HDC and Energy and has not been verified by the Company. Trading in securities in Golden Dynasty should be considered highly speculative.

This news release contains certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential", and similar expressions, or that events or conditions "will", "would", "may", "could" or "should", occur and include without limitation, statements regarding the Company's plan of business operations; the terms of the proposed transaction and regulatory approval thereof, financial impact and other benefits of the proposed transaction. Although the Company believes the expectations expressed in such forward-looking statements are based upon reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Factors that could cause the actual results to differ materially from those in forward-looking statements include transaction risks, regulatory risks, exploitation and exploration results, ability to obtain required permits and licences, availability of capital and financing, market prices, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Forward-looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made. The Company undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions or other factors, should change.

The TSXV 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

  • Golden Dynasty Resources Limited
    Douglas W. Scheving
    Director and Corporate secretary
    (604) 684-7619
    (604) 684-7346 (FAX)
    Website: www.goldendynasty.ca