Hathor Exploration Limited
TSX VENTURE : HAT

Hathor Exploration Limited

December 10, 2007 15:35 ET

Hathor Responds to Northern Continental Resources Directors' Circular

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 10, 2007) - Hathor Exploration Limited ("Hathor") (TSX VENTURE:HAT) has reviewed the Directors' Circular (the "Directors' Circular") filed by Northern Continental Resources Inc. ("Northern Continental") (TSX VENTURE:NCR) in response to Hathor's offer (the "Offer") for all of the outstanding common shares of Northern Continental.

Hathor believes the Directors' Circular is riddled with inaccuracies and misleading statements that require immediate clarification.



Examples of Inaccurate and Misleading Statements

(i) The Offer will significantly dilute the economic interest FALSE
of Northern Continental Shareholders in the Russell Lake
Property from a 60% interest to a 17% interest

(ii) The Offer substantially undervalues the 60% interest of FALSE
Northern Continental in the Russell Lake Property

(iii) Northern Continental's senior management has more skill and FALSE
experience than Hathor's exploration team to effectively
manage the exploration of the Russell Lake project

(iv) The Offer was at a discount to Northern Continental's share FALSE
price at the time of mailing

(v) The fairness opinion received by Northern Continental FALSE
provides sufficient analysis, including basis, valuation
methodology and comparative metrics, to determine whether
the Offer is financially adequate

(vi) The Offer is highly conditional FALSE

(vii) Northern Continental's Board of Directors responded to FALSE
Hathor's initial friendly proposal in a responsible manner
that was in the best interest of the Northern Continental
shareholders

(viii) The Offer discriminates against Northern Continental's U.S. FALSE
shareholders

(ix) Hathor has attributed an accounting value of $35.64 million FALSE
to the Russell Lake Property in its financial statements

(x) Hathor's proposed spin-out of its Eskay Creek Properties FALSE
will be dilutive to Northern Continental shareholders


Hathor continues to believe that a combination with Northern Continental will substantially increase value for Northern Continental shareholders as described in Hathor's offering circular dated November 16, 2007.

Hathor responds in greater detail to parts of the Directors' Circular that it believes are untrue, inaccurate and misleading as follows:

(i) There are several references in the Directors' Circular suggesting that Northern Continental shareholders' ownership in the Russell Lake Property would be reduced from 60% to 17% if the Offer is successful. This is both untrue and misleading. If the Offer is completed on its terms, Northern Continental shareholders will own shares in Hathor, which in turn will own 100% of the approximate 113,000 acre Russell Lake Property, interests in ten additional uranium projects that cover a total of approximately 773,000 acres in the Athabasca Basin, and a 100% interest in more than 300,000 acres in the Eskay Creek region of British Columbia. Pro forma, former Northern Continental shareholders and existing Hathor shareholders will own Hathor shares on the same economic basis in a larger, multi-property, better capitalized Hathor which will own 100% of the Russell Lake Property and all other existing Hathor properties. Furthermore, Northern Continental does not currently have a controlling interest in the Russell Lake Property as the joint venture is being controlled by a management committee with equal share participation by each of Hathor and Northern Continental.

Using the Northern Continental Board of Directors' flawed logic, it could be suggested that Northern Continental's announced $3.5 million non-brokered financing will reduce the ownership in the Russell Lake Property of those Northern Continental shareholders who did not, or were not given the opportunity to, participate in the financing from 60% to 50%.

(ii) There are numerous references in the Directors' Circular indicating that the Offer undervalues Northern Continental's 60% interest in the Russell Lake Property. However, there is no substantiation or quantification for Northern Continental shareholders of what the value of the Russell Lake Property should be. Hathor believes the reason for such deliberate exclusion is that any valuation methodology or basis for quantifying the Russell Lake Property or Northern Continental could be equally applied to Hathor's interest in the Russell Lake Property and its numerous other properties. Northern Continental's Board of Directors has made no attempt to quantify the value of Hathor shares which is the consideration that Northern Continental shareholders are to receive under the Offer. Northern Continental's Board of Directors appear to have ignored, or are unaware of, the fact that the correct valuation exercise is one of relative value between Northern Continental and Hathor shares, not just the absolute value of Northern Continental shares alone. On this basis, Hathor does not believe that the Directors' Circular has addressed the relative value of the Offer and is consequently defective from the perspective of applicable securities laws.

(iii) The Directors' Circular discloses an astonishing lack of technical expertise in uranium exploration. Northern Continental's Board of Directors state that "Normal exploration practice is that 50% of the budget goes to drilling, yet Hathor did not conduct any drilling while it spent in excess of $2 million during the earn-in period". The known uranium orebodies in the Athabasca Basin are small, extremely high grade bodies occurring at considerable depth. Finding an orebody is analogous to finding the "needle in the haystack". Without conducting a methodical, science-based pre-drilling program, as Hathor has done, the likelihood is that a company could spend its entire budget on drilling and find nothing.

Northern Continental's Board of Directors actually validate Hathor's comprehensive approach to the identification of drill targets by stating in the Directors' Circular that: "the results of drilling so far have been extremely positive".

As further validation of Hathor's approach, all of the drill targets set out in Northern Continental's 2008 program were identified by Hathor on the basis of Hathor's comprehensive and thorough exploration work.

(iv) The Directors' Circular makes an erroneous reference to the premium under the Offer. At the time of making the Offer on November 19, 2007, the closing price of Hathor shares on the TSX Venture Exchange ("TSX-V") was indeed $0.73, representing an implied value of $0.292 per Northern Continental share on the basis of 0.40 of a Hathor share per Northern Continental share. The Directors' Circular then erroneously compares the foregoing value to the then current Northern Continental share price and mistakenly calculates a discount. This methodology is incorrect. Any premium should only be calculated against the undisturbed market price of Northern Continental shares on the day prior to public announcement of the Offer. By November 19, 2007, the shares of Northern Continental fully reflected the market's reaction to Hathor's publicly announced Offer. In the absence of the announced Offer, Northern Continental's share price would likely be much lower than it is currently.

On November 5, 2007, the last trading day prior to Hathor's announcement of its intention to make the Offer, Northern Continental's closing share price on the TSX-V was $0.265. Northern Continental's volume weighted average share price on the TSX-V for the 30 days ended November 5, 2007 was approximately $0.243. Hence, at the time of making the Offer on November 19, 2007, the Hathor share consideration represented a premium of 10% over Northern Continental's closing share price on the TSX-V on November 5, 2007, and a premium of 20% over Northern Continental's volume weighted average share price on the TSX-V for the 30 days ended November 5, 2007.

(v) The fairness opinion of Stephen W. Semeniuk, CFA should be disregarded because it provides no basis, no valuation methodology, no comparative metrics nor any valuation conclusion.

In keeping with the lack of basis in the Directors' Circular regarding any absolute or relative valuation of Northern Continental's 60% interest in the Russell Lake Property, the individual valuator presents no basis, no valuation methodology, no comparative metrics nor any valuation conclusion in his opinion. Hathor can only conclude that his resistance to doing so is that any valuation methodology or basis for quantifying the Russell Lake Property or Northern Continental could be equally applied to Hathor's interest in the Russell Lake Property and its numerous other properties. The individual valuator, like the Northern Continental Board of Directors, has made no attempt to quantify the value of Hathor shares which is the consideration that Northern Continental shareholders are to receive under the Offer. He also appears to have ignored that the correct valuation exercise is one of relative value between Northern Continental and Hathor shares, not just the absolute value of Northern Continental shares alone.

(vi) The Directors' Circular claims that the Offer is highly conditional. Hathor believes that the conditions to the Offer are normal, customary and standard industry practice. There is no comparative analysis in the Directors' Circular to other recent industry offers and normal sets of conditions in like circumstances. In addition, under the terms of the Offer, Hathor reserves the right to waive certain conditions.

(vii) Reference is made in the Directors' Circular to a previous offer by Hathor to Northern Continental on the basis of 0.50 Hathor shares per share of Northern Continental. Indeed, Hathor made an initial, friendly approach to Northern Continental's senior management and evidenced such interest in a formal letter addressed to Northern Continental's Board of Directors. There was no formal response by Northern Continental's Board of Directors to Hathor's letter. The Directors' Circular now discloses that Hathor's offer "was not considered to be a serious proposal". Not only does this disclose a stunning lack of corporate responsibility, but Hathor believes that the inaction of Northern Continental's Board of Directors has denied Northern Continental shareholders the opportunity to participate in a friendly, supported transaction.

It appears to Hathor that the Board of Directors and senior management of Northern Continental are favouring a stance of entrenchment rather than an objective measure of alternatives for Northern Continental shareholder value maximization. Consider the following examples:

- A lack of any response to Hathor's initial friendly approach, which could have led to a friendly negotiation of terms;

- Northern Continental's announcement on November 9, 2007 that the Offer "completely underprice(s) the real value" of Northern Continental shares without Northern Continental's Board of Directors having seen the offer circular, hired a financial advisor or undertaken any financial analysis;

- Proceeding with a dilutive non-brokered financing to new investors after announcement of the Offer, a defensive measure that could potentially deny existing Northern Continental shareholders wishing to tender to the Offer the opportunity to participate in a successful Offer that creates value for all Northern Continental shareholders rather than a select chosen few; and

- Hiring an individual valuator who has provided no basis for valuation of Northern Continental shares. Northern Continental's Board of Directors could have retained a reputable investment bank with the necessary experience to advise the Northern Continental Board of Directors that a relative, not absolute, valuation of Northern Continental and Hathor is required.

(viii) The Directors' Circular claims that the Offer discriminates against Northern Continental's U.S. shareholders. This is untrue. Northern Continental's U.S. shareholders are eligible to tender their Northern Continental shares to the Offer and receive cash, net of brokerage commissions. There is no restriction for such shareholders to prevent them from repurchasing Hathor shares in the open market. The treatment of Northern Continental's U.S. shareholders is standard, normal and customary practice and is in keeping with all applicable U.S. and Canadian securities laws.

(ix) Another erroneous claim in the Directors' Circular is the reference to the value Hathor has attributed to the Russell Lake Property in its financial statements. There is no such accounting value for the Russell Lake Property in Hathor's financial statements. The $36.54 million value referred to is for all of Hathor's mineral property interests, including its 40% interest in the approximate 113,000 acre Russell Lake Property, interests in ten additional uranium projects that cover a total of approximately 773,000 acres in the Athabasca Basin, and a 100% interest in more than 300,000 acres in the Eskay Creek region of British Columbia.

(x) The Directors' Circular incorrectly states that Hathor's proposed "spin-out" of the Eskay Creek Properties will "include the issuance of additional Hathor Shares resulting in further immediate dilution of in the interest of Northern Continental Shareholders." Hathor's proposed "spin-out" will not result in the issuance of any additional Hathor shares; it will however result in every Hathor shareholder receiving shares in the newly-created "spin-out" company.

(xi) The Directors' Circular states that Northern Continental has contacted the relevant regulatory authorities with respect to Hathor's Offer's compliance with Quebec securities laws. Quebec securities laws state in essence that if more than 2% of Northern Continental's issued shares are beneficially owned by residents of Quebec, or there are more than 50 beneficial shareholders in Quebec, the Offer must be delivered to them in the French language. Hathor has determined that approximately 1.1% of Northern Continental's issued and outstanding shares are owned by residents of Quebec, and is currently determining from intermediaries the number of beneficial shareholders in that province. It is Hathor's intention to comply with all applicable laws and to bring to the attention of all of the Northern Continental shareholders the outstanding merits of Hathor's Offer. Consequently, if it is determined that there are more than 50 beneficial shareholders in Quebec, Hathor will deliver the Offer in the French language and extend the Offer in order to allow such shareholders to consider the Offer and to tender their shares. Hathor is in contact with the Quebec securities authorities ("AMF") in this regard.

The Offer

The Offer to Northern Continental shareholders will remain open until 8:00 p.m. (Toronto time) on Thursday, January 3, 2008, unless the Offer is withdrawn or extended by Hathor.

Under the terms of the Offer, Northern Continental shareholders will receive 0.40 of a Hathor common share for each Northern Continental common share tendered and taken up by Hathor.

In addition to its interest in the approximate 113,000 acre Russell Lake Property, Hathor has interests in ten uranium projects that cover a total of approximately 773,000 acres in the Athabasca Basin region of Saskatchewan and Alberta. This part of Canada has the most prospective geology in the world to explore for high-grade, unconformity-style uranium deposits.

Hathor also holds a 100% interest in more than 300,000 acres in the Eskay Creek region of British Columbia. All shareholders will be able to participate in Hathor's previously announced spin-out of the Eskay Creek properties into a new listed company by way of a plan of arrangement and will receive shares of the new company on a pro rata basis. The spin-out is expected to occur in the first quarter of 2008 following the successful completion of the Offer.

Hathor believes the combination with Northern Continental will increase value for all shareholders, and will offer the following benefits and opportunities:

- With Hathor's more than $20 million in working capital, the combined company will be well capitalized to pursue aggressive exploration programs, particularly on the Russell Lake Property;

- the combined entity will have a larger and more diversified portfolio of owned properties;

- consolidating the exploration and development of the Russell Lake Property should allow for significant cost savings and synergies by eliminating the administrative and other costs associated with the joint exploration and development of that property;

- combining the two companies will significantly enhance the ability to access the capital needed to continue to explore and develop the Russell Lake Property;

- combining the two companies will eliminate the significant costs of maintaining two public companies, including audit, legal and regulatory costs; Hathor estimates cash savings to be approximately $300,000 per year;

- enhanced access to capital will improve Hathor's ability to acquire additional properties and to fund the exploration of those and of the other properties held by the companies;

- combining the two companies will create a larger company with a greater public market presence, leading to greater coverage by investors and financial advisers, opportunities for an improved market valuation, and enhanced liquidity due to the larger number of shares and shareholder base; and

- the combined entity will have a stronger experienced management team and the ability to attract and retain the partners, service providers, staff and others needed to advance the combined companies' projects.

Additional Details of the Offer

Northern Continental shareholders wishing to accept the Offer must complete the Letter of Transmittal which is being mailed to them and return it together with the certificates representing their Northern Continental shares to Computershare Investor Services Inc., the Depositary under the Offer. If Northern Continental Shares are held by a broker or other financial intermediary, Northern Continental shareholders should contact their broker or intermediary and instruct them to tender the Northern Continental shares to the Offer. Northern Continental's shareholders are strongly encouraged to read the terms and conditions of our Offer and the additional information in the Offer and Circular mailed on November 19, 2007 and filed on SEDAR.

Note to Shareholders Regarding The Offer

The information contained in this press release is a summary only and does not constitute an offer to buy or an invitation to sell, or the solicitation of an offer or invitation to sell, any of the securities of Northern Continental or Hathor. The Offer is made solely under the terms and conditions set out in the Offer documents and is not being made to (nor will deposits be accepted from or on behalf of) Northern Continental shareholders in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. The Offer documents contain important information that Northern Continental shareholders should read carefully before making any decision with respect to the Offer.

About Hathor

Hathor Exploration Limited is a Canadian-based publicly traded mineral exploration company engaged in the acquisition and exploration of mineral properties. Hathor is primarily focused on uranium exploration in the Athabasca Basin region of Saskatchewan and Alberta, Canada and holds several large claim blocks near some of the world's most productive uranium deposits. Hathor has also obtained rights to several million acres with uranium potential in the Hornby Bay Basin of the North West Territories.

In addition, Hathor has maintained its interests in the Eskay Creek precious metal mining camp northwest of Stewart, British Columbia. The Eskay Creek mining camp is considered one of the richest and most prospective geologic terrains in North America and Hathor has assembled the largest land position in this area.

For more information on Hathor, its subsidiary Roughrider Uranium Corp. and their uranium projects, please visit the company's website: www.hathor.ca or contact Stephen Stanley at 604-684-6707.

Hathor Exploration Limited

Stephen G. Stanley, Director

Forward-Looking Statements

This press release and the Offer and Circular contain "forward-looking statements" concerning Hathor and includes, among other things, statements concerning the Russell Lake Property. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. All factors should be considered carefully and readers should not place undue reliance on such forward-looking information. Hathor disclaims any intent or obligations to update or revise publicly any forward-looking statements whether as a result of new information, estimates or options, future events or results or otherwise.

This press release does not constitute an offer to buy or an invitation to sell, or the solicitation of an offer to buy or invitation to sell, any of the securities of Hathor or Northern Continental. Such an offer may only be made pursuant to an offer and takeover bid circular filed with the securities regulatory authorities in Canada.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this news release.

Contact Information

  • Hathor Exploration Limited
    Stephen G. Stanley
    Director
    (604) 684-6707
    (604) 684-9277 (FAX)
    Website: www.hathor.ca