Highland Resources Inc.
TSX VENTURE : HI.P

Highland Resources Inc.

May 07, 2008 14:13 ET

Highland Enters Into Letter of Intent to Complete Qualifying Transaction Involving Canadian Prospector Inc.'s Properties in the Beardmore-Geraldton Area

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 7, 2008) - Highland Resources Inc. ("Highland" or the "Company") (TSX VENTURE:HI.P) is pleased to announce that it has entered into a letter of intent with Canadian Prospector Inc. (the "Target") dated April 23, 2008 (the "LOI") to acquire all of the issued and outstanding securities of the Target (the "Proposed Acquisition").

Highland is a capital pool company and intends for the Proposed Acquisition to constitute its Qualifying Transaction as such term is defined in the policies of the TSX Venture Exchange (the "Exchange"). The Proposed Acquisition is an arm's length transaction and upon completion of the Proposed Acquisition, Highland expects to be a Tier 2 Mineral Exploration Issuer.

The Target is incorporated under the laws of the Province of Alberta. The Target's principal assets are mineral exploration properties located in the Province of Ontario. The Target currently has shareholders holding an aggregate of 43,733,833 common shares outstanding. Jamie Wheeler, the President and Chief Executive Officer of the Target, is the majority shareholder of the Target. The Target has no dilutive securities issued or are outstanding.

Pursuant to the terms of the LOI, the Company intends to acquire all of the outstanding shares of the Target from its shareholders pursuant to a share for share exchange on a 1:1 ratio.

Summary of the Target's Significant Assets

The Target holds mineral claims located in the Beardmore-Geraldton Belt of the Thunder Bay Mining District. The area is known to host numerous gold deposits along with hosting numerous base metal occurrences. The claims are subject to a 3% net smelter return royalty in favour of Jaime Wheeler, the President and Chief Executive Officer of the Target.

Zeus Property

The Zeus property is a grassroots gold property located in Elmhirst and Rickaby Townships in Northwestern western Ontario (See Figure 1., available at the following link: http://media3.marketwire.com/docs/hi0507.pdf) located in the Thunder Bay Mining District.

The Zeus property consists of two 16 unit claim blocks totalling 32 mineral claims with a combined area of 512 hectares (1280 acres). (A unit is approximately 1/4 mile square). The property is located along the Kinghorn Road in the vicinity of kilometer 33. The Kinghorn Road is an all weather logging road travelling north from Highway 11 about 10 kilometers east of the village of Jellicoe.

Interest in the area has been sparked by Kodiak Exploration's Hercules gold project located less than 500 meters to the south of the property and along the same highway. The gold on Kodiak's property occurs in quartz-carbonate veins within regional shear zones trending northwest - southeast. Readers are cautioned that the proximity of the property to known mineralization does not mean that the property contains similar mineralization.

There are no known showings on the Zeus property and very little outcrop. The greater portion of the property is covered by glacial till. Historically there has been very little formal mineral exploration done on the property. The focus of exploration in the area has been on the gold showings to the south; however, the presence of the glacial till overburden and lack of outcrop has limited the information on the property. Canadian Prospector Inc. owns the property, subject to a 3% net smelter return in favor of Mr. Jamie Wheeler of Calgary, Alberta.

Allan J. Beaton, P.Eng., is the qualified person as required under NI 43-101 and has reviewed the technical information contained in this press release.

Board of Directors and Management of the Resulting Issuer

Concurrently with of the completion of the Proposed Acquisition, at least one of the current directors and officers of the Target will resign. Upon closing of the transaction, it is contemplated that Robert Eadie, Gary Arca and Kent Kirby will remain on the Board of Highland and be joined by Jamie Wheeler and Allan Beaton. It is further contemplated that Robert Eadie will remain president and chief executive officer, Gary Arca will remain chief financial officer, and Jamie Wheeler will become a director and officer of Highland. Further information for each of the above-mentioned directors and officers is set out below.

Robert Eadie, Chief Executive Officer and Director

West Vancouver, British Columbia

Mr. Eadie is a self-employed business owner and has many years of experience in working with and helping build start-up companies. He began his career as a corporate investor and public relations consultant and went on to establish his own investor relations consulting business. He has since become a manager, officer or director of a number of junior public companies, primarily in the natural resource sector. Mr. Eadie is currently President and a director of Starcore International Mines Ltd., a gold production and exploration company focussed on Mexico, President and CEO of Golden Oasis Exploration Corp., a gold exploration company focusing on developing mineral assets in Nevada, President and CEO of American Copper Corporation, an exploration company in search of copper and molybdenum, President and CEO of Highland Resources Inc., Cortez Resources Corp. and Parlane Resource Corp., all capital pool corporations, and President of Lebon Gold Mines Limited, a mineral exploration company. Until January 2007 he was Executive Vice President of Klondex Mines Ltd., a gold and silver exploration and development company. All of these companies are headquartered in Vancouver, British Columbia and listed on the TSX-V, with the exception of Starcore International Mines Ltd. and Klondex Mines Ltd., which are listed on the Toronto Stock Exchange and Lebon Gold Mines Limited which is listed on the CNQ.

Gary Arca, Chief Financial Officer and Director

Delta, British Columbia

Mr. Arca is a Chartered Accountant (CA) and has been a member of the Canadian Institute of Chartered Accountants and British Columbia Institute of Chartered Accountants since 1980. He was a partner with two separate public accounting firms from 1996 to December 2005. Mr. Arca has extensive experience dealing with public companies and start-ups both from the perspective of management and as a consultant, and has served as a director of seven publicly traded resource companies in the past. In addition to the Company, he is currently a director and Chief Financial Officer of Starcore International Mines Ltd., Golden Oasis Exploration Corp., American Copper Corporation, Cortez Resources Corp. and Parlane Resource Corp., all of which are listed on the TSX Venture Exchange, except for Starcore International Mines which is listed on the Toronto Stock Exchange and Lebon Gold Mines Limited, which is listed on the CNQ.

Jamie Wheeler, Director

Calgary, Alberta

Mr. Wheeler is a self employed businessman who has been involved in prospecting, venture capital and grass roots exploration since 1997. He is currently President and Chief Executive Officer of the Target, Canadian Prospector Inc. Mr. Wheeler has focused most of his career in the Thunder Bay Mining District prospecting for base and precious metals. He has developed extensive contacts in mineral exploration and finance and has negotiated and executed several option agreements with public companies listed on various Canadian exchanges.

Allan J. Beaton, Professional Mining Engineer, Director

North Vancouver, British Columbia

Mr. Beaton graduated from Nova Scotia Technical College, now Dalhousie University, in 1970, and has been a member of the Association of Professional Engineers of British Columbia since 1974. Mr. Beaton has been actively involved in most aspects of mineral exploration, development and production throughout his career, including former President of Canaf Group Inc. (CAF- TSX), a mineral exploration company listed on the TSX Venture Exchange (and was the President and founder of predecessor company Uganda Gold Mining Limited). He is also a director of Gold Bridge Mining Limited, a private company involved in mineral exploration. Between 1979 and 1985, Mr. Beaton was mine manager for Ericson Gold Mining Limited, a high grade gold mill in northeast British Columbia, and oversaw the expansion of their milling operations from 100 to 300 tons per day. Mr. Beaton is currently President of A.J. Beaton Mining Limited, where he consults to various clients throughout the mining industry. Mr. Beaton's experience and wealth of knowledge of the capital markets along with project advancement will prove to be an invaluable asset to the Resulting Issuer.

Proposed Financing

In connection with the Proposed Acquisition and subject to Exchange approval, Highland proposes to raise up to $2 million dollars by way of a non-brokered private placement to fund the Company's proposed exploration agenda for the Zeus property. The proposed financing will involve the issuance of 770,000 non-flow-through shares at a price of $0.65 per share, and 2,000,000 flow-through shares at a price of $0.75 per share, subject to regulatory approvals.

The proceeds from the financing will be used for the development of the Zeus Property, consisting of current airborne survey, prospecting, trenching, mapping, sampling and subsequent drilling, maintaining the claims, and for general corporate working capital purposes.

Change of Name

In connection with the Qualifying Transaction, Highland will change its name to "Canadian Prospector Inc." or such other name as may be acceptable to the regulatory authorities.

Finder's Fee

In connection with the Qualifying Transaction, Highland will pay EH & P Investments AG of Zurich, Switzerland a finder's fee in accordance with Exchange policies in connection with the introduction of Highland to the Target. This fee, payable in Highland Shares (the "Finder's Fee Shares") will result in the issuance of 600,000 Highland Shares at a deemed value of $0.66 per Highland Share and is subject to regulatory approval.

Description of Significant Conditions to Closing

Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange Policies. The Company intends to apply for an exemption from sponsorship requirements; however there is no assurance that the Company will obtain this exemption. Other conditions to closing include (i) execution of a definitive agreement between the parties, (ii) the acceptance of the Proposed Acquisition by the shareholders of Canadian Prospector Inc., (iii) delivery of audited and unaudited financial statements prepared in accordance with the requirements of the Exchange's policies and being acceptable to each of the Company and the Target, (iv) no material adverse change occurring in the business, financial condition or operations of either the Company and the Target (v) in completion of due diligence by each of the Company and the Target, (vi) approval of the Proposed Acquisition by the board of directors of each of the Company and the Target, (vii) the delivery of customary legal opinions, and (viii) the approval of the Exchange.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

ON BEHALF OF THE BOARD

Robert Eadie, Chief Executive Officer and Director

The TSX Venture Exchange Inc. 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

  • Highland Resources Inc.
    Robert Eadie
    Chief Executive Officer and Director
    (604) 602-4935
    (604) 602-4936 (FAX)