Huldra Silver Inc.
TSX VENTURE : HDA

Huldra Silver Inc.

March 31, 2011 09:00 ET

Huldra Silver Inc. Announces Entry Into Agreement to Acquire Craigmont Holdings Ltd.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 31, 2011) - Huldra Silver Inc. (TSX VENTURE:HDA) (the "Company" or "Huldra") is pleased to announce that it has entered into a definitive strategic acquisition agreement dated March 30, 2011 (the "Agreement") with Craigmont Holdings Ltd. ("Craigmont"), the shareholders of Craigmont, Craigmont Mines Ltd. ("CML") and a wholly-owned subsidiary of Huldra whereby Huldra has agreed to acquire all of the shares of Craigmont from the Craigmont shareholders for aggregate cash consideration of $7,500,000 and the issuance of an aggregate of 372,000 common shares of Huldra (each, a "Share") having a value equal to $500,000 (the "Transaction"). Craigmont holds real property, mineral claims and mineral leases, covering approximately 8,400 hectares (collectively, the "Craigmont Property"), located in south central British Columbia, approximately 10 kilometers west of Merritt. As soon as practicable after closing of the Transaction (the "Closing"), Huldra intends to commence the planning and construction of a mill on the Craigmont Property.

Upon entry into the Agreement, Huldra made an aggregate cash payment of $500,000 to the Craigmont shareholders, which amount will be held in escrow until the Closing and will be returned to Huldra in the event that the Transaction does not close. At Closing, Huldra will issue the Craigmont shareholders 372,000 Shares, at a deemed price of $1.34 per Share, for a total aggregate value of $500,000. On or prior to January 31, 2012, Huldra will make a second cash payment of $3,000,000 to the Shareholders (the "Second Payment"). The $4,000,000 balance of the Cash Consideration (the "Third Payment") will be payable by Huldra to the Craigmont shareholders on or prior to January 31, 2013. The amount of the Third Payment may be reduced by a maximum of $900,000 subject to a determination of: (i) reclamation plan costs to be set out in a Liability Cost Estimate (as defined in the Agreement) to be commissioned by Huldra in consultation with the Shareholders; and (ii) amounts set out in the Liability Cost Estimate that have been remedied by the Craigmont shareholders at their own expense prior to January 31, 2013.

Huldra president, Ryan Sharp, said, "This Agreement is a major milestone for Huldra. Since March, 2010, we have been reviewing our operational plans for the mining operation at Treasure Mountain and determined that the milling operations should be conducted closer to the necessary infrastructure. The Craigmont Property is only 75 minutes from the Treasure Mountain Mine and all necessary road use agreements are in place for transporting the raw ore to the site for milling."

"We are very pleased that the Agreement allows us to work alongside Craigmont without affecting their operations while forwarding our development plans. The Agreement also allows both sides to mutually benefit from any potential upside unrelated to each company's current operational focus. Through the Agreement, we have built a strong working relationship with the Craigmont team and look forward to enhancing that relationship going forward."

Craigmont's president, Barry Smythe, said, "Craigmont looks forward to developing a close working relationship with Huldra, for the mutual benefit of both organizations."

Closing of the Transaction is expected to occur on or prior to May 1, 2011. Closing will be subject to a variety of conditions, including the approval of the TSX Venture Exchange, approval of the boards of Huldra and Craigmont, and satisfactory completion of customary due diligence.

At Closing, Huldra will grant the Craigmont shareholders a security interest in their respective Craigmont shares and a mortgage on the Craigmont Property to secure the payment of the Second Payment and Third Payment.

At Closing, Huldra, CML and the Craigmont shareholders, as participants in Craigmont Mines (A Joint Venture) ("CMJV"), will enter into a mineral rights agreement pursuant to which:

(i) CML, as nominee for CMJV, will assign its payment and other rights under a pre-existing gravel agreement to Craigmont;

(ii) until June 2014, CMJV will be entitled to 80% and Huldra will be entitled to 20% of any net income derived from the commercial exploitation of tailings located on the Craigmont Property, other than income derived from CMJV's existing magnetite operations, provided that Huldra will be entitled to receive 100% of any revenues derived from tailings placed on the Craigmont Property as the result of Huldra's activities thereon. If, prior to June 2014, CMJV finds a commercial use for the tailings, Huldra and CMJV will continue to exploit the tailings for such use and each of them will be entitled to 50% of the net income therefrom until 2019 when CMJV's interest in the tailings will cease; and

(iii) CML and CMJV will continue to conduct existing magnetite recovery operations on the Craigmont Property until January 31, 2013, with CMJV entitled to 100% of the revenues therefrom.

About Craigmont Mines

Craigmont Mines, A Joint Venture, is currently engaged in the recovery of magnetite from the Craigmont Property referred to above, located near Merritt BC. Under the proposed Transaction, it is intended that the Craigmont Mines Joint Venture will complete the recovery of all of the magnetite from its remaining reserves. 

About Huldra

Huldra is currently working on plans to put its Treasure Mountain Project, located 3 hours east of Vancouver, BC, into development subject to permitting and financing. The Company is also actively assessing other opportunities for acquisition and development.
On behalf of the Board of Directors

Ryan Sharp, MBA, President, CEO & Director

Disclaimer for Forward-Looking Information

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events such as the closing of the Transaction. Such forward-looking information can include statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Company such as the willingness of the parties to close the Transaction, satisfactory results of the due diligence investigations by the parties to the Transaction, current economic conditions and the state of mineral exploration and mineral prices in general. These risks and uncertainties could cause actual results and the Company's plans and objectives to differ materially from those expressed in the forward-looking information. Due to conditions precedent to closing, and the risk that these conditions precedent will not be satisfied, the Company can offer no assurance that it will close the Transaction. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Except as required by law, the Company assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.

Neither the TSX Venture Exchange nor its Regulation Services 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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