KILLICK CAPITAL CORP.
TSX VENTURE : KIL.P

June 09, 2008 18:28 ET

Killick Capital Announces Letter of Intent for Qualifying Transaction

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 9, 2008) - Killick Capital Corp. ("Killick" or the "Company") (TSX VENTURE:KIL.P), a capital pool company pursuant to Policy 2.4 of the TSX Venture Exchange (the "TSX-V"), has entered into a letter of intent dated May 29, 2008 (the "LOI") with all of the shareholders of 1518164 Ontario Inc. ("Ontario Inc."), a private Ontario company, to acquire all of the issued and outstanding securities of Ontario Inc. (the "Transaction"). The Transaction will constitute Killick's "Qualifying Transaction" under the applicable policies of the TSX-V.

Ontario Inc. holds 100% right, title and interest to 79 mineral claims (1140 units) located in the Province of Ontario (the "Property") directly to the east of the gold and molybdenum rich Geraldton Mining Camp. The Property was initially staked by the founders of Ontario Inc., which includes Stephen Stares, Michael Stares, Wayne O'Connor, Robert Duess and Clint Barr. Results of recently conducted airborne magnetic surveys over the Property appear to support the findings from exploration activity previously conducted in and around the Property which indicate the geology of the area is host to gold mineralization. Since the signing of the LOI, Killick has staked an additional 31 claims (460 units) adjacent to the Property, which will be included as part of the land package comprising the Property. Total costs to be incurred by Killick in respect of the additional staking are expected to be approximately $60,000.00.

Pursuant to the terms of the LOI, subject to execution of a definitive purchase agreement and receipt of applicable regulatory and TSX-V approvals, Killick intends to acquire all of the issued and outstanding common shares of Ontario Inc. in consideration for (i) 5,500,000 common shares of Killick having a deemed value of $0.19 per common share; (ii) an aggregate cash payment of $160,000 to the shareholders of Ontario Inc.; and (iii) the granting of a 2% net smelter return royalty applicable to minerals and metals, and a 10% gross override royalty applicable to diamonds and gems, over the Property. Killick retains the right to purchase one-half of each royalty at any time prior or after the commencement of production on the Property. The aggregate consideration being paid by Killick implies an entity value for Ontario Inc. of approximately $1,205,000.

The Transaction is an arm's length transaction as none of the insiders of Killick or their associates and affiliates has any interest in the business of Ontario Inc., or is otherwise an insider of, or have any relationship with, Ontario Inc. or its direct or indirect shareholders. Accordingly, the Transaction is not subject to Killick shareholder approval.

Board of Directors and Insiders of Killick

Upon completion of the Transaction, it is anticipated that Killick's board of directors will be composed of five members, including the three members currently sitting on its board, who are Andrew McCarthy, Steve Vanry and Ken Thorsen, plus two new directors. All of the current directors of Ontario Inc. will resign from their board positions upon completion of the Transaction, and will not have a right to appoint any directors to the board of Killick. The Company may call a meeting of shareholders prior to completion of the Transaction in order to appoint the new directors of the Company. It is anticipated that the only insiders of the Company following completion of the Transaction will be the five board members.

It is intended that one of the two new board members of Killick will be Mr. David McCarthy who is currently unrelated to either Killick or Ontario Inc. Mr. McCarthy is a lawyer qualified to practice law in the Province of Ontario and the Province of Newfoundland and Labrador. Mr. McCarthy brings experience from a wide variety of industries including tobacco, airline and telecommunications.

For biographical information on the current insiders and members of the board of directors of Killick, please refer to the Company's Prospectus dated December 20, 2007.

Sponsorship of the Transaction

Sponsorship of a qualifying transaction of a capital pool company is required by the TSX-V unless exempt in accordance with TSX-V policies. The Company is currently reviewing the requirements for sponsorship and may apply for exemption from sponsorship requirements on the basis that it may conduct a concurrent brokered financing of at least $500,000 in connection with the Transaction (the "Financing"), such financing to be completed through a duly registered brokerage firm. There is no assurance Killick will ultimately obtain the exemption from sponsorship requirement.

The Company will issue a subsequent news release with further information on sponsorship and/or its plans for Financing.

Proforma Capital Structure

The Company currently has 9,025,000 common shares issued and outstanding, 3,505,000 of which are held in escrow. An additional 1,020,000 common shares are reserved for issuance on the exercise of options. Without including any securities issued in connection with a potential concurrent financing, upon closing of the Transaction the Company will have approximately 14,525,000 common shares issued and outstanding. There may also be additional options granted to directors, officers and consultants.

All shares issued or issuable to acquire Ontario Inc. will be subject to a four month hold period from the date of issuance. In addition, shares issued to principals of Ontario Inc. in connection with the Transaction will be subject to escrow in accordance with the policies of the TSX-V.

In accordance with TSX-V policies, Killick's shares are currently halted from trading and will remain so until completion of the Transaction, or until earlier approved by the TSX-V.

Description of Significant Conditions to Closing

Closing and final acceptance of the Transaction is subject to the satisfaction of certain conditions, including the completion of airborne surveys of the Property, fulfilling all remaining filing requirements under the TSX-V policies, completion of a concurrent Financing or sponsorship report (as applicable), and the filing of Killick's Filing Statement and related consents on SEDAR.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSX-V acceptance and if required by TSX-V policies, 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 Qualifying 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.

The TSX-V has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

On behalf of the Board of Directors,

Andrew McCarthy, President, C.E.O. & C.F.O.

The TSX Venture Exchange has not reviewed this news release and does not accept responsibility for the adequacy or accuracy of this release. The TSX-V has neither approved nor disapproved the contents of this news release.

Contact Information

  • Killick Capital Corp.
    Andrew McCarthy
    President, C.E.O. & C.F.O.
    (604) 689-1810
    (604) 689-1817 (FAX)