Klondike Capital Corp.
TSX VENTURE : KLC.P

March 12, 2008 12:31 ET

Klondike Capital Corp. Announces Proposed Amalgamation With Emerald Fields Resource Corporation

CALGARY, ALBERTA--(Marketwire - March 12, 2008) - Klondike Capital Corp. (TSX VENTURE:KLC.P) ("Klondike"), a capital pool company with its shares listed on the TSX Venture Exchange, is pleased to announce that it has reached an agreement in principle to amalgamate with Emerald Fields Resource Corporation ("Emerald Fields"), an Alberta corporation actively engaged in mineral exploration and development. The parties have entered into a letter of intent (the "Letter Agreement") dated as of February 20, 2008 with respect to the proposed amalgamation (the "Amalgamation").

The Letter Agreement

The Letter Agreement contemplates that Klondike and Emerald Fields will amalgamate to form a new corporation (the "Resulting Issuer"). The current holders of Emerald Fields common shares will receive, in exchange for each Emerald Fields common share held, 1 common share of the Resulting Issuer. The current holders of Klondike common shares will receive one (1) common share of the Resulting Issuer for each one and one half (1.5) shares of Klondike held. Outstanding stock options and broker warrants issued by either of the two corporations will be treated in the same manner. It is anticipated that the total number of outstanding common shares of the Resulting Issuer following the Amalgamation will be approximately 37,409,127 common shares, prior to taking into account shares issued in connection with the private placement financing (the "Private Placement") described below. The aforementioned 37,409,127 shares will be owned, as to approximately 95.5%, by the former holders of Emerald Fields and as to approximately 4.5% by the current holders of Klondike common shares. Accordingly, the Amalgamation will constitute a reverse takeover of Klondike. Post Amalgamation, it is anticipated that the Resulting Issuer will carry on business under the name "Pacific Iron Ore Corporation".

The Amalgamation remains subject to, among other things, all applicable regulatory, shareholder and directors' approvals, the execution of a formal agreement and the completion of satisfactory due diligence. Klondike and Emerald Fields expect to hold meetings of their respective shareholders as quickly as practicable in the circumstances in order to obtain approval for the Amalgamation, and currently anticipate holding such meetings on or before June 30, 2008.

The Amalgamation may be considered to be a Non-Arm's Length Qualifying Transaction, in that Messrs. Todd Montgomery and Brent Walter are directors and/or officers of both Klondike and Emerald Fields, and beneficially own or control, directly or indirectly, shares in both Klondike and Emerald Fields. The conflicts of interest have been disclosed to the respective Boards of Directors, and are being dealt with in accordance with the requirements of the Business Corporations Act (Alberta) (the "ABCA").

Emerald Fields

Emerald Fields was incorporated on October 6, 1997 under the Business Corporations Act (Ontario), and continued under the Business Corporations Act (Alberta) on November 1, 2007. Emerald Fields' head office and registered office are located in Calgary, Alberta. Since its incorporation, it has been actively involved in business of exploring and developing mineral concessions, and has amassed numerous Crown mineral concessions located in British Columbia, Ontario and Manitoba. Emerald Fields' primary focus, and assuming the completion of the Amalgamation, the Resulting Issuer's primary focus over the 12 months following the Amalgamation, will be the Pearson Iron Ore Project (the "Pearson Project") located on Vancouver Island, British Columbia.

The Pearson Project consists of 147 mineral claims covering over 63,000 hectares located approximately 107 kilometres west-northwest of Victoria, British Columbia and approximately 10 kilometres from the deep water port facilities at Port Renfrew, British Columbia. Emerald Fields has had a National Instrument 43-101 (NI 43-101) compliant technical report (the "Technical Report") in respect of the Pearson Project prepared by Mr. George Owsiacki, P. Geo., dated October 31, 2007 (revised February 13, 2008). Mr. Owsiacki is an independent "qualified person" within the meaning of NI 43-101, and has reviewed and approved the contents of this press release to the extent they relate to the Technical Report. The Technical Report recommends a $2.5 million exploration program based on, among other things, expanding the dimension of the known magnetite deposits and the potential for discovery of additional magnetite mineralization. The proposed work program includes, among other things, an airborne magnetometer survey, a ground magnetometer survey, 8,000 metres of diamond drilling, analysis of core and rock samples and related logistical matters. It is anticipated that the recommended work program will be completed within the calendar years of 2008 and 2009. Copies of the report will be available for review without charge on the SEDAR website at www.sedar.com and at the offices of Klondike, Suite 2, 880 - 16th Avenue S.W., Calgary, Alberta.

The following is a summary of certain financial information in respect of Emerald Fields based on audited financial statements for the years ended December 31, 2005 and 2006 and reviewed financial statements for the nine month interim period ended September 30, 2007:



----------------------------------------------------------------------------
Nine month
Year ended Year ended period from
December 31, December 31, January 1, 2007 to
2005 2006 September 30, 2007
Selected Financial (audited) (audited) (unaudited)
Information ($) ($) ($)
----------------------------------------------------------------------------
Total Revenue 44 33 295
----------------------------------------------------------------------------
Expenses 133,298 101,174 860,652
----------------------------------------------------------------------------
Net Loss 195,800 184,379 862,626
----------------------------------------------------------------------------
Total Assets 2,159,736 2,538,038 2,582,422
----------------------------------------------------------------------------
Total Liabilities 521,213 843,894 340,646
----------------------------------------------------------------------------
Working Capital Surplus
(Deficit) (15,287) 4,389 9,657
----------------------------------------------------------------------------
Dividends Nil Nil Nil
----------------------------------------------------------------------------


Subsequent to September 30, 2007, Emerald Fields received proceeds from a private placement of common shares completed during the period in the amount of $941,200. As well, subsequent to September 30, 2007, Emerald Fields issued 200,000 common shares to an arm's length third party as partial consideration for mineral claims.

Emerald Fields has approximately 45 shareholders. The following persons beneficially own or control more than 10% of the common shares of Emerald Fields:

Mr. R.A.N. Bonnycastle of Calgary, Alberta, and Cavendish Investing Ltd., a private Alberta corporation controlled by R.A.N. Bonnycastle.

Private Placement

Klondike anticipates entering into engagement letters with Salman Partners Inc. ("Salman") and Acumen Capital Finance Partners Limited ("Acumen") in the immediate future pursuant to which Salman and Acumen will act as selling agents, on a commercially reasonable efforts basis, in connection with the sale of Resulting Issuer shares by way of private placement to raise gross proceeds of up to $7.5 million, subject to an "over subscription option" entitling the agents to increase the private placement to $9.0 million (the "Offering"). The Offering will be comprised of both "flow through" and regular common shares, with pricing to be determined based on market conditions and other factors. The selling agents will be paid a commission equal to 7% of the amount raised in the Offering, will be entitled to recover their expenses and will receive broker warrants entitling them to acquire common shares equal to 7% of the number of securities sold under the Offering at the offering price. It is anticipated that the Offering will close concurrently with the Amalgamation. Proceeds of the Offering will be used by the Resulting Issuer for the completion of the $2.5 million work program as recommended by the Technical Report. In addition, it is anticipated that a further $2.5 million will be spent on additional magnetic surveys, drilling and further exploration expenses on the Pearson Project. The balance of the funds will be used to pay for field equipment, the costs of the transactions described herein and for general working capital.

Resulting Issuer

Following completion of the Amalgamation, it is anticipated that the Resulting Issuer will have a Board of Directors comprised of 6 members, being Messrs. R.A.N. Bonnycastle, Todd D. Montgomery, Ronald K. Netolitzky, Leonard A. Cornez, Jeffrey B. Austin and Brent J. Walter. It is further anticipated that Mr. Montgomery will serve as President and Chief Executive Officer, Mr. Cornez as Chief Financial Officer, and Mr. Bonnycastle as the Chairman of the Board of Directors of the Resulting Issuer. The business experience of the aforementioned individuals is as follows:

R.A.N. Bonnycastle

Mr. Bonnycastle can be considered to be the principal founder of Emerald Fields. Mr. Bonnycastle received a Bachelor of Commerce degree from the University of Manitoba in 1956, after which he worked with the Great-West Life Assurance Company. In 1963, he was Corporate Underwriter, Richardson Securities of Canada, Toronto, Calgary and Winnipeg. While at Richardson's, Mr. Bonnycastle operated Cavendish Investing Ltd., a private investment corporation, to which he devoted his full time commencing in 1968. Mr. Bonnycastle serves on several boards, including, Mosaic Energy Ltd., Twoco Petroleums Ltd., Century Energy Ltd., Network Capital and National Leasing Corporation. Mr. Bonnycastle has served as Chairman, Bracknell Corporation; Chairman, Patheon Inc., Director, Canada Development Investment Corporation (CDIC); and Chairman of the Divestiture Committee, CDIC; Director, TORSTAR Ltd.; and Chairman, Harlequin Enterprises Ltd., among others.

Ronald K. Netolitzky

Mr. Netolitzky is an independent consultant and director. Graduating from the University of Calgary with a Master of Science degree in Geology, Mr. Netolitzky has an extensive career in exploration and mining organizations around the world. Mr. Netolitzky is presently the Chairman of the Board of Gold Band Resources Inc, developing gold deposits in Saskatchewan, President and CEO of Santoy Resources focused on uranium exploration and is an active contributor to the management of Skeena Resources operating in Ecuador and Mexico, and Brett Resources. He also serves as an independent director on a diverse group of junior exploration companies including American Bonanza, Aurcana, Canadian Gold Hunter, Copper Canyon, Eagle Plains, Solomon Resources and Strongbow Exploration.

Todd D. Montgomery

Mr. Montgomery is the founder, President and CEO of Anglo Minerals Ltd. (TSXV - ALM), a mineral exploration company, since 1994. In 1999, Mr. Montgomery founded and served as President and CEO SynEnco Energy Inc., an oilsands development corporation. In addition, he has acted as an independent mining consultant and prospector, having staked and disposed of numerous oilsands and other mineral properties.

Leonard A. Cornez

Mr. Cornez is an independent consultant providing business advisory and financial services in the energy and mining sector. He is an experienced senior executive with substantial exposure to international markets and the oil and natural gas service sector. Mr. Cornez's experience extends over 26 years and includes both large international public companies and extensive experience in public accounting. He has held senior financial executive positions and serves on the boards of public and private corporations. Mr. Cornez has served as the senior financial officer of Enerflex Systems Income Fund (2004 to April, 2007); Terasen Pipelines Inc (2003 to 2004); Ryan Energy Technologies Ltd. (2000 to 2002); Hartland Pipeline Services Limited (1999); and Computalog Ltd (1991 to 1999). Prior to that Mr. Cornez was employed as Principal, Attestation Services with Coopers & Lybrand in both Canada and Australia from 1981 to 1991. Mr. Cornez is a Chartered Accountant, Alberta (1984); a Certified Public Accountant, Illinois (2004); and, holds a Bachelor of Commerce degree (1981) and a certificate in Business Data Processing (1988) both from the University of Calgary.

Jeffrey B. Austin

Mr. Austin is a professional engineer based in Kelowna, British Columbia and works as a consultant metallurgist specializing in assisting feasibility studies and new project commissioning. He has supported several hundred project studies in the last 20 years of project work. He received a Bachelor of Applied Science from the University of British Columbia in 1984, and has been registered as a professional engineer since 1987. He is also the president of Western Canada Limestone Ltd. of Kelowna, British Columbia.

Brent J. Walter

Mr. Walter received his LL.B. from the University of Saskatchewan in 1990. Since 2004, he has been a lawyer with the firm ProVenture Law LLP, and practices primarily in the areas of securities and corporate/commercial law. He presently serves as a director, senior officer and member of the audit committee of a number of public and private corporations, including Klondike and Anglo Minerals Ltd. (TSXV). He is a member of the Law Societies of Alberta and Saskatchewan, as well as the Canadian Bar Association.

Upon completion of the Amalgamation, the following individuals are expected to be Insiders (within the meaning of Exchange policies): Messrs. Bonnycastle, Netolitzky, Montgomery, Cornez, Austin and Walter.

Todd Montgomery and Brent Walter serve as a director and officer and a director, respectively, of both Klondike and Emerald Fields, and are proposed directors and/or officers of the Resulting Issuer. Messrs. Montgomery and Walter beneficially own or control, directly or indirectly, an aggregate of 500,000 common shares of Klondike and 2,320,000 common shares of Emerald Fields representing approximately 20% and 6.5% of the issued and outstanding shares of Klondike and Emerald Fields, respectively.

Klondike has made application to the Exchange for an exemption from the sponsorship requirements applicable to the Amalgamation in accordance with Exchange Policy 2.2. The common shares of Klondike will be posted for trading until either the aforementioned application for an exemption has been accepted by the Exchange or a sponsor has been retained in accordance with Exchange Policies 2.2 and 2.4.

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.

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

  • Klondike Capital Corp.
    Todd Montgomery
    President
    (403) 228-0607
    (403) 262-4860 (FAX)
    or
    Emerald Fields Resource Corp.
    Len Cornez
    CFO
    (403) 519-5531
    (403) 955-0380 (FAX)