Mersington Capital Inc.

Prime Meridian Resources Ltd.

November 16, 2006 17:39 ET

Mersington Capital Announces Proposed Qualifying Transaction With Prime Meridian Resources Ltd.

MONTREAL, QUEBEC--(CCNMatthews - Nov. 16, 2006) - Mersington Capital Inc. ("Mersington") (TSX VENTURE:MSG.P) is pleased to announce that it has entered into a letter of intent dated August 14, 2006 (the "Letter of Intent") with Prime Meridian Resources Ltd. ("PM") and certain principal shareholders of PM for an arm's length Qualifying Transaction in accordance with the policies of the TSX Venture Exchange. The Letter of Intent provides for Mersington to acquire all of the issued and outstanding shares of PM such that, upon completion of the transaction, the current shareholders of PM will collectively exercise control over Mersington and PM will become a wholly owned subsidiary of Mersington (the "Proposed Acquisition"). Pursuant to the Proposed Acquisition, Mersington will change its name to Prime Meridian Resource Corp., or a similar name.

The Proposed Acquisition is being made on the basis that the Mersington common shares will be consolidated on a 2 for 1 basis at the date of the closing of the Proposed Acquisition such that Mersington will have an aggregate of 4,489,250 post-consolidated common shares issued and outstanding as well as options entitling their holders to purchase 448,925 post-consolidated Mersington common shares.

The Letter of Intent provides for the acquisition by Mersington of all of the issued and outstanding common shares of PM for an aggregate purchase price of $15,000,000 which shall be payable by the issuance of an aggregate of 30,000,000 post-consolidated Mersington common shares at a deemed price of $0.50 per Mersington common share. A valuation report effective May 20, 2006, prepared by Broad Oak Associates (Toronto), an independent consulting firm, values the properties based on prior expenditures at US $8,900,000.

The Proposed Acquisition is also conditional upon the completion of a concurrent private placement by Mersington of units for a minimum amount of $2,000,000 and a maximum amount of $3,000,000 (the "Private Placement"). Each unit will be composed of 1 post-consolidated Mersington common share at a price of $0.50 and one-half Mersington common share purchase warrant, each whole warrant entitling the holder to purchase, for a period of 18 months following the closing of the Private Placement (subject to early expiry conditions), one post-consolidated Mersington common share at a price of $0.75 per post-consolidated common share. Mersington has entered into an engagement letter dated effective August 14, 2006, with Canaccord Capital Inc. ("Canaccord") in connection with the Private Placement. In consideration for its services rendered, Canaccord will receive a cash commission of 10% plus broker warrants entitling it to purchase Mersington common shares representing up to 10% of the number of Mersington common shares sold in the Private Placement. Mersington will also issue to Canaccord a minimum of 707,883 and a maximum of 1,061,825 post-consolidated Mersington common shares as a finder's fee upon closing of the Private Placement.

Upon completion of the Proposed Acquisition and Private Placement, there will be a minimum of 39,197,133 and a maximum of 41,551,075 post-consolidated Mersington common shares issued and outstanding, options entitling the holders to purchase 448,925 post-consolidated Mersington common shares as well as a minimum of 2,400,000 and a maximum of 3,600,000 warrants of Mersington issued and outstanding.

In addition, the shareholders of Mersington will be asked to authorize the creation of a stock option plan and set aside up to 10% of the Mersington common shares, from time to time, for the grant of stock options in order to facilitate the retention and recruitment of directors, officers, employees and service providers.

About Prime Meridian Resources Ltd.

PM is a private mining exploration company, incorporated pursuant to the Business Corporations Act (Yukon) in 1997 which holds, through it wholly-owned subsidiary, Prime Meridian Resources Inc. ("PMR"), mineral interests in a number of properties in northern Michigan and northern and southeastern Minnesota U.S.A. PMR is a private company incorporated in the State of Nevada (1998). All of the shares of PM are held by Primrose Drilling Ventures Ltd. (approximately 89%) and Michael Senn (approximately 11%). Primrose Drilling Ventures Ltd. is a private Alberta corporation which is controlled (51%) by members of the Boreta family. Michael Senn is a resident of Wisconsin U.S.A.

PMR successfully acquired over 30,000 mineral acres (mineral + surface estates) in five project areas located in Iron, Baraga, Dickinson, Marquette and Gogebic Counties, Michigan and two project areas in Koochiching and Fillmore Counties, Minnesota. Project areas were selected on the basis of several years of regional geologic and geophysical data compilations, follow-up reconnaissance mapping, rock chip and historic drill core sampling. PMR has a 100% interest in all of the subject properties.

In 2002 PMR entered into a joint venture agreement with BHP Billiton Minerals Exploration Inc. ("BHPB") that included the Baraga Basin, Kiernan Sills and Bangston targets in Michigan. According to the terms of the agreement, BHPB could have earned 65% interest in the project areas by spending $1 million per year for three years and completing a bankable feasibility study. That joint venture agreement was terminated in October 2005 due to a reprioritization for BHPB'S worldwide nickel program. BHPB did not earn an interest in any of the project areas.

PMR is using a Noril'sk-Voisey's Bay deposit model to explore for intrusion-hosted nickel-copper deposits. The model purports that this deposit-type is associated with hot mantle plumes that produce rifting and voluminous mafic magmas with a high content of magnesium, chromium, nickel and platinum-group elements but low sulfur. Economic deposits form along conduits when the metal-rich, but sulfur poor, magma comes in contact with sulfur-rich rocks (e.g. sediments).

Recent government and academic studies have postulated that the potential for similar nickel-copper deposits exists in intrusions related to the mid-continent rift system in the Lake Superior region. In 2002 the potential for these deposits was confirmed by Kennecott Mineral Company's discovery of the Eagle Ni-Cu deposit in northern Michigan.

PMR researched available government geologic maps and airborne geophysical survey data to identify mafic/ultramafic intrusions that might potentially host nickel-copper deposits. The target intrusions, or interpreted intrusions, are generally hosted by metasediments of the Early Proterozoic age, as at the Eagle Deposit in Upper Michigan. The majority of these metasedimentary sequences are sulfidic. In addition, PMR has targeted several Late Archean mafic intrusions within older rift settings that it believes are prospective for hosting Ni-Cu deposits.

National Instrument 43-101 technical reports of the exploration properties have been prepared by DeMatties, Munroe & Rowell, Geological - Geophysical Consultants in Cambridge, Minnesota. The reports are dated September 3, 2006, and the authors are independent of PM, PMR and Mersington.

The authors of the reports have made the following conclusions:

1) PMR has successfully established an inventory of mid-continent rift-related, intrusion-hosted nickel-copper targets within five project areas in Michigan, one project area in southeastern Minnesota; one Archean rift-related, intrusion-hosted nickel-copper target area has been established in northern Minnesota.

2) PMR has acquired over 30,000 mineral acres that control or partially control many but not all of the identified targets in the inventory.

3) Many of the identified targets are in various stages of exploration that range from land acquisition to ground geophysical follow-up and drill testing.

4) The authors consider all of PMR's project areas as legitimate targets and worthy of further exploration.

The authors have proposed a total budget of approximately US $2,909,667 to support a two phase exploration program for all project areas within the lands controlled by PMR. It is expected that both phase 1 and phase 2 exploration will extend over a period of 18 months and phase 1 exploration is expected to commence on February 1, 2007.

For the six month period ended June 30, 2006, PM had current assets totalling US$171,372, capitalized exploration expenditures and land lease assets of US$1,839,759 and shareholders' equity and shareholders' loans of US$201,825 and US$1,809,307, respectively. For the same period PM had no operating income and a net loss of US$86,720 (management prepared financial statements).

Proposed Directors of the Resulting Issuer

Messrs. Richard Rusiniak, Roy Bonnell, and Francois Fauteux, being three of the four current directors of Mersington intend to step down as directors effective at the special meeting of shareholders to approve certain matters related to the Proposed Acquisition. It is expected that a new board of directors will be nominated at the special meeting consisting of Paul Ramsay, a current director of Mersington, Michael Senn (of PM), Bill Anderson, Mark Fields, Frank Joklik and possibly one other director who will be a nominee proposed by PM.

Mr. Michael Senn, age 55, is a licensed professional geologist (Wisconsin U.S.) and has been President and CEO of PM since 1997. He worked as a consulting geologist from 1996 to 1997 and prior to that held progressively senior positions with Kennecott Exploration Co. from 1980 to 1996. The management of the team of professionals during 1991-1993 and their subsequent discovery of the producing Kennecott / RTZ / Aber's Lac de Gras diamond mines stands as one of his premier accomplishments along with his involvement as the Regional Manager / Chief Geologist during the time of the discovery (1995, announced by Kennecott in 2002) of the new Kennecott Eagle nickel mine in Michigan. Michael Senn has been working as a geologist since 1973 and has experience with precious metals, base metals and precious stones. Mr. Senn holds a Bachelor of Science degree with a Geology major and an Environmental Geology minor and is a member of the Society of Economic Geologists, Geological Society of America and Prospectors & Developers Association.

Mr. William Anderson, age 59, is currently President, CEO and a director of First Nickel Inc., a junior nickel mining and exploration company listed on the TSX. Prior to this, he was Vice President (1995-96) and President (1996-2004) of MPH Consulting Limited, a firm whose business is management of exploration and advanced mineral projects, minerals consulting, and technical reporting for public companies. William Anderson was also a consultant with Anderson Associates (1993-4), a private consulting practice serving industry and governments, specializing in organizing large-scale exploration programs, project management, and corporate and project evaluations. Selected clients included the Government of Greenland, Nunaoil A/S, FMC Gold Company, Noranda Inc. He was Exploration Manager, Central Canada (1991-1992), Eastern Canada (1984-1991) with BP Resources Canada Limited. Mr. Anderson holds a B.Sc. Geology, McGill University (1967) and a M.Sc. (A) Mineral Exploration Management, McGill University (1970). He is a member of the Canadian Institute of Mining and Metallurgy, the Prospectors and Developers Association, S.M.E. (AIME), Association of Professional Engineers and Geoscientists of Newfoundland and the Society of Economic Geologists.

Mr. Mark Fields, age 53, is a professional geoscientist (British Columbia). He is a director (since 1999) and was Vice President (1999-2001) of Copper Ridge Explorations Inc., a junior mining exploration company listed on the TSX Venture Exchange. Mark Fields was also a director and Executive Vice President (2001-2005) and President (2001-2003) of Pine Valley Mining Corporation a junior mining exploration company listed on the TSX Venture Exchange and Vice President (1998-2002) of New Claymore Resources Ltd. a junior mining exploration company listed on the TSX Venture Exchange. He holds a B.Sc. Geology, University of British Columbia (1986) and a B.Comm. (honours), Queen's University (1976). Mr. Fields is a member of the Association of Professional Engineers and Geoscientists of British Columbia (1992).

Mr. G. Frank Joklik, age 78, is currently a mining consultant. He began his career in 1954 as an exploration geologist with Kennecott Copper Corporation and then joined American Metal Climax Company to manage the early development of the Mt. Newman iron ore mines, Western Australia, and was later elected a Vice President. In 1974, he resumed his career with Kennecott and, after several promotions, became President and CEO in 1980. Under his management, Kennecott turned around its copper operations and diversified into precious metals, diamonds and coal. He retired from Kennecott in 1993. Between 1995 and 2005, he was Chairman and CEO of MK Resources Company which was engaged in the development of the Las Cruces copper project in Spain. From 1989 to 2002, he served in leadership of the 2002 Salt Lake City Olympic Winter Games. Mr. Joklik attended the University of Sydney, where he received B.Sc. (First Class Honors) and Ph.D. degrees in geology. In 1953, he came to the United States as a Fulbright Scholar at Columbia University. He is a member of the National Academy of Engineering.

A general policy of the TSX Venture Exchange requires that a sponsor be retained to prepare a sponsor report in compliance with TSX Venture Exchange Policy 2.2. Mersington has applied for an exemption from sponsorship requirements, however, there is no assurance that Mersington will obtain this exemption.

Completion of the Proposed Acquisition is subject to a number of conditions, including but not limited to, Exchange acceptance. The transaction cannot close until the Exchange's conditional approval has been 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 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 Proposed Acquisition is proposed to be Mersington's "Qualifying Transaction" within the meaning of Policy 2.4 of the Exchange (the "Policy"). The Proposed Acquisition is not a "Non Arm's Length Qualifying Transaction" within the meaning of the Policy and as such, shareholder approval is not required. However, Mersington's shareholders will be asked to vote upon, among other things, change in the directors, consolidation of the Mersington common shares on a 2 for 1 basis, a new stock option plan and the change of name of Mersington. Mersington will prepare and file a filing statement via SEDAR describing the Proposed Acquisition in further detail.

Among other things, the Proposed Acquisition is subject to satisfactory due diligence.

The Proposed Acquisition and the listing of the common shares of Mersington upon completion of the Proposed Acquisition and/or Private Financing is subject to Exchange and regulatory approval.

The Exchange has in no way passed upon the merits of the Proposed Acquisition and has neither approved or disapproved the contents of this release.

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