Natan Resources Ltd.
TSX VENTURE : NRL.P

Natan Resources Ltd.

August 16, 2012 15:40 ET

Natan Proposes Qualifying Transaction

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 16, 2012) - Natan Resources Ltd. ("Natan" or the "Company") (TSX VENTURE:NRL.P) has entered into an agreement ("Agreement") dated August 15, 2012 with Alojzy Aleksander Walus (the "Optionor"), a resident of British Columbia, to earn up to an 80% ownership interest in the Highland South copper property (the "Property") through the payment of cash, common shares of Natan and work expenditures over a period of three years (the "Transaction"). The proposed Transaction will constitute Natan's Qualifying Transaction under the policies of the TSX Venture Exchange (the "Exchange"). Upon completion of the Transaction, Natan expects to become a Tier 2 mining issuer on the Exchange.

The Highland South Copper Property

The Optionor currently holds a 100% interest in the Property, located a few kilometres east of Highway No 1, near Boston Bar in southwestern British Columbia, some 200km northeast of Vancouver and includes a 28km long NNW-SSE contiguous group of 19 mineral claims, covering an area of 9,650 hectares.

The Property is situated along the contact of a major intrusive complex with slightly metamorphosed sedimentary-volcanogenic units. The intrusive complex hosts numerous copper and molybdenum porphyry deposits, including Highland Valley the largest porphyry copper mine in Canada.

Natan has engaged Krzysztof Mastalerz, a "qualified person" under National Instrument 43-101 ("43-101"), to complete a technical report (the "Report") on the Property in compliance with 43-101. The Report is expected to include a proposed budget for exploration of the Property.

Upon completion of the Report, the Company will provide further details on the Property.

Details of the transaction

The Optionor has granted Natan the sole and exclusive right and option (the "Option") to acquire from the Optionor up to an 80% interest in and to the Property. The material terms of the Agreement are set out as follows:

  1. upon signing the Agreement, Natan has paid $25,000 to the Optionor as a non-refundable deposit ("Deposit");
  1. upon initial acceptance for filing of the Transaction or, if permitted by the Exchange, as soon as practicable, Natan will loan $100,000 to the Optionor as a non-interest bearing loan secured by the Optionor's interest in the Property and payable (in the event that the Qualifying Transaction does not close) one year from the date of the Agreement or forgiven in the event that the Qualifying Transaction closes (the "Loan");
  1. Natan will pay the Optionor a sum of $4,000 on the closing Date and incur a total of $1,500,000 of expenditures on the Property, as follows:
  1. $250,000 (the "First Year Expenditures") on or before the first anniversary of the date on which Natan completes its Qualifying Transaction in connection with the Transaction (the "Closing Date"),;
  2. an additional $450,000 on or before the second anniversary date of the Closing Date (the "Second Year Expenditures"); and
  3. an additional $800,000 on or before the third anniversary date of the Closing Date (the "Third Year Expenditures").
  1. Natan shall issue common shares to the Optionor as follows:
  1. a total of 100,000 common shares of Natan on the Closing Date (the "Initial Share Issuance");
  2. an additional 300,000 common shares of Natan on the first anniversary date of the Closing Date (the "First Year Shares"); and
  3. a final 600,000 common shares of Natan on the second anniversary date of the Closing Date (the "Second Year Shares").
  1. Upon making the Initial Share Issuance, issuing the First Year Shares and making all of the First Year Expenditures, the Loan and the Deposit, Natan shall have earned a 51% Interest in the Property.
  1. Upon making the Second Year Expenditures and issuing the Second Year Shares, Natan shall have earned an additional 19% Interest in and to the Property, for a total 70% Interest.
  1. Upon making the Third Year Expenditures, Natan shall have earned an additional 10% Interest in and to the Property, for a total 80% Interest.
  1. Any Expenditures that are over and above those required to be made by a particular date shall be carried forward and applied against the required Expenditures in subsequent period(s). Any issuance of shares contemplated above may be made, at Natan's election, prior to the date provided above.
  1. Upon Natan earning an interest and the Agreement being terminated, Natan and the Optionor will enter into a joint venture agreement to govern further exploration and development of the Property.
  1. Should either party's interest be reduced to a percentage equal to or less than 5%, then that party's Interest in the Property shall automatically be forfeited to the other party (the "Owner") and that party's interest in the Property shall thereafter be limited to an entitlement to a 2% net smelter royalty (the "Royalty"). The Owner will have the right to repurchase 1% of that royalty at any time up to commencement of commercial production by making a cash payment of $2,000,000.
  1. The Agreement also requires a 20km area of mutual interest in mineral properties surrounding the Property.

The proposed Transaction will not constitute a non-arm's-length Qualifying Transaction within the meaning of that term in Exchange policies. Accordingly, the Company does not anticipate it will be seeking shareholder approval in connection with the Transaction.

A sponsor has not been retained in connection with the Transaction, and the Company will be seeking a waiver of the sponsorship requirement by the Exchange.

Trading in the shares of the Company has been and will remain halted until completion of the Transaction or the filing of acceptance documentation with the Exchange in accordance with Exchange policy requirements.

Financing

Natan intends to complete a private placement financing (the "Financing") in order to meet the Exchange's initial listing requirements for a tier 2 mining issuer upon completion of the Transaction. The amount and proceeds of the Financing will be determined upon completion of a 43-101 geological report, with a recommended work program for the Property.

The Financing is expected to be comprised of: (i) non flow-through units (the "NFT Units") at $0.10 per NFT Unit with each NFT Unit comprised of one common share and one-half a share purchase warrant exercisable for a period of 24 months at a price of $0.15 per whole warrant and (ii) flow-through shares (the "FT Shares") at $0.13 per FT Share.

The Resulting Issuer

The names and backgrounds of all persons who will, upon completion of the Transaction, be insiders of the resulting issuer are set forth below.

Brett Matich, Chief Executive Officer and Director

Mr. Matich has over twenty years' experience in heading exploration and financing in the mining industry. As Managing Director from 1999 to 2003 of Australian Stock Exchange ("ASX") listed Acclaim Exploration NL in outback Western Australia, he was responsible for exploration and financing that lead to a maiden JORC compliant Mineral Resource of 227 million tonnes grading 1% nickel and 0.7% cobalt containing 2.3 million tonnes of contained nickel. At that time, the Wingellina Nickel property was in the top 20 nickel laterite resources in the world.

As inaugural Managing Director of ASX listed Fox Resources Ltd from 2002 to 2005, Mr. Matich headed exploration for gold, copper and nickel, including the following on the closed Radio Hill nickel/copper mine from 2002 to 2005. Dewatering, mine upgrades, extensive drilling, converting to JORC compliant Mineral Reserves, major refurbishment to the processing plant, infrastructure and environmental upgrades, financing, completion of a bankable feasibility study. Mining operations commenced in July 2004, employing approximately one hundred personnel through the process.

As Managing Director and Executive Director of ASX listed and London Stock Exchange AIM listed Aztec Resources Ltd from 2000 to 2005, Mr. Matich headed and directed geological consultants, which in 2003 resulted in a maiden JORC compliant Mineral Resource of 24.9 million tonnes grading 66.95% for Aztec's Koolan Island iron ore property. Aztec completed a bankable feasibility study before ASX listed Mt Gibson Iron Ore Ltd bid for Aztec in 2006. Today the Koolan Island iron mining operations produces approximately 3 million tonnes of direct shipping iron ore that is exported to China and Japan.

Since 2010, Mr. Matich resides in Vancouver. As President, CEO of TSXV listed Cap-Ex Ventures Ltd ("Cap-Ex") in 2011, he directed exploration and drilling programs on the Block 103 iron ore property, which led to the discovery of the Greenbush and the Northwest Zones. For the successors of 2011, Cap-Ex was ranked third out of the ten mining companies that made the TSX Venture 50®. Mr. Matich remains an Executive Director, and Cap-Ex is currently working towards completing a maiden NI43-101 compliant resource and a preliminary economic assessment on its Block 103 property.

Sean McGrath, Chief Financial Officer and Corporate Secretary

Mr. McGrath has a bachelor of commerce (honours) degree from Memorial University of Newfoundland, and has achieved both CPA and CGA accounting designations. He has extensive experience in finance, accounting and administration of public companies, particularly in the mineral resources sector. He has been the chief financial officer of a number of Exchange-listed corporations, and he is currently the CFO and Director of both Natan and Abenteuer Resources Corp.

Joel Schuster, Director

Mr. Schuster is a graduate of the University of Toronto with degrees in political science and law, and is a member of the Bar in British Columbia and Massachusetts. He has practised law for over a decade and has represented numerous companies in Canada and the United States in connection with initial public offerings, takeovers, private placements, company maintenance, corporate governance, public disclosure requirements, and the acquisition and disposition of key assets. He is also the vice-president and corporate secretary of three Exchange-listed corporations, and his experience provides the resulting issuer with legal and managerial experience in its efforts to commercialize its business.

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 Qualifying Transaction, any information released or received with respect to the Qualifying 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 Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

On Behalf of the Board,

Brett Matich, CEO and Director

Forward-Looking Information Cautionary Statement

This release contains forward-looking information and statements, as defined by law including without limitation Canadian securities laws and the "safe harbor" provisions of the US Private Securities Litigation Reform Act of 1995 ("forward-looking statements"), respecting the Transaction and the transactions ancillary thereto, including without limitation the Qualifying Transaction, the procurement of a 43-101 report, the Loan, sponsorship, trading halt, private placement, and nature of the resulting issuer. Forward-looking statements involve risks, uncertainties and other factors that may cause actual results to be materially different from those expressed or implied by the forward-looking statements, including without limitation, the Exchange's willingness to characterize the Transaction as satisfying its criteria for a Qualifying Transaction; that the Agreement will remain in force and effect; that a 43-101 report will be generated in a timely fashion and that same will contain a work program and other factors that satisfy the Exchange and the Company; that the Company will have sufficient funds to make the Loan; the ability to acquire necessary permits and other authorizations; that the Exchange will provide a waiver of its sponsorship requirements; whether shareholder approval is required in connection with the Transaction; environmental compliance; cost increases; availability of qualified workers and drill equipment; competition for mining properties; risks associated with exploration projects; mineral reserve and resource estimates (including the risk of assumption and methodology errors); dependence on third parties for services; non-performance by contractual counterparties; title risks; availability of funds for further exploration (both of the Company and of its partners); and general business and economic conditions. Forward-looking statements are based on a number of assumptions that may prove to be incorrect, including without limitation assumptions that the Transaction will satisfy Exchange requirements for a Qualifying Transaction on the terms substantially set out in this News Release; that the Agreement will remain in force and effect; that the Company will be able to satisfy the conditions precedent and ongoing conditions in the Agreement in particular those related to earning an interest in the Property; that the private placement will complete on terms acceptable to the Company or at all; that the resulting issuer after the Qualifying Transaction will be as set out in the News Release; weather; general business and economic conditions; the timing and receipt of required approvals; availability of financing; power prices; ability to procure equipment and supplies including without limitation drill rigs; and ongoing relations with employees, partners and joint venturers. The foregoing list is not exhaustive and the Company undertakes no obligation to update any of the foregoing except as required by law.

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 release.

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