NXA Inc.
NEX BOARD : NXI.H

November 27, 2006 17:48 ET

NXA Inc. Announces Acquisition of Mineral Properties, Private Placement of Securities and Application to Graduate to Tier 2 of TSX Venture Exchange

TORONTO, ONTARIO--(CCNMatthews - Nov. 27, 2006) -

NOT FOR DISTRIBUTION TO UNITED STATES OF AMERICA WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES OF AMERICA

NXA INC. ("NXA" or the "Company") (NEX BOARD:NXI.H) is announcing that it is continuing as a mining company and has entered into two agreements (the "Agreements") with 1698727 Ontario Inc. (the "Vendor") to acquire, pursuant to an assignment and assumption agreement (the "Assignment Agreement") and a mining claims acquisition agreement (the "Acquisition Agreement"), each dated November 23, 2006, the Vendor's rights in seven contiguous mining claims in British Columbia (the "Acquisition") known as the Topley Richfield property (the "Property"), subject to regulatory and shareholder approval. The terms of the Assignment Agreement provide, among other things, that NXA will be assigned all of the rights and obligations of the Vendor, a private Ontario corporation all of the shares of which are held by a single individual who is at arm's length from the Company, under an option agreement (the "Underlying Agreement") between the Vendor and the registered claimholders (the "Claimholders") of three of the mining claims comprising the Property. Pursuant to the Assignment agreement, NXA as assignee of the Vendor's interest may earn a 100% interest in these three claims partially comprising the Property. In order to earn such interest, NXA will assume the obligations of the Vendor in the Underlying Agreement, which obligations include the payment of a total of $120,000 and the issuance of 400,000 common shares of NXA over a four year period. The Underlying Agreement also provides for a 2% net smelter return royalty in favour of the Claimholders. In addition, NXA must incur a total of $700,000 in exploration expenditures over a four year period. As consideration for the assignment, NXA will, subject to receipt of required shareholder and regulatory approvals, issue the equivalent of $100,000 of its Common Shares to the Vendor. The terms of the Acquisition Agreement provide that NXA will acquire the remaining four mining claims comprising the Property by issuing to the Vendor the equivalent of $100,000 in common shares, half of which will be issued immediately upon receipt of shareholder and regulatory approvals and half will be issued on the first anniversary of receipt of such approvals. This agreement also provides for a 2% net smelter return royalty in favour of the Vendor. The Company intends to seek the approval of its shareholders for the acquisition of the Property pursuant to these agreements at the upcoming annual and special meeting of its shareholders, scheduled to be held early in 2007.

NXA is currently listed on the NEX board ("NEX") of the TSX Venture Exchange (the "Exchange") under the symbol NXI.H. The Acquisition is subject to the rules and policies of the Exchange governing a Change of Business (as that term is defined in applicable Exchange policies). As part of this transaction, NXA intends to apply for Tier 2 trading status with the Exchange. Following completion of the Acquisition, which is subject to regulatory, Exchange and shareholder approval, NXA will carry on business as a mining exploration company. The Acquisition is also subject to the Company being able to demonstrate that it has financial resources to be able to explore and exploit the Property. In connection with the Acquisition, NXA will undertake a non-brokered private placement (the "Offering") of common shares which qualify as "flow through shares" for purposes of the Income Tax Act (Canada) (the "Flow Through Shares") at a price of $0.06 per Flow Through Share, and will also offer units ("Units") of the Company at a price of $0.06 per Unit. Each Unit will consist of one common share and one common share purchase warrant of the Company. Each warrant shall be exercisable to acquire one common share of the Company for a period of two years at an exercise price of $0.10 per share. The Offering is expected to raise aggregate gross proceeds of a minimum of $200,000 and a maximum of $500,000, which will be used for purposes of the Acquisition, the funding of the work program on the Property and for general working capital.

The Acquisition and related transactions are subject to receipt of all required regulatory approvals, including the approval of the TSX Venture Exchange. The proposed Acquisition will be an arm's length transaction as the current directors and officers of NXA currently have no ownership or other interest in the Property. The price of the common shares to be issued to the Vendor pursuant to the Acquisition Agreement and the Assignment Agreement will be determined at the time of issuance.

It is expected that insiders of the Company will be participating for greater than 25% of the Offering, on the same terms as arm's length investors. The Company expects that it will be eligible for certain exemptions to the formal valuation and majority of the minority shareholder approval requirements under Exchange policies and applicable securities laws. The Offering may close within 21 days of the date of filing of a material change report in connection with the closing, if management of NXA determines it is reasonable or necessary in the circumstances.

NXA INC.

NXA was previously engaged in the business of software development. The Company specialized in the wireless software market, developing wireless middleware software that enabled enterprises to connect their field workers to their corporate data and applications. The Company also developed and sold three vertical applications targeted at the mobile workforce. However, the markets into which these products were sold were heavily populated, fairly mature and relatively small. As a result, the Company's strategic and operational focus had been on building and growing its wireless enabling platform; however, the Company experienced much slower market adoption rates for this platform than it had anticipated, low sales, and the inability to secure incremental financing. Although the Company's management actively pursued financing and aggressively marketed its wireless platform, it was unsuccessful and, as a result, the Company announced on November 9, 2004 that it was investigating its strategic options, including the potential sale of the Company or its assets, in order to meet its obligations. On December 22, 2004, the Company announced that its then-indirectly wholly owned subsidiary had entered into an agreement with an arm's length third party to sell substantially all of its assets. The sale of the assets of this indirect subsidiary was not considered material by the Company since such assets were not material to its wireless middleware operations. On January 11, 2004 the Company announced that it had signed an agreement to sell all of the shares of its wholly-owned operating subsidiary, which carried on the Company's main business of developing wireless middleware, to an arm's length purchaser. On February 18, 2005, the Company filed articles of amendment changing the name of the Company to "NXA Inc." and consolidating the Company's issued and outstanding common shares on the basis of 1 new common share for every 10 common shares previously outstanding. Due to the inability to meet minimum listing requirements, the common shares of the Company were voluntarily delisted from trading on the Toronto Stock Exchange as of the close of business on February 22, 2005 and were listed for trading on the NEX board of the Exchange effective February 23, 2005. Since that time, the Company has been exploring new business opportunities with a view to maximizing shareholder value.

THE PROPERTY

The Property is located approximately 100 km southeast of Smithers, British Columbia, Canada in the Omineca Mining Division. The Topley-Richfield Property consists of seven contiguous mineral exploration concessions covering an area of approximately 2,347 hectares. A technical report prepared in accordance with National Instrument 43-101 has been prepared in respect of the Property and will be available for viewing on www.SEDAR.com, subject to regulatory approval.

Three of the seven claims comprising the Property is under option to NXA in accordance with the terms of the Acquisition Agreement, pursuant to which NXA has been assigned the rights and obligations of the Vendor in the Underlying Agreement. In order to earn a 100% interest in theses three claims partially comprising the Property NXA shall transfer a total of 400,000 common shares to the Claimholders, pay a total of $120,000 and incur exploration expenditures on these claims of at least $700,000 in the forty eight (48) month period following the receipt of all required regulatory and shareholder approvals. A summary of NXA's obligations to the Claimholders is summarized in Table 1 below. In consideration of the assignment of its interests in the Option Agreement to NXA, NXA will issue $100,000 of common shares to the Vendor, 50% upon receipt of all required approvals and 50% on the first anniversary thereof. The Claimholders retain a 2% net smelter returns royalty in the event any of these three mining claims are put into production.



Table 1
---------------------------------------------------------
Year Cash Payments Share Payments Work Commitment
---------------------------------------------------------
1 $10,000.00(i) 100,000 $100,000.00
2 $25,000.00 100,000 $150,000.00
3 $35,000.00 100,000 $200,000.00
4 $50,000.00 100,000 $250,000.00
---------------------------------------------------------
Total: $120,000.00 400,000 $700,000.00
---------------------------------------------------------
(i) This amount has been paid.


Upon receipt of all required regulatory, Exchange and shareholder approvals, pursuant to the terms of the Acquisition Agreement the Vendor will transfer the four remaining mining claims partially comprising the Property to NXA in the relevant British Columbia mining registry. In exchange, NXA will issue $100,000 of common shares to the Vendor, 50% upon receipt of all such approvals and 50% on the one-year anniversary of receipt of such approvals. NXA had previously lent the sum of $36,000 to the Vendor for purposes of assisting NXA in evaluating the Property as a potential acquisition target pursuant to a loan agreement dated August 16, 2006. The full principal amount of such loan will be applied to the Acquisition Agreement such that NXA's obligations to transfer common shares on the first anniversary of receipt of all required approvals shall be reduced by this amount. In addition, as $10,000 had previously been paid to the Claimholders by the Vendor, NXA's cash payment obligations in Year 1 (see Table 1 above) have been reduced (to nil) by this amount. The full text of the Assignment Agreement and Acquisition Agreement may be viewed at www.SEDAR.com.

DIRECTORS AND EXECUTIVE OFFICERS

NXA intends to seek the approval of its shareholders for the Acquisition at the upcoming annual and special meeting of its shareholders, scheduled to be held early in 2007. At the meeting, management will propose Robert J. Metcalfe, LLB, for election as director, in addition to the currently serving directors Chuck Lilly, Chris Tambakis and Perry Dellelce. It is expected that Mr. Metcalfe will also act as President and Chief Executive Officer of the Company, subject to completion of the Acquisition and receipt of all regulatory and Exchange approvals.

Mr. Metcalfe is Counsel for the full service law firm of Metcalfe, Blainey & Burns LLP. He brings many years of corporate governance and business experience having been a senior partner at the law firm of Lang Michener LLP for 20 years, specializing in corporate/commercial law. He has a great deal of experience in the mining sector, having served on the boards of numerous of the Conwest Exploration Company Limited group of companies; namely, Faraday Resources/Uranium Limited, Chance Mining Inc., Central Patricia Gold Mines Ltd., Chimo Gold Mines Ltd. and Griffith Iron Bay Trust. Mr. Metcalfe is currently a member of the board of directors of Coalcorp Mining Inc., and also serves on the audit and compensation committees of that company. He has a great deal of public company experience, having served on the boards of EnviroTower Inc., ION Enterprises Inc., Hollinger Inc., Radiant Energy Corporation as well as Canada Lands Company Limited. He is a past Director and Non-Executive Chairman of the CN Tower, the tallest free standing structure in the world, and has served as Executive Vice-President and General Counsel of Spotnik Mobile Inc., a subsidiary of Telus Corporation. He is a past-President and CEO of Armadale Properties Limited.



FINANCIAL INFORMATION
---------------------

The following table presents a summary of the consolidated historical and
operating data of NXA for the year ended December 31, 2005, and for the
three and six months ended June 30, 2006.

Three Months Ended Six Months Ended Year Ended
June 30, 2006 June 30, 2006 December 31, 2005
(unaudited) (unaudited) (audited)

(Cdn$) (Cdn$) (Cdn$)
---- ---- ----

Net income (loss) (39,208) (89,370) 686,499
Cash and cash
equivalents 339,527 339,527 142,531
Total assets 529,317 529,317 592,768
Working capital 258,666 258,666 316,991
Shareholder's equity 416,167 416,167 482,740


FORWARD-LOOKING STATEMENTS

Some statements herein are forward-looking statements. These statements address future events and conditions and, as such, involve inherent risks and uncertainties. Actual results could be significantly different from those anticipated in the forward-looking statements, and therefore readers should not place undue reliance on the forward-looking statements.

Completion of the transaction is subject to a number of conditions, including Exchange acceptance and Shareholder approval. 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 to be prepared in connection with the transaction, any information released or received with respect to the Change of Business may not be accurate or complete and should not be relied upon. Trading in the securities of NXA should be considered highly speculative.

Shares Outstanding: 9,973,721

The TSX Venture Exchange 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

  • NXA Inc.
    Chuck Lilly
    President and Chief Executive Officer
    (705) 522-2400, ext. 207